Exhibit 10.3 (a)
SPACE SHARING AGREEMENT
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THIS SPACE SHARING AGREEMENT (this "Agreement") is dated as of
December 31, 1996, and is made by and between Xxxxx, Cone & Xxxxxxx Limited, a
Hong Kong company ("Sublessor"), and TN Technologies Limited, a Hong Kong
company ("Sublessee"). Sublessor and Sublessee hereby agree as follows:
1. Recitals: This Agreement is made with reference to the fact that Xipho
Development Company Limited, as landlord ("Master Lessor"), and Sublessor, as
tenant, entered into that certain lease, dated as of August 14, 1995 (the
"Master Lease"), with respect to premises consisting of approximately 10,335
square feet of space (the "Premises"), located on a portion of the second floor
of a building known as Harbour Centre, and located at 00 Xxxxxxx Xxxx, Xxxxxxx,
Xxxx Xxxx (the "Building"). A copy of the Master Lease is attached hereto as
Exhibit A and incorporated by reference herein.
2. Premises: Sublessor hereby subleases to Sublessee, and Sublessee hereby
subleases from Sublessor, a portion of the Premises more particularly described
in Exhibit B attached hereto (the "Subleased Premises"). In connection with its
use of the Subleased Premises, Sublessee shall also have the right to use the
office furniture described in Exhibit C attached hereto and shall have the non-
exclusive right to use (a) in common with Sublessor and the other occupants of
the Building, the common areas outside the Premises that Sublessor has the right
to use under the Master Lease and (b) such additional facilities in the
remainder of the Premises as shall be mutually agreed upon by Sublessor and
Sublessee.
3. Term:
A. Initial Term. The initial term (the "Term") of this Agreement shall
be for a period of one (1) year commencing on the "Closing Date" as defined in
that certain Acquisition Agreement dated as of December 31, 1996 between and
among True North Communications Inc. and TN Technologies Holding Inc., a
Delaware corporation and Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X. X'Xxxxxxx
and Xxxxx Enterprises LTD (the "Commencement Date"), unless this Agreement is
sooner terminated pursuant to its terms or the Master Lease is sooner terminated
pursuant to its terms.
B. Automatic Renewal. Immediately upon the expiration of the initial
term (and each subsequent term), the term of this Agreement shall be
automatically extended for an additional one (1) year period, not to exceed four
(4) renewal terms.
C. Early Termination. Notwithstanding anything to the contrary in this
Agreement, either party may terminate this Agreement by delivering written
notice to the other party at any time after six (6) months following the
Commencement Date. Such notice must set forth the early termination date, which
date may not be less than six (6) months from the date of delivery of such
notice.
4. Rent:
A. Base Rent. Sublessee shall pay to Sublessor as base rent for the
Subleased Premises ("Base Rent") for each month during (a) the initial Term, the
amount of Six Thousand Three Hundred Eighty-Six and 67/100 Hong Kong Dollars
(HK$6,386.67) per month and (b) the renewal term, an amount to be mutually
agreed upon between Sublessor and Sublessee prior to each anniversary of the
Commencement Date based upon changes in Sublessor's costs with respect to the
Premises. Base Rent shall be paid on or before the first (1st) day of each
month. Base Rent and Additional Rent (as defined below) for any period during
the Term hereof which is for less than one month of the Term shall be a pro rata
portion of the monthly installment. Base Rent and Additional Rent shall be
payable without notice or demand and without any deduction, offset, or
abatement, in lawful money of the United States of America. Base Rent and
Additional Rent shall be paid directly to Sublessor at FCB/Hong Kong, 0xx Xxxxx,
Xxxxxxx Xxxxxx, 00 Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx, Attention: Xxxxxxx Xx, or
such other address as may be designated in writing by Sublessor.
B. Operating Expenses. Sublessee shall also pay to Sublessor a pro
rata portion, determined by the ratio which the square footage of the Subleased
Premises bears to the square footage of the Premises, of all of the amounts
payable by Sublessor to Master Lessor under the Master Lease as operating
expenses, taxes, and related charges ("Operating Expenses"). Sublessee shall pay
such amounts as and when the same are due and payable to Master Lessor under the
Master Lease, and no earlier. Sublessee shall be entitled to its pro rata share
of all credits, if any, given by Master Lessor to Sublessor for Sublessor's
overpayment of Operating Expenses. Sublessee's current pro rata portion of the
Operating Expenses is estimated to be One Thousand Six Hundred Five Hong Kong
Dollars (HK$1,605) per month. Sublessor shall promptly notify Sublessee in
writing of any change therein.
C. Other Premises Expenses. Sublessee shall also pay to Sublessor a
pro rata portion, determined by the ratio which the square footage of the
Subleased Premises bears to the square footage of the Premises, of the amounts
of the following charges incurred by Sublessor with respect to the Premises to
the extent not included in Operating Expenses ("Additional Premises Expenses"):
depreciation of leasehold improvements, depreciation of furniture and fixtures,
cleaning and maintenance charges and utilities. Sublessee shall pay such amounts
within thirty (30) days of Sublessee's receipt of a written invoice of such
charges. Sublessee's current pro rata portion of the Additional Premises
Expenses is estimated to be Two Thousand Six Hundred Forty Hong Kong Dollars
(HK$2,640) per month. Sublessor shall promptly notify Sublessee in writing of
any change therein.
D. Additional Rent. All monies other than Base Rent required to be
paid by Sublessee under this Agreement, including, without limitation, Operating
Expenses and Additional Premises Expenses, shall be deemed additional rent
("Additional Rent"). Base Rent and Additional Rent hereinafter collectively
shall be referred to as "Rent."
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5. Late Charge: If Sublessee fails to pay to Sublessor any amount due
hereunder within five (5) days after the due date, Sublessee shall pay Sublessor
upon demand a late charge equal to five percent (5%) of the delinquent amount
accruing from the due date. In addition, Sublessee shall pay to Sublessor
interest on all amounts due, at the rate of prime plus two percent (2%) or the
maximum rate allowed by law, whichever is less (the "Interest Rate"), from the
due date to and including the date of the payment. The parties agree that the
foregoing late charge represents a reasonable estimate of the cost and expense
which Sublessor will incur in processing each delinquent payment. Sublessor's
acceptance of any interest or late charge shall not waive Sublessee's default in
failing to pay the delinquent amount.
6. Use:
A. Sublessee may use the Subleased Premises only for general office
use. Sublessee shall promptly and properly observe and comply with all laws with
respect to Sublessee's use of the Subleased Premises. Notwithstanding the
foregoing, Sublessee shall not be required to comply, or pay the cost of
complying, with any laws requiring the constructions of alterations or
improvements to the Subleased Premises.
B. Sublessee shall not use, store, transport or dispose of any
hazardous material in or about the Premises, except normal office products in
normal quantities. Sublessee shall defend, indemnify and hold Sublessor and its
officers, directors, successors and assigns harmless from and against, all
claims, costs and liabilities, including attorneys' fees and costs, arising out
of the release, emission or discharge by Sublessee or its employees or agents of
any hazardous material on or about the Subleased Premises during the Term. As
used herein, "hazardous materials" shall mean any material or substance that is
now or hereafter designated by any governmental authority to be radioactive,
toxic, hazardous or otherwise a danger to health, reproduction or the
environment.
C. Sublessee shall not do or permit anything to be done in or about
the Subleased Premises which would (i) injure the Subleased Premises; or (ii)
vibrate, shake, overload, or impair the efficient operation of the Subleased
Premises or the sprinkler systems, heating, ventilating or air conditioning
equipment, or utilities systems located therein. Sublessee shall comply with all
restrictions set forth in the Master Lease and all reasonable rules and
regulations promulgated from time to time by Master Lessor and Sublessor.
7. Repairs: Sublessee shall maintain in good order and condition the
Subleased Premises; provided, however, that Sublessee shall in no event be
required to perform any repairs and maintenance (a) necessitated by the acts or
omissions of Sublessor or its agents, employees or invitees, (b) to any of the
building systems servicing the Subleased Premises or any structural portions of
the Subleased Premises, or (c) which could be properly treated as a capital
expenditure under generally accepted accounting principles as in effect from
time to time.
8. Improvements: No alterations or improvements shall be made to the
Subleased
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Premises, except in accordance with the Master Lease, and with the prior written
consent of both Sublessor and (to the extent required) Master Lessor.
9. Services: Sublessor shall have no obligation to provide or cause Master
Lessor to provide to the Premises services Master Lessor is obligated to provide
under the Master Lease. Sublessor shall, on behalf of Sublessee, to the extent
required under Section 27 hereof, enforce the Master Lease with respect to
Master Lessor's default in providing any such services. To the extent not
required to be performed by Master Lessor under the Master Lease, Sublessor
shall provide to the Subleased Premises janitorial and other services normally
found in first class office buildings that Sublessor provides to other portions
of the Premises.
10. Indemnity:
A. Except to the extent caused by the negligence or willful misconduct
of Sublessor, its agents, employees or invitees, Sublessee shall indemnify,
defend with counsel reasonably acceptable to Sublessor, protect and hold
Sublessor harmless from and against any and all claims, liabilities, judgments,
causes of action, damages, costs and expenses (including reasonable attorneys'
and experts' fees), caused by or arising in connection with: (i) the negligence
or willful misconduct of Sublessee or its agents, employees or invitees; or (ii)
a breach of Sublessee's obligations under this Agreement. Sublessee's
indemnification of Sublessor shall survive termination of this Agreement.
B. Except to the extent caused by the negligence or willful misconduct
of Sublessee, its agents, employees or invitees, Sublessor shall indemnify,
defend with counsel reason ably acceptable to Sublessee, protect and hold
Sublessee harmless from and against any and all reasonable claims, liabilities,
judgments, causes of action, damages, costs and expenses (including reasonable
attorneys' and experts' fees) caused by or arising in connection with: (i) the
negligence or willful misconduct of Sublessor or its agents, employees or
invitees; or (ii) a breach of Sublessor's obligations under this Agreement or
under the Master Lease. Sublessor's indemnification of Sublessee shall survive
termination of this Agreement.
11. Insurance: Sublessee shall obtain and keep in full force and effect, at
Sublessee's sole cost and expense, a commercial general liability policy of
insurance protecting Sublessee against claims for bodily injury, personal injury
and property damage based upon, involving or arising out of Sublessee's use or
occupancy of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence. The policy shall include coverage for
liability assumed under this Agreement as an "insured contract" for the
performance of Sublessee's indemnity obligations under this Agreement. The
policy shall name Sublessor and Master Lessor as additional insureds.
12. Release and Waiver of Subrogation: Notwithstanding anything to the
contrary in this Agreement, Sublessor and Sublessee hereby release each other,
and their respective agents,
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employees, subtenants, and contractors, from all liability for damage to any
property that is caused by or results from a risk which is actually insured
against or which would normally be covered by "all risk" property insurance,
without regard to the negligence or willful misconduct of the entity so
released. Each party shall use its best efforts to cause each insurance policy
it obtains to provide that the insurer thereunder waives all right of recovery
by way of subrogation as required herein in connection with any injury or damage
covered by the policy. If the insurance policy cannot be obtained with the
waiver of subrogation, or if the waiver of subrogation is available only at
additional cost and the party for whose benefit the waiver is not obtained does
not pay the additional cost, then the party obtaining the insurance immediately
shall notify the other party of that fact.
13. Damage; Condemnation: If the Premises or the Building, or any part
thereof, are damaged due to any peril or condemned, Sublessee shall be entitled
to an abatement of all Rent to the extent Sublessor is entitled to an abatement
under the Master Lease. If the Premises are condemned or damaged by any peril
and the damage resulting therefrom cannot be (or is not in fact) repaired so
that the Subleased Premises will be reasonably suitable for Sublessee's intended
use within ninety (90) days after the condemnation or damage, then Sublessee
shall have the option to terminate this Agreement by delivery of written notice
thereof to Sublessor.
14. Assignment and Subletting: Sublessee may not assign this Agreement,
sublet the Subleased Premises or permit any use of the Subleased Premises by
another party. Notwithstanding the foregoing, a transfer in the capital stock of
Sublessee shall not be deemed to be an assignment hereunder.
15. Default: Sublessee shall be in default of its obligations under this
Agreement if any of the following events occur:
A. Sublessee fails to pay any Rent when due, when such failure
continues for three (3) days after written notice from Sublessor to Sublessee
that any such sum is due; or
B. Sublessee fails to perform any term, covenant or condition of this
Agreement (except those requiring payment of Rent) and fails to cure such breach
within fifteen (15) days after delivery of a written notice specifying the
nature of the breach; provided, however, that if more than fifteen (15) days
reasonably are required to remedy the failure, then Sublessee shall not be in
default if Sublessee commences the cure within the fifteen (15) day period and
thereafter diligently completes the cure.
16. Remedies: In the event of any default by Sublessee, Sublessor shall
have all remedies available under applicable law. Sublessor may resort to its
remedies cumulatively or in the alternative.
17. Right to Cure Defaults: If Sublessee fails to pay any sum of money to
Sublessor, or fails to perform any other act on its part to be performed
hereunder, then Sublessor may, but
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shall not be obligated to, after passage of any applicable notice and cure
periods, make such payment or perform such act. All such sums paid, and all
reasonable costs and expenses of performing any such act, shall be deemed
Additional Rent payable by Sublessee to Sublessor upon demand, together with
interest thereon at the Interest Rate from the date of the expenditure until
repaid.
18. Surrender: Prior to expiration of this Agreement, Sublessee shall
remove all of its personal property and shall surrender the Subleased Premises
to Sublessor in the same condition as received, broom-clean and free of
hazardous materials caused by Sublessee, reasonable wear and tear, leasehold
improvements that Sublessor agrees in writing may be surrendered, casualty and
condemnation, excepted. If the Subleased Premises are not so surrendered, then
Sublessee shall be liable to Sublessor for all costs incurred by Sublessor in
returning the Subleased Premises to the required condition, plus interest
thereon at the Interest Rate. Sublessor agrees to reasonably cooperate with
Sublessee in Sublessee's surrender of the Subleased Premises.
19. Holdover: In the event that Sublessee does not surrender the
Subleased Premises upon the expiration or earlier termination of this Agreement,
Sublessee shall indemnify, defend and hold harmless Sublessor from and against
all loss and liability resulting from Sublessee's delay in surrendering the
Subleased Premises and pay Sublessor holdover rent in the amount of one hundred
fifty percent (150%) of the Base Rent and Additional Rent payable in the last
month of the Term prior to the expiration or earlier termination thereof.
20. Estoppel Certificates: Within ten (10) calendar days after receipt of
written demand by either party, the other party shall execute and deliver to the
requesting party an estoppel certificate (a) certifying that this Agreement is
unmodified and in full force and effect or, if modified, the nature of such
modification; (b) acknowledging, to the best of the responding party's
knowledge, that there are no uncured defaults on the part of the requesting
party; and (c) certifying such other information as may be reasonably required
by the requesting party.
21. Sublessor's Right to Enter: Sublessor or its agents may, upon
reasonable notice, enter the Subleased Premises at any reasonable time for the
purpose of inspecting the same, supplying any service to be provided by
Sublessor to Sublessee, making necessary alterations, additions or repairs or
for any other purpose permitted under this Agreement.
22. Effect of Conveyance: As used in this Agreement, the term "Sublessor"
means the holder of the tenant's interest under the Master Lease. In the event
of any assignment, transfer or termination of the tenant's interest under the
Master Lease, Sublessor shall be and hereby is entirely relieved of all
covenants and obligations of Sublessor accruing after the date of such transfer,
and it shall be deemed and construed, that any transferee has assumed and shall
carry out all covenants and obligations thereafter to be performed by Sublessor
hereunder; provided, however, that no such assignment, transfer or termination
shall terminate this Agreement or affect Sublessee's rights to use the Subleased
Premises as provided in this Agreement.
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23. Parking: Sublessee shall not have any parking rights.
24. Signage: Sublessor shall, upon Sublessee's request, at Sublessee's
sole cost and expense, use reasonable efforts to cause Master Lessor to provide
Sublessee with directory signage and building standard signage at the entrance
to the Subleased Premises, in accordance with a design and at a location that is
mutually acceptable to Master Lessor, Sublessor and Sublessee.
25. Broker: Sublessor and Sublessee each represent to the other that they
have dealt with no real estate brokers, finders, agents or salesmen in
connection with this transaction.
26. Notices: Unless at least five (5) days' prior written notice is given
in the manner set forth in this paragraph, the address of each party shall be
that address set forth below their signatures at the end of this Agreement. All
notices, demands or communications in connection with this Agreement shall be
personally delivered or properly addressed and deposited in the mail (certified,
return receipt requested, and postage prepaid). Notices shall be deemed
delivered (a) upon receipt, if personally delivered, or (b) three (3) business
days after mailing, if mailed as set forth above. Notwithstanding the foregoing,
all notices given to Master Lessor under the Master Lease shall be considered
delivered only when delivered in accordance with the Master Lease.
27. Sublessor's Obligations with Respect to the Master Lease: Sublessor
shall fully perform all of its obligations under the Master Lease to the extent
Sublessee has not expressly agreed to perform such obligations under this
Agreement. Sublessor shall have the right to amend, terminate or waive any
provisions under the Master Lease or make any elections, exercise any right or
remedy or give any consent or approval under the Master Lease. Sublessor, with
respect to the obligations of Master Lessor under the Master Lease that
materially affect Sublessee's use of the Subleased Premises, shall, upon
Sublessee's written request, use Sublessor's diligent good faith efforts to
cause Master Lessor to perform such obligations for the benefit of Sublessee.
Such diligent good faith efforts shall include, without limitation, upon
Sublessee's written request, immediately notifying Master Lessor of its
nonperformance under the Master Lease and requesting that Master Lessor perform
its obligations under the Master Lease, but shall in no event require Sublessor
to bring a cause of action against Master Lessor.
28. Sublessee's Obligations with Respect to the Master Lease: Sublessee
acknowledges that this Sublease is and shall remain subject and subordinate to
the Master Lease. Sublessee shall comply with all restrictions contained in the
Master Lease that are applicable to the Subleased Premises and the occupation by
any person thereof. In the event of any termination of the Master Lease, this
Sublease shall automatically terminate. Sublessee covenants and agrees with
Sublessor, not to do anything that would result in a default under, or cause to
be terminated, the Master Lease. Nothing contained in this Sublease shall in any
way obligate Sublessor to perform any act required to be performed by the Master
Lessor under the Master Lease, nor shall Sublessor incur any liability to
Sublessee by virtue of Master Lessor's failure to perform any act required of it
under the Master Lease. Sublessee agrees to look solely to Master Lessor for the
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provision of all services and performance of all acts called for under the
Master Lease.
29. Quiet Enjoyment: Sublessee shall peacefully have, hold and enjoy the
Subleased Premises, subject to the terms and conditions of this Agreement and of
the Master Lease, provided that there is not a default by Sublessee. In the
event, however, that Sublessor defaults in the performance or observance of any
of Sublessor's remaining obligations under the Master Lease or fails to perform
Sublessor's stated obligations under this Agreement or to enforce, for
Sublessee's benefit, Master Lessor's obligations under the Master Lease (to the
extent required under Section 27 hereof), then Sublessee shall give Sublessor
notice specifying in what manner Sublessor has defaulted, and if such default
shall not be cured by Sublessor within thirty (30) days thereafter (except that
if such default cannot be cured within said thirty (30) day period, this period
shall be extended for an additional reasonable time, provided that Sublessor
commences to cure such default within such thirty (30) day period and proceeds
diligently thereafter to effect such cure as quickly as possible), then
Sublessee shall be entitled to cure such default and promptly collect from
Sublessor Sublessee's reasonable expenses in so doing (including, without
limitation, reasonable attorneys' fees and court costs). Sublessee shall not be
required, however, to wait the entire cure period described herein if earlier
action is required to comply with the Master Lease or with any applicable
governmental law, regulation or order.
30. Miscellaneous: This Agreement shall in all respects be governed by and
construed in accordance with the laws of the state in which the Subleased
Premises are located. If any term of this Agreement is held to be invalid or
unenforceable by any court of competent jurisdiction, then the remainder of this
Agreement shall remain in full force and effect to the fullest extent possible
under the law, and shall not be affected or impaired. This Agreement may not be
amended except by the written agreement of all parties hereto. Time is of the
essence with respect to the performance of every provision of this Agreement in
which time of performance is a factor. Any executed copy of this Agreement shall
be deemed an original for all purposes. This Agreement shall, subject to the
provisions regarding assignment, apply to and bind the respective heirs,
successors, executors, administrators and assigns of Sublessor and Sublessee.
The language in all parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Sublessor or Sublessee. The captions used in this Agreement are for convenience
only and shall not be considered in the construction or interpretation of any
provision hereof. When a party is required to do something by this Agreement, it
shall do so at its sole cost and expense without right of reimbursement from the
other party unless specific provision is made therefor.
31. Attorneys' Fees: If either party brings any action or legal proceeding
with respect to this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees, experts' fees and court costs.
32. Authority to Execute: Sublessee and Sublessor each represent and
warrant to the other that each person executing this Agreement on behalf of each
party is duly authorized to execute and deliver this Agreement on behalf of that
party.
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