Exhibit 10.2
Surrender of Lease
and
Lease Modification Agreement
This Agreement dated for reference June 19, 2002.
Between:
2725312 Canada Inc.
(the "Landlord")
And:
Redback Networks Inc.
(the "Tenant")
Whereas:
A. By a lease (the "Original Lease") made October 3, 2000 between the Landlord
and the Tenant, the Landlord leased to the Tenant all of the space situate
in the building (the "Building") located at 0000 Xxxxxxx Xxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, as such premises are more particularly described in the
Original Lease (the "Original Premises");
B. The Tenant requested that it be permitted to surrender its leasehold
interest in that portion of the Original Premises located on the 5th floor
of the Building and having a Rentable Area of 28,243.93 square feet (the
"5th Floor Premises") and, accordingly, the Landlord and the Tenant entered
into an agreement dated for reference March 11, 2002 with respect thereto
(the "First Amendment");
C. The Tenant requested that it be permitted to surrender its leasehold
interest in that portion of the Original Premises located on the 2nd floor
of the Building and having a Rentable Area of 27,535.60 square feet and in
a portion of the Original Premises forming part of the 1st floor of the
Building and having a Rentable Area of 7,823.95 square feet (together, the
"Titan Premises") and that it also be permitted to surrender its leasehold
interest in that portion of the Original Premises located on the 3rd floor
of the Building and having a Rentable Area of 32,980.50 square feet and in
that portion of the Original Premises located on the 4th floor of the
Building and having a Rentable Area of 32,968.66 square feet (together, the
"ING Premises") and, accordingly, the Landlord and the Tenant entered into
an agreement dated for reference June 4, 2002 with respect thereto (the
"Second Amendment") (the Original Lease, the First Amendment and the Second
Amendment are hereafter collectively referred to as the "Lease" and that
part of the Original Premises which does not include the 5th Floor
Premises, the Titan Premises and the ING Premises is hereafter referred to
as the "Remaining Premises");
D. The Tenant has requested that it be permitted to surrender its leasehold
interest in the Remaining Premises, being that portion of the Original
Premises located on the 1st floor of
the Building, as shown hatched on the plan attached hereto as Schedule A,
and having a Rentable Area of 17,566.2 square feet; and
E. The Landlord has agreed to permit the Tenant to surrender the Remaining
Premises to the Landlord subject to the terms and conditions set out in
this Agreement and in connection with a new lease which is to be entered
into between the Landlord and the IWA Forest Industry Pension Plan ("IWA")
with respect to the Remaining Premises (the "IWA Lease").
Therefore, in consideration of the sum of One Dollar ($1.00) (all monetary
amounts described in this Agreement shall be Canadian dollars) now paid by each
party to the other, the mutual covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, the parties agree as follows:
ARTICLE 1
SURRENDER OF REMAINING PREMISES
1.1 Surrender. The Tenant agrees that, effective as of 11:59 p.m. on July 31,
2002 (the "Surrender Date"), the Tenant assigns, releases and surrenders to
the Landlord all of the right, title and interest of the Tenant in and to
the Lease and all of the right, title and interest of the Tenant in the
Remaining Premises, such that all rights of the Tenant in the Remaining
Premises shall be merged and extinguished in the reversion held by the
Landlord.
1.2 Surrender Payment for Period Pre November 1, 2002. In consideration of the
Landlord agreeing to the surrender by the Tenant of the Remaining Premises,
the Tenant covenants and agrees to pay to the Landlord a surrender payment
of an amount (the "Pre Nov 1/02 Surrender Payment") that is equal to the
Rent that would have been applicable to the Remaining Premises for the
period from August 1, 2002 to October 31, 2002 had the Remaining Premises
remained part of the "Premises" under the Lease until 11:59 p.m. on October
31, 2002. The Pre Nov 1/02 Surrender Payment will be paid by the Tenant to
the Landlord by monthly payments commencing August 1, 2002 and to and
including October 1, 2002 in the amount that would have been due as Rent
for the Remaining Premises had the Remaining Premises remained leased to
the Tenant pursuant to the terms of the Lease. The Tenant acknowledges and
agrees that the Pre Nov 1/02 Surrender Payment shall be secured by the
Letter of Credit referred to in section 4.16 of the Lease (as such section
is amended by this Agreement).
1.3 Surrender Payment for Period From and After November 1, 2002. In further
consideration of the Landlord agreeing to the surrender by the Tenant of
the Remaining Premises, the Tenant covenants and agrees to pay to the
Landlord a surrender payment of $873,291.24 plus goods and services tax
(the "Post Nov 1/02 Surrender Payment") on or before November 1, 2002. The
Tenant acknowledges and agrees that the Post Nov 1/02 Surrender Payment
shall be secured by the Letter of Credit referred to in section 4.16 of the
Lease (as such section is amended by this Agreement).
1.4 Acceptance. In consideration of the Tenant's covenant and agreement to pay
the Pre Nov 1/02 Surrender Payment to the Landlord as set out in section
1.2 and the Post Nov 1/02 Surrender Payment to the Landlord as set out in
section 1.3 and to pay the amounts referred to in section 1.9, the Landlord
accepts the assignment, release and surrender referred to in section 1.1.
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1.5 Representations and Warranties. The Tenant represents and warrants to the
Landlord that the Tenant has the absolute right, power and authority to
surrender to the Landlord the Remaining Premises and the Tenant's interest
in the Remaining Premises as herein provided.
1.6 Landlord's Release. Effective as of the later of the Surrender Date and the
receipt by the Landlord of the new Letter of Credit (or amendment to the
existing Letter of Credit) referred to in section 2.3, the Landlord
releases and forever discharges the Tenant and its successors and assigns
of and from any and all manner and causes of action, suits, debts,
contracts, claims, demands, liabilities and damages in respect of any
matter in any way related to the Remaining Premises or any of the rents,
covenants, conditions and agreements contained in the Lease to the extent
they are applicable to the Remaining Premises. In no event shall the
foregoing release and discharge be effective to release or discharge, or be
interpreted or construed as releasing or discharging, the Tenant from its
obligations to the Landlord as set out in sections 1.2, 1.3, 1.8 and 1.9 of
this Agreement, sections 1.2, 1.3, 1.8 and 1.9 of the First Amendment and
sections 1.2, 1.3, 1.8, 1.9, 2.2, 2.3, 2.8 and 2.9 of the Second Amendment.
1.7 Tenant's Release. Effective as of the Surrender Date, the Tenant releases
and forever discharges the Landlord and its successors and assigns of and
from any and all manner and causes of action, suits, debts, contracts,
claims, demands, liabilities and damages in respect of any matter in any
way related to the Landlord's obligations to the Tenant under the Lease.
1.8 Goods and Services Tax. The Tenant shall be responsible for the payment of
the goods and services tax payable in respect of the surrender of the
Remaining Premises by the Tenant. Concurrently with the payments to the
Landlord referred to in sections 1.2 and 1.3, the Tenant shall pay to the
Landlord the goods and services tax applicable to such payments, on the
condition that the Landlord shall remit such tax amount to Canada Customs
and Revenue Agency on account of the goods and services tax which it is the
statutory obligation of the Landlord to collect and remit in connection
with such payment.
1.9 Commission. The parties hereto agree as follows:
(a) The Tenant covenants and agrees that it shall pay when due any
commission or fee (plus applicable goods and services tax thereon)
which may be payable by the Tenant to any agent or broker retained by
it which is in any way related to the Tenant's efforts to assign the
Lease or sublet any portion of the Remaining Premises (or to effect
the surrender contemplated herein as a result of the IWA Lease) and
that it shall indemnify and save harmless the Landlord from and
against any costs or damages incurred or suffered by the Landlord in
any way as a result of the failure of the Tenant to pay such amounts.
The Tenant acknowledges and agrees that the obligations of the Tenant
to pay the amounts referred to in the preceding sentence shall be
secured by the Letter of Credit referred to in section 4.16 of the
Lease (as such section is amended by this Agreement).
(b) In addition, the Tenant covenants and agrees to pay forthwith when due
the commission or fee (not to exceed $96,613) (plus goods and services
tax thereon) payable to CB Xxxxxxx Xxxxx Limited relating to the
Remaining Premises (or to effect the surrender contemplated herein as
a result of the IWA Lease) and to indemnify and save harmless the
Landlord from and against any costs or damages incurred or suffered by
the Landlord in any way as a result of the failure of the Tenant to
pay
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such amounts. The Tenant acknowledges and agrees that the obligations
of the Tenant to pay such amounts shall be secured by the Letter of
Credit referred to in section 4.16 of the Lease (as such section is
amended by this Agreement).
1.10 Amendment to Lease. The parties agree that this Article 1 constitutes an
amendment to the Lease, that each of the covenants set out in sections 1.2,
1.3, 1.8 and 1.9 hereof constitutes a covenant under the Lease by the
Tenant in favour of the Landlord and that the term "Lease" as used in the
Lease shall include this Article 1.
ARTICLE 2
STATUS OF LEASE
2.1 Status of Lease. The Landlord and the Tenant hereby covenant and agree
that, effective as of the Surrender Date (if the condition precedent set
out in section 4.1 has been satisfied or waived by the Landlord), all of
the Original Premises will have been surrendered to the Landlord and all
the terms of the Lease will have been terminated, except that the covenants
of the Tenant set out in sections 1.2, 1.3, 1.8 and 1.9 of the First
Amendment, in sections 1.2, 1.3, 1.8, 1.9, 2.2, 2.3, 2.8 and 2.9 of the
Second Amendment and in sections 1.2, 1.3, 1.8 and 1.9 of this Agreement
(all of which are covenants of the Tenant under the Lease) will remain in
full force and effect until the Tenant has fully satisfied its obligations
thereunder (the "Remaining Obligations"), and except that section 4.16 of
the Lease (as such section is amended by this Agreement) will remain in
full force and effect until the Tenant has fully satisfied all the Tenant's
Remaining Obligations.
2.2 Modification to Lease. In connection with the surrender of the Remaining
Premises pursuant to Article 1, the Landlord and the Tenant agree that
section 4.16 of the Lease is amended so that, effective as of the Surrender
Date (if the condition precedent set out in section 4.1 is satisfied or
waived by the Landlord), the following is deleted from the information
included under the "Term of Letter of Credit" and "Face Amount of Letter of
Credit" headings in paragraph (a) thereof:
"From the date of lease execution to July 9, 2002 $7,250,000.00
From July 10, 2002 to October 9, 2002 $6,437,363.00
From October 10, 2002 to November 4, 2002 $4,694,849.00
From November 5, 2002 to February 7, 2003 $2,257,520.00
February 8, 2003 to Month 60 of Lease Term $1,000,000.00",
and the following is substituted therefor:
"From the date of lease execution to July 9, 2002 $7,250,000.00
From July 10, 2002 to October 9, 2002 6,437,363.00
From October 10, 2002 to November 6, 2002 4,694,849.00
From November 7, 2002 to February 7, 2003 1,300,000.00
February 8, 2003 to Month 60 of Lease Term $ 0.00".
2.3 New Letter of Credit. In connection with the amendment to section 4.16 of
the Lease contained in this Agreement, the Tenant agrees to arrange for a
new Letter of Credit (or for an appropriate amendment to the existing
Letter of Credit) to be issued to the Landlord
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before the expiry date of the existing Letter of Credit. The new Letter of
Credit shall be in substantially the same form as the existing Letter of
Credit except that it shall reflect the terms of section 4.16 of the Lease,
as such section is to be amended by section 2.2 of this Agreement, and
except that each reference in the existing Letter of Credit to the Lease
shall be amended, if necessary, to refer to the Lease "as amended from time
to time". For greater certainty, the Tenant acknowledges and confirms that
such Letter of Credit secures all payments which the Tenant is obligated to
make to the Landlord under or pursuant to sections 1.2, 1.3, 1.8 and 1.9 of
the First Amendment, sections 1.2, 1.3, 1.8. 1.9, 2.2, 2.3, 2.8 and 2.9 of
the Second Amendment and sections 1.2, 1.3, 1.8 and 1.9 of this Agreement
and that, in the event the Tenant is ever in default of its obligation to
make any such payment, the Landlord may draw upon such Letter of Credit in
full or in part in an amount corresponding to the amount required to cure
such default.
ARTICLE 3
GENERAL PROVISIONS
3.1 Defined Terms. All terms defined in this Lease and used in this Agreement
will have the respective meanings ascribed to them in the Lease unless the
context otherwise requires or unless otherwise defined in this Agreement.
The defined terms in the recitals to this Agreement will have such meanings
throughout this Agreement, unless otherwise stated herein.
3.2 Whole Agreement. The Lease will be read and construed in conjunction with
this Agreement to the effect that the Lease and this Agreement will be read
and construed as one document. For greater certainty, the parties confirm
and agree that, if the condition precedent set out in section 4.1 has been
satisfied or waived by the Landlord, the Lease will remain in full force
and effect only to the extent described in section 2.1 hereof.
3.3 Confirmation and Ratification. The Landlord and the Tenant hereby confirm
and ratify the terms and conditions contained in the Lease, as amended by
the terms of this Agreement.
3.4 Counterparts/Facsimile. This Agreement may be executed in any number of
counterparts, with the same effect as if both parties had signed the same
document, and will become effective when one or more counterparts have been
signed by both the parties and delivered to each of the parties. All
counterparts will be construed together and evidence only one agreement,
which, notwithstanding the dates of execution of any counterparts, will be
deemed to be dated the date first above written. This Agreement may be
executed by the parties and transmitted by facsimile and if so executed and
transmitted this Agreement will be for all purposes as effective as if the
parties had delivered an executed original Agreement.
3.5 Enurement. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns. The Tenant will, at the request of the
Landlord, promptly execute and deliver such further documents and
instruments and do all such further acts and things as may be required in
order to effect or perfect the surrender and cancellation of the Lease with
respect to the Remaining Premises or to otherwise evidence, carry out and
give full effect to this Agreement.
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3.6 Legal Fees. In consideration of the Landlord undertaking all necessary
negotiations and efforts concerning the IWA Lease and the surrender related
thereto, the Tenant agrees to reimburse the Landlord for legal fees and
disbursements, up to a maximum of $15,000 (plus goods and services tax and
social services tax thereon), incurred by the Landlord in relation to the
preparation and negotiation of this Agreement and the IWA Lease. The Tenant
shall so reimburse the Landlord whether or not the condition precedent set
out in section 4.1 is satisfied or waived by the Landlord and the Tenant
will pay the amount due to the Landlord within 30 days of the Landlord
providing evidence to the Tenant of the legal fees and disbursements as
aforesaid being incurred.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions Precedent. The agreements set out in Article 1 hereof are
subject to the Landlord and IWA entering into the IWA Lease on terms and
conditions acceptable to the Landlord, in its sole discretion, and any
conditions precedent in favour of IWA which may be contained therein or in
any related offer to lease having been waived by IWA, in each case on or
before July 15, 2002. The Landlord and the Tenant agree that the agreements
set out in Article 1 and Article 2 hereof will become unconditional
agreements with respect to or in connection with the surrender of the
Remaining Premises forthwith upon the satisfaction or waiver by the
Landlord of the foregoing condition precedent. The foregoing condition
precedent is for the Landlord's sole benefit and may be waived,
unilaterally by the Landlord, at the Landlord's election. The condition
precedent will not be considered satisfied or waived unless the Landlord
confirms to the Tenant in writing that the condition has been satisfied or
waived. If the Landlord does not give the Tenant notice of the satisfaction
or waiver of the condition precedent on or before July 15, 2002, then the
agreements set out in Article 1 hereof and the related modifications to the
Lease and to the Letter of Credit set out in Article 2 will be null and
void and of no force or effect whatsoever.
In Witness Whereof the parties hereto have executed this Agreement as of the
date first above written.
2725312 Canada Inc. Redback Networks Inc.
By: /s/ Remco Daal
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Authorized Signatory By: /s/ Xxxxxx X. Xxxxxx III
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Authorized Signatory
By: /s/ Xxxx Xxxxxxxxxx
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Authorized Signatory
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SCHEDULE A
PLAN OF REMAINING PREMISES
ON THE FIRST FLOOR
