1
EXHIBIT 10.7
SUBLEASE AGREEMENT
1. PARTIES. This Sublease, dated October 23, 1999, is made between
Finisar Corporation, a California Corporation ("Sublessor"), and Redback
Networks, Inc., a California Corporation ("Sublessee").
2. MASTER LEASE. Sublessor is the lessee under a written lease
("Original Lease" dated May 26, 1999, wherein Aetna Life Insurance Company, A
Connecticut Corporation ("Landlord", but hereinafter referred to as "Lessor")
leased to Sublessor the real property located in the City of Sunnyvale, County
of Santa Xxxxx, State of California, described as approximately 51,813 sq. ft.
of a single-story R&D building (the "Building") located at 0000 Xxxxxxx Xxxx
Xxxxx ("Original Master Premises"). Lessor and Sublessor intend to enter into
that certain First Amendment to Lease, to expand the Original Master Premises by
leasing additional space consisting of approximately 23,198 rentable square
feet, located at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx ("Expansion
Space"). The Original Master Premises and Expansion Space are hereinafter
collectively referred to as the "Master Premises". The Original Lease and form
of First Amendment to Lease are attached hereto as Exhibit A and Exhibit B,
respectively, and are herein collectively referred to as the "Master Lease".
3. PREMISES. Subject to Paragraph 18 herein, Sublessor hereby subleases
to Sublessee on the terms and conditions set forth in this Sublease the
following portion of the Master Premises ("Premises"): approximately 15,000 sq.
ft. located in the north-western portion of the Building with an address of 0000
Xxxxxxx Xxxx Xxxxx (see attached Exhibit One).
4. WARRANTY BY SUBLESSOR. Sublessor warrants and represents to Sublessee
that the Master Lease has not been amended or modified except as expressly set
forth herein, 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, and that Sublessor has no knowledge of any claim by Lessor that Sublessor
is in default or breach of any of the provisions of the Master Lease.
5. TERM. The Term of this Sublease shall commence on November 1, 1999
("Commencement Date"), or when Lessor consents to this Sublease (if such consent
is required under the Master Lease), whichever shall last occur, and end on
October 31, 2000 ("Termination Date"), unless otherwise sooner terminated in
accordance with the provisions of this Sublease. In the event the Term commences
on a date other than the Commencement Date, Sublessor and Sublessee shall
execute a memorandum setting forth the actual date of commencement of the Term.
Possession of the Premises ("Possession") shall be delivered to Sublessee on the
commencement of the Term. If for any reason Sublessor does not deliver
Possession to Sublessee 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 Sublessee within ten
(10) days after the Commencement Date, then at any time thereafter and before
delivery of Possession, Sublessee may give written notice to Sublessor of
Sublessee's intention to cancel this Sublease.
1
2
Said notice shall set forth an effective date for such cancellation
which shall be at least five (5) days after delivery of said notice to
Sublessor. If Sublessor fails to deliver Possession to Sublessee on or before
such effective date, this Sublease shall be cancelled, in which case all
consideration previously paid by Sublessee 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
Sublessee on account of such delay or cancellation. If Sublessor permits
Sublessee 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.
6. RENT.
6.1 Minimum Rent. Sublessee shall pay to Sublessor as minimum
rent, without deduction, setoff, notice, or demand, at 0000 Xxxxxxx Xxxx Xxxxx,
Xxxxxxxxx, attention: Finisar Corporation or at such other place as Sublessor
shall designate from time to time by notice to Sublessee, the sum of Twenty-six
Thousand Three Hundred Thirty and 00/100 Dollars ($ 26,330.00) per month, in
advance on the first day of each month of the Term. Sublessee shall pay to
Sublessor upon execution of this Sublease the sum of Twenty-six Thousand Three
Hundred Thirty and 00/100 Dollars ($ 26,330.00) as rent for November 1, 1999
through November 30, 1999. If the Term begins or ends on a day other than the
first or last day of a month, the rent for the partial months shall be prorated
on a per diem basis.
6.2 Additional Rent: Section 4(b) of the Master Lease requires
Sublessor to pay to Lessor all the expenses of owning and operating the Master
Premises of which the Premises are a part as Additional Rent, including but not
limited to taxes, utilities, insurance, common area expenses, parking charges,
maintenance and repair costs, and life and safety costs. Sublessor and Sublessee
agree that this Sublease is intended to pass through to Sublessee all financial
obligations imposed on Sublessor for the Premises pursuant to the terms of the
Master Lease, except for Sublessor's obligation to pay Base Rent. Sublessee
shall pay to Sublessor as additional rent Twenty percent (20.0%) of the amounts
payable by Sublessor for Additional Rent incurred during the Term. Such
additional rent shall be payable as and when Additional Rent is payable by
Sublessor to Lessor. If the Master Lease provides for the payment by Sublessor
of Additional Rent on the basis of an estimate thereof, then as and when
adjustments between estimated and actual cost are made under the Master Lease,
the obligations of Sublessor and Sublessee hereunder shall be adjusted in a like
manner; and if any such adjustment shall occur after the expiration or earlier
termination of the Term, then the obligations of Sublessor and Sublessee under
this Subsection 6.2 shall survive such expiration or termination. Sublessor
shall, upon request by Sublessee, furnish Sublessee with copies of all
statements submitted by Lessor of actual or estimated costs during the Term.
7. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon
execution of this Sublease the sum Twenty-six Thousand Five Hundred and 00/100
Dollars ($ 26,500.00) as security for Sublessee's faithful performance of
Sublessee's obligations hereunder ("Security Deposit"). If Sublessee fails to
pay rent or other charges when due under this Sublease, or fails to perform any
of its other obligations hereunder, Sublessor may use or apply all or any
portion of the Security Deposit for the payment of any rent or other amount then
due hereunder and unpaid, for the payment of any other sum for which Sublessor
may become obligated by reason
2
3
of Sublessee's default or breach, or for any loss or damage sustained by
Sublessor as a result of Sublessee's default or breach. If Sublessor so uses any
portion of the Security Deposit, Sublessee shall, within ten (10) days after
written demand by Sublessor, restore the Security Deposit to the full amount
originally deposited, and Sublessee's failure to do so shall constitute a
default under this Sublease. Sublessor shall not be required to keep the
Security Deposit separate from its general accounts, and shall have no
obligation or liability for payment of interest on the Security Deposit. In the
event Sublessor assigns its interest in this Sublease, Sublessor shall deliver
to its assignee so much of the Security Deposit as is then held by Sublessor.
Within ten (10) days after the Term has expired, or Sublessee has vacated the
Premises, or any final adjustment pursuant to Subsection 6.2 hereof has been
made, whichever shall last occur, and provided Sublessee is not 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 Sublessee or
to the last assignee, if any, of Sublessee's interest hereunder. If Sublessor
files for protection as a debtor under any state or federal law, including
bankruptcy laws, then Sublessee shall have the right to offset the amount of the
Security Deposit against rent last due under this Sublease.
8. CONDITION OF PREMISES. Sublessor shall, at Sublessor's sole cost and
expense, replace a carpet strip in a conference room, hang doors in conference
rooms and paint walls, but only if such work is necessary, and reasonably demise
the Premises as soon as reasonably possible, but both parties acknowledge and
agree that such demise may not be complete prior to the Commencement Date.
Subject to the immediately preceding sentence, Sublessee shall accept the
Premises in their "AS IS" condition on the Commencement Date, and Sublessor and
Lessor shall have no obligation to pay for any improvements to the Premises. On
expiration or sooner termination of the term of this Sublease, Sublessee shall
fully remove all of its personal property and shall fully vacate the Premises.
In addition, Sublessee shall otherwise comply with all responsibilities of the
lessee under the Master Lease regarding surrender of the Premises, including the
removal of any alterations made by Sublessee in accordance with the terms of the
Master Lease. By accepting possession of the Premises, Sublessee acknowledges
that the condition of the Premises is acceptable in all respects.
9. USE OF PREMISES. The Premises shall be used and occupied only for
General office, engineering, research and development and light manufacturing,
and for no other use or purpose.
10. ASSIGNMENT AND SUBLETTING. Sublessee shall not assign this Sublease
or further sublet all or part of the Premises without the prior written consent
of Sublessor (and the consent of Lessor, if such is required under the terms of
the Master Lease).
11. OTHER PROVISIONS OF SUBLEASE. Except as provided herein, all terms
and conditions of the Master Lease are incorporated into and made a part of this
Sublease as if Sublessor were the lessor thereunder, Sublessee the lessee
thereunder, and the Premises the Master Premises, except for the following:
Xxxxxxxxxx 0, 0, 0, 0(x), 0, 0, 00, 00, 38, 49, 50; Exhibits B, B-2, C, and G;
and the definitions "Tenant", "Tenant's Contact Person", "Tenant's Address",
"Premises Square Footage", "Premises Address", "Length of Term", "Estimated
Commencement Date", "Estimated Expiration Date", "Monthly Base Rent", "Prepaid
Base Rent", "Prepaid Additional Rent", "Security Deposit", "Reserved Parking
Spaces", "Unreserved
3
4
Parking Spaces", "Brokers", "Tenant Improvements Allowance/Additional Premises
Alterations Allowance", "Tenant Improvements Loan/Additional Premises
Alterations Loan", "Architect", and "Contractor" provided in Exhibit B (Basic
Lease Information) of the First Amendment to Lease.
Notwithstanding the foregoing incorporation of the Master Lease,
Sublessor shall not be responsible for the performance or the furnishing of any
maintenance, repair, replacement or other obligations or services to be
performed or furnished by Lessor under the Master Lease. Sublessor shall not be
liable to Sublessee for any failure by Lessor to perform its obligations or to
furnish any services or utilities to be furnished by Lessor under the Master
Lease, nor shall such failure by Lessor excuse performance by Sublessee of its
obligations under this Sublease.
Except as otherwise provided in this Sublease, Sublessee assumes
and agrees to perform for the Benefit of Lessor and Sublessor the lessee's
obligations under the Master Lease during the Term to the extent that such
obligations are applicable to the Premises, except that the obligation to pay
rent to Lessor under the Master Lease shall be considered performed by Sublessee
to the extent and in the amount rent is paid to Sublessor in accordance with
Section 6 of this Sublease. Sublessee shall not commit or suffer any act or
omission that will violate any of the provisions of the Master Lease. Sublessor
shall exercise due diligence in attempting to cause Lessor to perform its
obligations under the Master Lease for the benefit of Sublessee. In the event
Lessor does not perform any of its obligations under the Master Lease which
pertain to the Premises, Sublessor agrees at Sublessee's request to enforce the
terms of the Master Lease against Lessor, provided that Sublessor pays for all
costs incurred by Sublessor in connection therewith, including actual attorneys'
fees and court costs.
If the Master Lease terminates, this Sublease shall terminate and
the parties shall be relieved of any further liability or obligation under this
Sublease, provided however, that if the Master Lease terminates as a result of a
default or breach by Sublessor or Sublessee under this Sublease and/or the
Master Lease, then the defaulting party shall be liable to the nondefaulting
party for the damage suffered as a result of such termination. Notwithstanding
the foregoing, if the Master Lease gives Sublessor any right to terminate the
Master Lease in the event of the partial or total damage, destruction, or
condemnation of the Master Premises or the building or project of which the
Master Premises are a part, the exercise of such right by Sublessor shall not
constitute a default or breach hereunder.
12. SUBLESSEE'S OBLIGATIONS. Except as provided herein to the contrary
and except as modified by this Sublease, Sublessee covenants and agrees that all
obligations of Sublessor under the Master Lease shall be done or performed by
Sublessee with respect to the Premises.
13. SUBLESSOR'S OBLIGATIONS. Sublessor agrees that Sublessee shall be
entitled to receive all services, utilities and repairs to be provided by Lessor
to Sublessor under the Master Lease with respect to the Premises. Sublessee
shall look solely to Lessor for all such services and utilities and shall not,
under any circumstances, seek or require Sublessor to perform any of such
services or provide any utilities, nor shall Sublessee make any claim upon
Sublessor for any damages which may arise by reason of Lessor's default under
the Master Lease unless such default is caused by Sublessor. Any condition
resulting from a default by Lessor under the
4
5
Master Lease (other than a default caused by Sublessor) shall not constitute as
between Sublessor and Sublessee an eviction, actual or constructive, of
Sublessee and no such default shall excuse Sublessee from the performance or
observance of any of its obligations to be performed or observed under this
Sublease, or entitle Sublessee to receive any reduction in or abatement of the
Rent provided for in this Sublease, except to the extent Sublessor receives an
abatement in its Rent under the Master Lease with respect to the Premises.
14. DEFAULT BY SUBLESSEE. In the event Sublessee shall be in default of
any covenant of, or shall fail to honor any obligation under, this Sublease,
Sublessor, upon giving any required notice and subject to the right, if any, of
Sublessee to cure any such default within any applicable cure period, shall have
available to it against Sublessee all of the remedies available to Lessor under
the Master Lease in the event of a similar default on the part of Sublessor
thereunder or at law.
15. ATTORNEYS' FEES. If Sublessor or Sublessee shall commence an action
against the other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover its costs of suit and reasonable
attorney's fees.
16. AGENCY DISCLOSURE. Sublessor and Sublessee each warrant that they
have dealt with no other real estate broker in connection with this transaction
except BT COMMERCIAL REAL ESTATE, who represents Sublessor ("Sublessor's
Broker") and Xxxxx Xxxxxx Associates, who represents Sublessee ("Sublessee's
Broker"). Each party agrees to indemnify and defend the other, and hold it
harmless, from and against any and all claims, damages, losses, expenses and
liabilities (including reasonable attorneys' fees) incurred by the other party
as a result of any breach by such party or any of its representation, warranties
or covenants in this Paragraph or Paragraph 13 of this Agreement.
17. COMMISSION. Upon execution of this Sublease, and consent thereto by
Lessor (if such consent is required under the terms of the Master Lease),
Sublessor shall pay Sublessor's Broker a real estate brokerage commission in
accordance with a contract with Sublessor's Broker for the subleasing of the
Premises, if any, and otherwise in the amount equal to six percent (6%) of the
total base rent described in Paragraph 6.1 above, for services rendered in
effecting this Sublease.
18. NOTICES. Anything contained in any provision of this Sublease to the
contrary notwithstanding, Sublessee agrees, with respect to the Premises, to
comply with and remedy any default in this Sublease or the Master Lease which is
Sublessee's obligation to cure, within the period allowed to Sublessor under the
Master Lease, even if such time period is shorter than the period otherwise
allowed therein due to the fact that notice of default from Sublessor to
Sublessee is given after the corresponding notice of default from Lessor to
Sublessor. Sublessor agrees to forward to Sublessee, promptly upon receipt
thereof by Sublessor, a copy of each notice, including notices of default,
received by Sublessor in its capacity as Tenant under the Master Lease.
Sublessee agrees to forward to Sublessor, promptly upon receipt thereof, copies
of any notices received by Sublessee from Lessor or from any governmental
authorities.
All notices and demands which may or are to be required or
permitted to be given by either party on the other hereunder shall be in
writing. All notices and demands by the
5
6
Sublessor to Sublessee shall be sent by United States Mail, postage prepaid,
addressed to the Sublessee at the Premises, and to the address hereinbelow, or
to such other place as Sublessee may from time to time designate in a notice to
the Sublessor. All notices and demands by the Sublessee to Sublessor shall be
sent by United States Mail, postage prepaid, addressed to the Sublessor at the
address set forth herein, and to such other person or place as the Sublessor may
from time to time designate in a notice to the Sublessee.
To Sublessor: FINISAR CORPORATION, 0000 XXXXXXX XXXX XXXXX, XXXXXXXXX, XX 00000
To Sublessee: REDBACK NETWORKS, INC. 0000 XXXXXXX XXXX XXXXX, XXXXXXXXX, XX
00000
19. CONSENTS. Wherever the consent of Lessor is required under the
Master Lease, Sublessee shall obtain both the consent of Sublessor and Lessor.
This Sublease shall not be effective unless and until the date on which both of
the following occurs: (a) this Sublease is executed by Sublessor and Sublessee
and consented to in writing by Lessor; and (b) the First Amendment to Lease is
executed by Lessor and Sublessor, such consent to be given, and execution
provide by, Lessor within ten (10) days from the execution date of this
Sublease. In the event Lessor does not consent to this Sublease or execute the
First Amendment to Lease within ten (10) days from the execution date of this
Sublease, then this Sublease shall be automatically terminated without delivery
of written notice by either party. Upon any such termination, Sublessor shall
promptly refund to Sublessee, without interest, any advance monthly rent and any
security deposit theretofore paid by Sublessee to Sublessor (but Sublessor shall
not be obligated to reimburse the out-of-pocket costs incurred by Sublessee in
connection with entering into this Sublease), whereupon neither party shall have
any further rights against or obligations to the other party.
20. COMPLIANCE. The parties hereto agree to comply with all applicable
federal, state and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the subject matter of
this Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment in Real Property Tax Act, the
Comprehensive Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.
21. PARKING. Sublessor shall provide Sublessee with sixty (60)
unreserved, non-exclusive parking spaces in accordance with the terms and
conditions of the Master Lease.
22. ANTENNA. Sublessee shall have the right to install and maintain an
antenna on the roof of the Building provided Sublessee complies with all of the
terms and conditions of Paragraph 51 of the Master Lease (Satellite Dish) with
respect to any antenna for the benefit of Lessor and Sublessor.
6
7
Sublessor: FINISAR CORPORATION Sublessee: REDBACK NETWORKS, INC.
By: /s/ X. X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
By: By:
------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
By: By:
------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
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 foregoing Sublease.
Lessor: AETNA LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Title:
----------------------------
By:
-------------------------------
Title:
----------------------------
Date:
-----------------------------
7
