PARTIAL SURRENDER OF LEASE
AND
LEASE MODIFICATION AGREEMENT
THIS AGREEMENT dated for reference March 11, 2002.
BETWEEN:
2725312 CANADA INC.
(the "Landlord")
AND:
REDBACK NETWORKS INC.
(the "Tenant")
WHEREAS:
A. By a lease (the "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 2955 Virtual Way, Vancouver, British
Columbia, as such premises are more particularly described in the Lease
(the "Original Premises");
B. The Tenant has 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
"Surrendered Premises");
C. The Landlord has agreed to permit the Tenant to surrender the Surrendered
Premises to the Landlord on 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 Klohn Crippen Consultants Ltd. (the "New Tenant")
with respect to the Surrendered Premises (the "New Lease"); and
D. In connection with the foregoing matters, the Landlord and the Tenant have
also agreed to amend the Lease as set out herein;
THEREFORE, in consideration of the sum of One Dollar ($1.00) 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 SURRENDERED PREMISES
1.1 SURRENDER. The Tenant agrees that, effective as of 11:59 p.m. on May 31,
2002 (the "Surrender Date"), the Tenant assigns, releases and surrenders to
the Landlord all of the
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right, title and interest of the Tenant in and to the Lease in so far as it
relates to the Surrendered Premises only and all of the right, title and
interest of the Tenant in the Surrendered Premises, such that all rights of
the Tenant in the Surrendered Premises shall be merged and extinguished in
the reversion held by the Landlord and such that the Lease shall continue
in full force and effect with respect to that portion of the Original
Premises which does not include the Surrendered Premises (the "Remaining
Premises").
1.2 SURRENDER PAYMENT FOR PERIOD PRE FEBRUARY 1, 2003. In consideration of the
Landlord agreeing to the surrender by the Tenant of the Surrendered
Premises, the Tenant covenants and agrees to pay to the Landlord a
surrender payment of an amount (the "Pre Feb 1/03 Surrender Payment") that
is equal to the Rent that would have been applicable to the Surrendered
Premises for the period from June 1, 2002 to January 31, 2003 had the
Surrendered Premises remained part of the "Premises" under the Lease until
11:59 p.m. on January 31, 2003. The Pre Feb 1/03 Surrender Payment will be
paid by the Tenant to the Landlord by monthly payments commencing June 1,
2002 and to and including January 1, 2003 in the amount that would have
been due as Rent for the Surrendered Premises had the Surrendered Premises
remained part of the Premises. The Tenant acknowledges and agrees that the
Pre Feb 1/03 Surrender Payment shall be secured by the Letter of Credit
referred to in section 4.16 of the Lease (as the Lease is amended by this
Agreement).
1.3 SURRENDER PAYMENT FOR PERIOD FROM AND AFTER FEBRUARY 1, 2003. In further
consideration of the Landlord agreeing to the surrender by the Tenant of
the Surrendered Premises, the Tenant covenants and agrees to pay to the
Landlord a surrender payment of $992,291.11 plus GST (the "Post Feb 1/03
Surrender Payment") on or before February 1, 2003. The Tenant acknowledges
and agrees that the Post Feb 1/03 Surrender Payment shall be secured by the
Letter of Credit referred to in section 4.16 of the Lease (as the Lease is
amended by this Agreement).
1.4 ACCEPTANCE. In consideration of the Tenant's covenant and agreement to pay
the Pre Feb 1/03 Surrender Payment to the Landlord as set out in section
1.2 and the Post Feb 1/03 Surrender Payment to the Landlord as set out in
section 1.3 and to pay the amount referred to in section 1.9, the Landlord
accepts the assignment, release and surrender referred to in section 1.1.
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 Surrendered Premises and the Tenant's
interest in the Surrendered 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 Surrendered Premises or any of the rents,
covenants, conditions and agreements contained in the Lease to the extent
they are applicable to the Surrendered 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
obligation to perform all of its
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agreements and covenants in the Lease (as amended by this Agreement) in so
far as they related to the Remaining Premises or from its obligations to
the Landlord as set out in sections 1.2, 1.3 and 1.9 and elsewhere in this
Agreement.
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 in respect of the
Surrendered Premises as set out in 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
Surrendered 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, in each
case 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 each such payment.
1.9 COMMISSION. 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 Original Premises 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. In addition, the Tenant covenants and agrees to
pay when due on or before July 1, 2002 a commission of $5.50 per rentable
square foot of the Surrendered Premises (plus goods and services tax
thereon) to Royal LePage Commercial Inc. which the Landlord will become
obligated to pay to Royal LePage Commercial Inc. in connection with the
execution of the New Lease. 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 the Lease 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 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
MODIFICATIONS TO LEASE
2.1 MODIFICATIONS TO LEASE. In connection with the surrender of the Surrendered
Premises pursuant to Article 1, the Landlord and the Tenant agree that the
Lease is amended as follows, effective as of the Surrender Date:
(a) section 1.5 (the definition of "Common Areas") is amended by adding to
the end thereof the following words: "(which, for greater certainty,
include any areas of the Building located below ground level or on the
roof, the entrance foyer area and ground floor elevator foyer area of
the Building, electrical rooms in the Building,
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central stairwells in the Building and all water, sewer and gas and
all other mechanical systems servicing the Building, including the
heating, ventilating and air-conditioning services and the elevator
services in the Building which service the entire Building)";
(b) section 1.12 (the definition of "Operating Costs") is amended by
adding to the end thereof the following new paragraph:
"For greater certainty, Operating Costs include all expenses,
costs and outlays of every nature incurred by the Landlord in
cleaning, maintaining, repairing and operating the Common Areas
located within the Building and the Tenant shall be responsible
for paying its Proportionate Share of all such expenses, costs
and outlays.";
(c) section 1.13 (the definition of "Premises") is amended by adding to
the end of the first sentence, immediately after the words "Schedule
"C" hereto", the words "except for any space located on the fifth
floor of such Building and not including the Common Areas of the
Building (which for greater certainty, include any areas of the
Building located below ground level or on the roof, the entrance foyer
area and ground floor elevator foyer area, electrical rooms, central
stairwells and all water, sewer and gas and all other mechanical
systems servicing the Building, including the heating, ventilating and
air-conditioning services and the elevator services which service the
entire Building)";
(d) section 1.16 (the definition of "Proportionate Share") is amended by
deleting "100%, the Premises comprising the whole of the Building" and
by substituting therefor "118,874.91/147,118.84, being a fraction
having as its numerator the Rentable Area of the Premises and as its
denominator the Rentable Area of the Building ;
(e) section 2.1 is deleted and replaced with the following:
"The Rentable Area of the Premises is 118,874.91 square feet.";
(f) subsection 3.3(a) is amended by deleting "$4,650,987.00, subject to
adjustment in accordance with section 2.1 of this Lease" therefrom and
by substituting therefor "$3,922,872.03";
(g) section 4.2 is amended by deleting therefrom the existing columns in
respect of "Period", "Annual Rent", "Monthly Rent" and "Rent Per
Square Foot" and the information included therein and by substituting
therefor the following:
2955 Virtual Way (Vancouver, BC) Partial Surrender of Lease and Lease Modification Agreement - 2725312 Canada Inc. and Redback Networks Inc.
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