8-KMaterial Agreements

CIENA CORP 8-K Report, Material Agreement (Oct 24, 2014)

Filed October 24, 2014For Securities:CIEN

Summary

CIENA CORP (CIEN) filed an 8-K on October 24, 2014, reporting the entry into a material definitive agreement. Specifically, Ciena Canada, Inc., a subsidiary, entered into a significant lease agreement for an office building located at 5050 Innovation Drive, Ottawa, Canada. This 170,582 square foot facility is intended to replace Ciena's largest current facility and a key research and development center. The lease commencement is expected around January 1, 2015, with a primary term of approximately 18 years (216 months), and includes options for renewal and early termination. This lease represents a strategic move for Ciena to consolidate and expand its R&D operations in Ottawa. The agreement also includes provisions for potential future expansion with adjacent buildings. The financial implications involve a staggered rent commencement, with the annual basic rent starting at CDN $2,814,600 (exclusive of operating expenses) and escalating thereafter. Ciena's parent company, Ciena Corporation, has provided a guarantee for this lease.

Key Highlights

  • 1Ciena Corporation, through its subsidiary Ciena Canada, Inc., has entered into a long-term lease agreement for a 170,582 square foot office building in Ottawa, Canada.
  • 2The leased premises are designated to become Ciena's largest facility and a key research and development (R&D) center, replacing the current 'Lab 10' building.
  • 3The lease has an initial term of 216 months (18 years) commencing around January 1, 2015, with an option for a ten-year renewal.
  • 4Ciena has a right to terminate the lease at the end of the 13th year with 18 months' notice.
  • 5The lease includes provisions for Ciena to potentially lease additional space in adjacent buildings and a right of first offer for another nearby building.
  • 6Annual basic rent starts at CDN $2,814,600 and is subject to escalations every 60 months after the initial period.
  • 7Ciena Corporation has provided a corporate guarantee for the lease obligations of its subsidiary.

Frequently Asked Questions

The primary purpose of this lease is to secure a new, larger facility that will serve as Ciena's main office and a critical research and development hub in Ottawa, Canada, effectively replacing their existing 'Lab 10' facility.

The rent commencement is staggered across different floors, starting January 1, 2015. Following the staggered period, the annual basic rent will be CDN $2,814,600 (excluding operating expenses). This rent will escalate by $1.50 per square foot every 60 months thereafter.

Yes, Ciena has flexibility. The lease has an 18-year primary term with an option to renew for an additional ten years. Furthermore, Ciena has the right to terminate the lease at the end of its 13th year without penalty, provided they give 18 months' prior written notice.

Yes, the lease agreement indicates that Ciena is in negotiations for the development and lease of two additional buildings adjacent to the leased premises. Additionally, Ciena holds a right of first offer to lease space in another adjacent building.