Exhibit 10.8

 

FIRST AMENDMENT TO AMENDED AND RESTATED
OFFICE LEASE AND SETTLEMENT AGREEMENT

 

This FIRST AMENDMENT TO AMENDED AND RESTATED OFFICE LEASE AND SETTLEMENT
AGREEMENT (“First Amendment”) is made and entered into as of the         day of
December 2003, by and between KILROY REALTY, L.P., a Delaware limited
partnership (“Landlord”), and PEREGRINE SYSTEMS, INC., a Delaware corporation
(“Tenant”).

 

R E C I T A L S:

 

A.            Landlord and Tenant entered into that certain Amended and Restated
Office Lease and Settlement Agreement dated for reference purposes as of April
1, 2003 (the “Lease”), whereby Landlord leased to Tenant and Tenant leased from
Landlord a total of 78,037 rentable (73,242 usable) square feet of space
consisting of approximately 27,689 rentable (24,338 usable) square feet of space
located on the first (1st) floor, approximately 24,375 rentable (23,653 usable)
square feet of space located on the second (2nd) floor, and approximately 25,973
rentable (25,251 usable) square feet of space located on the third (3rd) floor
(collectively, the “Existing Premises”) of that certain office building located
at 3611 Valley Centre Drive. San Diego, California 92130 (the “Building”).

 

B.            Tenant desires to expand the Existing Premises to include* that
certain space consisting of approximately 26,413 rentable (25,655 usable) square
feet of space comprising the entire fourth (4th) floor of the Building (the
“Expansion Premises”), an delineated on Exhibit A attached hereto and made &
part hereof, and to make other modifications to the Lease^ and in connection
therewith, Landlord and Tenant desire to amend the Lease as hereinafter
provided.

 

A G R E E M E N T:

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.             Capitalized Terms.  All capitalized terms when used herein shall
have the same meaning as is given such terms in the Lease unless expressly
superseded by the terms of this First Amendment.

 

2.             Modification of Premises.  Effective as of January 1, 2004 (the
“Expansion Commencement Date”), Tenant shall lease from Landlord and Landlord
shall lease to Tenant the Expansion Premises. Consequently, effective upon the
Expansion Commencement Date, the Existing Premises shall be increased to include
the Expansion Premises.  Landlord and Tenant hereby acknowledge that such
addition of the Expansion Premises to the Existing Premises shall, effective as
of the Expansion Commencement Date, increase the size of the Premises to
approximately 104,450 rentable (98,897 usable) square feet. The Existing
Premises and the Expansion Premises may hereinafter collectively be referred to
as the “Premises.”

 

3.             Lease Term.

 

3.1.          Expansion Term.  The term of Tenant’s lease of the Expansion
Premises (the “Expansion Term”) shall expire contentiously with Tenant’s Lease
of the Existing Premises on the Lease Expiration Date, unless sooner terminated
as provided in the Lease, as hereby amended.

 

3.2.          Right of First Refusal.  Subject to the terms and conditions of
Section 3.2.3, below, Landlord hereby grants to the Tenant originally named in
the Lease (the “Original Tenant”), and any Permitted Affiliate (but only to the
extent such Permitted Affiliate has, in Landlord’s reasonable determination,
financial strength equal to or greater than Original Tenant), an ongoing right
of first refusal with respect to the approximately 13,498 rentable square feet
of space located on the fifth (5th) floor of the Building commonly known as
Suite 550

 

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(the “First Refusal Space”), which First Refusal Space is delineated on Exhibit
B attached hereto, and which First Refusal Space is currently occupied in its
entirety by Clifford Chance Limited Partnership (the (the “Superior Right
Holder”). The right of first refusal set forth in this Section 3.2 shall be
subordinate to all rights of the Superior Right Holder.

 

3.2.1        Procedure far Lease.

 

3.2.1.1     Procedure for Offer.  Landlord shall notify Tenant (the “First
Refusal Notice”) from time-to-time when and if Landlord receives a “bona-fide
third-party offer” for all of the First Refusal Space.  Pursuant to each First
Refusal Notice, Landlord shall offer to lease to Tenant the applicable First
Refusal Space, The First Refusal Notice shall describe the First Refusal Space,
and the lease term, rent and other fundamental economic terms and conditions,
Including the method of measurement of rentable and usable square feet, upon
which Landlord proposes to lease such First Refusal Space pursuant to the
bona-fide third-party offer.   For purposes of this Section 3.2.1.1, a
“bona-fide third-party offer” shall mean a counter-offer received by Landlord to
lease First Refusal Space from a qualified third party which Landlord would
otherwise be willing to accept.   For purposes of example only, the following
would each constitute a bona-fide third-party offer:

 

(i)            Landlord receives a request for proposal from a qualified third
party.  Landlord responds to the request for proposal with a lease proposal and
subsequently receives a written bona-fide counter proposal from the qualified
third party.

 

(ii)           Landlord receives a written offer to lease from a qualified third
patty.  Landlord responds to the offer with a written counter offer and
subsequently receives a bona-fide counter to Landlord’s counter offer from the
qualified third party.

 

3.2.1.2     Procedure for Acceptance.  If Tenant wishes to exercise Tenant’s
right of first refusal with respect to the First Refusal Space described in the
First Refusal Notice, then within five (5) business days of delivery of the
First Refusal Notice to Tenant, Tenant shall deliver notice to Landlord of
Tenant’s exercise of its right of first refusal with respect to all of the First
Refusal Space described in the First Refusal Notice at the rent, for the term
and upon the other fundamental economic terms and conditions contained in such
First Refusal Notice.  If Tenant does not so notify Landlord within such five
(5) day period of Tenant’s exercise of its first refusal right, then Landlord
shall be free to negotiate and enter into a lease for the First Refusal Space to
anyone whom it desires on the net-effective economic terms and the fundamental
non-economic terms which are no more than five percent (5.0%) more beneficial to
such party than those set forth in the First Refusal Notice.  If Landlord does
not execute a lease with a third party for all or any portion of the First
Refusal Space within one hundred eighty-five (185) days following the delivery
to Tenant of the First Offer Notice, then Tenant shall again have a right of
first refusal for the such First Refusal Space pursuant to the provisions of
this Section 3.2, which provisions shall again become applicable in their
entirety. To the extent Landlord enters into any lease of First Refusal Space
with any such third party in accordance with the foregoing (“Third Party
Lease”), Tenant’s rights under this Section 3.2 shall be subordinate to the
rights of the tenant under the Third Party Lease with respect to the space
leased and encumbered pursuant to the provisions of the Third Party Lease, all
extensions and renewals thereof, all pure expansion options contained therein
which are stated as Landlord delivery obligations within a certain time frame
for a Certain amount of space, and all right of first offer expansions contained
therein.

 

3.2.2        Amendment to Lease.  If Tenant timely exercises Tenant’s right of
first refusal to tease First Refusal Space as set forth herein, Landlord and
Tenant shall within thirty (30) days thereafter execute an amendment to this
Lease (the “First Refusal Space Amendment”) for such First Refusal Space
pursuant to this Section 3.2.2.  Tenant’s lease of such First Refusal Space
shall be upon the express terms set forth in the First Refusal Notice, but
otherwise upon the Terms and conditions set forth in this Lease and this Section
3.2; provided, however, Landlord shall make a determination as to whether, and
if so to what extent, Tenant must provide Landlord with financial security, such
as a letter of credit or guaranty, for Tenant’s rent obligations incurred in
connection with Tenant’s lease of such First Refusal Space.  Notwithstanding the
foregoing, Landlord may, at its sole option, require that a separate lease be
executed by Landlord and Tenant in connection with Tenant’s lease of the First
Refusal Space, in

 

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which event such lease (the “First Refusal Space Lease”) shall be on the same
Terms and conditions as the initial Premises, except as provided in this Section
3.2 and in this Lease, including, but not limited to, Landlord’s right to make a
determination as to whether, and if so to what extent, Tenant must provide
Landlord with financial security, such as a letter of credit or guaranty, for
Tenant’s rent obligations incurred in connection with Tenant(1) s lease of such
First Refusal Space.  Such determination shall be made by reviewing the extent
of financial security then generally being imposed in comparable leases in the
Comparable Buildings upon tenants of comparable financial condition and credit
history to the then existing financial condition and credit history of Tenant
(with appropriate adjustments to account for differences in the then-existing
financial condition of Tenant and such other tenants). The First Refusal Space
Lease, if applicable, shall be executed by Landlord and Tenant within thirty
(30) days following Tenant’s exercise of its right to lease the First Refusal
Space.

 

3.2.3        Termination of First Refusal Right.  The rights contained in this
Section 3.2.3 shall be personal to the Original Tenant and its Permitted
Affiliates (and not any other assignee, sublessee or other transferee of the
Original Tenant’s interest in this Lease) if the Original Tenant and/or its
Permitted Affiliate occupies at least sixty percent (60%) of the then existing
Premises.  The right to lease First Refusal Space as provided in this Section
3.2 may not be exercised if, as of the date of the attempted exercise of the
expansion option by Tenant, or as of the scheduled date of delivery of such
First Refusal Space to Tenant, Tenant is in default under this Lease (beyond any
applicable notice and cure periods) or Tenant has previously been in economic
default under this Lease (beyond any applicable notice and cure periods) more
than once during the previous twelve (12) month period.

 

4.             Base Rent

 

4.1.          Existing Premises.  Notwithstanding anything to the contrary in
the Lease as hereby amended, Tenant shall continue to pay Base Rent for the
Existing Premises in accordance with the terms of Article 3 of the Lease.

 

4.2.          Expansion Premises.  Commencing on the Expansion Commencement Date
and continuing throughout the Expansion Term, Tenant shall pay to Landlord
monthly installments of Base Rent for the Expansion Premises as follows:

 

Period During
Expansion Term

 

Annual
Base Rent

 

Monthly Installment
of Base Rent

 

Approximate Monthly
Rental Rate per
Rentable Square Foot

 

 

 

 

 

 

 

 

 

Expansion Commencement Date through April 30, 2004*

 

$

499,205.76

*

$

41,600.48

*

$

3.1500

 

 

 

 

 

 

 

 

 

May 1, 2004 through June 3 0, 2004*

 

$

531,654.12

*

$

44,304.51

*

$

3.3547

 

 

 

 

 

 

 

 

 

July 1, 2004 through April 30, 2006

 

$

1,063,308.12

 

$

88,609.01

 

$

3.3547

 

 

 

 

 

 

 

 

 

May 1, 2006 through April 30, 2008

 

$

1,132,423.20

 

$

94,368.60

 

$

3,5728

 

 

 

 

 

 

 

 

 

May 1, 2008 through April 30, 2010

 

$

1,206,030.72

 

$

100,502.56

 

$

3.8050

 

 

 

 

 

 

 

 

 

May 1, 2010 through April 30, 2012

 

$

1,284,422.64

 

$

107,035.22

 

$

4.0524

 

 

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*              This schedule of Base Rent takes into account the “Rent Credit”
to which Tenant is entitled with respect to the Expansion Premises pursuant to
the express terms and conditions of Section 4.3, below.

 

On or before the Expansion Commencement Date, Tenant shall pay to Landlord the
Base Rent payable for the Expansion Premises for the first full month of the
Expansion Term.

 

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4.3.          Abated Base Bent for the Expansion Promises.  Provided that the
Original Tenant is not then in default of the Lease (as hereby amended), and is
in occupancy of the entire Premises (as hereby expanded), then for the period
beginning on the Expansion Commencement Date and ending on June 30, 2004 (the
“Rent Abatement Period”), Tenant shall only be obligated to pay fifty percent
(50%) of Base Rent otherwise attributable to the Expansion Premises during such
Rent Abatement Period (the “Rent Credit”).  Tenant acknowledges and agrees that
the foregoing Rent Credit has been granted to Tenant as additional consideration
for entering into this First Amendment and for agreeing to pay the Rent and
performing the terms and conditions otherwise required under the Lease (as
hereby amended). If Tenant shall be in default under the Lease (as hereby
amended) and shall fail to cure such default within any applicable notice and
cure periods provided under the Lease (as hereby amended), then Landlord may at
its option elect by notice to Tenant, and in addition to any other remedies
Landlord may have under the Lease (as hereby amended), one or both of the
following remedies: (i) that Tenant shall immediately become obligated to pay to
Landlord all Base Rent abated hereunder attributable to the Rent Abatement
Period, with interest as provided pursuant to the Lease from the date such Base
Rent would have otherwise been due but for the abatement provided herein, and/or
(ii) that the unapplied portion of the Rent Credit as of such default shall be
converted to a credit to be applicable to the end of the Expansion Term, and
Tenant shall immediately be obligated to begin paying Base Rent for the
Expansion Premises in full.

 

5.             Tenant’s Share of Building Direct Expenses.

 

5.1.          Existing Premises.  Notwithstanding anything in the Lease, as
hereby amended, to the contrary, Tenant shall continue to pay Tenant’s Share of
Direct Expenses in Connection with the Existing Premises in accordance with the
terms of the Lease.

 

5.2.          Expansion Premises.  Except as specifically set forth in this
Section 5.2, commencing on the Expansion Commencement Date, tenant shall pay
Tenant’s Share of Building Direct Expenses in connection with the Expansion
Premises in accordance with the terms of Article 4 of the Lease, provided that
with respect to the calculation of Tenant’s Share of Building Direct Expenses in
connection with the Expansion Premises, Tenant’s Share shall equal 20.37%.

 

6.             Expansion Improvements.  Landlord and Tenant acknowledge that
Tenant has been occupying the Premises pursuant to the terms of the Lease, and
therefore Tenant continues to accept the Premises in its presently existing, “as
is” condition. Landlord shall not be obligated to provide or pay for any
improvement work or services related to the improvement of the Premises.

 

7.             Broker.  Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this First Amendment, and that they know of no real
estate broker or agent who is entitled to a commission in connection with this
First Amendment. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgment’s and costs and expenses (including,
without limitation, reasonable attorneys’ fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of the
indemnifying party’s dealings with any real estate broker or agent. The terms of
this Section 7 shall survive the expiration or earlier termination of this First
Amendment.

 

8.             Parking.  Effective as of the Expansion Commencement Date and
continuing throughout the Expansion Term, Tenant shall be entitled to use up to
one hundred fifteen (115) unreserved parking passes in connection with Tenant’s
lease of the Expansion Premises (the “Expansion Parking Passes”).   Tenant’s use
of such Expansion Parking Passes shall be in accordance with the provisions of
Article 28 of the Lease.

 

9.             Letter of Credit.  Landlord and Tenant acknowledge that, in
accordance with Article 21 of the Lease, Tenant has previously delivered an L-C
in the amount of Two Million Three Hundred and No/100 Dollars ($2,300,000,00)
(the “Existing L-C”) to Landlord as security for the faithful performance by
Tenant of the terms, covenants and conditions of the Lease.  Concurrently with
Tenant’s execution of this First Amendment, Tenant shall replace the Existing
L-C by delivering to Landlord an unconditional, clean, irrevocable L-C in an
amount equal to Three Million Two Hundred Ninety-Eight Thousand Four Hundred
Twelve and No/100

 

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10.           No Further Modifications.  Except as set forth in this First
Amendment, all of the terms and provisions of the Lease shall apply with respect
to the Expansion Premises and shall remain unmodified and in full force and
effect.

 

IN WITNESS WHERROF, this First Amendment has been executed as of the day and
year first above written.

 

“LANDLORD”

“TENANT”

 

 

KILROY REALTY, L.P.,

PEREGRINE SYSTEMS, INC.,

a Delaware limited partnership

a Delaware corporation

 

 

By:

Kilroy Realty Corporation,

 

 

a Maryland corporation

By:

/s/ Mary Lou O'Keefe

 

 

General Partner

 

Its:

SVP Human Resources

 

 

 

 

Date:

12-9-03

 

 

 

By:

 

 

 

 

 

Its:

 

 

By:

/s/ Ken Sexton

 

 

 

Date:

 

 

 

Its:

CFO

 

 

 

 

Date:

12-9-03

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

Date:

 

 

 

 

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