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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______.
COMMISSION FILE NUMBER: 000-22209
PEREGRINE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3773312
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NUMBER)
ORGANIZATION)
12670 HIGH BLUFF DRIVE
SAN DIEGO, CALIFORNIA 92130
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(858) 481-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF
THE ACT: COMMON STOCK, $.001 PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based on the closing sale price of the Common Stock on May
28, 1999, as reported on the Nasdaq National Market, was approximately
$1,131,650,877. Shares of Common Stock held by each executive officer and
director and by each person who may be deemed to be an affiliate of the
Registrant have been excluded from this computation. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes. As of May 28, 1999, the Registrant had 49,336,278 shares of Common
Stock, $.001 par value, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant has incorporated by reference into Part III of this Form 10-K
portions of its Proxy Statement for the 1999 Annual Meeting of Stockholders.
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PEREGRINE SYSTEMS, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PART I ................................................................................................ 3
Item 1. Business .............................................................................. 3
Item 2. Properties............................................................................. 12
Item 3. Legal Proceedings...................................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders.................................... 13
PART II ............................................................................................. 15
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.............. 15
Item 6. Selected Consolidated Financial Data................................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 17
Item 7A. Quantitative and Qualitative Disclosures about Market Risk............................ 29
Item 8. Financial Statements and Supplementary Data............................................ 29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... 29
PART III ............................................................................................. 30
Item 10. Directors and Executive Officers of the Registrant..................................... 30
Item 11. Executive Compensation................................................................. 30
Item 12. Security Ownership of Certain Beneficial Owners and Management......................... 30
Item 13. Certain Relationships and Related Transactions......................................... 30
PART IV ............................................................................................. 31
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K...................... 31
Signatures ............................................................................................. 34
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PART I
ITEM 1. BUSINESS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. THESE STATEMENTS INCLUDE, AMONG OTHERS, STATEMENTS
CONCERNING OUR FUTURE OPERATIONS, FINANCIAL CONDITION AND PROSPECTS, AND OUR
BUSINESS STRATEGIES. THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE" AND OTHER
SIMILAR EXPRESSIONS GENERALLY IDENTIFY FORWARD-LOOKING STATEMENTS. INVESTORS IN
OUR COMMON STOCK ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
SUBSTANTIAL RISKS AND UNCERTAINTIES THAT COULD CAUSE OUR FUTURE BUSINESS,
FINANCIAL CONDITION, OR RESULTS OF OPERATIONS TO DIFFER MATERIALLY FROM
HISTORICAL RESULTS OR CURRENTLY ANTICIPATED RESULTS. INVESTORS SHOULD CAREFULLY
REVIEW THE INFORMATION CONTAINED UNDER THE CAPTION "FACTORS THAT MAY EFFECT
FUTURE RESULTS" IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND ELSEWHERE IN, OR INCORPORATED BY REFERENCE INTO,
THIS REPORT.
OVERVIEW
Peregrine Systems, Inc. refers to itself as "The Infrastructure
Management Company." We offer business organizations an integrated suite of
packaged infrastructure management application software. These software
applications are designed to manage the fiscal and physical aspects of
organizational infrastructure from the moment infrastructure enters an
organization until the moment it is taken out of service.
We were incorporated in California in 1981 and reincorporated in
Delaware in 1994. Unless the context requires otherwise, references in this
report to "Peregrine," "we," "PSI", "us," or "our" refer to Peregrine Systems,
Inc., a Delaware corporation, its predecessor, Peregrine Systems, Inc., a
California corporation, and its subsidiaries. Our principal executive offices
are located at 12670 High Bluff Drive, San Diego, California 92130. Our
telephone number is (858) 481-5000.
INDUSTRY AND CORPORATE BACKGROUND
Historically, automated management of organizational infrastructure was
not a priority for many companies. Rather, organizations tended to focus their
information technology (IT) spending on automating external business functions
that involve interaction with customers, suppliers, distributors, and other
third parties. These applications included building communications networks for
voice and data and implementing software solutions for Enterprise Resource
Planning (ERP), Customer Supply Chain Management (CSCM), and Customer
Relationship Management (CRM). Organizations have become increasingly dependent
on these networks, systems, and applications to provide core products and
services, and we believe they are now critical components of organizations'
operating infrastructures.
Organizational infrastructures have also become larger and more
complex. For example, modern businesses now depend on an array of systems and
applications to provide electronic mail and Internet and Intranet services, to
manage documents, and to support mission critical ERP, CSCM, and CRM
applications. In addition, the various components of infrastructure, including
desktop computers, networks, and telephony assets, are increasingly linked. In
turn, these internal networks and systems depend on a physical infrastructure
comprised of cable and wiring in walls, floors, and ceilings that are ultimately
part of the buildings and campuses that comprise the larger organizational
infrastructure.
We believe that the operational effectiveness of an organization
ultimately depends on the efficient management of these infrastructure assets.
Threats to infrastructure pose substantial business risks, and issues raised in
connection with Year 2000 remediation, European currency conversion, major
facilities relocations, and changes in network operating environments have
resulted in increased awareness by IT managers and senior executives of
infrastructure dependency. Accordingly, we believe that opportunities exist for
providers of an integrated suite of infrastructure management software that can
assist organizations to deploy, maintain, and operate infrastructure assets
efficiently throughout their life cycle -- from the time an organization starts
to contemplate purchase or lease of a
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new asset to the moment the asset is removed from service and sold or
disposed. Major phases in the lifecycle are: procurement or lease,
installation, data collection, taking a service request, upgrade, move,
problem management, problem resolution, change management of system-wide
changes, dispatch of work as a result of a request, problem, or change;
performance tracking, correlation of performance to service level agreements,
contract management, removal from service, and finally, disposition or re-use.
Until recently, our products focused principally on problem
management for an organization's IT infrastructure. Our principal product
suite, SERVICECENTER, is an integrated, enterprise service desk solution that
focused historically on network management. Recently, SERVICECENTER has been
extended to address the lifecycle of IT infrastructure assets. Since 1997, we
have also made several acquisitions intended to create a complete
infrastructure management software solution. In September 1997, we acquired
ASSETCENTER through the acquisition of Apsylog S.A., a French corporation,
and United Software, Inc., its parent company. ASSETCENTER extended our
infrastructure management product line by offering customers the ability to
manage the fiscal aspects of infrastructure through automated lease
management, procurement management, asset management, and cost management
applications. In July 1998, we acquired Innovative Tech Systems, Inc., a
leading provider of facilities management software. Innovative's SPAN-FM
product line offered the ability to manage real estate, space planning,
stacking, data collection, and other facilities management activities, as
well as the ability to integrate facilities data to underlying computer aided
design (CAD) drawings using third party CAD software. In September 1998, we
acquired a remote management technology from International Software Solutions
(ISS). ISS's remote management software manages a variety of graphical user
interface technologies over a network and assists network support personnel
to diagnose and remedy a user's problems remotely, without the need to
provide on-site support.
In March, 1999, we acquired Prototype, Inc., a leading provider of
fleet and transportation management applications in North America. As a
result of that acquisition, FLEETANYWHERE and E.FLEET are the primary product
families now offered to large organizations to assist in the management of
the fiscal and physical optimization of their transportation assets: fleets
of cars, trucks, planes, and specialized vehicles.
We believe that our future growth and profitability will depend on a
number of factors, including, among others, factors relating to the quality
of our products and to our ability to penetrate new markets and further
penetrate existing markets. In that regard, our strategy is focused on
maintaining and enhancing our technological position and the functionality of
our products; developing an integrated product line of software applications
to manage all aspects of the enterprise infrastructure; creating
organizational awareness of the benefits to be obtained from an integrated
approach to enterprise infrastructure management; expanding our sales and
service operations and capability both directly and through our alliance
partners; expanding international sales; leveraging a product authorship
model that rewards product developers based on sales of products developed by
them; expanding our distribution channels through relationships with third
party distributors, system integrators, and original equipment manufacturers;
and supporting the efforts of other companies to integrate their applications
and technologies our product offerings.
PRODUCTS
We currently offer over twenty Infrastructure Management software
products:
- - SERVICECENTER
SERVICECENTER is a set of applications intended to maintain the
effectiveness and functionality of IT infrastructure by keeping it working.
SERVICECENTER applications include problem management, problem resolution,
change management, service level agreement management, request management,
service management, remote management, work management, SERVICECENTER
INSIGHT, an OLAP data mining tool, REPORTCENTER, and SERVICECENTER/2000, a
specific version of SERVICECENTER tailored for Year 2000 crisis management
and contingency planning. SERVICECENTER also offers a number of gateway
products to the software tools and applications of other vendors. These
gateway products include interfaces to system and network management products
such as HP Openview, CA Unicenter, and Tivoli TME10. In addition, gateways to
Enterprise Resource Planning applications are supported to products such as
SAP R3, Peoplesoft, and Oracle. Gateways are licensed individually, providing
an additional product revenue source.
PRIMARY SERVICECENTER APPLICATIONS
PROBLEM MANAGEMENT. The problem management application automates the process of
reporting and tracking specific problems or classes of problems associated with
an enterprise network computing environment. Help desk personnel open problem
tickets using templates specific to the class of problem reported.
PROBLEM RESOLUTION. The problem management application works together with the
Company's IR EXPERT, a text search expert system that employs advanced
technology to allow network operators to retrieve relevant information. This
application assists in problem solving, based on prior solutions. The IR EXPERT
reduces a user's question, or
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query, to a number of "terms," refining the query to fit knowledge in the
database and can then search resolution databases using related terms. This
application is self-learning, so the customer does not have to perform any
work to keep the knowledge base up to date.
CHANGE MANAGEMENT. The change management application provides a functional
framework for proposing, accepting, scheduling, approving, reviewing and
coordinating network changes. Change management permits end-users to enter
proposed changes to the production environment and then circulate those changes
electronically for review and action. Change requests can be tracked and details
can be added at any time to the initial specifications.
CONTRACT MANAGEMENT. Contract Management provides enterprise IS organizations
with the tools they need to track all costs associated with infrastructure
problems or change. Tracking asset, labor, and outage costs in one central
repository provides management with real-time information on asset ROI and the
costs of supporting specific problems.
INVENTORY CONFIGURATION MANAGEMENT. The inventory configuration management
application provides the service desk with a central repository of information
about an organization's IT environment, including inventories of networked
devices and applications as well as information concerning end-users. Easy
access to inventory information permits the service desk to respond to end-user
problems, to plan changes and services, and to create accurate reports about the
network's status and environmental trends.
REQUEST MANAGEMENT. The request management application automates and tracks an
organization's equipment and services ordering process from initial request
through installation and follow-up. Using SERVICECENTER, an end-user identifies
and orders products or services from a catalog of items. SERVICECENTER then
consolidates requests, forwards orders through an organization's standard
approval and order processing procedures, and consolidates orders by vendor.
End-users can track the status of requests through SERVICECENTER at all times.
SERVICE LEVEL AGREEMENT MANAGEMENT. Service Level Agreements (SLA) are used
by companies to relate the availability and performance of infrastructure to
the business mission performed by the infrastructure. Service Level Agreement
Management is designed to simplify the task of managing SLA by providing an
automated, real-time view of SLA performance. It provides a single,
centralized repository of SLA information and automated data feeds related to
infrastructure health. It can also help prioritize problem resolution to
ensure that SLA metrics are achieved. If a threshold of performance is being
approached which would threaten the SLA, a problem ticket can be
automatically opened and managed.
SERVICECENTER INSIGHT. ServiceCenter Insight is a data mining tool which
facilities the ability of the customer to ask a number of ad hoc questions
relative to the information in the Infrastructure Repositories. From broad
questions such as "what do we own", "how well is it working," to detailed
questions such as "what is the Year 2000 compliance status of my PCs?" Based
on the Cognos OLAP engine, which we sell under license, ServiceCenter
Insight, provides a powerful query and reporting capability for the
Infrastructure manager.
SERVICE MANAGEMENT. Service Management provides businesses with a comprehensive
call management tool. The service desk operator uses Service Management to
assess an incoming call and determine whether it is an information request, a
call requiring problem management, a request for action to assist an individual
or a requirement for a change which would impact multiple elements of the
infrastructure.
WORK MANAGEMENT. Work Management is designed to help managers better balance
the demands for service and support based on the priority of tasks and the skill
set of the workforce. Work Management will automatically allocate unassigned or
incomplete problem tickets to individuals. The manager can also assign new work,
view progress on assigned items, or reassign work based on changing properties
using the drag and drop interface.
- - ASSETCENTER
ASSETCENTER is a set of applications intended to manage the
portfolio of IT infrastructure investments by managing related financial
information. ASSETCENTER applications include asset management, procurement
management, leasing management, and cost management. In the European market,
ASSETCENTER also includes a network help desk application. Like
SERVICECENTER, ASSETCENTER also supports gateways to ERP and desktop
inventory discovery tools. The gateways are licensed as add-ons to the base
applications.
MAJOR ASSETCENTER APPLICATIONS
ASSET MANAGEMENT. The Asset Management application provides a comprehensive
inventory of an organization's equipment, users, suppliers, and contracts. The
application provides detailed descriptions of software licenses
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acquired and their associated rights in order to reconcile them with the
software actually installed. Asset Management allows users to track assets
throughout their life cycle, from the initial purchase request to retirement.
LEASE MANAGEMENT. Lease Management manages the contractual aspects of leasing
and rental by returning, updating and renewing equipment through alarm and
messaging features. The application also includes a wide range of methods for
calculating lease terms and permits users to evaluate different financing
alternatives.
PROCUREMENT MANAGEMENT. This application manages the acquisition of IT products
including assets, consumables and services. Procurement Management covers the
entire purchasing cycle: request, approval, estimate, issuance of purchase
orders, delivery and receipt. The application allows users to set up
authorization procedures as well as automatic reordering based on user-defined
restocking criteria.
COST MANAGEMENT. Cost Management features analytic and budgetary functions that
allow tracking, control, and allocation of IT related expenses. The application
allows users to track costs related to each asset, including both capital and
operational expenses (E.G., training, service calls) and to measure the costs of
ownership for each asset. The application also allows users to compare
accounting and physical inventories to determine the correct valuation of
balance sheet assets.
- - SPAN-FM
SPAN-FM is a set of applications and multiple gateways that are
designed to manage non-IT assets related to physical plant and facilities.
SPAN-FM includes Space Planning, Facilities Management, Work Order
Management, Stacking, Maintenance Management, Facilities Help Desk, Cable
Plant Management, CAD integrator, Data Collection, and Real Estate Lease
Management. Like SERVICECENTER and ASSETCENTER, SPAN-FM also supports
gateways to external products.
The SPAN-FM product suite offers solutions specifically designed to automate
Facilities, Real Estate and Operations, and Maintenance Management.
- - SPAN-FM Solution for Facilities Management
The SPAN-FM Solution for Facilities Management is the only true
computer integrated facility management solution for facilities design,
planning and management. SPAN-FM accurately projects occupancy demand
and supply scenarios enabling efficient move planning thus substantially
reducing the costs of churn. A bi-directional interface to the most
popular computer-aided-design products such as Autocad and Microstation
allows users to easily view information graphically and to manage
facilities from a top down approach. Users can also use the SPAN-FM
application to manage project bids, costs and budgets automatically.
- - SPAN-FM Solution for Operations and Maintenance
The crux of any truly effective plant and facilities maintenance is
providing reliable preventive maintenance to avert or minimize the
impact of equipment breakdown. SPAN-FM Solution for Operations and
Maintenance enables corrective maintenance workflow to be streamlined
and managed from a single point. This reduces duplication allowing
managers to automatically schedule preventive maintenance, reducing
downtime and increasing production. SPAN-FM automatically provides work
order cost estimates, work order status and work order scheduling.
Purchasing, receiving and shipping functions can also be administered
automatically with this leading computerized maintenance management
solution.
- - SPAN-FM Solution for Real Estate
The SPAN-FM Real Estate Management Solution helps real estate
professionals optimize the use of available space, reduce overall
occupancy costs and implement continuous improvement strategies and
policy tactics. The application tracks owned and leased property
including space configuration and utilization. Its powerful project
management features automatically track work orders, staff and
contractors as well as other vendors. SPAN-FM also facilitates
benchmarking against the organization's own past performance and
accepted industry standards.
- - FLEETANYWHERE
FLEETANYWHERE is a comprehensive, Internet-enabled, fully integrated,
Windows-based fleet management system. It is capable of tracking an unlimited
number of equipment units and supporting an unlimited number of workstations
from any number of locations. FLEETANYWHERE tracks all functions related to the
maintenance of equipment fleets, including processing repair and PM work orders,
tracking operating expenses such as for fuel, oil, and licensing, and tracking
and billing for equipment usage. Customers receive immediate return on
investment related to warranty claims and reduction of obsolete parts inventory.
Optional modules offer functionality related to bar coding on the shop floor,
online employee labor capture, motor pool reservations tracking, shop
scheduling, service level agreement tracking, replacement analysis, tire
tracking, and fleet optimization.
E.FLEET is a variation of FLEETANYWHERE which offers the full
application set to fleet managers as an Internet service. If the customer
elects this option, we act as the system administrator and operator for the
customer. Their users connect to our software over the Internet and receive
the benefit of the application without the administrative burden of actually
running the server portion of the application. We recognize revenue both at
the time of initial sale, as with a standard FLEETANYWHERE sale, and in the
form of receiving payments for maintenance, operation, and administration of
the application's Internet server.
ADDITIONAL FLEETANYWHERE MODULES
BAR CODE MODULE. The Bar Code Module provides full support for automated data
collection in a customer's shop and parts inventory operations. Mechanics and
field technicians use this module to capture a log of their daily activities by
scanning bar coded work order and task numbers into a standalone hand-held
device, then uploading the data at the end of the day into the database.
Inventory warehouse operations use this module along with wireless hand-held bar
code devices and laser scanners to perform physical inventory counts and issue
parts.
LABOR CAPTURE MODULE. The Labor Capture Module provides the capability for
mechanics and technicians to log on and off of work order and indirect
activities by scanning bar codes with a laser scanner or by keying data into a
workstation positioned on the shop floor. Shop managers can view real-time data
representing tasks in progress and current assignments of employees to each work
order.
MOTOR POOL MODULE. The Motor Pool Module offers the online, real-time ability to
book in advance and track reservations for equipment units assigned to an
organization's motor pool (e.g. internal car rental operation). The module also
allows users to record the dispatch and return of equipment units to the pool
and to check the availability of equipment units of any type for any time into
the future.
SHOP SCHEDULING MODULE. The Shop Scheduling Module allows users to manage all
shop resources including labor (mechanics), work bays, parts, and tools. The
module generates an optimized schedule for each shop based on task priorities
(based on necessary turnaround time) designated for each equipment unit by the
user. Users can generate a schedule as often as they wish to adjust for changes
in work load, available resources, priorities, or start dates.
SERVICE LEVEL AGREEMENTS MODULE. The Service Level Agreements Module assesses
the level of service a fleet organization is providing to its customers based on
the needs of the customer's operation. It tracks available and non-available
equipment unit-minutes for each service level agreement requirements period
designated by the user.
REPLACEMENT ANALYSIS MODULE. The Replacement Analysis Module identifies, in
advance, the optimum replacement point for each individual equipment unit in its
life. The module considers the optimum replacement point for an equipment unit
to be the time at which the accumulated lifetime cost per meter unit achieves a
minimum value based on neural network calculations. The neural network projects
future performance for each equipment unit based on historical data for similar
equipment units at similar points in their lives.
TIRE MODULE. The Tire Module provides the capability to maintain master data for
each tire, including identifying, descriptive, installation, recap, and cost
information. It also records a complete history of each event affecting a tire.
The module generates a list of all tires currently mounted on a particular
equipment unit, a list of all tires associated with a specific part number, and
a list of all tires of a specified tire type.
- - INFRATOOLS
In the past, IT decision makers have had to choose between point
solutions that failed to address the breadth of their problem and expensive
cumbersome frameworks which often failed to deliver on their promises. Now IT
organizations concerned with service and asset management have a new set of
tools that uniquely address their problems with INFRATOOLS REMOTE CONTROL and
INFRATOOLS DESKTOP DISCOVERY, and the soon to be available INFRATOOLS NETWORK
DISCOVERY.
INFRATOOLS REMOTE CONTROL. InfraTools Remote Control is a graphical remote
control application with cross-platform support providing the most stable
connections and unparalleled enterprise-level security. InfraTools Remote
Control is designed for everything from help desk and remote support to teaching
applications and even network management. By slashing the time needed to
identify and solve problems and eliminating travel to manage remote and mobile
systems, IT organizations will dramatically reduce their Total Cost of
Ownership.
INFRATOOLS DESKTOP DISCOVERY. InfraTools Desktop Discovery addresses the
underlying need for IT intelligence about your desktops by providing complete,
accurate, and timely information that is continuously accessible and easy to
maintain. This information lets you know exactly what you own to confidently
address your service and
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asset management needs by providing integration with SERVICECENTER and
ASSETCENTER from Peregrine Systems.
INFRATOOLS NETWORK DISCOVERY. InfraTools Network Discovery, to be released this
summer, provides complete, accurate, and real-time information about your
network and all networked devices. This combined with InfraTools Desktop
Discovery will provide a complete view of your IT infrastructure and a unique
level of accurate detail that is simple to deploy and powerfully integrated with
Peregrine Systems SERVICECENTER and ASSETCENTER.
PRODUCT INTEGRATION
In light of our numerous acquisitions of new software products and
technologies, our research and development personnel have been focused, in
part, on integrating these products and technologies into a single product
suite with a common data repository. In April 1998, we announced and shipped
the Peregrine Repository Interface Manager (PRIM), which integrates common
elements between the data schema of SERVICECENTER and ASSETCENTER. PRIM
technology is currently being enhanced to further improve the integration of
SERVICECENTER and ASSETCENTER and to begin the integration of SPAN-FM. The
remote management application acquired from ISS has been integrated into
SERVICECENTER and ASSETCENTER and is now being offered commercially as both a
standalone and integrated solution. INFRATOOLS DESKTOP DISCOVERY is currently
being integrated to SERVICECENTER and ASSETCENTER and will be commercially
offered in the second fiscal quarter of fiscal 2000 as both an integrated and
standalone product.
PRODUCT DEVELOPMENT; PRODUCT AUTHORSHIP MODEL
We believe that attracting and retaining talented software
developers is an important component of our product development activities.
To this end, we have instituted a product authorship incentive program that
rewards our developers with commissions based on the market success of the
applications designed, written, marketed, and supported by them. Our product
authorship program is designed to encourage our developers to evaluate the
effectiveness of a product in the actual user environment.
We believe that the ability to deliver new and enhanced products to
customers is a key success factor. We have historically developed our products
through a consultative process with existing and potential customers. We expect
that continued dialogue with such existing and potential customers may result in
enhancements to existing products and the development of new products. We have
in the past devoted and expect in the future to continue to devote a significant
amount of resources to developing new and enhanced products. We currently have a
number of product development initiatives underway. We cannot predict, however,
whether any enhanced products, new products, or product suites will be embraced
by existing or new customers. The failure of any of these products to achieve
market acceptance would have a material adverse effect on our business, results
of operations and financial condition.
Our research and development expenditures in fiscal 1997, 1998, and
1999 were $5.9 million, $8.4 million, and $13.9 million, respectively,
representing 17%, 14%, and 10% of total revenues in the respective periods. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The market for our products is subject to rapid technological change,
changing customer needs, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As a
result, our position in its existing markets or other markets that it may enter
could be eroded rapidly by product advances. The life cycles of the our products
are difficult to estimate. Our growth and future financial performance will
depend in part on its ability to enhance existing applications, develop and
introduce new applications that keep pace with technological advances, meet
changing customer requirements and respond to competitive products. Our product
development efforts are expected to continue to require substantial investments
by us. There can be no
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assurance that we will have sufficient resources to make the necessary
investments. We have in the past experienced development delays, and there
can be no assurance that we will not experience such delays in the future.
There can be no assurance that we will not experience difficulties that could
delay or prevent the successful development, introduction, or marketing of
new or enhanced products. In addition, there can be no assurance that such
products will achieve market acceptance, or that our current or future
products will conform to industry requirements. Our inability, for
technological or other reasons, to develop and introduce new and enhanced
products in a timely manner could have a material adverse effect on our
business, results of operations, and financial condition.
TECHNOLOGY
Our products rely on a number of standard, commercially available
technologies for relational database storage and retrieval and client/server
communications and are designed to support a range of implementations of
infrastructure management applications and the Enterprise Service Desk within
medium sized organizations to large enterprises. We have developed other
technologies designed to provide a comprehensive environment to build, deploy,
and customize a range of applications.
We commenced integration of the SERVICECENTER and ASSETCENTER product
suites shortly after completion of the acquisition of Apsylog. The Company has a
phased plan for converging the technologies. The first phase, completed in 1998,
integrates SERVICECENTER and ASSETCENTER using a replication scheme called the
Peregrine Repository Interface Manager ("PRIM"). PRIM allows SERVICECENTER and
ASSETCENTER to manage simultaneously data describing infrastructure assets as
though they were in the same database. In July 1998 we acquired Innovative with
its SPAN-FM product suite. Our product objective is to merge the technologies of
the four product suites, retaining the best technology from each and maintaining
an upgrade path for current customers.
N-TIERED ARCHITECTURE. N-tiered architecture applications permit the
separation of multiple clients, multiple application servers, and multiple
database servers in a single cohesive application implementation. The
Company's database, business rules, and presentation technologies create a
N-tiered client/server architecture intended to provide scalability and
flexibility. The tiers are logically separated, allowing changes to the
database design or the graphical interface to be made without requiring
changes to the business rules or other related tiers.
EASY CUSTOMIZATION/EXTENSION. In order to make the software fit the
customers' needs, the Company's products provide a number of tools that
enable customers to customize and extend SERVICECENTER, ASSETCENTER, SPAN-FM,
and FLEETANYWHERE. The design of the database, the contents and appearance of
the user interface, and the business rules can be modified using the
Company's standard tools provided with the system.
RAPID APPLICATION DEVELOPMENT ENVIRONMENT. The Company has created a
"fill-in-the-blanks" development environment for building and deploying
applications. All SERVICECENTER applications are implemented using the
Company's RAD environment. If a customer requires more extensive
modification, the system can be customized by changing the applications
provided by the Company or implementing new applications using the RAD
environment. In fiscal 1999, the Company introduced an advanced graphical
workflow engine in ASSETCENTER, along with Wizard technology for simplified
tailoring of the application. These technologies will be introduced in future
Peregrine Systems applications.
DISTRIBUTED SERVICES. The Company has distributed a database technology that
provides replication services and the capability to move work from one
SERVICECENTER system to another. These services are database vendor
independent and contain knowledge of the application schema. The Company has
implemented a "follow-the-sun" approach to allow continuous updates of
information as ownership of processes moves from one group to another during
the global business day.
ADAPTERS. The Company provides adapters to industry standard APIs, such as SMTP
e-mail, and leading vendors products. These adapters expand the reach of the
Company's products by allowing them to interact with other products currently in
the customer's environment. The Company has also created adapters that permit
the system to communicate using e-mail, beeper, fax and Lotus Notes. The
adapters also provide communication with third party network management tools
such as Hewlett Packard's OpenView, CA-Unicenter, Tivoli's TME, Cabletron
Spectrum, Sun's SunNet Manager and others. In addition, the Company has created
an open API permitting software developed by third parties, end-users or the
Company's Professional Services group to be integrated into the system.
INTELLIGENT AGENTS. The Company provides intelligent agents that gather and feed
information to SERVICECENTER. The agents provide automated inventory gathering
and problem determination data for use in problem resolution and
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management of an IT environment. The agents permit help desk personnel to
open, update, and close trouble tickets based on criteria provided by the
customers.
JAVA CLIENT. The Company introduced a 100% pure Java SERVICECENTER GUI client
in fiscal 1999. The Java client duplicates the functionality of the
SERVICECENTER GUI, allowing access to the entire SERVICECENTER system via the
internet (world wide web). The Java client is designed for use by production
or "heavy" users of the system, while the HTML web client, available for
SERVICECENTER, ASSETCENTER, SPAN-FM, and FLEETANYWHERE is designed for the
casual user requiring easy, simple access to basic system functions.
SALES AND MARKETING
We sell our software and services in both North America and
internationally primarily through a direct sales force. In addition to the
Company's San Diego headquarters, the North American sales force is located
in the metropolitan areas of Atlanta, Boston, Chicago, Dallas, Houston, New
York, Philadelphia, San Francisco, Washington, D.C., and Winnipeg, Canada.
The international sales force is located in the metropolitan areas of
Amsterdam, Frankfurt, London, Milan, Munich, Paris, Singapore and Sydney. Our
sales model combines telephone and network communications for product
demonstrations and product sales with travel to customer locations to pursue
a consultative sales process. In addition to our direct sales strategy, we
continue to pursue indirect distribution channels. In the Pacific Rim and
Latin America, we have established a network of channel partners. In North
America, the Company has established a network of regional and national
systems integrators and channel partners. When sold through direct channels,
the sales cycle for the product is typically six to nine months depending on
a number of factors, including the size of the transaction and the level of
competition which the Company encounters in its selling activities.
In the last year, we have devoted significant resources to
restructuring and building its marketing organization. In the course of this
restructuring, the marketing organization has launched a new corporate
marketing strategy emphasizing our objective to be the leading infrastructure
management solution worldwide. As part of our marketing strategy, we have
implemented the infrastructure management strategy throughout its marketing
programs such as seminars, monthly executive briefings, direct mailings,
industry trade shows, advertising and public relations. In addition, we have
significantly expanded in product marketing, telemarketing, and web
marketing. We plan to continue to expand our marketing organization in an
effort to broaden our market presence.
We have significantly increased the size of our sales force over the
last year and expect to continue hiring sales personnel, both domestically and
internationally, over the next twelve months. Competition for qualified sales
personnel is intense in the software industry. We also expect to increase the
number of our regional, national, and system integrators and channel partners,
domestically and internationally. Any failure to expand the direct sales force
or other distribution channels could have a material adverse effect on our
business, results of operations and financial condition.
We believe that our continued growth and profitability will require
expansion of our international operations, particularly in Europe, Latin
America, and the Pacific Rim. We intend to expand international operations and
enter additional international markets, either directly or through international
distribution or similar arrangements, which will require significant management
attention and financial resources. Competition for suitable distribution
partners is intense in many markets outside North America. There can be no
assurance that we will be successful in attracting and retaining qualified
international distributors or that we will be successful in implementing direct
sales programs in selected international markets. If we are unable to obtain
qualified international distribution partners or otherwise unable to
successfully penetrate important international markets, our business, results of
operations, and financial condition could be materially and adversely affected.
In addition, continued international expansion poses a number of risks
associated with conducting business outside the United States, including
fluctuations in currency exchange rates, longer payment cycles, difficulties in
staffing and managing international operations, seasonal reductions in business
activity during the summer months in Europe and certain other parts of the
world, increases in tariffs, duties, price controls, or other restrictions on
foreign currencies, and trade barriers imposed by foreign countries, any of
which could have a material adverse effect on our business, operating results
and financial condition. In addition, we have only limited experience in
developing localized versions of our products and marketing and distributing our
products internationally. There can be no assurance that we will be able to
successfully localize, market, sell, and deliver products internationally. The
inability of the Company to expand its international operations successfully and
in a
9
<PAGE>
timely manner could have a material adverse effect on the Company's business,
results of operations, and financial condition.
PROFESSIONAL SERVICES AND CUSTOMER SUPPORT
Our Professional Services group provides technical consulting and
training to assist customers in implementing our products.
Our basic consulting services include analyzing user requirements and
providing the customer with a starter system that will quickly demonstrate
significant benefits of our products. More advanced consulting services include
providing turn-key implementations using our Advanced Implementation
Methodology, which begins with a structured analysis to map the customer's
business rules onto the Company's service desk tools, continues with the
technical design and construction, and finishes with system roll out.
Implementation assistance frequently involves process reengineering and the
development of interfaces between the Company's products and legacy systems and
other tools or systems.
We offer training courses in the implementation and administration
of our products. On a periodic basis, we offer product training at our
facilities in San Diego, Orlando, Washington D.C., and London for customers
and channel partners. Customer-site training is also available.
We maintain a staff of customer service personnel, who provide
technical support and complete training, and periodic software updates to our
customers and partners. We offer complete technical support services 24 hours
a day, five days per week with critical care services offered 24 hours a day,
seven days a week through our local offices in Europe and San Diego via toll
free lines. In addition to telephone support, we provide support via fax,
e-mail, and a Web server. We use our own "follow-the-sun" technology as a
foundation for this continuous worldwide support.
COMPETITION
The market for our products is highly competitive and diverse. The
technology for infrastructure management software products can change rapidly.
New products are frequently introduced and existing products are continually
enhanced. Competitors vary in size and in the scope and breadth of the products
and services offered.
EXISTING COMPETITION. We have faced competition from a number of
sources, including:
- providers of internal help desk software applications such as Remedy
Corporation and Software Artistry, Inc. (now a division of Tivoli
Systems, Inc.)
- customer interaction software companies such as Clarify Inc. and The
Vantive Corporation, whose products include internal help desk
applications
- information technology and systems management companies such as IBM,
Computer Associates International, Inc., Network Associates, Inc.
(recently formed as a result of the business combination of McAfee
Associates, Inc. and Network General Corporation), and
Hewlett-Packard Company through its acquisition of PROLIN
- providers of asset management and facilities management software
such as MainControl, Janus, and NCR in asset management,
and Archibus, FIS, and Assetworks in facilities management
- providers of fleet management software, such as the Control
Software division of Maximus.
- providers of plant and equipment asset management software which
is a market we compete in only peripherally today, but many of
those vendors are broadening their offerings into facilities,
fleet, and even technology infrastructure management. Companies
in this area include Project Software and Development, Indus,
and Datastream.
- the internal information technology departments of those companies
with infrastructure management needs
FUTURE COMPETITION. Because competitors can easily penetrate the
software market, we anticipate additional competition from other established and
new companies as the market for enterprise infrastructure management
applications develops. In addition, current and potential competitors have
established or may in the future establish cooperative relationships among
themselves or with third parties. Large software companies may acquire or
establish alliances with smaller competitors of Peregrine. We expect that the
software industry will continue to consolidate. It is possible that new
competitors or alliances among competitors may emerge and
10
<PAGE>
rapidly acquire significant market share.
Our ability to sell our products depends in part on their
compatibility with and support by providers of system management products,
including Tivoli, Computer Associates, and Hewlett-Packard. All three of
these companies have acquired providers of help desk software products over
the past 36 months. These providers of system management products may decide
to close their systems to competing vendors like Peregrine. They may also
decide to bundle their infrastructure management and/or help-desk software
products with other products for enterprise licenses for promotional purposes
or as part of a long-term pricing strategy. If that were to happen, our
ability to sell our products could be adversely affected. Increased
competition may result from acquisitions of help desk and other
infrastructure management software vendors by system management companies.
The results of increased competition including price reductions of our
products, reduced gross margins, and reduction of market share, could
materially adversely affect our business, operating results, and financial
condition.
GENERAL COMPETITION. Some of our current and many of our potential
competitors have much greater financial, technical, marketing, and other
resources than Peregrine. As a result, they may be able to respond more quickly
to new or emerging technologies and changes in customer needs. They may also be
able to devote greater resources to the development, promotion, and sale of
their products than we can. We may not be able to compete successfully against
current and future competitors. In addition, competitive pressures faced by
Peregrine may materially adversely affect our business, operating results, and
financial condition.
The Company believes that the principal competitive factors affecting
its market include product features such as adaptability, scalability, ability
to integrate with third party products, functionality, ease of use, product
reputation, quality, performance, price, customer service and support,
effectiveness of sales and marketing efforts and company reputation. Although
the Company believes that it currently competes favorably with respect to such
factors, there can be no assurance that the Company can maintain its competitive
position against current and potential competitors, especially those with
greater financial, marketing, service, support, technical, and other resources
than the Company. In addition, the Company believes that its future financial
performance will depend in large part on its success in developing an integrated
product line of software applications to manage all aspects of the enterprise
infrastructure, including management of IT, plant and facilities, communication
systems, and distribution systems, and to create organizational awareness of the
benefits to be obtained from an integrated approach to infrastructure
management.
INTELLECTUAL PROPERTY
The Company's success is heavily dependent upon proprietary technology.
The Company relies primarily on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
its proprietary rights. The Company seeks to protect its software, documentation
and other written materials under trade secret and copyright laws, which afford
only limited protection. Despite precautions taken by the Company, it may be
possible for unauthorized third parties to copy aspects of its current or future
products or to obtain and use information that the Company regards as
proprietary. In particular, the Company may provide its licensees with access to
its data model and other proprietary information underlying its licensed
applications. There can be no assurance that the Company's means of protecting
its proprietary rights will be adequate or that the Company's competitors will
not independently develop similar or superior technology. Policing unauthorized
use of the Company's software is difficult and, while the Company is unable to
determine the extent to which piracy of its software products exists, software
piracy can be expected to be a persistent problem. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. Litigation may be necessary in the
future to enforce the Company's intellectual property rights, to protect the
Company's trade secrets or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, results of operations and financial condition.
The Company is not aware that any of its software product offerings
infringes the proprietary rights of third parties. There can be no assurance,
however, that third parties will not claim infringement by the Company with
respect to current or future products. The Company expects that software product
developers will increasingly be subject to infringement claims as the number of
products and competitors in the Company's industry segment grows
11
<PAGE>
and the functionality of products in different industry segments overlaps.
Any such claims, with or without merit, could be time-consuming, result in
costly litigation, cause product shipment delays or require the Company to
enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company or at all, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
EMPLOYEES
As of March 31, 1999, we employed 878 persons, including 324 in sales
and marketing, 124 in research and development, 104 in customer support, 179 in
professional services, and 147 in finance and administration. Of our employees,
219 are located in Europe, 24 in the Pacific Rim, and the remainder in North
America. Our future success will depend in part on our continued ability to
attract, hire and retain qualified personnel. Competition for such personnel is
intense, and there can be no assurance that we will be able to identify,
attract, and retain such personnel in the future. None of our employees is
represented by a labor union (other than statutory unions required by law in
certain European countries). We have not experienced any work stoppages and
consider our relations with our employees to be good.
ITEM 2. PROPERTIES
Our principal administrative, sales, marketing, support, research and
development and training functions are located at our headquarters facility in
San Diego, California. We currently occupy 127,110 square feet of space in San
Diego, and the underlying leases extend through August 2003. An additional
13,310 square feet of leased space at the San Diego headquarters is subleased to
JMI Services, Inc., an affiliate of the Company.
In June 1999, we entered into a series of leases covering up to
approximately 540,000 square feet of office space in San Diego, including an
option on approximately 118,000 square feet of office space. Building has
commenced on this campus location and we intend to begin moving into the
location in the fall of 1999 and continuing as buildings are completed over the
next four years. We believe that these facilities along with our current
facilities are adequate to meet our needs through the next twelve months.
We also lease office space for sales, marketing, and professional
services staff in the metropolitan areas of Atlanta, Chicago, Houston, New York,
Philadelphia, San Francisco, Washington, D.C., and Winnipeg Canada. In Europe,
we lease space in the metropolitan areas of Amsterdam, Copenhagen, Frankfurt,
London, Milan, Munich, Paris, and Sydney for international sales, customer
support, professional services, and administration.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is party to various legal proceedings or
claims, either asserted or unasserted, which arise in the ordinary course of
business. Management has reviewed pending legal matters and believes that the
resolution of such matters will not have a significant adverse effect on the
Company's financial condition or results of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No stockholder votes took place during the fourth quarter of the year
ended March 31, 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the
Company's executive officers as of March 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Stephen P. Gardner ................ 45 President, Chief Executive Officer and Director
David A. Farley.................... 43 Senior Vice President, Finance, Chief Financial Officer and Director
Matthew C. Gless................... 33 Vice President, Finance, Chief Accounting Officer
William G. Holsten................. 62 Senior Vice President, Worldwide Professional Services
Gary A. Hughes ................... 35 Vice President, Worldwide Customer Support
Frederic B. Luddy.................. 44 Vice President, North American Research and Development
Richard T. Nelson.................. 39 Vice President, Secretary, and General Counsel
Douglas S. Powanda................. 42 Executive Vice President, Worldwide Operations
Gilles Queru ...................... 40 Vice President, Corporate Development
Steven S. Spitzer.................. 40 Vice President, Channel Sales
</TABLE>
STEPHEN P. GARDNER has served as the Company's President and Chief
Executive Officer and a member of the Board of Directors since April 1998. From
January 1998 until April 1998, Mr. Gardner served as Executive Vice President
and the Company's Principal Executive Officer. From May 1997 until January 1998,
Mr. Gardner served as Vice President, Strategic Acquisitions. From May 1996
until May 1997, Mr. Gardner served as president of Thunder & Lightning Company,
an internet software start-up company. From March 1995 until May 1996, Mr.
Gardner served as president of Alpharel, Inc., a document management software
company. From March 1993 until March 1995, Mr. Gardner served as a vice
president of Data General Corporation, a manufacturer of multiuser computer
systems, peripheral equipment, communications systems, and related products.
DAVID A. FARLEY has served as the Company's Senior Vice President,
Finance and Administration since August 1998 and Chief Financial Officer and
member of the Board of Directors since October 1995. Mr. Farley served as Vice
President, Finance from October 1995 until August 1998 and Secretary of the
Company from October 1995 until February 1997. From November 1994 to November
1995, Mr. Farley was Vice President, Finance, and Chief Financial Officer and a
director of XVT Software Inc. ("XVT"), a development tools software company.
From December 1984 until October 1994, Mr. Farley held various accounting and
financial positions at BMC Software, Inc., a vendor of software utilities for
IBM mainframe computing environments ("BMC"), most recently as Chief Financial
Officer and as a director.
MATTHEW C. GLESS has served as the Company's Vice President,
Finance and Chief Accounting Officer since October 1998. From April 1996 until
October 1998, Mr. Gless served as Controller. From 1990 to April 1996, Mr.
Gless held various accounting and financial positions at BMC, most recently
as Assistant Treasurer.
WILLIAM G. HOLSTEN has served as the Company's Senior Vice President,
Worldwide Professional Services since August 1998. Mr. Holsten served as Vice
President, Professional Services from November 1995 until August 1998. From July
1994 until November 1995, Mr. Holsten was Director of Professional Services for
XVT. From August 1992 until June 1994, he was a consultant with Engineering
Software Solutions, a consulting firm co-owned by Mr. Holsten and a partner,
which provided consulting services to XVT from May 1993 to June 1994. From
October 1984 to July 1992, Mr. Holsten held a variety of positions with
Precision Visuals, Inc., a graphics software company, most recently as Director
of Professional Services.
GARY A. HUGHES has served as the Company's Vice President, Worldwide
Customer Support since April 1998. From January 1998 until April 1998 Mr. Hughes
served as Director of Worldwide Customer Support. From
13
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August 1997 until January 1998 Mr. Hughes served as Manager, Systems
Engineers. Mr. Hughes served as Alternate Channels Manager from October 1995
until August 1997, Development Manager from December 1994 until October 1995,
and Vice President, Customer Support from December 1993 until December 1994.
Mr. Hughes joined the Company in July 1989 as a customer support
representative and held various positions in the customer support department
until December 1994.
FREDERIC B. LUDDY has served as the Company's Vice President, North
American Research and Development and Chief Technology Officer since January
1998. From October 1995 until January 1998, Mr. Luddy served as Product
Architect for the Company's SERVICECENTER product suite. From April 1990 until
October 1995, Mr. Luddy served as a Product Author for the Company's
SERVICECENTER product suite.
RICHARD T. NELSON has served as the Company's General Counsel since
November 1995, as Vice President since October 1996 and as Secretary since
February 1997. From August 1991 until November 1995, Mr. Nelson was an associate
in the Houston, Texas office of Jackson & Walker LLP, a law firm.
DOUGLAS S. POWANDA has served as the Company's Executive Vice
President, Worldwide Operations since April 1999. From August 1998 until April
1999, Mr. Powanda served as Senior Vice President, Worldwide Sales and from
January 1998 until August 1998, as Vice President, Worldwide Sales. From
September 1995 until January 1998, Mr. Powanda served as Vice President,
International Sales. From June 1994 until September 1995, he served as the
Company's Vice President, North American Sales. He served in various capacities
since his employment by the Company in 1992 until June 1994, most recently as
the Company's Director of Sales for Europe.
GILLES QUERU has served as the Company's Vice President, Corporate
Development since April 1998. Mr Queru joined the Company as President of
Apsylog S.A. ("Apsylog") in September 1997 as a result of the Apsylog
Acquisition. Mr. Queru founded Apsylog in 1987 and served as its Chief Executive
Officer and Chairman of its Board of Directors until the Apsylog Acquisition.
Prior to forming Apsylog, Mr. Queru held several management positions with
Hewlett-Packard, a developer and manufacturer of computer and imaging product
hardware.
STEVEN S. SPITZER has served as the Company's Vice President, Channel
Sales since August 1997. From 1986 until August 1997, Mr. Spitzer held various
positions with FileNet Corporation, a provider of workflow, document-imaging,
and electronic document management software solutions, most recently as Vice
President, Channel Sales.
14
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our Common Stock has been traded on the Nasdaq National Market under
the symbol "PRGN" since our initial public offering in April 1997. Prior to
April 1997, there was no established public trading market for the Company's
Common Stock. The following table sets forth for the periods indicated, the high
and low closing prices reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended March 31, 1999:
Fourth Quarter....................................................... $33.625 $21.250
Third Quarter........................................................ 23.188 14.219
Second Quarter....................................................... 20.688 11.688
First Quarter........................................................ 14.250 9.125
Fiscal Year Ended March 31, 1998:
Fourth Quarter....................................................... $9.563 $6.250
Third Quarter........................................................ 8.750 6.000
Second Quarter....................................................... 10.250 7.000
First Quarter........................................................ 7.813 4.250
</TABLE>
As of May 28, 1999, there were 49,336,278 shares of PSI Common Stock
issued and outstanding held by 1,129 stockholders of record. We estimate that
there are approximately 7,494 beneficial stockholders.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
In April 1999, we issued approximately 754,000 shares of common
stock in connection with our acquisition of F. Print UK Ltd. The holders of
those shares have a demand registration right, subject to standard terms,
arising thirty days after the filing of our March 31, 1999 Form 10-K.
In March 1999, we issued approximately 762,000 shares of common
stock in connection with our acquisition of Prototype, Inc. The holders of
those shares have a demand registration right, subject to standard terms,
arising thirty days after the filing of our March 31, 1999 Form 10-K.
15
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Our selected consolidated financial data is presented below as of March
31, 1995, 1996, 1997, 1998 and 1999 and for each of the years in the five-year
period ended March 31, 1999, and derives from the consolidated financial
statements of Peregrine Systems, Inc. and its subsidiaries, which financial
statements have been audited by Arthur Andersen LLP, independent public
accountants. The consolidated financial statements as of March 31, 1998 and 1999
and for each of the years in the three-year period ended March 31, 1999, and the
report of independent public accountants thereon, are included elsewhere in this
report. The selected consolidated financial data set forth below is qualified in
its entirety by, and should be read in conjunction with, the Consolidated
Financial Statements and Notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
report.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Licenses............................... $ 9,137 $11,642 $20,472 $38,791 $ 87,362
Services............................... 10,491 12,124 14,563 23,086 50,701
------- ------- ------- ------- --------
Total revenues....................... 19,628 23,766 35,035 61,877 138,063
Costs and expenses:
Cost of licenses....................... 393 415 215 326 1,020
Cost of services....................... 3,573 3,526 4,661 10,326 31,561
Sales and marketing.................... 9,549 11,820 15,778 22,728 50,803
Research and development............... 7,089 7,742 5,877 8,394 13,919
General and administrative............. 2,943 4,529 3,816 6,077 10,482
Amortization of intangibles............ - - - 3,168 18,012
Acquired in-process research and
development.......................... - - - 6,955 26,005
------- ------- ------- ------- --------
Total costs and expenses............. 23,547 28,032 30,347 57,974 151,802
------- ------- ------- ------- --------
Operating income (loss)................... (3,919) (4,266) 4,688 3,903 (13,739)
Interest income (expense) and other....... 3,970 (286) (478) 839 664
------- ------- ------- ------- --------
Income (loss) from continuing operations
before income taxes.................... 51 (4,552) 4,210 4,742 (13,075)
Income tax expense (benefit).............. - - (1,592) 5,358 10,295
------- ------- ------- ------- --------
Income (loss) from continuing operations.. 51 (4,552) 5,802 (616) (23,370)
Loss from discontinued operations:
Loss from operations................... - 781 - - -
Loss on disposal....................... - 1,078 - - -
------- ------- ------- ------- --------
Loss from discontinued operations.... - (1,859) - -
------- ------- ------- ------- --------
Net income (loss)......................... $ 51 $(6,411) $ 5,802 $ (616) $(23,370)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Net income (loss) per share - diluted..... $ (0.26) $ 0.19 $ (0.02) $ (0.54)
------- ------- ------- --------
------- ------- ------- --------
Shares used in per share calculation...... 24,662 29,928 34,760 43,583
------- ------- ------- --------
------- ------- ------- --------
<CAPTION>
MARCH 31,
--------------------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents, and short-term $ 57 $ 437 $ 305 $21,977 $ 23,545
investments...............................
Working capital (deficit).................... (4,118) (9,697) (4,065) 23,779 25,302
Total assets................................. 9,787 13,817 19,738 83,568 207,713
Total debt................................... 1,540 649
5,208 3,866 1,117
Stockholders' equity (deficit)............... (2,197) (8,450) (2,849) 55,639 150,781
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER
"FACTORS THAT MAY AFFECT FUTURE RESULTS" UNDER "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN, OR
INCORPORATED BY REFERENCE INTO, THIS REPORT.
OVERVIEW
The Company develops, markets, and supports an integrated suite of
applications that automates the management of complex, enterprise-wide
information and infrastructure assets.
During fiscal 1998, the Company determined that customer needs required
a more comprehensive solution for control and management of their infrastructure
assets, including availability of assets, minimizing investments and expense,
consolidating data, and interfacing to enterprise applications. Accordingly, the
Company refocused its marketing strategy and product positioning to focus on
this Infrastructure Management strategy. The Company's focus on the
Infrastructure Management strategy, the Company's rapid growth, and the
Company's acquisitions have resulted in continuing efforts to redefine the
product development strategy, establish a comprehensive marketing strategy, and
strengthen the Company's financial and budgeting processes.
Executing on that strategy, in September 1997 the Company acquired
United Software, Inc., including its wholly-owned subsidiary Apsylog S.A.
("Apsylog"). During fiscal 1999, the Company continued to execute on its
Infrastructure Management strategy, making several strategic acquisitions to
expand its product offerings. In July 1998, the Company acquired Innovative Tech
Systems, Inc. ("Innovative") providing the Company with software products and
experience to address facilities infrastructure management. In September 1998,
the Company completed the acquisition of certain technology and other assets and
liabilities from International Software Solutions and related persons and
entities (collectively "ISS"), expanding the Company's information technology
infrastructure management offerings. In March 1999, the Company entered into the
fleet infrastructure management market with the acquisition Prototype, Inc.
("Prototype"). The Company's software products are currently available on most
major computer operating platforms, however for the past two years over 85% of
the Company's license sales have been attributable to UNIX and Windows NT
platforms.
The Company's revenues are derived from product licensing and services.
Services are comprised of maintenance, professional services, and training.
License fees are generally due upon the granting of the license and typically
include a one-year maintenance period as part of the license agreement. The
Company also provides ongoing maintenance services, which include technical
support and product enhancements, for an annual fee based upon the current price
of the product.
Revenues from license agreements are recognized currently, provided
that all of the following conditions are met: a noncancelable license agreement
has been signed, the product has been delivered, there are no material
uncertainties regarding customer acceptance, collection of the resulting
receivable is deemed probable and the risk of concession is deemed remote, and
no other significant vendor obligations exist. Revenues from post-contract
support services are recognized ratably over the term of the support period,
generally one year. Maintenance revenues which are bundled with license
agreements are unbundled using vendor-specific objective evidence. Consulting
revenues are primarily related to implementation services most often performed
on a time and material basis under separate service agreements for the
installation of the Company's products. Revenues from consulting and training
services are recognized as the respective services are performed.
We currently derive a substantial portion of our license revenues from
the sale of its Infrastructure Management applications and expect them to
account for a substantial portion of our revenues for the foreseeable future. As
a result, our future operating results are dependent upon continued market
acceptance of the Infrastructure
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Management strategy and applications, including future product enhancements.
Factors adversely affecting the pricing of, demand for or market acceptance
of the Infrastructure Management applications, such as competition or
technological change, could have a material adverse effect on our business,
operating results, and financial condition.
The Company conducts business overseas in a number of foreign
currencies, principally in Europe. These currencies have been relatively
stable against the U.S. dollar for the past several years. As a result,
foreign currency fluctuations have not had a significant impact on the
Company's revenues or results of operations. Although the Company currently
derives no revenues from highly inflationary economies, the Company is
expanding its presence in international markets outside Europe, including the
Pacific Rim and Latin America, whose currencies have tended to fluctuate more
relative to the U.S. Dollar. There can be no assurance that European
currencies will remain stable relative to the U.S. dollar or that future
fluctuations in the value of foreign currencies will not have a material
adverse effect on the Company's business, operating results and financial
condition. The Company has implemented a foreign currency forward hedging
program. The hedging program consists primarily of using forward-rate
currency contracts of approximately one month in length to minimize the
short-term impact of foreign currency fluctuations. Currency contracts are in
accordance with SFAS No. 52 and receive hedge accounting treatment.
Accordingly, to the extent properly hedged by obligations denominated in
local currencies, the Company's foreign operations remain subject to the
risks of future foreign currency fluctuations, and there can be no assurances
that the Company's hedging activities will adequately protect the Company
against such risk. The maximum amounts outstanding during fiscal 1999 have
been less $10 million and have been for approximately one month in duration.
To date the Company's Pacific Rim sales activity has not been
material. Accordingly, the Company's operations and financial conditions have
not been materially impacted by the recent Asian financial crisis.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated selected
consolidated statements of operations data as a percentage of total revenues.
<TABLE>
<CAPTION>
MARCH 31,
---------------------------------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Licenses..................................... 58.4% 62.7% 63.3%
Services..................................... 41.6 37.3 36.7
------ ------ ------
Total revenues............................. 100.0 100.0 100.0
Costs and expenses:
Cost of licenses............................. 0.6 0.5 0.7
Cost of services............................. 13.3 16.7 22.9
Sales and marketing.......................... 45.0 36.7 36.8
Research and development..................... 16.8 13.6 10.1
General and administrative................... 10.9 9.8 7.6
Amortization of intangible assets............ - 5.1 13.1
Acquired in-process research and development. - 11.3 18.8
------ ------ ------
Total costs and expenses................... 86.6 93.7 110.0
------ ------ ------
Operating income (loss)......................... 13.4 6.3 (10.0)
Interest income (expense) and other............. (1.4) 1.3 .5
------ ------ ------
Income (loss) from before income taxes.......... 12.0 7.6 (9.5)
Income tax expense (benefit).................... (4.5) 8.7 7.4
------ ------ ------
Net income (loss).................................. 16.5% (1.1)% (16.9)%
------ ------ ------
------ ------ ------
</TABLE>
18
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FISCAL YEARS ENDED MARCH 31, 1997, 1998, AND 1999
REVENUES
Total revenues were $35.0 million, $61.9 million, and $138.1 million
in fiscal 1997, 1998, and 1999, respectively, representing year-to-year
increases of 77% between 1997 and 1998 and 123% between 1998 and 1999.
LICENSES. License revenues were $20.5 million, $38.8 million, and $87.4
million in fiscal 1997, 1998, and 1999, respectively, representing 58%, 63%,
and 63% of total revenues in the respective periods. The increases in license
revenues are attributable to increased demand for new licenses, introduction
of new applications, licenses of products obtained in the acquisitions,
additional seats purchased by existing customers, higher average transaction
sizes, more effective corporate marketing programs, improved sales force
productivity, expansion of the Company's domestic and international sales
forces. License revenues attributable to each acquisition are included in the
Company's combined financial statements of operations subsequent to the
acquisition date.
SERVICES. Services revenues were $14.6 million, $23.1 million, and $50.7
million in fiscal 1997, 1998, and 1999, respectively, representing 42%, 37%,
and 37% of total revenues in the respective periods. The dollar increases are
attributable to renewals of maintenance agreements from the Company's
expanded installed base of customers, maintenance revenues included as part
of new licenses, and an increased number of consulting engagements related to
implementation of software from initial license agreements and training fees.
COSTS AND EXPENSES
COST OF LICENSES. Cost of licenses revenues was $215,000, $326,000, and
$1,020,000 for fiscal 1997, 1998, and 1999, respectively, representing 1%,
1%, and 1% of total license revenues in the respective periods.
COST OF SERVICES. Cost of services revenues was $4.7 million, $10.3 million,
and $31.6 million in fiscal 1997, 1998, and 1999, respectively, representing
32%, 45%, and 62% of services revenues in the respective periods. The dollar
and percentage increases in fiscal 1998 and 1999 are attributable to an
increase in customer support personnel and professional services personnel to
meet the corresponding increase in professional services revenue. The cost of
services all increased as the customer support and professional services
operations of the Apsylog, Innovative, ISS and Prototype acquisitions have
been combined in the Company's financial statements of operations from each
acquisition date. Cost of services increased as a percentage of related
revenues due largely to a greater percentage growth in lower margin
consulting revenue compared to support revenue and to a lesser extent to
increased labor and related management costs.
SALES AND MARKETING. Sales and marketing expenses were $15.8 million, $22.7
million, and $50.8 million in fiscal 1997, 1998, and 1999, respectively,
representing 45%, 37%, and 37% of total revenues in the respective periods.
The dollar increases are attributable to the significant expansion of the
North American and international sales forces, increases in direct marketing
cots, the effect of combining the Apsylog, Innovative, ISS and Prototype
acquisitions in operations from each date thereof, and moderate operating
expense increases. Sales and marketing expenses decreased as a percentage of
total revenues from fiscal 1997 to fiscal 1998 as a result of increased sales
force productivity. If the Company experiences a decrease in sales force
productivity or for any other reason a decline in revenues, it is likely that
operating margins will decline as well.
RESEARCH AND DEVELOPMENT. Research and development expenses were $5.9
million, $8.4 million, and $13.9 million in fiscal 1997, 1998, and 1999,
respectively, representing 17%, 14%, and 10% of total revenues in the
respective periods. The dollar increases from fiscal 1997 through fiscal 1999
are due primarily to the increased dollar amount of product author
commissions, increased Research and Development personnel, and the effect of
combining the Apsylog, Innovative, ISS and Prototype acquisitions in
operations from each date thereof. Research and development expenses have
decreased as a percentage of total revenues from fiscal 1997 through fiscal
1999 as a result of revenues increasing at a faster rate.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $3.8
million, $6.1 million, and $10.5 million in fiscal 1997, 1998, and 1999,
respectively, representing 11%, 10%, and 8% of total revenues in the
respective
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<PAGE>
periods. The dollar increases are attributable primarily to costs associated
with administrative personnel additions to support the Company's growth and
the effect of combining the Apsylog, Innovative, ISS and Prototype
acquisitions in operations from each date thereof.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS. Acquired in-process
research and development costs of $7.0 million and $26.0 million were
incurred in fiscal 1998 and fiscal 1999, respectively. The fiscal 1998 amount
relates to the Apsylog acquisition. The fiscal 1999 amount is attributable to
the Innovative, ISS, and Prototype acquisitions. No acquired in-process
research and development costs were incurred in fiscal year 1997.
The value of each acquisitions acquired in-process technology was
computed using discounted cash flow analysis on the anticipated income stream
of the related product sales. The value assigned to acquired in-process
technology was determined by estimating the costs to develop the purchased
in-process technology into commercially viable products, estimating the
resulting net cash flows from the projects and discounting the net cash flows
to their present value. With respect to the acquired in-process technology,
the calculations of value were adjusted to reflect the value creation efforts
of the companies acquired prior to the close of each acquisition.
The nature of the efforts required to develop acquired in-process
technology into commercially viable products principally relates to the
completion of all planning, designing and testing activities that are
necessary to establish that the products can be produced to meet their design
requirements, including functions, features and technical performance
requirements. If the project and technologies are not completed as planned,
they will neither satisfy the technical requirements of a changing market nor
be cost effective.
No assurance can be given, however, that the underlying assumptions
used to estimate expected product sales, development costs or profitability,
or the events associated with such projects, will transpire as estimated. The
Company currently believes that actual results have been consistent with
forecasts with respect to acquired in-process revenues. Because the Company
does not account for expenses by product, it is not possible to determine the
actual expenses associated with any of the acquired technologies. However,
the Company believes that expenses incurred to date associated with the
development and integration of the acquired in-process research and
development projects are substantially consistent with the Company's previous
estimates.
The Company has completed many of the original research and
development projects in accordance with the plans outlined above. The company
continues to work toward the completion of other projects. The majority of
the projects are on schedule, but delays may occur due to changes in
technological and market requirements for the Company's products. The risk
associated with these efforts are still considered high and no assurance can
be made that any upcoming products will meet with market acceptance. Delays
in the introduction of certain products may adversely affect the Company's
revenues and earnings in future quarters.
AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets amounted
to $3.2 million and $18.0 million in fiscal 1998 and 1999, respectively,
representing 5% and 13% of total revenues in the respective periods, compared
with zero for fiscal 1997. The fiscal 1998 amount is due to the amortization
of intangible assets associated with the Apsylog acquisition. The fiscal 1999
amount is due to the continued amortization of the intangible assets
associated with the Apsylog acquisition and the amortization of the
intangible assets associated with the Innovative, ISS, and Prototype
acquisitions completed during fiscal 1999.
PROVISION FOR INCOME TAXES/INCOME TAX BENEFIT
In fiscal 1997, the Company recorded an income tax benefit of $1.6
million resulting from the utilization of a portion of the Company's
available net operating loss carryforwards as an offset against taxable
income. In fiscal 1998 and 1999, the Company recorded an income tax expense
of $5.4 million and $10.3 million, respectively. The Company has recorded a
valuation allowance to partially offset the carrying value of its net
deferred tax assets due to uncertainty surrounding its realization.
Management evaluates on a quarterly basis the recoverability of the deferred
tax assets and the amount of the valuation allowance. At such time as it is
determined that it is more likely than not that all or part of the deferred
tax assets are realizable, the valuation allowance will be reduced
accordingly.
IMPACT OF INFLATION
The effect of inflation on the Company's financial position has not
been significant to date.
LIQUIDITY AND CAPITAL RESOURCES
Until April 1997, the Company financed its operations through bank
borrowings and private sales of Common Stock. In fiscal 1997, the Company's
net repayments on borrowings totaled $1.3 million. In fiscal 1997, the
Company generated $3.2 million in cash from operations, which was reduced by
a net cash use of $1.3 million by a discontinued business resulting in $1.9
million net cash provided from operations. In April 1997, the Company
completed the initial public offering of its Common Stock, which resulted in
net proceeds to the Company of $19.3 million. In fiscal 1998, the Company
generated $5.0 million in cash from operations, paid $2.4 million for capital
expenditures and repaid $5.9 million on bank and long-term debt. In fiscal
1999, the Company generated $13.7 million in cash from operations, paid $12.4
million for capital expenditures and repaid $1.2 million on long-term debt.
As of March 31, 1998 and 1999, the Company had net operating loss
carryforwards of approximately $8.5 million and $23.7 million, respectively,
for federal income tax purposes which expire beginning in 2012. Utilization
of the net operating losses may be subject to annual limitations resulting
from certain changes in ownership of the Company. At March 31, 1998 and 1999,
the Company also has foreign net operating loss carryforwards of
approximately $5.8 million and $1.6 million, respectively.
The Company believes that its current cash and short-term investment
balances and cash flow from operations will be sufficient to meet its working
capital requirements for at least the next 12 months. Although operating
activities may provide cash in certain periods, to the extent the Company
experiences growth in the future, the Company anticipates that its operating
and investing activities may use cash. Consequently, any such future growth
may require the Company to obtain equity or debt financing, which may not be
available on commercially reasonable terms or which may be dilutive.
20
<PAGE>
YEAR 2000 RISKS
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date
code fields will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, many companies' software
and computer systems may need to be upgraded or replaced in order to comply
with such Year 2000 requirements. Significant uncertainty exists in the
software industry concerning the potential effects associated with such
compliance.
The Company utilizes third party equipment and software that may not
be Year 2000 compliant and is conducting an internal audit of products
provided by outside vendors to determine if such third party products are
Year 2000 compliant. Although such audit is not yet completed, the Company
has received assurances from suppliers of all third party software that the
Company deems material to its business that such software is Year 2000
compliant. Failure of such third party equipment or software to operate
properly with regard to the Year 2000 and thereafter could require the
Company to incur unanticipated expenses to remedy any problems, which could
have a material adverse effect on its business, results of operations, and
financial condition. If key systems, or a significant number of systems, were
to fail as a result of Year 2000 problems or if the Company was to experience
delays implementing Year 2000 compliant software products, the Company could
incur substantial costs and disruption of its business, which would
potentially have a material adverse effect on its results of operations and
financial conditions.
The Company is still assessing the impact the Year 2000 issue will
have on its proprietary software products and internal information systems
and will take appropriate corrective actions based on the results of such
analyses. To date the Company has spent less than $100,000, management of the
Company has not yet determined the full costs related to achieving Year 2000
compliance but does not believe any additional costs will be material. To the
extent the cost of achieving Year 2000 compliance are material, such costs
will have a material adverse effect on its business, results of operations,
and financial condition.
In the ordinary course of its business, the Company tests and
evaluates its own software products and believes that its software products
are generally Year 2000 compliant, meaning that the use or occurrence of
dates on or after January 1, 2000 will not materially affect the performance
of such software products with respect to four digit date dependent data or
the ability of such products to correctly create, store, process, and output
information related to such data. There can be no assurances, however, that
the Company will not subsequently learn that certain of its software products
do not contain all necessary software routines and codes necessary for the
accurate calculation, display, storage, and manipulation of data involving
dates. In addition, in certain circumstances, the Company has warranted that
the use or occurrence of dates on or after January 1, 2000 will not adversely
affect the performance of its products with respect to four digit date
dependent data or the ability to create, store, process, and output
information related to such data. If any licensees experience Year 2000
problems, such licensees could assert claims for damages.
In addition, the purchasing patterns of customers and potential
customers may be affected by Year 2000 issues. Many companies are expending
significant resources to correct their current software systems for Year 2000
compliance. These expenditures may result in reduced funds available to
purchase software products such as those offered by the Company, which could
have an adverse effect on the business, results of operations, and financial
condition of the Company.
FACTORS THAT MAY AFFECT FUTURE RESULTS
THIS REPORT, INCLUDING THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTAINS FORWARD-LOOKING
STATEMENT AND OTHER PROSPECTIVE INFORMATION RELATING TO FUTURE EVENTS. THESE
FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THE FOLLOWING:
HISTORY OF OPERATING LOSSES. Through March 31, 1999, the Company has
recorded cumulative net losses of approximately $39.8 million, including
approximately $33.0 million related to the write-off of acquired
21
<PAGE>
in-process research and development in connection with the acquisitions. The
Company's applications have changed substantially since the mid-1990s. In
addition, the Company has acquired a significant number of applications
bringing its total number of applications to in excess of 20 in the last
three years. As a result, prediction of the Company's future operating
results is difficult, if not impossible. Although the Company achieved
profitability during the years ended March 31, 1998 and 1999 (excluding the
impact of the $33.0 million charge related to acquired in-process research
and development in connection with the acquisitions), there can be no
assurance that the Company will be able to remain profitable on a quarterly
or annual basis. In addition, the Company does not believe that the growth in
revenues it has experienced in recent years is indicative of future revenue
growth or future operating results.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS; LENGTHY SALES CYCLE;
SEASONALITY. The Company's quarterly operating results have varied
significantly in the past and may vary significantly in the future depending
upon a number of factors, many of which are beyond the Company's control.
These factors include, among others, the ability of the Company to develop,
introduce and market new and enhanced versions of its software on a timely
basis; market demand for the Company's software; the size, timing and
contractual terms of significant orders; the timing and significance of new
software product announcements or releases by the Company or its competitors;
changes in pricing policies by the Company or its competitors; changes in the
Company's business strategies; budgeting cycles of its potential customers;
changes in the mix of software products and services sold; reliance on
indirect sales forces like systems integrators and channels; changes in the
mix of revenues attributable to domestic and international sales; the impact
of acquisitions of competitors; seasonal trends; the cancellations of
licenses or maintenance agreements; product life cycles; software defects and
other product quality problems; and personnel changes. The Company has often
recognized a substantial portion of its revenues in the last month or weeks
of a quarter. As a result, license revenues in any quarter are substantially
dependent on orders booked and shipped in the last month or weeks of that
quarter. Due to the foregoing factors, quarterly revenues and operating
results are not predictable with any significant degree of accuracy. In
particular, the timing of revenue recognition can be affected by many
factors, including the timing of contract execution and delivery. The timing
between initial customer contact and fulfillment of criteria for revenue
recognition can be lengthy and unpredictable, and revenues in any given
quarter can be adversely affected as a result of such unpredictability. In
the event of any downturn in potential customers' businesses or the economy
in general, planned purchases of the Company's products may be deferred or
canceled, which could have a material adverse effect on the Company's
business, operating results and financial condition.
The license of the Company's software generally requires the Company
to engage in a sales cycle that typically takes approximately six to nine
months to complete. The length of the sales cycle may vary depending on a
number of factors over which the Company may have little or no control,
including the size of the transaction and the level of competition which the
Company encounters in its selling activities. During the sales cycle, the
Company typically provides a significant level of education to prospective
customers regarding the use and benefits of the Company's products. Any delay
in the sales cycle of a large license or a number of smaller licenses could
have a material adverse effect on the Company's business, operating results
and financial condition.
The Company's business has experienced and is expected to continue
to experience seasonality. The Company's revenues and operating results in
its December quarter typically benefit from purchase decisions made by the
large concentration of customers with calendar year-end budgeting
requirements, while revenues and operating results in the March quarter
typically benefit from the efforts of the Company's sales force to meet
fiscal year-end sales quotas. In addition, the Company is currently
attempting to expand its presence in international markets, including Europe,
the Pacific Rim, and Latin America. International revenues comprise a
significant percentage of the Company's total revenues, and the Company may
experience additional variability in demand associated with seasonal buying
patterns in such foreign markets.
INTEGRATION OF INNOVATIVE TECH SYSTEMS INTO PSI'S BUSINESS. Our
acquisition of Innovative, which was completed in July 1998, will require
continuing integration of Innovative into PSI. Prior to the acquisition,
Innovative and PSI were two geographically separated companies that had been
operated independently. We believe that the acquisition of Innovative will
further our strategy to provide customers with a complete infrastructure
management software solution. However, difficulties may be encountered in
integrating the product offerings, operations and technology of Innovative
with those of PSI. We may not be able to successfully complete technology
development or market new products currently in development or develop any
new products that relate to the Innovative products. Anticipated marketing,
distribution, or other operational benefits and efficiencies from the
acquisition of Innovative may not be achieved. The morale of PSI and
Innovative employees may be adversely affected as a result of the acquisition
and the resulting integration.
Integrating Innovative into our existing business may prove
difficult given that the two companies are geographically separated, have
different corporate cultures and have personnel with different business
backgrounds. We may not be able to retain a sufficient number of Innovative's
key employees. Additionally, we may have problems combining the engineering
teams from Innovative with our existing teams so that such teams will
successfully cooperate and realize any technological benefits from the
combined businesses. Sales of Innovative products may not be markedly
enhanced by the broader distribution and marketing opportunities available
through PSI. We may not be able to benefit from the broader product offerings
available as a result of the acquisition or from any other anticipated
benefits. Any failure to integrate the businesses and technologies of the
companies successfully or any failure to realize the anticipated benefits of
the acquisition could materially adversely affect our business, results of
operations, and financial condition.
In addition, if our management devotes too much time and attention
to the integration of Innovative into our existing business, this also could
materially adversely affect our business, operating results, and financial
condition.
If a significant number of Innovative customers or potential customers cancel
or do not renew their arrangements with Innovative or PSI or delay their
orders of our products, this could have materially adversely affect our
business, results of operations, and financial condition. We expect any such
affects to be felt most strongly in near-term quarters.
RISKS ASSOCIATED WITH PSI ACQUISITIONS. Since September 1997 we have
completed five acquisitions. In the future PSI may make acquisitions of, or
large investments in, other businesses that offer products, services, and
technologies that further our goal of providing integrated infrastructure
management software solutions to businesses. Our past acquisitions and any
future acquisitions or investments that PSI were to complete present risks
commonly encountered with these types of transactions. The following are
examples of such risks:
- difficulty in combining the technology, operations, or work force
of the acquired business
- disruption of our on-going businesses
- difficulty in realizing the potential financial and strategic
position of PSI through the successful integration of the
acquired business
- difficulty in maintaining uniform standards, controls, procedures,
and policies - possible impairment of relationships with employees
and clients as a result of any integration of new businesses and
management personnel
- difficulty in adding significant numbers of new employees,
including training, evaluation, coordination of effort of all
employees towards our corporate mission
- diversion of management attention
- difficulty in obtaining preferred acquisition accounting treatment
for these types of transactions; likelihood that future acquisitions
will require purchase accounting resulting in increased intangible
assets and goodwill, substantial amortizaiton of such assets and
goodwill, and a negative impact on our reported earnings
- potential dilutive effect on our earnings
The risks described above, either individually or in the aggregate,
could materially adversely affect our business, operating results, and
financial condition. We expect that future acquisitions, if any, could
provide for consideration to be paid in cash, shares of PSI common stock, or
a combination of cash and PSI common stock. However, we may not be able to
complete any such additional acquisitions in the future.
PRODUCT CONCENTRATION. The Company currently derives substantially
all of its license revenues from the sale of its Infrastructure Management
applications and expects them to account for a significant portion of the
Company's revenues for the foreseeable future. The Company's future operating
results are dependent upon continued market acceptance of its Infrastructure
Management applications, including future enhancements. Factors adversely
affecting the pricing of, demand for, or market acceptance of the Company's
Infrastructure Management applications, such as competition or technological
change, could have a material adverse effect on
22
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the Company's business, results of operations, and financial condition.
DEPENDENCE ON MARKET ACCEPTANCE OF INFRASTRUCTURE MANAGEMENT
SOFTWARE SOLUTIONS. Until recently, the Company's product strategy has
focused on integrating a broad array of IT management applications with other
traditional internal help desk applications to create an Enterprise Service
Desk capable of managing multiple aspects of an enterprise's IT structure. In
recent years, the Company has broadened its product line beyond traditional
IT infrastructure management to offer a more comprehensive product suite
capable of managing a business enterprise's IT infrastructure, physical plant
and facilities, communications infrastructure, distribution systems, and
fleets.
In recent years, the market for enterprise software solutions has
been characterized by rapid technological change, frequent new product
announcements and introductions, and evolving industry standards. In response
to advances in technology, customer requirements have become increasingly
complex, resulting in industry consolidation of product lines offering
similar or related functionality. In particular, the Company believes that a
market for integrated enterprise-wide infrastructure management solutions,
including applications for IT management, asset management, building and
facilities management, communications resource management, distribution
systems management, and fleet management, is evolving from existing
requirements for specific IT management solutions. However, the existence of
such a market is unproven. If such a market does not fully develop, this
would have a materially adverse effect on our business, results of
operations, or financial condition. Regardless of the development of a market
for integrated infrastructure management solutions, factors adversely
affecting the pricing of, demand for, or market acceptance of one or more of
the Company's Infrastructure Management applications, or if the acquisition
could have a material adverse effect on the Company's business, results of
operations, and financial condition.
As a result of rapid technology change in our industry, our position
in existing markets or other markets that we may enter can be eroded rapidly
by product advances. The life cycles of our products are difficult to
estimate. Our growth and future financial performance depends in part upon
our ability to improve existing products, develop and introduce new products
that keep pace with technological advances, meet changing customer needs, and
respond to competitive products. Our product development efforts will
continue to require substantial investments. We may not have sufficient
resources to make the necessary investments.
23
<PAGE>
DEPENDENCE ON KEY PERSONNEL. The Company's success will depend to a
significant extent on the continued service of its senior management and
certain other key employees of the Company, including selected sales,
consulting, technical and marketing personnel. Few of the Company's
employees, including its senior management, are bound by an employment or
noncompetition agreement. In addition, the Company does not generally
maintain key man life insurance on any employee. The loss of the services of
one or more of the Company's executive officers or key employees or the
decision of one or more of such officers or employees to join a competitor or
otherwise compete directly or indirectly with the Company could have a
material adverse effect on the Company's business, operating results and
financial condition.
ABILITY TO RECRUIT PERSONNEL.
EXECUTIVE OFFICERS AND KEY PERSONNEL. Our future success will likely
depend in large part on our ability to attract and retain additional highly
skilled technical, sales, management, and marketing personnel. Competition
for such personnel in the computer software industry is intense, and in the
past we have experienced difficulty in recruiting qualified personnel. New
employees generally require substantial training in the use of our products.
We may not succeed in attracting and retaining such personnel. If we do not,
our business, operating results, and financial condition could be materially
adversely affected.
24
<PAGE>
FOREIGN EMPLOYEES. To achieve our business objectives we must be
able to recruit and employ skilled technical professionals from other
countries. Any future shortage of qualified technical personnel who are
either United States citizens or otherwise eligible to work in the United
States could increase our reliance on foreign professionals. Many technology
companies have already begun to experience shortages of such personnel. Any
failure to attract and retain qualified personnel as necessary, including as
a result of limitations imposed by federal immigration laws and the
availability of visas issued thereunder, could materially adversely affect
our business and operating results. Foreign computer professionals such as
those employed by us typically become eligible for employment in the United
States by obtaining a nonimmigrant visas. The number of nonimmigrant visas is
limited by federal immigration law. Currently, Congress is considering
approving an increase in the number of visas available. We cannot predict
whether such legislation will ultimately become law. We also cannot predict
what effect any future changes in the federal immigration laws will have on
our business, operating results, or financial condition.
COMPETITION. The market for our products is highly competitive and
diverse. The technology for infrastructure management software products can
change rapidly. New products are frequently introduced and existing products
are continually enhanced. Competitors vary in size and in the scope and
breadth of the products and services offered.
EXISTING COMPETITION. We have faced competition from a number of
sources, including:
- providers of internal help desk software applications such as
Remedy Corporation and Software Artistry, Inc. (now a division of
Tivoli Systems, Inc.)
- customer interaction software companies such as Clarify Inc. and
The Vantive Corporation, whose products include internal help desk
applications
- information technology and systems management companies such as
IBM, Computer Associates International, Inc., Network Associates,
Inc. (recently formed as a result of the business combination of
McAfee Associates, Inc. and Network General Corporation), and
Hewlett-Packard Company through its acquisition of PROLIN
- providers of asset management and facilities management software
- the internal information technology departments of those companies
with infrastructure management needs
FUTURE COMPETITION. Because competitors can easily penetrate the
software market, we anticipate additional competition from other established
and new companies as the market for enterprise infrastructure management
applications develops. In addition, current and potential competitors have
established or may in the future establish cooperative relationships among
themselves or with third parties. Large software companies may acquire or
establish alliances with smaller competitors of PSI. We expect that the
software industry will continue to consolidate. It is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share.
Our ability to sell our products depends in part on their
compatibility with and support by providers of system management products,
including Tivoli, Computer Associates, and Hewlett-Packard. Both Tivoli and
Hewlett-Packard have recently acquired providers of help desk software
products. These providers of system management products may decide to close
their systems to competing vendors like PSI. They may also decide to bundle
their infrastructure management and/or help-desk software products with other
products for enterprise licenses for promotional purposes or as part of a
long-term pricing strategy. If that were to happen, our ability to sell our
products could be adversely affected. Increased competition may result from
acquisitions of help desk and other infrastructure management software
vendors by system management companies. The results of increased competition
including price reductions of our products, reduced gross margins, and
reduction of market share, could materially adversely affect our business,
operating results, and financial condition.
GENERAL COMPETITION. Some of our current and many of our potential
competitors have much greater financial, technical, marketing, and other
resources than PSI. As a result, they may be able to respond more quickly to
new or emerging technologies and changes in customer needs. They may also be
able to devote greater resources to the development, promotion, and sale of
their products than we can. We may not be able to compete successfully
against current and future competitors. In addition, competitive pressures
faced by PSI may
25
<PAGE>
materially adversely affect our business, operating results, and financial
condition.
MANAGEMENT OF GROWTH. We have grown greatly in recent periods, with
total revenues increasing from $35.0 million in fiscal 1997 to $61.9 million
in fiscal 1998, and to $138.1 million in fiscal 1999.
If we achieve our growth plans, including the integration of
Apsylog, Innovative, and the technology acquired from ISS, such growth may
burden our operating and financial systems. This burden will require large
amounts of senior management attention and will require the use of other PSI
resources. Our ability to compete effectively and to manage future growth
(and our future operating results) will depend in part on our ability to
implement and expand operational, customer support, and financial control
systems and to expand, train, and manage our employees. In particular, in
connection with the acquisitions, we will be required to integrate additional
personnel and to augment or replace existing financial and management
systems. Such integration could disrupt our operations and could adversely
affect our financial results. We may not be able to augment or improve
existing systems and controls or implement new systems and controls in
response to future growth, if any. Any failure to do so could materially
adversely affect our business, operating results, and financial condition.
CAPITAL COMMITMENT. In June 1999, we entered into a series of leases
providing approximately 540,000 square feet of office space, including an
option for approximately 118,000 square feet of space. Even excluding the
exercise of the option, the leases require minimum lease payments of
approximately $124 million over the terms of the leases, approximately twelve
years. This office space is intended for a five building (including the
option) campus setting in San Diego, CA. Construction has commenced on the
first building and the final building is scheduled for delivery in 2003. The
capital commitments, construction oversight, and moving of personnel and
facilities involved in a transaction of this type and magnitude present
numerous risks involving estimation of future events, including growth of our
business, and execution of the transaction. Examples of the risks involved
include: failure to properly estimate the growth of our business in the
future; inability to sublease excess office space that may result; disruption
of operations, and inability to match substantially-fixed lease payments with
fluctuating revenues.
EXPANSION OF DISTRIBUTION CHANNELS. We sell our products through our
direct sales force and a limited number of distributors and we provide
maintenance and support services through our technical and customer support
staff. We plan to continue to invest large amounts of resources to our direct
sales force, particularly in North America where we have recently opened
several new sales offices. In addition, we are developing additional sales
and marketing channels through system integrators and original equipment
manufacturers and other channel partners. We may not be able to attract
channel partners that will be able to market our products effectively or that
will be qualified to provide timely and cost-effective customer support and
service. If we establish distribution through such indirect channels, our
agreements with channel partners may not be exclusive. As a result, such
channel partners may also carry competing product lines. If we do not
establish and maintain such distribution relationships, this could materially
adversely affect our business, operating results, and financial condition.
INTERNATIONAL OPERATIONS. International sales represented
approximately 36% of our total revenue both in fiscal 1998 and fiscal 1999.
We currently have international sales offices in Amsterdam, Copenhagen,
Frankfurt, London, Paris, and Sydney. Our continued growth and profitability
will require continued expansion of our international operations,
particularly in Europe, Latin America, and the Pacific Rim. Accordingly, we
intend to expand our current international operations and enter additional
international markets. Such expansion will require significant management
attention and financial resources. Our international operations are subject
to a variety of risks associated with conducting business internationally,
including the following:
- fluctuations in currency exchange rates
- longer payment cycles
- difficulties in staffing and managing international operations
- problems in collecting accounts receivable
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world
- increases in tariffs, duties, price controls, or other restrictions
on foreign currencies trade barriers imposed by foreign countries
These factors could materially adversely affect our business,
operating results, and financial condition. We have only limited experience
in developing local-language versions of our products and marketing and
distributing its products internationally. We may not be able to successfully
translate, market, sell and deliver our products internationally. If we are
unable to expand our international operations successfully and in a timely
manner, our business, operating results, and financial condition could be
adversely affected.
Recent instability in the Asian-Pacific economies and financial
markets could adversely affect our business, operating results, and financial
condition in future quarters as well.
CURRENCY FLUCTUATION. A large portion of our business is conducted
in foreign currencies. Fluctuations in the value of foreign currencies
relative to the U.S. dollar have caused and will continue to cause currency
transaction gains and losses. We cannot predict the effect of exchange rate
fluctuations upon future operating results. We may experience currency losses
in the future. We currently maintain a foreign exchange hedging
26
<PAGE>
program, consisting principally of purchases of one month forward-rate
currency contracts. However, our hedging activities may not adequately
protect us against the risks associated with foreign currency fluctuations.
ISSUES RELATED TO THE EUROPEAN MONETARY CONVERSION. On January 1,
1999, certain member states of the European Economic Community (the "EEC")
fixed their respective currencies to a new currency, the euro. On that date,
the euro became a functional legal currency within these countries. During
the three years beginning on January 1, 1999, business in these EEC member
states will be conducted in both the existing national currency, such as the
French franc or deutsche mark, and the euro. Companies operating in or
conducting business in EEC member states will need to ensure that their
financial and other software systems are capable of processing transactions
and properly handling the existing currencies, as well as the euro. Our
AssetCenter product was originally developed for the European market and is
capable of managing currency data measured in euros. We are still assessing
the impact that the euro will have on our internal systems and our other
products. We will take corrective actions based on the results of such
assessment. We have not yet determined the costs related to this problem.
Issues related to the introduction of the euro may materially adversely
affect our business, operating results, and financial condition.
CONTROL BY EXISTING STOCKHOLDERS. Based on shares outstanding as of
May 31, 1999, PSI's officers, directors, and entities directly related to
such individuals together beneficially own approximately 28.6% of the
outstanding shares of PSI common stock. In particular, John J. Moores,
Chairman of PSI's board of directors, owns approximately 22.3% of the
outstanding shares. As a result, PSI's officers and directors will be able to
control most matters requiring stockholder approval, including the election
of directors and the approval of mergers, consolidations, and sales of all or
substantially all of the assets of PSI. Such concentrated share ownership may
prevent or discourage potential bids to acquire PSI unless the terms of
acquisition are approved by such officers and directors.
PRODUCT DEVELOPMENT DELAYS. We have experienced product development
delays in the past and may experience delays in the future. Difficulties in
product development could delay or prevent the successful introduction or
marketing of new or improved products. Any such new or improved products may
not achieve market acceptance. Our current or future products may not conform
to industry requirements. If we are unable, for technological or other
reasons, to develop and introduce new and improved products in a timely
manner, our business, operating results, and financial condition could be
adversely affected.
Because our software products are complex, these products may
contain errors that could be detected at any point in a product's life cycle.
In the past we have discovered software errors in certain of our products and
have experienced delays in shipment of our products during the period
required to correct these errors. Despite testing by PSI and by current and
potential customers, errors in our products may be found in the future.
Detection of such errors may result in, among other things, loss of, or delay
in, market acceptance and sales of our products, diversion of development
resources, injury to our reputation, or increased service and warranty costs.
If any of these results were to occur, our business, operating results, and
financial condition could be materially adversely affected.
DEPENDENCE ON PROPRIETARY TECHNOLOGY. Our success will be heavily
dependent upon proprietary technology. We rely primarily on a combination of
copyright and trademark laws, trade secrets, confidentiality procedures and
contractual provisions to protect our proprietary rights. Such laws provide
only limited protection. Despite precautions that we take, it may be possible
for unauthorized third parties to copy aspects of our current or future
products or to obtain and use information that we regard as proprietary. In
particular, we may provide our licensees with access to our data model and
other proprietary information underlying our licensed applications. Such
means of protecting our proprietary rights may not be adequate. Additionally,
our competitors may independently develop similar or superior technology.
Policing unauthorized use of software is difficult and, while we do not
expect software piracy to be a persistent problem, some foreign laws do not
protect our proprietary rights to the same extent as United States laws.
Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets or to determine the validity
and scope of the proprietary rights of others. Litigation could result in
substantial costs and diversion of resources to PSI and could materially
adversely affect our business, operating results, and financial condition.
RISKS OF INFRINGEMENT. While we are not aware that any of our
software product offerings infringes the proprietary rights of third parties,
third parties may claim infringement with respect to our current or future
products. We expect that software product developers will increasingly be
subject to infringement claims as the number of products and competitors in
the software industry segment grows and the functionality of products in
different
27
<PAGE>
industry segments overlaps. Any such claims, with or without merit, could be
time consuming, result in costly litigation, cause product shipment delays,
or require us to enter into royalty or licensing agreements. Royalty or
license agreements may not be available on acceptable terms or at all. As a
result, infringement claims could have a material adverse affect on our
business, operating results, and financial condition.
PRODUCT LIABILITY. Our license agreements with our customers
typically contain provisions designed to limit exposure to potential product
liability claims. Such limitation of liability provisions may, however, not
be effective under the laws of certain jurisdictions. Although we have not
experienced any product liability claims to date, the sale and support of our
products entails the risk of such claims. We may be subject to such claims in
the future. A product liability claim could materially adversely affect our
business, operating results, and financial condition.
UNDESIGNATED PREFERRED STOCK. PSI's board of directors has the
authority to issue up to 5,000,000 shares of preferred stock in one or more
series. The board of directors can fix the price, rights, preferences,
privileges, and restrictions of such preferred stock without any further vote
or action by PSI's stockholders. The issuance of preferred stock allows PSI
to have flexibility in connection with possible acquisitions and other
corporate purposes. However, the issuance of shares of preferred stock may
delay or prevent a change in control transaction without further action by
the PSI stockholders. As a result, the market price of the PSI common stock
and the voting and other rights of the holders of PSI common stock may be
adversely affected. The issuance of preferred stock may result in the loss of
voting control to others. PSI has no current plans to issue any shares of
preferred stock.
CHARTER PROVISIONS. Certain provisions of PSI's charter documents
eliminate the right of stockholders to act by written consent without a
meeting and specify certain procedures for nominating directors and
submitting proposals for consideration at stockholder meetings. Such
provisions are intended to increase the likelihood of continuity and
stability in the composition of the PSI board of directors and in the
policies set by the board. These provisions also discourage certain types of
transactions which may involve an actual or threatened change of control
transaction. These provisions are designed to reduce the vulnerability of PSI
to an unsolicited acquisition proposal. As a result, these provisions could
discourage potential acquisition proposals and could delay or prevent a
change in control transaction. These provisions are also intended to
discourage certain tactics that may be used in proxy fights. However, they
could have the effect of discouraging others from making tender offers for
PSI's shares. As a result, these provisions may prevent the market price of
PSI common stock from reflecting the effects of actual or rumored takeover
attempts. These provisions may also prevent changes in the management of PSI.
ANTITAKEOVER EFFECTS OF DELAWARE LAW. PSI is subject to the
antitakeover provisions of the Delaware General Corporation Law, which
regulates corporate acquisitions. The Delaware law prevents certain Delaware
corporations, including PSI, from engaging, under certain circumstances, in a
"business combination" with any "interested stockholder" for three years
following the date that such stockholder became an interested stockholder.
For purposes of Delaware law, a "business combination" includes, among other
things, a merger or consolidation involving PSI and the interested
stockholder and the sale of more than 10% of PSI's assets. In general,
Delaware law defines an "interested stockholder" as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a company
and any entity or person affiliated with or controlling or controlled by such
entity or person. Under Delaware law, a Delaware corporation may "opt out" of
the antitakeover provisions. PSI has not "opted out" of the antitakeover
provisions of Delaware Law.
VOLATILITY OF TRADING PRICES. We completed the initial public
offering of PSI common stock in April 1997. Prior to April 1997 no public
market existed for PSI common stock. In the past, the market price of PSI
common stock has varied greatly and the volume of PSI common stock traded has
fluctuated greatly as well. We expect such fluctuation to continue. The
fluctuation result due to a number of factors including:
- any shortfall in revenues or net income from revenues or net
income expected by securities analysts
- announcements of new products by PSI or our competitors
- quarterly fluctuations in our financial results or the results of
other software companies, including those of our direct competitors
- changes in analysts' estimates of our financial performance, the
financial performance of our competitors, or the financial
performance of software companies in general
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<PAGE>
- general conditions in the software industry - changes in prices
for our products or the products of our competitors
- changes in our revenue growth rates or the growth rates of our
competitors
- sales of large blocks of the PSI common stock conditions in the
financial markets in general
In addition, the stock market may from time to time experience
extreme price and volume fluctuations. Many technology companies in
particular have experienced such fluctuations. Often such fluctuations have
been unrelated to the operating performance of the specific companies. The
market prices of PSI's common stock may experience significant fluctuations
in the future.
RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT RISKS. The
markets for the Company's products are subject to rapid technological change,
changing customer needs, frequent new product introductions, and evolving
industry standards that may render existing products and services obsolete.
As a result, the Company's position in its existing markets or other markets
that it may enter could be eroded rapidly by product advances. The life
cycles of the Company's products are difficult to estimate. The Company's
growth and future financial performance will depend in part upon its ability
to enhance existing applications, develop and introduce new applications that
keep pace with technological advances, meet changing customer requirements
and respond to competitive products. The Company's product development
efforts are expected to continue to require substantial investments. There
can be no assurance that the Company will have sufficient resources to make
the necessary investments. The Company has in the past experienced
development delays, and there can be no assurance that the Company will not
experience such delays in the future. There can be no assurance that the
Company will not experience difficulties that could delay or prevent the
successful development, introduction or marketing of new or enhanced
products. In addition, there can be no assurance that such products will
achieve market acceptance, or that the Company's current or future products
will conform to industry requirements. The inability of the Company, for
technological or other reasons, to develop and introduce new and enhanced
products in a timely manner could have a material adverse effect on business,
results of operations, and financial condition of the Company.
Software products as complex as those offered by the Company may
contain errors that may be detected at any point in a product's life cycle.
The Company has in the past discovered software errors in certain of its
products and has experienced delays in shipment of products during the period
required to correct these errors. There can be no assurance that, despite
testing by the Company and by current and potential customers, errors will
not be found, resulting in loss of, or delay in, market acceptance and sales,
diversion of development resources, injury to their reputation, or increased
service and warranty costs, any of which could have a material adverse effect
on the business, results of operations, and financial condition of the
Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth in the Company's
Financial Statements and Notes thereto beginning at page F-1 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item concerning the Company's directors
is incorporated by reference from the section captioned "Election of
Directors" contained in the Company's Proxy Statement related to the 1998
Annual Meeting of Stockholders, which will be filed by the Company with the
Securities and Exchange Commission within 120 days of the end of the
Company's fiscal year pursuant to General Instruction G(3) of Form 10-K (the
"Proxy Statement"). The information required by this item concerning
executive officers of the Registrant is set forth in Part I of this report.
The information required by this item concerning compliance with Section
16(a) of the Securities Exchange Act of 1934 is incorporated by reference
from the section of the Proxy Statement captioned "Section 16(a) Beneficial
Ownership Reporting Compliance."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to
the information under the section captioned "Executive Compensation" contained
in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference
to the information under the section captioned "Security Ownership of
Management and Certain Beneficial Owners" contained in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference
to the information under the sections captioned "Compensation Committee
Interlocks and Insider Participation" and "Certain Transactions" contained in
the Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements are filed as part of this Report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants......................... F-2
Consolidated Balance Sheets...................................... F-3
Consolidated Statements of Operations............................ F-4
Consolidated Statements of Stockholders' Equity (Deficit)........ F-5
Consolidated Statements of Cash Flows............................ F-6
Notes to Consolidated Financial Statements....................... F-8
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
3. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
----------- -------------
<S> <C>
3.1 (c) Amended and Restated Certificate of Incorporation
filed with the Secretary of State of Delaware on
February 11, 1997.
3.2 (c) Bylaws, as amended.
4.1 (c) Specimen Common Stock Certificate.
10.1 (c) Nonqualified Stock Option Plan, as amended, and forms
of Stock Option Agreement and Stock Buy-Sell
Agreement.
10.2 (c) 1991 Nonqualified Stock Option Plan, as amended, and
forms of Stock Option Agreement and Stock Buy-Sell
Agreement.
10.3 (d) 1994 Stock Option Plan, as amended through February
6, 1997, including 1995 Stock Option Plan for French
Employees.
10.4 (d) Form of Stock Option Agreement under 1994 Stock
Option Plan, as amended through February 6, 1997.
10.5 (d) 1997 Employee Stock Purchase Plan and forms of
participation agreement thereunder.
10.6 (d) 1997 Director Option Plan.
10.7 (c) Form of Indemnification Agreement for directors and
officers.
10.8 (e) Credit Agreement dated as of July 1, 1997 by and
between the Registrant and Wells Fargo Bank, N.A.
10.9 (c) Sublease between the Registrant and JMI Services, Inc.
10.10 (c) Lease between the Registrant and the Mutual Life
Insurance Company of New York dated October 26, 1994,
as amended in August 1995, and Notifications of
Assignment dated June 14, 1996 and December 9, 1996
for the Registrant's headquarters at 12670 High Bluff
Drive, San Diego, CA.
10.11 (c) Lease between the Registrant and the Mutual Life
Insurance Company of New York dated October 26, 1994,
as amended in August 1995, and Notification of
Assignment dated December 9, 1996 for the
Registrant's headquarters at 12680 High Bluff Drive,
San Diego, CA.
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
10.14 (c) XVT Stock Option Agreement dated January 18, 1995
between the Registrant and Christopher Cole, as
amended on October 3, 1996.
10.16 (d) Restricted Stock Agreement dated November 1, 1995
between the Registrant and David Farley.
10.17 (c) Stock Option Agreement dated as of December 7, 1990
between the Registrant and Christopher Cole as
amended on October 26, 1995.
10.18 (c) Form of Stock Option Agreement under 1995 Stock
Option Plan for French Employees.
10.19 (c) Form of Stock Option Agreement under 1997 Director
Option Plan.
10.21 (f) Certificate of Amendment, dated November 3, 1997, for
amendment of the 1994 Stock Option Plan.
10.22 (b) Executive Officer Incentive Program and Form of
Restricted Stock Agreement.
10.24 (a) Lease between the Registrant and KR-Carmel Partners
LLC dated June 9, 1999 for Building No. 1 of the
Registrant's future campus in San Diego, CA.
10.25 (a) Lease between the Registrant and KR-Carmel Partners
LLC dated June 9, 1999 for Building No. 2 of the
Registrant's future campus in San Diego, CA.
10.26 (a) Lease between the Registrant and KR-Carmel Partners
LLC dated June 9, 1999 for Building No. 3 of the
Registrant's future campus in San Diego, CA.
10.27 (a) Lease between the Registrant and KR-Carmel Partners
LLC dated June 9, 1999 for Building No. 5 of the
Registrant's future campus in San Diego, CA.
10.28 (a) Lease between the Registrant and KR-Carmel Partners
LLC dated June 9, 1999 for Building No. 4 of the
Registrant's future campus in San Diego, CA.
21.1 (a) List of Subsidiaries of the Registrant.
23.1 (a) Consent of Arthur Andersen LLP Independent Public
Accountants.
24.1 (a) Power of Attorney (see page 35).
27.1 (a) Financial Data Schedule.
</TABLE>
- -----------------
(a) Filed herewith.
(b) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Registration Statement on Form S-1 (Registration
No. 333-39891), which the Securities and Exchange Commission declared
effective on November 19,1997.
(c) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Registration Statement on Form S-1 (Registration
No. 333-21483), which the Securities and Exchange Commission declared
effective on April 8, 1997.
(d) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Annual Report on Form 10-K for the Year ended
March 31, 1997.
(e) Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's original Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
(f) Incorporated by reference to Exhibit 10.23 filed with the Registrant's
Registration Statement on Form S-8, which became effective upon its
filing on January 22, 1998.
- -----------------
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<PAGE>
(b) REPORTS ON FORM 8-K
We filed a Current Report on Form 8-K/A in May 1999 to amend our
Current Report on Form 8-K filed in connection with our acquisition of
Innovative Tech Systems, Inc. filed in August 1998.
We filed a Current Report on Form 8-K/A in May 1999 to amend our
Current Report on Form 8-K filed in connection with our acquisition of
Prototype, Inc. filed in March 1999.
We filed a Current Report on Form 8-K in April 1999 in connection
with our acquisition of F. Print UK Ltd.
We filed a Current Report on Form 8-K in March 1999 in connection
with our acquisition of Prototype, Inc.
(c) EXHIBITS
See Item 14(a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES
See Item 14(a)(2) above.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to its annual report on Form
10-K to be signed on its behalf by the undersigned thereunto duly authorized
in the City of San Diego, California, this June 29, 1999.
PEREGRINE SYSTEMS, INC.
By /s/ Stephen P. Gardner
----------------------------------------------------
Stephen P. Gardner
President, Chief Executive Officer and Director
(Principal Executive Officer)
By /s/ David A. Farley
----------------------------------------------------
David A. Farley
Senior Vice President, Finance and
Administration, Chief Financial Officer and Director
(Principal Financial Officer)
By /s/ Matthew C. Gless
----------------------------------------------------
Matthew C. Gless
Vice President, Finance and
Chief Accounting Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
34
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS STEPHEN P. GARDNER AND DAVID A.
FARLEY AND EACH OF THEM ACTING INDIVIDUALLY, AS HIS OR HER ATTORNEY-IN-FACT,
EACH WITH FULL POWER OF SUBSTITUTION, FOR HIM OR HER IN ANY AND ALL
CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS REPORT ON FORM 10-K, AND
TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT ON FORM 10-K HAS BEEN SIGNED ON BEHALF OF THE REGISTRANT BY THE
FOLLOWING PERSONS AND IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen P. Gardner President, Chief Executive Officer, June 29, 1999
- ----------------------------------------- and Director (Principal Executive
(Stephen P. Gardner) Officer)
/s/ David A. Farley Senior Vice President, Finance and June 29, 1999
- ----------------------------------------- Administration, Chief Financial Officer
(David A. Farley) and Director (Principal Financial Officer)
/s/ John J. Moores Chairman of the Board of Directors June 29, 1999
- -----------------------------------------
(John J. Moores)
/s/ Christopher A. Cole Director June 29, 1999
- -----------------------------------------
(Christopher A. Cole)
/s/ Richard A. Hosley II Director June 29, 1999
- -----------------------------------------
(Richard A. Hosley II)
/s/ Charles E. Noell III Director June 29, 1999
- -----------------------------------------
(Charles E. Noell III)
/s/ Norris van den Berg Director June 29, 1999
- -----------------------------------------
(Norris van den Berg)
/s/ Thomas G. Watrous, Sr. Director June 29, 1999
- -----------------------------------------
(Thomas G. Watrous, Sr.)
</TABLE>
35
<PAGE>
PEREGRINE SYSTEMS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants............................................................ F-2
Consolidated Balance Sheets......................................................................... F-3
Consolidated Statements of Operations............................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit)........................................... F-5
Consolidated Statements of Cash Flows............................................................... F-6
Notes to Consolidated Financial Statements.......................................................... F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Peregrine Systems, Inc.:
We have audited the accompanying consolidated balance sheets of
Peregrine Systems, Inc. (a Delaware corporation) and subsidiaries as of March
31, 1998 and 1999, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in
the period ended March 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Peregrine
Systems, Inc. and subsidiaries as of March 31, 1998 and 1999, and the results
of their operations and their cash flows for each of the three years in the
period ended March 31, 1999, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
San Diego, California
April 26, 1999, except with respect to the matter discussed
in Note 6 for which the date is June 9, 1999
F-2
<PAGE>
PEREGRINE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31,
-------------------------
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 14,950 $ 21,545
Short-term investments................................................ 7,027 2,000
Accounts receivable, net of allowance for doubtful accounts of $485
and $1,248, respectively........................................ 16,761 38,947
Deferred tax assets................................................... 7,297 5,798
Other current assets.................................................. 2,905 10,370
-------- --------
Total current assets.......................................... 48,940 78,660
Property and equipment, net........................................... 5,455 15,895
Intangible assets, net and other...................................... 29,173 113,158
-------- --------
$ 83,568 $207,713
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................... $ 2,337 $ 6,795
Accrued expenses................................................... 11,103 26,460
Deferred revenue................................................... 11,570 20,048
Current portion of long-term debt.................................. 151 55
-------- --------
Total current liabilities....................................... 25,161 53,358
Long-term debt, net of current portion................................ 966 594
Deferred revenue, net of current portion.............................. 1,802 2,980
-------- --------
Total liabilities............................................. 27,929 56,932
-------- --------
Stockholders' Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no
shares issued or outstanding.................................... - -
Common stock, $0.001 par value, 200,000,000 shares authorized,
37,580,000 and 48,553,000 shares issued and outstanding,
respectively.................................................... 38 49
Additional paid-in capital......................................... 74,332 193,787
Accumulated deficit................................................ (16,423) (39,793)
Unearned portion of deferred compensation.......................... (1,493) (1,019)
Cumulative translation adjustment.................................. (553) (518)
Treasury stock, at cost............................................ (262) (1,725)
-------- --------
Total stockholders' equity.................................... 55,639 150,781
-------- --------
$ 83,568 $207,713
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
PEREGRINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Revenues:
Licenses.................................................. $20,472 $38,791 $ 87,362
Services.................................................. 14,563 23,086 50,701
------- ------- --------
Total revenues......................................... 35,035 61,877 138,063
------- ------- --------
Costs and Expenses:
Cost of licenses.......................................... 215 326 1,020
Cost of services.......................................... 4,661 10,326 31,561
Sales and marketing....................................... 15,778 22,728 50,803
Research and development.................................. 5,877 8,394 13,919
General and administrative................................ 3,816 6,077 10,482
Amortization of intangible assets......................... - 3,168 18,012
Acquired in-process research and development ............. - 6,955 26,005
------- ------- --------
Total costs and expenses............................... 30,347 57,974 151,802
------- ------- --------
Operating income (loss)................................ 4,688 3,903 (13,739)
Interest income (expense) and other.......................... (478) 839 664
------- ------- --------
Income (loss) before income taxes............................ 4,210 4,742 (13,075)
Income tax expense (benefit)................................. (1,592) 5,358 10,295
------- ------- --------
Net income (loss)............................................ $ 5,802 $ (616) $(23,370)
------- ------- --------
------- ------- --------
Basic income (loss) per share............................. $ 0.23 $ (0.02) $ (0.54)
------- ------- --------
------- ------- --------
Shares used in computing basic income (loss)
per share............................................... 25,840 34,760 43,583
------- ------- --------
------- ------- --------
Diluted income (loss) per share........................... $ 0.19 $ (0.02) $ (0.54)
------- ------- --------
------- ------- --------
Shares used in computing diluted income (loss) per share..
29,928 34,760 43,583
------- ------- --------
------- ------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
PEREGRINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNEARNED
NUMBER OF ADDITIONAL PORTION OF CUMULATIVE
SHARES COMMON PAID-IN ACCUMULATED DEFERRED TRANSLATION
OUTSTANDING STOCK CAPITAL DEFICIT COMPENSATION ADJUSTMENT
----------- ------ ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1996............ 25,796 $26 $ 14,400 $(21,609) $(1,404) $ 137
Net income...................... - - - 5,802 - -
Issuance of common stock........ 44 - 37 - - -
Compensation expense
related to restricted
stock and options............ - - - - 287 -
Deferred compensation
related to options
granted...................... - - 631 - (631) -
Equity adjustment from
foreign currency
translation.................. - - - - - (525)
------- --- -------- -------- ------- -----
Balance, March 31, 1997............ 25,840 26 15,068 (15,807) (1,748) (388)
Net loss........................ - - - (616) - -
Issuance of common stock in
IPO, net of issuance
costs of $1,181.............. 4,600 5 18,066 - - -
Stock options exercised and
restricted stock granted
(net)........................ 3,308 3 2,791 - - -
Stock issued for Apsylog
acquisition.................. 3,832 4 30,502 - - -
Stock option tax benefit...... - - 7, 905 - - -
Compensation expense
related to restricted
stock and options............ - - - - 414 -
Deferred compensation
related to options
granted...................... - - - - (159) -
Stock repurchased............. - - - - - -
Equity adjustment from
foreign currency translation.. - - - - - (165)
------- --- -------- -------- ------- -----
Balance, March 31, 1998............ 37,580 38 74,332 (16,423) (1,493) (553)
Net loss........................ - - - (23,370) - -
Stock options exercised......... 3,509 4 7,917 - - -
Stock issued for
acquisitions.................... 7,464 7 105,442 - - -
Stock option tax benefit........ - - 6,096 - - -
Compensation expense related
to restricted stock and
options......................... - - - - 474 -
Stock repurchased............... - - - - - -
Equity adjustment from
foreign currency
translation..................... - - - - - 35
------- --- -------- -------- ------- -----
Balance, March 31, 1999............ 48,553 $49 $193,787 $(39,793) $(1,019) $(518)
------- --- -------- -------- ------- -----
------- --- -------- -------- ------- -----
<CAPTION>
TOTAL
STOCKHOLDERS'
TREASURY EQUITY COMPREHENSIVE
STOCK (DEFICIT) INCOME/LOSS
-------- ------------ -------------
<S> <C> <C> <C>
Balance, March 31, 1996............ $ - $ (8,450) $ -
Net income...................... - 5,802 5,802
Issuance of common stock........ - 37 -
Compensation expense
related to restricted
stock and options............ - 287 -
Deferred compensation
related to options
granted...................... - - -
Equity adjustment from
foreign currency
translation.................. - (525) (525)
------- -------- --------
Balance, March 31, 1997............ - (2,849) 5,277
------- -------- --------
------- -------- --------
Net loss........................ - (616) (616)
Issuance of common stock in
IPO, net of issuance
costs of $1,181.............. - 18,071 -
Stock options exercised and
restricted stock granted
(net)........................ - 2,794 -
Stock issued for Apsylog
acquisition.................. - 30,506 -
Stock option tax benefit...... - 7,905 -
Compensation expense
related to restricted
stock and options............ - 414 -
Deferred compensation
related to options
granted...................... - (159) -
Stock repurchased............. (262) (262) -
Equity adjustment from
foreign currency translation.. - (165) (165)
------- -------- --------
Balance, March 31, 1998............ (262) 55,639 (781)
------- -------- --------
------- -------- --------
Net loss........................ - (23,370) (23,370)
Stock options exercised......... - 7,921 -
Stock issued for
acquisitions.................... - 105,449 -
Stock option tax benefit........ - 6,096 -
Compensation expense related
to restricted stock and
options......................... - 474 -
Stock repurchased............... (1,463) (1,463) -
Equity adjustment from
foreign currency
translation..................... - 35 35
------- -------- --------
Balance, March 31, 1999............ $(1,725) $150,781 $(23,335)
------- -------- --------
------- -------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
PEREGRINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................... $ 5,802 $ (616) $(23,370)
Adjustments to reconcile net income (loss) to net cash, excluding
effects of acquisitions, provided by operating activities:
Depreciation and amortization.................................. 1,838 4,901 21,776
Deferred tax benefit........................................... (1,752) (856) 1,499
Charge for acquired research and development................... - 6,955 26,005
Increase (decrease) in cash resulting from changes in:
Accounts receivable.......................................... (3,936) (7,164) (18,984)
Financed receivables......................................... (1,182) 1,182 -
Other current assets......................................... (163) (1,116) (7,177)
Accounts payable............................................. (499) 674 2,939
Accrued expenses............................................. 2,458 (1,767) 6,390
Deferred revenue............................................. 1,381 1,361 4,874
Other........................................................ (705) 534 (245)
------- -------- --------
3,242 4,088 13,707
------- -------- --------
Net cash used by discontinued business..................... (1,303) (170) -
------- -------- --------
Net cash provided by operating activities............ 1,939 3,918 13,707
------- -------- --------
Cash flows from investing activities:
Purchases of short-term investments................................. - (45,732) (49,000)
Maturities of short-term investments................................ - 38,705 54,027
Purchases of property and equipment................................. (566) (2,427) (12,426)
Proceeds from sale of product line.................................. 700 - -
Cash acquired in acquisitions....................................... - 582 103
Cash expenditures related to acquisitions........................... - (2,410) (11,231)
------- -------- --------
Net cash provided by (used in) investing activities..... 134 (11,282) (18,527)
------- -------- --------
Cash flows from financing activities:
Repayments on bank line of credit, net.............................. (855) (3,387) -
Repayments of long-term debt........................................ (487) (2,541) (1,174)
Issuance of common stock and related tax benefit.................... 37 28,770 14,017
Treasury stock purchased ........................................... - (262) (1,463)
Principal payments under capital lease obligation................... (375) (406) -
------- -------- --------
Net cash provided by (used in) financing activities........ (1,680) 22,174 11,380
------- -------- --------
Effect of exchange rate changes on cash................................ (525) (165) 35
------- -------- --------
Net increase (decrease)................................................ (132) 14,645 6,595
Cash and cash equivalents, beginning of year........................... 437 305 14,950
------- -------- --------
Cash and cash equivalents, end of year................................. $ 305 $ 14,950 $ 21,545
------- -------- --------
------- -------- --------
</TABLE>
F-6
<PAGE>
PEREGRINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1997 1998 1999
---- ------- --------
<S> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest......................................................... $400 $ 38 $ 26
Income taxes..................................................... $ 27 $ 622 $ 155
Supplemental Disclosure of Noncash Investing and Financing Activities:
Stock issued as consideration for acquisitions.................... $ - $30,506 $105,449
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE>
PEREGRINE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Peregrine Systems, Inc. ("Peregrine" or the "Company") is a leading
provider of Infrastructure Management solutions. Infrastructure Management
unites the unique disciplines of the Consolidated Service Desk, Enterprise
Asset Management, Facilities Management and Fleet Management through
utilizing common shared data. The Company develops, markets, and supports its
various Infrastructure Management applications. These products are designed
to meet the Infrastructure Management requirements of large organizations and
are distinguished by their breadth of functionality and their ability to be
deployed across all major hardware platforms and network operating systems
and protocols. The Company sells its software and services in North America
and internationally through both a direct sales force and through business
partnerships.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Peregrine Systems, Inc. and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Certain amounts
previously reported have been reclassified in order to ensure comparability
among the years reported.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company generates revenues from licensing the rights to use its
software products primarily to end users. The Company also generates revenues
from post-contract support (maintenance), consulting and training services
performed for customers who license its products. The Company does not
provide professional services unrelated to its products.
Revenues from software license agreements are recognized currently,
provided that all of the following conditions are met: a noncancelable
license agreement has been signed, the software has been delivered, there are
no material uncertainties regarding customer acceptance, collection of the
resulting receivable is deemed probable and the risk of concession is deemed
remote, and no other significant vendor obligations exist. Revenues from
maintenance services are recognized ratably over the term of the maintenance
period, generally one year. Maintenance revenues which are bundled with
license agreements are unbundled using vendor specific objective evidence.
Consulting revenues are primarily related to implementation services
performed on a time and material basis under separate service agreements for
the installation of the Company's software products. Revenues from consulting
and training services are recognized as the respective services are performed.
Cost of license revenues consists primarily of amounts paid to
third-party vendors, product media, manuals, packaging materials, personnel
and related shipping costs. Cost of maintenance and services revenues
consists primarily of salaries, benefits, and allocated overhead costs
incurred in providing telephone support, consulting services, and training to
customers.
Deferred revenue primarily relates to maintenance fees, which have
been paid by customers in advance of the performance of these services.
F-8
<PAGE>
BUSINESS RISK AND CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk principally consist of trade and other
receivables. The Company performs ongoing credit evaluations of its customers
financial condition. Management believes that the concentration of credit
risk with respect to trade receivables is further mitigated as the Company's
customer base consists primarily of Fortune 1000 companies. The Company
maintains reserves for credit losses and such losses historically have been
within management expectations.
A significant portion of the Company's revenues are derived from its
Infrastructure Management products and related services. Any factor adversely
affecting the pricing of, demand for or market acceptance of these products
could have a material adverse effect on the Company's business, financial
condition and results of operations.
CASH AND CASH EQUIVALANTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash equivalents
primarily consist of overnight repurchase agreements and money market
accounts. The carrying amount reported for cash and cash equivalents
approximates its fair value.
SHORT-TERM INVESTMENTS
The company accounts for its short-term investments in accordance
with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS No. 115). Short-term
investments consist of auction rate preferred stock with original maturities
at date of purchase beyond three months. These securities are classified as
available-for-sale and are carried at market. The amount of gross unrealized
gains or gross unrealized losses were not significant.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of certain of the Company's financial
instruments, including accounts receivable, accounts payable and accrued
expenses approximates fair value due to their short maturities. Based on
borrowing rates currently available to the Company for loans with similar
terms, the carrying value of its notes payable approximates fair value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over estimated
useful lives, generally three to five years for furniture and equipment.
Amortization of leasehold improvements is provided using the straight-line
method over the lesser of the useful lives of the assets or the terms of the
related leases.
Maintenance and repairs are charged to operations as incurred. When
assets are sold, or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included
in operations for the applicable period.
LONG- LIVED ASSETS
The Company evaluates potential impairment of long-lived assets and
long-lived assets to be disposed of in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 establishes
procedures for review of recoverability, and measurement of impairment if
necessary, of long-lived assets and certain identifiable intangibles held and
used by an entity. SFAS No. 121 requires that those assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. SFAS No. 121 also
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less
estimated selling costs. As of March 31, 1999, management believes that there
has not been any impairment of the Company's long-lived assets or other
identifiable intangibles.
F-9
<PAGE>
INTANGIBLE ASSETS
Intangible assets are comprised of purchase price in excess of
identifiable assets associated with the Company's acquisitions. Intangible
assets are carried at cost less accumulated amortization, which is being
amortized on a straight line basis over five years.
CAPITALIZED COMPUTER SOFTWARE
In accordance with Statement of Financial Accounting Standards No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed", software development costs are capitalized from the time
the product's technological feasibility has been established until the
product is released for sale to the general public. During the three years in
the period ended March 31, 1999, no software development costs were
capitalized as the costs incurred between achieving technological feasibility
and product release were minimal. Research and development costs, including
the design of product enhancements, are expensed as incurred.
FOREIGN CURRENCY TRANSLATION AND RISK MANAGEMENT
Assets and liabilities of the Company's foreign operations are
translated into United States dollars at the exchange rate in effect at the
balance sheet date, and revenue and expenses are translated at the average
exchange rate for the period. Translation gains or losses of the Company's
foreign subsidiaries are not included in operations but are reported as a
separate component of stockholders' equity. The functional currency of those
subsidiaries is the primary currency in which the subsidiary operates. Gains
and losses on transactions in denominations other than the functional
currency of the Company's foreign operations, while not significant in
amount, are included in the results of operations.
The Company enters into forward exchange contracts of approximately
one month in length to minimize the short-term impact of foreign currency
fluctuations on assets and liabilities denominated in currencies other than
the functional currency of the reporting entity. All foreign exchange forward
contracts are designated as and effective as a hedge and are inversely
correlated to the hedged item as required by generally accepted accounting
principles.
Gains and losses on the contracts are included in other income and
offset foreign exchange gains or losses from the revaluation of intercompany
balances or other current assets and liabilities denominated in currencies
other than the functional currency of the reporting entity.
INCOME TAXES
Deferred taxes are provided utilizing the liability method as
prescribed by SFAS No. 109, "Accounting for Income Taxes," whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss carryforwards, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
The Company applies the provisions of Statement of Financial
Accounting Standards No. 128 ("SFAS No. 128"), "Earnings per share." SFAS
No.128 requires companies to compute net income (loss) per share under two
different methods, basic and diluted per share data for all periods for which
an income statement is presented. Basic earnings per share was computed by
dividing net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflects the
potential dilution that could occur if the income were divided by the
weighted-average number of common shares and potential dilutive common shares
from outstanding stock options for the year ended March 31, 1997. Potential
dilutive common shares were calculated using the treasury stock method and
represent incremental shares issuable upon exercise of the Company's
outstanding options. For the years ended March 31, 1998 and March 31, 1999,
the diluted loss per share calculation excludes
F-10
<PAGE>
effects of outstanding stock options as such inclusion would be
anti-dilutive. The following table provides reconciliation of numerators and
denominators used in calculating basic and diluted income (loss) per share
for the years presented.
<TABLE>
<CAPTION>
For the Years Ended March 31,
--------------------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Net income (loss) $ 5,802 $ (616) $(23,370)
------- ------- --------
------- ------- --------
BASIC INCOME (LOSS) PER SHARE:
Weighted average common shares outstanding............ 25,840 34,760 43,583
------- ------- --------
Basic income (loss) per share............................... $ 0.23 $ (0.02) $ (0.54)
------- ------- --------
------- ------- --------
DILUTED INCOME (LOSS) PER SHARE:
Weighted average common shares outstanding............ 25,840 34,760 43,583
Common stock options outstanding (unless anti-dilutive) 4,088 - -
------- ------- --------
Total weighted average common shares and equivalents........ 29,928 34,760 43,583
------- ------- --------
Diluted income (loss) per share............................. $ 0.19 $ (0.02) $ (0.54)
------- ------- --------
------- ------- --------
</TABLE>
STOCK SPLIT
On January 29, 1999, the Company's Board of Directors declared a
two-for-one stock split. This stock split was effected in the form of a stock
dividend. Stockholders of record received one share of common stock for each
share held. All stock related data in the consolidated financial statements
and related notes reflect this stock split for all periods presented.
COMPREHENSIVE INCOME
The Company has implemented Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income". This statement requires
that all items that are required to be recognized under accounting standards
as components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements.
Accordingly, in addition to reporting net income (loss) under the current
rules, the Company is required to display the impact of any fluctuations in
its foreign currency translation adjustments as a component of comprehensive
income and to display an amount representing total comprehensive income for
each period presented. The Company has presented the required information in
the consolidated statements of stockholders' equity (deficit).
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee issued
AICPA Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). This statement
provides guidance on accounting for the costs of computer software developed
or obtained for internal use and identifies characteristics of internal use
software as well as assists in determining when computer software is for
internal use. SOP 98-1 is effective for fiscal years beginning after December
15, 1998, with earlier application permitted. The Company has not determined
the impact of the adoption of SOP 98-1 as this is highly dependent upon the
nature, timing and extent of future internal use software development.
In March 1998, the Accounting Standards Executive Committee issued
AICPA Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities." This Statement of Position provides guidance on the financial
reporting of start-up costs and organization costs. It requires that the cost
of start-up activities and organization costs be expensed as incurred. The
SOP is effective for financial statements for fiscal years beginning after
December 15, 1998. The Company does not expect the adoption of this SOP to
have a material impact on its financial position or results of operations.
F-11
<PAGE>
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement changes the
previous accounting definition of derivative - which focused on freestanding
contracts such as options and forwards (including futures and
swaps)-expanding it to include embedded derivatives and many commodity
contracts. Under the Statement, every derivative is recorded in the balance
sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in a derivative's fair value be recognized
currently in operations unless specific hedge accounting criteria are met.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999.
Earlier application is allowed as of the beginning of any quarter beginning
after issuance. The Company does not anticipate that the adoption of SFAS 133
will have a material impact on its financial position or results of
operations.
The Company has adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information" and has determined that it operates in one business segment
dedicated to Infrastructure Management software (see Note 9, Geographic
Operations).
2. ACQUISITIONS
In September 1997, the Company completed the acquisition of all of
the outstanding stock of Apsylog, a developer of decision software solutions
designed for asset management. The consideration given for the stock of
Apsylog included 3,832,440 shares of Company Common Stock valued at a total
purchase price of $38.6 million, including merger costs and assumed
liabilities.
On July 30, 1998, the Company completed the acquisition of
Innovative Tech Systems, Inc. ("Innovative"), a developer of facilities
infrastructure management software. The acquisition was structured as a
tax-free stock-for-stock exchange resulting in the issuance of 5,918,328
shares of Company Common Stock for all outstanding shares of Innovative
Common Stock valued at a total purchase price of $85.9 million, including
merger costs and assumed liabilities.
On September 23, 1998, the Company completed the acquisition of
certain technology and other assets and liabilities from International
Software Solutions and related persons and entities (collectively "ISS"), a
developer of remote management software. The Company issued 784,160 shares of
Company Common Stock in exchange for these assets valued at a total purchase
price, including merger costs, of $15.6 million.
On March 2, 1999, the Company completed the acquisition of
Prototype, Inc. ("Prototype"), a developer of fleet infrastructure management
software. The Company issued 761,141 shares of Company Common Stock and $1.1
million in cash for all of the outstanding shares of Prototype. The total
purchase price, including merger costs and assumed liabilities, totaled $25.9
million.
ACCOUNTING TREATMENT OF ACQUISTIONS
All of the transactions above were accounted for under the purchase
method of accounting and, accordingly, the assets, including in-process
research and development, and liabilities, were recorded based on their fair
values at the date of acquisition and the results of operations for each of
the acquisitions have been included in the financial statements for the
periods subsequent to acquisition.
F-12
<PAGE>
The Company allocated the fair values of the net assets acquired
between acquired in-process research and development, developed technology
and purchase price in excess of identifiable assets. The results of the
allocation of values between the intangible assets are as follows:
<TABLE>
<CAPTION>
In thousands:
ACQUIRED IN-PROCESS PURCHASE PRICE IN EXCESS
ACQUISITION RESEARCH & DEVELOPMENT OF THE ACQUIRED ASSETS TOTAL
- ----------- ---------------------- ------------------------ -----
<S> <C> <C> <C>
FISCAL 1998
Apsylog $ 6,955 $ 31,684 $ 38,639
-------- -------- --------
$ 6,955 $ 31,684 $ 38,639
-------- -------- --------
-------- -------- --------
FISCAL 1999
Innovative $18,907 $ 67,032 $ 85,939
ISS 2,959 12,614 15,573
Prototype 4,139 21,728 25,867
------- -------- --------
$26,005 $101,374 $127,379
-------- -------- --------
-------- -------- --------
</TABLE>
The value of each acquisition's acquired in-process technology was
computed using a discounted cash flow analysis on the anticipated income
stream of the related product sales. The value assigned to acquired
in-process technology was determined by estimating the costs to develop the
purchased in-process technology into commercially viable products, estimating
the resulting net cash flows from the projects and discounting the net cash
flows to their present value. With respect to the acquired in-process
technology, the calculations of value were adjusted to reflect the value
creation efforts of the companies acquired prior to the close of each
acquisition.
The nature of the efforts required to develop acquired in-process
technology into commercially viable products principally relates to the
completion of all planning, designing and testing activities that are
necessary to establish that the products can be produced to meet their design
requirements, including functions, features and technical performance
requirements. If the research and development project and technologies are
not completed as planned, they will neither satisfy the technical
requirements of a changing market nor be cost effective.
No assurance can be given, however, that the underlying assumptions
used to estimate expected product sales, development costs or profitability,
or the events associated with such projects, will transpire as estimated. The
Company currently believes that actual results have been consistent with
forecasts with respect to acquired in-process revenues. Because the Company
does not account for expenses by product, it is not possible to determine the
actual expenses associated with any of the acquired technologies. However,
the Company believes that expenses incurred to date associated with the
development and integration of the acquired in-process research and
development projects are substantially consistent with the Company's previous
estimates.
The Company has completed many of the original research and
development projects in accordance with the plans outlined above. The company
continues to work toward the completion of other projects. The majority of
the projects are on schedule, but delays may occur due to changes in
technological and market requirements for the Company's products. The risks
associated with these efforts are still considered high and no assurance can
be made that any upcoming products will meet with market acceptance. Delays
in the introduction of certain products may adversely affect the Company's
revenues and earnings in future quarters.
During fiscal years 1998 and 1999 the Company expended $2.4 million
and $11.2 million, respectively, for acquisition costs and liabilities
assumed related to the acquisitions detailed above.
PRO FORMA FINANCIAL INFORMATION
The following table presents the unaudited pro forma results
assuming the Company had acquired each of Apsylog and Innovative at
(operations of ISS and Prototype are insignificant) the beginning of fiscal
years 1998 and 1999, respectively. Net loss and diluted loss per share
amounts have been adjusted to exclude acquired in process research and
development write-offs of $7 million and $26 million, in fiscal years 1998
and 1999, respectively and to include goodwill amortization of $26 million
and reflect the two-for-one split of the Company's common stock for both
periods presented. This information may not necessarily be indicative of the
future combined results of the Company.
F-13
<PAGE>
In thousands, except per share data:
<TABLE>
<CAPTION>
PROFORMA
FOR THE YEARS ENDED MARCH 31,
-----------------------------
(UNAUDITED)
1998 1999
-------- --------
<S> <C> <C>
Revenues $ 78,254 $144,063
Net loss $(16,936) $(14,321)
Basic loss per share $ (0.41) $ (0.31)
Diluted loss per share $ (0.41) $ (0.31)
</TABLE>
3. BALANCE SHEET COMPONENTS
Other current assets consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1998 1999
------- --------
<S> <C> <C>
Prepaid expenses ............................................... $ 2,661 $ 4,928
Other........................................................... 244 5,442
------- --------
$ 2,905 $ 10,370
------- --------
------- --------
</TABLE>
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1998 1999
------- --------
<S> <C> <C>
Furniture and equipment............................................... $10,219 $ 23,075
Leasehold improvements................................................ 2,249 5,035
------- --------
12,468 28,110
Less accumulated depreciation......................................... (7,013) (12,215)
------- --------
$ 5,455 $ 15,895
------- --------
------- --------
</TABLE>
Intangible assets, net and other consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1998 1999
------- --------
<S> <C> <C>
Intangible assets and other........................................... $32,341 $134,338
Less accumulated amortization......................................... (3,168) (21,180)
------- --------
$29,173 $113,158
------- --------
------- --------
</TABLE>
Accrued expenses consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1998 1999
------- --------
<S> <C> <C>
Employee compensation.................................................. $ 2,745 $ 7,370
Commissions............................................................ 3,494 6,066
Taxes.................................................................. 1,843 5,030
Acquisition related liabilities........................................ 1,112 3,379
Other.................................................................. 1,909 4,615
------- --------
$11,103 $ 26,460
------- --------
------- --------
</TABLE>
F-14
<PAGE>
4. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1998 1999
------ ----
<S> <C> <C>
Note payable to lessor. Unsecured; interest at 8%. Monthly
payments of principal and interest of $4 through November 2003...... $ 227 $194
French Government Agency loans and other............................... 890 455
------ ----
1,117 649
Less current portion................................................... (151) (55)
------ ----
$ 966 $594
------ ----
------ ----
</TABLE>
Scheduled fiscal year principal payments on long-term debt due as of
March 31, 1999 are as follows (in thousands):
<TABLE>
<S> <C>
2000....................................................................................... $ 55
2001....................................................................................... 66
2002....................................................................................... 372
2003....................................................................................... 128
2004....................................................................................... 28
----
$649
----
----
</TABLE>
5. INCOME TAXES
The tax effects of temporary differences that give rise to
significant portions of the net deferred tax assets are as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 31,
-----------------------------
1998 1999
------ -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ................................. $5,497 $ 3,148
Section 197 Intangible Assets .................................... - 3,143
Deferred maintenance revenue ..................................... 1,452 2,752
Other ............................................................ 1,324 1,030
------ -------
8,273 10,073
Deferred tax liabilities:
Depreciation ..................................................... (168) (324)
------ -------
8,105 9,749
Valuation allowance ................................................. (808) (3,951)
------ -------
Net deferred tax assets ............................................. $7,297 $ 5,798
------ -------
------ -------
</TABLE>
As of March 31, 1999, the Company had net operating loss
carryforwards of approximately $23.7 million for domestic federal income tax
reporting purposes, which expire beginning in 2012. Approximately $15.6
million of the net operating loss carryforwards relate to the exercise or
early disposition of stock options which will result in an increase in
additional paid-in capital and a decrease in income taxes payable at such
time that the tax benefit is realized. In certain circumstances, as specified
in the Internal Revenue Code, a fifty percent or more ownership change by
certain combinations of the Company's stockholders during any three year
period could result in a limitation on the Company's ability to utilize
portions of its domestic net operating loss carryforwards. As of March 31,
1999, the Company also had foreign net operating loss carryforwards of
approximately $1.6 million, which can be carried forward indefinitely.
A valuation allowance in the amount set forth in the table above has
been recorded to properly reserve for a portion of the deferred tax assets
due to uncertainties surrounding their realization. Management evaluates on a
quarterly basis the recoverability of the deferred tax assets and the amount
of the valuation allowance. At such time as it is determined that it is more
likely than not that the deferred tax assets are realizable, the valuation
allowance will be reduced.
F-15
<PAGE>
A reconciliation of expected income taxes using the statutory
federal income tax rate to the effective income tax provision is as follows
(in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------------
1997 1998 1999
------- ------ -------
<S> <C> <C> <C>
Federal tax provision (benefit) at the statutory rate .............. $ 980 $1,612 $(4,446)
State tax provision (benefit) , net of federal benefit (detriment) . 173 237 (654)
Foreign earnings taxed at lower rates .............................. - - (912)
Tax credits ....................................................... - - (860)
Non-deductible acquired in-process R&D and amortization of
purchased intangibles............................................ - 3,943 14,023
Other .............................................................. 140 15 1
Change in valuation allowance ...................................... (2,885) (449) 3,143
------- ------ -------
Total income tax provision (benefit) ............................... $(1,592) $5,358 $10,295
------- ------ -------
------- ------ -------
</TABLE>
The amounts stated in the table above for the years ended March
31, 1998 and 1999 include expenses (a significant portion of which are not
tax deductible) of $10,123,000 and $44,016,219, respectively, related to the
acquisition of in-process research and development and amortization of
purchased intangibles. Excluding these acquisition-related expenses, the
overall effective tax rate for the years ended March 31, 1998 and 1999 was
37.0 percent and 33.3 percent, respectively.
The income tax provision (benefit) consisted of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Current
Federal ......................................................... $ 76 $5,197 $ 5,304
State ........................................................... 84 1,017 792
Foreign ......................................................... - - 2,700
------- ------- -------
Total current ...................................................... 160 6,214 8,796
------- ------- -------
Deferred
Federal ......................................................... (1,523) (728) 1,262
State ........................................................... (229) (128) 188
Foreign ......................................................... - 49
------- ------- -------
Total deferred ..................................................... (1,752) (856) 1,499
------- ------- -------
Total provision (benefit) .......................................... $(1,592) $ 5,358 $10,295
------- ------- -------
------- ------- -------
</TABLE>
The Company realizes an income tax benefit from the exercise or
early disposition of certain stock options. This benefit results in a
decrease in current income taxes payable and an increase in additional
paid-in capital at the time the benefit is realized. The amount of the
benefit realized for the years ended March 31, 1998 and 1999 was $7,905,000
and $6,096,000, respectively.
The income tax provision (benefit) was based upon income before
taxes under the following jurisdictions:
<TABLE>
<CAPTION>
MARCH 31,
------------------------------------
1997 1998 1999
------- ------ -------
<S> <C> <C> <C>
Domestic ........................................................... $ 3,513 $ (772) $(21,041)
Foreign ............................................................ 697 5,514 7,966
------- ------ -------
Total .............................................................. $ 4,210 $4,742 $(13,075)
------- ------ -------
------- ------ -------
</TABLE>
F-16
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
The Company leases certain buildings and equipment under
noncancelable operating lease agreements. The leases generally require the
Company to pay all executory costs such as taxes, insurance and maintenance
related to the leased assets. Certain of the leases contain provisions for
periodic rate escalations to reflect cost-of-living increases. Rent expense
for such leases totaled approximately $2,051,000, $2,565,000 and $4,570,000
in fiscal 1997, 1998, and 1999, respectively.
Future minimum lease payments under noncancelable operating leases,
at March 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
2000......................................................................... 6,508
2001......................................................................... 11,465
2002......................................................................... 13,589
2003......................................................................... 13,567
2004......................................................................... 12,215
Thereafter................................................................... 97,225
---------
Total minimum lease payments........................................... $154,569
---------
---------
</TABLE>
The Company subleases office space at its corporate headquarters to
an affiliated company. The term of the sublease is from June, 1996 to
October, 2003 and requires monthly rental payments of approximately $17,000.
On June 9, 1999, the Company entered into a series of leases
covering up to approximately 540,000 square feet of office space in San
Diego, including an option on approximately 118,000 square feet of office
space. Construction has commenced on this campus location and the Company
intends to begin moving into the location in the fall of 1999 as construction
is completed over the next four years. The future minimum lease commitments
detailed above contain the Company's future commitments of approximately
$124 million associated with these leases. To the extent the Company does not
require all of the space under these leases, it has the right to sublet
excess space.
The Company pays commissions to employees who have authored certain
of the Company's products based on a percentage of the respective product's
sales. Commissions paid under such agreements are included in research and
development expense in the accompanying consolidated statements of operations
and were approximately $1,100,000, $1,700,000, and $3,200,000 for fiscal
1997, 1998, and 1999, respectively.
The Company is involved in various legal proceedings and claims
arising in the ordinary course of business, none of which, in the opinion of
management, is expected to have a material adverse effect on the Company's
consolidated financial position or results of operations.
7. STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company has authorized 5,000,000, $0.001 par value, undesignated
preferred shares, none of which were issued or outstanding at March 31, 1998
and 1999. The Board of Directors has the authority to issue the preferred
stock in one or more series and to fix the price, rights, preferences,
privileges, and restrictions, including dividend rights and rates, conversion
and voting rights, and redemption terms and pricing without any further vote
or action by the Company's stockholders.
STOCK OPTIONS
The Company has four stock option plans, the Nonqualified Stock
Option Plan ("1990 Plan"), the 1991 Nonqualified Stock Option Plan ("1991
Plan"), the 1994 Stock Option Plan ("1994 Plan"), and the 1997 Director
Option Plan (the "Director Plan").
F-17
<PAGE>
The Company may no longer grant options under the 1990 and 1991
Plans. The Company may grant up to 14,178,768 and 500,000 options under the
1994 Plan and Director Plan, respectively. Under the Plans, the option
exercise price is determined by the Board of Directors on a per-grant basis,
but shall not be less than fair market value. Option grants under all four
stock option plans generally vest over four years. During December 1996, the
Company recorded $631,000 in deferred compensation related to the grant of
370,000 options. This deferred compensation is being amortized on a straight
line basis to expense over the options' four year vesting period.
The following table summarizes the Company's four stock option plans
at March 31, 1997, 1998, and 1999 as well as changes during the periods
then ended. The table excludes all option plans acquired as the result of the
Company's acquisitions during the periods presented, which represent options
to purchase 379,000 shares at March 31, 1999.
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE
(000) EXERCISE PRICE (000) EXERCISE PRICE (000) EXERCISE PRICE
------ -------------- ------ -------------- ------ --------------
MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1999
----------------------------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 7,194.8 $0.90 8,122.6 $1.04 7,196.8 $ 3.39
-------- ----- -------- ----- -------- ------
Granted....................... 1,979.8 1.62 3,257.6 6.80 5,958.6 14.86
Exercised..................... (45.6) 0.82 (3,612.4) 0.75 (2,916.1) 1.59
Canceled...................... (1,006.4) 0.70 (571.0) 6.13 (987.9) 3.34
-------- ----- -------- ----- -------- ------
Outstanding, end of year...... 8,122.6 $1.04 7,196.8 $3.39 9,251.4 $11.36
-------- ----- -------- ----- -------- ------
-------- ----- -------- ----- -------- ------
Exercisable, end of year...... 4,343.4 $0.74 2,321.0 $1.04 1,019.8 $ 4.18
-------- ----- -------- ----- -------- ------
-------- ----- -------- ----- -------- ------
Weighted average fair value of
options granted............ $ - $3.82 $ 9.17
----- ----- ------
----- ----- ------
</TABLE>
The Company has adopted the disclosure only provisions of SFAS No.
123 "Accounting for Stock-Based Compensation." Accordingly, the Company
continues to account for stock options using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25.
Because certain of the options awarded to date have been granted at
significant premiums, under the minimum value pricing model the options were
determined to collectively have no value. As a result, had compensation cost
for stock options granted during the year ended March 31, 1997 been
determined consistent with SFAS No. 123, the Company's net income (loss) and
related per share amounts on a pro forma basis would not be materially
different as the per share amounts reported in the accompanying consolidated
statements of operations for the year ended March 31, 1997.
Compensation cost determined consistent with SFAS No. 123 would have
reduced the Company's net income and related per share amounts on a pro-forma
basis by $5.5 million and $0.13 in fiscal 1999 and $1.3 million and $0.07 in
fiscal 1998. The fair value of each option grant is estimated using the
minimum value method of option pricing model with the following assumptions
used in fiscal 1999 and 1998, respectively: weighted average risk-free
interest rate of 5.65 percent and 6.11 percent; volatility of 78.92 percent
and 63.06 percent; expected dividend yields of 0.00 percent for both years;
and an expected life of 4 years for both years.
RESTRICTED STOCK
During fiscal 1996, the Company granted 1,200,000 shares of
nontransferable common stock under restricted stock agreements to certain
employees. These shares were valued at a fair value of $1.17. The
restrictions lapse on the shares ten years from the date of grant or, if the
Company achieves certain objectives for earnings growth from fiscal 1997
through fiscal 2002, or, on a change in control of the Company. The unearned
portion of restricted stock is included in stockholders' equity and is being
amortized as compensation expense on a straight-line basis over the vesting
period. During fiscal 1998, 404,000 of the above shares were canceled.
F-18
<PAGE>
During the fiscal year 1998, the Company granted an additional
100,000 shares of nontransferrable common stock under restricted stock
agreements valued at $6.3125. These shares vest over a six-year term and
deferred compensation of $631,000 is currently being amortized as
compensation expense over this term.
1997 EMPLOYEE STOCK PURCHASE PLAN
In February 1997, the Board adopted, and the stockholders approved,
the 1997 Employee Stock Purchase Plan ("Purchase Plan"). The Company has
reserved 500,000 shares of common stock for issuance under the Purchase Plan.
The Purchase Plan enables eligible employees to purchase common stock at 85%
of the lower of the fair market value of the Company's common stock on the
first or last day of each option purchase period, as defined. No shares were
issued under the Purchase Plan during fiscal 1997 and 70,000 and 62,000 shares
were issued under the Purchase Plan during fiscal 1998 and 1999, respectively.
DIRECTOR OPTION PLAN
In February 1997, the Board adopted, and the stockholders approved,
the 1997 Director Option Plan ("Director Plan"). The Company has reserved
300,000 shares of common stock for issuance under the Director Plan. The
Director Plan provides an initial grant of options to purchase 25,000 shares
of common stock to each new eligible outside director of the Company upon
election to the Board. In addition, commencing with the 1998 Annual
Stockholders meeting, such eligible outside directors are granted an option
to purchase 5,000 shares of common stock at each annual meeting. The exercise
price per share of all options granted under the Director Plan will be equal
to the fair market value of the Company's common stock on the date of grant.
Options may be granted for periods up to ten years and generally vest over
four years. No grants were made under the Director Plan in fiscal 1997 and
1998. A grant for 50,000 shares of common stock was made under the Director
Plan in fiscal 1999.
8. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) Employee Savings Plan ("Plan") covering
substantially all employees. The Plan provides for savings and pension
benefits and is subject to the provisions of the Employee Retirement Income
Security Act of 1974. Those employees who participate in the Plan are
entitled to make contributions of up to 20 percent of their compensation,
limited by IRS statutory contribution limits. In addition to employee
contributions, the Company also contributes to the Plan by matching 25% of
employee contributions. Amounts contributed to the Employee Savings Plan by
the Company during fiscal 1997, 1998 and 1999 were $189,000, $200,000, and
$467,000 respectively.
F-19
<PAGE>
9. GEOGRAPHIC OPERATIONS
The Company operates exclusively in the Intrastructure management
software industry. A summary of the Company's operations by geographic area
is presented below:
<TABLE>
<CAPTION>
UNITED EUROPE &
STATES OTHER CONSOLIDATED
-------- -------- ------------
<S> <C> <C> <C>
Year ended March 31, 1997
Revenues............................... $ 24,925 $10,110 $ 35,035
Identifiable assets.................... 14,353 5,385 19,738
Year ended March 31, 1998
Revenues............................... $ 39,512 $22,365 $ 61,877
Identifiable assets.................... 72,434 11,134 83,568
Year ended March 31, 1999
Revenues............................... $ 88,649 $49,414 $138,063
Identifiable assets.................... 179,376 28,337 207,713
</TABLE>
Amounts included in Europe and other above relate principally to the
Company's European operations.
F-20
<PAGE>
10. SUBSEQUENT EVENT
On April 2, 1999 the Company completed the acquisition of F.Print UK
Ltd. ("FPrint"), a developer of desktop inventory and asset discovery
software. The Company issued 754,231 shares of Company Common Stock and $1.3
million in cash for all of the outstanding shares of FPrint. The acquisition
will be accounted for under the purchase method of accounting and,
accordingly, the Company will record the assets, including in-process
research and development, and liabilities based on their fair values at the
date of the acquisition. The results of operations for the acquisition will
be included in the financial statements for the periods subsequent to the
date thereof.
11. QUARTERLY RESULTS (UNAUDITED)
The following unaudited quarterly financial information includes, in
management's opinion, all normal and recurring adjustments (in thousands)
necessary to fairly state the Company's consolidated results of operations
and related information for the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1997 1997 1997 1998
-------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
License revenues .......................... $ 6,328 $ 7,039 $ 12,374 $ 13,050
Services revenues .......................... 4,687 5,164 6,135 7,100
Total costs and expenses.................... (8,944) (16,555) (15,693) (16,782)
-------- ------------- ------------ ---------
Income (loss) from operations............... 2,071 (4,352) 2,816 3,368
Interest income (expense) and other......... 178 226 204 231
Income tax expense.......................... 832 1,048 1,632 1,846
-------- ------------- ------------ ---------
Net income (loss) .......................... $ 1,417 $ (5,174) $ 1,388 $ 1,753
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
Basic income (loss) per share............... $ 0.05 $ (0.17) $ 0.04 $ 0.05
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
Diluted income (loss) per share............. $ 0.04 $ (0.17) $ 0.03 $ 0.04
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1998 1998 1998 1999
-------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
License revenues ........................... $ 13,882 $ 17,375 $ 26,064 $ 30,041
Services revenues .......................... 7,868 12,279 14,485 16,069
Total costs and expenses.................... (18,432) (49,960) (37,051) (46,359)
-------- ------------- ------------ ---------
Income (loss) from operations............... 3,318 (20,306) 3,498 (249)
Interest income (expense) and other......... 260 193 100 111
Income tax expense.......................... 1,742 2,209 2,969 3,375
-------- ------------- ------------ ---------
Net income (loss) .......................... $ 1,836 $(22,322) $ 629 $ (3,513)
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
Basic income (loss) per share............... $ 0.05 $ (0.52) $ 0.01 $ (0.07)
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
Diluted income (loss) per share............. $ 0.04 $ (0.52) $ 0.01 $ (0.07)
-------- ------------- ------------ ---------
-------- ------------- ------------ ---------
</TABLE>
F-21
<PAGE>
OFFICE LEASE
PEREGRINE SYSTEMS CORPORATE CENTER
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
as Landlord,
and
PEREGRINE SYSTEMS, INC.
a Delaware corporation
as Tenant
BUILDING 1
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER OFFICE LEASE
SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "SUMMARY"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "OFFICE LEASE") which
pertains to the "Project," as that term is defined in the Office Lease, to be
known as "PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 of the
Office Lease). This Summary and the Office Lease are collectively referred to
herein as the "LEASE". Each reference in the Office Lease to any term of this
Summary shall have the meaning set forth in this Summary for such term. In the
event of a conflict between the terms of this Summary and the Office Lease, the
terms of the Office Lease shall prevail. Any capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the Office
Lease.
<TABLE>
<CAPTION>
<S><C>
TERMS OF LEASE
(REFERENCES ARE TO THE OFFICE LEASE)
DESCRIPTION
1. Date: June 9, 1999.
2. Landlord: KR-CARMEL PARTNERS, LLC, a Delaware limited liability company.
3. Tenant: PEREGRINE SYSTEMS, INC., a Delaware corporation.
4. Premises (Article 1). The Premises is defined as the entire building to be constructed
by Landlord, consisting of approximately 52,375 rentable square
feet as generally depicted on EXHIBIT "A" to the Office Lease
("BUILDING"). The parties hereby stipulate that the Building
will contain a usable square footage of 45,390 usable square feet.
5. Lease Term (Article 2). The Lease Term for Tenant's lease of the Building shall be eleven
(11) years commencing on the Lease Commencement Date. The Lease
Commencement Date is estimated to be October 1, 1999.
6. Initial Base Rent (Article 3): The initial Base Rent payable with respect to the Building shall
be calculated as follows:
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Estimated Building Monthly Monthly Rental Rate Per
Rentable Square Footage Installment of Rentable
Base Rent Square Foot*
- -------------------------------------------------------------------------
<S> <C> <C>
52,375 $117,843.75 $2.25
- -------------------------------------------------------------------------
</TABLE>
*Plus electricity (as indicated in Section 6.2 of the Office Lease)
<TABLE>
<CAPTION>
<S><C>
7. Additional Rent (Article 4).
7.1 Base Year: Calendar year 2000.
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7.2 Tenant's Share: See Article 4.
8. Security Deposit: See Article 21.
9. Parking Privileges (Article 28): Four (4) parking permits for every 1,000 usable square feet of the
Premises until the parking structure for the Project is completed,
and then four and one-half (4 1/2) parking permits for every 1,000
usable square feet of the Premises as such square footage is
specified in Section 4 of the Summary. Each permit shall entitle
Tenant to utilize one (1) parking space on an unreserved basis in
the Project parking facilities.
10. Brokers (Section 29.18): John Burnham & Company (representing Landlord and Tenant) and CB
Richard Ellis, Inc. (representing Tenant only)
11. Address of Tenant 12670 High Bluff Drive
(Section 29.13): San Diego, CA 92130
Attention: Richard T. Nelson, Esq.
with a copy to:
12670 High Bluff Drive
San Diego, CA 92130
Attention: Mr. Robert Urwiler
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT MATTER PAGE
<S> <C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS........................................................ 1
1.1 Premises, Building, Project and Common Areas.................................... 1
1.2 Verification of Rentable and Usable Square Feet of Premises, Building, and
Project......................................................................... 3
ARTICLE 2 LEASE TERM........................................................................................... 3
2.1 Initial Term.................................................................... 3
2.2 Options to Extend............................................................... 4
ARTICLE 3 BASE RENT............................................................................................ 6
3.1 Initial Base Rent............................................................... 6
3.2 Adjustments to Base Rent........................................................ 6
ARTICLE 4 ADDITIONAL RENT...................................................................................... 7
4.1 General Terms................................................................... 7
4.2 Definitions of Key Terms Relating to Additional Rent............................ 7
4.3 Allocation of Direct Expenses.................................................. 13
4.4 Calculation and Payment of Additional Rent..................................... 14
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible............... 16
ARTICLE 5 USE OF PREMISES..................................................................................... 17
5.1 Permitted Use.................................................................. 17
5.2 Prohibited Uses................................................................ 17
5.3 CC&R's......................................................................... 17
ARTICLE 6 SERVICES AND UTILITIES.............................................................................. 18
6.1 Standard Tenant Services....................................................... 18
6.2 Utilities Costs; Overstandard Tenant Use....................................... 20
6.3 Interruption of Use............................................................ 20
6.4 Additional Services............................................................ 21
6.5 Utility Deregulation........................................................... 21
6.6 Emergency Generator............................................................ 22
6.7 Substitution of Vendors........................................................ 22
6.8 Abatement Event................................................................ 22
ARTICLE 7 REPAIRS............................................................................................. 23
7.1 Obligations.................................................................... 23
7.2 Tenant's Failure to Comply..................................................... 23
7.3 Landlord's Failure to Comply................................................... 24
ARTICLE 8 ADDITIONS AND ALTERATIONS........................................................................... 25
8.1 Landlord's Consent to Alterations.............................................. 25
8.2 Manner of Construction......................................................... 25
8.3 Payment for Improvements....................................................... 26
8.4 Construction Insurance......................................................... 26
8.5 Landlord's Property............................................................ 26
ARTICLE 9 COVENANT AGAINST LIENS.............................................................................. 26
ARTICLE 10 INSURANCE.......................................................................................... 27
10.1 Indemnification and Waiver..................................................... 27
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10.2 Tenant's Compliance with Landlord's Fire and Casualty Insurance................ 27
10.3 Tenant's Insurance............................................................. 27
10.4 Fire and Casualty Insurance of Landlord........................................ 28
10.5 Form of Policies............................................................... 28
10.6 Subrogation.................................................................... 29
10.7 Additional Insurance Obligations............................................... 29
ARTICLE 11 DAMAGE AND DESTRUCTION............................................................................. 29
11.1 Repair of Damage to Premises by Landlord....................................... 29
11.2 Landlord's Option to Repair.................................................... 30
11.3 Landlord's or Tenant's Option to Repair........................................ 30
11.4 Waiver of Statutory Provisions................................................. 30
11.5 Damage Near End of Term........................................................ 31
ARTICLE 12 NONWAIVER.......................................................................................... 31
ARTICLE 13 CONDEMNATION....................................................................................... 31
13.1 Permanent Taking............................................................... 31
13.2 Temporary Taking............................................................... 32
ARTICLE 14 ASSIGNMENT AND SUBLETTING.......................................................................... 32
14.1 Transfers...................................................................... 32
14.2 Landlord's Consent............................................................. 33
14.3 Transfer Premium............................................................... 34
14.4 Landlord's Option as to Subject Space.......................................... 35
14.5 Effect of Transfer............................................................. 35
14.6 Additional Transfers........................................................... 36
14.7 Affiliated and Permitted Transfers............................................. 36
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES................................................... 37
15.1 Surrender of Premises.......................................................... 37
15.2 Removal of Tenant Property by Tenant........................................... 37
15.3 Removal of Tenant's Property by Landlord....................................... 37
15.4 Landlord's Actions on Premises................................................. 38
ARTICLE 16 HOLDING OVER....................................................................................... 38
ARTICLE 17 ESTOPPEL CERTIFICATES.............................................................................. 39
ARTICLE 18 SUBORDINATION...................................................................................... 39
ARTICLE 19 DEFAULTS; REMEDIES................................................................................. 40
19.1 Defaults....................................................................... 40
19.2 Remedies Upon Default.......................................................... 40
19.3 Sublessees of Tenant........................................................... 41
19.4 Form of Payment After Default.................................................. 41
19.5 Waiver of Default.............................................................. 41
19.6 Efforts to Relet............................................................... 42
ARTICLE 20 COVENANT OF QUIET ENJOYMENT........................................................................ 42
ARTICLE 21 SECURITY DEPOSIT................................................................................... 42
21.1 Letter of Credit............................................................... 42
21.2 Financial Standards............................................................ 43
21.3 Conditional Release of Security................................................ 43
21.4 Cash Equivalent................................................................ 43
ARTICLE 22 ROOF RIGHTS........................................................................................ 43
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ARTICLE 23 SIGNAGE............................................................................................ 44
23.1 General........................................................................ 44
23.2 Tenant's Exterior Signage Rights............................................... 45
23.3 Tenant's Interior Signage Rights............................................... 46
ARTICLE 24 COMPLIANCE WITH LAW................................................................................ 46
ARTICLE 25 LATE PAYMENTS...................................................................................... 47
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT............................................... 47
26.1 Landlord's Cure................................................................ 47
26.2 Tenant's Reimbursement......................................................... 47
ARTICLE 27 ENTRY BY LANDLORD.................................................................................. 47
ARTICLE 28 TENANT PARKING..................................................................................... 48
ARTICLE 29 MISCELLANEOUS PROVISIONS........................................................................... 49
29.1 Binding Effect................................................................. 49
29.2 Modification of Lease/Memorandum of Lease...................................... 49
29.3 Transfer of Landlord's Interest................................................ 50
29.4 Consents by the Parties........................................................ 50
29.5 Captions....................................................................... 50
29.6 Time of Essence................................................................ 50
29.7 Partial Invalidity............................................................. 50
29.8 No Warranty.................................................................... 50
29.9 Construction................................................................... 50
29.10 Entire Agreement............................................................... 51
29.11 Right to Lease................................................................. 51
29.12 Force Majeure.................................................................. 51
29.13 Notices........................................................................ 51
29.14 Joint and Several.............................................................. 52
29.15 Authority...................................................................... 52
29.16 Governing Law.................................................................. 52
29.17 Submission of Lease............................................................ 52
29.18 Brokers........................................................................ 52
29.19 Independent Covenants.......................................................... 52
29.20 Project or Building Name and Signage........................................... 52
29.21 Transportation Management...................................................... 53
29.22 No Discrimination.............................................................. 53
29.23 Hazardous Material............................................................. 53
29.24 Development of the Project..................................................... 53
29.25 Landlord Exculpation........................................................... 54
29.26 Waiver of Redemption by Tenant................................................. 54
29.27 Attorneys' Fees................................................................ 54
29.28 Communications and Computer Lines.............................................. 55
29.29 No Air Rights.................................................................. 55
29.30 Counterparts................................................................... 55
29.31 Confidentiality................................................................ 55
29.32 Disclosures and Mutual Release................................................. 55
</TABLE>
EXHIBIT "A" SITE PLAN
EXHIBIT "B" TENANT WORK LETTER
EXHIBIT "C" NOTICE OF LEASE TERM DATES
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" FORM OF TENANT'S ESTOPPEL CERTIFICATE
EXHIBIT "F" CC&R'S
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EXHIBIT "G" HVAC AND ELECTRICAL STANDARDS
EXHIBIT "H-1" JANITORIAL SPECIFICATIONS
EXHIBIT "H-2" DAY PORTER SPECIFICATIONS
EXHIBIT "I" SECURITY SYSTEMS AND PERSONNEL
EXHIBIT "J" SIGNAGE CRITERIA
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Abatement Event..........................................................................22
Abatement Notice.........................................................................22
Accelerated Force Majeure Period.........................................................16
Acceptable Changes.......................................................................25
Actual Surrender Date....................................................................38
ADA......................................................................................46
Additional Rent...........................................................................7
Adjacent Building.........................................................................2
Adjacent Building Leases..................................................................2
Adjustment Year..........................................................................13
Aggregate Force Majeure Period...........................................................16
Alterations..............................................................................25
Alternative..............................................................................21
Applicable Laws..........................................................................25
Approved Working Drawings.........................................................EXHIBIT B
Architect.........................................................................EXHIBIT B
Association..............................................................................17
Base Rent.................................................................................6
Base Year.................................................................................7
Base, Shell and Core..............................................................EXHIBIT B
Base, Shell and Core Completion...................................................EXHIBIT B
BOMA......................................................................................3
Brokers..................................................................................52
Building..................................................................................i
Building 2................................................................................1
Building 2 Lease..........................................................................2
Building 3................................................................................1
Building 3 Lease..........................................................................2
Building 4................................................................................1
Building 4 Lease Option Agreement.........................................................2
Building 5................................................................................2
Building 5 Lease..........................................................................2
Building Common Areas.....................................................................2
Building Direct Expenses..................................................................7
Building Hours...........................................................................18
Building Operating Expenses...............................................................7
Building Systems and Equipment...........................................................20
Building Tax Expenses.....................................................................7
Building Top Signs.......................................................................45
Building Working Drawings.........................................................EXHIBIT B
CAD.......................................................................................3
CC&R's...................................................................................17
CD.......................................................................................43
Change Orders.....................................................................EXHIBIT B
Claims...................................................................................27
Code..........................................................................34. EXHIBIT B
Commencement Date.........................................................................4
Committee................................................................................18
Common Areas..............................................................................2
Communication Equipment..................................................................43
ComparableBuildings.......................................................................2
Construction Schedule.............................................................EXHIBIT B
Contractor........................................................................EXHIBIT B
Cost Pools...............................................................................14
Cost Proposal.....................................................................EXHIBIT B
Cost Proposal Delivery Date.......................................................EXHIBIT B
Delivery Period..........................................................................16
Direct Expenses...........................................................................7
Director Board...........................................................................46
Drawings..........................................................................EXHIBIT B
Effective Date....................................................................EXHIBIT B
Electric Service Provider................................................................21
Eligibility Period.......................................................................23
Engineers.........................................................................EXHIBIT B
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Estimate.................................................................................14
Estimate Statement.......................................................................14
Estimated Excess.........................................................................14
Excess...................................................................................14
Excess Over-Allowance Amount......................................................EXHIBIT B
Excusable Delay...................................................................EXHIBIT B
Expense Year..............................................................................7
Extension Notice..........................................................................4
Extension Options.........................................................................4
Extension Reminder Notice.................................................................4
Extension Term Base Rent..................................................................4
Extension Term Commencement Date..........................................................4
Extension Term(s).........................................................................4
Fair Market Rental Value..................................................................5
Final Space Plan..................................................................EXHIBIT B
Financial Standards......................................................................43
Force Majeure............................................................................51
Force Majeure Effective Date.............................................................15
Force Majeure Extension Options..........................................................16
Force Majeure Termination Notice.........................................................15
Hazardous Material.......................................................................53
Holdover Notice..........................................................................38
Holdover Notice Date.....................................................................38
Holidays.................................................................................18
HVAC.....................................................................................18
Interest Rate............................................................................47
KRC......................................................................................34
Landlord..................................................................................1
Landlord Parties.........................................................................27
Landlord Supervision Fee..........................................................EXHIBIT B
Landlord Work.....................................................................EXHIBIT B
Landlord Work Change Orders.......................................................EXHIBIT B
LC.......................................................................................42
Lease.....................................................................................1
Lease Commencement Date...................................................................3
Lease Expiration Date.....................................................................3
Lease Term................................................................................3
Lease Year................................................................................3
Lines....................................................................................54
Major Project Milestones..........................................................EXHIBIT B
Notices..................................................................................51
Objectionable Name.......................................................................45
Office Lease..............................................................................i
Operating Expenses........................................................................7
Original Tenant...........................................................................4
Other Improvements.......................................................................54
Outside Date......................................................................EXHIBIT B
Outside Date Extension Notice.....................................................EXHIBIT B
Outside Date Termination Notice...................................................EXHIBIT B
Over-Allowance Amount.............................................................EXHIBIT B
Package Units............................................................................18
Partial Cost Proposal.............................................................EXHIBIT B
Pedestrian Passageway.............................................................EXHIBIT B
Peregrine Center..........................................................................1
Permits...........................................................................EXHIBIT B
Permitted Affiliate......................................................................36
Permitted Signage Entities...............................................................45
Permitted Transferee.....................................................................37
Pre-Judgment Offset Amount...............................................................24
Premises..................................................................................1
Premium Base Amount......................................................................34
Premium Guidance.........................................................................34
Progress Payment Request..........................................................EXHIBIT B
Project...................................................................................1
Project Architect.................................................................EXHIBIT B
Project Architect Agreement.......................................................EXHIBIT B
Project Common Areas......................................................................2
Proposition 13...........................................................................12
Qualifying Income........................................................................34
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Qualifying Period.........................................................................5
Qualifying Transferee....................................................................44
Readjustment Year........................................................................13
Reassessment.............................................................................13
Recapture Notice.........................................................................35
REIT Requirements........................................................................34
Reno..............................................................................EXHIBIT B
Rent......................................................................................7
Requirements.............................................................................47
Review Period............................................................................15
Shell Completion Dates............................................................EXHIBIT B
Signage Criteria.........................................................................44
Single Appraiser Date.....................................................................5
Site Plan.................................................................................1
space comparable to the Building..........................................................5
Specifications....................................................................EXHIBIT B
Standard Improvement Package......................................................EXHIBIT B
Statement................................................................................14
Subject Space............................................................................32
Subleasing Costs.........................................................................34
Substantial Completion....................................................................3
Summary...................................................................................1
Tax Expenses.............................................................................12
Tenant....................................................................................1
Tenant Delays.....................................................................EXHIBIT B
Tenant Improvement Allowance......................................................EXHIBIT B
Tenant Improvement Allowance Items................................................EXHIBIT B
Tenant Improvements...............................................................EXHIBIT B
Tenant Work...............................................................................3
Tenant Work Letter........................................................................1
Tenant's Share...........................................................................13
Tenant's Signs...........................................................................45
Threshold Level..........................................................................31
Time Deadlines....................................................................EXHIBIT B
Title 24.................................................................................46
Transfer Notice..........................................................................32
Transfer Premium.........................................................................34
Transferee...............................................................................32
Transfers................................................................................32
Withdrawal Date...........................................................................4
Work..............................................................................EXHIBIT B
Working Drawings..................................................................EXHIBIT B
Y2K......................................................................................10
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "SUMMARY") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "LEASE"), dated as of the date set forth in Section 1 of the
Summary is made by and between KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company ("LANDLORD"), and PEREGRINE SYSTEMS, INC., a Delaware
corporation ("TENANT").
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Upon and subject to the terms hereinafter set
forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 4 of the Summary (the
"PREMISES"), consisting of the Building described therein and more particularly
depicted on the Site Plan attached hereto as Exhibit "A" (the "SITE PLAN"). The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of the Site Plan is to show the
location of the Building and the Adjacent Buildings only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the Common Areas, as that term is defined in Section 1.1.3 below and the
elements thereof or of the accessways to the Premises or the "Project," as that
term is defined in Section 1.1.2 below. Landlord will not make material changes
to the Site Plan without the prior written approval of Tenant, which consent
shall not be unreasonably withheld or delayed. However, notwithstanding the
foregoing, Landlord may make changes to the Site Plan due to topography,
underground conditions, and governmental requirements in order to resolve issues
which arise during construction of the Project without the prior written
approval of Tenant, provided that (i) any such changes to the Site Plan due to
topography may be made to landscaping only (and not to other Site Plan items)
without the prior written approval of Tenant, and (ii) with respect to changes
that do not require the approval of Tenant pursuant to this sentence, Landlord
shall notify Tenant of any material changes made to the Site Plan. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as Exhibit "B" (the "TENANT WORK LETTER"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building, the Adjacent Buildings or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 THE PROJECT. The Premises are located in the City and County
of San Diego, California, and are a part of the project to be known as
"PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 below). The
term "PROJECT," as used in this Lease, shall mean (i) the Building, the
Adjacent Buildings and the "Common Areas", as that term is defined in Section
1.1.3 below, and (ii) the land (which is or will be improved with
landscaping, parking facilities and other improvements) upon which the
Buildings and the Common Areas are to be located. For purposes of this Lease,
the term "BUILDING 2" shall mean that building to be constructed by Landlord
at the location so designated on the Site Plan, "BUILDING 3" shall mean that
building to be constructed by Landlord at the location so designated on the
Site Plan, "BUILDING 4" shall mean that building to be constructed by
Landlord at the location so designated
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on the Site Plan, and "BUILDING 5" shall mean that building to be constructed
by Landlord at the location so designated on the Site Plan. Building 2,
Building 3, Building 4 and Building 5 may be collectively referred to herein
as the "ADJACENT BUILDINGS." Landlord and Tenant hereby acknowledge that,
concurrently with the execution and delivery of this Lease, Landlord and
Tenant are entering into separate leases for Building 2 (the "BUILDING 2
LEASE"), Building 3 (the "BUILDING 3 LEASE"), and Building 5 (the "BUILDING 5
LEASE") and a Lease Option Agreement for Building 4 (the "BUILDING 4 LEASE
OPTION AGREEMENT") whereby Tenant shall lease from Landlord all of Building
2, all of Building 3, and all of Building 5 and shall have an option to lease
all of Building 4. The Building 2 Lease, Building 3 Lease, Building 5 Lease
and Building 4 Lease Option Agreement may be collectively referred to herein
as the "ADJACENT BUILDING LEASES."
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right
to use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas are collectively referred to herein as the
"COMMON AREAS"). The Common Areas shall consist of the Project Common Areas and
the Building Common Areas. The term "PROJECT COMMON AREAS," as used in this
Lease, shall mean the portion of the Project designated as such in the Site
Plan. The Project Common Areas shall consist of all parking facilities,
entrances and exits, driveways, exterior walkways, first-class landscaped and
hardscaped areas which are generally consistent with the quality of landscaped
and hardscaped areas of Comparable Buildings in existence as of the date of this
Lease, open space areas and plazas on the real property comprising the Project.
The term "BUILDING COMMON AREAS," as used in this Lease, shall mean the portions
of the Common Areas located within any building in the Project not entirely
leased by Tenant, which Building Common Areas shall be reasonably designated as
such by Landlord. Notwithstanding the foregoing and subject to (i) Landlord's
approval, which approval (as indicated in Section 29.4 below) shall not be
unreasonably withheld or delayed, (ii) the CC&R's, and (iii) all terms of this
Lease regarding Hazardous Materials, Tenant may install or locate such items as
benches, patio tables, bike racks, above-ground generators, security cameras and
the like (collectively, "MISCELLANEOUS COMMON AREA ITEMS") at Tenant's sole cost
in the Common Areas or on the exterior of the Building, as applicable, provided
that Tenant removes such items upon the expiration or earlier termination of
this Lease and repairs any damage to the Common Areas or the exterior of the
Building (as applicable) resulting from such removal. If Tenant fails to remove
any Miscellaneous Common Area Item or to repair any damage resulting from such
removal upon the expiration or earlier termination of this Lease, Landlord may
do so and may charge Landlord's actual cost thereof to Tenant. The manner in
which the Common Areas are maintained and operated shall be in accordance with a
standard which is not less than that customarily followed in the operation and
maintenance of first class mid-rise office buildings located within the
University Towne Center (I.E., the area from two (2) blocks to the North of La
Jolla Village Drive to two (2) blocks to the South of La Jolla Village Drive
between the I-5 and I-805 freeways), Del Mar, Carmel Valley and Torrey Hills
geographical areas, provided that Landlord shall manage, maintain and operate
the same in a manner consistent with that of Comparable Buildings, and the use
thereof shall be subject to such rules and regulations as Landlord reasonably
may make from time to time. As used herein, "COMPARABLE BUILDINGS" shall mean
the first class mid-rise office buildings (now existing or subsequently
constructed) within the projects located within the University Towne Center, Del
Mar, Carmel Valley and Torrey Hills geographical areas and having substantially
similar characteristics to the Building pertaining to size, age, accessibility,
design, quality, amenities and tenancies. Landlord reserves the right to make
alterations or additions to, or to change the location of, elements of the
Project and the Common Areas, provided that if any such changes might affect
Tenant's use of the Premises (in other than an immaterial manner), Landlord
obtains Tenant's prior written approval of any such alterations, additions and
changes and such alterations, additions and changes do not unreasonably
interfere with Tenant's access to the Premises. Except when and where Tenant's
right of access is specifically excluded in this Lease, Tenant shall have the
right of access to the Building and the parking facilities twenty-four (24)
hours per day, seven (7) days per week during the Lease Term.
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1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES, BUILDING, AND
PROJECT. The number of rentable square feet in the Premises and the Building
shall be determined pursuant to the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1 - 1996 ("BOMA"). The number of rentable square feet
of the Building shall be initially determined by Landlord from the "as-built"
drawings for the Building utilizing Landlord's computer assisted design ("CAD")
system. Tenant shall have the option, exercisable by written notice to Landlord
within thirty (30) days following Tenant's receipt of such initial determination
by Landlord, to cause the number of rentable square feet of the Building to be
verified by an architect, planner, designer or consultant specializing in
measuring square footage selected by Landlord and reasonably approved by Tenant
and such verification shall be made in accordance with the provisions of this
Article 1. In addition, the number of rentable square feet of any other
buildings within the Project not leased by Tenant are subject to verification by
an architect, planner, designer or consultant specializing in measuring square
footage selected by Landlord and such verification shall be made in accordance
with the provisions of this Article 1. The cost of any such verification of
square footage figures as specified in this Section 1.2 above shall be borne
fifty percent (50%) by Landlord and fifty percent (50%) by Tenant. In the event
that such architect, planner, designer or consultant determines that the amounts
thereof are different from those set forth in this Lease, all amounts,
percentages and figures appearing or referred to in this Lease based upon such
incorrect amount (including, without limitation, the amount of the Rent and
Tenant's Share as those terms are defined in this Lease) shall be modified in
accordance with such determination. Absent manifest error, such determination
shall be final and conclusive. As such determination is made, it will be
confirmed in writing by Landlord and Tenant, and Landlord and Tenant shall
execute an amendment to this Lease confirming the changed amounts of Rent,
Tenant's Share and the Tenant Improvement Allowance.
ARTICLE 2
LEASE TERM
2.1 INITIAL TERM. The terms, covenants and conditions and provisions of
this Lease shall be effective as of the date of this Lease. The term of this
Lease (the "LEASE TERM") shall be as set forth in Section 5 of the Summary and
shall commence ("LEASE COMMENCEMENT DATE") on the earlier of (i) the date
Tenant's work stations are installed and cabled or (ii) eight (8) business days
after "Substantial Completion" by Landlord of the Tenant Improvements for the
Building, provided Landlord has given to Tenant at least sixty (60) days' prior
written notice of the date Landlord estimates for Substantial Completion for the
Building (if such date is more than thirty (30) days different from the
estimated date specified in the Summary). The Lease Commencement Date shall not
under any circumstances occur earlier than the day which is thirty (30) days
earlier than the Estimated Lease Commencement Date set forth in Section 5 of the
Summary unless Tenant elects to commence business operations within such
Building as of an earlier date. The Lease Term shall terminate (the "LEASE
EXPIRATION DATE") on the last day of the month in which the eleventh (11th)
anniversary of the Lease Commencement Date occurs, unless this Lease is sooner
terminated or extended as hereinafter provided. For purposes of this Lease, the
term "LEASE YEAR" shall mean each consecutive twelve (12) month period during
the Lease Term; provided, however, that the first Lease Year shall commence on
the Lease Commencement Date and the last Lease Year shall end on the Lease
Expiration Date. For purposes of this Lease, "SUBSTANTIAL COMPLETION" shall
occur upon the completion of construction of the Tenant Improvements in the
Building pursuant to the plans and drawings which are prepared pursuant to the
terms of the Tenant Work Letter. The completion of the construction with respect
to any such Tenant Improvements shall not be deemed to have occurred unless and
until (i) Landlord has delivered the portion of the Premises covered by such
Tenant Improvements to Tenant in broom-clean condition subject only to punch
list items and any tenant fixtures, workstations or equipment to be installed by
Tenant in the Premises pursuant to the terms of the Tenant Work Letter (the
"TENANT WORK") (i.e., the completion of punchlist items and Tenant Work shall
not affect Substantial Completion), (ii) a temporary certificate of occupancy or
its equivalent permitting occupancy of such portion of the Premises improved
with such Tenant Improvements has been issued by the City of San Diego or other
applicable governmental agency, (iii) all essential building systems to be
installed by Landlord (including,
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but not limited to, electrical, plumbing, heat, air conditioning systems, and
their distribution into such portions of the Premises) are operational to the
extent reasonably necessary to service the portion of the Premises covered by
such Tenant Improvements, and (iv) Tenant has been provided with the parking to
which it is entitled under this Lease . If a temporary certificate of occupancy
or its equivalent is issued by the City of San Diego, Landlord shall use
commercially reasonable efforts to obtain a permanent certificate of occupancy
within three (3) months after the Lease Commencement Date (except to the extent
the receipt of such permanent certificate is delayed as a result of the Tenant
Work or any actions of Tenant, its agents, employees or contractors). At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in Exhibit "C" attached hereto, which notice (so long as it
contains accurate information) Tenant shall execute and return to Landlord
within ten (10) days of receipt thereof. If Tenant contends that such notice
contains inaccurate information, Tenant shall modify such notice as appropriate
and return such notice to Landlord within said ten (10) day period.
2.2 OPTIONS TO EXTEND. Tenant shall have two (2) option(s) to extend
(the "EXTENSION OPTIONS") the Lease Term for consecutive five (5) year period(s)
(the foregoing option term(s) shall be referred to hereinafter sometimes as the
"EXTENSION TERM(S)"), by delivering a written notice of exercise to Landlord
("EXTENSION NOTICE") with respect to the applicable Extension Term, which
Extension Notice may not be delivered earlier than the date which is eighteen
(18) months prior to the end of the initial Lease Term or first Extension Term
(as applicable) and may not be delivered later than the date which is thirty
(30) days after the Reminder Notice. If Landlord has not received an applicable
Extension Notice by the date which is twelve (12) months prior to the end of the
initial Lease Term or first Extension Term (as applicable), Landlord may provide
written notice ("EXTENSION REMINDER NOTICE") to Tenant that the Extension Option
will expire if Tenant fails to deliver the Extension Notice to Landlord within
thirty (30) days after the date of such notice from Landlord. If Tenant fails to
deliver the Extension Notice within said thirty (30) day period, Tenant shall be
deemed to have waived its right to exercise such Extension Option. The parties
acknowledge that Tenant's Extension Option will not lapse until the date which
is thirty (30) days after Landlord's delivery of the Extension Reminder Notice
pursuant to this Section 2.2. The Extension Option shall apply to all space (and
not a portion of the space) then leased by Tenant in the Building. Tenant may
exercise the Extension Option(s) only if this Lease is in full force and effect
and there is no uncured Event of Default under this Lease, at the time of
exercise of such Extension Option and/or at the time of the commencement of the
Extension Term, but Landlord shall have the right to waive such conditions
herein. Tenant's exercise of the second (2nd) Extension Option shall be
conditioned upon Tenant's exercise of the first Extension Option. The rights of
Tenant contained in this Section 2.2 shall be personal to the original Tenant
named in the Summary ("ORIGINAL TENANT") and any Permitted Affiliate and may
only be exercised by the Original Tenant or such Permitted Affiliate if Tenant,
at the date of Tenant's Extension Notice, meets or exceeds the Financial
Standards set forth in Section 21.2 below. The Base Rent during each Extension
Term ("EXTENSION TERM BASE RENT") shall be an amount equal to ninety-five
percent (95%) of the then "Fair Market Rental Value" of the Building (as such
term is defined in Section 2.2(e) below), as stated on a monthly basis and
determined pursuant to this Section 2.2 as of the first (1st) day of the
applicable Extension Term ("EXTENSION TERM COMMENCEMENT DATE"); provided,
however, in no event shall the Base Rent payable during any Extension Term for
the Building be less than the Base Rent payable during the period immediately
preceding such Extension Term for the Building and provided further that, on the
first anniversary of the Extension Term Commencement Date, and on each
subsequent anniversary thereof during such Extension Term, the then payable
monthly Extension Term Base Rent shall be increased in accordance with market
rate increases, as mutually agreed to by Landlord and Tenant or, if Landlord and
Tenant cannot agree, as determined by the appraisal process described below.
Upon receipt by Landlord of Tenant's Extension Notice under this Section 2.2,
above, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the applicable Extension Term Base Rent which shall become effective as of the
respective Extension Term Commencement Date. If Landlord and Tenant have not
agreed upon the Extension Term Base Rent (including the annual market rate
increases) on or before the "Withdrawal Date" (as that term is defined below),
Tenant may elect to withdraw the Extension Notice thereby canceling Tenant's
exercise of the Extension Option. The term "WITHDRAWAL DATE" shall mean (i) if
Landlord delivers the Reminder Notice
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prior to Tenant's delivery of the Extension Notice, the date which is thirty
(30) days after the date of the Reminder Notice, or (ii) if Landlord has not yet
delivered a Reminder Notice at the time of Tenant's delivery of the Extension
Notice, the date which is the earlier of (1) the date which is eleven (11)
months prior to the end of the initial Lease Term or first Extension Term (as
applicable), or (2) the date which is sixty (60) days after the date of Tenant's
delivery of the Extension Notice. If Tenant fails to deliver written notice to
Landlord so withdrawing the Extension Notice on or before the Withdrawal Date
and if Landlord and Tenant have not agreed upon the Extension Term Base Rent
(including the annual market rate increases) within sixty (60) days after the
delivery of Tenant's Extension Notice, the Extension Term Base Rent shall be
determined as follows:
(a) Landlord and Tenant shall attempt to agree in good faith upon a
single appraiser not later than the date ("SINGLE APPRAISER DATE") which is
forty-five (45) days after delivery of Tenant's Extension Notice. If Landlord
and Tenant are unable to agree upon a single appraiser within such time period,
then Landlord and Tenant shall each appoint one appraiser not later than five
(5) days after the deadline for selecting a single appraiser. Landlord and
Tenant shall each give written notice to the other as to the name of the
appraiser it has selected, within five (5) days after the deadline for selecting
a single appraiser. Within ten (10) days thereafter, the two (2) appointed
appraisers shall appoint a third appraiser. All appraisers shall be independent
from, and disinterested in, both Landlord and Tenant.
(b) The only tasks which the appraiser(s) shall perform shall be
forming and reporting to Landlord and Tenant an opinion of the Fair Market
Rental Value (including annual market rate increases) of the Premises for use in
determining the Extension Term Base Rent.
(c) If either Landlord or Tenant fails to appoint its appraiser within
the prescribed time period, the single appraiser appointed shall determine the
Fair Market Rental Value of the Building. If both parties fail to appoint
appraisers within the prescribed time periods, or if the two (2) appointed
appraisers cannot agree on a third appraiser then either party shall have the
right to apply to the presiding judge of the Superior Court of San Diego County
for the appointment of an appraiser meeting the qualifications hereof to
determine the Fair Market Rental Value of such Building.
(d) Each party shall bear the cost of its own appraiser and the
parties shall share equally the cost of any single or third appraiser, if
applicable. All appraisers so designated herein shall have at least ten (10)
years' experience in the appraisal of commercial properties similar to the
Premises and Comparable Buildings and shall be members of professional
organizations such as MAI or its equivalent.
(e) For the purpose of such appraisal and this subsection (e), the
term "FAIR MARKET RENTAL VALUE" shall mean the price that a ready and willing,
non-equity, non-sublease tenant would pay as annual rent as of the Extension
Term Commencement Date (taking into consideration the annual market rate
increases specified in Section 2.2(b) above) and a ready and willing landlord
would accept on a non-sublease, non-renewal basis, at arm's length, from
creditworthy tenants (provided Tenant is then in compliance with the Financial
Standards specified in Section 21.2) for a five (5) year term for unencumbered
"space comparable to the Building" in Comparable Buildings. Such "space
comparable to the Building" shall mean office space consisting of an entire
building, with tenant improvements of substantially similar quality and layout
as the Premises. Fair Market Rental Value shall include or take into
consideration any lease concessions offered by landlords in lease transactions
from and after the date which is twelve (12) months prior to the Single
Appraiser Date (the "QUALIFYING PERIOD") for space comparable to the Building
within such Comparable Buildings, including, without limitation, free rent,
tenant improvement allowances or any other payments or concessions; however,
Fair Market Rental Value shall also take into consideration (i) the market trend
(i.e., all other factors being equal, comparable transactions entered into
earlier in the Qualifying Period shall be accorded less weight than comparable
transactions entered into later in the Qualifying Period), and (ii) the value in
the market of the existing improvements in the Building, as compared to the
value in the market of the existing improvements in such space comparable to the
Building.
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Further, in calculating the Fair Market Rental Rate, no consideration shall be
given to the fact that Landlord is or is not required to pay a real estate
brokerage commission in connection with the Extension Term or the fact that
comparable deals do or do not involve the payment of real estate brokerage
commissions. If there are less than two (2) lease transactions for "space
comparable to the Building," as defined in this Section 2.2(e), entered into
during the Qualifying Period, then the term "space comparable to the Building"
shall be expanded as necessary to allow appraiser(s) to consider lease
transactions covering multiple floors in a building (but less than an entire
building) with the appraiser(s) making appropriate economic adjustments to
compensate for such lease transactions in which less than the entire building is
leased by the tenant.
(f) If a single appraiser is chosen, then such appraiser shall
determine the Fair Market Rental Value of the Building. Otherwise, the Fair
Market Rental Value of the Building shall be the arithmetic average of the two
(2) appraisals which are closest in amount, and the third appraisal shall be
disregarded.
(g) Landlord and Tenant shall instruct the appraiser(s), in writing,
to complete their written determination of the Fair Market Rental Value not
later than thirty (30) days after their selection. If the Fair Market Rental
Value has not been determined by such date, then the Fair Market Rental Value
shall be determined thereafter, and if it has not been determined by the
Extension Term Commencement Date, then Tenant shall continue to pay Landlord
monthly installments of Base Rent in the amount applicable to the Building
immediately prior to the Extension Term Commencement Date until the Fair Market
Rental Value is determined. When the Fair Market Rental Value of the Building is
determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between the monthly installments of Base Rent actually paid by Tenant
to Landlord subsequent to the Extension Term Commencement Date and the new
monthly installments of Base Rent which are determined to have been actually
owing during such period in accordance with this Section 2.2, plus interest at
the Interest Rate from the date the applicable monthly installments were due
until such difference is actually paid.
ARTICLE 3
BASE RENT
3.1 INITIAL BASE RENT. Tenant shall pay, without notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or at such
other place as Landlord may from time to time designate in writing, in currency
or a check for currency which, at the time of payment, is legal tender for
private or public debts in the United States of America, base rent ("BASE RENT")
as set forth in Section 6 of the Summary, payable in equal monthly installments
as set forth in Section 6 of the Summary in advance on or before the first day
of each and every month during the Lease Term, without any offset or deduction
whatsoever except as otherwise expressly set forth in this Lease. Base Rent
shall commence on the Lease Commencement Date. The Base Rent for the first full
month of the Lease Term shall be paid at the time of Tenant's execution of this
Lease. If any Rent payment date (including the Lease Commencement Date) falls on
a day of the month other than the first day of such month or if any payment of
Rent is for a period which is shorter than one month, the Rent for any
fractional month shall accrue on a daily basis for the period from the date such
payment is due to the end of such calendar month or to the end of the Lease Term
at a rate per day which is equal to 1/365 of the Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.
3.2 ADJUSTMENTS TO BASE RENT. The Base Rent rate payable (per rentable
square foot) with respect to the Building shall be increased on the second (2nd)
anniversary of the Lease Commencement Date and on each subsequent second (2nd)
anniversary thereof during the initial Lease Term to an amount equal to 106.5%
of the Base Rent rate payable (per rentable square foot) during the immediately
prior period, subject to further adjustment during any Extension Term in
accordance with Section 2.2 above.
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ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in Article
3 of this Lease, Tenant shall pay "Tenant's Share" of the annual "Building
Direct Expenses," as those terms are defined in Sections 4.2.9 and 4.2.2 of this
Lease, respectively, which are in excess of the amount of Building Direct
Expenses applicable to the "Base Year" for such Building, as that term is
defined in Section 4.2.1, below; provided, however, if the Lease Commencement
Date occurs after January 1 of the Base Year, the amount of Building Direct
Expenses applicable to the Base Year shall be increased in order to reflect
Building Direct Expenses for an entire twelve (12) month period. Further, in no
event shall any decrease in Building Direct Expenses for such Building for any
"Expense Year" for the Building as that term is defined in Section 4.2.6 below,
below Building Direct Expenses for the Base Year entitle Tenant to any decrease
in Base Rent for the Building or any credit against sums due under this Lease.
It is the intent of Landlord and Tenant hereunder that Building Direct Expenses
be calculated for the Building separately based on the Building Direct Expenses
allocated to such Building. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are collectively referred to in this Lease as the "ADDITIONAL RENT", and the
Base Rent and the Additional Rent are collectively referred to in this Lease as
"RENT." All amounts due under this Article 4 as Additional Rent shall be payable
for the same periods and in the same manner as the Base Rent. Without limitation
on other obligations of Tenant which survive the expiration of the Lease Term,
the obligations of Tenant to pay the Additional Rent provided for in this
Article 4, and the obligation of Landlord to refund to Tenant any overpayment of
Building Direct Expenses pursuant to Section 4.2 below, shall survive the
expiration of the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 7.1 of
the Summary.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses," as those terms are defined in Sections
4.2.3 and 4.2.4 below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses," as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and amounts
which Landlord pays or accrues during any Expense Year because of or in
connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof.
Without limiting the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the cost of supplying all
utilities to the Project (except that electricity supplied to the Premises shall
be separately paid for by Tenant pursuant to Section 6.2.2 below), the cost of
operating, repairing, maintaining, and renovating the utility, telephone,
mechanical, sanitary, storm drainage, and elevator systems, and the cost of
maintenance and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections (other than those obtained in
connection with the initial
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construction of the Building and the Tenant Improvements) and the cost of
contesting any governmental enactments which may affect Operating Expenses, and
the costs incurred in connection with a governmentally mandated transportation
system management program or similar program; (iii) the cost of all insurance
carried by Landlord in connection with the Project as reasonably determined by
Landlord; (iv) the cost of landscaping, relamping, and supplies, tools,
equipment and materials used in the operation, repair and maintenance of the
Project, or any portion thereof; (v) the cost of parking area (including any
parking structures) repair, restoration, and maintenance; (vi) reasonable fees
and other costs, including reasonable management, consulting, legal and
accounting fees, of all contractors and consultants in connection with the
management, operation, maintenance and repair of the Project; (vii) payments
under any equipment rental agreements and the fair rental value of any on-site
or off-site management office space for the Project (as described in Section
6.1.4 below) not to exceed 2,000 rentable square feet (which fair rental value
for the purpose of determining the Direct Expenses for the Base Year and any
subsequent Expense Years shall be the same rate per rentable square foot as the
monthly rental rate per rentable square foot paid by Tenant to Landlord from
time to time for the Building under this Lease); (viii) wages, salaries and
other compensation and benefits, including taxes levied thereon, of all
non-executive persons reasonably engaged in the operation, maintenance and
security of the Project; (ix) costs under any instrument pertaining to the
reasonable sharing of costs by the Project (including, without limitation, any
assessments and association dues under the CC&R's); (x) operation, repair,
maintenance and replacement of all systems and equipment and components thereof
of the Project including, but not limited to HVAC systems, electrical, plumbing
and life-safety systems, elevators, any Project locker rooms and workout
facilities (except that the cost of electricity used to operate the HVAC system
shall be paid by Tenant directly pursuant to Section 6.2.2 below); (xi) the cost
of janitorial, alarm, security and other services, replacement of wall and floor
coverings, ceiling tiles and fixtures in common areas, maintenance and
replacement of curbs, roadways, driveways, and walkways, repair to roofs and
re-roofing; (xii) amortization (including interest on the unamortized cost) over
the useful life as Landlord shall reasonably determine, of the cost of acquiring
or the rental expense of personal property used in the maintenance, operation
and repair of the Project, or any portion thereof; (xiii) the cost of capital
improvements or other costs incurred in connection with the Project (A) which
are intended, in good faith, to effect economies in the operation or maintenance
of the Project, or any portion thereof, and only to the extent such anticipated
economies exceed the cost of such item, (B) that are required to comply with
present or anticipated conservation programs, (C) required by laws, ordinances
or regulations enacted after the date permits for the construction of the
Building were obtained, and (D) includable in Operating Expenses pursuant to
consistently applied and sound accounting and management principles (including,
but not limited to, the repair, resurfacing and replacement of parking lots and
Project roadways and driveways); provided, however, that any capital expenditure
shall be amortized (including interest on the amortized cost at Landlord's
actual cost of funds) over its useful life as Landlord shall reasonably
determine; and (xiv) costs, fees, charges or assessments imposed by, or
resulting from any mandate imposed on Landlord by, any federal, state or local
government for fire and police protection, trash removal, community services, or
other services which do not constitute "Tax Expenses" as that term is defined in
Section 4.2.8 below. Notwithstanding the foregoing, for purposes of this Lease,
Operating Expenses shall not, however, include:
(a) costs incurred in connection with the original construction of the
Building and costs of repairing, replacing or otherwise correcting latent
defects, the cost of any "tap fees" or one-time lump sum sewer or water
connection fees for the Building payable in connection with the original
construction of the Building, costs incurred (less costs of recovery) for
any item to the extent covered by a manufacturer's, materialman's, vendor's
or contractor's warranty and paid by such manufacturer, materialman, vendor
or contractor (provided, however, the costs incurred for any normal repair
or maintenance item (not attributable to the correction of start-up
problems, repairs or replacements) to the extent covered by a
manufacturer's, materialman's, vendor's or contractor's warranty in the
Base Year (and not in a subsequent Expense Year) and paid by such
manufacturer, materialman, vendor or contractor during the Base Year shall
be included in Operating
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Expenses); non-cash items such as deductions for depreciation and
amortization of the Building and the Building Systems and Equipment;
(b) costs, including marketing costs, legal fees, space planners'
fees, and brokerage fees incurred in connection with the original
construction or development of the Project or the original or future
leasing of the Project, and costs, including permit, license and inspection
costs and allowances and other concessions, incurred with respect to the
installation of tenant improvements made for new tenants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space for tenants or other occupants (or
prospective tenants or occupants) of the Project;
(c) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(d) costs for which Landlord is reimbursed by any tenant or occupant
of the Project or by insurance by its carrier or any tenant's carrier (or
if Landlord fails to carry the insurance required to be carried by Landlord
pursuant to Section 10.4 below, costs which would have been covered by
insurance had Landlord obtained the coverage required to be carried under
this Lease) or by the Association under the CC&R's or by anyone else, and
electric power costs for which any tenant directly contracts with the local
public service company;
(e) any bad debt loss, rent loss, or reserves for bad debts or rent
loss;
(f) costs associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated
with the operation of the Project). Costs associated with the operation of
the business of the partnership or entity which constitutes Landlord
including costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of the
Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, and
costs incurred in connection with any disputes between Landlord and its
employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord's general corporate overhead and
general and administrative expenses;
(g) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and
managing the Project vis-a-vis time spent on matters unrelated to operating
and managing the Project; provided, that in no event shall Operating
Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of regional Project manager or
Project engineer;
(h) amount paid as ground rental for the Project by Landlord;
(i) any compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord, provided that any compensation
paid to any concierge at the Project and any compensation paid regarding
parking operations shall be includable as an Operating Expense;
(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Expenses as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an
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emergency condition in the Project, or during periods when the systems or
equipment is being repaired;
(k) all items and services for which Tenant or any other tenant in the
Project reimburses Landlord or which Landlord provides selectively to one
or more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses elsewhere in
this Lease;
(n) costs incurred to comply with laws or otherwise relating to the
removal or abatement of hazardous material in the soil and costs incurred
to comply with laws or otherwise relating to the removal or abatement of
hazardous material in the Building or any Common Area improvements except
where such removal or abatement in the Building or Common Area improvements
is required to be performed during the Lease Term by laws not in effect as
of the Lease Commencement Date (in which case an amount not exceeding
twenty-five cents (.25(cent)) per rentable square foot of the Building for
the cost of such removal or abatement may be included in Operating Expenses
and any remaining costs shall be capitalized and amortized over a useful
life determined in accordance with generally accepted accounting principles
(but in no event less than ten (10) years) but only fifty percent (50%) of
such amortized amount may be included in Operating Expenses in each
calendar year during such amortization term);
(o) costs arising from Landlord's charitable or political
contributions;
(p) expenses directly resulting from the active or gross negligence of
Landlord, its agents, servants or employees;
(q) rental for any space in the Building set aside for conference
facilities, storage facilities or exercise facilities;
(r) the amounts of any payments by Landlord or to its affiliates for
goods or services in the Project in excess of a competitive (but not
necessarily the lowest) rate;
(s) costs (not including Tax Expenses), incurred in connection with
the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building, including brokerage commissions, consultant's,
attorneys' and accountant's fees, closing costs, title insurance premiums,
transfer taxes and interest charges;
(t) costs incurred by Landlord to correct any Year 2000 ("Y2K")
problems incurred as a direct result of any Y2K problems (provided that
this exclusion shall not apply to Y2K problems of utility providers to
Landlord);
(u) costs attributable to increases in expenses during the Lease Term
for management fees unless the total management fees for such Expense Year
(including any such increases therein) are not in excess of a competitive
(but not necessarily the lowest) rate for Comparable Buildings; and
(v) assessments, charges, and dues under the CC&R's which would result
in a duplicative charge to Tenant or a charge which is otherwise precluded
under this Section 4.2.7 or other provisions of this Lease including
without limitation (1) any expense, cost or charge which would be
duplicative of a charge for which Tenant already is responsible under this
Lease; (2) any expense for property management which would be duplicative
of a charge for which Tenant already is responsible under this Lease; (3)
special assessments levied under the CC&R's which would be precluded by
subsection 4.2.7(c) above; and (4) any expense precluded by Section 5.3
below.
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With respect to Landlord's regional Project manager, such individual's
wages and benefits may be included in Operating Expenses; provided, however,
that (1) the amount so included in Operating Expenses for the Project shall not
increase by more than Two Thousand Dollars ($2,000.00) in the first Expense Year
after the Base Year and (2) the maximum amount includable in Operating Expenses
in each Expense Year thereafter shall be one hundred five percent (105%) of the
maximum amount includable in Operating Expenses for the immediately preceding
Expense Year, except that in no event shall such amount included in Operating
Expenses in any such subsequent Expense Year be more than one hundred ten
percent (110%) of the average amount so included in the immediately preceding
two (2) Expense Years. By way of example only, and not as a limitation upon the
foregoing, if the amount of such wages and benefits included in Operating
Expenses for the Project in the Base Year is Forty Thousand Dollars
($40,000.00), such wages and benefits are Forty-Two Thousand Dollars
($42,000.00) in the first (1st), second (2nd) and third (3rd) Expense Years
after the Base Year, but in the fourth (4th) Expense Year after the Base Year
such wages and benefits are increased to Forty-Eight Thousand Dollars
($48,000.00), the maximum amount includable in Operating Expenses for the fourth
(4th) Expense Year after Base Year shall be Forty-Six Thousand Two Hundred
Dollars ($46,200.00) (i.e., 110% of $42,000.00) and the maximum amount
includable in the Operating Expenses for the fifth (5th) Expense Year after Base
Year shall be Forty-Eight Thousand Five Hundred Ten Dollars ($48,510.00) (i.e.,
110% of the average of $42,000.00 and $46,200.00).
There shall be deducted from Operating Expenses the following items in the
year in which they are applicable: (i) insurance and condemnation proceeds to
the extent that such proceeds relate to costs and expenses previously included
in Operating Expenses, (ii) all other funds recovered from any tenant of the
Building, contractors, or other parties as payment for expenses which were
previously included in Operating Expenses, other than tenants' contributions for
their proportionate share of Operating Expenses, and (iii) all funds available
through the CC&R's which were previously included in Operating Expenses.
Operating Expenses shall reflect reductions for cash discounts and trade
discounts taken by Landlord.
If Landlord does not carry a form of insurance coverage (e.g., earthquake
insurance) for the Building during any part of the Base Year but subsequently
obtains such insurance for the Building during the Lease Term, then from and
after the date upon which Landlord obtains such insurance coverage and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent
calendar year. Conversely, if Landlord carries a form of insurance coverage
(e.g., earthquake insurance) for the Building during any part of the Base Year
but subsequently no longer carries such form of insurance coverage, then from
and after the date upon which Landlord no longer carries such insurance coverage
and continuing throughout the period during which Landlord no longer maintains
such insurance coverage, Operating Expenses for the Base Year shall be deemed to
be decreased by the amount of premium Landlord incurred for such insurance for
the same period of time during the Base Year as such insurance was no longer
maintained by Landlord during such subsequent calendar year.
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, then Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Building is
not at least ninety-five percent (95%) occupied during all or a portion of the
Base Year or any Expense Year, Landlord shall make an appropriate adjustment to
the components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been paid had such Building been ninety-five
percent (95%) occupied; and the amount reasonably so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, or utility rate
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increases due to extraordinary circumstances including, but not limited to,
conservation surcharges, boycotts, embargoes or other shortages (unless such
labor rate or utility rate increases remain in effect after the Base Year, in
which event the Operating Expenses for the Base Year shall be adjusted when the
labor rate increases or utility rate increases adjust following the cessation of
the extraordinary circumstances causing such increases in the first place), or
amortized costs relating to capital improvements.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state, county,
or local governmental or municipal taxes, fees, charges or other impositions
of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property
taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project, or any portion
thereof. Tax Expenses for the Base Year of the Lease Term for the Building
(and the underlying land for the tax parcel) shall be calculated as if the
value of such Building, the Base, Shell and Core of such Building and the
Tenant Improvements thereto and related improvements to the Common Area as
reasonably allocated to such Building were fully assessed. With respect to
Tenant Improvements in each Building, such Tax Expenses shall be calculated
to include the actual "soft" and "hard" costs of such improvements. If Tenant
fails to utilize the entire Tenant Improvement Allowance for any particular
Building for Tenant Improvements, thereupon Tax Expenses shall be adjusted to
the actual amount so utilized.
4.2.8.2 Tax Expenses shall include, without limitation: (i) any
tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) any assessment, tax, fee, levy or charge in addition
to, or in substitution, partially or totally, of any assessment, tax, fee,
levy or charge previously included within the definition of real property
tax, it being acknowledged by Tenant and Landlord that Proposition 13 was
adopted by the voters of the State of California in the June 1978 election
("PROPOSITION 13") and that assessments, taxes, fees, levies and charges may
be imposed by governmental agencies for such services as fire protection,
street, sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants, and, in further recognition of the decrease in the level and
quality of governmental services and amenities as a result of Proposition 13,
Tax Expenses shall also include any governmental or private assessments or
the Project's contribution towards a governmental or private cost-sharing
agreement for the purpose of augmenting or improving the quality of services
and amenities normally provided by governmental agencies; (iii) any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the Rent payable hereunder, including, without limitation,
any business or gross income tax or excise tax or business license tax with
respect to the receipt of or measured by the amount of such rent, or upon or
with respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any
portion thereof; and (iv) any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises.
4.2.8.3 Any costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year
such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year
to which the refund is applicable, provided that in no event shall the amount
to be refunded to Tenant for any such Expense Year exceed the total amount
paid by Tenant as Additional Rent under this Article 4 for such Expense Year.
If Tax Expenses for any period
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during the Lease Term or any extension thereof are increased after payment
thereof for any reason, including, without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord upon
demand Tenant's Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the terms of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.8 (except as set forth in
Section 4.2.8.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, and (iii) any items paid by
Tenant under Section 4.5 of this Lease.
4.2.8.4 If in any Expense Year subsequent to the Base Year (the
"ADJUSTMENT YEAR"), the amount of Tax Expenses decreases below the amount of Tax
Expenses for the Base Year as a result of a Proposition 8 reduction, then for
purposes of all subsequent Expense Years, including the Expense Year in which
such decrease in Tax Expenses occurs, the Building Direct Expenses for the Base
Year shall be decreased by an amount equal to such decrease in assessed value or
direct assessments, as applicable, in the Adjustment Year. Conversely, if the
Tax Expenses thereafter are decreased by a lesser amount during any comparison
year subsequent to the Adjustment Year (the "READJUSTMENT YEAR") as a result of
Landlord's failure to secure a Proposition 8 reduction which is greater than or
equal to the Proposition 8 reduction secured during the Adjustment Year, then
for purposes of all subsequent comparison years, including the comparison year
in which such lesser decrease in Tax Expenses occurs, the Building Direct
Expenses for the Base Year shall only be decreased by an amount equal to the
decrease in assessed value or direct assessments, as applicable, during such
Readjustment Year which resulted from Landlord's failure to secure a Proposition
8 reduction greater than or equal to the Proposition 8 reduction secured during
the Adjustment Year; provided that any costs and expenses incurred by Landlord
in securing any Proposition 8 reduction shall not be included in Building Direct
Expenses for purposes of this Lease. Landlord and Tenant acknowledge that this
Section 4.2.8.4 is not intended to in any way affect (A) the inclusion in Tax
Expenses of the statutory two percent (2%) annual increase in Tax Expenses (as
such statutory increase may be modified by subsequent legislation), or (B) the
inclusion or exclusion of Tax Expenses pursuant to the terms of Proposition 13,
which shall be governed pursuant to the terms of Sections 4.2.8.1 through
4.2.8.3, above and Section 4.4.4 below. Notwithstanding the foregoing, in the
event that the Project is reassessed (the "REASSESSMENT") for real estate tax
purposes by the appropriate governmental authority pursuant to the terms of
Proposition 13, and such Reassessment results in a decrease in Tax Expenses, the
component of Tax Expenses for the Base Year which is attributable to the
assessed value of the Project under Proposition 13 prior to the Reassessment
(without taking into account any Proposition 8 reductions) shall be reduced for
the purposes of comparison to all subsequent Expense Years (commencing with the
Expense Year for which the Reassessment is first attributable) to an amount
equal to the real estate taxes based upon such Reassessment.
4.2.9 "TENANT'S SHARE" with respect to Building Direct Expenses, shall
equal the percentage which the total rentable square footage of the space leased
by Tenant in such Building bears to the total rentable square footage of the
Building. In the event either the rentable square feet of the Premises and/or
the total rentable square feet of the Building is remeasured pursuant to Section
1.2 above, Tenant's Share shall be appropriately adjusted, and, as to the
Expense Year in which such change occurs, Tenant's Share for such Expense Year
shall be determined on the basis of the number of days during such Expense Year
that each such Tenant's Share was in effect.
4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the Building
will be a part of a multi-building project and that the costs and expenses
incurred in connection with the Project (I.E. the Direct Expenses) should be
shared among the tenants of the Building and the tenants of the Adjacent
Buildings in the Project. Such allocation shall be made in accordance
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with the CC&R's; provided, however, that to the extent such allocation is not
addressed in the CC&R's, Landlord shall, in Landlord's reasonable judgment,
determine which Direct Expenses are properly allocable to an individual building
(because the expense applies to only such building) and which Direct Expenses
shall be allocable to tenants of more than one (1) building (in which case
Building Direct Expenses shall include those expenses so allocated to the
Building based upon the relative square footages of the affected buildings).
4.3.2 COST POOLS. Notwithstanding anything to the contrary contained
herein, Landlord shall have the right, from time to time, to equitably allocate
some or all of the Direct Expenses for the Project among different portions or
occupants of the Project (the "COST POOLS"), in Landlord's reasonable judgment.
Such Cost Pools may include, but shall not be limited to, the office space
tenants of a building of the Project or of the Project, and the retail space
tenants of a building of the Project or of the Project. The Direct Expenses
within each such Cost Pool shall be allocated and charged to the tenants within
such Cost Pool in an equitable manner.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Building Direct
Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "EXCESS").
4.4.1 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. By May 1 of
each year, Landlord shall give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "ESTIMATED
EXCESS") as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary but Landlord shall not do
so more than twice during any Expense Year. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the next
to last sentence of this Section 4.4.1). Such fraction shall have as its
numerator the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator. Until a
new Estimate Statement is furnished (which Landlord shall have the right to
deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12th) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant. Landlord shall maintain books and records with respect to
Building Direct Expenses in accordance with generally accepted and sound
accounting and management practices, consistently applied.
4.4.2 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. In addition, Landlord shall give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year for the
Building, and which shall indicate the amount of the Excess. Upon receipt of the
Statement for each Expense Year commencing or ending during the Lease Term, if
an Excess is present, Tenant shall pay, with its next installment of Base Rent
due, the full amount of the Excess for such Expense Year, less the amounts, if
any, paid during such Expense Year as Estimated Excess, and if Tenant paid more
as Estimated Excess than the actual Excess, Tenant shall receive a credit in the
amount of Tenant's overpayment against Rent next due under this Lease. In
addition, Landlord shall, within ten (10) days after written request from
Tenant, distribute (or if Landlord does not control the Association, request the
Association to distribute) to Tenant a copy of (1) the budget, notice and
summary prepared pursuant to Section 3.3 of the CC&R's and (2) the accounting
prepared pursuant to Section 3.6(c) of the CC&R's. The failure of Landlord to
timely furnish the Statement, or any other information required under this
Section 4.4.2, for any Expense Year shall not prejudice Landlord or Tenant from
enforcing
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its rights under this Article 4. Even though the Lease Term has expired and
Tenant has vacated the Premises, when the final determination is made of
Tenant's Share of Building Direct Expenses for the Expense Year in which this
Lease terminates, if an Excess if present, Tenant shall pay to Landlord such
amount within thirty (30) days, and if Tenant paid more as Estimated Excess than
the actual Excess, Landlord shall, within thirty (30) days, deliver a check
payable to Tenant in the amount of the overpayment. The provisions of this
Section 4.4.2 shall survive the expiration or earlier termination of the Lease
Term.
4.4.3 TENANT'S AUDIT RIGHT. Within six (6) months after receipt of a
Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set forth
in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default in the payment of Base Rent
or Building Direct Expenses after expiration of all applicable cure periods and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord's records in strict confidence. Landlord shall cooperate with Tenant in
obtaining all necessary or appropriate information from the Association.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement by written notice to
Landlord within thirty (30) days after the Review Period shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement. If after such
inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing that Tenant still disputes such amounts, a certification as
to the proper amount shall be made by an independent certified public accountant
selected by Landlord and reasonably approved by Tenant who is a member of a
nationally or regionally recognized accounting firm. Landlord shall cooperate in
good faith with Tenant and the accountant to show Tenant and the accountant the
information upon which the certification is to be based. If such certification
by the accountant proves that the Building Direct Expenses set forth in the
Statement were (i) overstated by less than two percent (2%), then the cost of
the accountant and the cost of such certification shall be paid for by Tenant,
(ii) overstated by two percent (2%) or more but less than three percent (3%),
then the cost of the accountant and the cost of certification shall be split
evenly between Landlord and Tenant, or (iii) overstated by three percent (3%) or
more, then the cost of the accountant and the cost of such certification shall
be paid for by Landlord. Promptly following the parties receipt of such
certification, the parties shall make such appropriate payments or
reimbursements, as the case may be, to each other, as are determined to be owing
pursuant to such certification.
4.4.4 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease in the event that at any time
during the first seven (7) years of the Lease Term, any sale, refinancing, or
change in ownership of such Building is consummated, and as a result thereof,
and to the extent that in connection therewith, a Reassessment occurs pursuant
to the terms of Proposition 13, then the terms of this Section 4.4.4 shall apply
to such Reassessment for the Building.
4.4.4.1 THE TAX INCREASE. For purposes of this Article 4, the
term "Tax Increase" shall mean that portion of the Tax Expenses, as
calculated immediately following the Reassessment, which is attributable
solely to the Reassessment. Accordingly, the term Tax Increase shall not
include any portion of the Tax Expenses, as calculated immediately following
the Reassessment, which is attributable to (i) the initial assessment of the
value of the land associated with the Building, the Base, Shell and Core of
such Building, improvements in the Project or any "soft" costs, permit costs,
site improvement costs or entrepreneurial profit added by the assessor due to
construction of the Project, (ii) assessments which were pending immediately
prior to the Reassessment which assessments were conducted during, and
included in, such Reassessment, or which assessments were otherwise rendered
unnecessary following the Reassessment, or (iii) the annual inflationary
increase of real estate taxes permitted to be assessed annually under
Proposition 13.
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4.4.4.2 TAX INCREASE PROTECTION. During the first seven (7)
years of the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase. Notwithstanding the foregoing, Landlord shall be
permitted to pass through to Tenant any Tax Increase resulting from a change
in ownership of the Project arising out of the sale, financing or merger of
all or substantially all of the assets or stock of and/or partnership
interests and/or limited liability company interests owned by Kilroy Realty
Corporation and/or its affiliates.
4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13
PROTECTION AMOUNT ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of
Tax Expenses which Tenant is not obligated to pay or will not be obligated to
pay during the Lease Term in connection with a particular Reassessment
pursuant to the terms of this Section 4.4.4, shall be sometimes referred to
hereinafter as "Proposition 13 Protection Amount." If the occurrence of a
Reassessment is reasonably foreseeable by Landlord and the Proposition 13
Protection Amount attributable to such Reassessment can be reasonably
quantified or estimated for each Lease Year commencing with the Lease Year in
which the Reassessment will occur, the terms of this Section 4.4.4.3. shall
apply to each such Reassessment. Upon notice to Tenant, Landlord shall have
the right to purchase the Proposition 13 Protection Amount relating to the
applicable Reassessment (the "Applicable Reassessment"), at any time during
the Lease Term, by paying to Tenant an amount equal to the "Proposition 13
Purchase Price," as that term is defined below, provided that the right of
any successor of Landlord to exercise its right of repurchase hereunder shall
not apply to any Reassessment which results from the event pursuant to which
such successor of Landlord became the landlord under this Lease. As used
herein, "Proposition 13 Purchase Price" shall mean the present value of the
Proposition 13 Protection Amount remaining during the Lease Term, as of the
date of payment of the Proposition 13 Purchase Price by Landlord. Such
present value shall be calculated (i) by using the portion of the Proposition
13 Protection Amount attributable to each remaining Lease Year (assuming for
purposes of this computation that the amount of such Proposition 13
Protection Amount benefited Tenant on an equal monthly basis at the end of
each month during each Lease Year), as the amount to be discounted, and (ii)
by using an eight percent (8%) discount rate, compounded annually, for each
monthly amount to be discounted. Upon such payment of the Proposition 13
Purchase Price, the provisions of Section 4.4.4.2 of this Lease shall not
apply to any Tax Increase attributable to the Applicable Reassessment. Since
Landlord is estimating the Proposition 13 Purchase Price because a
Reassessment has not yet occurred, then when such Reassessment occurs, if
Landlord has underestimated the Proposition 13 Purchase Price, then upon
notice by Landlord to Tenant, Tenant's Rent next due shall be credited with
the amount of such under-estimation, and if Landlord overestimates the
Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Rent
next due shall be increased by the amount of the overestimation. The amount
of any such underestimate or overestimate shall be calculated by taking the
difference between the Proposition 13 Purchase Price for the Applicable
Reassessment actually paid to Tenant and the Proposition 13 Purchase Price
for the Applicable Reassessment as it should have been computed had all
relevant facts concerning the Applicable Reassessment been known at the time
such Purchase Price was originally computed, and adding interest thereto at a
rate per annum equal to ten percent (10%), compounded annually, from the date
such Purchase Price was paid to Tenant through the date that the amount of
the underestimate or overestimate is to be credited or debited (as the case
may be) against Rent next due hereunder.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
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4.5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the Tenant Improvement Allowance actually
used to build-out the Premises then the Tax Expenses levied against Landlord or
the property by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facilities; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises for office, software
development, training, research and development, storage, distribution and other
lawful uses permitted under the CC&R's (as defined below) and the Project's
permitted zoning and for no other purpose or purposes whatsoever without
Landlord's consent, which may be withheld in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant shall
not use, or suffer or permit any person or persons to use, the Premises or any
part thereof for any use or purpose contrary to the provisions of the Rules and
Regulations set forth in Exhibit "D," attached hereto, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project.
Tenant shall not do or permit anything to be done in or about the Premises which
will obstruct or interfere with the rights of other tenants or occupants of the
Buildings or Project, or injure them or use or allow the Premises to be used for
any unlawful purpose, nor shall Tenant cause or maintain any nuisance in, on or
about the Premises. Tenant shall not use or knowingly allow another person or
entity to use any part of the Premises for the storage, use, treatment,
manufacture or sale of "Hazardous Material," (as that term is defined in Section
29.23 of this Lease); provided, however, Tenant may use commercially reasonable
amounts of any Hazardous Material as is normal and customary for general office
use so long as Tenant complies, at Tenant's sole cost and expense, with all
Applicable Laws relating thereto.
5.3 CC&R's. Tenant acknowledges that Landlord intends to record an
Agreement Between Land Owners Including Covenants, Conditions and Restrictions
and Grants of Easements for Carmel Center and Including Termination of Both
Former Declaration and Prior Grants of Easements (the "CC&R'S") over the
Project. Tenant hereby approves the draft of CC&R's attached hereto as Exhibit
"F" and made a part hereof and hereby subordinates this Lease to the CC&R's and
any amendments or modifications thereto; provided, however, that any
modifications to the draft of the CC&R's attached as Exhibit "F" which may have
a material effect on Tenant's use or enjoyment of, or access to, the Premises or
Project shall be subject to Tenant's prior approval, which approval shall not be
unreasonably withheld or delayed. Tenant shall, within fifteen (15) days after
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination of this
Lease to the CC&R's. As of the date of execution of this Lease, Landlord
contemplates that it will be the declarant under the CC&R's and a California
nonprofit mutual benefit corporation has been, or will be, established (the
"ASSOCIATION") and charged with certain duties under the CC&R's. Certain
individuals who are directors, officers or employees of Landlord, the members of
Landlord, or affiliates thereof, are, or will be, members of the board of
directors of
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the Association. The board shall have the right to appoint members and
alternatives members of the Architectural and Development Review Committee (the
"COMMITTEE") contemplated by the CC&R's. As an owner of property subject to the
CC&R's, Landlord is a member of the Association for each parcel within the
Project which is subject to assessments under the CC&R's. With respect to
Landlord's respective capacities as declarant, member of the board, and a member
of the Committee under the CC&R's, Landlord covenants not to do any of the
following without Tenant's consent (which shall not be unreasonably withheld)
(i) take any action which in Landlord's reasonable opinion will jeopardize or be
detrimental to Tenant's rights under this Lease and Tenant's use and enjoyment
of its leasehold estate, (ii) take any action which has the effect of materially
increasing assessments or costs incurred by Landlord under the CC&R's, which
will result in an unreasonable increase in Direct Expenses in Expense Years
after the Base Year, (iii) vote in favor of or approve any new improvements,
operation or use on any of the properties covered by the CC&R's without first
consulting with Tenant, and (iv) knowingly allow any use of the parking
facilities within the Project (as defined in this Lease) that is not allowed
pursuant to the reciprocal parking rights described in the CC&R's. Landlord
shall provide (or if Landlord does not control the Association, Landlord will
request the Association to provide) to Tenant the draft budget prepared from
time to time in connection with the CC&R's for Tenant's review and comment, and
Landlord will reasonably consider Tenant's comments in preparing the budget.
Further, Landlord represents and warrants that the signage contemplated by this
Lease is in compliance with the CC&R's and the Sign Plan defined therein.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following services
on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and guidelines
applicable thereto, Landlord shall provide heating, ventilation and air
conditioning ("HVAC") , pursuant to the HVAC service levels set forth in Exhibit
"G" attached hereto, from Monday through Friday, during the period from 6:00
A.M. to 7:00 P.M. and on Saturday during the period from 8:00 A.M. to 12:00 P.M.
(the "BUILDING HOURS"), except for the dates of observation of New Year's Day,
Presidents Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, and
Christmas Day and other nationally recognized holidays that are not nationally
recognized as of the date of this Lease (collectively, the "HOLIDAYS").
Notwithstanding the foregoing, Landlord shall change the Building Hours as
requested by Tenant from time to time (but not more than two (2) times per
calendar year) so long as (i) the total Building Hours for the weekly period
(i.e., Monday through Sunday) do not exceed sixty-nine (69) hours, (ii) Tenant
leases the entire Building, (iii) any such Building Hours so designated by
Tenant for any day must be consecutive hours, and (iv) Tenant shall be
responsible for any additional reasonable costs incurred by Landlord as a result
of such change in hours requested by Tenant (which costs shall be payable as
Additional Rent within thirty (30) days after Tenant's receipt of invoice
therefor). Tenant shall be entitled to install, as an initial Tenant Improvement
or as an Alteration, dedicated heating, ventilation and air conditioning units
("PACKAGE UNITS") within or serving the Premises at Tenant's sole cost and
expense (but not window units). The plans and specifications for any Package
Units shall, as indicated in Article 8 below and the Tenant Work Letter (as
applicable), be subject to Landlord's reasonable approval and the electricity
required to power such Package Units shall be included within the allotment set
forth in Section 6.1.2 below and such electricity and any other utilities used
by such Package Units shall be payable by Tenant in accordance with Section 6.2
below. Tenant shall be solely responsible for maintenance and repair of the
Package Units and such units shall be considered to be a fixture within the
Premises and shall remain upon the Premises upon the expiration or earlier
termination of Lease Term unless Landlord requires Tenant to remove such items
upon expiration or earlier termination of this Lease pursuant to the provisions
of Section 8.5 below. Notwithstanding the foregoing, Tenant may remove any
"Libert" or similar type HVAC units from the Premises at any time prior to
expiration or earlier termination of the Lease Term provided that Tenant removes
all associated
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wiring and cabling, repairs any damage resulting from such removal and restores
the Premises to the condition prior to the placement of such unit(s), reasonable
wear and tear excepted.
6.1.2 Landlord shall provide adequate electrical wiring, facilities
and power sufficient to provide Tenant with four (4) watts per rentable square
foot of connected electrical load for Tenant's equipment and sufficient to
provide an additional one point five (1.5) watts per rentable square foot of
connected electrical load for Tenant's lighting fixtures. Any such electrical
usage shall be subject to applicable laws and regulations. Tenant shall bear the
cost of replacement of any non-Building standard lamps, starters and ballasts
for lighting fixtures within the Premises; replacement of any such Building
standard items (as shown on the Specifications) shall be included in Operating
Expenses.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall manage the Project and employ qualified property
management personnel and maintenance personnel to operate and manage the Project
in accordance with a standard which is not less than customarily observed in the
operation and management of Comparable Buildings. Such management personnel and
maintenance personnel shall, at a minimum, include the following: upon
completion of Building 5, on-site management shall include a full-time property
manager, an assistant property manager and an allocation of time for a regional
property manager; engineering staff will include one (1) senior full-time
engineer as of the Lease Commencement Date and an additional journeyman level
engineer to be hired upon the Lease Commencement Date for the initial Floor
Group for Building 3 and stationed at the Project; and one (1) full-time day
porter will be stationed at the Project upon the Lease Commencement Date whose
duties shall be as specified in Exhibit "H-2." The management office for the
Project shall be located in the Del Mar Heights area until such time as Building
5 has been completed, at which time the management office for the Project shall
be located within the Project for the remainder of the Lease Term. Landlord
shall at all times comply with the service levels and performance standards
specifically described in Exhibit "G" and Exhibit "H-1" and Exhibit "H-2",
attached hereto, which may be modified by Landlord from time to time so long as
an equivalent or better level of service is provided and such modification is
reasonable and customary for Comparable Buildings; provided, however, that if
any such modification is made by Landlord and results in an increase in
Operating Expenses, then from and after the date upon which such modification is
effective and continuing throughout the period during which such modification is
effective, Operating Expenses for the Base Year shall be increased by the amount
Landlord reasonably determines it would have incurred had the modification been
in effect throughout the Base Year.
6.1.5 Landlord shall provide janitorial services five (5) days per
week except the date of observation of the Holidays, in and about the Building
in accordance with the standards described in Exhibit "H-1" attached hereto and
window washing services in accordance with a standard which is not less than
that customarily observed in other Comparable Buildings. Notwithstanding the
foregoing, Tenant may elect upon reasonable prior notice to Landlord to require
Landlord to change the provider of such janitorial services in the Building in
accordance with, and subject to, Section 6.7 below.
6.1.6 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours; Landlord shall have one
elevator available at all other times, including Holidays.
6.1.7 Landlord, at its sole cost but includable as an Operating
Expense, shall provide a security system for the Project, including equipment,
on-site personnel, procedures and systems as provided in Exhibit "I" attached
hereto and made a part hereof. Security procedures shall be implemented to
regulate access to the Project during certain hours provided that, subject to
such restrictions and subject to the other provisions of this Lease, Tenant
shall have access to the Premises seven (7) days a week, twenty-four (24) hours
per day. Subject to Landlord's reasonable approval of Tenant's plans and
specifications and Tenant's compliance with the terms
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and conditions of Article 8, Tenant shall be entitled to install its own
security systems for the Premises, which shall be located within the Premises
and shall not interfere with the Project systems.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems (collectively, "BUILDING SYSTEMS AND EQUIPMENT") .
6.2 UTILITIES COSTS; OVERSTANDARD TENANT USE.
6.2.1 If Tenant uses heat-generating machines, machines other than
normal office machines, or equipment or lighting other than Building standard
lights in the Building, which adversely and materially affects the temperature
otherwise maintained by the air conditioning system or materially increase the
water normally furnished for such Building by Landlord pursuant to the terms of
Section 6.1 of this Lease, Landlord shall have the right to install
supplementary air conditioning units or other facilities in such Building,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance shall be paid by
Tenant to Landlord within thirty (30) days after billing by Landlord.
6.2.2 The Tenant Improvements to be constructed for the Building shall
include an electrical meter section and switchgear to measure electricity
supplied to the Premises (including, without limitation, electricity required in
order to provide HVAC to the Premises). Tenant shall contract directly with an
electricity service provider for electrical service to the Premises (including,
without limitation, electricity required in order to provide HVAC to the
Premises) and Tenant shall timely pay all charges for such service from such
provider and Landlord shall have no obligation with respect to the provision of
such service. The actual cost of electricity provided to the Premises
(including, without limitation, electricity required in order to provide HVAC to
the Premises) shall, notwithstanding anything to the contrary contained in this
Lease, not be included in Operating Expenses (including, without limitation,
Operating Expenses for the Base Year) for the Building (except for electricity
relating to the Common Areas, which shall be included in Operating Expenses
(including, without limitation, Operating Expenses for the Base Year) and paid
by Tenant as part of Building Direct Expenses).
6.2.3 If Tenant desires to use HVAC during hours other than those for
which Landlord is obligated to supply such HVAC pursuant to the terms of Section
6.1 of this Lease (i.e., in excess of sixty-nine (69) hours in any week), Tenant
shall not be required to give Landlord prior notice of Tenant's desired use but
rather Tenant may control its after-hours HVAC use from within the Premises.
Landlord shall supply such after-hours HVAC to Tenant subject to Tenant's
payment to Landlord of an amount reasonably determined by Landlord to be
attributable to increased wear and tear on existing Building Systems and
Equipment caused by such after-hours use, any engineer's over-time and a nominal
amount attributable to overhead and accounting costs. Amounts payable by Tenant
to Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be paid within thirty (30) days after Tenant's receipt of
invoice therefor.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent (except for abatement as specifically provided
in Section 6.8 below), or otherwise, for failure to furnish or delay in
furnishing any service (including telephone, electrical and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
the Project after diligent and reasonable efforts to do so, by any accident or
casualty whatsoever, by act or default of Tenant or other parties, or by any
other cause beyond Landlord's reasonable control; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
(except for abatement as specifically provided in Section 6.8
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below), or performing any of its obligations under this Lease. Furthermore,
Landlord shall not be liable under any circumstances for a loss of, or injury
to, property or for injury to, or interference with, Tenant's business,
including, without limitation, loss of profits, however occurring, through or in
connection with or incidental to a failure to furnish any of the services or
utilities as set forth in this Article 6, except in any circumstances where the
failure to furnish any such services or utilities arises out of or is a result
of, Landlord's sole or gross negligence or intentional misconduct (in which case
Landlord shall be responsible to the extent such item is not covered by
insurance required to be carried by Tenant under this Lease or actually carried
by Tenant). Landlord shall be entitled to cooperate in a reasonable manner with
the mandatory requirements of national, state or local governmental agencies or
utilities suppliers in reducing the consumption of energy or other resources
(including temporary stoppages in the supply of any utilities), and Landlord
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the Rent herein reserved be abated (except
as expressly provided in Section 6.8 below) by reason of such cooperation by
Landlord.
6.4 ADDITIONAL SERVICES. Landlord shall also provide any additional
services which may be reasonably requested by Tenant, including, without
limitation, locksmithing, lamp replacement, additional janitorial service, and
additional repairs and maintenance, provided that Tenant shall pay to Landlord
within fifteen (15) days after receipt of written notice from Landlord, the sum
of all costs to Landlord of such additional services plus a reasonable
administration fee. Charges for any service for which Tenant is required to pay
from time to time hereunder shall be deemed Additional Rent hereunder and shall
be billed on a monthly basis. Tenant shall not be required to use Landlord for
such any additional services; provided, however, that Landlord shall have the
right to reasonably approve any other provider of such services should Tenant
elect not to use Landlord for the providing of such services. However, nothing
in this Section 6.4 shall be construed as requiring Landlord to provide any such
service which would, in Landlord's reasonable judgment, result in the receipt by
Landlord of amounts that would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Internal Revenue Code of 1986, as
amended, or any successor section thereto.
6.5 UTILITY DEREGULATION.
6.5.1 SELECTION OF SERVICE PROVIDER. Landlord has advised Tenant that
presently San Diego Gas and Electric ("ELECTRIC SERVICE PROVIDER") is the
utility company selected by Landlord to provide electricity service for the
Project. Notwithstanding the foregoing, if permitted by Applicable Law, upon
mutual agreement of Tenant and Landlord, the contract for service to the Common
Areas will be let to a different company or companies providing electricity
service (each such company shall hereinafter be referred to as an "ALTERNATE
SERVICE PROVIDER"). Any and all rebates or discounts enjoyed or realized as a
result of the selection of an Alternate Service Provider or the continued use of
the Electric Service Provider shall be reflected in the payments to be made by
Tenant pursuant to Article 4 above. However, if, after the Base Year, the
parties agree to utilize an Alternate Service Provider, then from and after the
date upon which the Alternate Service Provider is retained and continuing
throughout the period during which the Alternate Service Provider is retained,
Operating Expenses for the Base Year shall be reduced by the amount Landlord
reasonably estimates it would have saved had the Alternate Service Provider been
retained throughout the Base Year (for service to the Common Areas) based upon
the rates of the Alternate Service Provider prevailing throughout the Base Year.
Landlord and Tenant acknowledge that, with respect to electricity service to be
provided to the Premises, Tenant shall be entitled to retain any provider
(including, without limitation, an Alternate Service Provider) and that Tenant
will be contracting directly with such provider as indicated in Section 6.2.2
above.
6.5.2 TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate with
Landlord, the Electric Service Provider, and any Alternate Service Provider at
all times and, as reasonably necessary, shall allow Landlord, Electric Service
Provider, and any Alternate Service Provider reasonable access to the Building's
electric lines, feeders, risers, wiring and any other machinery within the
Premises, provided Landlord shall take all reasonable measures to minimize any
interference or disruption to Tenant's use of the Premises. In addition,
Landlord
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shall cooperate with Tenant and Tenant's provider of electrical service to the
Premises at all times and as reasonably necessary to allow access to the
facilities of the Building necessary for the provision of such service.
6.6 EMERGENCY GENERATOR. Subject to Tenant's compliance with all Applicable
Laws and Landlord's prior approval of all plans and specifications, which
approval shall not be unreasonably withheld, Landlord shall permit Tenant to
install, at Tenant's sole cost and expense, an above-ground emergency generator
(as a Miscellaneous Common Area Item) for Tenant's use in the Building. Such
emergency generator shall be used by Tenant only during (i) testing and regular
maintenance, and (ii) any period of electrical power outage in the Building.
Tenant shall be entitled to operate the emergency generator for testing and
regular maintenance only upon notice to Landlord and at times reasonably
approved by Landlord. Landlord's consent to Tenant's plans for the emergency
generator may be conditioned on Tenant complying with such reasonable
requirements imposed by Landlord, based on the advice of Landlord's engineers,
so that the systems and equipment of the Building are not adversely affected.
Any repairs and maintenance of such generator shall be the sole responsibility
of Tenant. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, remove the emergency generator and all
associated cabling and wiring and repair all damage resulting from such removal.
Landlord makes no representation or warranty with respect to the emergency
generator or its suitability for use by Tenant and Article 10 of the Lease shall
apply with respect to Tenant's use, maintenance, repair and operation of the
emergency generator.
6.7 SUBSTITUTION OF VENDORS. Upon request from Tenant, Landlord shall
review with Tenant the performance and cost of vendors and contract service
providers for the Project and except for the property manager and the property
management staff and engineers, Tenant shall have the right to require Landlord
to substitute other vendors or contract service providers reasonably designated
by Tenant provided that (i) Tenant then leases on a direct basis (i.e., not
including any space leased by Tenant pursuant to a sublease) at least fifty
percent (50%) of the space then constructed for lease at the Project, (ii) such
substitution does not result in any increase in Operating Expenses during the
Base Year, (iii) such substitution does not result in any invalidation or
reduction in coverage of any warranties for the Project (unless Tenant agrees to
be responsible for the costs which would have otherwise been covered by such
warranties), and (iv) Landlord reasonably approves such substitute vendor or
contract service provider. If a vendor or contract service provider is
substituted pursuant to this Section 6.7 above and if the annual cost of such
substitute vendor or contract service provider is less than the amount included
in Operating Expenses during the Base Year for the same service, effective upon
the date of such substitution, Operating Expenses for the Base Year shall be
reduced by the amount of such difference.
6.8 ABATEMENT EVENT. An "ABATEMENT EVENT" shall be defined as an event that
prevents Tenant from using the Premises or any portion thereof, as a result of
any failure to provide services or access to the Premises, where (i) Tenant does
not actually use the Premises or such portion thereof, and (ii) such event is
not caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. In addition, an "Abatement Event" shall not be deemed
to have occurred where such failure is caused by (a) an Alternate Service
Provider for the Premises where such failure would generally not have occurred
had Tenant utilized the Electric Service Provider (or its successor), or (b) an
Alternate Service Provider for service to the Common Areas where Landlord
reasonably conditioned its approval of the use of such Alternate Service
Provider pursuant to Section 6.5.1 upon Tenant assuming the risk that any
failures to provide services or access to the Premises caused by such Alternate
Service Provider would not be deemed to constitute an "Abatement Event" pursuant
to this Section 6.8. Tenant shall give Landlord notice ("ABATEMENT NOTICE") of
any such Abatement Event, and if such Abatement Event continues beyond the
"Eligibility Period" (as that term is defined below), then the Base Rent and
Tenant's Share of Direct Expenses shall be abated entirely or reduced, as the
case may be, after expiration of the Eligibility Period for such time that
Tenant continues to be so prevented from using, and does not use, the Premises
or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises leased by Tenant; provided, however, in the
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event that Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period and the
remaining portion of the Premises is not sufficient to allow Tenant to
effectively conduct its business therein, and if Tenant does not conduct its
business from such remaining portion, then for such time after expiration of the
Eligibility Period during which Tenant is so prevented from effectively
conducting its business therein, the Base Rent and Tenant's Share of Direct
Expenses for the entire Premises shall be abated entirely for such time as
Tenant continues to be so prevented from using, and does not use, the Premises
for Tenant's business purposes. If, however, Tenant reoccupies any portion of
the Premises during such period, the Base Rent and Tenant's Share of Direct
Expenses allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date Tenant
reoccupies such portion of the Premises. The term "ELIGIBILITY PERIOD" shall
mean a period of five (5) consecutive business days after Landlord's receipt of
any Abatement Notice(s). If the Abatement Event is caused by the negligence or
willful misconduct of Tenant, or by the circumstances described in the second
(2nd) sentence of this Section 6.8 with respect to an Alternate Service
Provider, the Abatement described in this Section 6.8 shall not apply; however,
Tenant may seek recovery from its business interruption insurance. Except as
provided in Article 11 and Article 13, such right to abate Base Rent and
Tenant's Share of Direct Expenses shall be Tenant's sole and exclusive remedy at
law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 OBLIGATIONS. Landlord shall maintain and repair any and all defects in
the Base, Shell and Core of the Building, including, without limitation, the
foundations, floor/ceiling slabs, structural portions of the roof (including the
roof membrane), curtain wall, exterior glass, columns, beams, shafts, stairs,
stairwells, and elevator cabs, and shall also maintain and repair the basic
mechanical, electrical, life safety, plumbing, sprinkler systems and heating,
ventilating and air conditioning systems of the Building (i.e., all of such
systems except for distribution within the Premises, in which case (i) Landlord
shall be responsible for repair of construction defects, (ii) with respect to
design defects, that party that retained the consultant to design such
distribution shall be responsible for repair of the defect and additional costs
incurred as a result of such defect (to the extent not covered by warranty or
insurance), and (iii) Tenant shall be responsible for all other repairs and
maintenance), the exterior portions of the Building and the Common Areas of the
Project. In addition, Landlord shall make repairs necessitated by the acts or
omissions of Landlord or its respective agents, employees or contractors. Tenant
shall, at Tenant's own expense, keep the Premises and specifically all tenant
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term, and in this regard, Tenant shall
at Tenant's own expense within a reasonable period of time but under the
supervision and subject to the prior approval of Landlord with respect to any
repairs for which a building permit is required, adequately repair all such
damage thereto. Except with respect to the express maintenance and repair
obligations of Tenant under this Lease, Landlord shall maintain and repair the
Building and the Project (including the Common Areas) and replace or repair all
damaged, broken, or worn fixtures and appurtenances, the cost of which shall be
included in Operating Expenses (subject to the provisions of Article 4 above).
Landlord may enter the Premises at all reasonable times upon reasonable prior
notice to Tenant (except that no notice will be required in case of emergency)
to make such repairs, alterations, improvements or additions to the Buildings or
to the Project or to any equipment located in the Project as Landlord is
obligated under this Lease or Landlord shall deem reasonably necessary or as
Landlord may be required to do by governmental or quasi-governmental authority
or court order or decree.
7.2 TENANT'S FAILURE TO COMPLY. If Tenant fails to make any repairs
required of Tenant under this Lease, after written notice to Tenant and the
expiration of a reasonable cure period, Landlord may (but need not) enter the
Premises pursuant to Section 7.1 above to make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage (not to
exceed five percent (5%)) of the cost thereof to compensate Landlord for all
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overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements within fifteen (15)
days of being billed for same. Except as expressly provided in Section 7.3
below, Tenant hereby waives and releases its right to make repairs at Landlord's
expense under Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
7.3 LANDLORD'S FAILURE TO COMPLY. If Tenant provides notice to Landlord of
an event or circumstance which requires the action of Landlord with respect to
the provision of repairs as set forth in Section 7.1 of this Lease, and Landlord
fails to provide such action as required by the terms of this Lease within
thirty (30) days after the date of such notice from Tenant (or if such repair is
reasonably expected to require longer than thirty (30) days to complete, if
Landlord shall fail to commence such repair within said thirty (30) day period
or to diligently prosecute such repair to completion), then Tenant may proceed
to take the required action upon delivery of an additional ten (10) business
days notice and cure period to Landlord specifying that Tenant is taking such
required action, and if such action was required under the terms of this Lease
to be taken by Landlord, then Tenant shall be entitled to prompt reimbursement
by Landlord of Tenant's reasonable costs and expenses in taking such action
including a percentage (not to exceed five percent (5%) of the cost thereof to
compensate Tenant for all overhead, general conditions, fees and other costs or
expenses arising from Tenant's involvement with such repairs and replacement) in
which case the reimbursed amount shall be included in Operating Expenses to the
extent the action, if taken by Landlord, would have been includable in Operating
Expenses pursuant to Section 4.2.7 above. In the event Tenant takes such action,
and such work will affect the Building Systems and Equipment, structural
integrity of the Building or exterior appearance of the Building, Tenant shall
use only those contractors used by Landlord in the Project for such work unless
such contractors are unwilling or unable to perform such work or their pricing
is unreasonable, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
comparable first-class, institutional quality, office buildings in the San
Diego, California area whose pricing is reasonable. If Tenant is entitled to
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
any action pursuant to this Section 7.3, Tenant shall so notify Landlord in
writing (the "REIMBURSEMENT NOTICE"), which Reimbursement Notice shall specify
in detail such costs and expenses. Within thirty (30) days after Landlord's
receipt of a Reimbursement Notice, Landlord shall pay to Tenant any undisputed
portion of such costs and expenses and shall notify Tenant in writing of those
costs and expenses specified by Tenant in the Reimbursement Notice which
Landlord disputes (the "DISPUTED AMOUNTS") and the reasons for such dispute. Any
amounts which are not so identified by Landlord as Disputed Amounts within said
thirty (30) day period shall be considered to be undisputed. To the extent
Landlord fails to reimburse Tenant for the costs and expenses specified in the
Reimbursement Notice within thirty (30) days after demand therefor, Tenant shall
be entitled to offset the sum of (i) the amount of any undisputed portion of
such costs and expenses and (ii) one-half of the amount of any Disputed Amount
(which total sum may be referred to as the "PRE-JUDGMENT OFFSET AMOUNT") against
Base Rent payable by Tenant under this Lease together with interest at the
Interest Rate specified in Article 25 of this Lease from the date of expiration
of said thirty (30) day period until the date of offset (up to a maximum offset
each month of twenty percent (20%) of the Base Rent payable for the Building)
until the full Pre-Judgment Offset Amount (plus such interest) has been so
offset. If Tenant obtains a final judgment against Landlord for the remaining
portion of the Disputed Amount and if Landlord fails to pay such judgment within
thirty (30) days after the date such judgment is rendered, Tenant shall be
entitled to offset such judgment against Base Rent payable by Tenant under this
Lease together with interest at the Interest Rate specified in Article 25 of
this Lease from the date Landlord failed to timely reimburse Tenant for such
costs and expenses until the date of offset (up to a maximum offset each month
of twenty percent (20%) of the Base Rent payable for the Building) until the
full amount of such judgment (plus such interest) has been so offset. If
Landlord obtains a final judgment against Tenant for the Disputed Amount, Tenant
shall pay to Landlord such judgment (as it relates to the Disputed Amount plus
interest Tenant has previously offset with respect to the Disputed Amount)
within thirty (30) days after the date such judgment is rendered.
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ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent (as
indicated in Section 29.4 below) shall not be unreasonably withheld by Landlord.
However, Tenant may make (i) cosmetic changes to the finish work in the
Premises, not requiring any structural or other substantial modifications to the
Premises (e.g., voice/data cabling), without Landlord's prior consent, (ii)
cosmetic changes to the interior of any Tenant space within the Building (e.g.,
changes to the carpet, wallcovering and paint) and (iii) nonstructural changes
to the interior of any Tenant space within the Building (such cosmetic and
nonstructural changes to be referred to hereafter collectively as the
"ACCEPTABLE CHANGES") upon at least ten (10) days prior notice to Landlord but
without Landlord's prior consent provided (a) with respect to the changes
described in Subsection 8.1(iii) above only, such changes do not cost in excess
of Two Dollars ($2.00) per usable square foot of the Premises for any one (1)
job, (b) such Acceptable Changes do not affect the exterior appearance of the
Building or Common Areas, the structural aspects of the Building, or any
Building System or Equipment, and (c) Tenant shall perform such Acceptable
Changes in a good and workmanlike manner and in conformance with any and all
applicable federal, state, county or municipal laws, rules or regulations
(collectively, "APPLICABLE LAWS"). At any time Tenant proposes to make
Alterations which require the consent of Landlord pursuant to this Section 8.1,
Tenant's notice regarding the proposed Alterations shall be provided together
with plans and specifications for the Alterations, and Landlord shall approve or
disapprove of the same within fifteen (15) days after Landlord's receipt
thereof. The construction of the initial improvements to the Premises shall be
governed by the terms of the Tenant Work Letter and not the terms of this
Article 8, and therefore, as used herein, the term "Alterations" does not refer
to any tenant improvements installed pursuant to the Tenant Work Letter.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord may reasonably require, including, but
not limited to, the requirement that Tenant shall, at Tenant's expense, remove
such Alterations upon the expiration or any early termination of the Lease Term,
provided Landlord imposed such removal requirement as a condition to consenting
to such Alterations when they are installed, and/or the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials, mechanics
and materialmen approved by Landlord (which approval (as indicated in Section
29.4 below) shall not be unreasonably withheld or delayed). In any event, Tenant
shall utilize subcontractors of Landlord's selection to perform any and all work
that may affect the Building Systems and Equipment, structural aspects of the
Building, the Base Shell or Core or exterior appearance of the Building or
Common Areas provided that (i) if such subcontractors are unwilling or unable to
perform such work, Tenant may utilize the services of any other qualified
subcontractor which normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San Diego,
California area, and (ii) Landlord shall cause such subcontractor selected by
Landlord to charge Tenant for such work in an amount equal to the cost that a
comparable, first-class, reputable and reliable subcontractor would have charged
Tenant if selected pursuant to competitive bidding procedures (and if such
subcontractor refuses to meet such pricing requirements, Landlord shall have the
option to either pay the excess charges of such subcontractor or to permit
Tenant to utilize any other qualified subcontractor which meets the requirements
of subsection 8.2(i) above). Tenant shall construct such Alterations and perform
such repairs in conformance with any and all Applicable Laws and pursuant to a
valid building permit, issued by the City of San Diego, all in conformance with
Landlord's construction rules and regulations. All work with respect to any
Alterations must be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the Premises shall at all times be a
complete unit except during the period of work. In performing the work of any
such Alterations, Tenant shall have the work performed in such manner so as not
to obstruct
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access to the Project or any portion thereof by any other tenant of the Project,
and so as not to obstruct the business of other tenants in the Project. In
addition to Tenant's obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County of San Diego in accordance with
California Civil Code Section 3093 or any successor statute, and Tenant shall
deliver to the Project management office a reproducible copy of the "as built"
drawings of the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. The Cost of all Alterations shall be paid for
by Tenant. In the event Tenant orders any Alterations or repair work directly
from Landlord, the charges for such work shall be deemed Additional Rent under
this Lease, payable within fifteen (15) days of billing therefor, either
periodically during construction in reasonable progress payments or upon the
substantial completion of such work, at Landlord's option. Upon completion of
such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for labor, services or
materials. If Tenant orders any work directly from Landlord, Tenant shall pay to
Landlord a percentage of the cost of such work not to exceed three percent (3%)
of such cost to compensate Landlord for all overhead, general conditions, fees
and other costs and expenses arising from Landlord's involvement with such work.
If Tenant does not order such work directly from Landlord, Tenant shall pay to
Landlord a fee equal to one percent (1%) of the cost of such work and shall
reimburse Landlord for Landlord's reasonable out-of-pocket costs and expenses
actually incurred in connection with review of such work; provided, however,
that this sentence shall not apply to Acceptable Changes.
8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any Alterations
(other than work described in Subsections 8.1(i) and (ii) above), Tenant agrees
to carry "Builder's All Risk" insurance in a reasonable amount covering the
construction of such Alterations, and such other insurance as Landlord may
reasonably require, it being understood and agreed that all of such Alterations
shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon
completion thereof. In addition, if Tenant fails to meet the Financial Standards
(described in Section 21.2 below) and the cost of the Alteration exceeds One
Hundred Thousand Dollars ($100,000.00), Landlord may, in its reasonable
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any fixtures, equipment and/or other personal property
owned by Tenant (including, without limitation, items purchased by Tenant
pursuant to Section 2.2.10 of the Tenant Work Letter), provided Tenant repairs
any damage to the Premises and Building caused by such removal. Furthermore,
Landlord may require Tenant, at Tenant's expense, to remove any Alterations (or
any Tenant Improvements which do not conform to the Specifications) and to
repair any damage to the Premises and Building caused by such removal provided
Landlord gave to Tenant written notice (prior to the installation of any such
Alterations or Tenant Improvement) that Landlord would require such removal at
the end of the Lease Term or following any earlier termination of this Lease. If
Tenant fails to complete such removal and/or to repair any damage caused by the
removal of such Alterations or Tenant Improvements, Landlord may do so and may
charge the actual cost thereof to Tenant.
ARTICLE 9
COVENANT AGAINST LIENS
Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from mechanics'
liens. Tenant covenants and agrees not to suffer or permit any lien of mechanics
or materialmen or others to be placed against
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the Project, the Building or the Premises, or any portion thereof, with respect
to work or services claimed to have been performed for or materials claimed to
have been furnished to Tenant or the Premises, and, in case of any such lien
attaching or notice of any lien, Tenant covenants and agrees to cause it to be
promptly released and removed of record. Notwithstanding anything to the
contrary set forth in this Lease, in the event that such lien is not released
and removed by bond or otherwise on or before the date occurring thirty (30)
days after notice of such lien is delivered by Landlord to Tenant (which thirty
(30) day period shall be subject to reduction as provided in the next sentence
below), Landlord, at its sole option, may immediately take all action necessary
to release and remove such lien, without any duty to investigate the validity
thereof, and all sums, costs and expenses, including reasonable attorneys' fees
and costs, incurred by Landlord in connection with such lien shall be deemed
Additional Rent under this Lease and shall immediately be due and payable by
Tenant. However, if Landlord's notice of such lien to Tenant indicates that
Landlord is in escrow to sell or finance the Building or has an executed letter
of intent to sell or a commitment letter to finance the Building (or a
substantially similar document), Landlord may indicate in such notice that such
thirty (30) day period shall be reduced to a period designated by Landlord which
is not less than ten (10) business days.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its members, partners, subpartners and affiliates and their respective
officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability,
including without limitation court costs and reasonable attorneys' fees
(collectively, "CLAIMS") incurred in connection with or arising from any cause
in, on or about the Premises during the Lease Term, provided that the terms of
the foregoing indemnity by Tenant shall not apply to the gross negligence or
willful misconduct of Landlord or its agents, contractors, servants, employees
or licensees in connection with Landlord's activities in the Project and
Landlord shall indemnify, defend, protect and hold Tenant, its officers,
directors, agents, servants and employees harmless from any such Claims (except
for damage to the Tenant Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises, to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease). The provisions
of this Section 10.1 shall survive the expiration or sooner termination of this
Lease with respect to any claims or liability occurring prior to such expiration
or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages in
the following amounts.
10.3.1 Commercial/Comprehensive General Liability Insurance covering
the insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Broad Form Commercial/Comprehensive General Liability endorsement
covering the insuring provisions of this Lease and the performance by Tenant of
the indemnity agreements set forth in Section 10.1 of this Lease, for limits of
liability not less than:
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Bodily Injury and
Property Damage Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance and
excess liability
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance and
excess liability
10.3.2 Property Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant
Improvements, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include sprinkler leakage
coverage and earthquake sprinkler leakage coverage.
10.3.3 Worker's Compensation and Employer's Liability Insurance, with
a waiver of subrogation endorsement, with minimum limits of $1,000,000 per
employee and $1,000,000 per occurrence.
10.3.4 Business Interruption, loss of income and extra expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings for up to one (1) year attributable to the risks outlined in
Section 10.3.2 above; however, Tenant shall be entitled to self-insure the
coverage described in this Section 10.3.4 only, in which case such
self-insurance shall be deemed to contain all of the terms and conditions
applicable to the coverage described in this Section 10.3.4 including, without
limitation, a deemed waiver of subrogation and, consequently, Landlord shall be
treated, for all purposes, as if Tenant had actually purchased such insurance
from a third party.
10.4 FIRE AND CASUALTY INSURANCE OF LANDLORD. Landlord shall maintain
during the Lease Term and as an Operating Expense, a policy or policies of
insurance insuring the Building and Landlord's remaining interest in the Tenant
Improvements and Alterations against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage. Such coverage shall be in the amount of full
replacement cost for the Building (including coverages for enforcement of
Applicable Laws requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Building as the result of a covered loss) and
other improvements and may include, at the option of Landlord, the risks of
earthquakes and/or flood damage and additional hazards, a rental loss
endorsement for a period of one (1) year and one or more loss payee endorsements
in favor of the holders of any mortgages or deeds of trust encumbering the
interest of Landlord in the Building or any ground or underlying lessors of the
Building.
10.5 FORM OF POLICIES. The minimum limits of policies of insurance required
of Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. All insurance shall be issued on an occurrence basis and shall be
(i) be issued by an insurance company having a rating of not less than A-X in
BEST'S INSURANCE GUIDE or which is otherwise acceptable to Landlord and licensed
to do business in the State of California; and (ii) provide that said insurance
shall not be canceled or coverage changed unless thirty (30) days' prior written
notice shall have been given to Landlord and any mortgagee or ground or
underlying lessor of Landlord. In addition, the insurance described in Section
10.3.1 above shall (a) name Landlord, and any other party reasonably specified
by Landlord, as an additional insured; (b) specifically cover the liability
assumed by Tenant under this Lease including, but not limited to, Tenant's
obligations under Section 10.1 of this Lease; (c) be primary insurance as to all
claims thereunder and provide that any insurance obtained by Landlord is excess
and is non-contributing with any
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insurance requirement of Tenant; and (d) contain a cross-liability endorsement
or severability of interest clause acceptable to Landlord. Tenant shall deliver
said policy or policies or certificates thereof to Landlord before the Lease
Commencement Date (or Tenant's entry into the Building pursuant to the Tenant
Work Letter, if earlier) and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such certificate, Landlord may, at its option, procure such policies for
the account of Tenant, and the costs of it shall be paid to Landlord as
Additional Rent within fifteen (15) days after delivery to Tenant of bills
therefor. Tenant may satisfy the insurance coverage described in this Article 10
through one or more blanket policies so long as such policies otherwise meet the
requirements specified above.
10.6 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage and loss of insurance and extra
expense insurance waive any rights of subrogation that such companies may have
against Landlord or Tenant, as the case may be, so long as the insurance carried
by Landlord and Tenant, respectively, is not invalidated thereby. As long as
such waivers of subrogation are contained in their respective insurance policies
(or are deemed to be contained in any self-insurance maintained by Tenant
pursuant to the provisions of Section 10.3.4 above), Landlord and Tenant hereby
waive any right that either may have against the other on account of any loss or
damage to the extent such loss or damage is insurable under such policies of
insurance.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord. Notwithstanding the foregoing, Landlord's
request shall only be considered reasonable if such increased amounts and any
such other coverages are standard amounts and coverages for Comparable
Buildings, and Landlord shall not increase amounts and require additional
coverages during the first five (5) years of the Lease Term and thereafter not
more often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly notify
Landlord of any damage to the Building or other portion of the Project resulting
from fire or any other casualty. If such Building or any Common Areas serving or
providing access to such Building shall be damaged by fire or other casualty,
Landlord shall promptly and diligently, subject to reasonable delays for
insurance adjustment or other matters beyond Landlord's reasonable control, and
subject to all other terms of this Article 11, restore the Base, Shell, and Core
of such Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base, Shell, and Core of the Premises
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord and reasonably approved by Tenant, provided that access to
the Building shall not be materially impaired. Upon the occurrence of any damage
to such Building, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant's physical
damage and property damage insurance required under Section 10.3 of this Lease
(excluding, however, proceeds payable with respect to any damage to Tenant's
furniture, equipment and other personal property on the Premises), and Landlord
shall repair any injury or damage to the Tenant Improvements installed in the
Premises and shall return such Tenant Improvements and Alterations to their
original condition; provided that if the cost of such repair by Landlord exceeds
the amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, plus the amount of insurance proceeds received
by Landlord from Landlord's insurance carrier to the extent allocable to damage
of such Tenant Improvements and Alterations, the cost of such repairs shall be
paid by Tenant to Landlord in reasonable progress payments as Landlord repairs
the damage (provided
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that if any mortgage holder or deed of trust beneficiary so requires, Tenant
shall deposit such cost of repairs with such mortgage holder or deed of trust
beneficiary prior to the commencement of repair by Landlord of such injury or
damage, in which case Tenant shall be entitled to interest on such funds to the
extent permitted by such lender). In connection with such repairs and
replacements, Tenant shall, prior to the commencement of construction, submit to
Landlord, for Landlord's review and approval, all plans, specifications and
working drawings relating thereto, and Landlord shall select the contractors
(subject to Tenant's approval thereof, not to be unreasonable withheld or
delayed (as indicated in Section 29.4 below)) to perform such improvement work.
Landlord shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Building or Common Areas necessary to Tenant's occupancy,
Landlord shall allow Tenant a proportionate abatement of Base Rent during the
time and to the extent the Building is unfit for occupancy for the purposes
permitted under this Lease, and not occupied by Tenant as a result thereof for
the conduct of Tenant's business; provided, however, that if such damage is the
result of the negligence or willful misconduct of Tenant or Tenant's employees,
contractors, licensees or invitees, such abatement of Base Rent shall apply only
to the extent Landlord is reimbursed from the proceeds of rental interruption
insurance purchased by Landlord as a part of Operating Expenses.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section 11.1
of this Lease, Landlord may elect not to rebuild and/or restore the Building;
and instead terminate this Lease by notifying Tenant in writing of such
termination within ninety (90) days after the date Landlord learns of the
necessity for repairs as the result of damage, such notice to include a
termination date giving Tenant ninety (90) days to vacate the Building, but
Landlord may so elect only if (i) the Building shall be damaged by fire or other
casualty or cause, and the damage is not fully covered, except for deductible
amounts, by insurance policies required to be carried by Landlord under this
Lease and (ii) Tenant is not willing to fund the amount of the shortfall in
excess of deductible amounts.
11.3 LANDLORD'S OR TENANT'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, either Landlord or Tenant may elect to terminate
this Lease by notifying the other in writing of such termination with ninety
(90) days after the date Landlord learns of the necessity for repairs as a
result of such damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Building, but Landlord or Tenant, whichever is
the case, may so elect only if the Building shall be damaged by fire or other
casualty or cause and one or more of the following conditions is present: (i)
the repair or restoration is reasonably estimated to cost more than sixty
percent (60%) of the replacement cost of such Building, or (ii) repairs cannot
reasonably be substantially completed within three hundred sixty (360) days
after the date Landlord learns of the necessity for repairs as the result of
damage (when such repairs are made without the payment of overtime or other
premiums). Notwithstanding the foregoing, if this Lease is terminated by
Landlord and Landlord thereafter elects to commence the rebuilding of the
Building prior to the sooner to occur of the third (3rd) anniversary of the
termination date or the expiration of this Lease, Tenant shall have the right to
reinstate this Lease by written notice to Landlord within forty-five (45) days
after Tenant's receipt of notice from Landlord that Landlord so elects to
rebuild. Tenant's failure to so notify Landlord within said forty-five (45) day
period shall be deemed to constitute Tenant's waiver of the right to so
reinstate this Lease. Tenant hereby specifically acknowledges that its right to
reinstatement contained in this Section 11.3 shall not be applicable to any
assignee or transferee of Landlord to whom the Premises is transferred after
this Lease is terminated pursuant to this Section 11.3 as a result of a
foreclosure, trustee's sale or bona-fide deed in lieu of foreclosure.
11.4 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, California Civil Code
Sections 1932(2) and 1933(4), with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute
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or regulation, now or hereafter in effect, shall have no application to this
Lease or any damage or destruction to all or any part of the Premises, the
Buildings or the Project.
11.5 DAMAGE NEAR END OF TERM. In the event that the Building is
destroyed or damaged during the last twelve (12) months of the Lease Term or any
Extension Term and the repair or restoration is reasonably estimated to cost
more than the "Threshold Level" (as that term is defined below), then
notwithstanding anything contained in this Article 11, Landlord shall have the
option to terminate this Lease by giving written termination notice to Tenant of
the exercise of such option within thirty (30) days after Landlord learns of the
necessity for repairs as the result of such damage or destruction, and, to the
extent such damage or destruction was not caused as a result of the negligence
or willful misconduct of Tenant or any of Tenant's employees, agents,
contractors, licensees or invitees and the repair of same is reasonably expected
by Landlord to require more than three (3) months to complete, Tenant shall have
the option to terminate this Lease by giving written termination notice to
Landlord of the exercise of such option within thirty (30) days after Landlord
learns of the necessity for repairs as the result of such damage or destruction.
The term "THRESHOLD LEVEL" shall mean twenty percent (20%) of the replacement
cost of the Building where the damage occurs during the period from the first
day of the ninth (9th) month prior to the scheduled date of expiration of the
Lease Term or any Extension Term to the last day of the twelfth (12th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term, fifteen percent (15%) of the replacement cost of the Building where the
damage occurs during the period from the first day of the fifth (5th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term until the last day of the eighth (8th) month prior to the scheduled date of
expiration of the Lease Term or any Extension Term, and ten percent (10%) of the
replacement cost of the Building where the damage occurs during the last four
(4) months of the Lease Term or any Extension Term. If either Landlord or Tenant
exercises such option to terminate this Lease as provided above (i) this Lease
shall cease and terminate as of the earlier of (1) the date ninety (90) days
after the date of such notice, or (2) the expiration date of this Lease, (ii)
Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to
such date of termination, and (iii) both parties hereto shall thereafter be
freed and discharged of all further obligations hereunder, except as provided
for in provisions of this Lease which by their terms survive the expiration or
earlier termination of the Lease Term. Notwithstanding the foregoing, if Tenant
exercises an upcoming option to extend the term of this Lease, neither Landlord
nor Tenant shall not have any right to terminate this Lease under this Section
11.5.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
either party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently.
Any waiver by either party of any provision of this Lease may only be in
writing. Additionally, no express waiver shall affect any provision other than
the one specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
13.1 PERMANENT TAKING. If more than twenty-five percent (25%) of the
rentable square feet of the Building shall be taken by power of eminent domain
or condemned by any competent
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authority for any public or quasi-public use or purpose, or if Landlord shall
grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the option to terminate this Lease upon ninety
(90) days' notice, provided such notice is given no later than one hundred
twenty (120) days after the date of such taking, condemnation, reconfiguration,
vacation, deed or other instrument. If more than twenty-five percent (25%) of
the rentable square feet of the Building is taken, Tenant shall have the option
to terminate this Lease upon ninety (90) days' notice, provided such notice is
given no later than one hundred twenty (120) days after the date of such taking.
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for any taking of Tenant's personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Lease Term
pursuant to the terms of this Lease, and for moving expenses, so long as such
claims do not diminish the award available to Landlord, its ground lessor with
respect to such Building or Project or its mortgagee, and such claim is payable
separately to Tenant. All Rent shall be apportioned as of the date of such
termination, or the date of such taking, whichever shall first occur. If any
part of the Premises shall be taken, and this Lease is not terminated pursuant
to this Section 13.1, the Rent shall be abated proportionately based on the
percentage of the rentable square feet of the Building which is taken. Tenant
hereby waives any and all rights it might otherwise have pursuant to California
Code of Civil Procedure Section 1265.130.
13.2 TEMPORARY TAKING. Notwithstanding anything to the contrary contained
in this Article 13, in the event of a temporary taking of all or any portion of
the Premises for a period of one (1) year or less, then this Lease shall not
terminate but the Base Rent shall be abated for the period of such taking for
the number of rentable square feet of the Premises so taken. Landlord shall be
entitled to receive the entire award made in connection with any such temporary
taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, except as otherwise expressly provided herein, assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise
transfer, this Lease or any interest hereunder, permit any assignment, or other
transfer of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as "TRANSFERS" and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"TRANSFEREE"). Where Landlord's consent to a proposed Transfer is required under
this Article 14, if Tenant desires Landlord's consent to any Transfer, Tenant
shall notify Landlord in writing, which notice (the "TRANSFER NOTICE") shall
include (i) the proposed effective date of the Transfer, which shall not be less
than fifteen (15) business days nor more than one hundred eighty (180) days
after the date of delivery of the Transfer Notice, (ii) a description of the
portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii) all of
the material terms of the proposed Transfer and the consideration therefor
(including calculation of the "Transfer Premium," as that term is defined in
Section 14.3 below, in connection with such Transfer), the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) current financial statements of
the proposed Transferee certified by an officer, partner or owner thereof, and
any other information reasonably required by Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space, and such other
information as Landlord may reasonably require. Landlord shall approve or
disapprove of the proposed Transfer within fifteen (15) business days after
Landlord's receipt of the applicable Transfer Notice including all items
required pursuant to the immediately preceding sentence. Where Landlord's
consent to a proposed Transfer is required under this Article 14, any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under Section 19.1.2 of this
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Lease. Where Landlord's consent to a proposed Transfer is required under this
Article 14, whether or not Landlord consents to such proposed Transfer, for each
proposed Transfer Tenant shall pay to Landlord a review and processing fee in an
amount equal to $500.00 and any reasonable legal fees incurred by Landlord
(which legal fees shall not exceed $1,000 per proposed Transfer during the
initial Lease Term), upon request by Landlord.
14.2 LANDLORD'S CONSENT. Where Landlord's consent to a proposed Transfer is
required under this Article 14, Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in a
business which Landlord reasonably determines is not consistent with the quality
of the Project as a first-class, institutional quality office project;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof which Landlord reasonably determines is not consistent
with the quality of the Project as a first-class, institutional quality office
project;
14.2.3 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;
14.2.4 The Transfer will result in more than a reasonable and safe
number of occupants per floor within the Subject Space;
14.2.5 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Transfer on the date consent is requested (provided, however, that this Section
14.2.5 shall only apply if the Transfer is for a full floor or more of the
Building); or
14.2.6 The proposed Transfer would cause a violation of another lease
for space in the Project, or would give an occupant of the Project a right to
cancel its lease or bring an action against Landlord, provided that (i) the
foregoing provisions of this Section 14.2.6 shall only apply (a) to restrictions
in other leases in the Project to the extent Tenant has received written notice
of such restrictions prior to the proposed Transfer, and (b) if (at the time
Tenant gives Landlord any Transfer Notice) Tenant is leasing less than eighty
percent (80%) of the rentable square feet of the Project; and (ii) this Section
14.2.6 shall not apply to any proposed food service use by the proposed
Transferee (i.e., Landlord may not grant an exclusive within the Project for a
food service use that would restrict Tenant's ability to enter into a Transfer).
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to Tenant than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding any contrary provisions of this Lease, if Tenant claims
that Landlord has unreasonably withheld or delayed its consent to a proposed
Transfer or otherwise has breached its obligations under this Article, Tenant's
only remedies shall be to seek a declaratory judgment and/or injunctive relief
and/or monetary damages, and Tenant waives the right to terminate this Lease as
to all or any portion of the Premises.
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14.3 TRANSFER PREMIUM.
14.3.1 DEFINITION OF TRANSFER PREMIUM. If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall, except as otherwise provided in this Article 14, pay to Landlord
fifty percent (50%) of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee (the amount which may be
so payable to Landlord may be referred to herein as the "PREMIUM BASE AMOUNT").
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Landlord or Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any brokerage commissions,
reasonable attorneys' and architectural fees and reasonable advertising costs
incurred in connection with the Transfer, (iii) any Rent and Additional Rent
paid by Tenant for the portion of the Premises transferred while such space is
being actively marketed for sublease or assignment to the extent Tenant is not
occupying such space, and (iv) any other out-of-pocket costs reasonably incurred
by Tenant in connection with such Transfer (collectively, the "SUBLEASING
COSTS"). "Transfer Premium" shall also include, but not be limited to, key money
and bonus money paid by Transferee to Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to Transferee or for assets, fixtures, inventory, equipment, or furniture
transferred by Tenant to Transferee in connection with such Transfer.
14.3.2 PAYMENT OF TRANSFER PREMIUMS. The determination of the amount
of the Transfer Premium shall be made on an annual basis in accordance with the
terms of this Section 14.3.2, but an estimate of the amount of the Transfer
Premium shall be made each month and one-twelfth (1/12th) of such estimated
amount shall be paid to Landlord promptly, but in no event later than the next
date for payment of Base Rent hereunder, subject to an annual reconciliation on
each anniversary date of the Transfer. If the payments to Landlord under this
Section 14.3.2 during the twelve (12) months preceding each annual
reconciliation exceed the amount of Transfer Premium determined on an annual
basis and actually received by Tenant, then Landlord shall promptly refund the
excess to Tenant. If Tenant has underpaid the Transfer Premium, as determined by
such annual reconciliation, Tenant shall pay the amount of such deficiency to
Landlord promptly, but in no event later than the next date for payment of Basic
Rent hereunder. For purposes of calculating the Transfer Premium on an annual
basis, Tenant's Subleasing Costs shall be amortized on a straight-line basis
over the term of the Transfer.
14.3.3 LIMITATION ON AMOUNT AND TIMING. Notwithstanding the foregoing
provisions of this Section 14, Tenant shall have no obligation to pay, and shall
not pay, any percentage of the foregoing Transfer Premium under this or any
other section of this Lease in any calendar year, to the extent Tenant is
advised by Landlord that such payment would exceed the sum of: (A) the maximum
amount (if any) that can be paid to Landlord without causing Kilroy Realty
Corporation, a Maryland corporation ("KRC") to fail to meet the requirements of
sections 856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"CODE") for such year determined as if (i) the payment of such amount did not
constitute income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of
the Code ("QUALIFYING INCOME"), (ii) the payment of such amount resulted in all
other amounts received by Landlord from Tenant pursuant to this Lease during
such year failing to constitute Qualifying Income, and (iii) KRC had $1,000,000
of income from unknown sources during such year which was not Qualifying Income
(in addition to any known or anticipated income of KRC which was not Qualifying
Income), in each case as determined by KRC's independent accountants, and (B)
the Premium Base Amount less the amounts paid under clause (A) in the event KRC
receives and provides Tenant with a copy of a reasoned opinion from outside
counsel or a ruling from the Internal Revenue Service (the "PREMIUM GUIDANCE")
indicating that Landlord's receipt of the Premium Base Amount would constitute
Qualifying Income and would not cause other amounts paid by Tenant to Landlord
to fail to constitute Qualifying Income (the "REIT REQUIREMENTS"). In the event
that Landlord is not able to receive the full Premium Base Amount due to the
above limitation, Tenant shall not pay any amounts in excess of such limit
unless and until KRC receives (and delivers to Tenant)
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any one or combination of the following, once or more often: (i) a letter from
KRC's independent accountants indicating the maximum amount that can be paid by
Tenant to Landlord at that time without causing KRC to fail to meet the REIT
Requirements (calculated as described above) or (ii) the Premium Guidance; in
which event Tenant shall pay to Landlord the lesser of the unpaid Transfer
Premium or the maximum amount stated in the letter referred to in (i) above.
Tenant's obligation to pay any unpaid portion of the Transfer Premium shall
terminate on the December 31 following the date which is three (3) years after
the date such payment would (without regard to the limitations in this
subparagraph) have initially been due. Any amounts paid shall first be applied
to the Transfer Premium which is the oldest. Tenant shall cooperate with
Landlord and KRC and provide them with any information or documents that are
necessary or helpful to Landlord or KRC in obtaining any Premium Guidance or in
calculating the amount of any payment due hereunder.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. In the event that, following
any proposed Transfer, Tenant and its Permitted Affiliates do not or will not
occupy at least fifty percent (50%) of the rentable square footage of the
Building or should Tenant's financial performance at the time of such proposed
Transfer have fallen below the minimum Financial Standards set forth in Section
21.2 below, Landlord shall have the option, by giving written notice ("RECAPTURE
NOTICE") to Tenant within fifteen (15) days after receipt of any Transfer
Notice, to recapture the Subject Space. Such recapture shall cancel and
terminate this Lease, with respect to the Subject Space as of the date stated in
the Transfer Notice as the effective date of the proposed Transfer until the
last day of the term of the Transfer as set forth in the Transfer Notice.
However, if Landlord delivers a Recapture Notice to Tenant, Tenant may, within
ten (10) days after Tenant's receipt of the Recapture Notice, deliver written
notice to Landlord indicating that Tenant is rescinding its request for consent
to the proposed Transfer, in which case such Transfer shall not be consummated
and this Lease shall remain in full force and effect as to the portion of the
Premises that was the subject of the Transfer. Tenant's failure to so notify
Landlord in writing within said ten (10) day period shall be deemed to
constitute Tenant's election to allow the Recapture Notice to be effective. In
the event of a recapture by Landlord, if this Lease shall be canceled with
respect to less than all of the rentable square feet within the Building, the
Rent reserved herein shall be prorated on the basis of the number of rentable
square feet retained by Tenant in proportion to the number of rentable square
feet contained in the Building, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. If Landlord declines, or
fails to timely elect to recapture the Subject Space under this Section 14.4,
then, provided Landlord has consented to the proposed Transfer with respect to
any Transfer which such consent is required, Tenant shall be entitled to
transfer the Subject Space to the proposed Transferee, subject to the provisions
of this Article 14. If, as a result of Landlord's exercise of its recapture
rights, the Building is converted to a multi-tenant building, Landlord and
Tenant will amend this Lease in order to reflect appropriate modifications
necessary for a multi-tenant building.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord, (iv)
Tenant shall furnish upon Landlord's request a complete statement, certified by
an independent certified public accountant, or Tenant's chief financial officer,
setting forth in detail the computation of any Transfer Premium Tenant has
derived and shall derive from such Transfer, and (v) no Transfer relating to
this Lease or agreement entered into with respect thereto, whether with or
without Landlord's consent, shall relieve Tenant from liability under this
Lease. Landlord or its authorized representatives shall have the right at all
reasonable times (but no more than one (1) timer per calendar year) to audit the
books, records and papers of Tenant relating to any Transfer, and shall have the
right to make copies thereof. If the Transfer Premium respecting any Transfer
shall be found understated, Tenant shall, within thirty (30) days after demand,
pay the deficiency and, in addition, if understated by more than (a) two percent
(2%), Tenant shall pay Landlord's cost of such audit within thirty (30) days
after demand, and (b) ten percent (10%), Landlord shall be entitled to interest
on the understated amount at the rate of ten percent (10%) per annum from
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the date upon which the understated amount would have been paid if the Transfer
Premium had been accurately determined in the first place to the date Tenant
pays to Landlord in full such understated amounts; Landlord's rights pursuant to
the immediately preceding sentence shall constitute Landlord's sole remedy for
any understatement of the Transfer Premium (in the absence of fraud by Tenant).
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "Transfer"
shall also include (i) if Tenant is a partnership or limited liability company,
the withdrawal or change, voluntary, involuntary or by operation of law, of
fifty percent (50%) or more of the partners or members, or transfer of fifty
percent (50%) or more of partnership or membership interests, within a twelve
(12)-month period, or the dissolution of the partnership or company without
immediate reconstitution thereof, and (ii) except as otherwise provided in
Section 14.7 below, if Tenant is a closely held corporation (I.E., whose stock
is not publicly held and not traded through an exchange or over the counter),
(A) the dissolution, merger, consolidation or other reorganization of Tenant or,
(B) the sale or other transfer of more than an aggregate of fifty percent (50%)
of the voting shares of Tenant (other than to immediate family members by reason
of gift or death) within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 AFFILIATED AND PERMITTED TRANSFERS.
14.7.1 PERMITTED AFFILIATES. Notwithstanding anything contained in
this Lease to the contrary, an assignment, subletting or permitting the use of
all or any portion of the Premises to or by a Permitted Affiliate (as defined
below) of Tenant shall not be deemed a Transfer under this Article 14 and thus
shall not be subject to (i) any requirement of obtaining Landlord's consent
thereto under this Article 14, (ii) Landlord's right to receive fifty percent
(50%) of any Transfer Premium in connection therewith under Section 14.3 or
(iii) Landlord's right to recapture the Premises under Section 14.4, provided
that (a) Tenant notifies Landlord of such assignment or sublease and the
identity of the Permitted Affiliate prior to the effective date thereof and
promptly after request from Landlord supplies Landlord with any documents or
information reasonably requested by Landlord regarding such assignment or
sublease and/or such Permitted Affiliate; and (b) such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14. As used in this Section
14.7, "PERMITTED AFFILIATE" shall mean (1) any person, corporation or other
entity which is controlled by, controls, or in common control with Tenant, or
(2) any entity which merges with Tenant or acquires substantially all of
Tenant's stock or assets, and in either case of (1) or (2) above, such person,
corporation or other entity has a net worth as of the effective date of the
assignment or sublease at least equal to the net worth of Tenant as of the date
of execution of this Lease. "Control," as used in this Section 14.7, shall mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise.
14.7.2 PERMITTED TRANSFERS. Notwithstanding anything contained in this
Lease to the contrary, any subletting of less than fifty percent (50%) of the
rentable square footage, in the aggregate, of the Building by Tenant for a term
less than the remaining initial Lease Term (or, if during any Extension Term,
for a term less than the remaining Extension Term), shall not require Landlord's
consent and shall not be subject to Landlord's recapture right under Section
14.4 (unless Tenant's financial performance at the time of such proposed
Transfer has fallen below the minimum Financial Standards set forth in Section
21.2 below), but shall be subject to (a) the condition that the sublease does
not provide for the subtenant to receive parking in a ratio per rentable square
foot in excess of that to which Tenant is entitled under this Lease, and (b)
Landlord's receipt of the amounts described in Section 14.3. In the event of any
such sublease, Tenant shall notify Landlord at least thirty (30) days prior to
the effective date of such sublease, of such proposed sublease and the identity
of the proposed subtenant and supply Landlord with any documents or information
reasonably requested by Landlord in connection
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therewith. Any subtenant under any sublease occurring under this Section 14.7.2
may be referred to herein as a "PERMITTED TRANSFEREE."
ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to any portion of the Premises to Landlord or any agent or employee of Landlord
shall not constitute a surrender of the Premises or any portion thereof or
effect a termination or partial termination of this Lease, whether or not the
keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, Alterations and Tenant
Improvements which do not conform to the Specifications (provided Landlord
conditioned its approval of their installation under Section 8.5 above upon
Tenant's removal of such Alterations or non-standard Tenant Improvements (as
applicable) upon the expiration or earlier termination of this Lease),
free-standing cabinet work, and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may, in
its sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Building resulting from such removal. Tenant also
shall comply with the provisions of Section 8.5 of this Lease. Notwithstanding
the foregoing, with respect to Tenant's cabling, Landlord shall have the option,
exercisable by written notice to Tenant on or before the day which is thirty
(30) days prior to the expiration or earlier termination of this Lease, to
require Tenant to remove any or all of its cabling from the Premises and to
repair any damage to the Premises resulting from such removal; provided,
however, that if Landlord so requires Tenant to remove such cabling and if,
within six (6) months after the date of expiration or earlier termination of
this Lease, leasehold improvements within the Premises are demolished in a
manner such that the amount expended to remove such cabling as a part of such
demolition would have been less than the amount previously incurred by Tenant to
remove such cabling, Landlord shall promptly rebate to Tenant the difference
between the amount expended by Tenant to remove such cabling and the amount
which would have been incurred by Landlord to remove such cabling as a part of
the demolition process described herein.
15.3 REMOVAL OF TENANT'S PROPERTY BY LANDLORD. Whenever Landlord shall
re-enter the Building as provided in this Lease, any personal property of Tenant
not removed by Tenant upon the expiration of the Lease Term, or within five (5)
days after a termination by reason of Tenant's default as provided in this
Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord in
accordance with California Civil Code Sections 1980 through 1991 and California
Code of Civil Procedure Section 1174, or in accordance with any laws or judicial
decisions which may supplement or supplant those provisions from time to time.
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15.4 LANDLORD'S ACTIONS ON PREMISES. Excepting any claims for damages or
other liability arising out of Landlord's or its agents' or its representatives'
gross negligence or willful misconduct, Tenant hereby waives, and releases
Landlord from, all claims for damages or other liability in connection with
Landlord's or its agents' or representatives' reentering and taking possession
of the Premises or removing, retaining, storing or selling the property of
Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord
harmless from any such damages or other liability, and no such re-entry shall be
considered or construed to be a forcible entry.
ARTICLE 16
HOLDING OVER
If Tenant provides Landlord with written notice ("HOLDOVER NOTICE") at
least thirty (30) days prior to expiration of the Lease Term (or any applicable
Extension Term) that Tenant will be holding over in the Premises, Tenant shall
have the right (and, subject to the grace periods described below, the
obligation) to hold over after the expiration of the Lease Term until the date
("HOLDOVER NOTICE DATE") specified in such Holdover Notice (but not in excess of
one hundred twenty (120) days after the expiration of the Lease Term or
applicable Extension Term). Any holdover tenancy (including without limitation,
any holdover tenancy pursuant to a Holdover Notice) shall be subject to every
applicable term, covenant and agreement contained herein, except that the Base
Rent payable by Tenant for the Premises (irrespective of the amount of space
Tenant continues to occupy in the Building) shall be escalated to equal one
hundred ten percent (110%) of the then current Base Rent and Direct Expenses
payments for the entire Premises for the first ninety (90) days of such holdover
occupancy and one hundred twenty-five percent (125%) of such amount during the
next succeeding ninety (90) days and from and after such one hundred eighty
(180) day period, Rent shall equal one hundred fifty percent (150%) of such
amount thereafter; provided, however, subject to the next sentence of this
Article 16, such holdover Rent and Additional Rent shall be prorated on a per
diem basis through and including the date ("ACTUAL SURRENDER DATE") Tenant
actually vacates and surrenders the Premises to Landlord in the condition
required under this Lease. If Tenant properly delivers the Holdover Notice and
the Actual Surrender Date (a) is earlier than the Holdover Notice Date by
forty-five (45) days or less, Tenant's obligation to pay such holdover Rent and
Additional Rent shall terminate on a per diem basis as of the Actual Surrender
Date, however if the Actual Surrender Date is earlier than forty-five (45) days
prior to the Holdover Notice Date, Tenant's holdover Rent and Additional Rent
shall cease as of the date which is forty-five (45) days prior to the Holdover
Notice Date, or (b) is later than the Holdover Notice Date, Tenant's obligation
to pay holdover Rent and Additional Rent shall cease as of the Actual Surrender
Date, provided that Tenant shall have no right to holdover beyond the earlier to
occur of fifteen (15) days after the Holdover Notice Date or the expiration of
the one hundred twenty (120) period specified in the first sentence of this
Article 16 above. By way of example only, and not as a limitation upon the
foregoing, if the Holdover Notice indicates that the Holdover Notice Date is
ninety (90) days after the expiration of the Lease Term or applicable Extension
Term, Tenant shall be permitted to holdover until the date which is one hundred
five (105) days after the expiration of the Lease Term or applicable Extension
Term and Tenant's obligation to pay holdover Rent and Additional Rent shall be
prorated on a per diem basis until the later of the forty-fifth (45th) day after
the expiration of the Lease Term or applicable Extension Term or the Actual
Surrender Date. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant (except as expressly provided
in this Article 16 above), and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration of the Lease Term (or the period specified in clause
16(b) above, as applicable). The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
within the period specified in this Article 16 above, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys' fees) and liability resulting from such failure, including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender
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(including such tenant's lost profits) and any lost profits to Landlord
resulting therefrom, provided Landlord promptly notified Tenant in writing of
any lease or signed letter of intent for all or any portion of the Premises.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within fifteen (15) days following a request in writing by either party to
the other, but in no event more frequently than three (3) times in any twelve
(12) month period, the recipient party shall execute and deliver to the
requesting party an estoppel certificate, which shall be substantially in the
form of EXHIBIT "E", attached hereto (or such other form as may be reasonably
required by any prospective mortgagee or purchaser of the Building or other
portion of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of either
party to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises (if addressed to
Tenant) and an acknowledgment by such party that the statements included in the
estoppel certificate in good faith are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord agrees
to provide Tenant, within sixty (60) days after written request by Tenant, with
commercially reasonable nondisturbance agreements(s) in favor of Tenant from any
ground lessors, mortgage holders or deed of trust beneficiaries under any ground
lease, mortgage or deed of trust affecting the Project or any portion thereof
leased by Tenant (whether now existing or coming into existence at any time
after the date of execution of this Lease but prior to the expiration of the
Lease Term) and in consideration of, and as a condition precedent to, Tenant's
agreement to be bound by the terms of this Article 18. Tenant covenants and
agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof, to attorn, without any deductions or set-offs
whatsoever, to the purchaser or any successors thereto upon any such foreclosure
sale or deed in lieu thereof if so requested to do so by such purchaser, and to
recognize such purchaser as the lessor under this Lease. Tenant shall, within
fifteen (15) days of request by Landlord, execute such further instruments or
assurances as Landlord or any mortgage holder or deed of trust beneficiary may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases or other typical provisions contained in Subordination,
Non-Disturbance and Attornment Agreements. Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any foreclosure proceeding
or sale.
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ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due, where such
failure continues for five (5) days after written notice thereof from Landlord
to Tenant; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, if the nature of such a
default is such that the same cannot be reasonably be cured within a thirty (30)
day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as is reasonably possible under the
circumstances; or
19.1.3 To the extent permitted by law, a general assignment by Tenant
or any guarantor of the Lease for the benefit of creditors, or the filing by or
against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.4 The hypothecation or assignment of this Lease or subletting of
the Premises in violation of Article 14 hereof; or
19.1.5 Any default by Tenant (after expiration of any applicable cure
period) under any of the Adjacent Building Leases; provided, however, that any
such default by Tenant under any of the Adjacent Building Leases shall be
treated as a default by Tenant under this Lease only if (i) Landlord and all of
the other landlords under the Adjacent Building Leases all elect to declare a
default, and (ii) all lenders of this Building and the applicable Adjacent
Building consent. However, the restrictions upon Landlord in declaring a default
by Tenant pursuant this Section 19.1.5 are not intended to, and shall not,
restrict Landlord from declaring a default of this Lease by Tenant under the
circumstances described in Sections 19.1.1 through and including 19.1.4 above.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which has
been earned at the time of such termination; plus
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(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not limited
to, brokerage commissions and advertising expenses incurred, and an
amortized portion (over the balance of the Lease Term compared to the term
of any new lease) of any expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Sections
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Section 19.2.1(iii) above, the "worth at the time of award" shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate this
Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of more than
two (2) monetary events of default by Tenant in any twelve (12) month period
during the Lease Term, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.
19.5 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other or later violation or
breach of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the remedies
herein provided upon an event of default shall not be deemed or construed
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to constitute a waiver of such default. The acceptance of any Rent hereunder by
Landlord following the occurrence of any default, whether or not known to
Landlord, shall not be deemed a waiver of any such default, except only a
default in the payment of the Rent so accepted.
19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's right
to possession shall not be deemed to have been terminated by efforts of Landlord
to relet the Premises, by its acts of maintenance or preservation with respect
to the Premises, or by appointment of a receiver to protect Landlord's interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant's right to
possession.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
21.1 LETTER OF CREDIT. In addition to its primary obligations under this
Lease, Tenant shall, commencing March 31, 2000, and continuing throughout the
Lease Term (including any Extension Terms), at any time that Tenant fails to
meet or equal the "Financial Standards" set forth below, provide security
against a default by Tenant under this Lease in the form of an unconditional,
irrevocable, standby letter of credit ("LC"), naming Landlord as the payee
thereunder, with terms as described in more detail below. The LC shall be in an
amount equal to six (6) months' then current Base Rent and shall be increased by
the amount of and upon any increase in monthly Base Rent payable under this
Lease. The LC shall be issued by a money center bank (a bank which accepts
deposits, maintains accounts, has a local San Diego office which will negotiate
a letter of credit, and whose deposits are insured by the FDIC) reasonably
acceptable to Landlord, and shall be in a form and content reasonably acceptable
to Landlord and in the form required hereunder. The LC shall be drawable by
Landlord upon presentation of a sight draft or demand to the LC issuer. Landlord
may present such a sight draft or demand if (i) the LC has not been renewed and
replaced by Tenant at least thirty (30) days prior to the expiration date of the
then effective LC, or (ii) Tenant commits a default under this Lease; provided,
however, proceeds of the drawn LC shall be applied to Rent, damages or charges
to which Landlord is entitled under the Lease as a result of Tenant's default.
If Landlord makes a draw upon the LC pursuant to this Section 21.1 and Tenant
fails to replenish the LC (or, if applicable, the CD described in Section 21.4
below) within ten (10) days thereafter to an amount equal to six (6) months'
then current Base Rent, then Tenant shall be in default under this Lease. The LC
is not intended to represent liquidated damages for Tenant's default, but only a
mechanism for paying the Rent, damages or charges to which Landlord may be
entitled. If allowed by the issuing bank, Landlord shall be entitled to grant a
security interest in, or make a collateral assignment of, Landlord's rights
under the LC in connection with mortgage indebtedness incurred by Landlord to a
bona fide third-party institutional lender in an arm's-length transaction. The
LC shall indicate that it is transferable in it entirety by Landlord as
beneficiary and that upon receiving written notice of the transfer and upon
presentation to the issuer of the LC the issuer will reissue the LC naming such
transferee as beneficiary. Tenant shall pay all expenses, points, and/or fees
incurred in obtaining the LC.
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21.2 FINANCIAL STANDARDS. Such LC shall be required in the event Tenant, at
the end of any calendar quarter (commencing with the calendar quarter ending
March 31, 2000), fails to meet all of the following financial requirements
("FINANCIAL STANDARDS"): (i) Tenant shall have annual gross revenues of not less
than $150,000,000, (ii) Tenant shall have cash on hand of not less than
$15,000,000 and (iii) Tenant's equity-to-debt (which for purposes of this test
shall exclude deferred revenue) ratio shall not be less than 1:1.
21.3 CONDITIONAL RELEASE OF SECURITY. Any LC previously delivered by Tenant
shall be returned to Tenant at such time as Tenant has not been in default
(after expiration of any applicable notice and cure period) under this Lease and
has met or exceeded all of the Financial Standards, for four (4) consecutive
quarters. Notwithstanding the foregoing, in the event the LC has been returned
to Tenant, but Tenant thereafter fails, at the end of any quarter, to meet all
of the Financial Standards then, in such event, Landlord shall be entitled to
require that the LC be reestablished on the terms and provisions set forth in
this Article 21.
21.4 CASH EQUIVALENT. At Tenant's option, but subject to the terms and
conditions hereof and the condition that Landlord determine that Landlord's
ability to draw upon such security in the event of Tenant's bankruptcy is not
impaired, Tenant may , in lieu of the delivery of an LC, pledge a Certificate of
Deposit ("CD") which shall be administered, as practicable, in accordance with
the procedures set forth in this Article 21 with respect to the LC; provided,
however, in the event of such CD any interest accruing on the CD shall be for
the benefit of Tenant. The pledge of any such CD shall be on terms and
conditions approved by Landlord, and the CD shall be issued by a financial
institution reasonably acceptable to Landlord.
ARTICLE 22
ROOF RIGHTS
Subject to all governmental laws, rules and regulations and compliance with
the CC&R's, Tenant and Tenant's contractors (which shall first be approved by
Landlord but which approval shall not be unreasonably withheld or delayed (as
specified in Section 29.4 below)) shall have the nonexclusive right and access,
without further payment of Rent to Landlord, to install, repair, replace,
remove, operate and maintain satellite dishes and/or microwave dishes, and other
radio transmitting and receiving antennae, together with all necessary cable,
wiring, conduits and related equipment (collectively, "COMMUNICATION
EQUIPMENT"), for the purpose of receiving and sending telephone and other
communication signals, at a location on the roof of the Building as reasonably
requested by Tenant and reasonably approved by Landlord in writing. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) Tenant's right to install, replace, repair, remove, operate and
maintain the Communication Equipment shall be subject to all governmental laws,
rules and regulations and Landlord makes no representations that such laws,
rules and regulations permit such installation and operation. Any such
installation shall be under the supervision of Landlord, by a contractor
approved by Landlord and shall be installed in a lien-free manner in accordance
with the provisions of this Lease.
(ii) The exact size, quality, materials and aesthetics of, and any
required screening for, the Communication Equipment shall be subject to
Landlord's prior written consent which shall not be unreasonably withheld or
delayed. In addition, the installation, protection for roof membrane,
specifications for roof penetration and flashing shall be subject to Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
(iii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and of connections to the
Building's electrical system) shall be borne by Tenant. All such Communication
Equipment shall be screened to commercially reasonable standards and to prevent
visual impairment. Tenant shall be responsible for the replacement, repair and
maintenance, at Tenant's sole cost and expense, of those areas on the roof of
the
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Building surrounding Tenant's Communication Equipment to the extent any such
replacement, repair or maintenance is required by virtue of Tenant's
installation, operation or maintenance of Tenant's Communication Equipment,
notwithstanding anything to the contrary contained in this Lease.
(iv) Tenant shall endeavor to use the Communication Equipment so as
not to cause any interference (i) with any other communications from or to the
Project or (ii) to other existing tenants or occupants in the Project who may
use the communication facilities located at the Project and/or related
facilities.
(v) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the Communication
Equipment will be able to receive or transmit communication signals without
interference or disturbance and Tenant agrees that Landlord shall not be liable
to Tenant therefor.
(vi) Tenant's rights with respect to such Communication Equipment
shall be personal to the Original Tenant executing this Lease and may not be
assigned or transferred to, or utilized by, any other person or entity with the
exception of any Permitted Transferee under Article 14 which occupies a minimum
of 10,000 rentable square feet of the Building or (ii) any Permitted Affiliate
(collectively, "QUALIFYING TRANSFEREE"); provided, however, such Qualifying
Transferee's rights with respect to Communication Equipment shall be subject to
all the terms and conditions of this Article 22. Other than Qualifying
Transferees, Tenant shall not be permitted to allow any third party to use any
portion of the roof for Communication Equipment or otherwise without Landlord's
consent, which shall not be unreasonably withheld.
(vii) Tenant shall (i) be solely responsible for any damage caused as
a result of the Communication Equipment, (ii) promptly pay any tax, license or
permit fees charged pursuant to any laws or regulations in connection with the
installation, maintenance or use of the Communication Equipment and comply with
all precautions and safeguards recommended by all governmental authorities, and
(iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment and all roof repairs required by the installation and
maintenance of the Communication Equipment.
(viii) The Communication Equipment shall remain the sole property of
Tenant. Tenant shall remove the Communication Equipment and related equipment at
Tenant's sole expense upon the expiration or sooner termination of this Lease or
upon the imposition of any governmental law or regulation which may require
removal, and shall repair the Building upon such removal to the extent required
by such work of removal. If Tenant fails to remove the Communication Equipment
and repair the Building within thirty (30) days after the expiration or earlier
termination of this Lease with respect to such Building, Landlord may do so at
Tenant's expense.
Landlord reserves the right to use a portion of the roof space on the Building
or lease roof space on the Building to other parties; provided, however, any
party to which Landlord leases such roof space shall be subject to similar
restrictions as set forth in this Article 22.
ARTICLE 23
SIGNAGE
23.1 GENERAL. Other than as contemplated by Section 23.2 below, Tenant
shall have no right to install or maintain any Tenant identification signs (or
any other signs, banners or other such displays) in any location on the Building
or in the Project which may be visible from the exterior of the Building, except
as may be approved by Landlord in writing prior to installation (which approval
shall not be unreasonably withheld, and are consistent and compatible with (a)
the restrictions contained in this Article 23, (b) all governmental regulations
and requirements, (c) the Project's signage criteria, a copy of which is
attached hereto as EXHIBIT "J" ("SIGNAGE CRITERIA"), and (d) the CC&R's.
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23.2 TENANT'S EXTERIOR SIGNAGE RIGHTS.
23.2.1 Tenant shall have the right, at Tenant's sole cost and expense
(but chargeable against the Tenant Improvement Allowance described in the Tenant
Work Letter), to install during the Lease Term (i) an identity sign on the
exterior of the Building (the "BUILDING TOP SIGNS") and (ii) certain eyebrow,
directional and monument signage in accordance with the Signage Criteria. As
used herein, "TENANT'S SIGNS" shall mean all Building Signs and any eyebrow,
directional, monument or other signage rights granted to Tenant pursuant to this
Article 23 or EXHIBIT "J". Tenant's Signs shall identify the name of Tenant and
shall not refer to the name of the Project except that monument signage may
refer to the name of the Project.
23.2.2 Tenant's right to Tenant's Signs which are visible from the
exterior of the Building shall be personal to the Original Tenant, any Permitted
Affiliate and any other assignee of Tenant's entire interest in this Lease
(collectively, "PERMITTED SIGNAGE ENTITIES") and may not be transferred to any
other person or entity, except that, subject to the occupancy requirements of
Section 23.2.4 below, Tenant may assign Tenant's rights to any of Tenant's Signs
to any other Transferee occupying at least a full floor in the Building where
Landlord reasonably determines that the name of the Transferee is not an
"Objectionable Name," as that term is defined below. The term "OBJECTIONABLE
NAME" shall mean any name that (i) relates to an entity that is of a character
or reputation, or is associated with a political orientation or faction, that is
inconsistent with the quality of the Project as a first-class, institutional
quality office project, or which a landlord of a first-class, institutional
quality office project would reasonably find to be offensive, taking into
consideration the level and visibility of the applicable Tenant's Signs, or (ii)
conflicts with any exclusive use covenants in other leases of space in the
Project.
23.2.3 Tenant's signage rights shall include exclusive illuminated and
nonilluminated signage for the Building so long as Tenant occupies at least
fifty percent (50%) of the rentable square footage thereof, and Tenant shall
have the right to have its professional name and logo prominently displayed on
any monument signage for the Building so long as Tenant occupies at least fifty
percent (50%) of the rentable square footage thereof.
23.2.4 If Tenant's (or any other Permitted Signage Entity's) occupancy
of the Building falls below fifty percent (50%) of the rentable square footage
thereof, upon notice to Tenant, Tenant's right to Building Top Signs for such
Building shall terminate and Tenant shall remove such signs in accordance with
Section 23.2.8 below.
23.2.5 Any utility costs for illuminated signs shall be charged to
Tenant pursuant to Article 6.
23.2.6 Notwithstanding the foregoing, Landlord hereby reserves and
retains the right to identify Landlord (or its successor) as owner and/or
manager of the Project on monument signage and at the entry to the Building. Any
specifications for such signage not shown on EXHIBIT "J" shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
Tenant's name on the monument signage shall be prominent and at the top of such
signage. The monument signage shall be limited to tenants of the Project except
as described in this Section 23.2.6.
23.2.7 Tenant's Building Top Sign may (but shall not be required to)
face SR56 and shall be located on the skin of the Building in the location shown
on the Signage Criteria. The specifications, plans and elevations for Tenant's
Signs (including the graphics, materials, color, design, lettering, height,
lighting, size and quality) shall be subject to Landlord's approval, which shall
not be unreasonably withheld or delayed and shall be consistent with the Signage
Criteria for the Project. Tenant's Signs shall be installed under the
supervision of Landlord by a contractor reasonably approved by Landlord and
shall be installed in a lien-free manner in accordance with the provisions of
this Lease. Tenant's signs shall be maintained, at the sole cost and expense of
Tenant, pursuant to a maintenance program approved by Landlord.
23.2.8 Tenant shall, at Tenant's sole cost and expense (subject to
Landlord's supervision, but without charge to Tenant for such supervision),
cause Tenant's Signs
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to be removed and the Building and the Project to be restored to the condition
existing prior to the placement of such Tenant's Signs (reasonable wear and tear
excepted) at the expiration or earlier termination of this Lease (or such
earlier time as Tenant elects or is required to remove any such Tenant Signs).
If Tenant fails to remove Tenant's Signs and restore the Building and Project as
provided above within thirty (30) days following Landlord's demand therefor,
then Landlord may perform such work and all costs and expenses incurred by
Landlord in so performing such work shall be reimbursed by Tenant to Landlord
within fifteen (15) days following Landlord's delivery to Tenant of an invoice
therefor.
23.3 TENANT'S INTERIOR SIGNAGE RIGHTS. Tenant shall have the right to
locate in the Building lobby a Building directory board ("DIRECTORY BOARD") the
size, location, design, materials, color and quality of which shall be subject
to Tenant's reasonable discretion, except that if, at any time, the Building is
not one hundred percent (100%) leased by Tenant, the size, location, design,
material, color and quality of the Directory Board shall be subject to
Landlord's reasonable approval. The cost of the Directory Board shall be
included in the Base, Shell and Core for the Building and the cost of Tenant's
listings shall be borne by Tenant. Tenant shall have exclusive use of any such
Directory Board so long as Tenant's lease covers one hundred percent (100%) of
the rentable square footage in the Building; provided, however, Landlord shall
have the right to identify Landlord (or its successor) as owner and/or manager
of the Project on any such Directory Board. In the event Tenant no longer leases
and occupies one hundred percent (100%) of the rentable square footage of the
Building, Tenant and its Permitted Transferees shall be entitled to its Building
pro rata share of the space on such Directory Board. Tenant shall also have the
right to install other signage identifying Tenant within the Building, which
interior signage shall be in compliance with the Signage Criteria.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
(i) structural changes to the Building or (ii) changes to the Building's life
safety system, or (iii) any capital improvements to the Project the requirement
of which is not related to Tenant's particular use of the Premises or
Alterations made by Tenant. Compliance with the items described in subsections
(i), (ii) and (iii) above shall be Landlord's responsibility and shall, subject
to the terms of Article 4 above, be included in Operating Expenses. Should any
standard or regulation now or hereafter be imposed on Landlord or Tenant by a
state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, at its sole cost
and expense, to comply promptly with such standards or regulations. The judgment
of any court of competent jurisdiction or the admission of Tenant in any
judicial action, regardless of whether Landlord is a party thereto, that Tenant
has violated any of said governmental measures, shall be conclusive of that fact
as between Landlord and Tenant. Notwithstanding the foregoing or anything to the
contrary contained in this Lease, Landlord hereby warrants to Tenant that the
Building shall be in compliance with the requirements of the Americans With
Disabilities Act ("ADA") and California Administrative Code Title 24 ("TITLE
24") in effect at the time Landlord obtains the certificate of occupancy (or its
equivalent) for the Base, Shell and Core; provided, however, that if the
requirements of ADA and/or Title 24 change after the date upon which Landlord
obtains the permit for the initial construction of the Building and Landlord is
not required by law to comply with such change, Landlord shall not be in
violation of this provision so long as Landlord not making such change does not
increase the cost of construction of the Tenant Improvements or delay the
construction of the Tenant Improvements. Landlord will be fully responsible for
making all alterations and repairs to the Building, at Landlord's cost (which
shall not be included in Operating Expenses) resulting from or necessitated by
the failure of Landlord or Landlord's contractors to comply with the foregoing
ADA and Title 24 warranty. The obtaining of a Certificate of Occupancy by either
Landlord or
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Tenant permitting Tenant occupy the Building shall be prima facia evidence that
Landlord has complied with the foregoing requirements of this Article 24
("REQUIREMENTS") as of the date of such Certificate of Occupancy, unless refuted
or reversed by any applicable governmental authorities. However, notwithstanding
anything to the contrary contained in this Article 24, Tenant, at Tenant's sole
cost and expense, shall promptly make all repairs, replacements, alterations or
improvements needed to comply with the Requirements to the extent that the
Requirements relate to or are triggered by (a) Tenant's particular use of the
Building for other than general office use, or (b) any Alterations made to the
Building by Tenant.
ARTICLE 25
LATE PAYMENTS
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to two
percent (2%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum ("INTEREST RATE") equal to
the lesser of (i) two percent (2%) over the rate publicly announced by Wells
Fargo Bank as its prime or reference rate (or the largest state chartered bank
operating in California in the event that Wells Fargo Bank ceases to exist or to
announce a prime or reference rate) or (ii) the highest rate permitted by
applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall fail to perform
any of its obligations under this Lease, within a reasonable time after such
performance is required by the terms of this Lease, Landlord may, but shall not
be obligated to, after reasonable prior notice to Tenant (except in the case of
an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15) days
after delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures reasonably made and obligations incurred by Landlord in collecting
or attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Section 26.2 shall survive the expiration or sooner termination of
the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the
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Premises to prospective purchasers, mortgagees or tenants (but as to prospective
tenants, only during the last twelve (12) months of the initial Lease Term or of
any Extension Term), or to the ground or underlying lessors; (iii) post notices
of nonresponsibility; or (iv) alter, improve or repair the Premises or the
Building if necessary to comply with current building codes or other applicable
laws, or for structural alterations, repairs or improvements to the Building.
Tenant shall be offered an opportunity to accompany Landlord in connection with
any such entry and Landlord shall use reasonable efforts to comply with Tenant's
security procedures in connection with such entry (except that these
restrictions shall not apply in the case of an emergency where Tenant is not
available to accompany Landlord). Notwithstanding anything to the contrary
contained in this Article 27, Landlord may enter the Premises at any time to (A)
perform services required of Landlord; (B) take possession due to any breach of
this Lease in the manner provided herein; and (C) perform any covenants of
Tenant which Tenant fails to perform. Landlord may make any such entries without
the abatement of Rent so long as Tenant can continue to occupy and use any
affected portion of the Premises for the same business purposes as Tenant had
been using such affected portion prior to Landlord's entry, and Landlord may
take such reasonable steps as required to accomplish the stated purposes,
provided, however, that any such entry shall be accomplished as expeditiously as
reasonably possible and in a manner so as to not materially and adversely
interfere with Tenant's normal business functions. Tenant hereby waives any
claims for damages or for any injuries or inconvenience to or interference with
Tenant's business, lost profits, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby except any claims arising out of
Landlord's gross negligence or willful misconduct. For each of the above
purposes, Landlord shall at all times have a key with which to unlock all the
doors in the Premises, excluding Tenant's vaults, safes and special security
areas designated from time to time in advance by Tenant. In an emergency,
Landlord shall have the right to use any means that Landlord may deem proper to
open the doors in and to the Premises. Any entry into the Premises by Landlord
in the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.
ARTICLE 28
TENANT PARKING
Commencing on the Lease Commencement Date, Tenant shall have the right, at
no cost to Tenant during the initial Lease Term (with the parking charge, if
any, during Extension Terms to be determined as a component of Fair Market
Rental Value), to the use of the number of parking permits set forth in Section
9 of the Summary, which parking permits shall pertain to the Project parking
facilities. Such parking permits shall permit Tenant and its employees and
invitees to use, on a nonexclusive basis, together with other tenants and their
respective employees and invitees, any undesignated, unreserved spaces available
in such parking facility for the Building. Tenant shall abide by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the Project parking facility, provided that Landlord shall not prescribe
any rules and regulations which unreasonably and adversely affect Tenant's use
of the Project parking facility. Such rules and regulations shall provide that
Tenant shall pay Landlord's then current nominal charge for any replacement of
any Tenant parking pass card, if any, which is lost, stolen, damaged or
destroyed. Tenant understands and agrees that, pursuant to the CC&R's, other
owners of adjacent property to the Project have been or will be granted
reciprocal rights of access and parking over certain portions of the Project as
more particularly set forth in the CC&R's; provided, however, the use of the
parking structure will be limited to tenants of the Project. Landlord shall not,
without Tenant's prior written approval (which approval shall not be
unreasonably withheld), change the size, configuration, design, layout and all
other aspects of the Project parking facilities at any time, and if Tenant
approves any such changes, Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, temporarily restrict access to the Project
parking facility for purposes of permitting any such construction, alteration or
improvements so long as Landlord takes all reasonable measures to minimize any
disruption to Tenant's use or access of the Project parking facilities for the
duration of any such construction, alteration or improvements. Notwithstanding
the foregoing, Landlord may, without
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Tenant's prior written approval, make such changes to the Project parking
facilities to the extent such changes are mandated by any applicable
governmental law, rule or regulation or any changes to any governmental law,
rule or regulation. If Landlord is forced to relocate Tenant's parking off site
of the Project parking facility, any such relocation shall be temporary and
Landlord shall use commercially reasonable efforts to cause such relocation to
be within a reasonable walking or shuttle distance of the Project. Further,
Landlord shall not knowingly allow any non-tenants of the Project to use the
Project parking facilities in violation of the CC&R's without Tenant's prior
written approval. Landlord agrees that the average number of parking permits
granted by Landlord to any other tenants of the Project shall not exceed four
and one-half (4.5) parking permits per 1,000 usable square feet of space so
leased. Landlord may delegate its responsibilities hereunder to a parking
operator in which case such parking operator shall have all the rights of
control attributed hereby to the Landlord. Tenant's parking permits under this
Article 28 are provided to Tenant solely for use by Tenant's own personnel and
such privileges may not be transferred, assigned, subleased or otherwise
alienated by Tenant without Landlord's prior approval other than on a pro rata
basis to Permitted Affiliates and Permitted Transferees. Tenant's invitees and
guests may use parking spaces in such parking facility which are not allocated
or reserved for Tenant or other occupants or visitors of the Building or Project
on a first-come, first-serve basis. Notwithstanding the foregoing, approximately
ten percent (10%) of Tenant's parking permits for the Building shall be reserved
spaces for Tenant's visitors and employees of the Building, as will be shown on
a Project parking plan prepared by Landlord and acceptable to Tenant. Landlord
shall have the right to relocate such reserved spaces from time to time so long
as Landlord provides Tenant with reserved spaces within the same general
proximity of the Building. The parking permits allocated to Tenant are not for
long term (i.e., more than ninety-six (96) hours) storage of automobiles, and
are not for short or long term storage of boats, trailers, recreational
vehicles, motorcycles or other vehicles or equipment. Tenant shall have the
option to require Landlord to add, at Tenant's sole cost and expense (other than
the cost of card keys for tenant(s) of Building 4, unless Tenant exercises its
option to lease Building 4), a card key entry system to the parking structure
(as selected by Tenant and reasonably approved by Landlord) for the Project
and/or security cameras (including a security desk and console with monitors for
each security camera at the location specified in EXHIBIT "I") within the
parking structure for the Project; if Tenant exercises such option, Tenant shall
pay such cost to Landlord, as Additional Rent, within thirty (30) days after
Tenant's receipt of reasonably detailed invoice(s).
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Subject to all other provisions of this Lease, each of
the provisions of this Lease shall extend to and shall, as the case may require,
bind or inure to the benefit not only of Landlord and of Tenant, but also of
their respective successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.2 MODIFICATION OF LEASE/MEMORANDUM OF LEASE. Should any current or
prospective mortgagee or ground lessor for the Building or Project require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way change
the rights and obligations of Tenant hereunder (as reasonably determined by
Tenant), then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. Landlord agrees to pay to Tenant, within thirty (30) days
after invoice, any reasonable attorneys' fees incurred by Tenant in connection
with any modification to this Lease executed by Tenant pursuant to the
immediately preceding sentence. Should Landlord or any such prospective
mortgagee or ground lessor, or should Tenant, request execution of a short form
Memorandum of Lease for recording, containing, among other customary provisions,
the names of the parties, a description of the Premises and the Lease Term, each
party agrees to execute and deliver such short form Memorandum of Lease to the
other within twenty (20) days following the request therefor.
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Either party may record any such Memorandum of Lease at such party's sole cost
and expense; however, if Tenant records a Memorandum of Lease, Tenant agrees to
execute, acknowledge and deliver to Landlord, within ten (10) days after
Landlord's request (which request may be made by Landlord at any time after the
date of expiration or earlier termination of this Lease), a quitclaim deed
prepared by Landlord and in commercially reasonable form acknowledging the
expiration or earlier termination of this Lease. The immediately preceding
sentence shall survive the expiration or earlier termination of this Lease.
29.3 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord has
the right to transfer all or any portion of its interest in the Project and in
this Lease, and Tenant agrees that in the event of any such transfer, Landlord
shall automatically be released from all liability under this Lease for
obligations accruing after the date of transfer and Tenant agrees to look solely
to such transferee for the performance of Landlord's obligations to be performed
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that an assignment shall not release
Landlord from its obligations hereunder and Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.4 CONSENTS BY THE PARTIES. The parties intend that whenever Landlord's
or Tenant's consent or approval is expressly or impliedly required by any
provision of this Lease, the consent or approval may not be unreasonably or
arbitrarily withheld, conditioned or delayed; and on the contrary, shall be
approved or disapproved by a party acting in a commercially reasonable manner.
Notwithstanding anything to the contrary contained in this Lease, except as
expressly provided in Section 14.2 above, an action for declaratory judgment or
specific performance shall be Tenant's or Landlord's sole right and remedy in
any dispute as to whether Tenant or Landlord has breached this Section 29.4
concerning a consent or approval.
29.5 CAPTIONS. The captions of articles and sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such articles and sections.
29.6 TIME OF ESSENCE. Time is of the essence of this Lease and each of its
provisions.
29.7 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 NO WARRANTY. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.
29.9 CONSTRUCTION. Should any provision of this Lease require
interpretation by a court of law, it is agreed that the court interpreting or
construing this Lease shall not apply a presumption that the terms shall be more
strictly construed against one party who by itself or through its agents
prepared this document.
29.10 ENTIRE AGREEMENT. It is understood and acknowledged that there are no
oral agreements between the parties hereto affecting this Lease and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the
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Premises and shall be considered to be the only agreements between the parties
hereto and their representatives and agents. None of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto.
29.11 RIGHT TO LEASE. Subject to Tenant's rights hereunder, Landlord
reserves the absolute right to effect such other tenancies in the Project as
Landlord in the exercise of its sole business judgment shall determine to best
promote the interests of the Building or Project, provided that Landlord shall
lease space in the Project only to tenants who are consistent with the quality
of the Project as a first-class, institutional quality office project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the Lease Term, occupy any space in
the Building or Project.
29.12 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
29.13 NOTICES. All notices, demands, statements, designations, approvals or
other communications (collectively, "NOTICES") given or required to be given by
either party to the other hereunder shall be in writing, shall be sent by (i)
United States certified or registered mail, postage prepaid, return receipt
requested, (ii) nationally recognized and reputable overnight courier (e.g.,
Federal Express and Network Courier), or (iii) delivered personally. Notice
shall be sent (a) to Tenant at the appropriate address set forth in Section 11
of the Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord; or (b) to Landlord at the following addresses, or to
such other firm or to such other place as Landlord may from time to time
designate in a Notice to Tenant:
Kilroy Realty, L.P.
2250 East Imperial Highway, Suite 1200
El Segundo, California 92045
Attention: Legal Department
Facsimile: (310) 322-8790
with a copy to:
Kilroy Realty, L.P.
4370 Executive Drive, Suite 400
San Diego, California 92121
Attention: Asset Manager
Facsimile: (619) 547-4767
Any Notice will be deemed given on the date which is three (3) business days
after the date it is mailed as provided in this Section 29.13, the next business
day if sent by overnight courier, or upon the date personal delivery is made. If
Tenant is notified of the identity and address of the holder of any deed of
trust or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given the same opportunity to cure such
default as is available to Landlord, prior to Tenant's exercising any remedy
available to Tenant.
29.14 JOINT AND SEVERAL. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.
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29.15 AUTHORITY. If Tenant is a corporation or partnership, each individual
executing this Lease on behalf of Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Lease and that each person signing on behalf of Tenant is authorized to do
so. If only one (1) officer executes this Lease for Tenant, Tenant agrees to
provide to Landlord evidence reasonably satisfactory to Landlord confirming the
authority of the signing officer of Tenant to bind Tenant to this Lease.
29.16 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING
ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF
ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW. EACH PARTY HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION (FOR UNLAWFUL DETAINER OR OTHERWISE) BY LANDLORD TO
RECOVER POSSESSION OF THE PREMISES.
29.17 SUBMISSION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or an option for lease,
and it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.
29.18 BROKERS. 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 Lease, excepting only the real estate brokers or agents
specified in Section 10 of the Summary (the "BROKERS"), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. 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, judgments, 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 any
dealings with any real estate broker or agent, other than the Brokers (whose
commissions shall be paid by Landlord pursuant to a separate agreement),
occurring by, through, or under the indemnifying party.
29.19 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord except as expressly set forth in this Lease;
provided, however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of
the provisions hereof so long as notice is first given to Landlord.
29.20 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord and Tenant agree that
if Tenant leases on a direct basis (i.e., not including any space leased by
Tenant pursuant to a sublease) at least two-thirds (2/3) of any space then
constructed for lease at the Project, the name of the Project shall be
"Peregrine Systems Corporate Center." However, if at any time (after the Lease
Commencement Date for Building 1) Tenant fails to lease on a direct basis at
least two-thirds (2/3) of such space, Landlord shall have the right, at
Landlord's sole cost and expense, to change the name of the Project to "Carmel
Center", whether or not Tenant subsequently meets the leasing requirement
specified above. Except as provided in this Section 29.20 above, Landlord shall
not have the right at any time to change the name of the Project or Building
without first obtaining Tenant's written consent. Except for signs identifying
the Project or the owner or manager of the Project, Landlord shall not install,
affix and maintain any signs on the exterior or on the interior of the Building,
except as expressly contemplated by this Lease and/or may be required by law.
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29.21 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all present
or future mandatory programs imposed by statute or ordinance intended to manage
parking, transportation or traffic in and around the Project or Building, and in
connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any governmental transportation management
organization or any other transportation-related committees or entities. If any
of the foregoing are not imposed by statute or ordinance, Tenant may
participate, in its discretion, on a voluntary basis. Such programs may include,
without limitation: (i) restrictions on the number of peak-hour vehicle trips
generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of
an in-house ridesharing program and an employee transportation coordinator; (iv)
working with employees and any Project, Buildings or area-wide ridesharing
program manager; (v) instituting employer-sponsored incentives (financial or
in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work
shifts for employees. Tenant shall be entitled to the benefit of any
governmental incentives (financial or in-kind) available or otherwise offered to
induce compliance with such programs to the extent such incentives are
applicable to Tenant's implementation of any such programs.
29.22 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
29.23 HAZARDOUS MATERIAL. As used herein, the term "HAZARDOUS MATERIAL"
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Tenant acknowledges that Landlord
may incur costs (A) for complying with laws, codes, regulations or ordinances
relating to Hazardous Material, or (B) otherwise in connection with Hazardous
Material including, without limitation, the following: (i) Hazardous Material
present in soil or ground water; (ii) Hazardous Material that migrates, flows,
percolates, diffuses or in any way moves onto or under the Project; (iii)
Hazardous Material present on or under the Project as a result of any discharge,
dumping or spilling (whether accidental or otherwise) on the Project by other
tenants of the Project or their agents, employees, contractors or invitees, or
by others; and (iv) material which becomes Hazardous Material due to a change in
laws, codes, regulations or ordinances which relate to hazardous or toxic
material, substances or waste. Tenant agrees that the costs incurred by Landlord
with respect to, or in connection with, the Project for complying with laws,
codes, regulations or ordinances relating to the investigation, remediation or
removal of Hazardous Material shall not be an Operating Expense, except as
indicated in Section 4.2.7(n) above. However, if the cost of such compliance, as
between Landlord and Tenant, is the responsibility of Tenant under this Lease,
Tenant shall bear the cost of such compliance.
29.24 DEVELOPMENT OF THE PROJECT.
29.24.1 SUBDIVISION. Tenant acknowledges that the Project has been, or
is in the process of being, subdivided. Landlord reserves the right to further
subdivide all or a portion of the buildings and Common Areas in the Project.
Tenant agrees to execute and deliver, within ten (10) days after demand by
Landlord and in the form reasonably requested by Landlord, any additional
documents needed to conform this Lease to the circumstances resulting from a
subdivision and any all maps in connection therewith provided Tenant shall not
be required to incur any cost, undue burden or diminution of Tenant's rights
hereunder in connection therewith. Notwithstanding anything to the contrary set
forth in this Lease, the separate ownership of any buildings and/or Common Areas
of the Project by an entity other than Landlord shall not affect the calculation
of Direct Expenses or Tenant's payment of Tenant's Share of Direct Expenses.
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29.24.2 THE OTHER IMPROVEMENTS. If portions of the Project or property
adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are owned by an
entity other than Landlord, Landlord, at its option, may enter into an agreement
with the owner or owners of any of the Other Improvements to provide (i) for
reciprocal rights of access, use and/or enjoyment of the Project and the Other
Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and all or any
portion of the Other Improvements, (iii) for the allocation of a portion of the
Project Expenses to the Other Improvements and the allocation of a portion of
the operating expenses and taxes for the Other Improvements to the Project, (iv)
for the use or improvement of the Other Improvements and/or the Project in
connection with the improvement, construction, and/or excavation of the Other
Improvements and/or the Project, and (v) for any other matter which Landlord
deems necessary. Nothing contained herein shall be deemed or construed to limit
or otherwise affect Landlord's right to sell all or any portion of the Project
or any other of Landlord's rights described in this Lease.
29.24.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction, provided that Landlord shall
take all reasonable measures to minimize any interference or disruption to
Tenant's use of the Premises.
29.25 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord hereunder) and any recourse by Tenant against Landlord
from and after Landlord's Substantial Completion of the Building and delivery of
the same to Tenant in accordance with Landlord's obligations under this Lease,
shall be limited solely and exclusively to the lesser of (a) the equity interest
of Landlord in the Buildings then leased by Tenant as of the date upon which any
claim(s) arises or accrues in favor of Tenant or (b) the equity interest
Landlord would have in such Buildings if such Buildings were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Buildings, except to the extent any such claims and liability are covered by
insurance carried by Landlord. None of Landlord's constituent members, owners,
partners or subpartners, shall have any liability for the obligations of
Landlord under this Lease, and Tenant, on behalf of itself and all persons
claiming by, through or under Tenant, hereby expressly waives and releases such
members, owners, partners and subpartners from any and all liability.
29.26 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant, all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
29.27 ATTORNEYS' FEES. If either party commences litigation against
the other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
29.28 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at underground locations in the Project in or
serving the Premises, provided that (i) Tenant shall use an experienced and
qualified contractor approved in writing by Landlord (which approval shall not
be unreasonably withheld or delayed), and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of
conduits for additional Lines shall be maintained for existing and future
occupants of the Project, as determined in Landlord's reasonable opinion, (iii)
conduits for the Lines therefor (including riser cables unless originally
installed by Landlord) shall be appropriately insulated to prevent excessive
electromagnetic
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fields or radiation, and shall be surrounded by a protective conduit reasonably
acceptable to Landlord, (iv) any new or existing Lines servicing the Premises
shall comply with all applicable governmental laws and regulations, and (v)
Tenant shall pay all costs in connection therewith (except that Tenant shall
have no obligation to remove any Lines between the Buildings upon the expiration
or earlier termination of this Lease). However, Landlord reserves the right to
require that Tenant remove any Lines located in or serving the Premises which
are installed in violation of these provisions, or which are at any time in
violation of any laws or represent a dangerous or potentially dangerous
condition.
29.29 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.30 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.31 CONFIDENTIALITY. Landlord and Tenant acknowledge that the content of
this Lease and any related documents are confidential information. Landlord and
Tenant shall keep such confidential information strictly confidential and shall
not disclose such confidential information to any person or entity other than
(i) their financial, legal, and space planning consultants, (ii) as may be
required by any public reporting requirements, and (iii) as may be required by
any applicable governmental law, rule or regulation.
29.32 DISCLOSURES AND MUTUAL RELEASE. Tenant acknowledges that Landlord has
advised Tenant (i) that an earthquake fault may be located under a portion of
the Project, and (ii) of the proximity of the Project to the Miramar military
air base's vectored departure corridors and the potential overflights and
associated noise generated by various military aircraft in the area. Landlord
and Tenant hereby mutually release, acquit and discharge each other from any and
all Claims which either party may have against the other party arising out of or
in connection with (a) any earthquake affecting all or any portion of the
Project (subject to Landlord's and Tenant's rights and obligations under Article
11 above), and (b) any such overflights and associated noise.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD": KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: /s/ Steven L. Black
----------------------------
Name: Steven L. Black
--------------------------
Its: EVP & CEO
---------------------
By: /s/ Jeffrey C. Hawken
----------------------------
Name: Jeffrey C. Hawken
--------------------------
Its: EVP & COO
---------------------
"TENANT": PEREGRINE SYSTEMS, INC., a Delaware corporation
By: /s/ [ILLEGIBLE]
------------------------------------------------
Sr. V.P., Finance & Administration
------------------------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
By:
------------------------------------------------
------------------------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
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EXHIBIT A
PEREGRINE SYSTEMS CORPORATE CENTER
SITE PLAN
[MAP]
EXHIBIT A
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EXHIBIT B
PEREGRINE SYSTEMS CORPORATE CENTER
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Base, Shell and Core and tenant improvements for the
Building. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Building, in sequence, as such
issues will arise during the actual construction of the Building. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Lease. All references in this Tenant Work Letter to articles or
sections of "this Lease" shall mean the relevant portion of Articles 1 through
29 of this Office Lease to which this Tenant Work Letter is attached as EXHIBIT
B and of which this Tenant Work Letter forms a part, and all references in this
Tenant Work Letter to sections of "this Tenant Work Letter" shall mean the
relevant portion of Sections 1 through 7 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION OF BASE, SHELL AND CORE
The base, shell and core for the Building (collectively, the "BASE, SHELL
AND CORE") shall be constructed by Landlord, at its sole cost and expense
(except as expressly provided herein), in accordance with this Section 1.
1.1 LANDLORD'S RESPONSIBILITIES. The Base, Shell and Core for the Building
shall consist of only those items reflected on those certain drawings prepared
by the Project Architect as summarized on Schedule 3 to this Tenant Work Letter,
as such drawings may be revised pursuant to this Tenant Work Letter for reasons
other than a Landlord Work Change Order. Such drawings as revised pursuant to
this Tenant Work Letter for reasons other than a Landlord Work Change Order may
be referred to herein as the "BUILDING WORKING DRAWINGS". Notwithstanding the
foregoing, the Base, Shell and Core for the Building shall (without limitation
to the items reflected in the Building Working Drawings) consist of (i) core
walls and elevator lobby areas drywalled and taped ready for Building-standard
surface treatments; (ii) balance of core: exposed structure, level concrete
floors (broom clean) suitable for the installation of general office
improvements and ready to receive floor covering, Building-standard finish for
painted door frames, and Building-standard hardware; (iii) primary electrical
system ready for Tenant's switchgear in main electrical room which will service
the floor of the Building on which the Premises are located sufficient to
provide Tenant with 4 watts per rentable square foot and sufficient capacity in
such distribution to provide an additional 1.5 watts per rentable square foot;
(iv) Building telephone room to have floor sleeves to allow utility company to
distribute service lines onto each floor (Tenant to locate phone system
equipment in the Premises and to provide voice/data cabling from equipment to
termination in telephone room); (v) men's and ladies' restroom facilities with
Building-standard finishes located on each floor; (vi) sprinkler risers capped
at the core walls; (vii) primary heating, ventilating and air conditioning
system, including main water distribution loop (however, any heat pumps and
ducting including main ducting loop, shall be a Tenant Improvement); (viii)
drinking fountain at core on ground floor; (ix) electrical and janitorial
closets; (x) code required exit stairways; (xi) mechanical shafts; (xii)
life-safety systems as required by applicable building codes on an unoccupied
basis and ground floor lobby improvements including the improvements described
in the Building Working Drawings; and (xiii) card access system for Building
entrances and elevators. Landlord shall use commercially reasonable efforts to
cause the Base, Shell and Core of the Building to be completed by the date
specified in Section 1.5.2(v) below (the "SHELL COMPLETION DATES") in order to
allow a sufficient period of time for the construction of the Tenant
Improvements prior to the Estimated Lease Commencement Date.
1.1.1 BOOKS AND RECORDS. Landlord shall be responsible for performing
all accounting functions associated with the performance of the construction of
the improvements to the Common Areas and the Base, Shell and Core and Tenant
Improvements (collectively, the
EXHIBIT B
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"WORK") and shall prepare and maintain or cause to be prepared and maintained
detailed and accurate operating and financial records for the Work. Tenant shall
have the right to inspect such records at the offices of Landlord in Southern
California during normal business hours and to make copies thereof at its
expense. Landlord shall preserve, or cause its agents to preserve, copies of all
books and records relating to the Work for a period of three (3) years after the
completion of the Base, Shell and Core.
1.1.2 GOVERNMENTAL APPROVALS. Landlord shall be responsible for
obtaining all necessary agreements with governmental agencies and utility
companies relating to access, traffic control, utility services and other
similar entitlements affecting the construction of the Work.
1.1.3 BIDDING OF CONTRACTS. Landlord shall be responsible for the
bidding (or at Landlord's election the negotiation of fees) of the contract with
the general contractor and all subcontracts to be awarded in connection with the
initial Common Area improvements and the Base, Shell and Core (collectively, the
"LANDLORD WORK") in accordance with Section 1.4 below. Landlord shall be
responsible for negotiating the terms of the agreements with the contractor and
Project Architect with respect to the Landlord Work, both of which shall be
consistent with the terms and provisions of this Section 1. Except as expressly
provided in the Lease or this Tenant Work Letter, Landlord shall be solely
responsible for the payment of the costs of designing and constructing the
Landlord Work.
1.1.4 PERMITS. In addition to Landlord's obligations under Section
1.1.2 above, Landlord shall be responsible for obtaining, or causing its
contractor to obtain, all building permits and other governmental approvals,
permits and land use entitlements required to complete the Landlord Work.
Landlord shall be responsible for compliance with all laws, rules, regulations
and policies of the City of San Diego, State of California and United States of
America governing completion of the Landlord Work, including without limitation,
the requirements of the ADA and Title 24 in effect as of the Lease Commencement
Date, and shall correct any such violations at no cost to Tenant; however, if
the requirements of any laws change after the date upon which Landlord obtains
the permit for construction of the Base, Shell and Core and Landlord is not
required by law to comply with such change with respect to the Landlord Work,
Landlord shall not be in violation of this Section 1.1.4 so long as Landlord by
electing not to make such change does not increase the cost of construction of
the Tenant Improvements or delay the construction of the Tenant Improvements.
1.1.5 PROJECT ADMINISTRATION. Landlord shall be responsible for
supervising the progress of the Work and for reviewing and approving progress
payment applications before they are processed for payment.
1.1.6 POST-COMPLETION MATTERS. Following the completion of the
Landlord Work, Landlord shall assemble and maintain at the property management
office for the Project copies of (i) all warranties, operating manuals,
specifications and similar items with respect to the Building, and (ii) as-built
architectural and engineering drawings (including the master background) and any
other plans for the Landlord Work. Following the completion of the Work, upon
the request of Tenant and at Landlord's expense, Landlord also shall assemble
and deliver to Tenant copies of reproducible as-built plans and specifications
for the Building (in an auto-cad format, if available).
1.1.7 STATUS REPORTS. Landlord shall inform Tenant of any problems or
developments that may have an adverse impact on the completion of the Landlord
Work in a timely manner promptly after Landlord becomes aware of such problems
or developments.
1.1.8 PERIODIC INSPECTIONS. Landlord shall conduct ongoing inspections
(at least weekly) of the Landlord Work for compliance with plans and
specifications and review of progress of construction, and shall conduct
periodic site meetings with the construction trades. Landlord shall keep Tenant
reasonably informed of such meetings and proposed meetings and provided that
Tenant's participation does not extend the Construction Schedule, Tenant shall
have the right to participate in such meetings if it so desires.
EXHIBIT B
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1.1.9 PEDESTRIAN PASSAGEWAY. Landlord agrees to use commercially
reasonable efforts to obtain all necessary governmental permits and approvals to
construct a passageway between the Building and the parking structure for the
Project beneath the entry drive for the Project (the "PEDESTRIAN PASSAGEWAY").
If Landlord obtains all such governmental permits and approvals, subject to
Tenant's approval of costs to be incurred in connection with design and
construction of the Pedestrian Passageway, Landlord shall use reasonable efforts
to cause the Pedestrian Passageway to be completed concurrently with the
completion of such parking structure or as soon as reasonably possible
thereafter. The working drawings for the Pedestrian Passageway will be subject
to the approval of Tenant (which approval shall not be unreasonably withheld,
conditioned or delayed). Landlord shall be responsible for the first Two Hundred
Thousand Dollars ($200,000.00) of costs incurred in order to design and
construct the Pedestrian Passageway; however, should such costs exceed Two
Hundred Thousand Dollars ($200,000.00), such excess shall be paid by Tenant to
Landlord, as Additional Rent, in the same manner as payments of Over-Allowance
Amounts as described in Section 4.3.1 below.
1.2 DESIGN OF THE LANDLORD WORK. Landlord has entered into an agreement
with Carrier Johnson for the design of the Landlord Work including preparation
of design, development and construction documents. Landlord has entered into or
may enter into other agreements with other consultants for design of other
aspects of the Landlord Work (if applicable). Carrier Johnson and such other
design consultants (if applicable) retained by Landlord shall be collectively
referred to as the "PROJECT ARCHITECT." Landlord's agreement(s) with the Project
Architect shall be collectively referred to herein as the "PROJECT ARCHITECT
AGREEMENT." The specific terms of the Project Architect Agreement shall be such
that it will enable Landlord to perform Landlord's obligations hereunder.
The Project Architect has prepared and delivered to Tenant, and Tenant has
approved, the Building Working Drawings. Landlord has obtained approval of the
Building Working Drawings as approved by Tenant, from all appropriate
governmental agencies, including all departments of the City of San Diego having
jurisdiction to review the Building Working Drawings. Any revisions or changes
to the Building Working Drawings, if requested by Landlord (but not if required
by the City of San Diego or any other governmental agency), will be subject to
the approval of Tenant (which approval shall not be unreasonably withheld,
conditioned or delayed). Tenant shall approve or disapprove any such revisions
or changes by written notice to Landlord within five (5) days after Tenant's
receipt of such proposed revisions or changes; Tenant's failure to disapprove
any such revisions or changes by written notice to Landlord within said five (5)
day period (which written notice shall include detailed reasons for Tenant's
disapproval) shall be deemed to constitute Tenant's approval of such revisions
or changes.
1.3 CHANGE ORDERS REQUESTED BY TENANT TO THE LANDLORD WORK. Tenant may
request that additions to or deletions from the Landlord Work be made ("LANDLORD
WORK CHANGE ORDERS"). If Tenant desires a Landlord Work Change Order to be made,
Tenant shall so notify Landlord in writing and, within ten (10) days after such
notification, Landlord shall deliver to Tenant (i) written notice that Landlord
has determined, in Landlord's reasonable discretion, to disapprove the proposed
Landlord Work Change Order, or (ii) if Landlord approves the proposed Landlord
Work Change Order, a written estimate of any extension to the Construction
Schedule and any additional costs resulting from such proposed Landlord Work
Change Order. Without limitation on other reasons for Landlord's disapproval,
Landlord may disapprove any such proposed Landlord Work Change Order if it will
cause (a) a material change to the exterior of the Building, (b) a material
change to any of the finish materials, including without limitation, to the
lobby, bathrooms or elevator cabs of the Building, or (c) any material adverse
effect (as reasonably determined by Landlord) on the quality or adequate
functionality of the Landlord Work. If Landlord approves the proposed Landlord
Work Change Order, Tenant shall, within five (5) days following receipt of such
notification from Landlord, then notify Landlord in writing whether or not
Tenant elects to proceed with the Landlord Work Change Order. If Tenant elects
to cause any Landlord Work Change Order to be made, the Shell Completion Date
and other Major Project Milestones shall be appropriately adjusted as a result
of any delays due to such Landlord Work Change Order. If Landlord does not
approve a proposed Landlord Work
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Change Order, the Landlord Work Change Order shall not be implemented. Any
increased cost resulting from a Landlord Work Change Order shall be charged to
the Tenant Improvement Allowance and any delay resulting from a Landlord Work
Change Order shall, subject to Section 5 below, be deemed to constitute a Tenant
Delay and an Excusable Delay. Tenant acknowledges, however, that the contractor
for the Landlord Work shall not be instructed to stop work during the time taken
by Tenant in considering whether to proceed with any proposed Landlord Work
Change Orders and that the cost charged to the Tenant Improvement Allowance and
any potential Tenant Delay and Excusable Delay resulting from a Landlord Work
Change Order shall include any work necessary to reverse the work performed by
the contractor during the pendency of Tenant's decision whether to proceed with
a Landlord Work Change Order.
1.4 CONTRACTING. Landlord has entered into an agreement with Reno for the
construction of the Base, Shell and Core for the Building.
1.5 CONSTRUCTION SCHEDULE.
1.5.1 COMPLETION. The construction of the Base, Shell and Core of the
Building shall be deemed to be completed (the "BASE, SHELL AND CORE COMPLETION")
when (i) the Project Architect determines that the Base, Shell and Core for such
Building has been completed in accordance with the Building Working Drawings
(subject to customary "punch list" items) by issuing a certificate of
substantial completion, and (ii) a certificate of occupancy or an approval to
occupy (or their equivalent) with respect to the Base, Shell and Core has been
issued by the City of San Diego. "Punch list" items, as referred to in this
Section 1.5.1, are items that will require correction but that will not
materially interfere with, or cause a delay to, the construction of the Tenant
Improvements. Landlord agrees to correct all such Base, Shell and Core punch
list items prior to the Lease Commencement Date.
1.5.2 MAJOR PROJECT MILESTONES. Landlord agrees that it shall use
commercially reasonable efforts to complete its duties and tasks specified in
this Tenant Work Letter in accordance with the schedule attached to this Tenant
Work Letter as Schedule 1 and made a part hereof ("CONSTRUCTION SCHEDULE") and
to endeavor to accomplish all "Major Project Milestones" within the time set
forth in the Construction Schedule. As used herein, the term "MAJOR PROJECT
MILESTONES" means:
(i) Completion of Base, Shell and Core Working Drawings and
submittal of same to City of San Diego for permits by:
Done
(ii) Obtaining all building and other permits for the
construction of the Base, Shell and Core by:
Done
(iii) Commencement of construction of the Base, Shell and Core
by:
Done
(iv) Completion of vertical construction of the Base, Shell and
Core by:
Done
(v) Base, Shell and Core Completion by the applicable Shell
Completion Date:
September 30, 1999
Landlord shall use its reasonable, good-faith efforts to meet all
milestones by the date set forth for the accomplishment of such milestones in
the Construction Schedule. If Landlord fails to accomplish any milestone by the
date set forth in the Construction Schedule (as may be
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extended pursuant to the next sentence below), then Landlord shall authorize and
direct its employees, the Project Architect, the general contractor for the
Landlord Work and any relevant subcontractor to work at an accelerated pace
utilizing such "overtime" hours as may be necessary to bring the Landlord Work
back on schedule. The dates set forth in the Construction Schedule (including,
without limitation, any milestones and any Major Project Milestones) shall be
extended by any delay (collectively, "EXCUSABLE DELAY") attributable to Tenant's
failure to comply with its obligations under Section 1 of this Tenant Work
Letter, any Tenant Delay, any Landlord Work Change Order, and any Force Majeure.
However, any delay necessitated by changes in the Building Working Drawings
because the same do not comply with Code or other applicable laws shall not
constitute an Excusable Delay except to the extent the portion of the Building
Working Drawings which is found to not comply is attributable to Landlord Work
Change Orders made by Tenant.
SECTION 2
TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a tenant
improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount of One
Million Six Hundred Seventy-Eight Thousand Seven Hundred Fifty-Eight Dollars
($1,678,758.00) for the costs relating to the design and construction of
Tenant's improvements (the "TENANT Improvements"). Tenant shall have the right
to defer the construction of Tenant Improvements for space in the Building which
Tenant elects not to initially build-out until no later than three (3) years
after the Lease Commencement Date; however, (i) if Tenant elects to commence
construction of Tenant Improvements for any space in the Building, such
construction may not thereafter be deferred, and (ii) any such deferral shall be
deemed a Tenant Delay so that the Lease Commencement Date shall not be delayed.
In no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Tenant Improvement
Allowance (except as expressly contemplated by this Tenant Work Letter). Any
portion of the Tenant Improvement Allowance remaining after construction of the
Tenant Improvements for the Building may be used by Tenant for Tenant
Improvements for such Building before the first anniversary of the Lease
Commencement Date for such Building; provided, however, Tenant shall have the
right to transfer portions of the Tenant Improvement Allowance among the
Building and Buildings 2 and 5 for Tenant Improvements and space planning costs
only. Further, Tenant shall allocate and use a minimum Tenant Improvement
Allowance for "hard costs" (i.e., costs incurred under the general contract with
Contractor) of Tenant Improvements in an amount not less than One Million
Ninety-Six Thousand Nine Hundred Sixteen Dollars ($1,096,916.00). All Tenant
Improvements for which the Tenant Improvement Allowance has been made available
shall be deemed Landlord's property except as described under the terms of
Section 8.5 of this Lease.
2.2 DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE. Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to the
disbursement process described in Section 4.3.1 below) only for the following
items and costs (collectively, the "TENANT IMPROVEMENT ALLOWANCE ITEMS"):
2.2.1 Payment of the fees of all design consultants, project managers,
the "Space Planner," "Architect" and the "Engineers," as those terms are defined
in Section 3.1 of this Tenant Work Letter, and payment of the fees incurred by,
and the cost of documents and materials supplied by, Landlord and Landlord's
consultants in connection with the preparation and review of the "Construction
Drawings," as that term is defined in Section 3.1 of this Tenant Work Letter;
2.2.2 The payment of all governmental and utility service or
connection fees, including, but not limited to, plan check, permit and license
fees relating to construction of the Tenant Improvements; provided, however, the
Tenant Improvement Allowance Items shall not
EXHIBIT B
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include any costs for utilities or use of elevators during the construction of
the Tenant Improvements;
2.2.3 The cost of construction of the Tenant Improvements within such
Building, including, without limitation, all labor, materials, testing and
inspection costs, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.4 The cost of any changes in the Base, Shell and Core work when
such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural, engineering and/or other
consultant fees and expenses incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings or Tenant
Improvements required by applicable governing codes ("CODE") unless such changes
are required to cause the Base, Shell and Core to comply with applicable
building Code (however, changes to the Base, Shell and Core required due to the
unique nature of the Tenant Improvements requested by Tenant shall be charged to
the Tenant Improvement Allowance);
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 The costs incurred (by Landlord or Tenant) in connection with
third party design services prior to Lease execution (which costs shall not
exceed Twenty Cents ($0.20) per rentable square foot of the Building);
2.2.8 "Landlord's Supervision Fee", as that term is defined in Section
4.3.2 of this Tenant Work Letter;
2.2.9 All other costs to be expended by Landlord and reasonably
approved by Tenant in connection with the construction of the Tenant
Improvements; and
2.2.10 Costs incurred for Tenant's voice/data cabling, network racks
and hardware, furniture, telecom system, keys, locks, security costs, relocation
and interior and exterior signage (including Tenant's Signs); provided, however,
in no event shall the aggregate costs of the items forth in this Section 2.2.10
exceed Three Hundred Thirty-Three Thousand Eight Hundred Forty-Four Dollars
($333,844.00). Landlord and Tenant acknowledge that the Base Rent for the
Premises includes an amortization (with interest at twelve percent (12%) per
annum) of the amount payable by Landlord pursuant to this Section 2.2.10.
2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord and Tenant have
established specifications (the "SPECIFICATIONS") for some of the Building
standard components which Tenant may elect to construct in the Building
(collectively, the "STANDARD IMPROVEMENT PACKAGE"). The Standard Improvement
Package is attached as Schedule 2 to this Tenant Work Letter. Landlord may only
make changes to the Specifications and the Standard Improvement Package from
time to time with Tenant's prior written approval thereof. Tenant may deviate
from the Specifications with Landlord's approval (as part of the approval of
Construction Drawings).
SECTION 3
CONSTRUCTION DRAWINGS
3.1 SELECTION OF ARCHITECT. Tenant shall retain Carrier Johnson as
architect (the "ARCHITECT") to prepare the architectural plans and drawings for
the Tenant Improvements in the Building in accordance with the Construction
Schedule. Tenant shall have the right to replace Architect with another
architect(s) from time to time at Tenant's discretion and subject to Landlord's
reasonable approval. Tenant shall also retain engineering consultants (the
"ENGINEERS") selected by Tenant and subject to Landlord's reasonable approval to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work of the
Tenant Improvements. The parties
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acknowledge that Tenant's retention of the Engineers may be done in connection
with a design/build format. The plans and drawings to be prepared by Architect
and the Engineers hereunder shall be known collectively as the "CONSTRUCTION
DRAWINGS." All Construction Drawings shall comply with the drawing format and
specifications as reasonably determined by Landlord, and shall be subject to
Landlord's approval which shall not be unreasonably withheld or delayed. Tenant
shall be deemed to have approved any Construction Drawings submitted to Landlord
for Landlord's approval. Tenant and Architect shall verify, in the field, the
dimensions and conditions as shown in the relevant portions of Construction
Drawings for the Base, Shell and Core. Landlord shall cause the Contractor to
assist Tenant's Architect in identifying any coordination or other construction
issues relating to the Construction Drawings for the Base, Shell and Core.
Landlord's review of the Construction Drawings, as set forth in this Section 3,
shall not imply Landlord's review of the same for quality, design, Code
compliance or other like matters, but Landlord shall nevertheless inform Tenant
of any deficiencies discovered. Accordingly, notwithstanding any Construction
Drawings reviewed by Landlord or its consultants, and notwithstanding any advice
or assistance which may be rendered to Tenant by Landlord or Landlord's
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings unless any omissions or errors are a result of omissions
or errors in the Construction Drawings for the Base, Shell and Core, and
Tenant's waiver and indemnity set forth in Section 10.1 of the Lease shall
specifically apply to the Construction Drawings.
3.2 FINAL SPACE PLAN. On or before the applicable date set forth in the
Construction Schedule, Tenant shall cause the Architect to prepare the final
space plan for Tenant Improvements in the Building (collectively, the "FINAL
SPACE PLAN"), which Final Space Plan shall include a layout and a designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval. Subject to the restrictions specified in Section 2.1 above,
Tenant may exclude from the Final Space Plan a layout for any space in the
Building which Tenant elects not to initially build out. Landlord shall notify
Tenant of its approval (which approval shall not be unreasonably withheld) or
disapproval (with reasons for disapproval specified) of the Final Space Plan for
the Premises within ten (10) business days after receipt thereof; any failure by
Landlord to notify Tenant of its approval or disapproval within such ten (10)
business day period shall be deemed to be Landlord's disapproval thereof. If
Landlord disapproves the Final Space Plan, Landlord and Tenant shall, within two
(2) business days thereafter, meet (or telephonically confer) in an attempt to
resolve such disapproval as soon as reasonably possible. If, in connection with
such meeting, Landlord and Tenant conceptually agree upon revisions to be made
to the Final Space Plan, then within ten (10) business days after such meeting,
Tenant shall cause the Final Space Plan to be revised in accordance with the
parties' conceptual agreement and shall resubmit the Final Space Plan for
Landlord's approval. This process shall continue until the Final Space Plan is
approved by Landlord. If Landlord and Tenant are, despite such meeting, unable
to resolve the items disapproved by Landlord in the Final Space Plan, the
parties shall mutually select an architect from Carrier Johnson to resolve such
disagreement (or if Carrier Johnson is unwilling to make a determination to
resolve such dispute or either party objects to Carrier Johnson playing such
role, then the parties shall mutually agree upon some other reasonably qualified
architect to resolve such issues). Any such resolution by such architect
(whether from Carrier Johnson or some other firm) shall be made within ten (10)
business days after the meeting between Landlord and Tenant.
3.3 WORKING DRAWINGS. On or before the applicable date set forth in the
Construction Schedule, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
construction documents in a form which is complete to allow contractors and
subcontractors to bid on the work, to obtain all applicable permits, and to
subsequently construct the work (collectively, the "WORKING DRAWINGS"). Subject
to the restrictions specified in Section 2.1 above, Tenant may exclude from the
Working Drawings any space which Tenant elects not to initially build-out.
Landlord shall notify Tenant of its approval (which approval shall not be
unreasonably withheld) or disapproval (with reasons for such disapproval
specified) of the Working Drawings within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten
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[Peregrine Systems]
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(10) business day period shall be deemed to be Landlord's disapproval thereof.
However, Landlord may not disapprove any details of the Working Drawings which
have already been approved by Landlord in the Final Space Plan. If Landlord
disapproves the Working Drawings, Landlord and Tenant shall, within two (2)
business days thereafter, meet in an attempt to resolve such disapproval as soon
as reasonably possible. If, in connection with such meeting, Landlord and Tenant
conceptually agree upon revisions to be made to the Working Drawings, then
within ten (10) business days after such meeting, Tenant shall cause the Working
Drawings to be revised in accordance with the parties' conceptual agreement and
shall resubmit the Working Drawings for Landlord's approval. This process shall
continue until the Working Drawings are approved by Landlord. If Landlord and
Tenant are, despite such meeting, unable to resolve the items disapproved by
Landlord in the Working Drawings, the parties shall mutually select an architect
from Carrier Johnson to resolve such disagreement (or if Carrier Johnson is
unwilling to make a determination to resolve such dispute or either party
objects to Carrier Johnson playing such role, then the parties shall mutually
agree upon some other reasonably qualified architect to resolve such issues).
Any such resolution by such architect (whether from Carrier Johnson or some
other firm) shall be made within ten (10) business days after the meeting
between Landlord and Tenant.
3.4 PERMITS. The Working Drawings shall be approved by Landlord (the
"APPROVED WORKING DRAWINGS") prior to the commencement of construction of the
Tenant Improvements. Landlord shall, in accordance with the Construction
Schedule, submit or cause the Approved Working Drawings to be submitted to the
appropriate municipal authorities for all applicable building permits necessary
to allow the Contractor selected pursuant to Section 4.1 below to commence and
fully complete the construction of the Tenant Improvements (the "PERMITS"), and
in connection therewith, Landlord and Tenant shall coordinate with Contractor to
allow Landlord and Tenant to take part in all phases of the permitting process.
Landlord shall require Contractor to supply Landlord and Tenant, as soon as
possible, with all plan check numbers and dates of submittal with respect to the
Building. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord and Tenant,
which shall not be unreasonably withheld or delayed, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would delay the Substantial Completion of such
Tenant Improvements or the Building unless Tenant agrees in writing to be
responsible for any such delay as in a Tenant Delay and for the costs of any
delay resulting therefrom.
3.5 TIME DEADLINES. Landlord and Tenant shall use good faith, reasonable
efforts and all due diligence to cooperate with each other and the Architect and
the Engineers to complete all phases of the Working Drawings and the permitting
process, and with Contractor for approval of the Cost Proposal (as defined
below), as is necessary to keep such Tenant Improvements on schedule. The
applicable dates for approval of items, plans and drawings as described in this
Tenant Work Letter are set forth and further elaborated upon in the Construction
Schedule (the "TIME DEADLINES"), attached hereto. Landlord and Tenant agree to
use good faith, reasonable efforts to comply with the Time Deadlines.
3.6 DESIGN-BUILD. Landlord and Tenant acknowledge that Tenant may elect to
design and construct the Tenant Improvements using a fast-track design/build
format. If Tenant so elects, Tenant may forward to Landlord, for Landlord's
approval, Construction Drawings for portions of the Tenant Improvement project
rather than Construction Drawings for the entire Premises. Landlord agrees to
advise Tenant within ten (10) business days after Landlord's receipt of any such
drawings if the same are unsatisfactory or incomplete in any respect. Upon
Landlord's approval of any such drawings, the Contractor may be instructed to
submit the same to the applicable governmental authorities for receipt of
Permits. This process may be repeated by Tenant, as necessary, for all portions
of the Tenant Improvement project.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 CONTRACTOR. A general contractor retained by Landlord (the
"CONTRACTOR"), shall construct the Tenant Improvements. Reno Contracting, Inc.,
a California corporation ("RENO") shall act as Contractor for the Tenant
Improvements for the Building. Reno has agreed to a four percent (4%)
contracting fee and a three percent (3%) general conditions fee, both of which
fees shall be based upon the direct costs of the subcontractors.
4.1.1 CONTRACT WITH CONTRACTOR. The contract with the Contractor shall
be consistent with this Tenant Work Letter and shall provide that Tenant shall
have the full benefit of all warranties provided by Contractor and that such
warranties shall be assignable to Tenant. Landlord shall provide Tenant with an
opportunity to review the construction contract with the Contractor to confirm
that such contract is not in conflict with this Tenant Work Letter. In addition,
upon request from Tenant, Landlord shall provide Tenant with a copy of all
Contractor's contracts with the major trade subcontractors in Landlord's
possession at the time of such request.
4.1.2 GENERAL CONDITIONS FEE. The general conditions fee charged by
Contractor shall cover all of the following: project executive, general
superintendent, home office expenses, general overhead, office supplies,
accounting services, computer charges, telephone expenses, fax office/job site,
data processing, secretarial services, mail, express mail, insurance, city
licenses, project manager, estimator, project engineer, scheduling,
superintendent, daily clean up and final clean up, protection of work, petty
cash, safety enforcement and safety signage, small tools, first aid facilities,
general field coordination, project field office, tenant vendor coordination and
job trailer, but shall exclude reconstruction services, general labor, blue
printing and temporary structures. Except as provided herein, Landlord or
Contractor shall not receive any other fee or payment from Tenant in connection
with Contractor's services.
4.1.3 CONTRACT OF WORK. Landlord shall cause its contract with
Contractor to include the provisions set forth in this Section 4.1.3. Contractor
shall take appropriate field measurements and verify field conditions before
commencing construction of Tenant Improvements. Contractor shall review, approve
and submit to the Architect shop drawings, product data, samples and submittals
required by the contract documents with promptness and in sequence as to cause
no delay in the Construction Schedule. During the course of construction,
Contractor shall take all reasonable precautions to maintain industry safety
standards and protect against damage, injury or loss to any persons or property.
Contractor shall supervise and direct the construction of the Tenant
Improvements using Contractor's best skills and attention and shall be fully
responsible for and have control over construction means, methods, techniques,
sequences and procedures for coordinating all portions of the work under the
contract.
4.2 COST PROPOSAL. After the Approved Working Drawings are approved by
Landlord and Tenant, and the Contractor and subcontractors have been selected
pursuant to Section 4.1 above, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings setting forth the
reconciled bids and copies of all sub-bids, which cost proposal shall include,
as nearly as possible, the cost of all Tenant Improvement Allowance Items to be
incurred in connection with the construction of the Tenant Improvements (the
"COST PROPOSAL"). The Cost Proposal shall reflect bids that will be priced by
Contractor on an individual item-by-item or trade-by-trade basis. Landlord and
Tenant shall work together in good faith in an attempt to agree upon a mutually
acceptable Cost Proposal as soon as reasonably possible. Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the "PARTIAL COST PROPOSAL") for purposes of
facilitating the early purchase of items and construction of the same. Tenant
shall approve and deliver the Cost Proposal to Landlord within seven (7)
business days of the receipt of the same, or, as to a Partial Cost Proposal
within five (5) business days of receipt of the same, and upon receipt of the
same
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by Landlord, Landlord shall be released by Tenant to purchase the items set
forth in the Cost Proposal or Partial Cost Proposal, as the case may be, and to
commence the construction relating to such items. If Tenant disapproves the Cost
Proposal or Partial Cost Proposal, Tenant shall provide Landlord with a
reasonably sufficient explanation, and in such event, Landlord and Tenant shall
use good faith, diligent efforts to work with each other and Contractor to
address Tenant's reasons for disapproving the Cost Proposal or Partial Cost
Proposal, whichever is the case and a new Cost Proposal (or Partial Cost
Proposal, as applicable) shall be prepared and the process described in this
Section 4.2 shall be repeated. The date by which Tenant must approve and deliver
the Cost Proposal or the last Partial Cost Proposal to Landlord, as the case may
be, shall be known hereafter as the "COST PROPOSAL DELIVERY DATE". The total of
all Partial Cost Proposals, if any, shall be known as the Cost Proposal.
4.3 CONSTRUCTION OF TENANT IMPROVEMENTS BY LANDLORD'S CONTRACTOR UNDER THE
SUPERVISION OF LANDLORD.
4.3.1 OVER-ALLOWANCE AMOUNT. In connection with Tenant's approval of
the Cost Proposal, Tenant shall be responsible for the amount equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (as adjusted for any transfer to or from
Adjacent Buildings as provided in, and subject to, Section 2.1 of this Tenant
Work Letter above and less any portion thereof already disbursed by Landlord, or
in the process of being disbursed by Landlord, on or before the Cost Proposal
Delivery Date) (which difference is referred to herein as the "OVER-ALLOWANCE
AMOUNT"). All costs for Tenant Improvements shall be fully documented and may be
verified by Tenant. In the event that, after the Cost Proposal Delivery Date,
Tenant shall request any revisions, changes, or substitutions to the
Construction Drawings or the Tenant Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs (in excess of the Tenant Improvement Allowance) shall be
considered to be an addition to the Over-Allowance Amount (which shall result in
a recalculation of the amounts to be paid by Tenant pursuant to Sections
4.3.1.1. and 4.3.1.2 below).
4.3.1.1 PAYMENT OF INITIAL PORTION OF OVER-ALLOWANCE AMOUNT.
Except as provided in Section 4.3.1.2 below, the procedure described in this
Section 4.3.1.1 shall apply to Tenant's payment of the Over-Allowance Amount.
Tenant shall pay ninety percent (90%) of the Over-Allowance Amount and
Landlord shall pay ninety percent (90%) of the Tenant Improvement Allowance,
in monthly progress payments corresponding to the progress of the Tenant
Improvement Work and Tenant and Landlord shall each retain ten percent (10%)
thereof to be paid as part of the final retention, in accordance with the
construction contract, upon completion of such work. During the course of
construction of the Tenant Improvements, Contractor shall deliver to Landlord
and Tenant not more than once for each calendar month a written request for
payment ("PROGRESS PAYMENT REQUEST") which shall be accompanied by (i)
Contractor's certification of the payment amount requested and the percentage
of completion of each item of work for which payment is sought and (ii)
copies of conditional lien releases (for upcoming payments) and unconditional
lien releases (for the previous month's payments) from all subcontractors and
vendors. Through this monthly process, Tenant shall pay to Landlord ninety
percent (90%) of the completed percentage of the Over-Allowance Amount, if
any, and Landlord shall pay to Contractor ninety percent (90%) of the Tenant
Improvement Allowance due pursuant to the Progress Payment Request, each
month within thirty (30) days after Tenant's and Landlord's receipt of the
above items and approval of the same (which approval shall not be
unreasonably withheld, conditioned or delayed and shall be granted or denied
(with detailed reasons for such denial) within five (5) days after Tenant's
receipt of a Progress Payment Request). Failure to grant or deny any such
approval within said five (5) day period shall be deemed to constitute
Tenant's approval thereof. The Over-Allowance Amount shall be proportionately
paid by Landlord prorata with the Tenant Improvement Allowance, and such
disbursement by Landlord of the Over- Allowance Amount shall be pursuant to
the same procedure as Landlord's disbursement of the Tenant Improvement
Allowance.
4.3.1.2 PAYMENT OF ANY EXCESS PORTION OF OVER-ALLOWANCE AMOUNT.
To the extent that the Over-Allowance Amount is Four Hundred Seventy-Six
Thousand Nine
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[Peregrine Systems]
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Hundred Twenty Dollars ($476,920.00) or more (such excess to be referred to as
the "EXCESS OVER-ALLOWANCE AMOUNT") and/or if as of the Cost Proposal Delivery
Date, Tenant fails to meet all of the Financial Standards, and if in either such
case, Landlord's lender (who is unaffiliated with Landlord) so requires, Tenant
shall pay the Excess Over-Allowance Amount (or if the Financial Standards are
not met, then all of the Over-Allowance Amount) in accordance with the procedure
specified in this Section 4.3.1.2 below. Tenant shall deposit fifty percent
(50%) of the Excess Over-Allowance Amount (or if the Financial Standards are not
met, then all of the Over-Allowance Amount) within ten (10) days after the Cost
Proposal Delivery Date and shall deposit the remaining fifty percent (50%) of
the Over-Allowance Amount within ten (10) days after notice from Landlord that
the Contractor has determined that the Tenant Improvement Work has been fifty
percent (50%) completed. Such deposits from Tenant shall be with Landlord (or
with the lender if so required by such lender) and maintained in a segregated
account at a financial institution reasonably selected by Landlord (if not with
the lender). To the extent permitted by the lender, any amounts so deposited by
Tenant shall earn interest which shall accrue to Tenant at the actual rate
earned from the date of such deposit until the date that such funds are
disbursed.
4.3.2 LANDLORD'S RETENTION OF CONTRACTOR. Landlord shall independently
retain Contractor to construct the Tenant Improvements in accordance with the
Approved Working Drawings and the Cost Proposal and Tenant shall pay (as part of
the Tenant Improvement Allowance) a construction supervision fee (the "LANDLORD
SUPERVISION FEE") to Landlord in an amount equal to one percent (1%) of all
"hard" Tenant Improvement Allowance Items.
4.3.3 CONTRACTOR'S WARRANTIES AND GUARANTIES. Landlord hereby assigns
to Tenant all warranties and guaranties by Contractor relating to the Tenant
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant Improvements (except for any
portion of the Tenant Improvements which consist of components of the Building
Systems and Equipment for which Landlord maintains responsibility for repair
pursuant to Section 7.1 of the Lease). Such warranties and guaranties of
Contractor shall guarantee that the Tenant Improvements shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof, and Contractor shall be responsible for the
replacement or repair, without additional charge, of the Tenant Improvements
that shall become defective within one (1) year after Substantial Completion of
such Tenant Improvements. The correction of such work shall include, without
additional charge, all additional expenses and damages in connection with such
removal or replacement of all or any part of the Tenant Improvements.
4.3.4 TENANT'S COVENANTS. Tenant hereby indemnifies Landlord for any
loss, claims, damages or delays arising from the actions of the Architect
retained by Tenant pursuant to Section 3.1 of this Tenant Work Letter on the
Premises or in the Building to design or construct the Tenant Improvements.
Tenant, immediately after the Substantial Completion of the Building, shall have
prepared and delivered to Landlord a copy of the "as built" plans and
specifications (including all working drawings) for the Tenant Improvements.
4.4 CHANGE ORDERS. Subject to Landlord's reasonable approval, Tenant shall
have the right to order changes in the Tenant Improvements ("CHANGE ORDERS").
Landlord's contract with Contractor shall provide that, upon request and prior
to Tenant's submitting any binding Change Order, Contractor shall promptly
provide Tenant with a written itemized breakdown of labor and materials for the
estimated cost to implement, the estimated time delay and any other estimated
increased construction costs associated with the proposed Change Order. Costs
related to changes shall include, without limitation, any architectural or
design fees, and Contractor's fee (not to exceed the percentage rate for
Contractor's fee and general conditions fee as previously set forth herein) for
effecting the change. In addition, any Change Order shall be subject to
Landlord's approval, not to be unreasonably withheld, conditioned or delayed. If
ordered by Tenant and so approved by Landlord, Contractor shall implement such
Change Order and the cost of construction of the Tenant Improvements shall be
increased or decreased in accordance with the cost proposal previously approved
by Tenant for any such Change Order, subject to reconciliation for actual costs.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
Except as provided in this Section 5, the Lease Commencement Date for the
Premises shall occur as set forth in Article 2 of this Lease. Any delay or
delays in the Substantial Completion of the Premises as set forth in Article 2
of this Lease, as a result of any of the following shall be considered "TENANT
DELAYS":
5.1 Tenant's failure to comply with the Time Deadlines which are Tenant's
responsibility to meet in accordance with this Tenant Work Letter;
5.2 Tenant's failure to timely approve any matter requiring Tenant's
approval;
5.3 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
5.4 Changes in any of the Construction Drawings because the same do not
comply with Code or other applicable laws;
5.5 Tenant's request for changes in the Working Drawings or the Approved
Working Drawings including any delay resulting from Tenant's request for
information from the Contractor, the time taken by Tenant in considering any
such information prior to agreeing to proceed (or not to proceed) with such
change and/or the actual Change Order;
5.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the
Lease, or which are different from, or not included in, the Standard Improvement
Package, provided Landlord informed Tenant in writing that any such requirement
would not be available in accordance with the Construction Schedule and would
likely cause a delay in the anticipated date of Substantial Completion of the
Premises;
5.7 Changes to the Base, Shell and Core work required by the Approved
Working Drawings; or
5.8 Any other acts or omissions of Tenant, or its agents, or employees.
Notwithstanding the foregoing, no delay under Sections 5.2, 5.3, 5.5, 5.6,
5.7 or 5.8 above shall be considered a Tenant Delay unless and until Tenant is
(i) provided prior written notice that it is about to suffer a Tenant Delay and
is afforded a one (1) business day opportunity to cure the same, and (ii)
offered the opportunity to incur premium costs (as an Over-Allowance Amount if
the Tenant Improvement Allowance has been exceeded) to prevent or minimize such
delay if it is possible to do so. Landlord shall not assess any day towards a
Tenant Delay for delays caused by Contractor, Landlord or any third parties or
due to Force Majeure. For purposes of determining whether a delay by Tenant or
Architect constitutes a Tenant Delay, reference shall be made to the critical
path schedule for the construction of Tenant Improvements set forth in the
Construction Schedule. Landlord and Contractor shall take commercially
reasonable actions, remedial or otherwise, to maintain the Construction Schedule
notwithstanding any Tenant Delay, provided that this requirement shall not
require Landlord or Contractor to incur any additional costs or expenses (e.g.,
contractor overtime or costs resulting from accelerated delivery) unless Tenant
agrees to pay for such additional costs or expenses.
Notwithstanding anything to the contrary set forth in this Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date for the Premises shall
be deemed to be the date the Lease Commencement Date would have occurred if no
Tenant Delays, as set forth above, had occurred; provided, however, if the
actual date of Substantial Completion of the Tenant Improvements occurs on or
before the estimated Lease Commencement Date specified in Section 5 of the
Summary, no Tenant Delays shall be deemed to have occurred.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SECTION 6
ACCEPTANCE OF TENANT IMPROVEMENTS
Tenant's taking possession of the Premises shall be an acceptance of the
Tenant Improvements except for (i) any "punch list" type items of which Tenant
has given Landlord written notice, (ii) any latent defects in the construction
of the Tenant Improvements, (iii) Landlord's obligation to correct construction
defects, (iv) any warranties made by Landlord and Contractor, and (v) any
noncompliance of the Premises with all laws and codes in effect as of the Lease
Commencement Date. Tenant shall provide Landlord with Tenant's written list of
"punch list" items within ten (10) business days after the Lease Commencement
Date. Landlord shall cause Contractor to correct within thirty (30) days of
Landlord's receipt of notice thereof any construction deficiencies or other
"punch list" items of which Tenant notifies Landlord and Contractor; except that
for minor items (such as minor items on backorder) that cannot reasonably be
corrected in thirty (30) days, Landlord shall cause correction to occur as soon
as reasonably practicable. Any such corrective work shall be performed so as to
reasonably minimize any interference or disruption to Tenant and its activities
on the Premises.
SECTION 7
MISCELLANEOUS
7.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Project and the Building, Contractor shall allow Tenant (and its vendors,
consultants, contractors, and agents) access to the Building during the forty
five (45) day period prior to the estimated Substantial Completion date of the
Tenant Improvements (but if such access is to be prior to the issuance of the
Temporary Certificate of Occupancy for the Building, then such access shall be
only as allowed by the City of San Diego) for the purpose of Tenant installing
equipment, furniture or fixtures (including Tenant's data and telephone
equipment) in the Premises. Tenant's access shall include reasonable use
(subject to scheduling) of any exterior loading and staging areas and the use of
stairs, elevators and hoists, roofs and conduits. Tenant's entry into the
Premises prior to Substantial Completion pursuant to this Section 7.1 shall be
at no cost or charge from Landlord to Tenant including, without limitation, any
charge for utilities. Prior to Tenant's entry into the Premises as permitted by
the terms of this Section 7.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval, which schedule shall detail the timing and
purpose of Tenant's entry. Tenant shall hold Landlord, the Contractor and
subcontractors harmless from and indemnify, protect and defend Landlord against
any loss or damage to the Project or Premises and against injury to any persons
caused by Tenant's actions pursuant to this Section 7.1.
7.2 TENANT'S REPRESENTATIVE. Tenant has designated Robert Urwiler as its
sole representative with respect to the matters relating to cost and schedule
set forth in this Tenant Work Letter, who, until further notice to Landlord,
shall have full authority and responsibility to act on behalf of Tenant in such
matters as required in this Tenant Work Letter. Tenant has designated Michele
Voth as its local representative with respect to daily decisions required under
this Tenant Work Letter that do not relate to cost or schedule, who, until
further notice to Landlord, shall have full authority and responsibility to act
on behalf of Tenant in such matters as required in this Tenant Work Letter.
7.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Randy Jackson as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
7.4 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Landlord or Tenant is required to approve
or deliver an item, time is of the essence.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
7.5 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in
Section 19.1 of this Lease has occurred at any time on or before the
Substantial Completion of the Tenant Improvements, then (i) in addition to
all other rights and remedies granted to Landlord pursuant to the Lease,
Landlord may cause Contractor to cease the construction of the Premises (in
which case, Tenant shall be responsible for any delay in the Substantial
Completion of the Premises caused by such work stoppage as set forth in
Section 5.3 of this Tenant Work Letter), and (ii) all other obligations of
Landlord under the terms of this Tenant Work Letter shall be forgiven until
such time as such default is cured pursuant to the terms of the Lease.
SECTION 8
TENANT REMEDIES FOR DELAY
8.1 LIQUIDATED DAMAGES FOR DELAY IN SUBSTANTIAL COMPLETION. In the event
the Substantial Completion of the Tenant Improvements has not occurred (or been
deemed to have occurred) by September 30, 1999 (as such date may be adjusted for
Excusable Delays), Landlord shall credit Tenant with two (2) days of free Base
Rent for each day and every day that Substantial Completion occurs after
September 30, 1999 (as such date may be adjusted for Excusable Delays) through
and including October 7, 1999 (as such date may be adjusted for Excusable
Delays) and, thereafter, with one (1) day of free Base Rent for each and every
day that Substantial Completion occurs after October 7, 1999 (as may be adjusted
for Excusable Delays).
LANDLORD AND TENANT AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF A
DELAY IN THE SUBSTANTIAL COMPLETION DATE BEYOND THE ESTIMATED LEASE
COMMENCEMENT DATE (AS MAY BE ADJUSTED), WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE AND THAT THE AMOUNTS DESIGNATED ABOVE AS
LIQUIDATED DAMAGES PAYABLE BY LANDLORD TO TENANT IN SUCH EVENTS ARE EACH
REASONABLE AMOUNTS TO BE SET AS DAMAGES FOR SUCH EVENTS UNDER THE
CIRCUMSTANCES EXISTING AT THE TIME THIS LEASE HAS BEEN ENTERED INTO. IN
CONSIDERATION OF THE PAYMENT OF LIQUIDATED DAMAGES, EXCEPT AS EXPRESSLY
PROVIDED IN SECTION 8.2 BELOW, TENANT SHALL BE DEEMED TO HAVE WAIVED ALL
OTHER CLAIMS FOR DAMAGES OR RELIEF AT LAW OR IN EQUITY DUE TO SUCH DELAY
INCLUDING ANY RIGHTS TO SPECIFIC PERFORMANCE TENANT MAY OTHERWISE HAVE.
Tenant: /s/ [Illegible] Landlord: /s/ [Illegible]
--------------------- ---------------------
8.2 TERMINATION RIGHTS.
8.2.1 DEFINITION OF OUTSIDE DATE. The term "OUTSIDE DATE" shall mean
the date which is five (5) months after the date for any Major Project Milestone
specified in the Construction Schedule, as such five (5) month period may be
extended by any Excusable Delay (subject to Section 8.2.4 below).
8.2.2 OUTSIDE DATE TERMINATION. In the event that any Major Project
Milestone has not occurred by the Outside Date for such Major Project Milestone,
then the sole remedy of Tenant (in addition to the remedy specified in Section
8.1 above) shall be the right to deliver a notice to Landlord (the "OUTSIDE DATE
TERMINATION NOTICE") electing to terminate this Lease effective upon receipt of
the Outside Date Termination Notice by Landlord (the "EFFECTIVE DATE"). However,
until the Lease Commencement Date for Building 2 occurs, Tenant may elect to
terminate the leases of any or all of the Adjacent Buildings effective as of the
Effective Date by giving to Landlord notice thereof in the Outside Date
Termination Notice. Landlord and
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Tenant acknowledge that Tenant's right to terminate any of the Adjacent Building
Leases pursuant to this Section 8.2 shall cease as of the Lease Commencement
Date for Building 2. The Outside Date Termination Notice must be delivered by
Tenant to Landlord, if at all, not earlier than the applicable Outside Date and
not later than ten (10) business days after the applicable Outside Date. If
Tenant timely delivers the Outside Date Termination Notice to Landlord, then
Landlord shall have the right to suspend the Effective Date for a period ending
thirty (30) days after the original Effective Date. In order to suspend the
Effective Date, Landlord must deliver to Tenant, within ten (10) business days
after Landlord's receipt of the Outside Date Termination Notice, a written
statement from the general contractor certifying that it is such contractor's
best, good faith judgment that the applicable Major Project Milestone will occur
within thirty (30) days after the original Effective Date. If the applicable
Major Project Milestone occurs within said thirty (30) day suspension period,
then the Outside Date Termination Notice shall be of no further force or effect;
if, however, the applicable Major Project Milestone does not occur within said
thirty (30) day suspension period, then this Lease (and the other leases so
specified in the Outside Date Termination Notice) shall terminate as of the date
of expiration of such thirty (30) day period.
8.2.3 PROSPECTIVE EXTENSION OF OUTSIDE DATE. If, prior to any
applicable Outside Date, Landlord determines that any particular Major Project
Milestone will not occur by the applicable Outside Date, Landlord shall have the
right to deliver a written notice ("OUTSIDE DATE EXTENSION NOTICE") to Tenant
stating Landlord's opinion as to the date by which the Major Project Milestone
will occur and Tenant shall be required, within ten (10) business days after
receipt of such Outside Date Extension Notice, to either deliver the Outside
Date Termination Notice (in which case this Lease (and the other Adjacent
Building Leases so specified in the Outside Date Termination Notice subject to
the restrictions specified in Section 8.2.2 above) shall terminate) or to agree
to extend the applicable Outside Date (and any subsequent Outside Dates for the
Building) to that date which is set by Landlord in the Outside Date Extension
Notice. Failure of Tenant to so respond in writing within said five (5) business
day period shall be deemed to constitute Tenant's agreement to extend the
applicable Outside Date (and any subsequent Outside Dates for the Building) to
that date which is set by Landlord in the Outside Date Extension Notice. If such
Outside Date is so extended, Landlord's right to request Tenant to elect to
either terminate or further extend such Outside Date shall remain and shall
continue to remain, with each of the notice and response periods set forth
above, until the applicable Major Project Milestone occurs or until this Lease
is terminated.
8.2.4 LIMITATION ON FORCE MAJEURE EXTENSIONS. Notwithstanding anything
to the contrary contained in this Section 8.2 above, the date for any Major
Project Milestone specified in the Construction Schedule may only be extended
for Force Majeure (whether or not such Major Project Milestone is also extended
pursuant to Section 8.2.1 for reasons other than Force Majeure) for up to a
maximum of one (1) year. If Force Majeure extends any Major Project Milestone
for one (1) year, without limitation on Tenant's rights under Section 8.2.2
above, Tenant shall have the right to deliver a notice to Landlord (the "FORCE
MAJEURE TERMINATION NOTICE") electing to terminate this Lease effective upon
receipt of the Force Majeure Termination Notice by Landlord (the "FORCE MAJEURE
EFFECTIVE DATE"). However, until the Lease Commencement Date for Building 2
occurs, Tenant may elect to terminate the leases of any or all of the Adjacent
Buildings effective as of the Force Majeure Effective Date by giving to Landlord
notice thereof in the Force Majeure Termination Notice. Landlord and Tenant
acknowledge that Tenant's right to terminate any Adjacent Building Leases
pursuant to this Section 8.2.4 shall cease as of the Lease Commencement Date for
Building 2. The Force Majeure Termination Notice must be delivered by Tenant to
Landlord, if at all, within thirty (30) calendar days after the date upon which
Tenant's right to deliver the Force Majeure Termination Notice to Landlord is
triggered. However, if Force Majeure extends for greater than one (1) year,
thereby triggering Tenant's right to deliver the Force Majeure Termination
Notice to Landlord, and if Tenant elects not to deliver such Force Majeure
Termination Notice to Landlord, and if Force Majeure continues for an additional
year, then Tenant shall have an additional right to deliver the Force Majeure
Termination Notice to Landlord within thirty (30) days after the expiration of
such two (2) year period based upon the date for any Major Project Milestone
being extended by Force Majeure for two (2) years. However, if Tenant does not
elect to deliver the
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
Force Majeure Termination Notice to Landlord based upon the two (2) year
extension for Force Majeure, Tenant shall not thereafter have the right to
deliver the Force Majeure Termination Notice to Landlord whether or not Force
Majeure continues beyond such two (2) year period.
8.2.5 ACCELERATION OF TERMINATION RIGHT FOR LACK OF REASONABLE
ASSURANCES. If one (1) or more Force Majeure events extends the date for any
Major Project Milestone (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for a
period in excess of the "Accelerated Force Majeure Period" (as that term is
defined below) and if Landlord does not deliver to Tenant within fifteen (15)
days thereafter a statement providing reasonable assurances to Tenant that the
Force Majeure delay will last for a total period of less than one (1) year,
Tenant shall be entitled to deliver the Force Majeure Termination Notice to
Landlord within ten (10) days after the expiration of such fifteen (15) day
period (rather than waiting until the expiration of the one (1) year period
specified in Section 8.2.4 above). The one (1) year period described in this
Section 8.2.5 above may be referred to as the "AGGREGATE FORCE MAJEURE PERIOD"
and the fifteen (15) day period described in this Section 8.2.5 above may be
referred to as the "DELIVERY PERIOD." The term "ACCELERATED FORCE MAJEURE
PERIOD" shall mean a total of one hundred eighty (180) days of delay for events
of Force Majeure which may affect office construction projects in San Diego
County generally (e.g., labor strikes, material shortages and permit
moratoriums) or a period of one hundred twenty (120) total days of Force Majeure
delay for Force Majeure events which are particular to the Project and do not
apply to office construction in general. Notwithstanding the foregoing, Landlord
shall have five (5) separate options to extend the Accelerated Force Majeure
Period and the Aggregate Force Majeure Period for thirty (30) days each ("FORCE
MAJEURE EXTENSION OPTIONS"). In order to exercise a Force Majeure Extension
Option, Landlord must so notify Tenant in writing within the Delivery Period (as
to the first (1st) Force Majeure Extension Option) or prior to the expiration of
the previous thirty (30) day period for extension of the Accelerated Force
Majeure Period (with respect to each of the four (4) subsequent Force Majeure
Extension Options). In addition, in order to properly exercise any such Force
Majeure Extension Option, Landlord must pay to Tenant Forty-Five Thousand
Dollars ($45,000.00) within thirty (30) days after Landlord's notice to Tenant
of the exercise of such option, for each option so exercised. If Landlord
properly exercises any such Force Majeure Extension Option, the Accelerated
Force Majeure Period and the Aggregate Force Majeure Period shall each be
extended for thirty (30) days for each such option so exercised.
SECTION 9
CONTINUITY OF LANDLORD
Landlord acknowledges and agrees that Tenant has entered into this Lease in
reliance upon Landlord's reputation and ability to do all things necessary for
the proper construction and lien free completion of all Project improvements.
Accordingly, Landlord agrees not to sell its interest in any uncompleted
building in the Project (or otherwise assign its interest and duties hereunder
as to any uncompleted building in the Project) until after the Lease
Commencement Date has occurred for the initial Floor Group in Building 3 (or if
the Lease for Building 3 is terminated, until the termination date for such
Lease) except for (i) transfers between or among entities affiliated with Kilroy
Realty Corporation (i.e., entities controlled, controlled by or under common
control with Kilroy Realty Corporation); (ii) a merger or sale of all or
substantially all of the assets, stock, partnership interests and/or limited
liability company interests of, or owned by, Kilroy Realty Corporation and/or
its affiliates; (iii) a sale, contribution or distribution to a partnership,
corporation, joint venture, limited liability company or other ownership
structure, where Kilroy Realty Corporation or its affiliate(s) retains
responsibility for managing the development of the Project; or (iv) any transfer
resulting from foreclosure, trustee's sale or deed in lieu of foreclosure. Upon
the Lease Commencement Date for the initial Floor Group in Building 3, the
restrictions specified in this Section 9 shall terminate..
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 1
CONSTRUCTION SCHEDULE
MILESTONE DATES - BUILDING 1
BASE, SHELL AND CORE
<TABLE>
<CAPTION>
Event Date
----- ----
<S> <C> <C>
1 Completion of Schematic Design Done
2 Completion of Base, Shell and Core Working Drawings Done
*3 Submittal to City of San Diego for Permits Done
*4 Obtaining all Building and other Permits for Construction of
Base, Shell and Core Done
*5 Commencement of Construction Done
6 Completion of Slab-on-Grade Done
*7 Completion of Vertical Construction Done
8 Completion of Roof Framing Done
*9 Completion of Construction of Base, Shell and
Core/Certificate of Occupancy/Shell Completion Date September 30, 1999
</TABLE>
Notes: Items marked with an "*" are Major Project Milestones
TENANT IMPROVEMENTS
<TABLE>
<S> <C> <C>
1. Delivery by Tenant of Final Space Plan for Landlord Approval May 7, 1999
2. Delivery by Tenant of Working Drawings for Landlord Approval June 7, 1999
</TABLE>
SCHEDULE 1
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[Peregrine Systems]
<PAGE>
SCHEDULE 2
STANDARD IMPROVEMENT PACKAGE
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.0 PARTITIONS
- --------------------------------------------------------------------------------
1.1 1 HOUR PARTITION: (One-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 20-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.2 2 HOUR PARTITION: (Two-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, two layers each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association. Second layer of gypsum board shall be
installed at right angles over the first layer with joints
staggered.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 90-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.3 STANDARD INTERIOR OFFICE PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend to underside of suspended
acoustical ceiling grid (+10'-0" AFF, nominal); or shall extend 6"
above ceiling grid plane. Refer to wall types and referenced
details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Diagonal bracing shall be installed per details illustrated on
the drawings.
f. Install metal casing beads at all exposed corners and edges, as
applicable.
g. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.4 STANDARD INTERIOR OFFICE ACOUSTICAL PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend from floor slab to underside of
metal or roof deck above (+13'-6" AFF, nominal). Refer to wall
types and referenced details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Provide continuous bead of acoustical sealant between bottom edge
of gypsum board panels and floor slab. Cut gypsum board panels at
top of wall to fit undulations of metal deck structures and seal
all gaps with drywall taping compound.
f. Install R-8 unfaced fiberglass sound batts in cavity between
studs, full height of partition.
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
2.0 COLUMN COVERS, CORE WALLS, PERIMETER SOFFITS
- --------------------------------------------------------------------------------
a. Provide either 1-1/2" or 2-1/2"-25 gage metal studs at 16" O.C.
(or as otherwise noted or configured) per details illustrated on
drawings.
b. Furnish and install 5/8" standard gypsumboard, one layer around
interior and perimeter columns, attached to studs with screws as
required by code and as recommended by the Gypsum Association.
c. Provide and install R-8 unfaced sound batt insulation at all
furred columns where plumbing lines occur, typical.
d. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
3.0 DOORS, FRAMES, HARDWARE
- --------------------------------------------------------------------------------
3.1 ONE-HOUR CORRIDOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 20 minute rated, 3'-0" x 8'-10" x
1-3/4" (U.N.O.). Doors shall conform to A.W.I. standards and carry
a lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness, minimum 20
minute rated with applicable listing labels provided and securely
fastened to frame. Color: Black Anodized.
c. Hardware:
i. Single
4 each Butts
1 each Lockset
1 each Closer
1 each Stop
1 each Smokeseal
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
ii. Pair
8 each Butts
2 each Closer
1 each Lockset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
2 each Smokeseal
1 each Dustproof
Strike
2 each Electro Magnetic
Hold Open
3.2 INTERIOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 3'-0" x 8'-10" x 1-3/4"
(U.N.O.). Doors shall conform to A.W.I. standards and carry a
lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness. Color:
Black Anodized.
c. Hardware.
i. Single
4 each Butts
1 each Latchset
1 each Stop
ii. Single Locking
a. All the above. In place of latchset, provide lockset.
iii. Single with Closer
a. All the above, plus closer.
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
iv. Pair
8 each Butts
2 each Closer
1 each Latchset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
1 each Dustproof
Strike
4.0 SUSPENDED GRID CEILINGS
- --------------------------------------------------------------------------------
4.1 GENERAL INSTALLATION REQUIREMENTS:
a. Install ceiling under the supervision of an experienced
superintendent. Consult with and coordinate installation with other
trades. Install ceiling using laser level within a tolerance of
1/8" in 12 feet in any direction.
b. Pattern: Unless otherwise indicated or specified, install
ceilings in a regular pattern without border, joint lines parallel
to walls. Install acoustical units symmetrically about centerlines
of each room or space (unless specifically noted otherwise on
drawings), avoiding narrow units at walls.
c. Framing for Lighting and Mechanical Fixtures: Obtain necessary
data from other trades and provide additional hanger wire and
framing in suspended grids as required to support lighting and
mechanical fixtures.
d. Lateral Bracing: Lateral bracing for suspended ceiling must be
provided (UBC Table 23-j). Where ceiling loads are less than 5PSF
and not supporting interior partitions, ceiling bracing shall be
provided by four (4) No. 12 gauge wires secured to the main runner
within 2 inches from the cross runner intersection and splayed 90
degrees from each other at an angle not exceeding 45 degrees from
the plane of the ceiling. These horizontal restraint points shall
be placed 12 feet o.c. in both directions with the first point
within 4 feet from each wall. Attachment of the restraint wires to
the structure above shall be adequate for the load imposed.
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
e. Hanger Wires: Space wires at maximum 48" centers along main tees
and connect to structure above. Provide: 2 safety wires per
mechanical diffuser, 2 per light fixture and 4 at main runner
within 3" of fixture.
f. Ceiling Offsets: Provide trim pieces and/or accessories where
illustrated on drawings or as necessary to properly finish or
transition offsets or ceiling breaks.
g. Seismic Bracing: Provide splayed bracing wires as shown and
required by the Uniform Building Code. Provide compression struts
at 12'-0" o.c., both directions fastened to the main runner and a
structural member above. Repair, Cleaning and Completion: Remove
and replace all discolored, broken or damaged materials. Completed
ceilings shall present a smooth level surface free of edge or corner
offsets, cupping, scratches, gouges or other defects. Clean exposed
surfaces and remove foreign matter.
4.2 2 x 2 ACOUSTICAL CEILING:
a. Suspension Grid: ARMSTRONG, "Suprafine" XL 9/16" Exposed Tee.
b. Ceiling Tile: ARMSTRONG, "Hi-LR Ultima" RH90 2 x 2 #1792 beveled
tegular lay in.
c. Ceiling heights vary and are as noted on plans.
4.3 DRYWALL CEILING:
a. Carrying channel at 24" on center.
b. 1-1/2" cold-rolled carrying channel at 48" on center with hanger
wire spaced a maximum of 48" on center along carrying channel.
c. 5/8" gypsum wallboard.
d. Seismic bracing as required per the Uniform Building Code and as
noted on drawings.
e. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint. (Note: no texture; all painted surfaces
shall be 'smooth').
f. Locate all mechanical and electrical equipment requiring access
in 2' x 2' lay-in ceiling to avoid access doors in gypsum board
ceilings, where possible.
SCHEDULE 2
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[Peregrine Systems]
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
5.0 FINISHES
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NOTE: PROVIDE CUTTINGS, BRUSH-OUTS, SAMPLES, ETC. OF ACTUAL DYE LOTS,
OR PRODUCTION RUNS FOR ARCHITECT'S AND INTERIOR DESIGNER'S APPROVAL.
5.1 PAINT:
a. Provide paint color as specified on finish plans - one (1) coat
primer base, two (2) coats flat water base latex acrylic.
5.2 CARPET:
a. Standard multicolored loop tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
b. Standard cut pile tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
5.3 VINYL COMPOSITION TILE:
a. Vinyl composition tile (VCT) shall be: ARMSTRONG, "Imperial
Texture". Colors as selected from standard range.
5.4 RESILIENT SHEET FLOORING:
a. Resilient sheet flooring shall be: ARMSTRONG, "Standard
Excelon". Colors as selected from standard range.
5.5 RUBBER BASE:
a. Rubber base shall be: ROPPE, 4" topset; straight base at carpeted
areas and coved at all hard surface areas. Colors as selected from
standard range.
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
6.0 MILLWORK
11.0 GENERAL:
a. See millwork plans, details and notes for configuration and
fabrication specifications.
b. Millwork shops drawings shall be WIC approved.
c. All fabrications shall conform to WIC standards for "Premium
Grade" U.N.O. and be certified as such.
d. Submit shop drawings, samples, finishes for Architect's and
Interior Designer's approval prior to fabrication and
installation.
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15300 - FIRE PROTECTION SYSTEMS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall include all work necessary for a
complete automatic fire sprinkler system for the tenant
improvement of the shell building.
b. The shell building includes necessary standpipes, tamper
switches, flow and alarm switches and alarm bell.
B. SYSTEM REQUIREMENTS
1. The entire tenant improvement of the building shall be provided
with a hydraulically calculated automatic fire sprinkler system for
each occupancy classification.
2. Minimum densities for areas of coverage shall be determined by
the City of San Diego Fire Department. Hydraulically calculate water
protection systems. Form sheets, summary sheets, detailed work
sheets and graphs shall be in strict accordance with the required
and advisory provisions of NFPA 13; 7-3.
3. Tenant spaces shall be sized for Ordinary Hazard Group 1.
4. The system shall be designed for earthquakes and shall include
all materials necessary to provide the system complete and ready
for use. Design and install the system to give full consideration
to blind spaces, piping, electrical equipment, ductwork and other
construction and equipment in accordance with detailed drawings to
be submitted for approval.
5. Devices and equipment for fire protection service shall be UL
listed and FM approved for the specific purpose for which the item
is used in sprinkler systems.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
C. MATERIALS
1. Buried pipe and fittings: N/A
2. Above ground pipe and fittings:
a. 2-inch and smaller: ASTM A53 or ASTM A135 Schedule 40 black
steel pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow or equal.
b. 2 1/2-inch and larger: ASTM A135 Schedule 40 black steel
pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow pipe, or rolled groove pipe with mechanical
joint grooved coupling fittings; or ASTM A135 Schedule 10
welded steel pipe with rolled groove ends and mechanical
joint grooved coupling fittings. Cut grooving of pipe will not
be permitted.
c. Flanged fittings: ANSI B16.1 Class 125 cast iron.
d. Flanges: ANSI B16.1 Class 125 cast iron.
3. Gate Valves:
a. 4-inch and larger: UL listed and labeled, FM approved, 175 psi
OS&Y type, iron body, bronze mounted.
b. 3-inch and smaller: UL listed and labeled, FM approved, 175
psi OS&Y type, bronze body gate with solid wedge.
4. Check Valves: UL listed and labeled, FM approved, 175 psi iron
body, bronze mounted, horizontal swing check valve with bolted
bonnet and flanged end connections. Check valves shall be designed
for replacement of internal parts without removal of valve body
from piping with the exception that water check valves may be used
with freestanding Fire Department Connections.
5. Butterfly Valves: UL listed and labeled. FM approved, 175 psi
bronze body, threaded ends, stainless steel disc and stem, two
inch maximum pipe size with integral tamper switch, and geared
slow-close mechanism.
6. Drain Valve: UL listed and labeled, FM approved, 175 psi bronze
body gate valve, OS&Y type, solid wedge bronze disc; or class 150,
400 lb. WWP, conventional port, bronze, two-piece construction ball
valve.
7. Sprinkler Heads:
a. Spacing and number of heads shall comply with recommendations
of NFPA 13 for type of occupancy involved.
b. Sprinkler Heads: UL listed and labeled and FM approved for
installation in the hazard classification as indicated and by
the agencies listed above; 165 degree F rated fusible link,
1/2 inch orifice, standard response.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
.1 Finished ceiling Areas: Recessed, chrome-plated brass
pendant heads, matching chrome plated adjustable metal
escutcheon.
.2 Exposed Piping: Upright or pendant type; natural brass
finish.
D. EQUIPMENT
1. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15400 - PLUMBING SYSTEMS DESCRIPTIONS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall cover all plumbing systems for the tenant
improvement design. Utilities shall be connected to and
extended from points-of-connection from the original building
shell.
b. Piped utilities required by the installation of HVAC
equipment/systems for the tenant improvements to the building.
2. Work Excluded:
a. Plumbing sanitary and vent mains, potable water mains,
condensate drains for building shell rooftop units, roof and
storm water mains, shell toilet rooms and janitors closets.
B. SYSTEM REQUIREMENTS
1. Principal systems to be included in the tenant design:
a. Convenience sinks required by tenant for lunch/coffee rooms.
With local instahot water heater.
b. Potable cold water for drinking fountain system throughout the
building.
c. All drain piping from any HVAC equipment installed as part
of the tenant improvement that would generate condensate.
d. An hydraulically calculated automatic fire sprinkler system,
extended from the building shell to be installed in the tenant
improvement ceilings.
2. Materials:
a. Soil, Waste and Vent Above Ground: Service-weight, no-hub
cast-iron pipe and fittings.
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
b. Soil, Waste and Vent Below Ground and to 5'-0" Outside of
Building: Service-weight, cast-iron hub & spigot pipe and
fittings.
c. Water and Condensate Drain Piping Above Ground: Type "M"
hard-drawn copper type, ASTM B88, and wrought copper fittings,
ANSI B1 6.22. All hot water supply piping shall be insulated
with 1 inch thick fiberglass insulation for sizes up to 2-1/2
inch size, 1-1/2 inch thick above 2-inch size piping.
Condensate drain piping above ceilings shall be insulated.
d. Water Piping Below Ground 4-inches and Smaller: Type "K"
hard-drawn copper tubing, ASTM B88, and wrought copper fittings
ANSI B 16.22, silver brazed joints.
e. Natural Gas Piping: Buried piping shall be Polyethylene
(P.E.) per ASTM D2513. Above grade shall be Schedule 40 black
steel pipe per ASTM D2513.
f. Indirect Drains: Type "M" copper fittings, ANSI B16.22,
solder joint type. Insulate with Manville Micro-Lok 650AP.
3. Equipment:
a. N/A
4. Plumbing Fixtures:
a. Sinks as required and described in architectural floor
plans. If no description is provided, install 20 gage
stainless steel sink with standard single lever faucet.
b. Electric Water Cooler: Barrier-free, wall hung water cooler
with push bar control and equipped for handicap usage.
5. Drains:
a. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15800 - HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS DESCRIPTIONS
A. CODES AND REGULATIONS
All work shall be in strict conformance with, but not limited to:
Uniform Mechanical Code - UMC 1997
Uniform Building Code - UBC 1997
CEC Title 24 Energy Standards
Fire Department Regulation
City of San Diego Requirements
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Tenant Improvement (TI) Work:
a. All main air moving equipment including all air handling
units, exhaust fans, hot water boilers and pumps, variable air
volume with hot water reheat terminals for the building core
and all associated vertical ductwork and heating hot water
piping, and DDC control backbone will be installed as part of
the shell work. Five rooftop VAV units, one per floor are
provided with cooling only, and are based on a nominal 350
sf/ton.
b. Tenant shall provide all extensions of duct, piping,
electronic VAV boxes, DDC thermostats, control power and
wiring, smoke/fire dampers, diffusers and grilles for all
tenant improvements. Any specialty tenant requirement, such as
Kitchen exhaust will be designed and installed during the TI
work.
c. Any controls associated with the operation of the VAV boxes,
reheat coils and equipment added as TI work including
sub-control panels and thermostats required for the
environmental controls will be done as part of the TI work.
C. ENVIRONMENTAL DESIGN CONDITIONS
The following criteria will be used for sizing the heating and
cooling plants:
1. Outdoor Ambient Design Conditions:
Summer (mean 0.5%): 83DEG F dB 69DEG F wB
13DEG F dB outdoor daily range
Winter (0.2%): 42DEG F dB
Note: 88DEG F dB, 70DEG F wB is the 0.1% mean temperature: we
assume the less conservative 0.5% temperature is acceptable
for this project.
2. Indoor Conditions for Air Conditioned Area:
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
All floors 70DEG F dB +/- 2DEG F dB (winter)
72F dB +/- 2F dB (Summer)
60% RH (no low end humidity
control)
Electrical, Telecommunication No Temperature Control -
Rooms: Ventilation only - if Tenant
Equipment mounted within a
room requires a controlled
environment, it shall be
provided as part of the TI
D. VENTILATION AIR REQUIREMENTS
Outdoor air for ventilation will be based on the American Society of
Heating Ventilation and Air Conditioning Engineers (ASHRAE) Standard
62-1989, Ventilation for Acceptable Indoor Air Quality.
E. ENERGY USE AND CONSERVATION
The Energy Efficiency Standard, Title 24, will be used as the basis of
the design.
F. HEATING HOT WATER SYSTEM
1. The heating for the building will be by hot water, generated on
site by a rooftop boiler plant. The boilers, pumps and controls
will be installed as part of the building shell, along with valved
riser system to each floor.
2. Tenant improvement shall extend the heating hot water system to
heating coils at each VAV terminal with automatic flow control
valves, two way solenoids and a three way valve at four of the most
remote VAV boxes on each floor.
3. Heating hot water piping shall be type M copper with wrought
fittings, insulated.
G. MISCELLANEOUS VENTILATION/EXHAUST SYSTEMS
The following exhaust system will be installed within the scope of the
shell building design, it is assumed that ambient outside air (1) and
building air (2) (3) shall provide makeup air to the exhausted area:
(1) Elevator Machinery Room on roof.
(2) Electrical/telecom Rooms
(3) Janitors closets.
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
H. TI CONTROLS
1. An electronic direct digital control (DDC) system shall
incorporate stand alone, remote control units at each of the new
air handling units. Electronic digital control will be provided at
the zone level.
2. The controls will automatically operate the HVAC system and provide
the necessary change-over commands for the occupied and non-occupied
temperature and ventilation schedules. The system shall provide the
necessary monitoring, alarm, and by-pass for efficient energy
management.
I. Specification Sections
The following specification sections will be provided:
1. Division 15
a. Section 15010 Mechanical General Requirements
b. Section 15060 Hangers and Supports
c. Section 15090 Mechanical Identification
d. Section 15240 Vibration and Seismic Isolation
e. Section 15250 Mechanical Insulation
f. Section 15500 HVAC Pumps, Piping, Valves, and Accessories
g. Section 15850 Ductwork and Accessories
h. Section 15900 HVAC Controls
i. Section 15990 Testing, Adjusting and Balancing
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15300 - 3
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Section 16050 BASIC ELECTRICAL REQUIREMENTS
PART 1 GENERAL REQUIREMENTS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions and Division 1 are part of this section
and the contract for this work and apply to this section as fully
as if repeated herein. This section, 16050, applies to all
Division 16 categories.
1.1.2 Reference to other sections: The applicable requirements from
other Division 16 sections shall form a part of the electrical
work and each section shall be referenced to the other sections.
1.2 EXPLANATION OF DRAWINGS
1.2.1 These construction documents are intended to be diagrammatic
and reflect the scope, quality, and character of the work to be
performed; all miscellaneous materials and work, though not
specifically mentioned, shall be furnished and installed by the
Contractor.
1.2.2 The Contractor shall confirm sizes, dimensions, weights and
locations of all equipment prior to installation. Dimensioned
architectural drawings shall take precedence over diagrammatic
layouts shown on these contract documents.
1.2.3 The specifications and the drawings are an integral document and
shall be considered complementary to each other. In the case of a
conflict between the specifications and the drawings, the more
constricting condition shall be enforced.
1.2.4 The Contractor shall be responsible for reporting any
discrepancies, errors, or omissions noted prior to bid.
1.2.5 It is the intent of the drawings to indicate schematic routing
and placement of devices, fixtures, equipment and conduit. Exact
locations shall be dimensioned on these documents or in other
trade documents (architectural, mechanical, etc.). Offsets,
elbows, or extensions shall be furnished and installed by the
Contractor as necessary to avoid structure, piping, clearances
and to provide a complete and workmanlike installation.
1.3 QUALITY ASSURANCE
1.3.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.3.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
Section 16050 Basic Electrical Requirements
Master Specs 16050-1
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.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriters' Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.3.3 All items shall be listed by Underwriter's Laboratories and
shall bear the U.L. label.
1.3.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.3.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the Contractor.
1.4 SUBMITTALS
1.4.1 Shop drawings for materials, equipment, devices, fixtures, and
systems shall be submitted by the Contractor for review within 30
days after award of the contract. In addition to the requirements
for submittals stated herein, the Contractor shall be responsible
for compliance with the requirements of Division 1.
1.4.2 The Contractor shall bear the responsibility for any materials
installed which were not submitted for review or not installed in
compliance with the review comments and the contract documents.
1.4.3 Verbal authorization of submittal documents or changes to the
requirements of the contract documents shall not be acceptable.
All submittal material must be documented in a written format.
1.4.4 All submittal packages must be submitted at one time and in
accordance with the specification section appropriate for the
material. All packages must be identical and clearly labeled
indicating the specification section, project name, submittal
date, Contractor's name, Engineer's name, preparer's name and
submission version (first submission, resubmittal #1, etc.).
1.4.5 Product catalog cutsheets and descriptive literature shall be
cross-referenced to the specification section by paragraph.
1.4.6 All submittal packages shall be permanently bound in brochure
or booklet format. A minimum quantity of six submittal booklets
shall be provided by the Contractor; additional copies may be
required if so noted.
Section 16050 Basic Electrical Requirements
Master Specs 16050-2
SCHEDULE 2
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1.4.7 Materials which bear a certification or approval of a testing
agency, performance criteria, society, agency, or other
organization shall be submitted with all labels identified.
1.4.8 The submittal shall be complete and with catalog data and
information properly marked to show, among other things,
materials, capacity and performance data to meet the specified
requirements.
1.4.9 Incomplete submittals will be rejected at the discretion of the
reviewing Engineer.
1.4.10 Review of the submittal is only for general conformance with
the contract documents. The Contractor is responsible for
confirmation and coordination of dimensions, quantities, sizes,
fabrication, installation methods, and for coordination of work
of other trades with electrical work.
1.4.11 Detailed working drawings shall be prepared and submitted showing
items which are to be fabricated including transformer mounting
racks, unistrut mounting frames, equipment room layouts, pull
boxes, splice boxes, gutters, etc.
1.4.12 Minimum scale for submitted drawings shall be 1/8". Details shall
be drawn to 1/4" scale. All drawings shall be 8.5"x11" or larger.
1.4.13 Submittal brochures shall be complete and descriptive of the
type, make, manufacturer, application, quantity, performance,
capacity, ratings, options, dimensions, clearances, weights,
nameplate data, special installation requirements, mounting
method, NEMA type, NEMA class, environmental restrictions, layout
requirements or other information as may be necessary for review
of the material.
1.4.14 Submittal brochures for switchgear shall include, as a minimum,
the following: singleline diagrams; fault current ratings of
buses and devices; device identification, ratings, layout and
characteristics; dimensions; circuit identification;
identification label type and method of affixing; mounting;
conduit entry point and quantities; NEMA enclosure type; and
additional data as required for a complete review.
1.4.15 Submittal brochures for lighting systems shall include, as a
minimum, the following: manufacturer; detailed drawing or
photograph; dimensions; lamp data; ballast data; certified
photometric data from a third-party testing agency; U.L. label
listing; fixture number or identification from the drawings;
finish color and material; mounting equipment; socket type and
rating; environmental ratings (damp location, watertight,
explosionproof, etc.); voltage; input wattage; and additional
information as necessary for a complete review.
1.4.16 The Contractor shall be responsible for all aspects of
substitutions of material including any additional cost or delay
incurred as a result of the substitution. The Contractor shall
coordinate all substitutions with other trades, verify code
compliance, verify clearances, photometric performance,
appearance, suitability, constructability, and availability of the
material prior to submitting the substitution for review. The
Contractor shall bear the responsibility of any increased costs
to other trades with are directly related to the substitution.
1.5 MATERIAL HANDLING
Section 16050 Basic Electrical Requirements
Master Specs 16050-3
SCHEDULE 2
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1.5.1 The Contractor shall deliver all equipment and material to the site
in the manufacturer's original packaging without seals broken.
1.5.2 The Contractor shall handle, store, and protect all equipment and
materials in accordance with the manufacturer's recommendations.
1.5.3 The Contractor shall immediately replace damaged or defective
equipment or materials with identical new equipment or material at
no cost, inconvenience, or delay to the Owner.
1.6 EXISTING CONDITIONS
1.6.1 The Contractor shall verify all existing conditions prior to bid and
include all costs in bid.
1.6.2 The Contractor shall match the finish and appearance of all existing
conditions where constructing new work adjacent to existing surfaces
or equipment.
1.6.3 Coordinate with the Owner's Representative for all ongoing projects
or the work of other trades which may affect the Contractor's work.
Verify Owner schedule requirements for special or standard events
which may impact the Contractor's work.
1.6.4 Coordinate work to be performed in occupied areas and comply with
the Owner's requirements such that the Owner's work is not disrupted
by the Contractor. Verify the need for work to be performed during
premium hours, evenings, weekends, or holidays prior to bid and
include all costs in bid. Bring to the Owner's attention the need
for all disruptive work prior to commencement of work.
1.7 UTILITY COMPANY REQUIREMENTS
1.7.1 The contractor shall contact the serving utility company for all
utility system requirements prior to commencement of work. Utility
work shall include electric power, telephone, data, fiber optic
cable, cable television or other utilities as may require connections
as a part of this contract. Coordinate and comply with all serving
utility company requirements.
1.7.2 The utility information depicted on the contract documents is for
bidding purposes only and shall not be used for construction
purposes. All construction shall be performed according to
engineered documents from the serving utility company. The
Contractor shall obtain and coordinate with utility company
requirements as a part of this contract and furnish and install all
work as a part of this contract.
1.7.3 Verify all connection points, routing, and requirements with the
serving utility company prior to commencement of work and coordinate
final requirements with other trades.
1.7.4 The Contractor shall be responsible for all costs associated with
his failure to contact or coordinate with utility company
requirements.
1.8 CONSTRUCTION UTILITY REQUIREMENTS
1.8.1 Power, telephone or other temporary construction utility services
required by the Contractor shall be the responsibility of the
Contractor.
Section 16050 Basic Electrical Requirements
Master Specs 16050-4
SCHEDULE 2
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1.8.2 Arrangements for construction utility services shall be made by the
Contractor in coordination with the Owner's Representative and the
serving utility company.
1.9 CONTINUITY OF SERVICE
1.9.1 The Contractor shall coordinate all shutdowns with the Owner's
Representative. Electrical shutdowns shall be kept to the minimum
number necessary to complete the work.
1.9.2 The Contractor shall coordinate all work done on overtime or premium
time with Owner's Representative prior to commencement of work.
1.9.3 All work performed in or through occupied spaces, or other work
disruptive to existing occupants shall be considered as performed
during premium time or as overtime for the purposes of the
bid; include all costs in bid.
1.9.4 The Contractor shall notify Owner's Representative of all shutdowns
or disruptive work minimum of 72 hours prior to commencement of
work. The Contractor shall obtain approval from the Owner's
Representative prior to commencement of work.
1.9.5 The Contractor shall provide all necessary temporary power, including
temporary power generation, to accommodate shutdowns and minimize
disruption of work.
1.9.6 The Owner reserves the right to provide emergency repairs or
temporary power to maintain service continuity at the Contractor's
cost in the event Contractor fails to provide adequate service
continuity.
1.10 RECORD DOCUMENTS
1.10.1 The Contractor shall prepare as-built documents depicting all
revisions to branch circuits, conduit routing, equipment, or
materials. Drawings shall be legible, reproducible, and properly
identified such they may be used as a reference for maintenance or
construction.
1.10.2 The Contractor shall provide a minimum of three copies of the
operation and maintenance manuals to the Owner's Representative at
the completion of the project. Each copy shall be bound in a
three-ring binder and labeled indicating: the project name; system
name; Contractor's name, telephone number, and contact person; and
Owner's name. The Contractor shall provide the following information
within each manual:
.1 List of the Subcontractors performing work on the system
including contact names and telephone numbers.
.2 Routine and emergency service contacts and telephone numbers
for each system.
.3 Description of system operation.
.4 Single line diagrams and control wiring diagrams.
.5 Detailed product literature with technical information.
Section 16050 Basic Electrical Requirements
Master Specs 16050-5
SCHEDULE 2
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.6 Sequence of starting, shutdown and operation.
.7 Installation instructions and safety requirements.
.8 Maintenance schedule, testing instructions and performance
parameters.
.9 Parts list including recommended spare parts.
1.11 GUARANTEE
All electrical work, materials and equipment provided under this
contract shall be guaranteed for a period of one year from the date
of acceptance of the work by the Owner. Any failures, problems, or
deficiencies experienced during this period due to defective
materials or faulty workmanship shall be immediately corrected by
the Contractor without cost to the Owner. The Contractor shall be
responsible for all damages to the Owner's facility due to
deficiencies in the electrical system. Equipment guarantees in
excess of one year shall not be superseded by this guarantee.
PART 2 PRODUCTS
2.1 MATERIALS
2.1.1 All materials shall be new, of prime quality, listed as suitable for
the application, and bear factory-applied U.L. labels.
2.1.2 Materials shall be currently in production and shall be supported by
spare parts, repair service, maintenance, and factory technical
support.
2.1.3 Materials of one assembly (switchboards, substations, motor control
centers, etc.) shall be of one manufacturer unless specifically stated
otherwise in the contract documents.
PART 3 EXECUTION
3.1 INSTALLATION REQUIREMENTS
3.1.1 All work shall conform to National Electrical Contractors
Association standards of installation and the requirements of the
manufacturer, Division 1, Division 16, and the Owner's Representative.
3.1.2 The Contractor shall field-verify all dimensions and coordinate
dimensions with equipment sizes and locations.
3.1.3 The Contractor shall coordinate and install all penetrations, openings,
slots, chases, or sleeves as necessary for the routing and installation
of raceways, conductors, or equipment. The Contractor shall provide
approved fire sealant to maintain fire ratings at all penetrations.
3.1.4 The Contractor shall coordinate the placement and sequence of
installation of all mounting bolts, conduits, sleeves, etc. which are
to be set in poured-in-place concrete slabs per the structural
drawings.
3.1.5 The Contractor shall install access panels in walls or ceilings in
coordination with the Architect for all junction boxes or electrical
equipment which requires access.
Section 16050 Basic Electrical Requirements
Master Specs 16050-6
SCHEDULE 2
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3.1.6 All equipment shall be installed plumb, parallel, or orthogonal to
structure and in a neat orderly fashion. All material shall be
accessible for maintenance, inspection, servicing or replacement.
3.1.7 Verify final locations for devices during the rough-in phase with
dimensioned architectural drawings, fabrication drawings, or other
space planning requirements included in the contract documents.
3.1.8 The Contractor shall coordinate and arrange for the proper sequence
of construction including scheduling of long-lead items, shutdowns,
work of other trades, and Owner-scheduled events.
3.1.9 The Contractor shall provide adequate and qualified supervision for
the work performed: no work shall be performed without the
supervision of a representative of the Contractor.
3.1.10 The Contractor shall coordinate and cooperate with all other trades
for a successful completion of the project.
3.2 SEISMIC BRACING
The Contractor shall seismically brace all equipment in accordance
with Title 24 requirements for Seismic Zone 4 and provide
certification of seismic compliance upon request.
3.3 CUTTING AND PATCHING
3.3.1 The Contractor shall provide cutting and patching as required to
install the electrical system in this contract.
3.3.2 Coordinate the schedule of all cutting such that the work may be
performed in an expeditious manner with minimum inconvenience to
the Owner.
3.3.3 Remove or cut structures or materials as necessary for demolition
prior to the installation of new electrical work.
3.3.4 The Contractor shall protect all surfaces, structure, furnishings,
and finishes not directly affected by cutting or patching.
3.3.5 Provide dust and moisture barriers as required during cutting and
prior to patching openings.
3.3.6 All penetrations through roofs shall be performed per architectural
requirements.
3.3.7 Patching shall be performed with materials which exactly match the
adjacent surfaces in color, texture, character, and appearance.
3.3.8 All patches must maintain the fire ratings of the original surface
and shall be sealed with a U.L. listed and Fire Marshal approved
sealant.
3.4 COMMISSIONING
Section 16050 Basic Electrical Requirements
Master Specs 16050-7
SCHEDULE 2
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3.4.1 The Contractor shall initiate start up of all electrical equipment
including operation of all devices, switches, generators, transfer
switches, overcurrent protection, disconnect switches, etc. to verify
normal operation of all moving parts and electrical performance.
3.4.2 The Contractor shall test, adjust, aim, align, label, clean and
complete all systems prior to acceptance by the Owner's
Representative.
3.4.3 The Contractor shall demonstrate that all systems operate within the
manufacturer's recommended performance characteristics, the
electrical construction documents, system requirements, and Owner
requirements.
3.4.4 The Contractor shall test each system per the manufacturer's
requirements and shall perform the following system tests:
.1 Inspect cables for physical damage and proper connection.
.2 Torque test cable connection and tighten in accordance with
industry standards.
.3 Infrared scan all connections under loaded conditions.
.4 Insulation resistance test of each cable.
.5 Inspect ground system connections.
.6 Voltage drop tests on the main grounding electrode of system.
.7 Determine the ground resistance between the main grounding
system and all major electrical equipment frames, system neutral
points.
.8 Check rated voltage and phase balance at all equipment, motors
and selected devices at full load conditions. Measure no load
voltage conditions at each location.
.9 Furnish all material, equipment, instruments and labor as
required to complete testing.
3.5 TRAINING
3.5.1 Furnish at least one copy operating instructions from the
manufacturer for all electrical equipment to the Owner's
Representative. Instructions shall be clean, legible, and properly
bound.
3.5.2 The Contractor shall provide training for the Owner's staff as
directed by the Owner's Representative for a minimum of one
man-day (eight hours).
3.5.3 Provide classroom training by a qualified instructor for the
operation, installation, and maintenance of designated equipment or
systems including, but not limited to, generation systems, transfer
switches, uninterruptible power supplies, energy management
systems, lighting control systems, power distributions systems, and
other systems which may require instruction.
3.6 CLEANING
Section 16050 Basic Electrical Requirements
Master Specs 16050-8
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
Contractor shall clean all equipment, panelboard interiors, conduit
interiors, fixtures, devices, etc. of all extraneous paint, drywall
mud, overspray, dust, dirt, debris, trash, grease or markings. All
cleaning shall be performed by the Contractor in accordance with the
appropriate manufacturer's recommendations.
END OF SECTION
Section 16050 Basic Electrical Requirements
Master Specs 16050-9
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
Section 16110 RACEWAYS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Basic Electrical Requirements
(Section 16050) are part of this section and the contract for this
work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16110 Raceways
Master Specs 16110-1
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Raceway materials
.2 Fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Rigid Galvanized Steel (RGS) Conduit
2.1.1 Continuous hot-dipped galvanized manufactured per UL and ANSI
requirement.
2.1.2 Rigid aluminum conduit is not acceptable.
2.1.3 Fittings for use with steel conduit, rigid or flexible, shall be
manufactured per UL requirements and shall be cast metal with
gasketed closures.
2.1.4 Fittings for RGS conduit shall be malleable iron or forged steel
with cadmium or zinc coating.
2.1.5 Union couplings for joining rigid conduit at intermediate runs shall
be of the same material as the conduit. Couplings shall be threaded
concrete-tight to permit completing conduit runs when neither
conduit can be turned and to permit breaking the conduit run at the
union.
2.1.6 Set screw connectors or threadless type are not acceptable.
2.1.7 Minimum raceway size shall not be less than 3/4".
2.2 Electrical Metallic Tubing (EMT)
2.2.1 Conduit shall be cold rolled zinc coated steel and manufactured per
UL and ANSI requirements.
2.2.2 Fittings for EMT shall be watertight steel or malleable gripping ring
compression type.
2.2.3 Pressure cast material for nuts of compression ring type fittings
and set screw connections are not acceptable.
2.2.4 Minimum raceway size shall be 1/2".
2.3 Flexible Metallic Conduit
2.3.1 Flexible conduit shall bear the UL label and be zinc coated steel.
2.3.2 Fittings for flexible metallic conduit shall be steel or malleable
iron. Fittings shall clamp to conduit securely.
2.3.3 Screw in type, sheet metal or set screw type fittings are not
acceptable.
Section 16110 Raceways
Master Specs 16110-2
SCHEDULE 2
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2.3.4 Minimum raceway size shall not be less than 3/4".
2.4 Liquid Tight Flexible Conduit
2.4.1 Conduit shall be manufactured in accordance with UL and ANSI
requirements. Conduit shall be approved for grounding and compatible
with approved fittings. Flexible steel conduit shall be hot dipped
galvanized with extruded PVC covering manufactured per UL
requirements.
2.4.2 Fittings shall be liquid tight type with body and gland nut of steel
or malleable iron with provisions for grounding flexible conduit to
fittings.
2.4.3 Minimum raceway size shall be 3/4".
2.5 Polyvinyl Chloride (PVC) Conduit
2.5.1 PVC shall be constructed of a virgin homopolymer PVC compound and be
manufactured according to NEMA and UL specifications. PVC conduit shall
be Schedule 40 or 80.
2.5.2 Minimum raceway size shall be 3/4".
PART 3 EXECUTION
3.1 Rigid Galvanized Steel (RGS) Conduit
3.1.1 RGS shall be used where exposed to weather or where subject to
physical damage in exposed areas below 8'0" above finished floor.
3.1.2 RGS shall be used in NEC classified hazardous locations with seal
connections per NEC requirements.
3.2 Electrical Metallic Tubbing (EMT)
3.2.1 EMT shall be run indoors concealed in drywall type
construction, above suspended ceilings, and exposed indoors not less
than 8'0" above finished floor in unfinished areas.
3.2.2 EMT shall not be installed underground or embedded in concrete.
3.3 Flexible Metallic Conduit
3.3.1 Flexible conduit shall be used for indoor lighting connections in
suspended ceiling areas and shall not exceed 6'0" in length.
3.3.2 Flexible conduit shall be used for final connection to control
equipment and not to exceed 2'0" in length.
3.3.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL approved.
3.4 Liquid Tight Flexible Conduit
Section 16110 Raceways
Master Specs 16110-3
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
3.4.1 Flexible conduit shall be used for final connection to
machines, motors, transformers and equipment that requires vibration
isolation.
3.4.2 Flexible conduit shall be used for final connection to equipment in
wet or damp locations or where exposed to grease, water, dust, or dirt.
3.4.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL requirements.
3.5 Polyvinyl Chloride (PVC) Conduit
3.5.1 All sweeps, bends, and risers shall be concrete encased Schedule 80.
3.5.2 All underground high voltage conduit, telephone conduit, service
entrance conduit and feeders 100A and over shall have 3" of red
mixed concrete cover.
3.5.3 All PVC conduit feeders shall contain a copper green grounding
conductor sized per NEC requirements and continuity shall be
maintained throughout conduit runs and pullboxes.
3.6 All conduit installation methods shall comply with the latest
enforced edition of the National ELectrical Code and the authority
having jurisdiction.
3.7 All conduit installations shall comply with the manufacturer's
installation requirements.
3.8 All spare conduit shall be provided with a pullwire.
END OF SECTION
Section 16110 Raceways
Master Specs 16110-4
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16120
WIRE AND CABLE
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
Section 16120 Wire and Cable
Master Specs 16120-1
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
.1 Conductor materials
.2 Connector and fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Conductors shall be copper; conductors size #10AWG and smaller shall
be solid, conductors size #8AWG and larger shall be stranded.
Conductors shall be minimum size #12AWG for power and lighting
circuits; control circuits shall use a minimum conductor size of
#14AWG.
2.2 Insulation shall be type THW or THHN/THWN for all branch circuits up
to and including size #2AWG. Insulation for conductors over size
#2AWG shall be XHHN.
2.3 Jackets shall be nylon of PVC material.
2.4 All cables shall be UL listed for the application.
2.5 All conductors shall be installed in conduit in the field, unless
specifically noted otherwise in these documents. Type AC and type NM
cable is not acceptable; type MC cable may be used where
specifically noted for purposes of flexibility, maintenance, or ease
of installation but shall not be used without permission.
2.6 Multi-conductor flexible cords shall be types SO, SJO, STO, or SJTO.
2.7 Connectors shall be UL listed and suitable for the conductor
material being connected and rated appropriately. Connectors shall
be solderless metal pressure type for conductors #10AWG and smaller.
Connectors shall be compression type for conductors #8AWG and larger.
PART 3 EXECUTION
3.1 All wiring methods shall comply with the latest enforced edition of
the National Electrical Code and the authority having jurisdiction.
3.2 Conductors shall be installed in clean raceways using nylon
cord, polypropylene cord, hemp rope, or other material which will not
damage the conductors or conduit. Do not use metal fish tape. Use
lubricant when necessary for pulling.
3.3 Conductors shall be pulled into conduit simultaneously so as to not
damage conductors during pulling.
3.4 Conductors installed at outlets and switches shall have a minimum of
6" pigtail left in the box for future connections. All conductors
not connected to devices shall be terminated with splice caps or
tape.
3.5 Conductors shall be terminated such that no copper material is
exposed. Conductors shall be trained and labeled at terminations in
a neat and workmanlike manner.
3.6 All terminations shall comply with the manufacturer's installation
and torquing requirements.
3.7 Splices on conductors #10AWG and smaller shall be made with splice
caps twisted
Section 16120 Wire and Cable
Master Specs 16120-2
SCHEDULE 2
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<PAGE>
onto the conductors. Tape all splices.
3.8 Splices on conductors #8AWG and larger shall be made with pressure
connectors and terminal lugs. Where exposed to water, damp air, or
moisture splices shall be watertight.
3.9 Splices shall be not be made in feeders; splices to branch circuits
shall not be made within panelboards or similar enclosures.
3.10 When combining homeruns, the Contractor shall derate all conductors
per code requirements including reducing the capacity, using high
temperature insulation where necessary. Conduit sizes shall be
adjusted by the Contractor as suitable for the conductor revisions.
3.11 The Contractor shall provide a code-sized insulated ground
conductor, in addition to the feeder conductors indicated on the
drawings, where non-metallic conduit is used.
3.12 Conductors shall be color-coded as follows:
208Y/120V Phase 480Y/277V
Black A Brown
Red B Orange
Blue C Yellow
White Neutral Gray
Green Ground Green
3.13 Where tape or labels are used for color-coding, apply material at each
end of the conductor, splices, boxes, and all terminations.
END OF SECTION
Section 16120 Wire and Cable
Master Specs 16120-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16130 BOXES
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3. All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16130 Boxes
Master Specs 16130-1
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Box materials
.2 Accessory materials
PART 2 PRODUCTS
2.1 Boxes shall be flat rolled steel sized as required by code and as
suitable for the application. Boxes shall have mounting holes and
knock-outs in sides and back. Grounding shall be accommodated by
means of threaded holes.
2.2 Provide accessories, extension rings, gaskets, supports, trim
rings, hangers, straps, and other material as necessary for a
complete code complying installation.
2.3 Boxes installed outdoors shall be weathertight, dusttight, and
corrosion resistant. Provide gaskets and conduit hubs.
2.4 Provide Type FS boxes for surface mounted applications.
2.5 Provide additional support for boxes as necessary when mounting
fixtures or devices from boxes.
2.6 Provide ganged boxes for multiple switches and devices; provide
barriers for boxes served by separate voltages.
2.7 Acceptable manufacturers shall be Appleton, Crouse Hinds, Steel
City, or Raco.
PART 3 EXECUTION
3.1 All box installation method shall comply with the latest enforced
edition of the National Electrical Code and the authority having
jurisdiction.
3.2 Install all boxes plumb, square, and securely fastened to
structure.
3.3 Boxes shall be placed such that they are readily accessible.
3.4 Cover or plug all unused openings in boxes where knockout blanks
have been removed.
3.5 Install boxes such that they are flush with the finished surface
of the wall or surface within which they are mounted.
3.6 Install all boxes at mounting heights per architectural,
electrical code, and ADA requirements.
3.7 Boxes shall not be mounted back to back in walls.
3.8 Boxes in sealed environments shall be sealed with an approved
sealant suitable for the application.
3.9 Boxes penetrating fire rated walls or surfaces shall be sealed
with a Fire Marshall approved fire sealant to maintain the fire
rating of the wall or surface.
Section 16130 Boxes
Master Specs 16130-2
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
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<PAGE>
3.10 Boxes located above inaccessible ceilings shall be made accessible
by means of access doors or hatches in the ceiling.
3.11 Install all boxes per manufacturer's recommendations and
requirements.
3.12 Provide for ground continuity at all boxes.
END OF SECTION
Section 16130 Boxes
Master Specs 16130-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16140 WIRING DEVICES AND CONNECTORS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and
the contract for this work and apply to this section as fully
as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Receptacles
.2 Switches
.3 Wiring devices
.4 Accessories
PART 2 PRODUCTS
2.1 RECEPTACLES
2.1.1 Wiring devices shall be UL listed and suitable for the application.
2.1.2 Devices shall be color coded per the system to which they are
connected: normal power shall be white; emergency power shall
be red; dedicated outlets shall be grey; unless otherwise noted
on the construction documents.
2.1.3 Receptacles shall be heavy duty with the screw type, side wired,
120V, 20A, duplex type, unless noted otherwise on the contraction
documents. Verify NEMA configuration with construction documents.
2.1.4 Weathertight receptacles shall be gasketed in cast metal boxes
with cast metal coverplates with spring-loaded hinged covers over
each opening.
2.1.5 Ground fault interrupting receptacles shall be duplex type and
capable of detecting a leaking current of 5mA.
2.2 TOGGLE SWITCHES
2.2.1 Toggle wall switches shall be quiet AC type, rated 120/277V, 20A
and UL listed for the application.
2.2.2 Switches shall be single pole, double throw with white finish
unless noted otherwise.
2.3 COVERPLATES
2.3.1 Single, combination coverplates shall be used at all ganged device
locations.
2.3.2 Provide white plastic coverplates with white screws in all office
areas. Provide stainless steel coverplates with matching screws in
laboratory, process, manufacturing, and clean room areas or as
noted on the construction documents.
2.3.3 Provide labeled plates as noted on the construction documents.
2.3.4 Provide labeled plates at all receptacles with circuit and panel
designation. Labeling method shall utilize clear adhesive printed
labels with black bold letters.
2.4 ACCEPTABLE MANUFACTURERS
2.4.1 Acceptable manufacturers shall be Arrow Hart, Hubbell, Leviton, or
Pass and Seymour.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-2
SCHEDULE 2
-37-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of wiring devices shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all devices in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate device mounting height, location and type with
architectural and interior drawings. Coordinate with other
trades to identify conflicts with device locations and notify
the Engineer of any conflicts.
3.4 Install devices only in clean boxes.
3.5 Install all trim rings and coverplates in coordination with other
trades and their installation schedules.
3.6 Tighten and inspect all connections prior to covering devices and
reconnect or repair wiring as necessary.
3.7 Test all devices for voltage level, continuity, ground fault, and
short circuits.
3.8 Install all devices plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to covering device.
3.10 Demonstrate the proper operation of all ground fault interrupting
devices.
END OF SECTION
Section 16140 Wiring Devices and Connectors
Master Specs 16140-3
SCHEDULE 2
-38-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16170 CIRCUIT AND MOTOR DISCONNECTS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-1
SCHEDULE 2
-39-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage and current ratings
.2 NEMA enclosure type
.3 Horsepower rand fault current rating
.4 Dimensions
.5 Fuse type and class
PART 2 PRODUCTS
2.1 Disconnects shall NEMA 1, indoor type, or rated for the location
in which they are installed as noted on the construction documents.
2.2 Disconnects shall be UL listed and suitable for the application.
2.3 Exterior disconnects shall be raintight, dusttight, have raintight
hubs, and be rated NEMA 3R.
2.4 Disconnects shall be heavy duty type, rated 600V with current
capacity as noted on the construction documents. Verify NEMA
configuration with construction documents.
2.5 Disconnects shall have hinged, lockable, dead-front doors wit
permanently marked ON/OFF indicators. Enclosures shall be baked
enamel factory painted steel with conduit knockouts.
2.6 Disconnects shall be operated by a handle accessible from the
exterior of the enclosure. Handles shall have provision to be
padlocked in the OFF position.
2.7 All current carrying parts shall be high conductivity copper
designed to carry rated load without damage from heat and plated
to resist corrosion.
2.8 Switch mechanism shall be a quick-make, quick-break type such that
the operation of the contact is restrained by the handle during the
closing or opening operation.
2.9 Switches shall have a minimum fault current rating of 200,000A RMS.
All switches shall be fused unless specifically noted otherwise.
2.10 The disconnect door cover shall have an interlocking mechanism to
prevent opening the cover when the switch is in the ON position.
2.11 Fuses serving motor loads shall be Class L and Class RK1, 250V and
600V, time delay, dual element unless noted otherwise on the
construction documents.
2.12 Fuses serving non-motor loads shall be Class L and Class RK1, 250V
and 600V, fast acting, dual element unless noted otherwise on the
construction documents.
2.13 Provide built-in fuse pullers.
2.14 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. and Westinghouse. Fuses shall be Gould-Shawmut
or Bussman.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-2
SCHEDULE 2
-40-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of disconnects shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all disconnects in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate disconnect mounting height, location and type with
architectural and interior drawings. Coordinate with other trades
to identify conflicts with device locations and notify the
Engineer of any conflicts. Mount switches 42" above finished
floor unless noted otherwise.
3.4 Provide suitable galvanized metal strut framework where no wall or
structure is available for the mounting of vibrating equipment.
3.5 Provide flexible conduit connections for disconnects mounted to
strut framework, motors, or vibrating equipment.
3.6 Tighten and inspect all connections and reconnect or repair wiring
as necessary.
3.7 Test all disconnects for voltage level, continuity, ground fault,
and short circuits. Check switch mechanism operation under no load
conditions prior to operating under load.
3.8 Install all disconnects plumb and square to structure and adjacent
surfaces.
3.9 Provide and install all fuses sized per the equipment
manufacturer's recommendation.
END OF SECTION
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-3
SCHEDULE 2
-41-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16420 SWITCHBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearance prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16420 Switchboards
Master Specs 16420-1
SCHEDULE 2
-42-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Switchboards
.2 Overcurrent protection
.3 Instrumentation
.4 Dimensions, weights, ratings, and layouts
.5 Device settings and trip ratings
PART 2 PRODUCTS
2.1 Switchboards shall be factory assembled, dead-front, metal
enclosed, self-supporting floor standing sections as noted in the
construction documents.
2.2 Vertical sections shall contain overcurrent protective devices
including circuit breakers and fuses and shall be nominally
90" in height.
2.3 Switchboard finish shall be baked enamel factory paint of
manufacturer's standard color.
2.4 Provide front accessibility for wireways on each side of
overcurrent protective devices for entire height of section.
Provide welded steel framework with screw covers removable from
the front; covers may be hinged.
2.5 All bussing shall be silver-coated copper with ratings as
indicated in the construction documents.
2.6 Switchboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Switchboards shall be equipped with lifting eyes.
2.8 Switchboards shall be suitable for the environment in which they
are located and shall be NEMA 1, indoor, unless noted otherwise on
the construction documents.
2.9 Main circuit breakers shall be provided and shall be solid state
trip with ratings as noted. Distribution circuit breakers shall be
molded case type. All circuit breakers shall be bolt-on type.
2.10 Cross bussing shall be fully rated for the length of the
switchboard.
2.11 Instrumentation shall be provided where noted. Utility company
metering shall be provided in accordance with the serving utility
company requirements.
2.12 The switchgear manufacturer shall submit a coordination and short
circuit study for the entire system provided including long time,
short time, instantaneous, and ground fault.
2.13 Provide permanently adhered bakelite labels indicating the
identification of each device on the switchboard adjacent to the
device and visible on the enclosure exterior.
2.14 Provide a ground bus in each switchboard section with connecting
ground bonds between sections.
Section 16420 Switchboards
Master Specs 16420-2
SCHEDULE 2
-43-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square
D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of switchboards shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all switchboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate switchboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with switchboard locations and notify the Engineer of any conflicts.
3.4 Coordinate switchboard size with concrete housekeeping pads.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Ground fault protective devices shall be testing by an approved
third party testing agency and a written report submitted with the
operation manual for review.
3.7 Test all switchboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all switchboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing switchboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all switchboard interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation. Set ground fault
protective device as per the written report recommendations.
END OF SECTION
Section 16420 Switchboards
Master Specs 16420-3
SCHEDULE 2
-44-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16460 TRANSFORMERS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and contract for
this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electric Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with the applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16460 Transformers
Master Specs 16460-1
SCHEDULE 2
-45-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage, KVA, impedance, frequency, taps, and efficiency
.2 Temperature rating above ambient
.3 Regulation and sound levels
.4 Mounting details and vibration isolation
.5 Nameplate data
PART 2 PRODUCTS
2.1 Transformers shall be general purpose, ventilated dry type, factory
assembled, dead-front, metal enclosed, self-supporting floor standing
as noted in the construction documents.
2.2 Transformers shall be 480V-208Y/120V 3 amps 4W(primary-secondary)
voltage rated, unless noted otherwise.
2.3 Transformers shall be rated for 80DEG. C rise above an ambient
temperature of 40DEG C.
2.4 Coils shall be continuously wound non-hygroscopic type with
thermosetting varnish. Windings shall be aluminum or copper.
2.5 Taps shall be provided at primary windings with (6)2 1/2 % taps,
three above and three below.
2.6 Intergral vibration isolators shall be provided between the core and
coil assembly and the transformer enclosure in addition to the
vibration isolation located between the enclosure and the floor.
2.7 Grounding shall be provided by means of a flexible grounding strap.
2.8 Transformers shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Transformers shall have lifting lugs and be enclosed in a heavy
gauge, sheet steel housing with baked enamel finish. The enclosure
shall be ventilated.
2.10 Transformers located in exterior areas shall be NEMA 3R, with drip
shield and corrosion resistant finish.
2.11 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of transformers shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all transformers in accordance with the manufacturer's
recommendations and requirements.
Section 16460 Transformers
Master Specs 16460-2
SCHEDULE 2
-46-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.3 Coordinate transformer location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with transformer locations and notify the Engineer of any conflicts.
3.4 Coordinate transformer size with concrete housekeeping pads,
structural frames, and mounting hardware.
3.5 Brace transformers per California Code of Regulations, Title 24,
Seismic Zone 4 requirements.
3.6 Provide rubber vibration isolation between transformer and floor,
structure, or any fixed surface (including wireways).
3.7 Test all transformers for voltage level at primary and secondary
windings.
3.8 Install all transformers plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing transformer.
3.10 Install all conduit connections to transformer with liquid tight
flexible conduit.
3.11 Clean all transformer interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Tighten and test all connections prior to energizing the transformer.
END OF SECTION
Section 16460 Transformers
Master Specs 16460-3
SCHEDULE 2
-47-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16470 PANELBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the contract
for this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16470 Panelboards
Master Specs 16470-1
SCHEDULE 2
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Panelboards
.2 Overcurrent protection, bus capacity, main ratings, AIC rating
.3 Mounting, enclosure, dimensions
.4 Dimensions, voltage, ratings and phases
.5 Device settings, trip ratings, and layout
PART 2 PRODUCTS
2.1 Panelboards shall be factory assembled, dead-front, metal enclosed,
wall mounted type as noted in the construction documents.
2.2 Panelboards shall be rated 600VAC and shall not exceed 1200A current
capacity.
2.3 Panelboard finish shall be baked enamel factory paint of manufacturer's
standard color.
2.4 Provide front accessibility for wireways on each side of overcurrent
protective devices for entire height of panelboard.
2.5 All bussing shall be silver-plated copper with ratings as indicated in
the construction documents.
2.6 Panelboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Enclosures shall be galvanized sheet steel cabinet type with hinged
and lockable doors, dead front, and permanently adhered identification
labels on the front.
2.8 Switchboards shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Circuit breakers shall be molded case type; all circuit breakers shall
be bolt-on type.
2.10 Main lugs shall be anti-turn solderless pressure type for use with
copper conductors.
2.11 Instrumentation shall be provided where noted.
2.12 Enclosures, panel interiors, and devices shall be of one manufacture.
2.13 Provide a typewritten panel schedule located in a sleeve on the
interior of the panelboard door indicating loads and areas connected
to each circuit.
2.14 Provide a ground bus in each panelboard.
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square D,
Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of panelboards shall comply with the latest
enforced edition of the
Section 16470 Panelboards
Master Specs 16470-2
SCHEDULE 2
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
National Electrical Code and the authority having jurisdiction.
3.2 Install all panelboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate panelboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with panelboard locations and notify the Engineer of any conflicts.
3.4 Fasten panelboards securely to structural wall or surface to Seismic
Zone 4 requirements. Panelboards shall be mounted no higher than 6'0"
to the highest device from finished floor and no lower than 24" above
finished floor. Provide panel skirts where noted.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Complete the panel schedule card and place in the sleeve on the
interior of the panelboard door.
3.7 Test all panelboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all panelboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing panelboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all panelboard interiors and exteriors prior to handing over to
Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation.
END OF SECTION
Section 16470 Panelboards
Master Specs 16470-3
SCHEDULE 2
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
SCHEDULE 3
SUMMARY OF BUILDING WORKING DRAWINGS
BLDG. ONE - PROJECT NO. 4085.10
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
GRADING PERMIT (WO# 980807)
CIVIL
1D GENERAL NOTES, LEGEND, KEY MAP
2D GRADING/UTILITY PLAN
LANDSCAPE
3D IRRIGATION PLAN
4D PLANTING PLAN
5D ENTRY ROAD IRRIGATION PLAN
6D ENTRY ROAD PLANTING PLAN SEPARATE
7D IRRIGATION DETAILS SITE
8D IRRIGATION DETAILS PACKAGE
9D PLANTING DETAILS
10D LANDSCAPE SPECIFICATIONS
11D LANDSCAPE SPECIFICATIONS
12D LANDSCAPE SPECIFICATIONS
13D LANDSCAPE SPECIFICATIONS
14D LANDSCAPE SPECIFICATIONS
15D RIGHT OF WAY IRRIGATION PLAN
16D RIGHT OF WAY PLANTING PLAN
- -------------------------------------------------------
SHELL ONLY BUILDING PERMIT
(PLAN FILE #A108210-98)
TS-1 TITLE SHEET 12-18-98
TS-2 ACCESSIBILITY NOTES 12-18-98
ARCHITECTURAL-ALL "A" DRAWINGS DATED 12-18-98
A1.1 SITE PLAN
A1.2 SITE DETAILS
A2.1 FIRST FLOOR PLAN
A2.2 SECOND FLOOR PLAN
A2.3 THIRD FLOOR PLAN
A2.4 ROOF PLAN
A3.1 EXTERIOR ELEVATIONS
A3.2 EXTERIOR ELEVATIONS
A3.3 BUILDING SECTIONS
A3.4 BUILDING SECTIONS
A3.5 WALL SECTIONS
A3.6 WALL SECTIONS
A3.7 WALL SECTIONS
A4.1 STAIR PLANS AND SECTIONS
A4.2 ENLARGED PLANS, INTERIOR ELEVATIONS
A4.3 ENLARGED DECK PLAN, REFLECTED SOFFIT PLANS
A4.4 SCHEDULES
A5.1 DETAILS
A5.2 DETAILS
A5.3 DETAILS
A5.4 DETAILS
- -------------------------------------------------------
FOUNDATION/FRAMING PERMIT
(PLAN FILE #A107551-98)
STRUCTURAL--ALL "S" DRAWINGS DATED 11-10-98
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S1.2 TYPICAL DETAILS
S1.4 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 SECOND FLOOR FRAMING PLAN
S2.3 THIRD FLOOR FRAMING PLAN
S2.4 ROOF FRAMING PLAN
S3.1 FRAME ELEVATIONS AND STAIR DETAILS
S4.1 SECTIONS AND DETAILS
S4.2 SECTIONS AND DETAILS
S5.2 PANEL ELEVATIONS
S5.3 PANEL DETAILS
- -------------------------------------------------------
MECHANICAL--ALL "M" DRAWINGS DATED 12-18-98
M1 MECHANICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
M2 TITLE 24
M3 MECHANICAL FIRST FLOOR PLAN
M4 MECHANICAL SECOND FLOOR PLAN
M5 MECHANICAL THIRD FLOOR PLAN
M6 MECHANICAL ROOF PLAN
M7 MECHANICAL DETAILS
M8 MECHANICAL DETAILS
M9 MECHANICAL DETAILS
PLUMBING--ALL "P" DRAWINGS DATED 12-18-98
P1 PLUMBING SYMBOLS, ABBREVIATIONS, SCHEDULES
P2 PLUMBING SITE PLAN
P3 PLUMBING FIRST FLOOR PLAN
P4 PLUMBING SECOND FLOOR PLAN
P5 PLUMBING THIRD FLOOR PLAN
P6 PLUMBING ROOF PLAN
P7 PLUMBING DIAGRAMS
P8 PLUMBING DETAILS
ELECTRICAL--ALL "E" DRAWINGS DATED 12-18-98
E1 ELECTRICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
E2 SINGLE LINE DIAGRAM
E3 ELECTRICAL SITE PLAN
E4 ELECTRICAL FIRST FLOOR PLAN
E5 ELECTRICAL SECOND FLOOR PLAN
E6 ELECTRICAL THIRD FLOOR PLAN
E7 ELECTRICAL ROOF PLAN
E8 ELECTRICAL PANEL SCHEDULES
E9 ELECTRICAL PARTIAL PLAN AND DETAILS
E10 TITLE 24 AND ELECTRICAL DETAILS
- -------------------------------------------------------
SCHEDULE 3
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
BLDG. TWO - PROJECT NO. 4085.20
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
[ILLEGIBLE]
SCHEDULE 3
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT C
PEREGRINE SYSTEMS CORPORATE CENTER
NOTICE OF LEASE TERM DATES
To: ______________________
______________________
______________________
Re: Office Lease dated _________________, ______ between KR-CARMEL
PARTNERS, LLC, a Delaware limited liability company ("LANDLORD"), and
PEREGRINE SYSTEMS, INC., a Delaware corporation ("TENANT") concerning
that certain office building located at ______ Valley Center Drive,
San Diego, California 92130.
Ladies and Gentlemen:
In accordance with the referenced Office Lease (the "LEASE"), we wish to
advise you and/or confirm as follows:
1. The Substantial Completion of the Premises has occurred, and the
Lease Term shall commence on or has commenced on _________________ for a term
of ______________________ ending on __________________.
2. Rent commenced to accrue on ____________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to _________________ at
______________________________________________________.
5. The exact number of rentable and usable square feet within the
Premises are _________ and ___________ square feet, respectively.
6. Base Rent, as adjusted based upon the exact number of rentable
square feet within the Premises, is as follows: ______________________________
_____________________.
7. Tenant's Share, as adjusted based upon the exact number of rentable
square feet within the Building(s), is _________%.
EXHIBIT C
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The street address(es) of the Building is _________________ Valley
Center Drive, San Diego, California 92130.
"LANDLORD":
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: _________________________
Name: _______________________
Its: ___________________
By: _________________________
Name: _______________________
Its: ___________________
Agreed to and Accepted as
of _______________, _____.
"TENANT":
_________________________________,
a _______________________________
By: ____________________________
Its: _______________________
By: ____________________________
Its: _______________________
EXHIBIT C
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT D
PEREGRINE SYSTEMS CORPORATE CENTER
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors, windows or mailboxes of the Premises without
giving to Landlord prior written notice. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to install its own
security system within the Premises in accordance with the provisions of the
Lease.
2. All doors opening to public corridors (other than Building lobbies
(which shall be kept closed if required by law)) shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Any tenant, its employees, agents or any other persons entering or
leaving any Building at any time when it is considered to be after normal
business hours for such Building will be required to sign the Building
register. Access to the Building may be refused unless the person seeking
access has proper identification or has a previously arranged pass for access
to the Building. Landlord and its agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from any
Building of any person. In case of invasion, mob, riot, public excitement,
or other commotion, Landlord reserves the right to prevent access to the
Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.
Notwithstanding the foregoing, Tenant may adopt its own rules and regulations
with respect to access to any building for which Tenant leases the entire
building.
4. All moving activity into or out of the Building shall be done in
such manner as Landlord reasonably designates; Landlord shall at all times
reasonably cooperate with Tenant with respect to such activities. Service
deliveries (other than messenger services) shall be allowed only during hours
reasonably approved by Landlord. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building. Safes and other heavy objects shall stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property in
any case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be
the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be reasonably
designated by Landlord. Landlord shall at all times reasonably cooperate
with Tenant with respect to such activities.
6. Any requests of Tenant shall be directed to the management office
for the Project or at such office location designated by Landlord.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Landlord and its agents to prevent such
activities.
EXHIBIT D
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the tenant who, or whose employees or agents,
shall have caused it.
9. Tenant shall not overload the floor of the Premises, Tenant shall
not mark, drive nails or screws, or drill into the partitions, woodwork or
plaster or deface the Premises without Landlord's prior consent other than in
connection with any Alterations for which Landlord's consent is not required.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. Notwithstanding the foregoing, the
foregoing limitation shall not apply to Tenant's cafeteria, workout facility,
showers and lockers which are contemplated to be a part of Tenant's
improvements.
11. Tenant shall not use or keep in or on the Premises, the Building,
or the Project any kerosene, gasoline or other inflammable or combustible
fluid or material other than as expressly permitted in Section 5.2 of the
Lease.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by
Landlord other than supplemental heating and air conditioning approved by
Landlord, which approval shall not be unreasonably withheld.
13. Tenant shall not use, keep or permit to be used or kept, any foul
or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having
business therein.
14. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals or birds. Bicycles are permitted in
designated areas, and Tenant may install bike racks at appropriate locations
designated by Landlord in the Common Areas to accommodate bicycles.
15. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used
in the Premises for heating food and brewing coffee, tea, hot chocolate and
similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations. The foregoing rule and restriction shall
not apply to any cafeteria facility of Tenant.
16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. Boring or cutting for wires shall be
allowed only at locations reasonably designated by Landlord. The location of
telephone, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
17. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
18. Tenant, its employees, contractors and agents (i) shall not loiter
in the entrances or corridors, nor in any way obstruct the sidewalks, lobby,
halls, stairways or elevators, and shall use them only as a means of ingress
and egress for the Premises, and (ii) shall only be permitted to smoke in the
areas of the Project designated for smoking.
EXHIBIT D
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage
in the "Carmel Valley" area of San Diego, California without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse
disposal shall be made only through entry-ways and elevators provided for
such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises if visible from the
exterior of the Building without the prior written consent of Landlord. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent and/or of a quality, type, design and bulb
color approved by Landlord provided Tenant shall have the right to install
specialty lighting in the Premises not visible from the exterior of the
Building. Tenant shall abide by Landlord's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
25. Any access by Tenant or its agents, employees or contractors to the
roof of any Building shall be subject to coordination with Landlord and
Landlord's reasonable rules and regulations.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein; provided, however, Landlord shall not change
or make any Rules and Regulations which materially adversely affects Tenant's
rights under this Lease, including without limitation Tenant's use and
enjoyment of the Premises. Landlord shall cooperate with Tenant in connection
with changing or making any Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as
a condition of its occupancy of the Premises. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of
such Rules and Regulations in favor of any other tenant, nor prevent Landlord
from thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project.
EXHIBIT D
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT E
PEREGRINE SYSTEMS CORPORATE CENTER
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "LEASE")
made and entered into as of _____________, _____ by and between as Landlord,
and the undersigned as Tenant, for Premises on the ____ floor(s) of the
office building located at ______ Valley Center Drive, San Diego, California
92130, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained
in EXHIBIT A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on __________________, and the Lease Term
expires on __________________.
4. Base Rent became payable on ________________________.
5. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
6. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows: __________________________________________________
______________________________.
7. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of the holder of the first deed of trust on
the Premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$________.
9. All conditions of the Lease to be performed by Landlord necessary
to the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the Security Deposit held by Landlord is
$_________.
11. No rental has been paid more than thirty (30) days in advance and
no security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Landlord nor have any events occurred that
with the passage of time or the giving of notice, or both, would constitute a
default on the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making of such loan or
acquisition of such property.
14. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
EXHIBIT E
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
Executed at ____________________ on the ____ day of _____________, 19__.
"TENANT": ____________________________________,
a __________________________________
By: _______________________________
Name:__________________________
Title:_________________________
By: _______________________________
Name:__________________________
Title:_________________________
EXHIBIT E
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT F
PEREGRINE SYSTEMS CORPORATE CENTER
CC&R'S
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
KR-CARMEL PARTNERS, LLC
4365 Executive Drive, Suite 850
San Diego, California 92121
Attention: Mr. Steven L. Black
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Space Above For Recorder's Use)
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
EXHIBIT F
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS...........................................................3
ARTICLE 2 MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION...........................6
2.1 Membership.....................................................6
2.2 Voting Rights..................................................6
ARTICLE 3 COVENANT FOR PAYMENT OF ASSESSMENTS TO
ASSOCIATION...........................................................7
3.1 Creation of Lien and Personal Obligation for Assessments.......7
3.2 Purpose of Assessments.........................................7
3.3 Budgets........................................................7
3.4 Parcel Area....................................................8
3.5 Parcels Subject to Assessment; Allocation of Assessments ......8
3.6 Regular Assessments............................................8
3.7 Special Assessments............................................9
3.8 Reimbursement Assessments.....................................10
3.9 Effect of Non-Payment of Assessments; Remedies of
Association...................................................10
3.10 Right of Owner to Audit Books and Records of Association......11
3.11 Subordination of the Lien to First Mortgages..................11
3.12 Estoppel Certificate..........................................11
3.13 Personal Liability of Owner...................................11
ARTICLE 4 ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE ......................11
4.1 Committee Composition.........................................12
4.2 Alternate Members.............................................12
4.3 Appointment...................................................12
4.4 Removal.......................................................12
4.5 Terms of Office...............................................12
4.6 Resignations; Vacancies.......................................12
4.7 Duties and Appeals............................................12
4.8 Meetings......................................................12
4.9 Design Guidelines.............................................12
ARTICLE 5 LAND USE.............................................................13
5.1 Permitted Uses................................................13
5.2 Use Restrictions .............................................13
5.3 Prohibited Operations and Uses ...............................14
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
5.4 Other Operations and Uses.....................................15
5.5 Laws..........................................................15
ARTICLE 6 REGULATION OF IMPROVEMENTS...........................................16
6.1 Approval of Application Required..............................16
6.2 Filing Fee....................................................16
6.3 Basis for Approval............................................17
6.4 Result of Inaction............................................17
6.5 Proceeding With Work..........................................18
6.6 Completion of Work............................................18
6.7 Estoppel Certificate..........................................18
6.8 Indemnity and Limitation of Liability.........................19
6.9 Limitations on Improvements...................................19
6.10 Certain Improvements Exempt from Application..................21
6.11 Disclosure and Waiver of Conflict of Interest.................21
ARTICLE 7 OPERATIONS GENERALLY.................................................22
7.1 Slope and Drainage Easements..................................22
7.2 Shared Parking; Common Parking Areas..........................22
7.3 Storage and Loading Areas.....................................23
7.4 Inspection....................................................23
7.5 Division of Land..............................................23
7.6 Hazardous Materials...........................................23
7.7 Payment of Taxes, Liens.......................................24
ARTICLE 8 COMMON AREA..........................................................25
8.1 Use...........................................................25
8.2 Modification of Common Area...................................26
8.3 Parking Regulations...........................................26
8.4 Construction and Repair.......................................26
8.5 Interim Improvements and Maintenance of Parcels...............27
8.6 Lighting the Common Area......................................28
ARTICLE 9 EMINENT DOMAIN.......................................................28
ARTICLE 10 MUTUAL RELEASE.......................................................29
ARTICLE 11 EASEMENTS............................................................29
11.1 Grants of Reciprocal Easements over Common Areas..............29
11.2 Utility Easements.............................................30
11.3 Construction and Repair.......................................31
11.4 Obstructions Within Common Area...............................31
11.5 Right of Entry by Declarant, Association, Board...............31
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
11.6 Entry by Owners...............................................32
11.7 Reservation by Declarant......................................32
11.8 Termination of Former Declaration and Confirmation of
Termination of 1990 Grant of Easements........................32
ARTICLE 12 BUILDING MAINTENANCE.................................................33
12.1 Owner's Maintenance Obligations...............................33
12.2 Closure.......................................................33
12.3 Repair or Replacement of Damaged Building.....................34
ARTICLE 13 COMMON AREA MAINTENANCE..............................................34
13.1 Association Maintenance.......................................34
13.2 Common Area Insurance.........................................35
13.3 Association's Right to Repair Neglected Parcels...............36
13.4 Property Management Company...................................36
ARTICLE 14 THE ASSOCIATION......................................................36
14.1 Organization..................................................36
14.2 Duties........................................................36
14.3 Powers........................................................37
14.4 Election of New Board of Directors............................38
14.5 Subsequent Board of Directors.................................38
14.6 Personal Liability............................................38
14.7 Annual Membership Meetings....................................38
ARTICLE 15 APPROVAL OF OWNERS AND NOTICES.......................................38
ARTICLE 16 MODIFICATION PROVISION...............................................40
ARTICLE 17 NOT A PUBLIC DEDICATION..............................................40
ARTICLE 18 INJUNCTIVE RELIEF....................................................40
ARTICLE 19 BREACH SHALL NOT PERMIT TERMINATION..................................40
ARTICLE 20 INDEMNITY BY OWNERS..................................................41
20.1 Indemnity.....................................................41
20.2 Building Area Liability Insurance.............................41
ARTICLE 21 SEVERABILITY.........................................................41
ARTICLE 22 ENFORCEMENT AND REMEDIES.............................................41
22.1 Right to Enforce..............................................41
-iii-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
22.2 Owner's Remedies..............................................42
22.3 Waiver........................................................42
ARTICLE 23 LITIGATION EXPENSES..................................................42
ARTICLE 24 NO ASSIGNMENT OR TRANSFER............................................42
ARTICLE 25 SALE BY OWNER........................................................42
25.1 Notice........................................................42
25.2 Constructive Notice and Acceptance............................43
25.3 Release of Owner..............................................43
25.4 Liability of Transferee.......................................43
ARTICLE 26 TERM OF DECLARATION..................................................43
ARTICLE 27 MISCELLANEOUS........................................................43
27.1 Captions......................................................43
27.2 Gender........................................................44
27.3 Declarant's Reserved Rights...................................44
27.4 Exhibits......................................................44
27.5 Governing Law.................................................44
27.6 Mortgage Protection...........................................44
27.7 Mutuality, Reciprocity; Runs With Land........................44
</TABLE>
EXHIBITS
Exhibit "A" Site Plan of the Center
Exhibit "B" Legal Descriptions of Parcels Comprising the Center
Exhibit "C" Table of Parcel Areas
-iv-
EXHIBIT F
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
This AGREEMENT BETWEEN LANDOWNERS INCLUDING COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANTS OF EASEMENTS FOR CARMEL CENTER AND INCLUDING
TERMINATION OF BOTH FORMER DECLARATION AND PRIOR GRANTS OF EASEMENTS is made as
of _________, 1999, with reference to the following:
RECITALS:
A. Declarant (defined in Article 1) owns those certain Parcels (defined in
Article 1) of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels B and E
through K, inclusive (and sometimes referred to herein as the "Carmel Center
Office Campus"). The legal descriptions of such Parcels are also set forth on
EXHIBIT "B".
B. Piazza Partners, L.P., a California limited partnership, owns that
certain Parcel of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcel A. The
legal description of such Parcel is also set forth on EXHIBIT "B".
C. Carmel Valley, LLC, a California limited liability company, owns those
certain Parcels of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels D and M.
The legal descriptions of such Parcels are also set forth on EXHIBIT "B".
D. Acacia Gasoline and Car Wash of Carmel Valley, LLC, a California limited
liability company, owns that certain Parcel of real property located in the City
of San Diego, County of San Diego, California, identified on EXHIBIT "B"
attached hereto as Parcel L. The legal description of such Parcel is also set
forth on EXHIBIT "B".
E. RFS Financing Partnership, L.P., a Tennessee limited partnership, owns
that certain Parcel of real property located in the City of San Diego, County of
San Diego, California, identified on EXHIBIT "B" attached hereto as Parcel C.
The legal description of such Parcel is also set forth on EXHIBIT "B". A hotel
is currently open for business on Parcel C.
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
F. Previous owners of the properties comprising the Center (defined in
Article 1) intended to develop a retail shopping center and an adjacent
commercial complex, and in furtherance of that objective recorded that certain
Agreement Between Landowners Including Easements With Covenants and Restrictions
Affecting Land for Carmel Valley Commercial, recorded in the Office of the
County Recorder of San Diego County, California, on September 29, 1994, as
Document No. 19940579026 ("FORMER DECLARATION"). Except for the hotel on Parcel
C, in most respects the properties comprising the Center have not been
developed as contemplated under the Former Declaration. The Former Declaration
is not consistent with the manner in which the current Owners intend to develop
the property comprising the undeveloped portions of the Center. Therefore, the
Owners intend to terminate the Former Declaration and to replace the Former
Declaration in its entirety with this Declaration.
G. The Owners intend to develop and operate the Center as a commercial
common interest development described in Section 1351(k) of the California
CIVIL CODE as a "Planned Development". The Center will include certain Common
Area which is shown on the Site Plan attached hereto as Exhibit "A". Portions
of the Common Area are or may be designated as Exclusive Use Areas for the
exclusive use of one or more Occupants. "Common Area" and "Exclusive Use
Area" are defined in Article 1.
H. The Association was formed by certain previous owners of portions of the
property comprising the Center. Substantially concurrently with the recordation
of this Declaration, the membership of the Association will be changed so that
the current Owners of the Parcels become the current members of the Association.
Among other things, the Association will maintain, repair and replace the
portions of the Parcels designated as Common Area, except any Exclusive Use
Areas, and except as otherwise provided in this Declaration. Each Owner or
Occupant will maintain, repair and replace the building(s) and any Exclusive Use
Area(s) on the Owner's or Occupant's Parcel(s).
I. The Owners wish to subject the Center, in accordance with a common plan,
to certain covenants, conditions and restrictions for the benefit of the Owners
and any and all future owners of the Center or of a Parcel in the Center. The
purposes of this Declaration are to ensure proper development and use of the
Center, to protect the Owner of each Parcel against any improper development or
use of surrounding Parcels which might depreciate the value of the Parcel, to
prevent the erection on the Center of structures built of improper design or
materials, to encourage the erection of attractive Improvements, to prevent
haphazard and inharmonious Improvements, to secure and maintain proper setbacks
from streets and adequate free spaces between structures, to provide for
reciprocal parking and reciprocal pedestrian and vehicular access, ingress and
egress upon certain portions of the Center for the benefit of certain of the
Parcels, to enhance and protect the value, desirability and attractiveness of
the entire Center, and in general to provide adequately for a high type and
quality of improvement of the Center in accordance with a uniform plan of
development.
J. The Center is presently comprised of thirteen (13) legal parcels as of
the date of this Declaration, which in this Declaration will be designated and
referred to as Parcel A through Parcel M, inclusive. The Owners intend that the
provisions of this Declaration be restrictive
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EXHIBIT F
-7-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
covenants made pursuant to Section 1468 of the California CIVIL CODE, and that
this Declaration will bind and inure to the benefit of the Parcels and the
respective Owners of the Parcels during their respective periods of ownership.
Declarant is processing with the City a new Parcel Map (the "New Parcel Map")
which, upon recordation, shall effect a reparcelization and lot line adjustment
of that portion of the Center owned by Declarant and presently described as Lots
1 through 6 and 9 of Piazza Carmel II, Unit No. 1, of Map No. 13138 into seven
(7) newly configured parcels which will be more particularly described as
Parcels 1 through 7 of the New Parcel Map. Exhibit "B" attached hereto sets
forth the tentative description of these Parcels contained within the New Parcel
Map, and upon recordation of the New Parcel Map, the legal description of the
Parcels contained therein shall supersede those descriptions of their
predecessor Parcels.
NOW, THEREFORE, the Owners hereby certify, declare and establish the
following general plan for the protection and benefit of the Center, and hereby
fix the following protective covenants, conditions and restrictions upon each
and every ownership interest in the Center. Each ownership interest in the
Center shall be hereafter held, used, occupied, leased, sold, encumbered,
conveyed and transferred under and pursuant to such covenants, conditions and
restrictions. Each and all of the covenants, conditions and restrictions set
forth herein are for the purpose of protecting the value and desirability of the
Center and shall bind and inure to the benefit of the Parcels and the respective
Owners of the Parcels during their respective periods of ownership.
ARTICLE 1
DEFINITIONS
In addition to any other terms defined in this Declaration, the following
definitions shall apply unless otherwise indicated:
"APPLICATION" - Any plans, specifications and other documentation required
to be submitted to the Committee pursuant to the provisions of Article 6.
"APPROVED DECLARANT IMPROVEMENTS" - Those Improvements more particularly
described and defined in Section 4.9.
"ARCHITECT" - A Person holding a certificate to practice architecture in
the State of California under authority of Division 3, Chapter 3 of the
BUSINESS & PROFESSIONS CODE of the State of California or any successor
legislation thereto.
"ARTICLES" - The Articles of Incorporation of the Association filed with
the California Secretary of State on September 20, 1994, amended in their
entirety by those Restated Articles of Incorporation of Carmel Center
Association filed with the Secretary of State on ___________, 1999, and as
may be further amended from time to time.
"ASSOCIATION" - Carmel Center Association, a California Nonprofit Mutual
Benefit Corporation.
"BOARD" - The Board of Directors of the Association.
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"BYLAWS" - The Restated Bylaws of the Association dated _____, 1999, as
may be further amended from time to time.
"CARMEL CENTER OFFICE CAMPUS" - Parcels B and E through K, inclusive, which
Declarant intends to improve with multi-story buildings primarily for office use
and the Parking Structure.
"CENTER" - All of the Parcels of real property shown on the Site Plan and
described on EXHIBIT "B".
"CITY" - The City of San Diego, California, a municipal corporation.
"COMMITTEE" - The Architectural and Development Review Committee created
pursuant to Article 4.
"COMMON AREA" - Those portions of the Center shown on Exhibit "A" attached
hereto intended for the common use of Owners and Occupants, and comprised of
parking areas, vehicular and pedestrian access areas and driveways, sidewalks,
Common Landscaping, curbs, loading areas and lighting facilities; EXCEPTING
THEREFROM, HOWEVER, portions of the Common Area which are, or from time to
time may be, designated for the exclusive use of one or more Occupants, and as
such are "Exclusive Use Areas" as defined in this Article 1. The Common Area and
Exclusive Use Areas may be modified from time to time to change the location or
configuration thereof or to reflect the requirements of the City or other
governmental authorities by recordation of a supplement to this Declaration by
Declarant or the Association.
"COMMON EXPENSES" - The actual and estimated expenses of maintaining and
operating the Association, including property management fees, maintaining and
operating the Common Areas and the Improvements located thereon (excluding
Exclusive Use Areas), the cost of utility services for the Common Areas
(excluding Exclusive Use Areas), the cost of insurance maintained by the Board
as described herein or in the Bylaws, exercising the powers and performing the
duties of the Association and the Board under this Declaration, the Articles,
the Bylaws and any rules or regulations adopted by the Association, and
maintaining any reasonable reserves for such purposes as determined by the
Board.
"COMMON LANDSCAPING" - The landscaping and related irrigation system
improvements to be maintained by the Association, the approximate location of
which is shown on Exhibit "A" attached hereto.
"DECLARANT" - KR-CARMEL PARTNERS, LLC, a Delaware limited liability company
("KRCP") and its successor-in-interest (defined below). As used in this
definition, a "SUCCESSOR-IN-INTEREST" of KRCP shall mean a Person which, through
a purchase or acquisition of stock or partnership interest(s), amalgamation,
consolidation, reorganization, dissolution, merger or similar transaction (as
opposed to a purchase, transfer or conveyance of one or more Parcels), becomes
vested with the rights and assumes the obligations of KRCP, as "Declarant",
pursuant to this Declaration. "DECLARANT" shall also mean the transferee from
KRCP or its successor-in-interest of three (3) or more Parcels comprising the
Center, provided KRCP or its
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[Peregrine Systems]
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successor-in-interest assigns to such transferee the rights of "Declarant", and
such transferee assumes the obligations of "Declarant", under this Declaration;
any such assignment and assumption of the rights and obligations of "Declarant"
shall be in writing and signed by both KRCP or its successor-in-interest and by
the transferee in recordable form and shall be recorded by the transferee in the
Office of the County Recorder of San Diego County, California.
"DECLARATION" - This Agreement Between Landowners Including Covenants,
Conditions and Restrictions and Grants of Easements for Carmel Center and
Including Termination of Both Former Declaration and Prior Grants of Easements,
as it may be amended from time to time.
"DESIGN GUIDELINES" - Guidelines, rules and regulations which may be
prepared and issued from time to time (and which may be amended from time to
time) by the Committee, and approved and adopted by the Board for the purpose of
assisting Owners in preparing plans and specifications for Improvements and in
preparing other plans, specifications and other materials (including designs for
signs and the like) which are subject to review by the Committee pursuant to
this Declaration.
"ELIGIBLE OCCUPANT" - An Occupant of an Owner's entire Parcel (or of all of
the usable area within the building(s) on the Parcel): (a) pursuant to a lease
or sublease which, as of the date of the Owner's designation of the Occupant as
an Eligible Occupant, has a remaining term which exceeds five (5) years, not
including periods for which the term thereof may be extended by unexercised
options to extend; and (b) designated as such by the Owner of the Parcel
pursuant to Section 2.1.
"EXCLUSIVE USE AREAS" - Those portions of the Common Area within a Parcel
for the exclusive use of one or more Occupants and either (i) designated as
Exclusive Use Areas on the Site Plan, or (ii) subject to the provisions of
Section 8.2, subsequently designated as Exclusive Use Areas from time to time by
the Board or the Committee in writing.
"IMPROVEMENTS" - Buildings, outbuildings, underground installations, slope
and grade alterations, roads, curbs, gutters, storm drains, utilities,
driveways, parking areas, fences, screening walls and barriers, retaining walls,
stairs, decks, windbreaks, plantings, planted trees and shrubs, sidewalks,
poles, signs, loading areas, docks and all other structures, land development or
landscaping improvements of every type and kind.
"MEMBER" - An Owner entitled to membership in the Association as provided
in this Declaration.
"MORTGAGE" - A deed of trust as well as a mortgage encumbering a Parcel.
"MORTGAGEE" - The beneficiary of a deed of trust as well as the mortgagee
of a mortgage encumbering a Parcel.
"OCCUPANT" - Any Person from time to time entitled by right of ownership or
under any lease, sublease or license to use and occupy any portion of the
building Improvements on any Parcel within the Center.
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"OWNER" - Any Person (including Declarant) who from time to time holds fee
title to any Parcel within the Center.
"PARCEL" - Any separate legal lot or parcel which is a portion of the
Center. Any lot or parcel of real property created after this Declaration is
recorded, whether created by a legal split, subdivision or parcelization of a
Parcel, lot line adjustment, or by combination or merger of one or more Parcels,
shall be included in the definition of Parcel for purposes of this Declaration.
"PARCEL AREA" - The total gross square footage of a Parcel as shown on
EXHIBIT "C".
"PARKING STRUCTURE" - The multi-level parking garage to be constructed by
Declarant, at Declarant's cost and expense, on Parcels E, F and G (Parcels 1, 6,
and 7 of the New Parcel Map). The Parking Structure and the parking spaces
within the Parking Structure are not Common Area and are for the exclusive use
and benefit of the Owners and Occupants of the Carmel Center Office Campus and
their customers, guests and invitees.
"PERSON" - An individual, partnership, association, corporation, limited
liability company, trust, governmental agency, administrative tribunal or any
other form of business or legal entity.
"PROJECT DOCUMENTS" - This Declaration, the exhibits attached hereto, the
Articles and Bylaws, the Sign Plan, and any Design Guidelines and rules and
regulations as may be adopted from time to time by the Board or the Association,
all as amended or supplemented from time to time.
"SIGN PLAN" - The Carmel Center Sign Guidelines and Criteria, dated
February 24, 1999, on file with the Association, as may be amended and
supplemented from time to time.
"SITE PLAN" - The Site Plan attached to this Declaration as EXHIBIT "A".
ARTICLE 2
MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION
2.1 MEMBERSHIP. Every Owner of a Parcel which is subject to assessment by
the Association shall be a Member of the Association. Membership shall be
appurtenant to ownership of any Parcel subject to assessment, and membership
shall not be separated from such ownership or transferred, pledged or alienated
in any way, except that an Owner, upon giving written notice to the Association,
may, at its option, grant to an Eligible Occupant a power coupled with an
interest to act as the Owner's agent in all matters relating to the Association;
any such power shall automatically terminate upon expiration of the Eligible
Occupant's lease or the earlier termination of the Eligible Occupant's tenancy
for any reason. Any attempt to transfer a membership in violation of this
Section shall be void and shall not be reflected in the books and records of the
Association.
2.2 VOTING RIGHTS. The Association shall have one (1) class of voting
membership.
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Each Owner shall be entitled to one (1) vote for each four hundred (400)
square feet of Parcel Area owned which is subject to assessment, rounded down to
the next lowest whole four hundred (400) square feet of Parcel Area subject to
assessment; PROVIDED, HOWEVER, any Owner of a Parcel comprised of less than four
hundred (400) square feet of Parcel Area subject to assessment shall be entitled
to one (1) vote for such Parcel. (For example and illustration only, the Owner
of a Parcel comprised of 16,000 square feet of Parcel Area subject to assessment
would be entitled to 40 votes, and the Owner of a Parcel comprised of 15,950
square feet of Parcel Area subject to assessment would be entitled to 39 votes.)
When more than one (1) Person holds an ownership interest in any Parcel subject
to assessment, all such Persons shall be Members, the vote(s) for such Parcel
shall be exercised as they among themselves determine, and the authorized voter
shall be designated in a writing delivered to the Association signed by a
majority of the co-Owners.
ARTICLE 3
COVENANT FOR PAYMENT OF ASSESSMENTS TO ASSOCIATION
3.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Each Owner,
for each Parcel owned which is subject to assessment hereunder, hereby covenants
and agrees to pay to the Association: (a) annual Regular Assessments described
in Section 3.6 for the periodic maintenance, repair and replacement of the
Common Area (except any Exclusive Use Areas); (b) Special Assessments described
in Section 3.7; (c) Reimbursement Assessments described in Section 3.8; and (d)
such other assessments which the Board is authorized to levy pursuant to this
Declaration or the Bylaws, such assessments to be established and collected as
provided in this Declaration. Assessments, together with interest pursuant to
Section 3.9, reasonable collection costs and attorney's fees, shall (except as
otherwise provided in Section 3.8) be a charge on the Parcel and shall be a
continuing lien upon the Parcel against which each such assessment is made, the
lien to be effective upon recordation of a notice of delinquent assessment. Each
such assessment, together with interest pursuant to Section 3.9, reasonable
collection costs and attorney's fees, shall also be the personal obligation of
the Person who was the Owner of such Parcel at the time the assessment fell due.
If more than one Person is the Owner of a Parcel subject to assessment, the
personal obligation to pay such assessment shall be joint and several. The
personal obligation for delinquent assessments shall not pass to an Owner's
successors in title, however, unless expressly assumed by them, but any lien
established hereunder shall remain a charge against the Parcel except to
bonafide purchasers or encumbrancers for value without notice and further except
as set forth in Section 3.11.
3.2 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall
be used exclusively to pay the Common Expenses (as defined in Article 1),
reimburse the Association for the costs incurred in bringing an Owner into
compliance with the Project Documents and only such other purposes expressly set
forth in this Declaration.
3.3 BUDGETS. At least thirty (30) days prior to the date for commencement
of Regular Assessments pursuant to Section 3.6, and at least thirty (30) days
prior to each calendar year thereafter, the Board shall prepare or cause to be
prepared and distribute to all Members of the
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[Peregrine Systems]
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Association a pro forma operating budget ("Budget") for such first or successive
calendar year setting forth the estimated revenue and expenses on an accrual
basis. The Budget shall include a reasonable allowance for contingencies,
replacements and reserves. The Association shall deliver, together with the
Budget: (a) notice of the Members' right to obtain copies of minutes of Board
meetings, to the extent required under California Civil Code Section 1363; and
(b) the summary of the provisions of California Civil Code Section 1354, as
required by such Section.
3.4 PARCEL AREA. The Parcel Area of each Parcel subject to assessment as of
the date of recordation of this Declaration is indicated on EXHIBIT C. The
Parcel Area of one or more Parcels shall be redetermined and shall be subject to
the approval of Declarant and the Board in the event of: (a) resubdivision of
any Parcel or a merger affecting two or more Parcels, in which event the Parcel
Area shall be redetermined for each resulting Parcel; (b) a lot line or boundary
adjustment affecting two or more Parcels; or (c) any other change in the gross
square footage of any Parcel. The Board shall maintain a current schedule of the
Parcel Area of the Parcels, which shall be available for inspection by any Owner
upon request. From time to time, as deemed appropriate by the Board, Declarant
or the Board shall have the right to execute and record a supplement to this
Declaration, which includes the modified Parcel Areas in an updated EXHIBIT C.
Such supplement need only be executed by the Board and the EXHIBIT C
incorporated in such supplement shall replace the EXHIBIT C hereto or in any
previously recorded supplement.
3.5 PARCELS SUBJECT TO ASSESSMENT; ALLOCATION OF ASSESSMENTS. Except as
provided below, all Parcels within the Center are subject to Regular Assessments
and to Special Assessments. All assessments (except for Reimbursement
Assessments described in Section 3.8) shall be allocated among the Owners in the
proportion the Parcel Area of each Owner's Parcel or Parcels subject to
assessment bears to the total Parcel Area of all Parcels then subject to
assessment under this Declaration. The Parking Structure Parcels shall not be
subject to any assessments levied by the Association or otherwise under this
Declaration. Parcels L and M shall not be assessed for any expenses of
maintenance and repair of the Common Parking Area.
3.6 REGULAR ASSESSMENTS.
(a) PURPOSE. Regular Assessments shall be used to defray the
Common Expenses.
(b) DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES. The
Regular Assessments shall commence for Parcel C upon recordation of this
Declaration. The Regular Assessments shall commence for each Parcel other than
Parcel C on the date on which construction of any building Improvements on the
Parcel have been substantially completed, and the Regular Assessments for all
Parcels then subject to assessment shall be recalculated, on a going forward
basis, as Parcels are added to the assessment roll. The first Regular Assessment
for a Parcel shall be adjusted according to the number of months and any
partial month (prorated on the basis of a 30-day month) remaining in the
calendar year. The Board shall fix the amount of the Regular Assessment against
each Parcel at least thirty (30) days in advance of each Regular Assessment
period. Written notice of the Regular Assessment shall be sent to every Owner of
a Parcel subject thereto.
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(c) REVISED REGULAR ASSESSMENT. If the Board reasonably
determines that the Regular Assessment established for any year is, or will
become, insufficient to meet all Common Expenses, it may determine the
approximate amount of such deficiency and revise the amount of the Regular
Assessments for each Owner for the balance of such year to reduce or avoid the
deficiency. After the end of each calendar year, the Board shall cause an
accounting to be made of all Common Expenses for such year and the amount of
Regular Assessments paid for such year. If the Regular Assessments collected
exceed the Common Expenses, the Board may refund the excess to Owners, or apply
such excess toward Regular Assessments next becoming due from Owners, in either
event in the same proportion as the Regular Assessments were paid.
(d) PAYMENT OF ASSESSMENTS. Regular Assessments shall be due and
payable by the Owners to the Association in advance in four (4) equal quarterly
installments, on or before the first (1st) day of January, April, July and
October of each calendar year, or in such other manner as the Board shall
designate.
3.7 SPECIAL ASSESSMENTS.
(a) PURPOSE. Special Assessments may be levied by the Board:
(i) If the Board determines that the Regular Assessments
are or will be insufficient to defray actual Common Expenses of the
Association for a given year due to unanticipated delinquencies or cost
increases or unexpected repairs, replacements or reconstruction of any
Improvements in those Common Areas maintained by the Association;
(ii) If funds are otherwise required for any authorized
activity of the Association; or
(iii) For the purpose of defraying, in whole or in part, the
cost of construction of any capital improvements within the Common Area
(excluding Exclusive Use Areas) deemed reasonably necessary by the Board
for the benefit of the Center, provided that any such capital improvement
assessment in excess of five percent (5%) of all Regular Assessments
budgeted for that calendar year shall require approval by the vote or
written consent of Members holding a majority of the voting power of the
Association Members, and the Declarant for so long as Declarant owns any
portion of the Center.
(b) ESTABLISHMENT. The Board shall determine the approximate
amount necessary to defray the expenses set forth in Section 3.7(a), and, if the
amount is approved by the Board, it shall become a Special Assessment; provided,
however, that the Board may, in its discretion, prorate such Special Assessment
over the remaining months of the calendar year or levy the full assessment
immediately against each Parcel subject to assessment. Any Special Assessment in
excess of ten percent (10%) of the budgeted Common Expenses of the Association
for the calendar year in which a Special Assessment is levied shall require
approval by Members holding a majority of the voting power of the Association
Members, and the Declarant for so long as Declarant owns any portion of the
Center.
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(c) PAYMENT OF ASSESSMENTS. Special Assessments shall be due and
payable within thirty (30) days after a Member receives written notice from the
Board specifying the amount of the Special Assessment, unless the Board
specifies in such notice a later date for payment.
3.8 REIMBURSEMENT ASSESSMENTS. The Association may also impose a
Reimbursement Assessment against any Owner to reimburse the Association for
costs incurred in bringing the Owner and the Owner's Parcel into compliance with
the provisions of this Declaration, the Articles, the Bylaws and the rules and
regulations of the Association, which assessment may be imposed upon the vote of
the Board after notice and an opportunity for a hearing which satisfy the
requirements of Section 7341 of the California CORPORATIONS CODE, as set forth
in the Bylaws; PROVIDED, HOWEVER, except to the extent such Reimbursement
Assessment is to reimburse the Association for the cost of (i) repairing damage
to Common Areas for which the Owner or its Occupants, guests or invitees are
responsible, or (ii) collecting assessments, any Reimbursement Assessment shall
not constitute a lien on the Owner's Parcel.
3.9 EFFECT OF NON-PAYMENT OF ASSESSMENTS; REMEDIES OF ASSOCIATION. Any
assessment made in accordance with this Declaration shall be a debt of the Owner
of a Parcel from the time the assessment is due. Any assessment not paid within
thirty (30) days after the due date shall bear interest from thirty (30) days
following the due date at the rate of the greater of (a) twelve percent (12%)
per annum, or (b) two percent (2%) per annum over the Prime Rate published in
the California Edition of the Wall Street Journal most recently before the due
date. The Association may bring an action at law against the Owner personally
obligated to pay the assessment, and in addition thereto, or in lieu thereof,
may foreclose the lien against the Parcel. Any assessment not paid within
fifteen (15) days after the due date shall be delinquent. Except as otherwise
provided in Section 3.8, the amount of any such delinquent assessment plus costs
of collection, late charges, penalties, interest and attorneys' fees, shall be
and become a lien upon the Parcel when the Association causes to be recorded in
the Office of the County Recorder of San Diego County, California, a Notice of
Delinquent Assessment, which shall state the amount of such delinquent
assessment and such other charges thereon as may be authorized by this
Declaration, a description of the Parcel against which the same has been
assessed, the name of the record owner of the Parcel and, in order for the lien
to be foreclosed by non-judicial foreclosure, the name and address of the
trustee authorized by the Association to enforce the lien by sale. The Notice of
Delinquent Assessment shall be signed by the person designated by the
Association for that purpose or, if no one is designated, by the President of
the Association. Upon payment of the delinquent assessment and charges in
connection with which the Notice of Delinquent Assessment has been recorded, or
other satisfaction thereof, the Association shall cause to be recorded a further
notice stating the satisfaction and the release of the lien thereof. Such lien
may be enforced by sale by the Association after failure of the Owner to pay
such assessment in accordance with its terms, such sale to be conducted in
accordance with the provisions of Section 2924, Section 2924b and Section 2924c
of the California CIVIL CODE applicable to the exercise of powers of sale in
mortgages or in any other manner permitted by law. The Association shall have
the power to purchase the Parcel at the foreclosure sale and to hold, lease,
mortgage and convey the same. Suit to recover a money judgment for unpaid
assessments, interest and attorney's fees may be commenced and maintained
without foreclosing or waiving the lien
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securing the same. Any sale or transfer of any Parcel pursuant to this Section
3.9 shall not disturb the possession, or otherwise diminish the rights or
enlarge the obligations, of any Occupant under any then-existing lease.
3.10 RIGHT OF OWNER TO AUDIT BOOKS AND RECORDS OF ASSOCIATION. Each year,
each Owner shall have the right, exercisable by delivering ten (10) days advance
written notice to the Chief Financial Officer of the Association, to have
conducted, at such Owner's cost and expense, one (1) audit of the books and
records of the Association. Any such audit may encompass any or all of the three
(3) previous years of the operation of the Association; provided, however, any
Owner shall be entitled to audit any given year only once. If any such audit
discloses any error in the determination of the proportionate share of Regular
Assessments of any Owner or in the composition of any cost comprising the
Regular Assessments: (a) an appropriate adjustment shall be made promptly
between the Owner(s) and the Association to correct the error; and (b) if the
error is greater than ten percent (10%) of the auditing Owner's actual
proportionate share of the Regular Assessments, then the Association shall
reimburse the auditing Owner for the reasonable auditor's fees and costs
incurred by the auditing Owner in having the audit performed.
3.11 SUBORDINATION OF THE LIEN TO FIRST MORTGAGES. The lien of any
assessment levied upon a Parcel pursuant to this Declaration shall be
subordinate to the lien of any first Mortgage upon such Parcel, and the sale or
transfer of such Parcel pursuant to judicial or nonjudicial foreclosure of a
first Mortgage shall extinguish the lien of such assessments as to payments
which became due prior to such sale or transfer. No sale or transfer shall
relieve such Parcel from lien rights for any assessments thereafter becoming
due. Where the Mortgagee of a first Mortgage or other purchaser of a Parcel
obtains title to the same as a result of foreclosure, such acquirer of title,
its successors and assigns, shall not be liable for the share of assessments
chargeable to such Parcel which became due prior to the acquisition of title to
such Parcel by such acquirer.
3.12 ESTOPPEL CERTIFICATE. The Association shall furnish or cause an
appropriate officer to furnish, within ten (10) days of a written demand by any
person, a certificate signed by an officer of the Association setting forth
whether the assessments on a specified Parcel have been paid. A properly signed
certificate of the Association with respect to the status of assessments on a
Parcel is binding upon the Association as of the date of its issuance.
3.13 PERSONAL LIABILITY OF OWNER. No Owner may exempt itself from personal
liability for assessments, nor any part thereof, levied by the Association, nor
release the Parcel it owns from the liens and charges of assessments pursuant to
this Declaration, by waiving the use and enjoyment of the Common Area and
facilities thereof, or by abandonment of its Parcel(s).
ARTICLE 4
ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE
Declarant hereby creates an architectural and development review Committee,
which shall be organized as follows:
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4.1 COMMITTEE COMPOSITION. The Committee shall consist of three (3)
individuals, at least one (1) of which shall not be an employee, contractor or
other affiliate of Declarant.
4.2 ALTERNATE MEMBERS. There shall also be two (2) alternate members,
either of whom may be designated by the Committee to act as a substitute for any
member of the Committee in the event of the member's unavailability or
disability.
4.3 APPOINTMENT. The Board shall have the right to appoint all members and
alternate members of the Committee.
4.4 REMOVAL. The right to remove any member or alternate member of the
Committee shall be and is hereby vested solely in the Board.
4.5 TERMS OF OFFICE. The term of all Committee members appointed shall be
one (1) year. Any new member appointed to replace a member who has resigned or
has been removed shall serve such member's unexpired term. Members whose terms
have expired may be reappointed.
4.6 RESIGNATIONS; VACANCIES. Any member of the Committee may, at any time,
resign from the Committee upon written notice to the Board.
4.7 DUTIES AND APPEALS. It shall be the duty of the Committee to perform
the functions required of it pursuant to this Declaration; to consider and
act upon each Application which is submitted to it pursuant to the terms of
this Declaration; to enforce the Design Guidelines if any are adopted; and to
perform all other duties delegated to it by the Board or imposed upon it by
this Declaration. Any Owner may appeal any decision of the Committee to the
Board.
4.8 MEETINGS. The Committee shall meet as often as it, in its sole,
absolute and unfettered discretion, considers necessary or proper to perform
properly its duties and obligations pursuant to this Declaration. The vote,
written consent or written approval of any two (2) members shall constitute an
act by the Committee, unless the unanimous decision of its members is otherwise
required pursuant to this Declaration. The Committee shall keep written records
of all actions the Committee takes.
4.9 DESIGN GUIDELINES. The Committee may, from time to time, and in its
sole, absolute and unfettered discretion, adopt Design Guidelines and amend
the Sign Plan and any Design Guidelines adopted by the Committee, provided,
however, that no such amendment shall apply to any previously approved (or
deemed approved) Improvement within the Center. The Design Guidelines may
include (a) standards and procedures for Committee review; and (b) guidelines
for Improvements, which may include, but not necessarily be limited to,
guidelines for the architectural design of Improvements, site plans, floor
plans and exterior elevations, the size and location of buildings (including
setback requirements), the height of buildings (including architectural
features), the location and pitch of slopes, requirements for grading,
excavation and drainage, the location and capacity of facilities for
utilities, parking areas, loading areas and docks, trash areas (including
compactor pads), Exclusive Use Areas, landscaping designs and
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[Peregrine Systems]
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irrigation plans, color schemes, signs, exterior lighting, and finishes and
materials for use in the Center. Notwithstanding the foregoing, and
notwithstanding anything in the Design Guidelines to the contrary (or which may
be interpreted as being to the contrary), the following are exempt from the
Design Guidelines: (i) Improvements existing or under construction on the date
of this Declaration; and (ii) Improvements for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration including, without limitation, the five office buildings and the
Parking Structure comprising the Carmel Center Office Campus and related
Improvements (herein the "Approved Declarant Improvements") approved by the City
for construction upon Parcel B and Parcels E, F, G, H, I, J and K pursuant to
Carmel Valley Planned District and Coastal Development Permit No. 98-0227
(Amendment to Carmel Valley Planned District, Coastal Development and
Conditional Use Permit No. 93-0451) for Kilroy Carmel Center (the "KILROY CARMEL
CENTER PERMIT").
4.10 EXERCISE OF RIGHTS. Exercise of the Board's right of appointment and
removal, as set forth in this Declaration, shall be evidenced by the Board's
recording among the Committee's regular records a declaration identifying each
new Committee member appointed and each member replaced or removed from the
Committee.
ARTICLE 5
LAND USE
5.1 PERMITTED USES. The following Parcels and the Improvements constructed
or to be constructed thereon may be used for those purposes set forth below
provided such uses comply with all Laws as defined in Section 5.5 in effect as
of the date of this Declaration and the provisions of this Declaration and the
other Project Documents:
(a) With respect to Parcels B and Parcels E through K, inclusive,
those uses set forth in the Kilroy Carmel Center Permit.
(b) With respect to Parcel C, hotel and other related uses as set
forth in North City West Planned District Development Plan Permit No. 88-0941
("PERMIT NO. 88-0941").
(c) With respect to Parcel A, restaurant use pursuant to Permit No.
88-0941.
(d) With respect to Parcel L, those uses set forth in that certain
Carmel Valley Planned District Development/Conditional Use/Coastal Development
Permit Amendment No. 96-7784 issued to Acacia Gasoline and Car Wash of Carmel
Valley, LLC (the "PARCEL L PERMIT")
5.2 USE RESTRICTIONS. Except as otherwise consented to in writing by the
Declarant (or the Board, after there is no longer a Declarant), which may be
withheld in its sole, absolute and unfettered discretion:
(a) There shall be no children's play areas or day care facilities in
the Center, except that (i) a play area may be located and operated on
Parcel M in connection with any fast-food restaurant located and operated
thereon; (ii) the hotel on Parcel C may
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contain related recreational facilities; and (iii) a day care center and
related play areas may be located within the Carmel Center Office Campus.
(b) There shall be no tavern, night club or bar in the Center, except
that a bar may be located in a restaurant or a hotel.
(c) Neither Parcels B nor D may be used for a fast food or
drive-through restaurant.
(d) No portion of the Center or any Improvements constructed thereon
may be put to any use which is not allowed pursuant to the Laws applicable
to the Center and in effect as of the date of this Declaration.
To be effective, any written consent of Declarant for the purpose of this
Section 5.2 must be (i) signed by Declarant in recordable form; and (ii)
recorded in the Office of the County Recorder of San Diego County. After there
is no longer a Declarant, to be effective, any written consent of the Board for
the purpose of this Section must be (A) evidenced by a duly adopted resolution
of the Board, certified as such in writing by the Secretary or an Assistant
Secretary of the Association in recordable form; and (B) recorded in the Office
of the County Recorder of San Diego County.
5.3 PROHIBITED OPERATIONS AND USES. No use or operation will be made,
conducted or permitted on or with respect to all or any part of any Parcel or
Improvement which is obnoxious to, or out of harmony with the development or
operation of the business conducted on any other Parcel or on other sites in the
general vicinity of the Center. Included among the uses or operations which are
prohibited because of their obvious detrimental effect on the general appearance
of the Parcels and their conflict with the reasonable standards of appearance
and maintenance required by Declarant and the Board, are uses or operations
which produce, or are accompanied by, the following characteristics:
(a) Any public or private nuisance;
(b) Any use which, in the Board's sole and absolute discretion, is
considered to be objectionable as an intrusion into the environment of
sound, odor, visual effect or physical impact or that will disturb or tend
to disturb the other Owners or Occupants or their customers or invitees in
the Center;
(c) Any use that produces intense glare or heat, unless such use is
performed only within an enclosed or screened area in a manner such that
the glare or heat emitted will not be discernible from any property line of
the Parcel;
(d) Any use or operation that results in a discharge or release of
Hazardous Materials (defined in Section 7.7) on or under the surface of a
Parcel or into the surface or ground water of the Center, unless such
discharge or release is in compliance with all applicable Laws relating to
Hazardous Materials;
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(e) Any use or operation that results in air omissions of pollutants
or contaminants unless such emissions are in compliance with all applicable
laws relating to Hazardous Materials;
(f) Any emission of odorous, noxious, caustic or corrosive matter or
gas, whether toxic or non-toxic;
(g) Any unusual litter, dust, dirt or debris, except as generated
during construction of Improvements;
(h) Any unusual firing, explosion or other damaging or dangerous
hazard, including, but not limited to, storage, display or sale of
explosives or fireworks;
(i) Any mobile home or trailer court, labor camp, junk yard, stock
yard, distillation of bones, or raising, storing, slaughtering or disposing
of animals of any kind;
(j) Any drilling for, excavation, refining and/or removal of earth
materials, oil, gas, hydrocarbon substance, water, geothermal steam or any
other subsurface substance of any nature whatsoever, except as part of
normal grading operations in connection with construction of
approved Improvements;
(k) Any dumping, disposal, incineration or reduction of garbage or
reuse of the same, other than handling or reducing such garbage in a
reasonably clean and sanitary manner;
(l) Any auction, public sale (except as may be conducted inside the
hotel Improvements located on Parcel C by clients or patrons of the hotel)
or other auction house operation;
(m) Any display or sale of merchandise or any storage or placement of
merchandise, portable signs or other objects belonging to an Owner or
Occupant of the Center outside the defined exterior walls, roof and
permanent doorways of any building.
(n) Any commercial excavation of building or construction materials;
and
(o) Any smelting of iron, tin, zinc or other metals or ores.
5.4 OTHER OPERATIONS AND USES. Operations and uses which are neither
specifically prohibited nor specifically authorized by this Declaration may
be permitted in a specific case if an Application containing operational
plans and specifications are submitted to and approved in writing by the
Committee. Approval or disapproval of and compatibility with such operational
plans and specifications shall be based upon the effect of such proposal
operations or uses on the balance of the Center and the Owners and Occupants
thereof, but shall be in the sole discretion of the Committee.
5.5 LAWS. As used herein, "Laws" means, collectively, all laws, statutes,
ordinances, rules, regulations, requirements, permits, approvals, or
certificates of occupancy promulgated by
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any federal, state or local governmental entity with jurisdiction over the
Center or any business, use or operation thereon. No Owner or Occupant shall
permit any activity, use or operation on any portion of the Center in violation
of any Law. Each Owner and Occupant shall, upon written notice from Declarant,
or the Board, discontinue any use which is finally determined by any
governmental entity having such jurisdiction to be a violation of any Law. Each
Owner and Occupant shall, immediately upon receipt from any governmental entity
of an alleged violation of any Law, provide a copy of such allegation to the
Board, notwithstanding such party's belief that meritorious defenses to such
allegations exist.
ARTICLE 6
REGULATION OF IMPROVEMENTS
6.1 APPROVAL OF APPLICATION REQUIRED. Subject to Section 6.10, no
Improvement shall be constructed, reconstructed, rebuilt, erected, placed,
altered, used, maintained or permitted to remain in the Center (i) unless the
Improvement and intended use thereof conforms with all applicable Laws; and (ii)
until plans, specifications and other documentation required by the Committee
(or as otherwise specified in any Design Guidelines adopted by the Committee)
for the Improvement and the intended use thereof ("APPLICATION") have been
submitted to and approved in writing by the Committee. Each Application,
including all exhibits and supporting materials and documentation, must be
submitted in duplicate. Such Applications shall be in such form and shall
contain such information as may be required by the Committee, but shall in any
event include the following:
(a) A site development plan of the Parcel showing the nature, grading
scheme, kind, shape, composition, and location of all structures with respect to
the particular Parcel (including proposed front, rear and side setback lines),
and with respect to structures on adjoining Parcels, and the number and location
of all parking spaces and driveways on the Parcel;
(b) A landscaping plan for the particular Parcel;
(c) A plan for the location of signs and lighting; and
(d) A building elevation plan showing dimensions, materials and
exterior color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit.
Material changes to previously approved plans must be similarly
submitted to and approved by the Committee.
6.2 FILING FEE. As a means of defraying its costs and expenses, the
Committee may institute and require that a reasonable filing and review fee
("REVIEW FEE") accompany an Application. The initial schedule of Review Fees is
set forth in the following schedule:
(a) If an Application is prepared by an Architect, the Review Fee
shall be Two Hundred Fifty Dollars ($250) per building per Parcel.
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(b) In all other cases, the Review Fee shall be Five Hundred Dollars
($500) per building per Parcel.
(c) If an Application is resubmitted, the Committee may require an
additional Review Fee in an amount not to exceed One Hundred Dollars ($100)
for each resubmission.
(d) The schedule of Review Fees may be modified from time to time by
the Committee to reflect increased costs and expenses or changed
circumstances, such as, but not limited to, inflation.
6.3 BASIS FOR APPROVAL. The Committee shall have the right to disapprove an
Application submitted to it in the event any part of the Application: (a) is not
in accordance with this Declaration, the Sign Plan and any Design Guidelines or
other requirements adopted by the Committee; or (b) is incomplete; or (c) is not
in compliance with the applicable governmental approvals and regulations for the
Center; or (d) is deemed by the Committee to be contrary to the best interests
of the Center or the Owners; or (e) any combination of the foregoing. The
Committee shall not unreasonably withhold its approval of an Application
submitted to it, but may condition its approval on the satisfaction of one or
more conditions set forth in writing. In this regard, the Committee may base its
approval or disapproval on criteria which may include, but are not limited to,
the following: (i) the adequacy of the building locations and dimensions on the
Parcel; (ii) the adequacy of the parking to be provided; (iii) conformity and
harmony of external design with neighboring structures; (iv) effect of location
and proposed use of proposed Improvements on neighboring Parcels and the types
of operations and uses thereof; (v) relation of topography, grade and finish
ground elevation of the Parcel being improved to that of neighboring Parcels;
(vi) proper facing of main elevation with respect to nearby streets and other
buildings; (vii) adequacy of screening trash facilities and mechanical, air
conditioning or other rooftop installations; (viii) adequacy of landscaping; and
(ix) conformity of the Application to the purpose and general plan and intent of
this Declaration. No Application shall be approved which does not provide for
the underground installation of all utility services. The Committee may
condition its approval of an Application on such changes therein as it deems
appropriate such as, and without limitation, the approval of such Improvements
by a holder of an easement which may be impaired thereby or upon approval of any
such Improvements by the appropriate governmental entity. Any Committee approval
conditioned upon the approval by a governmental entity shall not imply the
Association is enforcing any government codes or regulations, nor shall the
failure to make such conditional approval imply that any such governmental
entity approval is not required.
6.4 RESULT OF INACTION. The Committee shall approve or disapprove an
Application within thirty (30) days after receipt of a complete Application
and the Review Fee. If the Committee fails either to approve or disapprove an
Application within such thirty-day (30-day) period, then it shall be
conclusively presumed that the Committee has disapproved the Application,
unless the applicant has delivered to the Committee, within fifteen (15) days
after the expiration of the thirty-day (30-day) period, a notice in writing
setting forth a date of initial submittal of the complete Application to the
Committee and the fact that no approval or
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disapproval has been given as of the date of such notice. If the Committee
thereafter fails to either approve or disapprove the Application on or before
the fifteenth (15th) day after the Committee's receipt of such notice, the
provisions of this Declaration requiring approval of such Application shall be
deemed to have been waived by the Committee with respect to such Improvements;
provided, however, that such waiver shall not be deemed to be a waiver of any
other covenant, condition or restriction provided herein. One (1) set of the
Application shall, with the approval or disapproval of the Committee endorsed
thereon, be returned to the Owner submitting it, and the other set shall be
retained by the Committee for its permanent files. In the case of a conditional
approval of an Application, the written conditions shall accompany the
Committee's written conditional approval.
6.5 PROCEEDING WITH WORK. Upon the Committee's approval of an Application
pursuant to this Article 6, the Owner to whom the approval is granted and
delivered, shall, as soon as practicable, satisfy all conditions thereof (if
any) and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations, excavations and landscaping so that no
Improvement remains in a partly-finished condition any longer than reasonably
necessary for completion thereof. In addition, each Owner shall cause all work
to be as nondisruptive as practicable to the Center and the guests, invitees,
tenants, employees and Owners who use the Center. Each Owner shall disrupt
traffic flow and parking as little as possible during construction and shall
clean up daily any construction debris to the extent reasonably practicable. In
all cases, work shall be commenced within one (1) year following the date of
such approval. If work is not commenced within one (1) year following the date
of such approval, then the approval given pursuant to this Article 6 shall be
deemed revoked; PROVIDED, HOWEVER, upon written request made prior to the
expiration of said one (1) year period, the Committee may, in its sole, absolute
and unfettered discretion, extend the time for commencing work.
6.6 COMPLETION OF WORK. Construction, refinishing, alteration or excavation
of any Improvements previously approved under this Article 6 shall be completed
within two (2) years following the commencement thereof, except for so long as
such completion is rendered impossible or would result in hardship due to action
of the elements, fire or other casualty, war, riot, labor dispute, inability to
procure or general shortage of labor or material in the normal channels of
trade, delay in transportation, delay in inspections, governmental action or
inaction or moratorium or any other cause beyond the reasonable control of the
Owner so obligated, whether similar or dissimilar to the foregoing, financial
inability excepted. Failure to comply with this Section 6.6 shall constitute a
breach of this Declaration and subject the defaulting Owner or Owners to all
enforcement procedures set forth in this Declaration or any other remedies
provided by law or in equity. Upon completion of construction of any
Improvement, one complete set of as-built plans shall be submitted to and
maintained by the Committee.
6.7 ESTOPPEL CERTIFICATE. The Committee shall deliver to any Owner an
estoppel certificate within thirty (30) days following receipt of a written
request therefor. If the Committee does not have an as-built survey of the
Owner's Parcel in its files, then any such request shall be accompanied by an
ALTA map of survey or a certified as-built survey of the Owner's Parcel. The
estoppel certificate shall certify that as of the date of the certificate either
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(a) all Improvements made or work done on or within the Owner's Parcel
comply with this Declaration; or (b) such Improvements or work do not
so comply, in which event the certificate shall identify the
non-complying Improvements and shall set forth the cause or causes for
such noncompliance. Any existing or prospective Owner, Occupant or
Mortgagee in good faith for value shall be entitled to rely on the
certificate with respect to the matters set forth therein, such matters
being conclusive as between the Committee and all such subsequent
parties in interest.
6.8 INDEMNITY AND LIMITATION OF LIABILITY. Neither Declarant, the
Association, the Board nor the Committee, nor any member of the Board or the
Committee, nor any agents, employees or contractors of Declarant, the
Association, the Members, Occupants, the Board or the Committee (individually or
collectively, "INDEMNITEE") shall be liable for any liability, damage, loss,
cost, expense or prejudice suffered, incurred or claimed by any Owner, Occupant
or other person (an "Applicant") who submits an Application, or by any other
Person (including any other Owner or Occupant); and each Applicant who submits
an Application shall forever hold each and every Indemnitee harmless from and
against any liability, damage, loss, cost, expense or prejudice suffered,
incurred or claimed by such Applicant, and shall forever indemnify, defend,
protect and hold each Indemnitee harmless for any liability, damage, loss, cost,
expense or prejudice suffered, incurred or claimed by any other Person
(including any other Owner or Occupant), arising from, our of or in connection
with (a) any defects in any plans, drawings, specifications or other
documentation submitted in any Application, revised or approved in accordance
with this Declaration, or for any structural or other defects in any work done
according to such plans, drawings, specifications or other documentation; (b)
the approval or disapproval of any Application, whether or not defective; (c)
the construction or performance of any work, whether or not constructed or
performed pursuant to an approved Application; (d) the development of any Parcel
within the Center; (e) the execution and filing of an estoppel certificate
pursuant to Section 6.7, whether or not the facts therein are correct, provided
that the Committee has acted in good faith in issuing such estoppel certificate
on the basis of such information as may be possessed by it; or (f) any
combination of the foregoing.
6.9 LIMITATIONS ON IMPROVEMENTS. All limitations contained in this
Declaration supplement the controls established by applicable zoning, land
use-related entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules and
regulations; and of the foregoing, the more restrictive shall apply. Each Owner
and Occupant is responsible for identifying and conforming with all Laws.
(a) SETBACK LINES. Buildings, structures of any kind (or any part
thereof), Exclusive Use Areas and parking areas shall be subject to the
minimum setback requirements of applicable zoning, land use-related
entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules
and regulations.
(b) LANDSCAPING. Every Parcel on which a building is constructed in
the Center shall be landscaped by the Owner in accordance with the
Application approved by the Committee pursuant to this Article 6; and, if
not previously installed, the Owner shall
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also install the Common Landscaping upon the Parcel in accordance with the
plans and specifications adopted by the Declarant, or as otherwise approved
by the Committee. Landscaping for each Parcel, as approved by the
Committee, shall be installed before the earlier of (a) the date on which
the first Occupant occupies the building (or any portion thereof) on the
Parcel; or (b) the date of substantial completion of the building;
PROVIDED, HOWEVER, the Committee may, in its sole, absolute and unfettered
discretion, approve in writing another final date of landscape
installation. As used in this Section, "SUBSTANTIAL COMPLETION" means the
date on which final City inspection is obtained for the building shell.
Once installed, landscaping in the Center shall be maintained, repaired and
replaced as provided in Section 12.1 and Section 13.1 of this Declaration.
(c) EXCLUSIVE USE AREAS. Any Exclusive Use Areas within a Parcel shall
be as designated on the Site Plan, or as otherwise approved by the Board or
by the Committee in its written approval of an Application pursuant to this
Article 6. Exclusive Use Areas shall be maintained, repaired and replaced
in accordance with Article 12.
(d) SIGNS. Except for street and traffic control signs and such other
signs as may be required by applicable law, no sign, billboard or other
advertising shall be erected, placed or maintained within the Center
without written approval by the Committee, which, unless such signage is
consistent with the Sign Plan, may be withheld in its sole, absolute and
unfettered discretion. Nothing contained herein shall preclude Declarant or
any subsequent Owner of the Carmel Center Office Campus from renaming it
after such Owner, an Eligible Occupant, or a major tenant that leases in
excess of twenty-five percent (25%) of the space within the buildings
comprising the Carmel Center Office Campus, and installing signage
consistent with the Sign Plan to reflect such name change.
(e) PARKING AREAS. The Committee shall have the authority to
disapprove any Application for the construction of any building on a Parcel
in the Center if the Application does not provide for parking substantially
in accordance with the Site Plan and in compliance with applicable
ordinances, rules and regulations of the City. The purpose and intent of
this requirement is to ensure that all development and parking arrangements
comply with the Site Plan and that this Declaration satisfies any
City-imposed requirements for shared parking existing on the date of this
Declaration.
(f) EXTERIOR LIGHTING. Exterior lighting shall conform to the Design
Guidelines and shall not be of such intensity, size, color or location as
to be a nuisance to Owners or the public.
(g) UTILITY LINES AND ANTENNAS. No sewer, drainage or utility
lines, cables or wires or other devices for the communication or
transmission of electric current, power or signals (including, but not
limited to, telephone, television, microwave or radio signals) shall be
constructed, placed or maintained anywhere in or upon any Parcel other than
within buildings or structures unless contained in underground conduits;
PROVIDED, HOWEVER, transformers and terminal equipment related thereto may
be installed above
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ground if screened from view of adjacent streets and Parcels in a manner
satisfactory to the Committee. No antenna, satellite dish or disc for
transmitting or receiving telephone, television, microwave or radio signals
shall be placed on any Parcel unless (i) such antenna, dish or disc,
whether on the ground or on a building, is screened from view of adjacent
streets and Parcels in a manner satisfactory to the Committee; and (ii) the
prior written consent of the Committee is obtained. Nothing contained in
this Section shall prohibit (x) the erection or use of temporary power or
telephone facilities incidental to the construction or repair of
Improvements on any Parcel, or (y) the installation and maintenance of
security and surveillance devices upon the exterior of buildings, within
Common Areas adjacent to such buildings or elsewhere upon an Owner's Parcel
and Exclusive Use Areas. No Owner shall enter into any contract or
agreement with the City, the County of San Diego or any other governmental
agency or entity or public utility with respect to sewer lines or
connections, water lines or connections, or street improvements (including,
but not limited to, curbs, gutters, parkways, street lighting or other
utility connections, lines or easements) relating to the Center or any
Parcel without the prior written consent of the Committee (including the
Committee's approval of the contract or agreement proposed to be entered
into), which may be withheld if the Committee determines such contract or
agreement, or the improvements to be constructed pursuant thereto, are not
consistent with the Declaration or any of the other Project Documents.
(h) EXCAVATION AND UNDERGROUND UTILITIES. No excavation shall be made
except in connection with construction of an Improvement, and upon
completion thereof, exposed openings shall be back filled and disturbed
ground shall be graded, leveled and restored to its original or approved
similar condition.
6.10 CERTAIN IMPROVEMENTS EXEMPT FROM APPLICATION. Notwithstanding
anything in this Declaration to the contrary (or which may be interpreted as
being to the contrary), the following Improvements shall be exempt from the
provisions of this Article 6 and are not required to be the subject of an
Application pursuant to this Article 6: (i) Improvements existing or under
construction on the date of this Declaration; (ii) Improvements which are
substantially consistent with the Site Plan and for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration which include, without limitation, the Approved Declarant
Improvements; and (iii) Improvements within the interior of a building such as
tenant improvements, lobbies and other interior space.
6.11 DISCLOSURE AND WAIVER OF CONFLICT OF INTEREST. Committee members may
be appointed by, affiliated with or employed by Declarant. If Declarant submits
an Application to the Committee for approval, Committee members appointed by
Declarant may have a conflict of interest in rendering their decisions. Neither
Declarant nor any Committee member shall have any liability to any Owner,
Occupant or other Person as a result of decisions which may benefit Declarant
rendered in good faith by the Committee or any Committee member, and each Owner
hereby waives any claim of liability against Declarant, the Committee or any
Committee member, based upon such conflict of interest. Nothing in this Section
6.11 is intended to limit the application or meaning of Section 14.6.
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ARTICLE 7
OPERATIONS GENERALLY
7.1 SLOPE AND DRAINAGE EASEMENTS. The Owner of each Parcel will permit free
access by Owners of adjacent or adjoining Parcels and by Declarant to slopes or
drainageways located on the Owner's Parcel which affect such adjacent or
adjoining Parcels when such access is required for the maintenance of permanent
stabilization on said slopes, or maintenance of the drainage facilities for the
protection and use of property other than the Parcel on which the slope or
drainageway is located. No Owner shall in any way interfere with the established
drainage pattern over the Owner's Parcel from adjoining or other Parcels, and
each Owner shall make adequate provisions for proper drainage in the event it is
necessary to change the established drainage over the Owner's Parcel. For the
purpose of this paragraph, "ESTABLISHED" drainage is defined as the drainage
patterns at the time the overall grading of each Parcel is completed in
accordance with the City-approved grading plans therefor. Upon completion of
final grading of a Parcel, no surface drainage shall be directed across any
portion of an adjoining Building Area, all surface drainage shall be directed to
a public street or into the underground drainage system.
7.2 SHARED PARKING; COMMON PARKING AREAS.
(a) The Owners intend that this Declaration satisfies any City-imposed
requirements for shared parking existing on the date of this Declaration.
(b) Those portions of the Common Area improved, or to be improved,
with parking spaces as generally shown on the Site Plan and not designated
or subsequently designated as Exclusive Use or Exclusive Parking Area or,
with respect to Parcel D, improved with a building (herein "Common Parking
Area") shall be reciprocal parking area for the common use and enjoyment of
all Parcels (excluding Parcels L and M) and their respective Owners,
Occupants, customers, guests and invitees. The Owners of Parcels L and M
shall have no rights to use any of the Common Parking Area.
(c) The Parking Structure, the parking spaces included therein and
those additional surface parking areas within the Carmel Center Office
Campus and shown on the Site Plan as Exclusive Parking Area shall be for
the exclusive use and enjoyment of the Carmel Center Office Campus and
their respective Owners, Occupants, customers, guests and invitees (herein
"Exclusive Parking Area").
(d) In addition to the Exclusive Parking Areas described in subsection
(c) above, Declarant (and the Board when there no longer is a Declarant)
may designate other portions of a Parcel improved as parking as Exclusive
Parking Area, subject to the provisions of Section 8.2.
(e) No commercial truck is permitted to be parked on any Parcel unless
hidden from view from other Parcels within the Center and from public
streets by attractive visual barriers. Notwithstanding the immediately
preceding sentence, commercial trucks may park for the purpose of loading
and unloading on all Parcels; PROVIDED HOWEVER, reasonable restrictions
concerning permitted times for parking,
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loading and unloading commercial trucks, which may be applicable to one or
more Parcels, may be adopted by the Board.
(f) No charge of any kind shall ever be made for ingress to, egress
from or parking in the Center, unless ordered or permitted by governmental
authority. The Owner of the Carmel Center Office Campus may install a card
access system in the Parking Structure and receive reimbursement from the
Occupants of the Carmel Center Office Campus for the cost of installing
such system and the cost of access cards and replacement cards.
7.3 STORAGE AND LOADING AREAS. Subject to Committee approval, which may be
withheld in its sole, absolute and unfettered discretion:
(a) No materials, supplies or equipment, including any trucks, shall
be stored in any area on a Parcel, except inside a closed building or on a
temporary basis behind a Committee approved visual barrier which screens
such areas from the view of adjoining Parcels and public streets.
(b) Loading areas and docks shall be set back and screened to
minimize the visual and noise effects from the street. All loading areas
shall be hidden from view from public streets by visual barriers approved
by the Committee. Notwithstanding the foregoing, it may not be practical or
feasible for all loading areas and docks to comply with this restriction,
in which event, as to those loading areas and docks, the Committee shall
have the right to designate hours for loading and unloading and the rules
reasonably necessary to minimize the visual and noise effects thereof.
7.4 INSPECTION. Declarant, members of the Board, members of the Committee
and their authorized representatives may from time to time, at any reasonable
hours, enter upon and inspect any Parcel, or any portion thereof, or
Improvements thereon, to ascertain compliance with this Declaration and other
Project Documents, but without obligation to do so or liability therefor
provided, however, no such entry shall be permitted to inspect the interior or
exterior of any building improvements without at least five (5) business days'
prior written notice and a statement for the reasons such entry is permitted or
required under the Project Documents.
7.5 DIVISION OF LAND. No Parcel shall be subdivided or resubdivided without
the prior written approval of Declarant (or the Board, if there is no
Declarant), which may be withheld in its sole, absolute and unfettered
discretion. The creation of a "condominium project" on any Parcel or Parcels
pursuant to Section 1351, ET SEQ. of the California CIVIL CODE shall not
constitute a subdivision or resubdivision of a Parcel which is prohibited by the
provisions of this Section.
7.6 HAZARDOUS MATERIALS. Each Owner with respect to the Parcel(s) owned by
such Owner covenants to do as follows:
(a) At all times and in all respects to comply, and cause all of its
Occupants to comply, with all federal, state and local laws, ordinances and
regulations, including, but
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not limited to, the Federal Water Pollution Control Act (33 U.S.C. Section
1251, ET SEQ.), Resource Conservation & Recovery Act (42 U.S.C. Section
6901, ET SEQ.), Safe Drinking Water Act (42 U.S.C. Section 3000f, ET SEQ.),
Toxic Substances Control Act (15 U.S.C. Section 2601, ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401, ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, ET
SEQ.), California Health & Safety Code (Section 25100, ET SEQ.; Section
39000, ET SEQ.), California Safe Drinking Water & Toxic Enforcement Act of
1986 (California Health & Safety Code Section 25249.5, ET SEQ.), California
Water Code (Section 13000, ET SEQ.), and other comparable state and federal
laws, currently in force or enacted in the future ("HAZARDOUS MATERIALS
LAWS"), relating to industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"HAZARDOUS MATERIALS").
(b) Each Owner, Occupant and all other users of a Parcel shall, at its
own expense, procure, maintain in effect and comply with all conditions of
any and all permits, licenses, and other governmental and regulatory
approvals required for its or its use of the Center, including, without
limitation, discharge of (appropriately treated) materials or wastes into
or through any sanitary sewer serving the Center. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, no Person shall cause any and all Hazardous
Materials removed from the Center to be removed and transported except
solely by duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Each Owner, Occupant and user shall
in all respects handle, treat, deal with and manage any and all Hazardous
Materials in, on, under or about the Center in total conformity with all
applicable Hazardous Materials Laws and prudent industry practices
regarding management of such Hazardous Materials.
7.7 PAYMENT OF TAXES, LIENS. Each Owner shall pay or cause to be paid prior
to delinquency the real estate taxes, assessments, special district charges and
all other public, governmental, quasi-public or quasi-governmental charges which
are or may become a lien upon the Owner's Parcel or Parcels ("Impositions"), and
all other liens or charges which may be or become superior to this Declaration
or any amendments thereto. If any Owner fails to pay any Imposition or other
lien or charge as provided herein, the Association shall have the right, but no
obligation, to cure such default. All costs and expenses, including attorneys'
fees and costs, incurred by the Association in connection with any such cure may
be recovered by the Association as a Reimbursement Assessment against said Owner
and its Parcel or Parcels. An Owner shall have the right, at its own cost and
expense, and in its own name, to contest or protest or seek to have reviewed,
reduced, equalized or abated any Imposition levied upon its Parcel(s) by first
paying such Imposition and thereafter filing a claim for refund or pursuing
such other remedy as may then be available under and in accordance with
California law. Upon final determination of any such proceeding, the protesting
Owner shall pay the Impositions for which
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it is responsible pursuant to this Section as they are finally determined and
all penalties, interest, costs and expense which may thereupon be due or have
resulted therefrom. An Owner shall notify the Association in writing of any
contest or protest so filed by an Owner, and shall provide the Association,
upon request, with any and all documents pertaining thereto.
ARTICLE 8
COMMON AREA
8.1 USE. Subject to the provisions of this Article 8 and such other
provisions of the Declaration regarding restrictions upon use, the Common Area
of each Parcel shall be used solely for the purposes specified in Sections
7.2(b) and 11.1. In addition, no Owner or Occupant shall use or permit to be
used the Common Area for any use other than the following:
(a) Parking motor vehicles, and pedestrian and vehicular ingress and
egress by Occupants, their agents, employees, customers and other invitees,
to and from buildings, the Common Area and adjacent public streets;
(b) Parking stalls, sidewalks, walls, ramps, driveways, lanes, curbs,
gutters, seating areas, flagpoles, bike racks, kiosks, automatic teller
machines, bus stops and similar facilities for accommodating public
transportation, traffic control areas, signals, traffic islands, landscaped
areas, traffic and parking lighting facilities and monument signs with
appropriate underground electrical connections, and all things incidental
thereto, all as approved by the Committee and only in locations approved by
the Committee;
(c) Public utility installations serving buildings or the Common Area;
(d) Ingress and egress of delivery and service vehicles to and from
the Center or any portion thereof and adjacent public streets, and parking
thereof only in unloading and truck loading and unloading areas;
(e) Delivery of goods, wares, merchandise and providing services to
Occupants of the Center;
(f) Perimeter walls and fences shown on the Site Plan;
(g) If required by law, recycling facilities or pickup points, the
location of which are approved by the Committee; and
(h) Lighting standards, Common Landscaping, and any other landscaping
or Common Area Improvements as may be required under applicable controls
and regulations of the City. The Owners and/or Eligible Occupants of
Parcels may also install and maintain security and surveillance devices
upon the Common Areas within their respective Parcels.
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The Common Area shall be used reasonably for the foregoing purposes so as not to
interfere with parking.
8.2 MODIFICATION OF COMMON AREA. The initial design of the Common Parking
Areas and pattern of traffic flow over the Common Area within the Center shall
be as shown on the Site Plan, and there shall be no material change thereto
unless:
(a) In the case of any material change to the Common Area located on
Parcels A, B, C, D, E and H, the prior written consent of Declarant and the
Owners of all such Parcels, which shall not be unreasonably withheld, has
been obtained;
(b) With respect to any material change to the Common Area (excluding
Common Parking Area) within Parcels G, K, L or M, the prior written consent
of Declarant and the Owners of all such Parcels, which shall not be
unreasonably withheld, has been obtained;
(c) With respect to any material change to the Common Parking Area
within Parcels E through K, the prior written consent of the Declarant and
the Owners of all such Parcels, which shall not be unreasonably withheld by
any of them, has been obtained;
(d) In all other cases, the prior written consent of Declarant (or the
Board, after there is no longer a Declarant), which may be withheld in its
sole, absolute and unfettered discretion, has been obtained; and
(e) In all cases, the resulting Common Parking Area layout and pattern
of traffic flow over the Common Area comply with all applicable Laws.
8.3 PARKING REGULATIONS. Occupants within the Center will have widely
varying parking requirements. To ensure Common Parking Areas are used in the
most efficient manner and in the best interest of all Occupants entitled to the
use thereof, the Board may adopt reasonable rules and regulations governing
the use of the Common Parking Areas; PROVIDED, HOWEVER, that no such rule or
regulation shall diminish the parking rights of any Occupant under any lease
existing at the time such rule or regulation is adopted; and PROVIDED FURTHER,
any and all such rules or regulations shall be subject to Section 8.2.
8.4 CONSTRUCTION AND REPAIR. All construction, alteration or repair work
requiring workers to perform activity or to use or locate materials, tools or
equipment (such as, but not limited to, compressors, sawhorses, tool boxes,
scaffolds, ladders and barricades) in the Common Area (other than Exclusive Use
Areas) during the course of performing such work, whether such work is
undertaken with respect to building Improvements located on a Parcel or in the
Common Area, shall be subject to the prior written approval of the Board (or any
committee of the Board established in accordance with the Bylaws for the purpose
of administering this Section) and shall be accomplished in the most expeditious
and speedy manner consistent with ongoing business operations within the Center.
The Owner or Occupant undertaking such work shall take all measures necessary to
minimize any disruption or inconvenience caused by such work. Such work shall be
accomplished by the Owner or Occupant undertaking it in a reasonable manner so
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that any damage or adverse effect which might be caused by such work to any
other Owner or Occupant or to any Parcel (including the Parcel on which the work
is being accomplished) is minimized. The Owner or Occupant undertaking such work
shall repair at its own cost any and all damage caused by such work and shall
restore the affected portion of any Parcel (including the Parcel upon which such
work is performed) to a condition which is equal to or better than the condition
which existed prior to the beginning of such work. In addition, the Owner or
Occupant undertaking such work shall pay all costs and expenses associated
therewith and shall indemnify, protect, defend and hold the Association and all
other Owners and Occupants harmless from all liabilities, damages, losses,
costs, expenses or claims arising out of, in connection with or attributable to
the performance of such work. Except in cases of emergency, all such work
shall be undertaken only after giving the Board ten (10) days prior written
notice of the work to be undertaken, the scope and nature of the work, the
duration of the work and the area in which the work is to be performed.
Notwithstanding the foregoing, construction, alteration or repair work to be
accomplished outside the Common Area may be made without the consent of or
prior written notice to the Board (or committee thereof) required under this
Section.
8.5 INTERIM IMPROVEMENTS AND MAINTENANCE OF PARCELS.
(a) Commencing as required in paragraph (b) of this Section and
continuing until such time as the commencement of construction of a building
or buildings upon a Parcel in the Center, the Owner of such Parcel shall, at its
sole cost, and subject to the discretion and approval of the Committee, pave
with asphalt for parking or landscape with ground cover (or both) and take such
other measures as are reasonably necessary to control weeds, blowing dirt and
sand, accumulation of refuse and other matters with respect to the undeveloped
portions of such Parcel. The cost of design and construction of such interim
parking or landscaping improvements (or, if applicable, both) shall be borne
solely by the Owners of the respective Parcels upon which such improvements are
constructed. Once constructed, the Association shall maintain any such interim
improvements within the Common Area and the cost and expense thereof shall be
Common Expenses; and the Owner shall maintain such other interim improvements.
Each Owner's paving plans or landscaping plans (or, if applicable, both) for the
Parcel shall be subject to the Committee's written approval to ensure
consistency and harmony with (a) the landscaping plan and theme of the Center;
and (b) the parking configuration and pattern of traffic flow in the Center. The
Committee's approval shall not be unreasonably withheld or delayed, and neither
paving nor landscaping the Parcel shall commence unless and until the
Committee's written approval has been obtained. After the Committee's written
approval has been obtained, the Parcel shall be paved and landscaped pursuant to
and in accordance with the plans approved by the Committee. Nothing contained in
this Section 8.5 regarding interim improvements of Parcels shall restrict or
impair the Owners' rights to fully develop and improve their respective Parcels
with buildings and other Improvements consistent with the Project Documents.
(b) The Owners of all Parcels shall pave with asphalt or landscape
with ground cover, or a combination of both as provided in subsection (a)
above, the otherwise unimproved portions of their respective Parcels within
six (6) months after the first Occupant of any building constructed within
the Carmel Center Office Campus opens for business in its
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premises; PROVIDED, HOWEVER, the Owner of any Parcel on which construction of a
building and related improvements has commenced before or during such six (6)
month period shall not be bound by this subparagraph (b) as to such Parcel.
(c) At least ten (10) days before commencing construction of any
Improvements upon a Parcel, the Owner of the Parcel must deliver written notice
to the Board of its intent to commence construction, and the Association shall
have the right to remove any Association property from the Parcel.
8.6 LIGHTING THE COMMON AREA. The provisions of this Section shall be
subject to any resolution or resolutions to the contrary which may be adopted by
the Board from time to time. Lighting for the Common Area (other than lighting
necessary for security of the Center or portions thereof) shall be turned on at
least thirty (30) minutes before sunset (but not more than one (1) hour before
sunset) and shall remain on each day until at least 11:00 p.m., unless to do so
is contrary to any law, rule, statute or ordinance then in effect, in which
event, the standard so prescribed shall be adhered to while in effect. Lighting
representing not less than twenty-five percent (25%) of full intensity of the
Common Area lighting system, uniformly distributed throughout the Common Area,
shall remain on each day after 11:00 p.m. until dawn for security purposes,
unless all of the Owners consent to a lesser amount of lighting in writing, or
unless to do so is contrary to any law, rule, statute or ordinance then in
effect, in which event, the standard so prescribed shall be adhered to while in
effect. If "special" lighting (other than lighting necessary for security of the
Center) is required or if regular lighting is required for a time later than the
foregoing by any Owner or Occupant of the Center, then the electricity to
service such lighting requirements shall, if reasonably feasible, be separately
metered and all expenses thereof shall be paid by the Owner(s) or Occupant(s)
who requires the special service. If such separate metering is not reasonably
feasible, then the cost of such special lighting shall be determined and
equitably prorated based on the amount of time required by each such Owner or
Occupant and the Parcel Area of each Owner or Occupant in relation to the Parcel
Area of all of the Owners or Occupants requiring the special service; all such
prorated expenses shall be paid by the Owners or Occupants which require the
special service.
ARTICLE 9
EMINENT DOMAIN
In the event the whole or any part of the Center is taken by right of
eminent domain or any similar authority of law, the entire award for the value
of the land and improvements so taken shall belong to the Owner(s) of the
property so taken or to their Occupants, as their interest may appear, and no
other Owner of land in the Center shall claim any portion of such award by
virtue of any interest, easement or other right created by this Declaration;
PROVIDED, HOWEVER, any such other Owner may file a collateral claim with the
condemning authority over and above the value of the land and improvements being
so taken to the extent of any damage suffered by such Owner resulting from the
severance of the area so taken, provided such collateral claim does not diminish
the amount recoverable by the Owner(s) of the property so taken. In the event of
a partial taking, the Owner(s) of the portion of the Center so condemned shall
restore the remaining portion of the Center owned by such Owner(s), including
improvements in the
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Common Area, as nearly as possible to the condition existing just prior to such
condemnation, without contribution from the Owners of the area not so taken and
any condemnation award necessary therefore shall be held in trust and applied
for such purpose; PROVIDED, HOWEVER, that if any Mortgagee of any property in
the Center makes the requirement pursuant to a provision in a Mortgage that the
portion of the award representing compensation for severance damage to property
not taken be paid to the Mortgagee, then the party required to make such payment
to such Mortgagee shall not be obligated to restore the remaining portion of its
Parcel(s) so taken, except to the extent necessary to clear and pave for parking
and/or landscape in accordance with plans approved by the Committee.
ARTICLE 10
MUTUAL RELEASE
Each Owner, for itself and, to the extent it is legally possible for it to
do so, on behalf of its insurer, hereby releases the other Owners from any
liability for (a) any loss or damage to the property of each Owner located upon
or in the Center, including buildings or other improvements in the Center or the
contents thereof caused by fire or other risks of the type generally covered by
a standard policy insuring against "all risk" perils (also known as "special
causes of loss"); and (b) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is of the type generally covered by a
standard policy insuring against "all risk" perils (also known as "special
causes of loss").
ARTICLE 11
EASEMENTS
11.1 GRANTS OF RECIPROCAL EASEMENTS OVER COMMON AREAS. Each Owner, as
grantor, grants to and reserves from all other Owners, for the benefit of the
Association and each other Owner and their respective successors, assigns,
Occupants, customers and invitees, and for the benefit of the respective
Parcel(s) belonging to said other Owners, as grantees, the following
non-exclusive easements upon, over, under, across and through that portion of
the Common Area lying within the grantor's Parcel(s):
(a) For ingress and egress by vehicular and pedestrian traffic and
vehicle parking upon, over and through the Common Area and the entryways,
driveways, roads, pedestrian pathways and parking areas as may be
constructed thereon for those purposes, provided, that, Parcels L and M and
their Owners, Occupants, guests, customers and invitees shall have no
rights hereunder to use the Common Parking Areas;
(b) For grading and installation of utilities, landscaping, irrigation
and drainage facilities, and other Improvements, as necessary or
appropriate to complete the improvement of such Common Areas within the
Center pursuant to City approvals and other applicable Laws;
(c) To the Declarant and Association, and their agents and
representatives, an easement over all Common Areas for the purpose of
operation, maintenance, repair,
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reconstruction, restoration and landscaping, and, as necessary, to exercise
the rights and to perform the duties set forth in this Declaration.
(d) For the installation, maintenance, repair and replacement from
time to time of any monument or other freestanding sign permitted under
this Declaration and in accordance with the Sign Plan, including any
permitted Occupant identification signs which have been placed thereon or
made a part thereof;
(e) For construction staging, storage of construction materials and
equipment, temporary construction trailers, erection of ladders,
scaffolding and barricades upon Common Areas owned by the Owner during
construction, remodeling or repair of buildings and building appurtenances
upon such Owner's Parcel or Parcels; and
(f) For the purpose of entering onto the grantor's Parcel(s) to cure
any default or breach under this Declaration.
11.2 UTILITY EASEMENTS. There is hereby reserved for the use and benefit of
the Association and all Owners, non-exclusive easements within the Common Areas
for the location, installation and maintenance of utilities and drainage
facilities of convenience or necessity as may be requested or required by the
Association or any Owner provided that the grant thereof does not unreasonably
interfere with the normal operation, improvement, and use of the Common Area and
the buildings constructed within the Center, and no affirmative monetary
obligation is imposed upon the Owners (other than the Owner benefiting from such
easement). The Declarant (and the Board where there no longer is a Declarant)
shall have the authority to grant easements or rights-of-way for utilities over
the Common Areas as necessary to serve the Common Areas and/or the Parcels. The
Owner of any Parcel and any of his Occupants or licensees shall have the right
at all reasonable times to enter upon the land subject to said easements and to
install, maintain, operate, repair and service utilities and drainage facilities
thereon for the use and benefit of his Parcel; provided, however, any such
Person shall restore said land, at his own expense, as nearly as practicable, to
the same condition as existed prior to such entry and shall comply with the
provisions of Section 11.6. The Owner of any Parcel shall have the right to
assign the benefit and use of any such easement to any public or private utility
company, agency or district for the purpose of installing, operating, repairing,
servicing and maintaining utilities or drainage facilities and enforcing the
easement rights. For purposes hereof, "utilities" shall include electricity, gas
mains and lines, water distribution lines, storm water sewers, sanitary sewers,
telephone, fiberoptic, cable TV, and telegraph cables and lines, and other
similar or related facilities commonly regarded as utilities.
All storm drains, utility lines, transformers and meters shall be
maintained under the terms of this Declaration in a safe and good working
condition by the party responsible therefor. No grantee of a utility easement
shall in the use, construction, reconstruction, operation, maintenance or repair
of any storm drains, utility lines, transformers and meters in any way
interfere, obstruct or delay the business of the grantor of said easement or any
other Owner or Occupant, or the public access to and from said business or
interfere, obstruct or delay in any way the receiving of merchandise by said
grantor or any Owner or Occupant.
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11.3 CONSTRUCTION AND REPAIR. In addition to the foregoing and in
connection with any work performed upon a Parcel, incidental encroachments into
or upon the Common Area within that Parcel shall be permitted in connection with
the use of ladders, scaffolding, storefront barricades and similar facilities
resulting in temporary obstruction of portions of the Common Area, all of which
are permitted under this Section so long as their use is kept within reasonable
requirements of construction work expeditiously pursued. The Common Area may be
used for ingress and egress of vehicles transporting construction materials,
equipment and Persons employed in connection with any work provided for in this
Declaration and that Common Area within the Parcel upon which the construction
is taking place may also be used for temporary storage of material and vehicles
being used in connection with such construction, subject to all of the other
terms of this Declaration. Reasonable precautions and measures shall be taken so
that any disturbance to the use of the Common Area generated by such
encroachments will be minimized.
11.4 OBSTRUCTIONS WITHIN COMMON AREA. Except as otherwise expressly
provided in Sections 8.1, 8.4, 11.1 and 11.3, no walls, fences, barriers or
obstructions of any sort or kind shall be constructed or maintained in the
Center, or any portion thereof, by any Owner, its agent or Occupant, which
prevent or impair the use or exercise of any of the easements granted in this
Article 11, including, but not limited to, the ingress and egress of vehicular
and pedestrian traffic and parking within the Common Area and the Common Parking
Area; PROVIDED, HOWEVER, reasonable traffic controls (including speed bumps) as
may be necessary to guide and control the orderly flow of traffic may be
installed so long as access driveways to the Common Parking Area are not closed
or blocked and the traffic circulation pattern of the Common Area, as shown on
the Site Plan, is not changed or affected in a substantial way; AND PROVIDED
FURTHER, temporary fences made of security chain link may be erected to cordon
off areas of construction activity (including staging areas for equipment and
materials). The Owners and Occupants of the Parking Structure and the Exclusive
Parking Areas may also establish and install control devices and measures such
as a card entry system to the Parking Structure, restricted parking signs,
security gates, or other mechanisms to secure the Parking Structure and
Exclusive Parking Areas from unauthorized use and traffic.
11.5 RIGHT OF ENTRY BY DECLARANT, ASSOCIATION, BOARD. Declarant, the
Association, the Board, and their employees, agents, and contractors are hereby
granted the right to enter upon the Common Areas and upon any other portion of
the Center, to the extent reasonably necessary, to repair, improve, maintain and
operate the Common Areas and to exercise the rights and to perform the duties
imposed by this Declaration on the Board or the Association. Such right of entry
upon portions of the Center other than the Common Areas shall be exercised so as
to interfere as little as reasonably possible with the possession, use and
enjoyment of the Owner or Occupants of such portion and shall be subject to the
provisions of Section 7.4. The Association shall indemnify, protect, hold
harmless and defend the Owner and Occupants of each Parcel over which the
foregoing easements are reserved from and against all liabilities, losses,
liens, damages, claims, costs and expenses and arising from or caused by the use
of such Common Areas by the Declarant, Association, and Board.
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11.6 ENTRY BY OWNERS. In connection with any entry by an Owner onto any
Common Areas for purposes of exercising such Owner's rights pursuant to utility
or drainage easements pursuant to Section 11.2, or performing any other work on
the Common Areas (not including Exclusive Use Areas within such Owner's Parcel)
permitted under this Declaration or otherwise approved by the Board, such Owner
shall, at its expense:
(a) Maintain, at all times during such period of entry, commercial
general liability insurance with a combined single limit per occurrence of
at least $1,000,000, naming the Association (and the Owner and Occupants
of such Common Areas if not owned by the entering Owner) as additional
insureds, and providing that such coverage shall not be terminated or
modified without at least thirty (30) days' prior written notice to the
Board;
(b) Deliver to the Board a certificate evidencing that such insurance
is in full force and effect prior to entry onto such Common Areas;
(c) Perform all work in a safe manner, insure that no hazardous
condition remains on such Common Areas, and repair any damage thereto;
(d) Keep such Common Areas free and clear of all mechanics' or
materialmen's liens arising out of such Owner's activities;
(e) Comply with all applicable Laws in connection with such work;
and
(f) Indemnify, protect, hold harmless and defend the Association, the
Board and the Owner and Occupants of such Common Areas from and against all
liabilities, losses, liens, claims, damages, costs and expenses (including
attorneys' fees and court costs) for labor or services performed
or materials furnished to or for such Owner, or for personal injury, death
or property damage, arising out of or related to such Owner's entry or
breach of the provisions of this Section 11.6.
11.7 RESERVATION BY DECLARANT. The Declarant hereby reserves the right to
subsequently grant and create additional easements over one or more of the
Parcels owned by Declarant, including the Common Areas contained therein, for
the benefit of one or more other Parcels owned by Declarant provided, and upon
condition that, the grant of any such additional easements shall not materially
interfere or impede with the grant and use of the other easements established
hereunder.
11.8 TERMINATION OF FORMER DECLARATION AND CONFIRMATION OF TERMINATION OF
1990 GRANT OF EASEMENTS. The Former Declaration (defined in Recital F) is hereby
terminated in its entirety and is declared to be of no further force or effect;
PROVIDED, HOWEVER, the termination of the 1990 Grant of Easements (as defined in
Section X(e) of the Former Declaration), which is set forth in Section X(e) of
the Former Declaration, shall remain in effect (I.E., the 1990 Grant of
Easements are hereby confirmed previously terminated and of no further force or
effect). The easements granted in this Article 11 replace and supersede the
easements
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granted in that Grant of Easement dated February 12, 1990 and recorded in the
Office of the County Recorder at San Diego County on February 13, 1990 as
Document No. 1990-080110, and that Grant of Easement and the easements granted
thereunder are hereby terminated and declared to be of no further force or
effect.
ARTICLE 12
BUILDING MAINTENANCE
12.1 OWNER'S MAINTENANCE OBLIGATIONS. Subject to Section 12.3, each Owner
shall maintain, repair and replace (or cause to be maintained, repaired and
replaced) the following:
(a) All exterior surfaces and roofs of buildings and other structures
located on the Owner's Parcel(s), so that the exterior walls, exterior
signs, roofing materials and painted surfaces, are at all times maintained
in a first-class condition. All painted portions of building exteriors
shall be repainted no less frequently than once each five (5) years with
the same colors as such portions were originally painted or stained, unless
the Committee approves a change in color, which approval may be withheld in
the Committee's sole, absolute and unfettered discretion.
(b) All other portions of the Owner's Parcel, other than Common Area,
in a neat, clean, sightly and well-kept condition, free and clear of
weeds, debris and rubbish. All landscaping, other than Common Landscaping,
shall be maintained in a first-class condition and, as and when necessary,
replaced.
(c) Any and all monument signs on which the name of an Occupant of the
Owner's Parcel appears, even if the monument sign is located on another
Owner's Parcel.
(d) Those portions of facilities for water, sewer, gas, telephone,
electricity and other utilities serving such Owners' buildings so as to not
interfere, interrupt or otherwise impair delivery of utilities required for
maintenance of the Common Areas and by other buildings within the Center.
(e) Each Owner and or its Occupants shall also contract for the
removal of trash from its buildings.
Each Owner shall also adopt and maintain such standards of property maintenance,
appearance and housekeeping as are necessary or appropriate to keep and maintain
the foregoing in first-class condition, repair and appearance.
12.2 CLOSURE. The Owner of a Parcel shall, following the permanent closure
or cessation of any business operation which is expected to continue for any
extended period of time take such measures as may be reasonably required under
the circumstances to prevent vandalism, including preventing graffiti and
preventing windows from being broken, and to keep the vacant building or
premises in a reasonably attractive manner.
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12.3 REPAIR OR REPLACEMENT OF DAMAGED BUILDING. In the event of any damage
to or destruction of any building within the Center, the Owner of the Parcel
upon which such building is located shall, subject to the requirements and
limitations stated in this Declaration and any Mortgage encumbering such Parcel,
(a) repair, restore and rebuild such building as quickly as reasonably
practicable subject to the requirements and limitations stated in this
Declaration; (b) tear down and remove all parts of said damaged or destroyed
building then remaining and the debris resulting therefrom and otherwise clean
and restore the Building Area affected by such casualty to a level and clean
condition; or (c) any combination of the above in a manner satisfactory to the
Committee. The Owner of any Parcel on which damaged building improvements are
located shall be obligated to proceed with all due diligence hereunder, and such
Owner shall cause cleanup and/or reconstruction to commence within three (3)
months after the damage occurs and to be completed within twelve (12) months
thereafter, unless prevented by causes beyond such Owner's reasonable control.
ARTICLE 13
COMMON AREA MAINTENANCE
13.1 ASSOCIATION MAINTENANCE. Upon completion of construction of the
Improvements on a Parcel (which as of the date of this Declaration includes only
Parcel C), the Association shall manage, maintain, repair and replace (or cause
to be managed, maintained, repaired and replaced) the Common Area on such Parcel
(except any portion thereof which is an Exclusive Use Area) and all Improvements
within the Common Area on such Parcel (except in any portion of the Common Area
which is an Exclusive Use Area) in good repair and appearance, including, but
not limited to, contracting for and paying costs of or related to (i) utility
services provided to such Common Area including, but not limited to, water,
electricity and natural gas (if applicable); (ii) sweeping and cleaning
(including steam cleaning) the parking areas, sidewalks and other hardscape, as
necessary; (iii) repairing and replacing asphalt paving using materials equal to
or better than those originally installed; (iv) bumpers; (v) parking lot
striping and directional signs; (vi) light bulbs and light standards; (vii)
perimeter walls; (viii) electrical lines, gas lines (if applicable), storm
drains, water lines and sanitary sewers which serve such Common Area or which
are within such Common Area; (ix) planters, landscaping and sprinkler systems
comprising the Common Landscaping; (x) hiring and supervising private security,
if any; (xi) the insurance for which Section 13.2 provides; and (xii) all other
items of maintenance, repair or replacement that may be needed from time to time
to maintain such Common Area properly and in a first-class condition.
The foregoing notwithstanding, the following exceptions shall apply:
(a) During the period of construction or repair of any building on any
Parcel, the Owner of such Parcel shall maintain (or cause to be maintained)
those portions of the Common Area within its Parcel, if any, which are
affected by such building construction or repair and shall be responsible
for controlling blowing dust and debris resulting from such construction or
repair activity.
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(b) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving more than one
building with different Owners and lying beneath the Common Area (e.g., an
electric trunk line from which individual lateral lines are routed to serve
different individual buildings), the Association will perform any required
maintenance, repair or replacement (or cause the same to be performed), and
will bill each Owner's share of the cost of the work to the Owners of the
Parcels whose buildings are served by the facilities. Each Owner's share of
the total bill shall be determined by multiplying the total bill by a
fraction, the numerator of which is the Parcel Area of the Owner's Parcel
or Parcels served by the facility, and the denominator of which is the
Parcel Area of all Parcels served by the facility. Each Owner shall be
responsible for maintenance and repair of the lateral lines serving his
Parcel or Parcels.
(c) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving one or more
buildings owned by the same Owner and lying beneath the Common Area, the
Association will perform any required maintenance, repair or replacement
(or cause the same to be performed), and will bill the Owner of the
Parcel(s) whose building(s) is served by the facilities. With the consent
of the Association, the Owner of the affected building or buildings may
contract directly for any such required maintenance, repair or replacement
work to be performed at the sole cost and expense of such Owner.
13.2 COMMON AREA INSURANCE.
(a) As part of its obligation to maintain the Common Area within
the Center except those portions designated Exclusive Use Areas, the
Association shall at all times maintain in force and effect commercial or
comprehensive general liability insurance insuring the Association and, as
additional insureds, all Owners and Eligible Occupants who now or hereafter
own or hold any Parcel or any qualifying leasehold estate (I.E., qualifying the
lessee thereunder to be an Eligible Occupant) or other interest therein as
their respective interests may appear (provided that the Association is given
prior written notice of such interest), against claims for bodily injury,
personal injury, death or property damage occurring in, upon or about the
Common Area. Such insurance shall be written with an insurer licensed to do
business in the State of California. All such insurance shall be primary
coverage, endorsed to name as additional insureds all Owners and Eligible
Occupants under leases of which the Association has been notified in writing,
and shall not require that any other insurance be called upon to contribute
to a loss under such coverage, and shall have liability limits of not less
than Three Million Dollars ($3,000,000) combined single limit coverage for
bodily injury, personal injury, death and/or property damage arising out of
any single occurrence, which amount shall be reviewed annually and changed to
reflect the current practice in mixed use commercial centers in San Diego
County, California which are of a similar size and which have a similar mix
of Occupants. The Association shall cause certificates of insurance to be
issued by the insurer to each of the Owners and Eligible Occupants of whom
the Association has been notified in writing, certifying that such insurance
is in full force and effect and shall not be canceled or materially amended
without thirty (30) days prior written notice thereof to each of such Owners
and Eligible Occupants.
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(b) Association shall obtain and maintain in force property damage
insurance under a standard form policy or policies of all-risk insurance
then in use in California, covering retaining walls and other walls,
lighting facilities and lighting standards, landscaping (in the reasonable
business judgment of the Association), and other improvements in the Common
Area (excluding Exclusive Use Areas);
(c) Worker's compensation insurance, as required by law;
(d) Association Directors' and Officers' errors and omissions
insurance, in form and amount determined by the Board; and
(e) Insurance against any other risk which the Board considers
appropriate.
13.3 ASSOCIATION'S RIGHT TO REPAIR NEGLECTED PARCELS. In addition to
maintaining the Common Area, if an Owner fails to maintain the Improvements, and
other portions of Owner's Parcel so as to violate Section 12.1, then the
Association, after approval of the Board, shall have the right, through its
agents, contractors and employees, to enter onto the Owner's Parcel to repair,
maintain and restore the Parcel, any Exclusive Use Areas, and the exteriors of
any building and other Improvements erected thereon. However, entry into a
Building Area or Exclusive Use Area may be made only after not less than five
(5) business days notice has been given to the Owner and any Eligible Occupant.
Entry shall be made with as little inconvenience to the Owner and Occupants as
possible and any damage caused thereby shall be repaired by the Association at
its cost and expense. The cost of such exterior maintenance shall be levied as a
Reimbursement Assessment against such Parcel pursuant to Section 3.8.
13.4 PROPERTY MANAGEMENT COMPANY. Nothing in this Article 13 or in this
Declaration shall preclude or be interpreted as precluding the Association from
retaining a "managing agent" within the meaning of Section 1363.1 of the
California CIVIL CODE, as it may be amended or replaced from time to time. In
the event the Association so retains such a "managing agent", then the "managing
agent" and the Association shall make all arrangements necessary or proper to
ensure that funds accepted or received by the "managing agent" and belonging to
the Association are deposited and handled in compliance with Section 1363.2 of
the California CIVIL CODE, as it may be amended or replaced from time to time.
The Association may retain the Declarant or an affiliate of the Declarant as
managing agent.
ARTICLE 14
THE ASSOCIATION
14.1 ORGANIZATION. The Association is a California nonprofit mutual benefit
corporation.
14.2 DUTIES. The Association shall be charged with the duties set forth in
the Articles, the Bylaws and this Declaration, including, but not limited to,
the following:
(a) ASSESSMENTS. The Association shall fix, levy, collect and
enforce Assessments as further described in Article 3.
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(b) COMMON AREAS. The Association shall maintain, repair,
replace, restore, operate, control and manage the Common Areas (excluding
Exclusive Use Areas) and all facilities, Improvements and equipment located
thereon, as further described in Article 13, except to the extent such
maintenance has been assumed by a governmental agency or public or private
utility, and except as otherwise set forth herein.
(c) PAYMENT OF EXPENSES. The Association shall pay all expenses
and obligations incurred by the Association in the conduct of its business,
including, without limitation, all licenses, taxes or governmental charges
levied or imposed against the property of the Association.
14.3 POWERS. The Association shall have the following powers, rights and
duties, in addition to those provided elsewhere in this Declaration, the
Articles and the Bylaws and those powers granted to a nonprofit mutual benefit
corporation pursuant to the California Corporations Code:
(a) ACQUISITION OF PROPERTY. The Association shall have the power
to acquire (by gift, purchase or otherwise), own, hold, improve, operate,
maintain, convey, sell, lease, transfer, dedicate for public use or otherwise
dispose of real or personal property in connection with the affairs of the
Association.
(b) ASSESSMENTS, LIENS. The Association shall have the power to
levy and collect assessments pursuant to Article 3 and to perfect and enforce
liens in accordance with the provisions of Article 3.
(c) BORROWING. The Association shall have the power to borrow
funds to pay costs of operation, secured by assessment revenues due for
succeeding years or by assignment or pledge of rights against delinquent Owners;
provided, however, that the affirmative vote or written consent of Declarant and
other Owners holding a majority of the total voting power of the Class A Members
shall be required to borrow, during any calendar year, in excess of an amount
equal to Ten Thousand Dollars ($10,000) multiplied by the number of Parcels
within the Center subject to assessment. Such borrowing may be from Declarant if
Declarant agrees to advance funds; and, in such event, Declarant shall receive,
as interest, no more than the published Wall Street Journal Prime Rate, as
modified from time to time, plus two percent (2%).
(d) CONTRACTS. The Association shall have the power to contract
for goods and/or services for the Common Areas or for the performance of any
power or duty of the Association, subject to limitations set forth elsewhere in
this Declaration, the Articles or the Bylaws. The Association's power to
contract shall include, but is not limited to, the right to enter into
agreements with one or more other owners' associations for the purposes
described in this Section.
(e) DELEGATION. The Association shall have the power to delegate
its authority and powers to committees, officers or employees of the
Association.
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(f) ENFORCEMENT. The Association shall have the power to enforce
this Declaration pursuant to the provisions hereof.
(g) SECURITY SERVICES. The Association shall have the power to
provide, or to contract for the provision of, security patrols or other security
measures, or both, as the Board deems necessary.
(h) VARIANCES. The Board, acting for the Association, shall have
the power to grant reasonable variances from the provisions of this Declaration
from time to time, as the Board may deem, in its sole discretion, to be in the
best interests of the Center, in order to overcome practical difficulties and to
prevent unnecessary hardship in the application of the provisions contained
herein; provided, however, that: (a) a variance shall not materially injure any
of the Parcels or Improvements in the Center; and (b) the Owner seeking the
variance shall otherwise be subject to and conform with all applicable
governmental laws, ordinances, regulations and requirements. No variance granted
pursuant to the authority granted herein shall constitute a waiver of any
provision of this Declaration as applied to any person or real property.
14.4 ELECTION OF NEW BOARD OF DIRECTORS. Concurrently with the recordation
of this Declaration, the Members shall elect a new Board of Directors of the
Association consisting of three (3) directors who shall hold office until the
next annual meeting of Members pursuant to Section 14.7.
14.5 SUBSEQUENT BOARD OF DIRECTORS. At each annual meeting of Members, a
new Board consisting of three (3) directors shall be elected, and such Board
shall serve until the next annual meeting. The Bylaws may provide for staggered
terms and lengths of terms for directors different from those initially set
forth in this Declaration and may provide for a greater or lesser number of
directors than set forth herein; provided, however, in no event shall there be
more than seven (7) directors or less than three (3) directors. The Board shall
undertake all duties and responsibilities of the Association and the management
and conduct of the affairs thereof, except as expressly reserved herein to a
vote of the Members.
14.6 PERSONAL LIABILITY. No member of the Board, or of any committee of the
Association, or any officer or manager of the Association shall be personally
liable to any Owner, or to any other party, including the Association, for any
damage, loss or prejudice suffered or claimed on account of any act, omission,
error or negligence of any such Person.
14.7 ANNUAL MEMBERSHIP MEETINGS. The Association shall hold annual meetings
of the Members in accordance with the Bylaws of the Association.
ARTICLE 15
APPROVAL OF OWNERS AND NOTICES
All notices, demands or requests for consent or approval of any kind which
the Association or any Owner or Occupant is required or desires to give or make
upon the
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Association or any other Owner or Occupant shall (a) be in writing; (b) specify
the Section of this Declaration which requires or authorizes that such notice be
given or requires that such consent or approval be obtained; and (c) be given or
made (subject to the right of the Association or any Owner or Occupant to
designate a different address by giving notice of such change in the manner
provided in this Section) by personal delivery, private express courier, or by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed, in the case of Declarant and the consenting parties, as
follows:
DECLARANT: KR-Carmel Partners, LLC
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
PIAZZA PARTNERS, L.P.: Piazza Partners, L.P.
c/o The Allen Group
401 "B" Street, Suite 2150
San Diego, CA 9101
Attention: Mr. David L. Dick
CARMEL VALLEY, LLC: Carmel Valley, LLC
___________________________________
___________________________________
Attention:_________________________
ACACIA GASOLINE AND CAR WASH Acacia Gasoline and Car Wash of
OF CARMEL VALLEY, LLC Carmel Valley, LLC
___________________________________
___________________________________
___________________________________
Attention:_________________________
RFS FINANCING PARTNERSHIP, L.P.: RFS Financing Partnership, L.P.
___________________________________
___________________________________
Attention:_________________________
ASSOCIATION: Carmel Center Association
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
When given in the manner prescribed in this Section, all notices, demands
or requests for consent or approval shall be deemed given, received, made or
communicated on the date
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personal delivery is effected or, if mailed, on the delivery date or the date on
which delivery is refused by the addressee.
ARTICLE 16
MODIFICATION PROVISION
This Declaration may not be modified in any respect whatsoever, or
rescinded, in whole or in part, except by written instrument duly recorded in
the Office of the County Recorder of San Diego County, after first being duly
signed and acknowledged by Declarant for so long as there is a Declarant, and by
those Owners (which may include Declarant) holding at least seventy-five percent
(75%) of the Members' voting power. Notwithstanding the foregoing, any
modification or rescission of any of the provisions of Section 8.2 regarding the
Common Area and the provisions of Article 11 regarding the grant of easements
with respect to the Common Area shall require the written consent of those
Owners as set forth in Section 8.2.
ARTICLE 17
NOT A PUBLIC DEDICATION
Nothing contained in this Declaration shall be deemed to be a gift or
dedication of any portion of the Center to the general public or for the benefit
of the general public or for any public purposes whatsoever, it being the intent
of Declarant that this Declaration shall be strictly limited to and for the
purposes expressed in this Declaration. The right of the public or any Person to
make any use whatsoever of the Center or any portion thereof (other than any use
expressly allowed by a written or recorded map, agreement, deed or dedication)
is by permission and subject to control of the Owners.
ARTICLE 18
INJUNCTIVE RELIEF
In the event of any violation or threatened violation by any Owner or
Occupant of any portion of the Center of any of the terms, covenants, conditions
and obligations of this Declaration, in addition to the other remedies for which
this Declaration provides, any or all of the Owners shall have the right to
enjoin such violation or threatened violation in a court of competent
jurisdiction.
ARTICLE 19
BREACH SHALL NOT PERMIT TERMINATION
No breach of this Declaration shall entitle any Owner to cancel, rescind or
otherwise terminate this Declaration, but such limitation shall not affect in
any manner any other rights or remedies which such Owner may have under this
Declaration by reason of any breach of this Declaration. Any breach of any of
the covenants, conditions or restrictions set forth in this Declaration,
however, shall not defeat or render invalid the lien of any Mortgage made in
good faith and for value, but such covenants, conditions or restrictions shall
be binding upon and be effective against such Owner of any of said property or
any portion thereof whose title thereto is acquired by foreclosure, trustee's
sale or otherwise.
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ARTICLE 20
INDEMNITY BY OWNERS
20.1 INDEMNITY. Each Owner shall indemnify, protect, defend and hold the
Association and the other Owners harmless from and against all claims, expenses,
liabilities, loss, damage and costs, including any actions or proceedings in
connection therewith and including reasonable attorneys' fees and costs,
incurred in connection with, arising from, due to or as a result of the death of
or any accident, injury, loss or damage, howsoever caused, to any Person or loss
or damage to the property of any Person as shall occur on the indemnifying
Owner's Parcel (excluding Common Areas), except claims resulting from the
negligence or willful act or omission of (a) the Association or the indemnified
Owner, whichever is applicable; (b) any Occupant of the indemnified Owner's
Parcel (including such Occupant's agents, servants and employees); or (c) the
agent, servants or employees of such indemnified Owner, wherever such negligence
or willful act or omission may occur.
20.2 BUILDING AREA LIABILITY INSURANCE. Each Owner shall at all times
during the term of this Declaration maintain or cause to be maintained
commercial or comprehensive general liability insurance covering the Owner's
Parcel (excluding Common Area) insuring against the risks of bodily injury,
property damage and personal injury liability, with a limit of not less than
Three Million Dollars ($3,000,000) per occurrence, which amount shall be
reviewed and adjusted by the Board every three (3) years for increases
recommended by insurance industry-recommended standards for mixed use commercial
centers in San Diego County, California.
ARTICLE 21
SEVERABILITY
If any provision of this Declaration is held by a court of competent
jurisdiction to be invalid, the invalidity of such provision shall not affect
the validity of the remaining provisions of this Declaration, and all remaining
provisions shall continue unimpaired, in full force and effect.
ARTICLE 22
ENFORCEMENT AND REMEDIES
22.1 RIGHT TO ENFORCE. The Declarant or the Association shall have the
right to enforce, by all appropriate legal and equitable proceedings, all
conditions, covenants, restrictions, reservations, liens, and charges now or
hereafter imposed by the provisions of this Declaration. It is hereby agreed
that money damages are an inadequate remedy for breach of any of the conditions,
covenants and restrictions contained herein, other than a default in the payment
of any assessment when due. Every Owner and Occupant of a Parcel subject to
these restrictions expressly waives the benefit of California Code of Civil
Procedure Section 731 (a) and any other comparable statute or rule, and agrees
that such violation or breach may be enjoined whether or not monetary damages
may be provided or provable. Prior to commencing litigation, the requirements of
California Civil Code Section 1354 relating to alternative dispute resolution
shall be satisfied.
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22.2 OWNER'S REMEDIES. After written request to the Association to prevent
any violation of this Declaration, and failure to act by Declarant or the
Association within fifteen (15) days after receipt of such request, any Owner
shall additionally have all enforcement rights provided for in this Declaration.
In addition, any other party to whose benefit this Declaration inures shall have
the right, in the event of violation or breach of this Declaration, to prosecute
a proceeding at law or in equity against the Person or Persons who have violated
or are attempting to violate this Declaration, to enjoin or prevent them from
doing so, to cause said violation to be remedied and to recover damages for said
violation.
22.3 WAIVER. The failure of any Owner, Declarant or the Association to
enforce any provision of this Declaration shall in no event be deemed a waiver
of the right to do so thereafter, and neither any Owner, Declarant nor the
Association shall have any liability for such failure of such Owner, Declarant
or the Association to enforce any provision of this Declaration.
ARTICLE 23
LITIGATION EXPENSES
If any Owner or the Association brings an action against any other Owner or
Occupant by reason of a breach or alleged violation of any covenant, term or
obligation of this Declaration, or for the enforcement of any provision of this
Declaration or otherwise arising out of this Declaration, the prevailing party
in such action shall be entitled to its cost of suit and reasonable attorneys'
fees, which shall be made part of any judgment rendered in such action.
ARTICLE 24
NO ASSIGNMENT OR TRANSFER
The rights, powers, duties and obligations conferred upon the Owners
pursuant to this Declaration shall not at any time be transferred or assigned by
any Owner, except (a) in the case of the rights, powers, duties and obligations
of Declarant, by Declarant pursuant to the definition of "Declarant" set forth
in Article 1; or (b) in the case of any Owner, (i) through a transfer of the
Owner's interest in its Parcel in the manner provided in Article 25, or (ii) to
an Eligible Occupant pursuant to Section 2.1.
ARTICLE 25
SALE BY OWNER
Upon the sale, transfer, conveyance or assignment by any Owner of its
right, title and interest in its Parcel, the following shall apply:
25.1 NOTICE. The transferring Owner shall give prompt written notice of the
sale, transfer, conveyance or assignment to the Association, Declarant and each
other Owner. Such notice shall set forth the name of the transferee and the
transferor, the description of the affected Parcel, the nature of the interest
transferred, the transferee's mailing address and the date of transfer. Prior to
receipt of such notification, any and all communications required or permitted
to be given under the Project Documents shall be deemed to be duly given to the
transferee if duly and timely given to said transferee's transferor.
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25.2 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Each Owner and Occupant, and every
other person who now or hereafter owns or acquires any right, title, estate or
interest in or to any portion of the Center, by acceptance of a deed, lease or
other interest therein, shall be conclusively deemed to have consented and
agreed to hold such title, leasehold or interest subject to and to comply with
every covenant, condition and restriction contained herein and to the rights of
Declarant and the Association hereunder, whether or not any reference to this
Declaration is contained in the deed, lease or other instrument by which such
person acquired said interest in the Center. Every provision of this
Declaration, regardless of its characterization herein, shall be deemed a
covenant, condition, restriction, reservation, easement or servitude, as the
circumstances may require, to permit the enforcement thereof and to carry out
the intent of this Declaration.
25.3 RELEASE OF OWNER. A transferring Owner shall be released from all
obligations of this Declaration as of the effective date of the transfer;
provided that with respect to the period before the effective date of the
transfer, such Owner is not in default in the performance of any duties or
obligations arising under this Declaration or in the payment of any amounts due
and payable under this Declaration.
25.4 LIABILITY OF TRANSFEREE. In no event shall any transferee of any Owner
be liable for any default of the transferring Owner under this Declaration which
occurred prior to the effective date of the transfer; PROVIDED, HOWEVER, nothing
contained in this Section shall affect the existence, priority, validity or
enforceability of any lien placed upon the transferred Parcel or portion thereof
pursuant to Section 3.9.
ARTICLE 26
TERM OF DECLARATION
This Declaration shall continue for a period of fifty (50) years and
thereafter year to year, unless, before the expiration of the term (as it may be
so extended), this Declaration is terminated or modified by written instrument
duly signed and acknowledged by the Declarant, if the Declarant still owns a
Parcel within the Center, and Owners (which may include Declarant) holding at
least seventy-five percent (75%) of the Members voting power, and such
instrument is recorded in the Office of the County Recorder of San Diego County,
California. This Declaration shall terminate upon the expiration of the term
following such recordation. Notwithstanding any such termination, the provisions
of Section 8.2 regarding the Common Area and the provisions of Article 11
regarding the grant of easements with respect to the Common Area shall survive
and remain in full force and effect unless terminated or otherwise modified by
the requisite written consent of the Owners as set forth in Section 8.2.
ARTICLE 27
MISCELLANEOUS
27.1 CAPTIONS. Captions and Section headings, where used in this
Declaration, are for convenience of reference only, are not intended to be a
part of this Declaration and in no way
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define, limit, amplify, change, alter or describe the scope or intent of the
particular paragraphs to which they refer.
27.2 GENDER. For the purpose of this Declaration, the neuter gender
includes the feminine or masculine and the singular number includes the plural.
27.3 DECLARANT'S RESERVED RIGHTS. Wherever it appears in this Declaration
that the Declarant has the right to waive compliance with certain provisions,
the right to approve or deny certain matters or the right to exercise its
discretion in various areas, these rights of the Declarant are expressly
reserved or retained by the Declarant, and all of the provisions of this
Declaration are subject to such retained and reserved rights.
27.4 EXHIBITS. All exhibits referred to herein are attached hereto and
incorporated by reference.
27.5 GOVERNING LAW. This Declaration shall be governed, construed and
enforced in accordance with the laws of the State of California.
27.6 MORTGAGE PROTECTION. No breach of this Declaration shall affect,
impair, defeat or render invalid the lien of any Mortgage now or hereafter
executed in good faith and for value upon any part of the Center. However, if
any portion of the Center is sold under a foreclosure of any Mortgage or is
conveyed to the party so secured in lieu of foreclosure, any purchaser at such
sale, and his successors and assigns, shall hold any and all property so
acquired subject to all of the restrictions and other provisions of this
Declaration. Such a purchaser shall not be obligated to cure any preexisting
breach of this Declaration which is non-curable by payment of money (subject to
the provisions of Section 3.11 subordinating the lien of delinquent assessments
to the lien of a first priority Mortgage) or of a type which is not practical or
feasible to cure. Any loan to facilitate the resale of any portion of the
Property after a foreclosure sale or deed in lieu of foreclosure is a loan made
in good faith and for value. If a Mortgagee delivers written notice of its
Mortgage to the Board together with a request for notices of default with
respect to the Parcel or Parcels encumbered by the Mortgage, the Association
shall deliver copies of all such notices of default to such Mortgagee (a
"Requesting Mortgagee") concurrently with delivery to the Owner or Owners. A
Requesting Mortgagee shall also be entitled to timely written notice of any
destruction, taking or threatened taking that affects a material portion of the
Common Area (including without limitation any Common Parking Area) benefiting a
Parcel securing the Mortgage, and any lapse, cancellation or material
modification of any insurance policy maintained by the Association. Mortgagees
are hereby authorized to furnish information to the Board concerning the status
of any Mortgage. Nothing contained in this Declaration or the other Project
Documents shall give the Association, any Owner, or any other party priority
over the rights of a first Mortgagee with respect to distributions of insurance
proceeds or condemnation awards for losses to or a taking of a Parcel, or any
portion thereof, encumbered by a Mortgage held by such Mortgagee.
27.7 MUTUALITY, RECIPROCITY; RUNS WITH LAND. This Declaration is made for
the direct, mutual and reciprocal benefit of each and every Parcel; shall create
mutual, equitable servitudes upon each Parcel in favor of every other Parcel;
shall create reciprocal rights and
-44-
EXHIBIT F
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
obligations between and among the respective Owners during their respective
periods of ownership and privity of contract and estate between and among all
grantees of each Parcel, their respective heirs, successors and assigns; and
shall, with respect to the Owner of each Parcel, its heirs, successors and
assigns during their respective periods of ownership, operate as covenants
running with the land, for the benefit of all other Parcels.
IN WITNESS WHEREOF, the Owners have signed and made this Declaration as of
the date first above written.
-45-
EXHIBIT F
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DECLARANT KR-CARMEL PARTNERS, LLC, a Delaware
limited liability company
By: Kilroy Realty, L.P., a Delaware limited
partnership, Managing Member
By: Kilroy Realty Corporation, a
Maryland corporation, its
General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIAZZA PARTNERS, L.P. PIAZZA PARTNERS, L.P.,
a California
limited partnership
By: Allen Development, Inc., a California
corporation, Its General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-46-
EXHIBIT F
-51-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ACACIA GASOLINE AND CAR WASH ACACIA GASOLINE AND CAR WASH OF
OF CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RFS FINANCING PARTNERSHIP, L.P. RFS FINANCING PARTNERSHIP, L.P., a
Tennessee limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSENT OF ASSOCIATION
The Association hereby manifests its assent to the foregoing Declaration as
of the date of its recordation in the Office of the County Recorder of San Diego
County, California.
CARMEL CENTER ASSOCIATION, a California
nonprofit mutual benefit corporation
-47-
EXHIBIT F
-52-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-48-
EXHIBIT F
-53-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-49-
EXHIBIT F
-54-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ____________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-50-
EXHIBIT F
-55-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-51-
EXHIBIT F
-56-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-52-
EXHIBIT F
-57-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-53-
EXHIBIT F
-58-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-54-
EXHIBIT F
-59-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SUBORDINATION AGREEMENT
_______________________________________________________, being the
beneficiary under that certain deed of trust dated _____________________, 199__
and recorded in the Office of the County Recorder of San Diego County,
California on ____________, 1999__ as Document No. ________________, hereby
declares that the lien and charge of said deed of trust are and shall be
subordinate and inferior to the Agreement Between Landowners Including
Covenants, Conditions and Restrictions and Grants of Easements for Carmel Center
and Including Termination of Both Former Declaration and Prior Grants of
Easements to which this Subordination Agreement is attached.
[NAME OF LENDER]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
EXHIBIT F
-60-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "A"
SITE PLAN OF THE CENTER
[MAP]
EXHIBIT F
-61-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTIONS OF PARCELS COMPRISING THE CENTER
PARCEL A: Parcel 2 of Parcel Map 15957 (NW corner site)
PARCEL B: Parcel 1 of Parcel Map 17382 (office building - west of parking
garage)
PARCEL C: Parcel 1 of Parcel Map 18098 (hotel)
PARCEL D: Parcel 2 of Parcel Map 18098 (Frank's pad immediately east of
hotel)
PARCEL E: Parcel 1 of New Parcel Map (parking garage)*
PARCEL F: Parcel 6 of New Parcel Map (parking garage)*
PARCEL G: Parcel 7 of New Parcel Map (parking garage)*
PARCEL H: Parcel 2 of New Parcel Map (office building - most westerly)*
PARCEL I: Parcel 3 of New Parcel Map (office building)*
PARCEL J: Parcel 4 of New Parcel Map (office building)*
PARCEL K: Parcel 5 of New Parcel Map (office building - most easterly)*
PARCEL L: Lot 7 of Parcel Map 13138 (gas station - car wash)
PARCEL M: Lot 8 of Parcel Map 13138 (Frank's pad at far east end of site)
EXHIBIT "B"
EXHIBIT F
-62-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
* - These Parcels are presently described as Lots 1 through 6 and 9 of
Piazza Carmel II, Unit No. 1, in the City of San Diego, County of San Diego,
State of California, according to map thereof No. 13138, filed in the Office of
the County Recorder of San Diego County, September 13, 1994.
EXHIBIT F
-63-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "C"
TABLE OF PARCEL AREAS (PRELIMINARY)
PARCEL A: 47,568 square feet of Parcel Area
PARCEL B: 104,326 square feet of Parcel Area
PARCEL C: 168,839 square feet of Parcel Area
PARCEL D: 18,861 square feet of Parcel Area
PARCEL E: N/A (Parking Garage) square feet of Parcel Area
PARCEL F: N/A (Parking Garage) square feet of Parcel Area
PARCEL G: N/A (Parking Garage) square feet of Parcel Area
PARCEL H: 756,677 (total for Parcels H-K) square feet of Parcel Area
PARCEL I: _________________ square feet of Parcel Area
PARCEL J: _________________ square feet of Parcel Area
PARCEL K: _________________ square feet of Parcel Area
PARCEL L: 76,404 square feet of Parcel Area
PARCEL M: 58,501 square feet of Parcel Area
----------------------------
Total Parcel Area 1,229,176 square feet
Subject to Assessment
EXHIBIT F
-64-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
HVAC AND ELECTRICAL STANDARDS
HEATING, VENTILATING & AIR CONDITIONING
Description of System: The system design
shall include grade-mounted water source
heat pump central plant with associated
pumps, boiler, valves, pipes and fittings.
Capacity and number of units as indicated
on the plans. Supply and return water loop
on each floor included as part of Base,
Shell and Core.
A. One (1) water source cooling tower,
boiler and pumps connected to below grade
supply and return water loop to building.
B. Air Distribution: The sheet metal ducts
will all be designated and installed in
accordance with A.S.H.R.A.E. and
S.M.A.C.N.A. recommendations. The supply
diffusers in the core will be a
combination of modular ceiling lay-in
type and fixed linear type.
C. Controls: The controls will be a
electronic type and give individual zone
control.
D. Exhaust System: Provide all toilet rooms
with acceptable exhaust systems with
quiet operation. Exhaust to roof.
Exhausting to meet code requirements.
Provide exhaust in stair enclosures as
required by code.
E. The electrical contractor shall provide
all starters, connections and live
voltage wiring and conduit required in
the Base, Shell and Core space. All work
shall be done in accordance with all
required ordinances.
ELECTRICAL
Main Service Main service to Building to be
277/480 volt, 3 phase 4 wire, 1200 amp
located within an electric room with
distribution and subpanel to each floor as
a part of the Base, Shell and Core
improvements.
Building Power and Lighting Electrical work shall include metering
facilities, conduit, conductors, main
switch board, subpanels, branch circuits,
J-boxes, lighting fixtures, wall light
switches, power receptacles, etc. for the
site common areas and Base, Shell and Core
improvements.
Power & Utility Core Electrical for the Base, Shell and Core
improvements shall include a service and
distribution including a conduit,
conductors, switch board, subpanels, branch
circuits, J-boxes, lighting fixtures, wall
light switches, power receptacles, etc.
Power for Equipment Power wiring and connection to air
conditioning equipment as well as control
wiring and control devices shall be
provided.
Telephone & Data Communication Telephone and data communication cabling
provided by Tenant.
Installation All electrical work to be in accordance
with applicable codes. All necessary
outlets, conduit, wiring, trenching and
concrete encasing shall be provided as
required.
Interior Lighting Fluorescent lighting (exit corridor,
janitor closet): Provide 2' x 4' recessed
fixtures with parabolic lens and electronic
ballast in suspended ceilings. Provide
recessed down lighting in lobbies. Provide
1' x 4' recess mounted fixtures at toilet
rooms, electrical and telephone rooms. All
lighting in lobby and exit enclosures to be
controlled by wall mounted motion sensors
with override switch as required by Title
24.
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-1
PEREGRINE SYSTEMS CORPORATE CENTER
JANITORIAL SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 6
--------------
SPECIFICATIONS
ENTRANCE LOBBIES/BUILDING CORRIDORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum carpets completely.
3. Empty all waste containers and spot-clean.
4. Spot clean carpeted floor surface.
5. Dust ledges within reach.
6. Damp mop spillage as needed.
7. Empty cigarette receptacles.
8. Spot clean walls and doors.
9. Clean entrance mats as necessary.
10. Clean all metal door frames and thresholds.
11. Clean building directory board glass.
12. Vacuum entrance mats as necessary.
13. Only designated lights will be left on.
Weekly Services:
1. Spot clean walls, woodwork, and doors.
2. Perform high dusting.
3. Edge all carpets.
4. Polish entrance metals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 6
--------------
SPECIFICATIONS - CONTINUED
5. Dust all baseboards.
6. Dust all horizontal surfaces.
Monthly Services:
1. Dust and vacuum air supply and exhaust diffusers.
2. Vacuum all furniture in lobby area.
ELEVATORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum and spot clean carpets.
3. Clean and polish doors.
4. Clean and polish interior of cab.
5. Vacuum tracks thoroughly.
6. Clean all bright work.
Weekly Services:
1. Polish all bright work.
2. Clean tracks thoroughly.
Monthly Services:
1. Vacuum ceiling grate.
STAIRWAYS AND LANDINGS
Daily Services: Five (5) Days Per Week
1. Police area to remove refuse.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 3 OF 6
--------------
SPECIFICATIONS - CONTINUED
2. Damp mop to remove spillage as needed.
3. Spot sweep stairs as needed.
Weekly Services:
1. Sweep stairways and landings.
2. Dust all handrails.
3. Wet mop as needed.
OFFICE/TENANT AREAS
Daily services: Five (5) Days Per Week
1. Sweep with chemically treated dust-mop or vacuum all high traffic
areas.
2. Spot clean composition floors.
3. Dust desks, chairs, and all other office furniture.
4. Clean all ash trays and sand urns.
5. Empty all waste baskets and carry trash to pick up area.
6. Spot clean partition door glass.
7. Clean and polish drinking fountains.
8. Install plastic waste basket liners furnished by customer, replace as
necessary.
Weekly Services:
1. Dust ledges and window sills.
2. Perform High Dusting.
3. Dust picture frames and book shelves.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 4 OF 6
--------------
SPECIFICATIONS - CONTINUED
4. Remove fingerprints from woodwork, walls and partitions.
5. Dust vertical surfaces of office furniture.
6. Dust chair rungs and furniture legs.
7. All in suite carpet to be vacuumed completely.
8. Spot clean around wall switches.
9. Spot clean doors, door frames, and counters.
10. Dust all horizontal surfaces.
11. Spot clean all glass partitions.
Monthly Services:
1. Perform high dusting, i.e. door sashes and tops of partitions.
2. Wipe down plastic and leather furniture.
3. Dust venetian blinds.
4. Dust and vacuum ceiling and wall vents.
RESTROOM AND LOUNGES
Daily Services: Five (5) Days Per Week
1. Empty and wipe out all waste paper containers.
2. Empty sanitary napkin containers and replace insert.
3. Polish all metal and mirrors.
4. Clean all dispensers.
5. Clean and disinfect wash basins, toilets and urinals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 5 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Disinfect undersides and tops of toilet seats.
7. Clean floors with germicidal solution.
8. Vacuum carpets.
9. Refill soap, towel, and tissue dispensers.
10. Report to Building Manager any fixture not working.
Weekly Services:
1. Perform high dusting.
2. Dust all air supply and exhaust diffusers.
3. Polish all dispensers.
4. Spot clean tile walls and toilet partitions.
5. Spot clean walls around wash basins.
Monthly Services:
1. Wash down toilet compartment partitions.
KITCHEN, VENDING OR LUNCHROOM
Daily Services: Five (5) Days Per Week
1. Clean sink if empty.
2. Clean counter top.
3. Empty trash.
4. Damp mop floor.
5. Wipe off tables and chairs and arrange.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 6 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Wipe off fronts of vending machines.
7. Vacuum carpeting.
8. Wipe down microwaves.
FLOOR CARE
ENTRANCE LOBBIES AND BUILDING CORRIDORS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
OFFICE/TENANT AREAS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
RESTROOMS
1. Scrub and seal floors monthly.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-2
PEREGRINE SYSTEMS CORPORATE CENTER
DAY PORTER SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 2
--------------
SPECIFICATIONS
DAY PORTER JOB DESCRIPTION
A. ENTRANCE LOBBY AND BUILDING CORRIDORS
1. Spot clean entrance door glass and lobby glass.
2. Wipe down all interior and exterior window sills at lobby level.
3. Dust lobby, including guard station and vacuum as needed. Empty trash
at guard station and clean counters.
4. Remove trash from receptacles in elevator lobbies on each floor.
5. Clean lobby directory as necessary throughout the day.
6. Empty and clean sand urns and replace sand as needed.
7. Polish and clean all metal and brightwork as necessary.
8. Spot clean carpets for spills.
9. Spot vacuum carpets as necessary.
10. Clean drinking fountains.
B. BUILDING EXTERIOR
1. Police for trash, sidewalks, curbs, around trees, planters and pots
around entire building.
2. Damp mop walkway for spills and stains.
3. Clean hose bib cover plates, as needed.
4. Sweep entrance sidewalks as needed.
5. Police balconies daily for leaves and debris.
6. Sweep balconies as needed.
7. Wipe down handrails on balconies.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 2
--------------
SPECIFICATIONS - CONTINUED
C. PARKING GARAGE AND TRASH ENCLOSURES
1. Police and clean around trash bins.
2. Empty and break down all boxes before disposing in dumpsters.
3. Clean pay phones in garage and keep area around them clean.
4. Spot clean garage lobby door and glass.
5. Dust exterior of lobby doors and wall in garage.
6. Check mail room daily, and wipe down counters and mail boxes.
Vacuum as needed.
D. STAIRWELLS, LANDINGS AND ELEVATORS
1. Police stairwells daily for trash and debris.
2. Damp mop for spills and stains.
3. Thoroughly sweep two flights of stairs per day.
4. Check stairwells for cobwebs, dustballs and burned out lights.
5. Dust and wipe handrails after sweeping.
6. Check elevator cabs several times daily.
7. Spot vacuum elevator cabs as necessary.
8. Spot clean elevator doors and walls.
9. Keep elevator cab emergency phones clean and sanitary at all times.
E. RESTROOMS
1. Empty trash containers if necessary.
2. Clean and restock restroom supplies after the noon hour.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
SECURITY SYSTEMS AND PERSONNEL
A card key access system will be included in the Base, Shell and Core. One
(1) security guard will be on duty at the Project on a twenty-four (24) hour
per day, seven (7) days per week basis commencing upon the Lease Commencement
Date. Security rounds will be made at applicable shift changes. If Tenant
constructs a security desk and security console (as a Tenant Improvement or
as an Alteration), Tenant shall have the option to cause such security guard
to be stationed at such desk and console; however, if Tenant elects to
construct such desk and console on a permanent basis at the Building, and if
Tenant's occupancy in the Project falls below 182,000 rentable square feet,
Landlord shall have the option, at Landlord's sole cost and expense, to
relocate such security desk and console to a location in Building 2
reasonably designated by Landlord. An additional security guard will be hired
to patrol the Project during the hours of 6:00 a.m. to 10:00 p.m. Monday
through Friday and 8:00 a.m. to 12:00 noon on Saturday (except Holidays)
commencing upon the Lease Commencement Date for Building 2; the cost of such
additional security guard will be included in Operating Expenses and
Operating Expenses for the Base Year shall be grossed up to include such
guard's services as if provided throughout the Base Year.
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT J
PEREGRINE SYSTEMS CORPORATE CENTER
SIGNAGE CRITERIA
CARMEL CENTER
SIGN GUIDELINES AND CRITERIA
February 24, 1999
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SUBMITTALS AND APPROVALS.....................................................1
RESTRICTIONS.................................................................2
NONCONFORMING SIGNS.......................................................4
ILLEGAL SIGNS.............................................................4
ABANDONED SIGNS...........................................................4
GENERAL PROVISIONS...........................................................5
CONSTRUCTION REQUIREMENTS....................................................7
DESIGN GUIDELINES............................................................9
SIGN CRITERIA...............................................................12
PROJECT AND TENANT SIGNAGE...............................................12
GAS STATION IDENTIFICATION SIGNS.........................................14
SECONDARY SITE SIGNS.....................................................15
ANCILLARY SIGNAGE........................................................15
TEMPORARY SIGNAGE: .........................................................16
PROJECT LEASING / CONSTRUCTION / FUTURE FACILITIES.......................16
TENANT LEASE SPACE BANNERS...............................................16
SEASONAL / SPECIAL EVENT SIGNAGE.........................................16
EXHIBITS....................................................................17
</TABLE>
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
OBJECTIVE
The objective of The Carmel Center Sign Guidelines and Criteria is to provide
design standards and specifications that assure consistency in quality,
color, size, placement, and configuration for signage throughout the project,
and to provide signage that will be an integral part of the overall
architectural character and design theme suitable for the prestigious
corporate image of the Carmel Center project.
SUBMITTALS AND APPROVALS
1. There is a formal process for the creation, review and approval of
signage throughout The Carmel Center project. Prior to sign fabrication,
plans for all proposed signage shall be submitted to the Owner who will
review plans for conformance with the Sign Guidelines and Criteria. All plans
submitted for approval must conform to requirements of the criteria contained
in The Carmel Center Sign Guidelines and Criteria. Only those sign types
specifically approved in writing by the Owner will be allowed. The Owner
shall have the discretionary authority to deny approval for any submittal
which does not comply with the intent or purpose of the sign criteria.
The Tenant shall submit all sign designs to Owner and obtain his written
approval prior to sign fabrication. Approval or disapproval shall remain the
sole right and discretion of the Owner. The Tenant must continue to revise
and resubmit rejected designs until approval is obtained.
Prior to sign fabrication, the Tenant or his sign contractor shall submit for
Owner approval three (3) sets of complete and fully-dimensioned shop drawings
reflecting the sign design approved by the Owner. The shop drawings submittal
shall include:
a. Name, address and phone number of tenant / user
b. Name, address and phone number of Sign Contractor, Designer.
c. Elevation of structure showing all proposed signs indicating sign
type, design, location, size and layout of sign drawn to scale and
indicating dimensions, attachment devices and construction details,
colors, materials and lighting details.
d. Section detail of letters and/or sign element showing the
dimensioned projection of the face of letters, method and intensity
of illumination.
e. Color board with actual sample colors (8-1/2" x 11" format).
f. Site plan showing property lines, buildings, location and
dimensions from public right of way.
1
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3. Requests to establish signs that vary from the provisions of this sign
program shall be submitted to the Owner for approval in writing prior to
being submitted to the City of San Diego.
4. Following approval of proposed signage by the Owner, applications for all
permits for fabrication and installation by Sign Contractor may be submitted
to the City of San Diego for approval, along with applicable sign permit
applications.
5. Fabrication and installation of all signs shall be performed in accordance
with the standards and specifications outlined in these guidelines and in the
final approved plans and working drawings.
RESTRICTIONS
Only those sign types provided for herein and specifically approved in writing
by the Owner will be allowed. The following signs are prohibited:
1. PROHIBITED SIGNS
a. Exposed junction boxes, transformers, lamps, tubing, conduits,
raceways or neon crossovers of any type.
b. Signs using "Trim Cap" retainers that do not match the color of the
letter returns and logo returns.
c. Rooftop signs.
d. Rotating, revolving, flashing or moving signs, except as provided in
this text.
e. Advertising or promotional signs on parked vehicles.
f. Advertising signs on bus benches, within or outside of the public
right-of-way.
g. Off-premise signs (other than directional signs) installed for the
purpose of advertising a project, event, person or subject not related
to the premises upon which said sign is located.
h. No signs, decals or advertising may be placed on windows except as
provided for in the Sign Guidelines and Criteria and specifically
approved in writing by the Owner.
i. No temporary promotional signs, appliances, or advertising shall be
permitted such as banners, pennants, streamers, temporary wall signs,
portable signs, including
2
EXHIBIT J
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[Peregrine Systems]
<PAGE>
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signs on vehicles, sandwich boards, inflatable displays or any other
attention getting devices except as provided for herein.
3
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<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
2. NONCONFORMING SIGNS
The Owner may, at its sole discretion, correct, replace or remove any
sign that is installed without written approval and/or that is deemed not to
be in conformance with the plans as submitted and with the Carmel Center
Signage Plan.
3. ILLEGAL SIGNS
Any sign that is deemed not to be in conformance with the approved
guidelines or erected without government approval or permits is considered
an illegal sign. The Owner may, at its sole discretion, correct, replace or
remove any illegal sign.
4. ABANDONED SIGNS
An abandoned sign is one whose use is discontinued because the premises
upon which it is located becomes vacated and unoccupied for a period of more
than 90 days. The Owner may, at its sole discretion, replace or remove any
abandoned sign.
4
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[Peregrine Systems]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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GENERAL PROVISIONS
1. Signs shall be designed in a manner that is compatible with and
complementary to the overall project and adjacent facades.
2. Only those sign types provided for in the Sign Guidelines and Criteria
and/or specifically approved in writing by the Owner will be allowed.
3. Signage that incorporates logos, business identity, and/or images
denoting the type of business shall be encouraged. Logo design and colors
to be approved by the Owner.
4. Logo, letter heights and sign square footages, where specified, shall be
determined by measuring the normal capital letter of type exclusive of
typographic swashes, ascenders, descenders or exaggerated initial capitals.
Maximum copy areas shall be calculated exclusive of display surfaces,
backings, architectural elements, and mounting devices.
Logos and/or images that are in use on similar buildings operated by the
tenant in California may be used, provided that said images are
architecturally compatible and approved by the Owner and shall be counted in
overall allowable square footage for tenant signs.
5. Notwithstanding the maximum square footages specified for copy area
allowances, signs and typography in all cases shall appear balanced and in
scale within the context of the sign spaces - monuments and building walls -
as a whole. Thickness, height, and color of sign lettering shall be visually
balanced and in proportion to other signs on the building.
6. Wall signs shall be affixed without visible means of attachment, unless
attachments make an intentional statement. Wall signs need not be attached
directly to the lease space to which they refer.
5
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7. Ground signs or monument signs may be located within landscaped zones
between property lines and building setback lines, allowing for adequate
site-lines for approaching vehicular traffic at street intersections and
project entries, but may not be located in the public right-of-way. Ground
signs identifying any tenant or use within the project area may be located
on any lot within the project area.
8. All sign fabrication work shall be of excellent quality. All logo images
and typestyles shall be accurately reproduced. Lettering that approximates
typestyles shall not be acceptable. The Owner reserves the right to reject
any fabrication work deemed to be below standard.
6
EXHIBIT J
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[Peregrine Systems]
<PAGE>
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- -------------------------------------------------------------------------------
CONSTRUCTION REQUIREMENTS
1. All formed metal, such as letter forms, shall be fabricated using
full-weld construction.
2. All ferrous and non-ferrous metals shall be separated with non-conductive
gaskets to prevent electrolysis. In addition to gaskets, stainless steel
fasteners shall be used to secure ferrous to non-ferrous metals.
3. Threaded rods or anchor bolts shall be used to mount sign letters which
are spaced out from background panel. Angle clips attached to letter sides
will not be permitted.
4. Surfaces with color mixes and hues prone to fading (e.g., pastels,
fluorescent, complex mixtures, and intense reds, yellows and purples) shall
be coated with ultraviolet-inhibiting clear coat in a matte, gloss, or
semi-gloss finish.
5. Joining of materials (e.g., seams) shall be finished in such a way as to
be unnoticeable. Visible welds shall be continuous and ground smooth.
Rivets, screws, and other fasteners that extend to visible surfaces shall
be flush, filled, and finished so as to be unnoticeable.
6. Finished surfaces of metal shall be free from canning and warping. All
sign finishes shall be free of dust, San Diego peel, drips, and runs and
shall have a uniform surface conforming to the highest standards of the
industry.
7. Reverse channel letters shall be pinned 2" off building wall. Return
depth shall be 2-1/4", maximum, for letters less than 12" in height, and
such signs shall have a clear acrylic backing. Double tube neon shall be
used where width of letter stroke exceeds 2-1/4".
8. Depth of open channel letters shall not exceed 2". All hardware and neon
tube supports inside open channel letters shall be painted to match interior
letter color. Neon tubing shall be sufficient to make letters read "solid"
and shall be installed so that top surface of neon is flush with front edges
of open channel.
9. Signs illuminated with neon shall use 30 m.a. transformers. The ballast
for fluorescent lighting shall be 430 m.a. Fluorescent lamps shall be single
pin (slimline) with 12" center-to-center lamp separation. All lighting must
match the exact specifications of the approved shop drawings.
10. Surface brightness of all illuminated materials shall be consistent in
all letters and components of the sign. Light leaks will not be permitted.
7
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11. The back side of all bare neon used for signage shall be painted to
provide an opaque finish. Paint color shall exactly match the
Owner-approved specification.
12. All conduit, raceways, crossovers, wiring, ballast boxes, transformers,
and other equipment necessary for sign connection shall be concealed. All
bolts, fastenings and clips shall consist of enameling iron with porcelain
enamel finish, stainless steel, anodized aluminum, brass or bronze; or
carbon-bearing steel with painted finish. No black iron materials will be
allowed.
13. Underwriter's Laboratory-approved labels shall be affixed to all
electrical fixtures. Fabrication and installation of electrical signs shall
comply with all national and local building and electrical codes.
14. Penetrations into building walls, where required, shall be made
waterproof.
15. Location of all openings for conduit sleeves and support in sign panels
and building walls shall be indicated by the sign contractor on drawings
submitted to the Owner. Sign contractor shall install same in accordance
with the approved drawings.
16. In no case shall any manufacturer's label be visible from normal viewing
angles.
17. Sign permit stickers shall be affixed to the bottom edge of signs, and
only that portion of the permit sticker that is legally required to be
visible shall be exposed.
8
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
DESIGN GUIDELINES
1. DESIGN OBJECTIVE
The primary objective of these guidelines is to generate signage of the
highest quality design, fabrication and installation, consistent with the
project architecture and design theme.
2. ACCEPTABLE SIGN TREATMENTS
The following treatments are considered appropriate:
- painted metal
- etched or polished metal
- dimensional letter forms with seamless edge treatment
- opaque acrylic materials with matte finishes
- internally illuminated channel or reverse channel letters
9
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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3. LIGHTING
The following treatments are considered appropriate:
- reverse channel neon with silhouette illumination
- open channel neon
- exposed neon
- internal illumination
- front lighting
- area lighting
All front lighting should be baffled and obscured in channels where
possible. Where fixtures, shades, or other elements are exposed, they
should contribute to the design of the tenant's lease space.
All exposed or skeletal neon must be backed with a opaque coating,
unless otherwise specified herein or approved in writing by the Owner. All
housings and posts for exposed neon signs must be painted out to match the
building background immediately behind and adjacent to the sign.
The following shall be prohibited:
- animated lights
- exposed conduits and raceways
- front lighting fixtures that compete with the storefront design
4. COLORS
The following guidelines are to be adhered to in selecting colors for
tenant signage:
- sign colors should be selected to provide sufficient contrast against
building background colors
- colors within each sign should be harmoniously blended
- sign colors should be compatible with building background colors
- color of letter returns should contrast with face colors for good
daytime readability
- interior of open channel letters should be painted dark when against
light backgrounds
- neon colors should complement related signage elements
All sign colors are subject to review and approval by the Owner as part
of the tenant sign submittal.
10
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[Peregrine Systems]
<PAGE>
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- -------------------------------------------------------------------------------
5. TYPESTYLES AND LOGOS
Tenants may adapt established typestyles, logos and/or images that are in
use on similar buildings operated by them in California, provided that
said images are architecturally compatible and approved by the Owner. Type
may be arranged in one or more lines of copy and may consist of upper
and/or lower case letters.
6. SIZES AND QUANTITIES
Sizes and quantities for tenant signs shall be as outlined in the
criteria for each sign type. Notwithstanding the maximum square footage
specified for copy area allowances, adequate amounts of visual open space
shall be provided around wall signs so that signs appear balanced and in
scale in relation to their backgrounds.
11
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[Peregrine Systems]
<PAGE>
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- -------------------------------------------------------------------------------
SIGN CRITERIA
PROJECT AND TENANT SIGNAGE
Signs shall be designed to be harmonious with the overall project design
theme and architecture, and shall be consistent with the provisions of the
Sign Guidelines and Criteria for the project. Minor tenant or directional
signs not oriented towards the public right-of-way are allowed with Owner's
prior written approval in addition to the signs below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Sign Type Max. Qty. Single-Faced/ Dimensions, Wall/ Max. Copy Copy Location
Double-faced Monument Height Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(B) Building (1) sign per bldg. s.f. 24" max. letter Building address/ Address
Address Wall elevation, not to height street number locations to
Signs exceed four signs satisfy Fire
max. per bldg. Dept.
regulations
- -----------------------------------------------------------------------------------------------------------------------------------
(C) Directional As required for s.f. or d.f. 5' 12 sq. ft. + - Directional As necessary
Signs facilitating project logo per information and
traffic sign face arrows
- Project name
and logo
- -----------------------------------------------------------------------------------------------------------------------------------
(D) Secondary As required/
Site Signs see general
guidelines and
provisions for
secondary site
signage
- -----------------------------------------------------------------------------------------------------------------------------------
(E) Restaurant (1) sign per s.f., d.f. 6' 40 sq. ft. Restaurant name As shown on
Identification restaurant and/or logo sign location
Monument Sign frontage plan
- -----------------------------------------------------------------------------------------------------------------------------------
(E2)Restaurant 2 signs per s.f. 50 sq. ft. Restaurant name On
Identification restaurant each and logo restaurant
Wall Sign building
wall
- -----------------------------------------------------------------------------------------------------------------------------------
(H1)Carmel Center 2 along El s.f. 6 ft max. ht. 60 sq. ft. - Project name, As shown on
Project Camino Real each logo and address site map
Identification
Monument
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Sign Type Max Qty. Single- Dimensions. Max. Copy Location
Faced / Wall / Copy
Double- Monument Area
faced Height
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(H2) Office Project 2 per entry s.f. or 5 ft. max ht. 32 sq. ft. - Project As shown on
Entry d.f. each Identification sign location
Identification logo and address plan
Monument - Tenant
Identification and
/or logo
- -------------------------------------------------------------------------------------------------------------------------------
(H3) Tenant 2 signs s.f. -- 100 sq. Building As shown on
Identification total each ft. identification sign location
Wall Signs building; 1 Max. and/or tenant name plan
max. per each and/or logo
tenant each
building
elevation
- -------------------------------------------------------------------------------------------------------------------------------
(H4) Office Building (1) sign per s.f. or 4' max. ht. 32 sq. ft. Building and/or
Monument building d.f. each tenant
Sign identification
Note: Where signs
orient to the
public right of
way, tenant
listings will not
be allowed.
- -------------------------------------------------------------------------------------------------------------------------------
(H5) Tenant (1) sign per s.f. 4 ft. 12 sq. ft. Tenant name As shown on
Identification tenant with Max. and/or logo sign location
Signs individual each plan. May be
entry wall or ground
sign
- -------------------------------------------------------------------------------------------------------------------------------
(H6) Project 1 on s.f. Project name and On retaining
Identification retaining logo wall south side
Sign (on wall south of project
retaining wall) side of
project
- -------------------------------------------------------------------------------------------------------------------------------
(J5) Retail Pad 2 per pad s.f. 32 sq. ft. Tenant name and/or On exterior
Tenant tenant logo building wall
Identification (a third wall
Wall Sign sign may be
allowed in
lieu of Sign
Type J6
monument
sign)
- -------------------------------------------------------------------------------------------------------------------------------
(J6) Retail Pad 1 per pad s.f., d.f. 5 ft. 25 sq. ft. Tenant name and/or As shown on
Tenant tenant 12" max logo sign location
Identification letter ht. plan.
Monument
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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GAS STATION IDENTIFICATION SIGNS
G1. Gas Station Identification Wall Sign
1 per each street frontage, single or double-faced; 50 sq. ft. each maximum
copy area. Copy limited to name and logo of company and product/service.
Color, letter style and logo may be used with Owner's prior written approval.
Signs for associated uses (e.g. car wash) shall conform to criteria for
Tenant Identification Sign Type H5.
G2. Gas Station Identification Monument Sign
1 per street frontage, single or double-faced; 6 ft max. ht., 60 sq. ft. each
face maximum copy area. Copy limited to name and logo of company, associated
uses and gas pricing information.
14
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SECONDARY SITE SIGNS
Secondary Site Signs are signs other than the primary project or tenant
identification signs and include:
- address signage
- entrance signs
- directory maps and listings
- directional signs, both pedestrian and automobile-oriented
- unit number signs
- parking and traffic control signs
- informational signs such as identification for public restrooms
- building entrance signs
- restaurant menuboards
- other code required signs
Secondary site signs are not to be visible from the public right-of-way, with
the exception of entrance signs, parking control signs, and address signs
which should be oriented toward the public right-of-way. All secondary site
signs shall be designed as a family of signs. Selected elements such as
typestyle, layout, form, detail, colors and materials, shall remain
consistent within each sign "family".
A strong connection shall be maintained between secondary site signs and the
project architecture and landscaping. Elements of color, material, scale,
form and detail shall be reflected in the signage. Signs shall fit
comfortably, never crowding the architectural and landscape elements in the
immediate vicinity.
Secondary signs may be freestanding or wall-mounted. Freestanding signs
should generally be less than (4) feet in height, with the exception of
tow-away, handicapped, address, clearance and traffic regulatory signs, which
shall conform to the regulations and safety standards established by the City
of San Diego. Traffic regulatory signs may be reduced in scale where viewing
distances are diminished. Maximum copy area for all secondary site signs shall
be 12 square feet.
ANCILLARY SIGNAGE
Ancillary signage are signs other than primary tenant identification signs,
and are not included in maximum tenant signage area. Ancillary signage is
subject to Owner's prior written approval. Typical ancillary signage includes:
- Window Signs
- Suite Identification Signs
- Tenant Door Signs
- Delivery Entrance Identification Signs
15
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- -------------------------------------------------------------------------------
TEMPORARY SIGNAGE:
PROJECT LEASING/CONSTRUCTION/FUTURE FACILITIES
Temporary signs will be required for various activities at Carmel Center
during and after completion of the development phase. Shapes, base colors and
proportions of the signage must be consistent with sign design guidelines
(see Exhibit for specific sign type).
- - may be ground-mounted.
- - may be externally illuminated.
TENANT LEASE SPACE BANNERS
- - temporary signs may be allowed at individual lease spaces displaying
"for lease", "coming soon" and similar messages.
- - tenants will be allowed use of a temporary identification banner for a
period of time not to exceed 60 days with prior written approval of the
Owner:
- one sign per street frontage
- 32 square feet maximum copy area per banner
- placed below roof eave
SEASONAL/SPECIAL EVENT SIGNAGE
Cooperative seasonal or special event signage will be permitted upon review
and approval by the Owner.
- - Typical message:
- "Now Open"
- "Grand Opening"
- Themes related to seasonal, holiday or community events
- Design to be compatible with project design theme
- 50 square feet maximum copy area per banner
- placed below roof eave
- use of special event signage for a period of time not to exceed 45
days per event
16
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EXHIBITS
NOTE: All maps and figures indicate typical design concepts and locations.
Exhibits are not intended to suggest final sign designs or exact locations
17
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18
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[MAP]
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- -------------------------------------------------------------------------------
[MAP]
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- ------------------------------------------------------------------------------ B
[DIAGRAM]
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- ------------------------------------------------------------------------------ C
[DIAGRAM]
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[DIAGRAM]
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- ----------------------------------------------------------------------------- E1
[DIAGRAM]
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- ----------------------------------------------------------------------------- F2
[DIAGRAM]
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- ------------------------------------------------------------------------------ G
[DIAGRAM]
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- ----------------------------------------------------------------------------- H1
[DIAGRAM]
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- ----------------------------------------------------------------------------- H2
[DIAGRAM]
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- ----------------------------------------------------------------------------- H3
[DIAGRAM]
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- ----------------------------------------------------------------------------- H4
[DIAGRAM]
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- ----------------------------------------------------------------------------- H5
[DIAGRAM]
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[Peregrine Systems]
<PAGE>
OFFICE LEASE
PEREGRINE SYSTEMS CORPORATE CENTER
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
as Landlord,
and
PEREGRINE SYSTEMS, INC.
a Delaware corporation
as Tenant
BUILDING 2
PEREGRINE SYSTEMS CORPORATE CENTER
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE LEASE
SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "SUMMARY"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "OFFICE LEASE") which
pertains to the "Project," as that term is defined in the Office Lease, to be
known as "PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 of the
Office Lease). This Summary and the Office Lease are collectively referred to
herein as the "LEASE". Each reference in the Office Lease to any term of this
Summary shall have the meaning set forth in this Summary for such term. In the
event of a conflict between the terms of this Summary and the Office Lease, the
terms of the Office Lease shall prevail. Any capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the Office
Lease.
<TABLE>
<CAPTION>
TERMS OF LEASE
(REFERENCES ARE TO THE OFFICE
LEASE) DESCRIPTION
----- -----------
<S><C>
1. Date: June 9, 1999.
2. Landlord: KR-CARMEL PARTNERS, LLC, a Delaware limited liability company.
3. Tenant: PEREGRINE SYSTEMS, INC., a Delaware corporation.
4. Premises (Article 1). The Premises is defined as the entire building to be constructed
by Landlord, consisting of approximately 129,680 rentable square
feet as generally depicted on EXHIBIT "A" to the Office Lease
("BUILDING"). The parties hereby stipulate that the Building
will contain a usable square footage of 116,556 usable square
feet.
5. Lease Term (Article 2). The Lease Term for Tenant's lease of the Building shall be twelve
(12) years commencing on the Lease Commencement Date. The Lease
Commencement Date is estimated to be May 1, 2000.
6. Initial Base Rent (Article 3): The initial Base Rent payable with respect to the Building shall
be calculated as follows:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------- ------------------- ----------------------------
Estimated Building Monthly Monthly Rental Rate Per
Rentable Square Footage Installment of Rentable
Base Rent Square Foot*
- ------------------------- ------------------- ----------------------------
<S> <C> <C>
129,680 $295,670.40 $2.28
- ------------------------- ------------------- ----------------------------
</TABLE>
*Plus electricity (as indicated in Section 6.2 of the Office Lease)
7. Additional Rent (Article 4).
7.1 Base Year: The calendar year during which the
Lease Commencement Date occurs.
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7.2 Tenant's Share: See Article 4.
8. Security Deposit: See Article 21.
9. Parking Privileges (Article 28): Four and one-half (4 1/2)
parking permits for every 1,000
usable square feet of the
Premises as such square footage
is specified in Section 4 of
the Summary. Each permit shall
entitle Tenant to utilize one
(1) parking space on an
unreserved basis in the Project
parking facilities.
10. Brokers (Section 29.18): John Burnham & Company (representing
Landlord and Tenant) and CB
Richard Ellis, Inc.
(representing Tenant only)
11. Address of Tenant 12670 High Bluff Drive
(Section 29.13): San Diego, CA 92130
Attention: Richard T. Nelson, Esq.
with a copy to:
12670 High Bluff Drive
San Diego, CA 92130
Attention: Mr. Robert Urwiler
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT MATTER PAGE
<S> <C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS........................................................1
1.1 Premises, Building, Project and Common Areas....................................1
1.2 Verification of Rentable and Usable Square Feet of Premises, Building, and
Project.........................................................................3
ARTICLE 2 LEASE TERM...........................................................................................3
2.1 Initial Term....................................................................3
2.2 Options to Extend...............................................................4
ARTICLE 3 BASE RENT............................................................................................6
3.1 Initial Base Rent...............................................................6
3.2 Adjustments to Base Rent........................................................6
ARTICLE 4 ADDITIONAL RENT......................................................................................7
4.1 General Terms...................................................................7
4.2 Definitions of Key Terms Relating to Additional Rent............................7
4.3 Allocation of Direct Expenses..................................................14
4.4 Calculation and Payment of Additional Rent.....................................14
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible...............16
ARTICLE 5 USE OF PREMISES.....................................................................................17
5.1 Permitted Use..................................................................17
5.2 Prohibited Uses................................................................17
5.3 CC&R's.........................................................................17
ARTICLE 6 SERVICES AND UTILITIES..............................................................................18
6.1 Standard Tenant Services.......................................................18
6.2 Utilities Costs; Overstandard Tenant Use.......................................20
6.3 Interruption of Use............................................................20
6.4 Additional Services............................................................21
6.5 Utility Deregulation...........................................................21
6.6 Emergency Generator............................................................22
6.7 Substitution of Vendors........................................................22
6.8 Abatement Event................................................................22
ARTICLE 7 REPAIRS.............................................................................................23
7.1 Obligations....................................................................23
7.2 Tenant's Failure to Comply.....................................................24
7.3 Landlord's Failure to Comply...................................................24
ARTICLE 8 ADDITIONS AND ALTERATIONS...........................................................................25
8.1 Landlord's Consent to Alterations..............................................25
8.2 Manner of Construction.........................................................25
8.3 Payment for Improvements.......................................................26
8.4 Construction Insurance.........................................................26
8.5 Landlord's Property............................................................26
ARTICLE 9 COVENANT AGAINST LIENS..............................................................................27
ARTICLE 10 INSURANCE .........................................................................................27
10.1 Indemnification and Waiver.....................................................27
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10.2 Tenant's Compliance with Landlord's Fire and Casualty Insurance................27
10.3 Tenant's Insurance.............................................................27
10.4 Fire and Casualty Insurance of Landlord........................................28
10.5 Form of Policies...............................................................28
10.6 Subrogation....................................................................29
10.7 Additional Insurance Obligations...............................................29
ARTICLE 11 DAMAGE AND DESTRUCTION.............................................................................29
11.1 Repair of Damage to Premises by Landlord.......................................29
11.2 Landlord's Option to Repair....................................................30
11.3 Landlord's or Tenant's Option to Repair........................................30
11.4 Waiver of Statutory Provisions.................................................31
11.5 Damage Near End of Term........................................................31
ARTICLE 12 NONWAIVER .........................................................................................31
ARTICLE 13 CONDEMNATION.......................................................................................32
13.1 Permanent Taking...............................................................32
13.2 Temporary Taking...............................................................32
ARTICLE 14 ASSIGNMENT AND SUBLETTING..........................................................................32
14.1 Transfers......................................................................32
14.2 Landlord's Consent.............................................................33
14.3 Transfer Premium...............................................................34
14.4 Landlord's Option as to Subject Space..........................................35
14.5 Effect of Transfer.............................................................35
14.6 Additional Transfers...........................................................36
14.7 Affiliated and Permitted Transfers.............................................36
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES...................................................37
15.1 Surrender of Premises..........................................................37
15.2 Removal of Tenant Property by Tenant...........................................37
15.3 Removal of Tenant's Property by Landlord.......................................37
15.4 Landlord's Actions on Premises.................................................38
ARTICLE 16 HOLDING OVER.......................................................................................38
ARTICLE 17 ESTOPPEL CERTIFICATES..............................................................................39
ARTICLE 18 SUBORDINATION......................................................................................39
ARTICLE 19 DEFAULTS; REMEDIES.................................................................................40
19.1 Defaults.......................................................................40
19.2 Remedies Upon Default..........................................................40
19.3 Sublessees of Tenant...........................................................41
19.4 Form of Payment After Default..................................................41
19.5 Waiver of Default..............................................................41
19.6 Efforts to Relet...............................................................42
ARTICLE 20 COVENANT OF QUIET ENJOYMENT........................................................................42
ARTICLE 21 SECURITY DEPOSIT...................................................................................42
21.1 Letter of Credit...............................................................42
21.2 Financial Standards............................................................43
21.3 Conditional Release of Security................................................43
21.4 Cash Equivalent................................................................43
ARTICLE 22 ROOF RIGHTS........................................................................................43
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ARTICLE 23 SIGNAGE ...........................................................................................44
23.1 General........................................................................44
23.2 Tenant's Exterior Signage Rights...............................................45
23.3 Tenant's Interior Signage Rights...............................................46
ARTICLE 24 COMPLIANCE WITH LAW................................................................................46
ARTICLE 25 LATE PAYMENTS......................................................................................47
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT...............................................47
26.1 Landlord's Cure................................................................47
26.2 Tenant's Reimbursement.........................................................47
ARTICLE 27 ENTRY BY LANDLORD..................................................................................47
ARTICLE 28 TENANT PARKING.....................................................................................48
ARTICLE 29 MISCELLANEOUS PROVISIONS...........................................................................49
29.1 Binding Effect.................................................................49
29.2 Modification of Lease/Memorandum of Lease......................................49
29.3 Transfer of Landlord's Interest................................................50
29.4 Consents by the Parties........................................................50
29.5 Captions.......................................................................50
29.6 Time of Essence................................................................50
29.7 Partial Invalidity.............................................................50
29.8 No Warranty....................................................................50
29.9 Construction...................................................................50
29.10 Entire Agreement...............................................................50
29.11 Right to Lease.................................................................51
29.12 Force Majeure..................................................................51
29.13 Notices........................................................................51
29.14 Joint and Several..............................................................52
29.15 Authority......................................................................52
29.16 Governing Law..................................................................52
29.17 Submission of Lease............................................................52
29.18 Brokers........................................................................52
29.19 Independent Covenants..........................................................52
29.20 Project or Building Name and Signage...........................................52
29.21 Transportation Management......................................................53
29.22 No Discrimination..............................................................53
29.23 Hazardous Material.............................................................53
29.24 Development of the Project.....................................................53
29.25 Landlord Exculpation...........................................................54
29.26 Waiver of Redemption by Tenant.................................................54
29.27 Attorneys' Fees................................................................54
29.28 Communications and Computer Lines..............................................54
29.29 No Air Rights..................................................................55
29.30 Counterparts...................................................................55
29.31 Confidentiality................................................................55
29.32 Disclosures and Mutual Release.................................................55
EXHIBIT "A" SITE PLAN
EXHIBIT "B" TENANT WORK LETTER
EXHIBIT "C" NOTICE OF LEASE TERM DATES
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" FORM OF TENANT'S ESTOPPEL CERTIFICATE
EXHIBIT "F" CC&R'S
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EXHIBIT "G" HVAC AND ELECTRICAL STANDARDS
EXHIBIT "H-1" JANITORIAL SPECIFICATIONS
EXHIBIT "H-2" DAY PORTER SPECIFICATIONS
EXHIBIT "I" SECURITY SYSTEMS AND PERSONNEL
EXHIBIT "J" SIGNAGE CRITERIA
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C>
Abatement Event.............................................................22
Abatement Notice............................................................22
Accelerated Force Majeure Period............................................16
Acceptable Changes..........................................................25
Actual Surrender Date.......................................................38
ADA.........................................................................46
Additional Rent..............................................................7
Adjacent Building............................................................2
Adjacent Building Leases.....................................................2
Adjustment Year.............................................................13
Aggregate Force Majeure Period..............................................16
Alterations.................................................................25
Alternative.................................................................21
Applicable Laws.............................................................25
Approved Working Drawings............................................EXHIBIT B
Architect............................................................EXHIBIT B
Association.................................................................18
Base Rent....................................................................6
Base Year....................................................................7
Base, Shell and Core.................................................EXHIBIT B
Base, Shell and Core Completion......................................EXHIBIT B
BOMA.........................................................................3
Brokers.....................................................................52
Building.....................................................................i
Building 1...................................................................1
Building 1 Lease.............................................................2
Building 3...................................................................1
Building 3 Lease.............................................................2
Building 4...................................................................1
Building 4 Lease Option Agreement............................................2
Building 5...................................................................2
Building 5 Lease.............................................................2
Building Common Areas........................................................2
Building Direct Expenses.....................................................7
Building Hours..............................................................18
Building Operating Expenses..................................................7
Building Systems and Equipment..............................................20
Building Tax Expenses........................................................7
Building Top Signs..........................................................45
Building Working Drawings............................................EXHIBIT B
CAD..........................................................................3
CC&R's......................................................................17
CD..........................................................................43
Change Orders........................................................EXHIBIT B
Claims......................................................................27
Code.............................................................34. EXHIBIT B
Commencement Date............................................................4
Committee...................................................................18
Common Areas.................................................................2
Communication Equipment.....................................................43
ComparableBuildings..........................................................2
Construction Schedule................................................EXHIBIT B
Contractor...........................................................EXHIBIT B
Cost Pools..................................................................14
Cost Proposal........................................................EXHIBIT B
Cost Proposal Delivery Date..........................................EXHIBIT B
Delivery Period.............................................................16
Designated Subcontractors............................................EXHIBIT B
Direct Expenses..............................................................7
Director Board..............................................................46
Drawings.............................................................EXHIBIT B
Effective Date.......................................................EXHIBIT B
Electric Service Provider...................................................21
Eligibility Period..........................................................23
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Engineers............................................................EXHIBIT B
Estimate....................................................................14
Estimate Statement..........................................................14
Estimated Excess............................................................14
Excess......................................................................14
Excess Over-Allowance Amount.........................................EXHIBIT B
Excusable Delay......................................................EXHIBIT B
Expense Year.................................................................7
Extension Notice.............................................................4
Extension Options............................................................4
Extension Reminder Notice....................................................4
Extension Term Base Rent.....................................................4
Extension Term Commencement Date.............................................4
Extension Term(s)............................................................4
Fair Market Rental Value.....................................................5
Final Space Plan.....................................................EXHIBIT B
Financial Standards.........................................................43
Force Majeure...............................................................51
Force Majeure Effective Date................................................16
Force Majeure Extension Options.............................................17
Force Majeure Termination Notice............................................16
Hazardous Material..........................................................53
Holdover Notice.............................................................38
Holdover Notice Date........................................................38
Holidays....................................................................18
HVAC........................................................................18
Interest Rate...............................................................47
KRC.........................................................................34
Landlord.....................................................................1
Landlord Parties............................................................27
Landlord Supervision Fee.............................................EXHIBIT B
Landlord Work........................................................EXHIBIT B
Landlord Work Change Orders..........................................EXHIBIT B
LC..........................................................................42
Lease........................................................................1
Lease Commencement Date......................................................3
Lease Expiration Date........................................................3
Lease Term...................................................................3
Lease Year...................................................................3
Lines.......................................................................54
Major Project Milestones.............................................EXHIBIT B
Notices.....................................................................51
Objectionable Name..........................................................45
Office Lease.................................................................i
Operating Expenses...........................................................7
Original Tenant..............................................................4
Other Improvements..........................................................54
Outside Date.........................................................EXHIBIT B
Outside Date Extension Notice........................................EXHIBIT B
Outside Date Termination Notice......................................EXHIBIT B
Over-Allowance Amount................................................EXHIBIT B
Package Units...............................................................18
Partial Cost Proposal................................................EXHIBIT B
Peregrine Center.............................................................1
Permits..............................................................EXHIBIT B
Permitted Affiliate.........................................................36
Permitted Signage Entities..................................................45
Permitted Transferee........................................................37
Pre-Judgment Offset Amount..................................................24
Premises.....................................................................1
Premium Base Amount.........................................................34
Premium Guidance............................................................35
Progress Payment Request.............................................EXHIBIT B
Project......................................................................1
Project Architect....................................................EXHIBIT B
Project Architect Agreement..........................................EXHIBIT B
Project Common Areas.........................................................2
Proposition 13..............................................................12
Qualifying Income...........................................................34
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Qualifying Period............................................................5
Qualifying Transferee.......................................................44
Readjustment Year...........................................................13
Reassessment................................................................13
Recapture Notice............................................................35
REIT Requirements...........................................................35
Reno.........................................................................4
Rent.........................................................................7
Requirements................................................................47
Review Period...............................................................15
Shell Completion Dates...............................................EXHIBIT B
Signage Criteria............................................................44
Single Appraiser Date........................................................5
Site Plan....................................................................1
space comparable to the Building.............................................5
Specifications.......................................................EXHIBIT B
Standard Improvement Package.........................................EXHIBIT B
Statement...................................................................14
Subject Space...............................................................32
Subleasing Costs............................................................34
Substantial Completion.......................................................3
Summary......................................................................1
Tax Expenses................................................................12
Tenant.......................................................................1
Tenant Delays........................................................EXHIBIT B
Tenant Improvement Allowance.........................................EXHIBIT B
Tenant Improvement Allowance Items...................................EXHIBIT B
Tenant Improvements..................................................EXHIBIT B
Tenant Work..................................................................3
Tenant Work Letter...........................................................1
Tenant's Share..............................................................13
Tenant's Signs..............................................................45
Threshold Level.............................................................31
Time Deadlines.......................................................EXHIBIT B
Title 24....................................................................46
Transfer Notice.............................................................32
Transfer Premium............................................................34
Transferee..................................................................32
Transfers...................................................................32
Withdrawal Date..............................................................4
Work.................................................................EXHIBIT B
Working Drawings.....................................................EXHIBIT B
Y2K.........................................................................10
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "SUMMARY") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "LEASE"), dated as of the date set forth in Section 1 of the
Summary is made by and between KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company ("LANDLORD"), and PEREGRINE SYSTEMS, INC., a Delaware
corporation ("TENANT").
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Upon and subject to the terms hereinafter set
forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 4 of the Summary (the
"PREMISES"), consisting of the Building described therein and more particularly
depicted on the Site Plan attached hereto as EXHIBIT "A" (the "SITE PLAN"). The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of the Site Plan is to show the
location of the Building and the Adjacent Buildings only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the Common Areas, as that term is defined in Section 1.1.3 below and the
elements thereof or of the accessways to the Premises or the "Project," as that
term is defined in Section 1.1.2 below. Landlord will not make material changes
to the Site Plan without the prior written approval of Tenant, which consent
shall not be unreasonably withheld or delayed. However, notwithstanding the
foregoing, Landlord may make changes to the Site Plan due to topography,
underground conditions, and governmental requirements in order to resolve issues
which arise during construction of the Project without the prior written
approval of Tenant, provided that (i) any such changes to the Site Plan due to
topography may be made to landscaping only (and not to other Site Plan items)
without the prior written approval of Tenant, and (ii) with respect to changes
that do not require the approval of Tenant pursuant to this sentence, Landlord
shall notify Tenant of any material changes made to the Site Plan. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as EXHIBIT "B" (the "TENANT WORK LETTER"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building, the Adjacent Buildings or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 THE PROJECT. The Premises are located in the City and
County of San Diego, California, and are a part of the project to be known as
"PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 below). The term
"PROJECT," as used in this Lease, shall mean (i) the Building, the Adjacent
Buildings and the "Common Areas", as that term is defined in Section 1.1.3
below, and (ii) the land (which is or will be improved with landscaping, parking
facilities and other improvements) upon which the Buildings and the Common Areas
are to be located. For purposes of this Lease, the term "BUILDING 1" shall mean
that building to be constructed by Landlord at the location so designated on the
Site Plan, "BUILDING 3" shall mean that building to be constructed by Landlord
at the location so designated on the Site Plan, "BUILDING 4" shall mean that
building to be constructed by Landlord at the location so designated
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on the Site Plan, and "BUILDING 5" shall mean that building to be constructed by
Landlord at the location so designated on the Site Plan. Building 1, Building
3, Building 4 and Building 5 may be collectively referred to herein as the
"ADJACENT BUILDINGS." Landlord and Tenant hereby acknowledge that, concurrently
with the execution and delivery of this Lease, Landlord and Tenant are entering
into separate leases for Building 1 (the "BUILDING 1 LEASE"), Building 3 (the
"BUILDING 3 LEASE"), and Building 5 (the "BUILDING 5 LEASE") and a Lease Option
Agreement for Building 4 (the "BUILDING 4 LEASE OPTION AGREEMENT") whereby
Tenant shall lease from Landlord all of Building 1, all of Building 3, and all
of Building 5 and shall have an option to lease all of Building 4. The Building
1 Lease, Building 3 Lease, Building 5 Lease and Building 4 Lease Option
Agreement may be collectively referred to herein as the "ADJACENT BUILDING
LEASES."
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas are collectively referred to herein as the
"COMMON AREAS"). The Common Areas shall consist of the Project Common Areas and
the Building Common Areas. The term "PROJECT COMMON AREAS," as used in this
Lease, shall mean the portion of the Project designated as such in the Site
Plan. The Project Common Areas shall consist of all parking facilities,
entrances and exits, driveways, exterior walkways, first-class landscaped and
hardscaped areas which are generally consistent with the quality of landscaped
and hardscaped areas of Comparable Buildings in existence as of the date of this
Lease, open space areas and plazas on the real property comprising the Project.
The term "BUILDING COMMON AREAS," as used in this Lease, shall mean the portions
of the Common Areas located within any building in the Project not entirely
leased by Tenant, which Building Common Areas shall be reasonably designated as
such by Landlord. Notwithstanding the foregoing and subject to (i) Landlord's
approval, which approval (as indicated in Section 29.4 below) shall not be
unreasonably withheld or delayed, (ii) the CC&R's, and (iii) all terms of this
Lease regarding Hazardous Materials, Tenant may install or locate such items as
benches, patio tables, bike racks, above-ground generators, security cameras and
the like (collectively, "MISCELLANEOUS COMMON AREA ITEMS") at Tenant's sole cost
in the Common Areas or on the exterior of the Building, as applicable, provided
that Tenant removes such items upon the expiration or earlier termination of
this Lease and repairs any damage to the Common Areas or the exterior of the
Building (as applicable) resulting from such removal. If Tenant fails to remove
any Miscellaneous Common Area Item or to repair any damage resulting from such
removal upon the expiration or earlier termination of this Lease, Landlord may
do so and may charge Landlord's actual cost thereof to Tenant. The manner in
which the Common Areas are maintained and operated shall be in accordance with a
standard which is not less than that customarily followed in the operation and
maintenance of first class mid-rise office buildings located within the
University Towne Center (i.e., the area from two (2) blocks to the North of La
Jolla Village Drive to two (2) blocks to the South of La Jolla Village Drive
between the I-5 and I-805 freeways), Del Mar, Carmel Valley and Torrey Hills
geographical areas, provided that Landlord shall manage, maintain and operate
the same in a manner consistent with that of Comparable Buildings, and the use
thereof shall be subject to such rules and regulations as Landlord reasonably
may make from time to time. As used herein, "COMPARABLE BUILDINGS" shall mean
the first class mid-rise office buildings (now existing or subsequently
constructed) within the projects located within the University Towne Center, Del
Mar, Carmel Valley and Torrey Hills geographical areas and having substantially
similar characteristics to the Building pertaining to size, age, accessibility,
design, quality, amenities and tenancies. Landlord reserves the right to make
alterations or additions to, or to change the location of, elements of the
Project and the Common Areas, provided that if any such changes might affect
Tenant's use of the Premises (in other than an immaterial manner), Landlord
obtains Tenant's prior written approval of any such alterations, additions and
changes and such alterations, additions and changes do not unreasonably
interfere with Tenant's access to the Premises. Except when and where Tenant's
right of access is specifically excluded in this Lease, Tenant shall have the
right of access to the Building and the parking facilities twenty-four (24)
hours per day, seven (7) days per week during the Lease Term.
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1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES, BUILDING, AND
PROJECT. The number of rentable square feet in the Premises and the Building
shall be determined pursuant to the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1 - 1996 ("BOMA"). The number of rentable square
feet of the Building shall be initially determined by Landlord from the
"as-built" drawings for the Building utilizing Landlord's computer assisted
design ("CAD") system. Tenant shall have the option, exercisable by written
notice to Landlord within thirty (30) days following Tenant's receipt of such
initial determination by Landlord, to cause the number of rentable square feet
of the Building to be verified by an architect, planner, designer or consultant
specializing in measuring square footage selected by Landlord and reasonably
approved by Tenant and such verification shall be made in accordance with the
provisions of this Article 1. In addition, the number of rentable square feet of
any other buildings within the Project not leased by Tenant are subject to
verification by an architect, planner, designer or consultant specializing in
measuring square footage selected by Landlord and such verification shall be
made in accordance with the provisions of this Article 1. The cost of any such
verification of square footage figures as specified in this Section 1.2 above
shall be borne fifty percent (50%) by Landlord and fifty percent (50%) by
Tenant. In the event that such architect, planner, designer or consultant
determines that the amounts thereof are different from those set forth in this
Lease, all amounts, percentages and figures appearing or referred to in this
Lease based upon such incorrect amount (including, without limitation, the
amount of the Rent and Tenant's Share as those terms are defined in this Lease)
shall be modified in accordance with such determination. Absent manifest error,
such determination shall be final and conclusive. As such determination is
made, it will be confirmed in writing by Landlord and Tenant, and Landlord and
Tenant shall execute an amendment to this Lease confirming the changed amounts
of Rent, Tenant's Share and the Tenant Improvement Allowance.
ARTICLE 2
LEASE TERM
2.1 INITIAL TERM. The terms, covenants and conditions and provisions of
this Lease shall be effective as of the date of this Lease. The term of this
Lease (the "LEASE TERM") shall be as set forth in Section 5 of the Summary and
shall commence ("LEASE COMMENCEMENT DATE") on the earlier of (i) the date
Tenant's work stations are installed and cabled or (ii) eight (8) business days
after "Substantial Completion" by Landlord of the Tenant Improvements for the
Building, provided Landlord has given to Tenant at least sixty (60) days' prior
written notice of the date Landlord estimates for Substantial Completion for the
Building (if such date is more than thirty (30) days different from the
estimated date specified in the Summary). The Lease Commencement Date shall not
under any circumstances occur earlier than the day which is thirty (30) days
earlier than the Estimated Lease Commencement Date set forth in Section 5 of the
Summary unless Tenant elects to commence business operations within such
Building as of an earlier date. The Lease Term shall terminate (the "LEASE
EXPIRATION DATE") on the last day of the month in which the twelfth (12th)
anniversary of the Lease Commencement Date occurs, unless this Lease is sooner
terminated or extended as hereinafter provided. For purposes of this Lease, the
term "LEASE YEAR" shall mean each consecutive twelve (12) month period during
the Lease Term; provided, however, that the first Lease Year shall commence on
the Lease Commencement Date and the last Lease Year shall end on the Lease
Expiration Date. For purposes of this Lease, "SUBSTANTIAL COMPLETION" shall
occur upon the completion of construction of the Tenant Improvements in the
Building pursuant to the plans and drawings which are prepared pursuant to the
terms of the Tenant Work Letter. The completion of the construction with
respect to any such Tenant Improvements shall not be deemed to have occurred
unless and until (i) Landlord has delivered the portion of the Premises covered
by such Tenant Improvements to Tenant in broom-clean condition subject only to
punch list items and any tenant fixtures, workstations or equipment to be
installed by Tenant in the Premises pursuant to the terms of the Tenant Work
Letter (the "TENANT WORK") (i.e., the completion of punchlist items and Tenant
Work shall not affect Substantial Completion), (ii) a temporary certificate of
occupancy or its equivalent permitting occupancy of such portion of the Premises
improved with such Tenant Improvements has been issued by the City of San Diego
or other applicable governmental agency, (iii) all essential building systems to
be installed by Landlord (including,
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but not limited to, electrical, plumbing, heat, air conditioning systems, and
their distribution into such portions of the Premises) are operational to the
extent reasonably necessary to service the portion of the Premises covered by
such Tenant Improvements, and (iv) Tenant has been provided with the parking to
which it is entitled under this Lease . If a temporary certificate of occupancy
or its equivalent is issued by the City of San Diego, Landlord shall use
commercially reasonable efforts to obtain a permanent certificate of occupancy
within three (3) months after the Lease Commencement Date (except to the extent
the receipt of such permanent certificate is delayed as a result of the Tenant
Work or any actions of Tenant, its agents, employees or contractors). At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in EXHIBIT "C" attached hereto, which notice (so long as it
contains accurate information) Tenant shall execute and return to Landlord
within ten (10) days of receipt thereof. If Tenant contends that such notice
contains inaccurate information, Tenant shall modify such notice as appropriate
and return such notice to Landlord within said ten (10) day period.
2.2 OPTIONS TO EXTEND. Tenant shall have two (2) option(s) to extend (the
"EXTENSION OPTIONS") the Lease Term for consecutive five (5) year period(s) (the
foregoing option term(s) shall be referred to hereinafter sometimes as the
"EXTENSION TERM(s)"), by delivering a written notice of exercise to Landlord
("EXTENSION NOTICE") with respect to the applicable Extension Term, which
Extension Notice may not be delivered earlier than the date which is eighteen
(18) months prior to the end of the initial Lease Term or first Extension Term
(as applicable) and may not be delivered later than the date which is thirty
(30) days after the Reminder Notice. If Landlord has not received an applicable
Extension Notice by the date which is twelve (12) months prior to the end of the
initial Lease Term or first Extension Term (as applicable), Landlord may provide
written notice ("EXTENSION REMINDER NOTICE") to Tenant that the Extension Option
will expire if Tenant fails to deliver the Extension Notice to Landlord within
thirty (30) days after the date of such notice from Landlord. If Tenant fails
to deliver the Extension Notice within said thirty (30) day period, Tenant shall
be deemed to have waived its right to exercise such Extension Option. The
parties acknowledge that Tenant's Extension Option will not lapse until the date
which is thirty (30) days after Landlord's delivery of the Extension Reminder
Notice pursuant to this Section 2.2. The Extension Option shall apply to all
space (and not a portion of the space) then leased by Tenant in the Building.
Tenant may exercise the Extension Option(s) only if this Lease is in full force
and effect and there is no uncured Event of Default under this Lease, at the
time of exercise of such Extension Option and/or at the time of the commencement
of the Extension Term, but Landlord shall have the right to waive such
conditions herein. Tenant's exercise of the second (2nd) Extension Option shall
be conditioned upon Tenant's exercise of the first Extension Option. The rights
of Tenant contained in this Section 2.2 shall be personal to the original Tenant
named in the Summary ("ORIGINAL TENANT") and any Permitted Affiliate and may
only be exercised by the Original Tenant or such Permitted Affiliate if Tenant,
at the date of Tenant's Extension Notice, meets or exceeds the Financial
Standards set forth in Section 21.2 below. The Base Rent during each Extension
Term ("EXTENSION TERM BASE RENT") shall be an amount equal to ninety-five
percent (95%) of the then "Fair Market Rental Value" of the Building (as such
term is defined in Section 2.2(e) below), as stated on a monthly basis and
determined pursuant to this Section 2.2 as of the first (1st) day of the
applicable Extension Term ("EXTENSION TERM COMMENCEMENT DATE"); provided,
however, in no event shall the Base Rent payable during any Extension Term for
the Building be less than the Base Rent payable during the period immediately
preceding such Extension Term for the Building and provided further that, on the
first anniversary of the Extension Term Commencement Date, and on each
subsequent anniversary thereof during such Extension Term, the then payable
monthly Extension Term Base Rent shall be increased in accordance with market
rate increases, as mutually agreed to by Landlord and Tenant or, if Landlord and
Tenant cannot agree, as determined by the appraisal process described below.
Upon receipt by Landlord of Tenant's Extension Notice under this Section 2.2,
above, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the applicable Extension Term Base Rent which shall become effective as of the
respective Extension Term Commencement Date. If Landlord and Tenant have not
agreed upon the Extension Term Base Rent (including the annual market rate
increases) on or before the "Withdrawal Date" (as that term is defined below),
Tenant may elect to withdraw the Extension Notice thereby canceling Tenant's
exercise of the Extension Option. The term "WITHDRAWAL DATE" shall mean (i) if
Landlord delivers the Reminder Notice
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prior to Tenant's delivery of the Extension Notice, the date which is thirty
(30) days after the date of the Reminder Notice, or (ii) if Landlord has not yet
delivered a Reminder Notice at the time of Tenant's delivery of the Extension
Notice, the date which is the earlier of (1) the date which is eleven (11)
months prior to the end of the initial Lease Term or first Extension Term (as
applicable), or (2) the date which is sixty (60) days after the date of Tenant's
delivery of the Extension Notice. If Tenant fails to deliver written notice to
Landlord so withdrawing the Extension Notice on or before the Withdrawal Date
and if Landlord and Tenant have not agreed upon the Extension Term Base Rent
(including the annual market rate increases) within sixty (60) days after the
delivery of Tenant's Extension Notice, the Extension Term Base Rent shall be
determined as follows:
(a) Landlord and Tenant shall attempt to agree in good faith upon a
single appraiser not later than the date ("SINGLE APPRAISER DATE") which is
forty-five (45) days after delivery of Tenant's Extension Notice. If Landlord
and Tenant are unable to agree upon a single appraiser within such time period,
then Landlord and Tenant shall each appoint one appraiser not later than five
(5) days after the deadline for selecting a single appraiser. Landlord and
Tenant shall each give written notice to the other as to the name of the
appraiser it has selected, within five (5) days after the deadline for selecting
a single appraiser. Within ten (10) days thereafter, the two (2) appointed
appraisers shall appoint a third appraiser. All appraisers shall be independent
from, and disinterested in, both Landlord and Tenant.
(b) The only tasks which the appraiser(s) shall perform shall be
forming and reporting to Landlord and Tenant an opinion of the Fair Market
Rental Value (including annual market rate increases) of the Premises for use in
determining the Extension Term Base Rent.
(c) If either Landlord or Tenant fails to appoint its appraiser
within the prescribed time period, the single appraiser appointed shall
determine the Fair Market Rental Value of the Building. If both parties fail to
appoint appraisers within the prescribed time periods, or if the two (2)
appointed appraisers cannot agree on a third appraiser then either party shall
have the right to apply to the presiding judge of the Superior Court of San
Diego County for the appointment of an appraiser meeting the qualifications
hereof to determine the Fair Market Rental Value of such Building.
(d) Each party shall bear the cost of its own appraiser and the
parties shall share equally the cost of any single or third appraiser, if
applicable. All appraisers so designated herein shall have at least ten (10)
years' experience in the appraisal of commercial properties similar to the
Premises and Comparable Buildings and shall be members of professional
organizations such as MAI or its equivalent.
(e) For the purpose of such appraisal and this subsection (e), the
term "FAIR MARKET RENTAL VALUE" shall mean the price that a ready and willing,
non-equity, non-sublease tenant would pay as annual rent as of the Extension
Term Commencement Date (taking into consideration the annual market rate
increases specified in Section 2.2(b) above) and a ready and willing landlord
would accept on a non-sublease, non-renewal basis, at arm's length, from
creditworthy tenants (provided Tenant is then in compliance with the Financial
Standards specified in Section 21.2) for a five (5) year term for unencumbered
"space comparable to the Building" in Comparable Buildings. Such "space
comparable to the Building" shall mean office space consisting of an entire
building, with tenant improvements of substantially similar quality and layout
as the Premises. Fair Market Rental Value shall include or take into
consideration any lease concessions offered by landlords in lease transactions
from and after the date which is twelve (12) months prior to the Single
Appraiser Date (the "QUALIFYING PERIOD") for space comparable to the Building
within such Comparable Buildings, including, without limitation, free rent,
tenant improvement allowances or any other payments or concessions; however,
Fair Market Rental Value shall also take into consideration (i) the market trend
(i.e., all other factors being equal, comparable transactions entered into
earlier in the Qualifying Period shall be accorded less weight than comparable
transactions entered into later in the Qualifying Period), and (ii) the value in
the market of the existing improvements in the Building, as compared to the
value in the market of the existing improvements in such space comparable to the
Building.
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Further, in calculating the Fair Market Rental Rate, no consideration shall be
given to the fact that Landlord is or is not required to pay a real estate
brokerage commission in connection with the Extension Term or the fact that
comparable deals do or do not involve the payment of real estate brokerage
commissions. If there are less than two (2) lease transactions for "space
comparable to the Building," as defined in this Section 2.2(e), entered into
during the Qualifying Period, then the term "space comparable to the Building"
shall be expanded as necessary to allow appraiser(s) to consider lease
transactions covering multiple floors in a building (but less than an entire
building) with the appraiser(s) making appropriate economic adjustments to
compensate for such lease transactions in which less than the entire building is
leased by the tenant.
(f) If a single appraiser is chosen, then such appraiser shall
determine the Fair Market Rental Value of the Building. Otherwise, the Fair
Market Rental Value of the Building shall be the arithmetic average of the two
(2) appraisals which are closest in amount, and the third appraisal shall be
disregarded.
(g) Landlord and Tenant shall instruct the appraiser(s), in writing,
to complete their written determination of the Fair Market Rental Value not
later than thirty (30) days after their selection. If the Fair Market Rental
Value has not been determined by such date, then the Fair Market Rental Value
shall be determined thereafter, and if it has not been determined by the
Extension Term Commencement Date, then Tenant shall continue to pay Landlord
monthly installments of Base Rent in the amount applicable to the Building
immediately prior to the Extension Term Commencement Date until the Fair Market
Rental Value is determined. When the Fair Market Rental Value of the Building
is determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between the monthly installments of Base Rent actually paid by Tenant
to Landlord subsequent to the Extension Term Commencement Date and the new
monthly installments of Base Rent which are determined to have been actually
owing during such period in accordance with this Section 2.2, plus interest at
the Interest Rate from the date the applicable monthly installments were due
until such difference is actually paid.
ARTICLE 3
BASE RENT
3.1 INITIAL BASE RENT. Tenant shall pay, without notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or at such
other place as Landlord may from time to time designate in writing, in currency
or a check for currency which, at the time of payment, is legal tender for
private or public debts in the United States of America, base rent ("BASE RENT")
as set forth in Section 6 of the Summary, payable in equal monthly installments
as set forth in Section 6 of the Summary in advance on or before the first day
of each and every month during the Lease Term, without any offset or deduction
whatsoever except as otherwise expressly set forth in this Lease. Base Rent
shall commence on the Lease Commencement Date. The Base Rent for the first full
month of the Lease Term shall be paid on or before the date which is ninety (90)
days after Landlord notifies Tenant in writing that it has commenced
construction of the Base Shell and Core with respect to such Building. Landlord
shall invest such payment of the first month's Base Rent in a Certificate of
Deposit with a maturity date approximately that of the Lease Commencement Date
in a financial institution selected by Landlord, and any interest accruing
thereon shall be credited to Tenant's Base Rent obligations for the second (2nd)
full month of the Lease Term. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the Rent.
All other payments or adjustments required to be made under the terms of this
Lease that require proration on a time basis shall be prorated on the same
basis.
3.2 ADJUSTMENTS TO BASE RENT. The Base Rent rate payable (per rentable
square foot) with respect to the Building shall be increased on the second (2nd)
anniversary of the Lease
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Commencement Date and on each subsequent second (2nd) anniversary thereof during
the initial Lease Term to an amount equal to 106.5% of the Base Rent rate
payable (per rentable square foot) during the immediately prior period, subject
to further adjustment during any Extension Term in accordance with Section 2.2
above.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.9 and
4.2.2 of this Lease, respectively, which are in excess of the amount of Building
Direct Expenses applicable to the "Base Year" for such Building, as that term is
defined in Section 4.2.1, below; provided, however, if the Lease Commencement
Date occurs after January 1 of the Base Year, the amount of Building Direct
Expenses applicable to the Base Year shall be increased in order to reflect
Building Direct Expenses for an entire twelve (12) month period. Further, in no
event shall any decrease in Building Direct Expenses for such Building for any
"Expense Year" for the Building as that term is defined in Section 4.2.6 below,
below Building Direct Expenses for the Base Year entitle Tenant to any decrease
in Base Rent for the Building or any credit against sums due under this Lease.
It is the intent of Landlord and Tenant hereunder that Building Direct Expenses
be calculated for the Building separately based on the Building Direct Expenses
allocated to such Building. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are collectively referred to in this Lease as the "ADDITIONAL RENT", and the
Base Rent and the Additional Rent are collectively referred to in this Lease as
"RENT." All amounts due under this Article 4 as Additional Rent shall be
payable for the same periods and in the same manner as the Base Rent. Without
limitation on other obligations of Tenant which survive the expiration of the
Lease Term, the obligations of Tenant to pay the Additional Rent provided for in
this Article 4, and the obligation of Landlord to refund to Tenant any
overpayment of Building Direct Expenses pursuant to Section 4.2 below, shall
survive the expiration of the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 7.1
of the Summary.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses," as those terms are defined in Sections
4.2.3 and 4.2.4 below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses," as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts which Landlord pays or accrues during any Expense Year because of or in
connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof.
Without limiting the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the cost of supplying
all
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utilities to the Project (except that electricity supplied to the Premises shall
be separately paid for by Tenant pursuant to Section 6.2.2 below), the cost of
operating, repairing, maintaining, and renovating the utility, telephone,
mechanical, sanitary, storm drainage, and elevator systems, and the cost of
maintenance and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections (other than those obtained in
connection with the initial construction of the Building and the Tenant
Improvements) and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project as reasonably determined by Landlord; (iv) the cost of landscaping,
relamping, and supplies, tools, equipment and materials used in the operation,
repair and maintenance of the Project, or any portion thereof; (v) the cost of
parking area (including any parking structures) repair, restoration, and
maintenance; (vi) reasonable fees and other costs, including reasonable
management, consulting, legal and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental agreements and the
fair rental value of any on-site or off-site management office space for the
Project (as described in Section 6.1.4 below) not to exceed 2,000 rentable
square feet (which fair rental value for the purpose of determining the Direct
Expenses for the Base Year and any subsequent Expense Years shall be the same
rate per rentable square foot as the monthly rental rate per rentable square
foot paid by Tenant to Landlord from time to time for Building 1 under the
Building 1 Lease); (viii) wages, salaries and other compensation and benefits,
including taxes levied thereon, of all non-executive persons reasonably engaged
in the operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the reasonable sharing of costs by the Project
(including, without limitation, any assessments and association dues under the
CC&R's); (x) operation, repair, maintenance and replacement of all systems and
equipment and components thereof of the Project including, but not limited to
HVAC systems, electrical, plumbing and life-safety systems, elevators, any
Project locker rooms and workout facilities (except that the cost of electricity
used to operate the HVAC system shall be paid by Tenant directly pursuant to
Section 6.2.2 below); (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
common areas, maintenance and replacement of curbs, roadways, driveways, and
walkways, repair to roofs and re-roofing; (xii) amortization (including interest
on the unamortized cost) over the useful life as Landlord shall reasonably
determine, of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, or any portion
thereof; (xiii) the cost of capital improvements or other costs incurred in
connection with the Project (A) which are intended, in good faith, to effect
economies in the operation or maintenance of the Project, or any portion
thereof, and only to the extent such anticipated economies exceed the cost of
such item, (B) that are required to comply with present or anticipated
conservation programs, (C) required by laws, ordinances or regulations enacted
after the date permits for the construction of the Building were obtained, and
(D) includable in Operating Expenses pursuant to consistently applied and sound
accounting and management principles (including, but not limited to, the repair,
resurfacing and replacement of parking lots and Project roadways and driveways);
provided, however, that any capital expenditure shall be amortized (including
interest on the amortized cost at Landlord's actual cost of funds) over its
useful life as Landlord shall reasonably determine; and (xiv) costs, fees,
charges or assessments imposed by, or resulting from any mandate imposed on
Landlord by, any federal, state or local government for fire and police
protection, trash removal, community services, or other services which do not
constitute "Tax Expenses" as that term is defined in Section 4.2.8 below.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:
(a) costs incurred in connection with the original construction of
the Building and costs of repairing, replacing or otherwise correcting
latent defects, the cost of any "tap fees" or one-time lump sum sewer or
water connection fees for the Building payable in connection with the
original construction of the Building, costs incurred (less costs of
recovery) for any item to the extent covered by a manufacturer's,
materialman's, vendor's or contractor's warranty and paid by such
manufacturer, materialman, vendor or contractor (provided, however, the
costs incurred for any normal repair or maintenance
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item (not attributable to the correction of start-up problems, repairs or
replacements) to the extent covered by a manufacturer's, materialman's,
vendor's or contractor's warranty in the Base Year (and not in a subsequent
Expense Year) and paid by such manufacturer, materialman, vendor or
contractor during the Base Year shall be included in Operating Expenses);
non-cash items such as deductions for depreciation and amortization of the
Building and the Building Systems and Equipment;
(b) costs, including marketing costs, legal fees, space planners'
fees, and brokerage fees incurred in connection with the original
construction or development of the Project or the original or future
leasing of the Project, and costs, including permit, license and inspection
costs and allowances and other concessions, incurred with respect to the
installation of tenant improvements made for new tenants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space for tenants or other occupants (or
prospective tenants or occupants) of the Project;
(c) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(d) costs for which Landlord is reimbursed by any tenant or occupant
of the Project or by insurance by its carrier or any tenant's carrier (or
if Landlord fails to carry the insurance required to be carried by Landlord
pursuant to Section 10.4 below, costs which would have been covered by
insurance had Landlord obtained the coverage required to be carried under
this Lease) or by the Association under the CC&R's or by anyone else, and
electric power costs for which any tenant directly contracts with the local
public service company;
(e) any bad debt loss, rent loss, or reserves for bad debts or rent
loss;
(f) costs associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated
with the operation of the Project). Costs associated with the operation of
the business of the partnership or entity which constitutes Landlord
including costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of the
Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, and
costs incurred in connection with any disputes between Landlord and its
employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord's general corporate overhead and
general and administrative expenses;
(g) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and
managing the Project vis-a-vis time spent on matters unrelated to operating
and managing the Project; provided, that in no event shall Operating
Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of regional Project manager or
Project engineer;
(h) amount paid as ground rental for the Project by Landlord;
(i) any compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord, provided that any compensation
paid to any concierge at the Project and any compensation paid regarding
parking operations shall be includable as an Operating Expense;
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(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Expenses as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an emergency
condition in the Project, or during periods when the systems or equipment
is being repaired;
(k) all items and services for which Tenant or any other tenant in
the Project reimburses Landlord or which Landlord provides selectively to
one or more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses elsewhere in
this Lease;
(n) costs incurred to comply with laws or otherwise relating to the
removal or abatement of hazardous material in the soil and costs incurred
to comply with laws or otherwise relating to the removal or abatement of
hazardous material in the Building or any Common Area improvements except
where such removal or abatement in the Building or Common Area improvements
is required to be performed during the Lease Term by laws not in effect as
of the Lease Commencement Date (in which case an amount not exceeding
twenty-five cents (.25CENTS) per rentable square foot of the Building for
the cost of such removal or abatement may be included in Operating Expenses
and any remaining costs shall be capitalized and amortized over a useful
life determined in accordance with generally accepted accounting principles
(but in no event less than ten (10) years) but only fifty percent (50%) of
such amortized amount may be included in Operating Expenses in each
calendar year during such amortization term);
(o) costs arising from Landlord's charitable or political
contributions;
(p) expenses directly resulting from the active or gross negligence
of Landlord, its agents, servants or employees;
(q) rental for any space in the Building set aside for conference
facilities, storage facilities or exercise facilities;
(r) the amounts of any payments by Landlord or to its affiliates for
goods or services in the Project in excess of a competitive (but not
necessarily the lowest) rate;
(s) costs (not including Tax Expenses), incurred in connection with
the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building, including brokerage commissions, consultant's,
attorneys' and accountant's fees, closing costs, title insurance premiums,
transfer taxes and interest charges;
(t) costs incurred by Landlord to correct any Year 2000 ("Y2K")
problems incurred as a direct result of any Y2K problems (provided that
this exclusion shall not apply to Y2K problems of utility providers to
Landlord);
(u) costs attributable to increases in expenses during the Lease Term
for management fees unless the total management fees for such Expense Year
(including any such increases therein) are not in excess of a competitive
(but not necessarily the lowest) rate for Comparable Buildings; and
(v) assessments, charges, and dues under the CC&R's which would
result in a duplicative charge to Tenant or a charge which is otherwise
precluded under this Section 4.2.7 or other provisions of this Lease
including without limitation (1) any expense, cost
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or charge which would be duplicative of a charge for which Tenant already
is responsible under this Lease; (2) any expense for property management
which would be duplicative of a charge for which Tenant already is
responsible under this Lease; (3) special assessments levied under the
CC&R's which would be precluded by subsection 4.2.7(c) above; and (4) any
expense precluded by Section 5.3 below.
With respect to Landlord's regional Project manager, such individual's
wages and benefits may be included in Operating Expenses; provided, however,
that (1) the amount so included in Operating Expenses for the Project shall not
increase by more than Two Thousand Dollars ($2,000.00) in the first Expense Year
after the Base Year and (2) the maximum amount includable in Operating Expenses
in each Expense Year thereafter shall be one hundred five percent (105%) of the
maximum amount includable in Operating Expenses for the immediately preceding
Expense Year, except that in no event shall such amount included in Operating
Expenses in any such subsequent Expense Year be more than one hundred ten
percent (110%) of the average amount so included in the immediately preceding
two (2) Expense Years. By way of example only, and not as a limitation upon the
foregoing, if the amount of such wages and benefits included in Operating
Expenses for the Project in the Base Year is Forty Thousand Dollars
($40,000.00), such wages and benefits are Forty-Two Thousand Dollars
($42,000.00) in the first (1st), second (2nd) and third (3rd) Expense Years
after the Base Year, but in the fourth (4th) Expense Year after the Base Year
such wages and benefits are increased to Forty-Eight Thousand Dollars
($48,000.00), the maximum amount includable in Operating Expenses for the fourth
(4th) Expense Year after Base Year shall be Forty-Six Thousand Two Hundred
Dollars ($46,200.00) (i.e., 110% of $42,000.00) and the maximum amount
includable in the Operating Expenses for the fifth (5th) Expense Year after Base
Year shall be Forty-Eight Thousand Five Hundred Ten Dollars ($48,510.00)
(i.e., 110% of the average of $42,000.00 and $46,200.00).
There shall be deducted from Operating Expenses the following items in the
year in which they are applicable: (i) insurance and condemnation proceeds to
the extent that such proceeds relate to costs and expenses previously included
in Operating Expenses, (ii) all other funds recovered from any tenant of the
Building, contractors, or other parties as payment for expenses which were
previously included in Operating Expenses, other than tenants' contributions for
their proportionate share of Operating Expenses, and (iii) all funds available
through the CC&R's which were previously included in Operating Expenses.
Operating Expenses shall reflect reductions for cash discounts and trade
discounts taken by Landlord.
If Landlord does not carry a form of insurance coverage (e.g., earthquake
insurance) for the Building during any part of the Base Year but subsequently
obtains such insurance for the Building during the Lease Term, then from and
after the date upon which Landlord obtains such insurance coverage and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent
calendar year. Conversely, if Landlord carries a form of insurance coverage
(e.g., earthquake insurance) for the Building during any part of the Base Year
but subsequently no longer carries such form of insurance coverage, then from
and after the date upon which Landlord no longer carries such insurance coverage
and continuing throughout the period during which Landlord no longer maintains
such insurance coverage, Operating Expenses for the Base Year shall be deemed to
be decreased by the amount of premium Landlord incurred for such insurance for
the same period of time during the Base Year as such insurance was no longer
maintained by Landlord during such subsequent calendar year.
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, then Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Building is
not at least ninety-five percent (95%) occupied during all or a portion of the
Base Year or any
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Expense Year, Landlord shall make an appropriate adjustment to the components of
Operating Expenses for such year to determine the amount of Operating Expenses
that would have been paid had such Building been ninety-five percent (95%)
occupied; and the amount reasonably so determined shall be deemed to have been
the amount of Operating Expenses for such year. Operating Expenses for the Base
Year shall not include market-wide labor-rate increases due to extraordinary
circumstances, including, but not limited to, boycotts and strikes, or utility
rate increases due to extraordinary circumstances including, but not limited to,
conservation surcharges, boycotts, embargoes or other shortages (unless such
labor rate or utility rate increases remain in effect after the Base Year, in
which event the Operating Expenses for the Base Year shall be adjusted when the
labor rate increases or utility rate increases adjust following the cessation of
the extraordinary circumstances causing such increases in the first place), or
amortized costs relating to capital improvements.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state, county,
or local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof. Tax Expenses for the Base
Year of the Lease Term for the Building (and the underlying land for the tax
parcel) shall be calculated as if the value of such Building, the Base, Shell
and Core of such Building and the Tenant Improvements thereto and related
improvements to the Common Area as reasonably allocated to such Building were
fully assessed. With respect to Tenant Improvements in each Building, such Tax
Expenses shall be calculated to include the actual "soft" and "hard" costs of
such improvements. If Tenant fails to utilize the entire Tenant Improvement
Allowance for any particular Building for Tenant Improvements, thereupon Tax
Expenses shall be adjusted to the actual amount so utilized.
4.2.8.2 Tax Expenses shall include, without limitation: (i)
any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax or
business license tax with respect to the receipt of or measured by the amount of
such rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; and (iv) any assessment, tax, fee, levy or
charge, upon this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises.
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4.2.8.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.8.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.8.4 If in any Expense Year subsequent to the Base Year
(the "ADJUSTMENT YEAR"), the amount of Tax Expenses decreases below the amount
of Tax Expenses for the Base Year as a result of a Proposition 8 reduction, then
for purposes of all subsequent Expense Years, including the Expense Year in
which such decrease in Tax Expenses occurs, the Building Direct Expenses for the
Base Year shall be decreased by an amount equal to such decrease in assessed
value or direct assessments, as applicable, in the Adjustment Year. Conversely,
if the Tax Expenses thereafter are decreased by a lesser amount during any
comparison year subsequent to the Adjustment Year (the "READJUSTMENT YEAR") as a
result of Landlord's failure to secure a Proposition 8 reduction which is
greater than or equal to the Proposition 8 reduction secured during the
Adjustment Year, then for purposes of all subsequent comparison years, including
the comparison year in which such lesser decrease in Tax Expenses occurs, the
Building Direct Expenses for the Base Year shall only be decreased by an amount
equal to the decrease in assessed value or direct assessments, as applicable,
during such Readjustment Year which resulted from Landlord's failure to secure a
Proposition 8 reduction greater than or equal to the Proposition 8 reduction
secured during the Adjustment Year; provided that any costs and expenses
incurred by Landlord in securing any Proposition 8 reduction shall not be
included in Building Direct Expenses for purposes of this Lease. Landlord and
Tenant acknowledge that this Section 4.2.8.4 is not intended to in any way
affect (A) the inclusion in Tax Expenses of the statutory two percent (2%)
annual increase in Tax Expenses (as such statutory increase may be modified by
subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13, which shall be governed pursuant to the
terms of Sections 4.2.8.1 through 4.2.8.3, above and Section 4.4.4 below.
Notwithstanding the foregoing, in the event that the Project is reassessed (the
"REASSESSMENT") for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, and such Reassessment results
in a decrease in Tax Expenses, the component of Tax Expenses for the Base Year
which is attributable to the assessed value of the Project under Proposition 13
prior to the Reassessment (without taking into account any Proposition 8
reductions) shall be reduced for the purposes of comparison to all subsequent
Expense Years (commencing with the Expense Year for which the Reassessment is
first attributable) to an amount equal to the real estate taxes based upon such
Reassessment.
4.2.9 "TENANT'S SHARE" with respect to Building Direct Expenses,
shall equal the percentage which the total rentable square footage of the space
leased by Tenant in such Building bears to the total rentable square footage of
the Building. In the event either the rentable square feet of the Premises
and/or the total rentable square feet of the Building is remeasured pursuant to
Section 1.2 above, Tenant's Share shall be appropriately adjusted, and, as to
the Expense Year in which such change occurs, Tenant's Share for such Expense
Year shall be determined on the basis of the number of days during such Expense
Year that each such Tenant's Share was in effect.
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4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the
Building will be a part of a multi-building project and that the costs and
expenses incurred in connection with the Project (I.E. the Direct Expenses)
should be shared among the tenants of the Building and the tenants of the
Adjacent Buildings in the Project. Such allocation shall be made in accordance
with the CC&R's; provided, however, that to the extent such allocation is not
addressed in the CC&R's, Landlord shall, in Landlord's reasonable judgment,
determine which Direct Expenses are properly allocable to an individual building
(because the expense applies to only such building) and which Direct Expenses
shall be allocable to tenants of more than one (1) building (in which case
Building Direct Expenses shall include those expenses so allocated to the
Building based upon the relative square footages of the affected buildings).
4.3.2 COST POOLS. Notwithstanding anything to the contrary
contained herein, Landlord shall have the right, from time to time, to equitably
allocate some or all of the Direct Expenses for the Project among different
portions or occupants of the Project (the "COST POOLS"), in Landlord's
reasonable judgment. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building of the Project or of the Project, and the
retail space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Building Direct
Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "EXCESS").
4.4.1 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. By May 1 of
each year, Landlord shall give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "ESTIMATED
EXCESS") as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish
the Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary but Landlord shall not do
so more than twice during any Expense Year. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the next
to last sentence of this Section 4.4.1). Such fraction shall have as its
numerator the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator. Until
a new Estimate Statement is furnished (which Landlord shall have the right to
deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12th) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant. Landlord shall maintain books and records with respect to
Building Direct Expenses in accordance with generally accepted and sound
accounting and management practices, consistently applied.
4.4.2 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. In addition, Landlord shall give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year for the
Building, and which shall indicate the amount of the Excess. Upon receipt of
the Statement for each Expense Year commencing or ending during the Lease Term,
if an Excess is present, Tenant shall pay, with its next installment of Base
Rent due, the full amount of the Excess for such Expense Year, less the amounts,
if any, paid during such Expense Year as Estimated Excess, and if Tenant paid
more as Estimated Excess than the actual Excess, Tenant shall receive a credit
in the amount of Tenant's overpayment against Rent next
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due under this Lease. In addition, Landlord shall, within ten (10) days after
written request from Tenant, distribute (or if Landlord does not control the
Association, request the Association to distribute) to Tenant a copy of (1) the
budget, notice and summary prepared pursuant to Section 3.3 of the CC&R's and
(2) the accounting prepared pursuant to Section 3.6(c) of the CC&R's. The
failure of Landlord to timely furnish the Statement, or any other information
required under this Section 4.4.2, for any Expense Year shall not prejudice
Landlord or Tenant from enforcing its rights under this Article 4. Even though
the Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Share of Building Direct Expenses for the
Expense Year in which this Lease terminates, if an Excess if present, Tenant
shall pay to Landlord such amount within thirty (30) days, and if Tenant paid
more as Estimated Excess than the actual Excess, Landlord shall, within thirty
(30) days, deliver a check payable to Tenant in the amount of the overpayment.
The provisions of this Section 4.4.2 shall survive the expiration or earlier
termination of the Lease Term.
4.4.3 TENANT'S AUDIT RIGHT. Within six (6) months after receipt of
a Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set forth
in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default in the payment of Base Rent
or Building Direct Expenses after expiration of all applicable cure periods and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord's records in strict confidence. Landlord shall cooperate with Tenant
in obtaining all necessary or appropriate information from the Association.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement by written notice to
Landlord within thirty (30) days after the Review Period shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement. If after such
inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing that Tenant still disputes such amounts, a certification as
to the proper amount shall be made by an independent certified public accountant
selected by Landlord and reasonably approved by Tenant who is a member of a
nationally or regionally recognized accounting firm. Landlord shall cooperate
in good faith with Tenant and the accountant to show Tenant and the accountant
the information upon which the certification is to be based. If such
certification by the accountant proves that the Building Direct Expenses set
forth in the Statement were (i) overstated by less than two percent (%), then
the cost of the accountant and the cost of such certification shall be paid for
by Tenant, (ii) overstated by two percent (2%) or more but less than three
percent (3%), then the cost of the accountant and the cost of certification
shall be split evenly between Landlord and Tenant, or (iii) overstated by three
percent (3%) or more, then the cost of the accountant and the cost of such
certification shall be paid for by Landlord. Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification.
4.4.4 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease in the event that at any time
during the first seven (7) years of the Lease Term, any sale, refinancing, or
change in ownership of such Building is consummated, and as a result thereof,
and to the extent that in connection therewith, a Reassessment occurs pursuant
to the terms of Proposition 13, then the terms of this Section 4.4.4 shall apply
to such Reassessment for the Building.
4.4.4.1 THE TAX INCREASE. For purposes of this Article 4,
the term "Tax Increase" shall mean that portion of the Tax Expenses, as
calculated immediately following the Reassessment, which is attributable solely
to the Reassessment. Accordingly, the term Tax Increase shall not include any
portion of the Tax Expenses, as calculated immediately following the
Reassessment, which is attributable to (i) the initial assessment of the value
of the land associated with the Building, the Base, Shell and Core of such
Building, improvements in the
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Project or any "soft" costs, permit costs, site improvement costs or
entrepreneurial profit added by the assessor due to construction of the Project,
(ii) assessments which were pending immediately prior to the Reassessment which
assessments were conducted during, and included in, such Reassessment, or which
assessments were otherwise rendered unnecessary following the Reassessment, or
(iii) the annual inflationary increase of real estate taxes permitted to be
assessed annually under Proposition 13.
4.4.4.2 TAX INCREASE PROTECTION. During the first seven
(7) years of the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase. Notwithstanding the foregoing, Landlord shall be
permitted to pass through to Tenant any Tax Increase resulting from a change in
ownership of the Project arising out of the sale, financing or merger of all or
substantially all of the assets or stock of and/or partnership interests and/or
limited liability company interests owned by Kilroy Realty Corporation and/or
its affiliates.
4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13
PROTECTION AMOUNT ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax
Expenses which Tenant is not obligated to pay or will not be obligated to pay
during the Lease Term in connection with a particular Reassessment pursuant to
the terms of this Section 4.4.4, shall be sometimes referred to hereinafter as
"Proposition 13 Protection Amount." If the occurrence of a Reassessment is
reasonably foreseeable by Landlord and the Proposition 13 Protection Amount
attributable to such Reassessment can be reasonably quantified or estimated for
each Lease Year commencing with the Lease Year in which the Reassessment will
occur, the terms of this Section 4.4.4.3. shall apply to each such Reassessment.
Upon notice to Tenant, Landlord shall have the right to purchase the Proposition
13 Protection Amount relating to the applicable Reassessment (the "Applicable
Reassessment"), at any time during the Lease Term, by paying to Tenant an amount
equal to the "Proposition 13 Purchase Price," as that term is defined below,
provided that the right of any successor of Landlord to exercise its right of
repurchase hereunder shall not apply to any Reassessment which results from the
event pursuant to which such successor of Landlord became the landlord under
this Lease. As used herein, "Proposition 13 Purchase Price" shall mean the
present value of the Proposition 13 Protection Amount remaining during the Lease
Term, as of the date of payment of the Proposition 13 Purchase Price by
Landlord. Such present value shall be calculated (i) by using the portion of
the Proposition 13 Protection Amount attributable to each remaining Lease Year
(assuming for purposes of this computation that the amount of such Proposition
13 Protection Amount benefited Tenant on an equal monthly basis at the end of
each month during each Lease Year), as the amount to be discounted, and (ii) by
using an eight percent (8%) discount rate, compounded annually, for each monthly
amount to be discounted. Upon such payment of the Proposition 13 Purchase
Price, the provisions of Section 4.4.4.2 of this Lease shall not apply to any
Tax Increase attributable to the Applicable Reassessment. Since Landlord is
estimating the Proposition 13 Purchase Price because a Reassessment has not yet
occurred, then when such Reassessment occurs, if Landlord has underestimated the
Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Tenant's
Rent next due shall be credited with the amount of such under-estimation, and if
Landlord overestimates the Proposition 13 Purchase Price, then upon notice by
Landlord to Tenant, Rent next due shall be increased by the amount of the
overestimation. The amount of any such underestimate or overestimate shall be
calculated by taking the difference between the Proposition 13 Purchase Price
for the Applicable Reassessment actually paid to Tenant and the Proposition 13
Purchase Price for the Applicable Reassessment as it should have been computed
had all relevant facts concerning the Applicable Reassessment been known at the
time such Purchase Price was originally computed, and adding interest thereto at
a rate per annum equal to ten percent (10%), compounded annually, from the date
such Purchase Price was paid to Tenant through the date that the amount of the
underestimate or overestimate is to be credited or debited (as the case may be)
against Rent next due hereunder.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and
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any other personal property are levied against Landlord or Landlord's property
or if the assessed value of Landlord's property is increased by the inclusion
therein of a value placed upon such equipment, furniture, fixtures or any other
personal property and if Landlord pays the taxes based upon such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof but only under proper protest if requested by Tenant, Tenant shall upon
demand repay to Landlord the taxes so levied against Landlord or the proportion
of such taxes resulting from such increase in the assessment, as the case may
be.
4.5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the Tenant Improvement Allowance actually
used to build-out the Premises then the Tax Expenses levied against Landlord or
the property by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facilities; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises for office, software
development, training, research and development, storage, distribution and other
lawful uses permitted under the CC&R's (as defined below) and the Project's
permitted zoning and for no other purpose or purposes whatsoever without
Landlord's consent, which may be withheld in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in EXHIBIT "D", attached hereto, or in violation of
the laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project.
Tenant shall not do or permit anything to be done in or about the Premises which
will obstruct or interfere with the rights of other tenants or occupants of the
Buildings or Project, or injure them or use or allow the Premises to be used for
any unlawful purpose, nor shall Tenant cause or maintain any nuisance in, on or
about the Premises. Tenant shall not use or knowingly allow another person or
entity to use any part of the Premises for the storage, use, treatment,
manufacture or sale of "Hazardous Material," (as that term is defined in
Section 29.23 of this Lease); provided, however, Tenant may use commercially
reasonable amounts of any Hazardous Material as is normal and customary for
general office use so long as Tenant complies, at Tenant's sole cost and
expense, with all Applicable Laws relating thereto.
5.3 CC&R'S. Tenant acknowledges that Landlord intends to record an
Agreement Between Land Owners Including Covenants, Conditions and Restrictions
and Grants of Easements for Carmel Center and Including Termination of Both
Former Declaration and Prior Grants of Easements (the "CC&R'S") over the
Project. Tenant hereby approves the draft of CC&R's attached hereto as Exhibit
"F" and made a part hereof and hereby subordinates this Lease to the CC&R's and
any amendments or modifications thereto; provided, however, that any
modifications to the draft of the CC&R's attached as EXHIBIT "F" which may have
a material effect on Tenant's use or enjoyment of, or access to, the Premises or
Project shall be subject to
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Tenant's prior approval, which approval shall not be unreasonably withheld or
delayed. Tenant shall, within fifteen (15) days after request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination of this Lease to the CC&R's.
As of the date of execution of this Lease, Landlord contemplates that it will be
the declarant under the CC&R's and a California nonprofit mutual benefit
corporation has been, or will be, established (the "ASSOCIATION") and charged
with certain duties under the CC&R's. Certain individuals who are directors,
officers or employees of Landlord, the members of Landlord, or affiliates
thereof, are, or will be, members of the board of directors of the Association.
The board shall have the right to appoint members and alternatives members of
the Architectural and Development Review Committee (the "COMMITTEE")
contemplated by the CC&R's. As an owner of property subject to the CC&R's,
Landlord is a member of the Association for each parcel within the Project which
is subject to assessments under the CC&R's. With respect to Landlord's
respective capacities as declarant, member of the board, and a member of the
Committee under the CC&R's, Landlord covenants not to do any of the following
without Tenant's consent (which shall not be unreasonably withheld) (i) take any
action which in Landlord's reasonable opinion will jeopardize or be detrimental
to Tenant's rights under this Lease and Tenant's use and enjoyment of its
leasehold estate, (ii) take any action which has the effect of materially
increasing assessments or costs incurred by Landlord under the CC&R's, which
will result in an unreasonable increase in Direct Expenses in Expense Years
after the Base Year, (iii) vote in favor of or approve any new improvements,
operation or use on any of the properties covered by the CC&R's without first
consulting with Tenant, and (iv) knowingly allow any use of the parking
facilities within the Project (as defined in this Lease) that is not allowed
pursuant to the reciprocal parking rights described in the CC&R's. Landlord
shall provide (or if Landlord does not control the Association, Landlord will
request the Association to provide) to Tenant the draft budget prepared from
time to time in connection with the CC&R's for Tenant's review and comment, and
Landlord will reasonably consider Tenant's comments in preparing the budget.
Further, Landlord represents and warrants that the signage contemplated by this
Lease is in compliance with the CC&R's and the Sign Plan defined therein.
ARTICLE 6
SERVICE AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and guidelines
applicable thereto, Landlord shall provide heating, ventilation and air
conditioning ("HVAC") , pursuant to the HVAC service levels set forth in
EXHIBIT "G" attached hereto, from Monday through Friday, during the period from
6:00 A.M. to 7:00 P.M. and on Saturday during the period from 8:00 A.M. to
12:00 P.M. (the "BUILDING HOURS"), except for the dates of observation of New
Year's Day, Presidents Day, Independence Day, Labor Day, Memorial Day,
Thanksgiving Day, and Christmas Day and other nationally recognized holidays
that are not nationally recognized as of the date of this Lease (collectively,
the "HOLIDAYS"). Notwithstanding the foregoing, Landlord shall change the
Building Hours as requested by Tenant from time to time (but not more than two
(2) times per calendar year) so long as (i) the total Building Hours for the
weekly period (i.e., Monday through Sunday) do not exceed sixty-nine (69) hours,
(ii) Tenant leases the entire Building, (iii) any such Building Hours so
designated by Tenant for any day must be consecutive hours, and (iv) Tenant
shall be responsible for any additional reasonable costs incurred by Landlord as
a result of such change in hours requested by Tenant (which costs shall be
payable as Additional Rent within thirty (30) days after Tenant's receipt of
invoice therefor). Tenant shall be entitled to install, as an initial Tenant
Improvement or as an Alteration, dedicated heating, ventilation and air
conditioning units ("PACKAGE UNITS") within or serving the Premises at Tenant's
sole cost and expense (but not window units). The plans and specifications for
any Package Units shall, as indicated in Article 8 below and the Tenant Work
Letter (as applicable), be subject to Landlord's reasonable approval and the
electricity required to power such Package Units shall be included within the
allotment set forth in Section 6.1.2 below and such electricity and any other
utilities used by such Package Units shall be payable by Tenant in accordance
with
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Section 6.2 below. Tenant shall be solely responsible for maintenance and
repair of the Package Units and such units shall be considered to be a fixture
within the Premises and shall remain upon the Premises upon the expiration or
earlier termination of Lease Term unless Landlord requires Tenant to remove such
items upon expiration or earlier termination of this Lease pursuant to the
provisions of Section 8.5 below. Notwithstanding the foregoing, Tenant may
remove any "Libert" or similar type HVAC units from the Premises at any time
prior to expiration or earlier termination of the Lease Term provided that
Tenant removes all associated wiring and cabling, repairs any damage resulting
from such removal and restores the Premises to the condition prior to the
placement of such unit(s), reasonable wear and tear excepted.
6.1.2 Landlord shall provide adequate electrical wiring, facilities
and power sufficient to provide Tenant with four (4) watts per rentable square
foot of connected electrical load for Tenant's equipment and sufficient to
provide an additional one point five (1.5) watts per rentable square foot of
connected electrical load for Tenant's lighting fixtures. Any such electrical
usage shall be subject to applicable laws and regulations. Tenant shall bear
the cost of replacement of any non-Building standard lamps, starters and
ballasts for lighting fixtures within the Premises; replacement of any such
Building standard items (as shown on the Specifications) shall be included in
Operating Expenses.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall manage the Project and employ qualified
property management personnel and maintenance personnel to operate and manage
the Project in accordance with a standard which is not less than customarily
observed in the operation and management of Comparable Buildings. Such
management personnel and maintenance personnel shall, at a minimum, include the
following: upon completion of Building 5, on-site management shall include a
full-time property manager, an assistant property manager and an allocation of
time for a regional property manager; engineering staff will include one (1)
senior full-time engineer as of the Lease Commencement Date for Building 1 and
an additional journeyman level engineer to be hired upon the Lease Commencement
Date for the initial Floor Group for Building 3 and stationed at the Project;
and one (1) full-time day porter will be stationed at the Project upon the Lease
Commencement Date for Building 1 whose duties shall be as specified in EXHIBIT
"H-2." The management office for the Project shall be located in the Del Mar
Heights area until such time as Building 5 has been completed, at which time the
management office for the Project shall be located within the Project for the
remainder of the Lease Term. Landlord shall at all times comply with the
service levels and performance standards specifically described in EXHIBIT "G"
and EXHIBIT "H-1" and EXHIBIT "H-2", attached hereto, which may be modified by
Landlord from time to time so long as an equivalent or better level of service
is provided and such modification is reasonable and customary for Comparable
Buildings; provided, however, that if any such modification is made by Landlord
and results in an increase in Operating Expenses, then from and after the date
upon which such modification is effective and continuing throughout the period
during which such modification is effective, Operating Expenses for the Base
Year shall be increased by the amount Landlord reasonably determines it would
have incurred had the modification been in effect throughout the Base Year.
6.1.5 Landlord shall provide janitorial services five (5) days per
week except the date of observation of the Holidays, in and about the Building
in accordance with the standards described in EXHIBIT "H-1" attached hereto and
window washing services in accordance with a standard which is not less than
that customarily observed in other Comparable Buildings. Notwithstanding the
foregoing, Tenant may elect upon reasonable prior notice to Landlord to require
Landlord to change the provider of such janitorial services in the Building in
accordance with, and subject to, Section 6.7 below.
6.1.6 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours; Landlord shall have one
elevator available at all other times, including Holidays.
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6.1.7 Landlord, at its sole cost but includable as an Operating
Expense, shall provide a security system for the Project, including equipment,
on-site personnel, procedures and systems as provided in Exhibit "I" attached
hereto and made a part hereof. Security procedures shall be implemented to
regulate access to the Project during certain hours provided that, subject to
such restrictions and subject to the other provisions of this Lease, Tenant
shall have access to the Premises seven (7) days a week, twenty-four (24) hours
per day. Subject to Landlord's reasonable approval of Tenant's plans and
specifications and Tenant's compliance with the terms and conditions of Article
8, Tenant shall be entitled to install its own security systems for the
Premises, which shall be located within the Premises and shall not interfere
with the Project systems.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems (collectively, "BUILDING SYSTEMS AND EQUIPMENT") .
6.2 UTILITIES COSTS; OVERSTANDARD TENANT USE.
6.2.1 If Tenant uses heat-generating machines, machines other than
normal office machines, or equipment or lighting other than Building standard
lights in the Building, which adversely and materially affects the temperature
otherwise maintained by the air conditioning system or materially increase the
water normally furnished for such Building by Landlord pursuant to the terms of
Section 6.1 of this Lease, Landlord shall have the right to install
supplementary air conditioning units or other facilities in such Building,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance shall be paid by
Tenant to Landlord within thirty (30) days after billing by Landlord.
6.2.2 The Tenant Improvements to be constructed for the Building
shall include an electrical meter section and switchgear to measure electricity
supplied to the Premises (including, without limitation, electricity required in
order to provide HVAC to the Premises). Tenant shall contract directly with an
electricity service provider for electrical service to the Premises (including,
without limitation, electricity required in order to provide HVAC to the
Premises) and Tenant shall timely pay all charges for such service from such
provider and Landlord shall have no obligation with respect to the provision of
such service. The actual cost of electricity provided to the Premises
(including, without limitation, electricity required in order to provide HVAC to
the Premises) shall, notwithstanding anything to the contrary contained in this
Lease, not be included in Operating Expenses (including, without limitation,
Operating Expenses for the Base Year) for the Building (except for electricity
relating to the Common Areas, which shall be included in Operating Expenses
(including, without limitation, Operating Expenses for the Base Year) and paid
by Tenant as part of Building Direct Expenses).
6.2.3 If Tenant desires to use HVAC during hours other than those
for which Landlord is obligated to supply such HVAC pursuant to the terms of
Section 6.1 of this Lease (i.e., in excess of sixty-nine (69) hours in any
week), Tenant shall not be required to give Landlord prior notice of Tenant's
desired use but rather Tenant may control its after-hours HVAC use from within
the Premises. Landlord shall supply such after-hours HVAC to Tenant subject to
Tenant's payment to Landlord of an amount reasonably determined by Landlord to
be attributable to increased wear and tear on existing Building Systems and
Equipment caused by such after-hours use, any engineer's over-time and a nominal
amount attributable to overhead and accounting costs. Amounts payable by Tenant
to Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be paid within thirty (30) days after Tenant's receipt of
invoice therefor.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent (except for abatement as specifically provided
in Section 6.8 below), or otherwise, for failure to furnish or delay in
furnishing any service (including telephone, electrical and telecommunication
services), or for any diminution in the quality or quantity thereof, when
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such failure or delay or diminution is occasioned, in whole or in part, by
repairs, replacements, or improvements, by any strike, lockout or other labor
trouble, by inability to secure electricity, gas, water, or other fuel at the
Building or the Project after diligent and reasonable efforts to do so, by any
accident or casualty whatsoever, by act or default of Tenant or other parties,
or by any other cause beyond Landlord's reasonable control; and such failures or
delays or diminution shall never be deemed to constitute an eviction or
disturbance of Tenant's use and possession of the Premises or relieve Tenant
from paying Rent (except for abatement as specifically provided in Section 6.8
below), or performing any of its obligations under this Lease. Furthermore,
Landlord shall not be liable under any circumstances for a loss of, or injury
to, property or for injury to, or interference with, Tenant's business,
including, without limitation, loss of profits, however occurring, through or in
connection with or incidental to a failure to furnish any of the services or
utilities as set forth in this Article 6, except in any circumstances where the
failure to furnish any such services or utilities arises out of or is a result
of, Landlord's sole or gross negligence or intentional misconduct (in which case
Landlord shall be responsible to the extent such item is not covered by
insurance required to be carried by Tenant under this Lease or actually carried
by Tenant). Landlord shall be entitled to cooperate in a reasonable manner with
the mandatory requirements of national, state or local governmental agencies or
utilities suppliers in reducing the consumption of energy or other resources
(including temporary stoppages in the supply of any utilities), and Landlord
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the Rent herein reserved be abated (except
as expressly provided in Section 6.8 below) by reason of such cooperation by
Landlord.
6.4 ADDITIONAL SERVICES. Landlord shall also provide any additional
services which may be reasonably requested by Tenant, including, without
limitation, locksmithing, lamp replacement, additional janitorial service, and
additional repairs and maintenance, provided that Tenant shall pay to Landlord
within fifteen (15) days after receipt of written notice from Landlord, the sum
of all costs to Landlord of such additional services plus a reasonable
administration fee. Charges for any service for which Tenant is required to pay
from time to time hereunder shall be deemed Additional Rent hereunder and shall
be billed on a monthly basis. Tenant shall not be required to use Landlord for
such any additional services; provided, however, that Landlord shall have the
right to reasonably approve any other provider of such services should Tenant
elect not to use Landlord for the providing of such services. However, nothing
in this Section 6.4 shall be construed as requiring Landlord to provide any such
service which would, in Landlord's reasonable judgment, result in the receipt by
Landlord of amounts that would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Internal Revenue Code of 1986, as
amended, or any successor section thereto.
6.5 UTILITY DEREGULATION.
6.5.1 SELECTION OF SERVICE PROVIDER. Landlord has advised Tenant
that presently San Diego Gas and Electric ("ELECTRIC SERVICE PROVIDER") is the
utility company selected by Landlord to provide electricity service for the
Project. Notwithstanding the foregoing, if permitted by Applicable Law, upon
mutual agreement of Tenant and Landlord, the contract for service to the Common
Areas will be let to a different company or companies providing electricity
service (each such company shall hereinafter be referred to as an "ALTERNATE
SERVICE PROVIDER"). Any and all rebates or discounts enjoyed or realized as a
result of the selection of an Alternate Service Provider or the continued use of
the Electric Service Provider shall be reflected in the payments to be made by
Tenant pursuant to Article 4 above. However, if, after the Base Year, the
parties agree to utilize an Alternate Service Provider, then from and after the
date upon which the Alternate Service Provider is retained and continuing
throughout the period during which the Alternate Service Provider is retained,
Operating Expenses for the Base Year shall be reduced by the amount Landlord
reasonably estimates it would have saved had the Alternate Service Provider been
retained throughout the Base Year (for service to the Common Areas) based upon
the rates of the Alternate Service Provider prevailing throughout the Base Year.
Landlord and Tenant acknowledge that, with respect to electricity service to be
provided to the Premises, Tenant shall be entitled to retain any provider
(including, without limitation, an Alternate Service Provider) and that Tenant
will be contracting directly with such provider as indicated in Section 6.2.2
above.
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6.5.2 TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate
with Landlord, the Electric Service Provider, and any Alternate Service Provider
at all times and, as reasonably necessary, shall allow Landlord, Electric
Service Provider, and any Alternate Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring and any other machinery
within the Premises, provided Landlord shall take all reasonable measures to
minimize any interference or disruption to Tenant's use of the Premises. In
addition, Landlord shall cooperate with Tenant and Tenant's provider of
electrical service to the Premises at all times and as reasonably necessary to
allow access to the facilities of the Building necessary for the provision of
such service.
6.6 EMERGENCY GENERATOR. Subject to Tenant's compliance with all
Applicable Laws and Landlord's prior approval of all plans and specifications,
which approval shall not be unreasonably withheld, Landlord shall permit Tenant
to install, at Tenant's sole cost and expense, an above-ground emergency
generator (as a Miscellaneous Common Area Item) for Tenant's use in the
Building. Such emergency generator shall be used by Tenant only during (i)
testing and regular maintenance, and (ii) any period of electrical power outage
in the Building. Tenant shall be entitled to operate the emergency generator
for testing and regular maintenance only upon notice to Landlord and at times
reasonably approved by Landlord. Landlord's consent to Tenant's plans for the
emergency generator may be conditioned on Tenant complying with such reasonable
requirements imposed by Landlord, based on the advice of Landlord's engineers,
so that the systems and equipment of the Building are not adversely affected.
Any repairs and maintenance of such generator shall be the sole responsibility
of Tenant. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, remove the emergency generator and all
associated cabling and wiring and repair all damage resulting from such removal.
Landlord makes no representation or warranty with respect to the emergency
generator or its suitability for use by Tenant and Article 10 of the Lease shall
apply with respect to Tenant's use, maintenance, repair and operation of the
emergency generator.
6.7 SUBSTITUTION OF VENDORS. Upon request from Tenant, Landlord shall
review with Tenant the performance and cost of vendors and contract service
providers for the Project and except for the property manager and the property
management staff and engineers, Tenant shall have the right to require Landlord
to substitute other vendors or contract service providers reasonably designated
by Tenant provided that (i) Tenant then leases on a direct basis (i.e., not
including any space leased by Tenant pursuant to a sublease) at least fifty
percent (50%) of the space then constructed for lease at the Project, (ii) such
substitution does not result in any increase in Operating Expenses during the
Base Year, (iii) such substitution does not result in any invalidation or
reduction in coverage of any warranties for the Project (unless Tenant agrees to
be responsible for the costs which would have otherwise been covered by such
warranties), and (iv) Landlord reasonably approves such substitute vendor or
contract service provider. If a vendor or contract service provider is
substituted pursuant to this Section 6.7 above and if the annual cost of such
substitute vendor or contract service provider is less than the amount included
in Operating Expenses during the Base Year for the same service, effective upon
the date of such substitution, Operating Expenses for the Base Year shall be
reduced by the amount of such difference.
6.8 ABATEMENT EVENT. An "ABATEMENT EVENT" shall be defined as an event
that prevents Tenant from using the Premises or any portion thereof, as a result
of any failure to provide services or access to the Premises, where (i) Tenant
does not actually use the Premises or such portion thereof, and (ii) such event
is not caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. In addition, an "Abatement Event" shall not be deemed
to have occurred where such failure is caused by (a) an Alternate Service
Provider for the Premises where such failure would generally not have occurred
had Tenant utilized the Electric Service Provider (or its successor), or (b) an
Alternate Service Provider for service to the Common Areas where Landlord
reasonably conditioned its approval of the use of such Alternate Service
Provider pursuant to Section 6.5.1 upon Tenant assuming the risk that any
failures to provide services or access to the Premises caused by such Alternate
Service Provider would not be deemed to constitute an "Abatement Event" pursuant
to this Section 6.8. Tenant shall give Landlord notice ("ABATEMENT NOTICE") of
any such Abatement Event, and if such Abatement
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Event continues beyond the "Eligibility Period" (as that term is defined below),
then the Base Rent and Tenant's Share of Direct Expenses shall be abated
entirely or reduced, as the case may be, after expiration of the Eligibility
Period for such time that Tenant continues to be so prevented from using, and
does not use, the Premises or a portion thereof, in the proportion that the
rentable area of the portion of the Premises that Tenant is prevented from
using, and does not use, bears to the total rentable area of the Premises leased
by Tenant; provided, however, in the event that Tenant is prevented from using,
and does not use, a portion of the Premises for a period of time in excess of
the Eligibility Period and the remaining portion of the Premises is not
sufficient to allow Tenant to effectively conduct its business therein, and if
Tenant does not conduct its business from such remaining portion, then for such
time after expiration of the Eligibility Period during which Tenant is so
prevented from effectively conducting its business therein, the Base Rent and
Tenant's Share of Direct Expenses for the entire Premises shall be abated
entirely for such time as Tenant continues to be so prevented from using, and
does not use, the Premises for Tenant's business purposes. If, however, Tenant
reoccupies any portion of the Premises during such period, the Base Rent and
Tenant's Share of Direct Expenses allocable to such reoccupied portion, based on
the proportion that the rentable area of such reoccupied portion of the Premises
bears to the total rentable area of the Premises, shall be payable by Tenant
from the date Tenant reoccupies such portion of the Premises. The term
"ELIGIBILITY PERIOD" shall mean a period of five (5) consecutive business days
after Landlord's receipt of any Abatement Notice(s). If the Abatement Event is
caused by the negligence or willful misconduct of Tenant, or by the
circumstances described in the second (2nd) sentence of this Section 6.8 with
respect to an Alternate Service Provider, the Abatement described in this
Section 6.8 shall not apply; however, Tenant may seek recovery from its business
interruption insurance. Except as provided in Article 11 and Article 13, such
right to abate Base Rent and Tenant's Share of Direct Expenses shall be Tenant's
sole and exclusive remedy at law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 OBLIGATIONS. Landlord shall maintain and repair any and all defects
in the Base, Shell and Core of the Building, including, without limitation, the
foundations, floor/ceiling slabs, structural portions of the roof (including the
roof membrane), curtain wall, exterior glass, columns, beams, shafts, stairs,
stairwells, and elevator cabs, and shall also maintain and repair the basic
mechanical, electrical, life safety, plumbing, sprinkler systems and heating,
ventilating and air conditioning systems of the Building (i.e., all of such
systems except for distribution within the Premises, in which case (i) Landlord
shall be responsible for repair of construction defects, (ii) with respect to
design defects, that party that retained the consultant to design such
distribution shall be responsible for repair of the defect and any additional
costs incurred as a result of such defect (to the extent not covered by warranty
or insurance), and (iii) Tenant shall be responsible for all other repairs and
maintenance), the exterior portions of the Building and the Common Areas of the
Project. In addition, Landlord shall make repairs necessitated by the acts or
omissions of Landlord or its respective agents, employees or contractors.
Tenant shall, at Tenant's own expense, keep the Premises and specifically all
tenant improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term, and in this regard, Tenant shall
at Tenant's own expense within a reasonable period of time but under the
supervision and subject to the prior approval of Landlord with respect to any
repairs for which a building permit is required, adequately repair all such
damage thereto. Except with respect to the express maintenance and repair
obligations of Tenant under this Lease, Landlord shall maintain and repair the
Building and the Project (including the Common Areas) and replace or repair all
damaged, broken, or worn fixtures and appurtenances, the cost of which shall be
included in Operating Expenses (subject t the provisions of Article 4 above).
Landlord may enter the Premises at all reasonable times upon reasonable prior
notice to Tenant (except that no notice will be required in case of emergency)
to make such repairs, alterations, improvements or additions to the Buildings or
to the Project or to any equipment located in the Project as Landlord is
obligated under this Lease or Landlord shall deem reasonably necessary or as
Landlord may be required to do by governmental or quasi-governmental authority
or court order or decree.
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7.2 TENANT'S FAILURE TO COMPLY. If Tenant fails to make any repairs
required of Tenant under this Lease, after written notice to Tenant and the
expiration of a reasonable cure period, Landlord may (but need not) enter the
Premises pursuant to Section 7.1 above to make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage (not to
exceed five percent (5%)) of the cost thereof to compensate Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements within fifteen (15)
days of being billed for same. Except as expressly provided in Section 7.3
below, Tenant hereby waives and releases its right to make repairs at Landlord's
expense under Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
7.3 LANDLORD'S FAILURE TO COMPLY. If Tenant provides notice to Landlord
of an event or circumstance which requires the action of Landlord with respect
to the provision of repairs as set forth in Section 7.1 of this Lease, and
Landlord fails to provide such action as required by the terms of this Lease
within thirty (30) days after the date of such notice from Tenant (or if such
repair is reasonably expected to require longer than thirty (30) days to
complete, if Landlord shall fail to commence such repair within said thirty (30)
day period or to diligently prosecute such repair to completion), then Tenant
may proceed to take the required action upon delivery of an additional ten (10)
business days notice and cure period to Landlord specifying that Tenant is
taking such required action, and if such action was required under the terms of
this Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action including a percentage (not to exceed five percent (5%) of the cost
thereof to compensate Tenant for all overhead, general conditions, fees and
other costs or expenses arising from Tenant's involvement with such repairs and
replacement) in which case the reimbursed amount shall be included in Operating
Expenses to the extent the action, if taken by Landlord, would have been
includable in Operating Expenses pursuant to Section 4.2.7 above. In the event
Tenant takes such action, and such work will affect the Building Systems and
Equipment, structural integrity of the Building or exterior appearance of the
Building, Tenant shall use only those contractors used by Landlord in the
Project for such work unless such contractors are unwilling or unable to perform
such work or their pricing is unreasonable, in which event Tenant may utilize
the services of any other qualified contractor which normally and regularly
performs similar work in comparable first-class, institutional quality, office
buildings in the San Diego, California area whose pricing is reasonable. If
Tenant is entitled to reimbursement by Landlord of Tenant's reasonable costs and
expenses in taking any action pursuant to this Section 7.3, Tenant shall so
notify Landlord in writing (the "REIMBURSEMENT NOTICE"), which Reimbursement
Notice shall specify in detail such costs and expenses. Within thirty (30) days
after Landlord's receipt of a Reimbursement Notice, Landlord shall pay to Tenant
any undisputed portion of such costs and expenses and shall notify Tenant in
writing of those costs and expenses specified by Tenant in the Reimbursement
Notice which Landlord disputes (the "DISPUTED AMOUNTS") and the reasons for such
dispute. Any amounts which are not so identified by Landlord as Disputed
Amounts within said thirty (30) day period shall be considered to be undisputed.
To the extent Landlord fails to reimburse Tenant for the costs and expenses
specified in the Reimbursement Notice within thirty (30) days after demand
therefor, Tenant shall be entitled to offset the sum of (i) the amount of any
undisputed portion of such costs and expenses and (ii) one-half of the amount of
any Disputed Amount (which total sum may be referred to as the "PRE-JUDGMENT
OFFSET AMOUNT") against Base Rent payable by Tenant under this Lease together
with interest at the Interest Rate specified in Article 25 of this Lease from
the date of expiration of said thirty (30) day period until the date of offset
(up to a maximum offset each month of twenty percent (20%) of the Base Rent
payable for the Building) until the full Pre-Judgment Offset Amount (plus such
interest) has been so offset. If Tenant obtains a final judgment against
Landlord for the remaining portion of the Disputed Amount and if Landlord fails
to pay such judgment within thirty (30) days after the date such judgment is
rendered, Tenant shall be entitled to offset such judgment against Base Rent
payable by Tenant under this Lease together with interest at the Interest Rate
specified in Article 25 of this Lease from the date Landlord failed to timely
reimburse Tenant for such costs and expenses until the date of offset (up to a
maximum offset each month of twenty percent (20%) of the Base Rent payable for
the Building) until the full amount of such judgment (plus such interest) has
been so offset. If Landlord obtains a final judgment against Tenant for the
Disputed Amount, Tenant
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shall pay to Landlord such judgment (as it relates to the Disputed Amount plus
interest Tenant has previously offset with respect to the Disputed Amount)
within thirty (30) days after the date such judgment is rendered.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent (as
indicated in Section 29.4 below) shall not be unreasonably withheld by Landlord.
However, Tenant may make (i) cosmetic changes to the finish work in the
Premises, not requiring any structural or other substantial modifications to the
Premises (e.g., voice/data cabling), without Landlord's prior consent, (ii)
cosmetic changes to the interior of any Tenant space within the Building (e.g.,
changes to the carpet, wallcovering and paint) and (iii) nonstructural changes
to the interior of any Tenant space within the Building (such cosmetic and
nonstructural changes to be referred to hereafter collectively as the
"ACCEPTABLE CHANGES") upon at least ten (10) days prior notice to Landlord but
without Landlord's prior consent provided (a) with respect to the changes
described in Subsection 8.1(iii) above only, such changes do not cost in excess
of Two Dollars ($2.00) per usable square foot of the Premises for any one (1)
job, (b) such Acceptable Changes do not affect the exterior appearance of the
Building or Common Areas, the structural aspects of the Building, or any
Building System or Equipment, and (c) Tenant shall perform such Acceptable
Changes in a good and workmanlike manner and in conformance with any and all
applicable federal, state, county or municipal laws, rules or regulations
(collectively, "APPLICABLE LAWS"). At any time Tenant proposes to make
Alterations which require the consent of Landlord pursuant to this Section 8.1,
Tenant's notice regarding the proposed Alterations shall be provided together
with plans and specifications for the Alterations, and Landlord shall approve or
disapprove of the same within fifteen (15) days after Landlord's receipt
thereof. The construction of the initial improvements to the Premises shall be
governed by the terms of the Tenant Work Letter and not the terms of this
Article 8, and therefore, as used herein, the term "Alterations" does not refer
to any tenant improvements installed pursuant to the Tenant Work Letter.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord may reasonably require, including, but
not limited to, the requirement that Tenant shall, at Tenant's expense, remove
such Alterations upon the expiration or any early termination of the Lease Term,
provided Landlord imposed such removal requirement as a condition to consenting
to such Alterations when they are installed, and/or the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials, mechanics
and materialmen approved by Landlord (which approval (as indicated in Section
29.4 below) shall not be unreasonably withheld or delayed). In any event,
Tenant shall utilize subcontractors of Landlord's selection to perform any and
all work that may affect the Building Systems and Equipment, structural aspects
of the Building, the Base Shell or Core or exterior appearance of the Building
or Common Areas provided that (i) if such subcontractors are unwilling or unable
to perform such work, Tenant may utilize the services of any other qualified
subcontractor which normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San Diego,
California area, and (ii) Landlord shall cause such subcontractor selected by
Landlord to charge Tenant for such work in an amount equal to the cost that a
comparable, first-class, reputable and reliable subcontractor would have charged
Tenant if selected pursuant to competitive bidding procedures (and if such
subcontractor refuses to meet such pricing requirements, Landlord shall have the
option to either pay the excess charges of such subcontractor or to permit
Tenant to utilize any other qualified subcontractor which meets the requirements
of subsection 8.2(i) above). Tenant shall construct such Alterations and
perform such repairs in conformance with any and all Applicable Laws and
pursuant to a valid building permit, issued by the City of San Diego, all in
conformance with Landlord's construction rules
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and regulations. All work with respect to any Alterations must be done in a
good and workmanlike manner and diligently prosecuted to completion to the end
that the Premises shall at all times be a complete unit except during the period
of work. In performing the work of any such Alterations, Tenant shall have the
work performed in such manner so as not to obstruct access to the Project or any
portion thereof by any other tenant of the Project, and so as not to obstruct
the business of other tenants in the Project. In addition to Tenant's
obligations under Article 9 of this Lease, upon completion of any Alterations,
Tenant agrees to cause a Notice of Completion to be recorded in the office of
the Recorder of the County of San Diego in accordance with California Civil Code
Section 3093 or any successor statute, and Tenant shall deliver to the Project
management office a reproducible copy of the "as built" drawings of the
Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. The Cost of all Alterations shall be paid
for by Tenant. In the event Tenant orders any Alterations or repair work
directly from Landlord, the charges for such work shall be deemed Additional
Rent under this Lease, payable within fifteen (15) days of billing therefor,
either periodically during construction in reasonable progress payments or upon
the substantial completion of such work, at Landlord's option. Upon completion
of such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for labor, services or
materials. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord a percentage of the cost of such work not to exceed three percent
(3%) of such cost to compensate Landlord for all overhead, general conditions,
fees and other costs and expenses arising from Landlord's involvement with such
work. If Tenant does not order such work directly from Landlord, Tenant shall
pay to Landlord a fee equal to one percent (1%) of the cost of such work and
shall reimburse Landlord for Landlord's reasonable out-of-pocket costs and
expenses actually incurred in connection with review of such work; provided,
however, that this sentence shall not apply to Acceptable Changes.
8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any
Alterations (other than work described in Subsections 8.1(i) and (ii) above),
Tenant agrees to carry "Builder's All Risk" insurance in a reasonable amount
covering the construction of such Alterations, and such other insurance as
Landlord may reasonably require, it being understood and agreed that all of such
Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof. In addition, if Tenant fails to meet the
Financial Standards (described in Section 21.2 below) and the cost of the
Alteration exceeds One Hundred Thousand Dollars ($100,000.00), Landlord may, in
its reasonable discretion, require Tenant to obtain a lien and completion bond
or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any fixtures, equipment and/or other personal property
owned by Tenant (including, without limitation, items purchased by Tenant
pursuant to Section 2.2.10 of the Tenant Work Letter), provided Tenant repairs
any damage to the Premises and Building caused by such removal. Furthermore,
Landlord may require Tenant, at Tenant's expense, to remove any Alterations (or
any Tenant Improvements which do not conform to the Specifications) and to
repair any damage to the Premises and Building caused by such removal provided
Landlord gave to Tenant written notice (prior to the installation of any such
Alterations or Tenant Improvement) that Landlord would require such removal at
the end of the Lease Term or following any earlier termination of this Lease.
If Tenant fails to complete such removal and/or to repair any damage caused by
the removal of such Alterations or Tenant Improvements, Landlord may do so and
may charge the actual cost thereof to Tenant.
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ARTICLE 9
COVENANT AGAINST LIENS
Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from mechanics'
liens. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project, the
Building or the Premises, or any portion thereof, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be promptly
released and removed of record. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed by
bond or otherwise on or before the date occurring thirty (30) days after notice
of such lien is delivered by Landlord to Tenant (which thirty (30) day period
shall be subject to reduction as provided in the next sentence below), Landlord,
at its sole option, may immediately take all action necessary to release and
remove such lien, without any duty to investigate the validity thereof, and all
sums, costs and expenses, including reasonable attorneys' fees and costs,
incurred by Landlord in connection with such lien shall be deemed Additional
Rent under this Lease and shall immediately be due and payable by Tenant.
However, if Landlord's notice of such lien to Tenant indicates that Landlord is
in escrow to sell or finance the Building or has an executed letter of intent to
sell or a commitment letter to finance the Building (or a substantially similar
document), Landlord may indicate in such notice that such thirty (30) day period
shall be reduced to a period designated by Landlord which is not less than ten
(10) business days.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its members, partners, subpartners and affiliates and their respective
officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability,
including without limitation court costs and reasonable attorneys' fees
(collectively, "CLAIMS") incurred in connection with or arising from any cause
in, on or about the Premises during the Lease Term, provided that the terms of
the foregoing indemnity by Tenant shall not apply to the gross negligence or
willful misconduct of Landlord or its agents, contractors, servants, employees
or licensees in connection with Landlord's activities in the Project and
Landlord shall indemnify, defend, protect and hold Tenant, its officers,
directors, agents, servants and employees harmless from any such Claims (except
for damage to the Tenant Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises, to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease). The provisions
of this Section 10.1 shall survive the expiration or sooner termination of this
Lease with respect to any claims or liability occurring prior to such expiration
or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages in
the following amounts.
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10.3.1 Commercial/Comprehensive General Liability Insurance covering
the insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Broad Form Commercial/Comprehensive General Liability endorsement
covering the insuring provisions of this Lease and the performance by Tenant of
the indemnity agreements set forth in Section 10.1 of this Lease, for limits of
liability not less than:
Bodily Injury and
Property Damage Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
10.3.2 Property Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant
Improvements, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include sprinkler leakage
coverage and earthquake sprinkler leakage coverage.
10.3.3 Worker's Compensation and Employer's Liability Insurance, with
a waiver of subrogation endorsement, with minimum limits of $1,000,000 per
employee and $1,000,000 per occurrence.
10.3.4 Business Interruption, loss of income and extra expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings for up to one (1) year attributable to the risks outlined in
Section 10.3.2 above; however, Tenant shall be entitled to self-insure the
coverage described in this Section 10.3.4 only, in which case such
self-insurance shall be deemed to contain all of the terms and conditions
applicable to the coverage described in this Section 10.3.4 including, without
limitation, a deemed waiver of subrogation and, consequently, Landlord shall be
treated, for all purposes, as if Tenant had actually purchased such insurance
from a third party.
10.4 FIRE AND CASUALTY INSURANCE OF LANDLORD. Landlord shall maintain
during the Lease Term and as an Operating Expense, a policy or policies of
insurance insuring the Building and Landlord's remaining interest in the Tenant
Improvements and Alterations against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage. Such coverage shall be in the amount of full
replacement cost for the Building (including coverages for enforcement of
Applicable Laws requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Building as the result of a covered loss) and
other improvements and may include, at the option of Landlord, the risks of
earthquakes and/or flood damage and additional hazards, a rental loss
endorsement for a period of one (1) year and one or more loss payee endorsements
in favor of the holders of any mortgages or deeds of trust encumbering the
interest of Landlord in the Building or any ground or underlying lessors of the
Building.
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. All insurance shall be issued on an occurrence basis
and shall be (i) be issued by an insurance company having a rating of not less
than A-X in BEST'S INSURANCE GUIDE or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; and (ii) provide that
said
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insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Landlord and any mortgagee or
ground or underlying lessor of Landlord. In addition, the insurance described
in Section 10.3.1 above shall (a) name Landlord, and any other party reasonably
specified by Landlord, as an additional insured; (b) specifically cover the
liability assumed by Tenant under this Lease including, but not limited to,
Tenant's obligations under Section 10.1 of this Lease; (c) be primary insurance
as to all claims thereunder and provide that any insurance obtained by Landlord
is excess and is non-contributing with any insurance requirement of Tenant; and
(d) contain a cross-liability endorsement or severability of interest clause
acceptable to Landlord. Tenant shall deliver said policy or policies or
certificates thereof to Landlord before the Lease Commencement Date (or Tenant's
entry into the Building pursuant to the Tenant Work Letter, if earlier) and at
least thirty (30) days before the expiration dates thereof. In the event Tenant
shall fail to procure such insurance, or to deliver such certificate, Landlord
may, at its option, procure such policies for the account of Tenant, and the
costs of it shall be paid to Landlord as Additional Rent within fifteen (15)
days after delivery to Tenant of bills therefor. Tenant may satisfy the
insurance coverage described in this Article 10 through one or more blanket
policies so long as such policies otherwise meet the requirements specified
above.
10.6 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage and loss of insurance and extra
expense insurance waive any rights of subrogation that such companies may have
against Landlord or Tenant, as the case may be, so long as the insurance carried
by Landlord and Tenant, respectively, is not invalidated thereby. As long as
such waivers of subrogation are contained in their respective insurance policies
(or are deemed to be contained in any self-insurance maintained by Tenant
pursuant to the provisions of Section 10.3.4 above), Landlord and Tenant hereby
waive any right that either may have against the other on account of any loss or
damage to the extent such loss or damage is insurable under such policies of
insurance.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord. Notwithstanding the foregoing, Landlord's
request shall only be considered reasonable if such increased amounts and any
such other coverages are standard amounts and coverages for Comparable
Buildings, and Landlord shall not increase amounts and require additional
coverages during the first five (5) years of the Lease Term and thereafter not
more often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Building or other portion of the Project
resulting from fire or any other casualty. If such Building or any Common Areas
serving or providing access to such Building shall be damaged by fire or other
casualty, Landlord shall promptly and diligently, subject to reasonable delays
for insurance adjustment or other matters beyond Landlord's reasonable control,
and subject to all other terms of this Article 11, restore the Base, Shell, and
Core of such Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base, Shell, and Core of the Premises
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord and reasonably approved by Tenant, provided that access to
the Building shall not be materially impaired. Upon the occurrence of any
damage to such Building, Tenant shall assign to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under Tenant's
physical damage and property damage insurance required under Section 10.3 of
this Lease (excluding, however, proceeds payable with respect to any damage to
Tenant's furniture, equipment and other personal property on the Premises), and
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Landlord shall repair any injury or damage to the Tenant Improvements installed
in the Premises and shall return such Tenant Improvements and Alterations to
their original condition; provided that if the cost of such repair by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant's
insurance carrier, as assigned by Tenant, plus the amount of insurance proceeds
received by Landlord from Landlord's insurance carrier to the extent allocable
to damage of such Tenant Improvements and Alterations, the cost of such repairs
shall be paid by Tenant to Landlord in reasonable progress payments as Landlord
repairs the damage (provided that if any mortgage holder or deed of trust
beneficiary so requires, Tenant shall deposit such cost of repairs with such
mortgage holder or deed of trust beneficiary prior to the commencement of repair
by Landlord of such injury or damage, in which case Tenant shall be entitled to
interest on such funds to the extent permitted by such lender). In connection
with such repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors (subject to Tenant's approval thereof, not to be unreasonable
withheld or delayed (as indicated in Section 29.4 below)) to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Building or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Base Rent during the time and to the extent the Building is unfit for occpancy
for the purposes permitted under this Lease, and not occupied by Tenant as a
result thereof for the conduct of Tenant's business; provided, however, that if
such damage is the result of the negligence or willful misconduct of Tenant or
Tenant's employees, contractors, licensees or invitees, such abatement of Base
Rent shall apply only to the extent Landlord is reimbursed from the proceeds of
rental interruption insurance purchased by Landlord as a part of Operating
Expenses.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Building; and instead terminate this Lease by notifying Tenant in writing of
such termination within ninety (90) days after the date Landlord learns of the
necessity for repairs as the result of damage, such notice to include a
termination date giving Tenant ninety (90) days to vacate the Building, but
Landlord may so elect only if (i) the Building shall be damaged by fire or other
casualty or cause, and the damage is not fully covered, except for deductible
amounts, by insurance policies required to be carried by Landlord under this
Lease and (ii) Tenant is not willing to fund the amount of the shortfall in
excess of deductible amounts.
11.3 LANDLORD'S OR TENANT'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, either Landlord or Tenant may elect to terminate
this Lease by notifying the other in writing of such termination with ninety
(90) days after the date Landlord learns of the necessity for repairs as a
result of such damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Building, but Landlord or Tenant, whichever is
the case, may so elect only if the Building shall be damaged by fire or other
casualty or cause and one or more of the following conditions is present: (i)
the repair or restoration is reasonably estimated to cost more than sixty
percent (60%) of the replacement cost of such Building, or (ii) repairs cannot
reasonably be substantially completed within three hundred sixty (360) days
after the date Landlord learns of the necessity for repairs as the result of
damage (when such repairs are made without the payment of overtime or other
premiums). Notwithstanding the foregoing, if this Lease is terminated by
Landlord and Landlord thereafter elects to commence the rebuilding of the
Building prior to the sooner to occur of the third (3rd) anniversary of the
termination date or the expiration of this Lease, Tenant shall have the right to
reinstate this Lease by written notice to Landlord within forty-five (45) days
after Tenant's receipt of notice from Landlord that Landlord so elects to
rebuild. Tenant's failure to so notify Landlord within said forty-five (45) day
period shall be deemed to constitute Tenant's waiver of the right to so
reinstate this Lease. Tenant hereby specifically acknowledges that its right to
reinstatement contained in this Section 11.3 shall not be applicable to any
assignee or transferee of Landlord to whom the Premises is transferred after
this Lease is terminated pursuant to this Section 11.3 as a result of a
foreclosure, trustee's sale or bona-fide deed in lieu of foreclosure.
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11.4 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, California Civil Code
Sections 1932(2) and 1933(4), with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Buildings or the Project.
11.5 DAMAGE NEAR END OF TERM. In the event that the Building is destroyed
or damaged during the last twelve (12) months of the Lease Term or any Extension
Term and the repair or restoration is reasonably estimated to cost more than the
"Threshold Level" (as that term is defined below), then notwithstanding anything
contained in this Article 11, Landlord shall have the option to terminate this
Lease by giving written termination notice to Tenant of the exercise of such
option within thirty (30) days after Landlord learns of the necessity for
repairs as the result of such damage or destruction, and, to the extent such
damage or destruction was not caused as a result of the negligence or willful
misconduct of Tenant or any of Tenant's employees, agents, contractors,
licensees or invitees and the repair of same is reasonably expected by Landlord
to require more than three (3) months to complete, Tenant shall have the option
to terminate this Lease by giving written termination notice to Landlord of the
exercise of such option within thirty (30) days after Landlord learns of the
necessity for repairs as the result of such damage or destruction. The term
"THRESHOLD LEVEL" shall mean twenty percent (20%) of the replacement cost of the
Building where the damage occurs during the period from the first day of the
ninth (9th) month prior to the scheduled date of expiration of the Lease Term or
any Extension Term to the last day of the twelfth (12th) month prior to the
scheduled date of expiration of the Lease Term or any Extension Term, fifteen
percent (15%) of the replacement cost of the Building where the damage occurs
during the period from the first day of the fifth (5th) month prior to the
scheduled date of expiration of the Lease Term or any Extension Term until the
last day of the eighth (8th) month prior to the scheduled date of expiration of
the Lease Term or any Extension Term, and ten percent (10%) of the replacement
cost of the Building where the damage occurs during the last four (4) months of
the Lease Term or any Extension Term. If either Landlord or Tenant exercises
such option to terminate this Lease as provided above (i) this Lease shall
cease and terminate as of the earlier of (1) the date ninety (90) days after the
date of such notice, or (2) the expiration date of this Lease, (ii) Tenant shall
pay the Base Rent and Additional Rent, properly apportioned up to such date of
termination, and (iii) both parties hereto shall thereafter be freed and
discharged of all further obligations hereunder, except as provided for in
provisions of this Lease which by their terms survive the expiration or earlier
termination of the Lease Term. Notwithstanding the foregoing, if Tenant
exercises an upcoming option to extend the term of this Lease, neither Landlord
nor Tenant shall not have any right to terminate this Lease under this
Section 11.5.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
either party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently.
Any waiver by either party of any provision of this Lease may only be in
writing. Additionally, no express waiver shall affect any provision other than
the one specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
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ARTICLE 13
CONDEMNATION
13.1 PERMANENT TAKING. If more than twenty-five percent (25%) of the
rentable square feet of the Building shall be taken by power of eminent domain
or condemned by any competent authority for any public or quasi-public use or
purpose, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease upon ninety (90) days' notice, provided such notice is
given no later than one hundred twenty (120) days after the date of such taking,
condemnation, reconfiguration, vacation, deed or other instrument. If more than
twenty-five percent (25%) of the rentable square feet of the Building is taken,
Tenant shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred twenty (120)
days after the date of such taking. Landlord shall be entitled to the entire
award or payment in connection therewith, except that Tenant shall have the
right to file any separate claim available to Tenant for any taking of Tenant's
personal property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to such Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination, or the date of such taking,
whichever shall first occur. If any part of the Premises shall be taken, and
this Lease is not terminated pursuant to this Section 13.1, the Rent shall be
abated proportionately based on the percentage of the rentable square feet of
the Building which is taken. Tenant hereby waives any and all rights it might
otherwise have pursuant to California Code of Civil Procedure Section 1265.130.
13.2 TEMPORARY TAKING. Notwithstanding anything to the contrary contained
in this Article 13, in the event of a temporary taking of all or any portion of
the Premises for a period of one (1) year or less, then this Lease shall not
terminate but the Base Rent shall be abated for the period of such taking for
the number of rentable square feet of the Premises so taken. Landlord shall be
entitled to receive the entire award made in connection with any such temporary
taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, except as otherwise expressly provided herein, assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise
transfer, this Lease or any interest hereunder, permit any assignment, or other
transfer of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as "TRANSFERS" and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"TRANSFEREE"). Where Landlord's consent to a proposed Transfer is required
under this Article 14, if Tenant desires Landlord's consent to any Transfer,
Tenant shall notify Landlord in writing, which notice (the "TRANSFER NOTICE")
shall include (i) the proposed effective date of the Transfer, which shall not
be less than fifteen (15) business days nor more than one hundred eighty (180)
days after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii) all
of the material terms of the proposed Transfer and the consideration therefor
(including calculation of the "Transfer Premium," as that term is defined in
Section 14.3 below, in connection with such Transfer), the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) current financial statements of
the proposed Transferee certified by an officer, partner or owner thereof, and
any other information reasonably required by Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space, and such
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other information as Landlord may reasonably require. Landlord shall approve or
disapprove of the proposed Transfer within fifteen (15) business days after
Landlord's receipt of the applicable Transfer Notice including all items
required pursuant to the immediately preceding sentence. Where Landlord's
consent to a proposed Transfer is required under this Article 14, any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under Section 19.1.2 of this Lease. Where Landlord's consent
to a proposed Transfer is required under this Article 14, whether or not
Landlord consents to such proposed Transfer, for each proposed Transfer Tenant
shall pay to Landlord a review and processing fee in an amount equal to $500.00
and any reasonable legal fees incurred by Landlord (which legal fees shall not
exceed $1,000 per proposed Transfer during the initial Lease Term), upon request
by Landlord.
14.2 LANDLORD'S CONSENT. Where Landlord's consent to a proposed Transfer
is required under this Article 14, Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in a
business which Landlord reasonably determines is not consistent with the quality
of the Project as a first-class, institutional quality office project;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof which Landlord reasonably determines is not consistent
with the quality of the Project as a first-class, institutional quality office
project;
14.2.3 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;
14.2.4 The Transfer will result in more than a reasonable and safe
number of occupants per floor within the Subject Space;
14.2.5 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Transfer on the date consent is requested (provided, however, that this Section
14.2.5 shall only apply if the Transfer is for a full floor or more of the
Building); or
14.2.6 The proposed Transfer would cause a violation of another lease
for space in the Project, or would give an occupant of the Project a right to
cancel its lease or bring an action against Landlord, provided that (i) the
foregoing provisions of this Section 14.2.6 shall only apply (a) to restrictions
in other leases in the Project to the extent Tenant has received written notice
of such restrictions prior to the proposed Transfer, and (b) if (at the time
Tenant gives Landlord any Transfer Notice) Tenant is leasing less than eighty
percent (80%) of the rentable square feet of the Project; and (ii) this Section
14.2.6 shall not apply to any proposed food service use by the proposed
Transferee (i.e., Landlord may not grant an exclusive within the Project for a
food service use that would restrict Tenant's ability to enter into a Transfer).
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to Tenant than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's
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right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding
any contrary provisions of this Lease, if Tenant claims that Landlord has
unreasonably withheld or delayed its consent to a proposed Transfer or otherwise
has breached its obligations under this Article, Tenant's only remedies shall be
to seek a declaratory judgment and/or injunctive relief and/or monetary damages,
and Tenant waives the right to terminate this Lease as to all or any portion of
the Premises.
14.3 TRANSFER PREMIUM.
14.3.1 DEFINITION OF TRANSFER PREMIUM. If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall, except as otherwise provided in this Article 14, pay to Landlord
fifty percent (50%) of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee (the amount which may be
so payable to Landlord may be referred to herein as the "PREMIUM BASE AMOUNT").
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Landlord or Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any brokerage commissions,
reasonable attorneys' and architectural fees and reasonable advertising costs
incurred in connection with the Transfer, (iii) any Rent and Additional Rent
paid by Tenant for the portion of the Premises transferred while such space is
being actively marketed for sublease or assignment to the extent Tenant is not
occupying such space, and (iv) any other out-of-pocket costs reasonably incurred
by Tenant in connection with such Transfer (collectively, the "SUBLEASING
COSTS"). "Transfer Premium" shall also include, but not be limited to, key
money and bonus money paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
14.3.2 PAYMENT OF TRANSFER PREMIUMS. The determination of the amount
of the Transfer Premium shall be made on an annual basis in accordance with the
terms of this Section 14.3.2, but an estimate of the amount of the Transfer
Premium shall be made each month and one-twelfth (1/12th) of such estimated
amount shall be paid to Landlord promptly, but in no event later than the next
date for payment of Base Rent hereunder, subject to an annual reconciliation on
each anniversary date of the Transfer. If the payments to Landlord under this
Section 14.3.2 during the twelve (12) months preceding each annual
reconciliation exceed the amount of Transfer Premium determined on an annual
basis and actually received by Tenant, then Landlord shall promptly refund the
excess to Tenant. If Tenant has underpaid the Transfer Premium, as determined
by such annual reconciliation, Tenant shall pay the amount of such deficiency to
Landlord promptly, but in no event later than the next date for payment of Basic
Rent hereunder. For purposes of calculating the Transfer Premium on an annual
basis, Tenant's Subleasing Costs shall be amortized on a straight-line basis
over the term of the Transfer.
14.3.3 LIMITATION ON AMOUNT AND TIMING. Notwithstanding the
foregoing provisions of this Section 14, Tenant shall have no obligation to pay,
and shall not pay, any percentage of the foregoing Transfer Premium under this
or any other section of this Lease in any calendar year, to the extent Tenant is
advised by Landlord that such payment would exceed the sum of: (A) the maximum
amount (if any) that can be paid to Landlord without causing Kilroy Realty
Corporation, a Maryland corporation ("KRC") to fail to meet the requirements of
sections 856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"CODE") for such year determined as if (i) the payment of such amount did not
constitute income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of
the Code ("QUALIFYING INCOME"), (ii) the payment of such amount resulted in all
other amounts received by Landlord from Tenant pursuant to this Lease during
such year failing to constitute Qualifying Income, and (iii) KRC had $1,000,000
of income from unknown sources during such year which was not Qualifying Income
(in addition to any known or anticipated income of KRC which was not Qualifying
Income), in each case as determined by KRC's independent accountants, and (B)
the Premium Base Amount less the
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amounts paid under clause (A) in the event KRC receives and provides Tenant with
a copy of a reasoned opinion from outside counsel or a ruling from the Internal
Revenue Service (the "PREMIUM GUIDANCE") indicating that Landlord's receipt of
the Premium Base Amount would constitute Qualifying Income and would not cause
other amounts paid by Tenant to Landlord to fail to constitute Qualifying Income
(the "REIT REQUIREMENTS"). In the event that Landlord is not able to receive
the full Premium Base Amount due to the above limitation, Tenant shall not pay
any amounts in excess of such limit unless and until KRC receives (and delivers
to Tenant) any one or combination of the following, once or more often: (i) a
letter from KRC's independent accountants indicating the maximum amount that can
be paid by Tenant to Landlord at that time without causing KRC to fail to meet
the REIT Requirements (calculated as described above) or (ii) the Premium
Guidance; in which event Tenant shall pay to Landlord the lesser of the unpaid
Transfer Premium or the maximum amount stated in the letter referred to in (i)
above. Tenant's obligation to pay any unpaid portion of the Transfer Premium
shall terminate on the December 31 following the date which is three (3) years
after the date such payment would (without regard to the limitations in this
subparagraph) have initially been due. Any amounts paid shall first be applied
to the Transfer Premium which is the oldest. Tenant shall cooperate with
Landlord and KRC and provide them with any information or documents that are
necessary or helpful to Landlord or KRC in obtaining any Premium Guidance or in
calculating the amount of any payment due hereunder.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. In the event that, following
any proposed Transfer, Tenant and its Permitted Affiliates do not or will not
occupy at least fifty percent (50%) of the rentable square footage of the
Building or should Tenant's financial performance at the time of such proposed
Transfer have fallen below the minimum Financial Standards set forth in
Section 21.2 below, Landlord shall have the option, by giving written notice
("RECAPTURE NOTICE") to Tenant within fifteen (15) days after receipt of any
Transfer Notice, to recapture the Subject Space. Such recapture shall cancel
and terminate this Lease, with respect to the Subject Space as of the date
stated in the Transfer Notice as the effective date of the proposed Transfer
until the last day of the term of the Transfer as set forth in the Transfer
Notice. However, if Landlord delivers a Recapture Notice to Tenant, Tenant may,
within ten (10) days after Tenant's receipt of the Recapture Notice, deliver
written notice to Landlord indicating that Tenant is rescinding its request for
consent to the proposed Transfer, in which case such Transfer shall not be
consummated and this Lease shall remain in full force and effect as to the
portion of the Premises that was the subject of the Transfer. Tenant's failure
to so notify Landlord in writing within said ten (10) day period shall be deemed
to constitute Tenant's election to allow the Recapture Notice to be effective.
In the event of a recapture by Landlord, if this Lease shall be canceled with
respect to less than all of the rentable square feet within the Building, the
Rent reserved herein shall be prorated on the basis of the number of rentable
square feet retained by Tenant in proportion to the number of rentable square
feet contained in the Building, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. If Landlord declines,
or fails to timely elect to recapture the Subject Space under this Section 14.4,
then, provided Landlord has consented to the proposed Transfer with respect to
any Transfer which such consent is required, Tenant shall be entitled to
transfer the Subject Space to the proposed Transferee, subject to the provisions
of this Article 14. If, as a result of Landlord's exercise of its recapture
rights, the Building is converted to a multi-tenant building, Landlord and
Tenant will amend this Lease in order to reflect appropriate modifications
necessary for a multi-tenant building.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord,
(iv) Tenant shall furnish upon Landlord's request a complete statement,
certified by an independent certified public accountant, or Tenant's chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant from liability
under this Lease. Landlord or its
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authorized representatives shall have the right at all reasonable times (but no
more than one (1) timer per calendar year) to audit the books, records and
papers of Tenant relating to any Transfer, and shall have the right to make
copies thereof. If the Transfer Premium respecting any Transfer shall be found
understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency and, in addition, if understated by more than (a) two percent (2%),
Tenant shall pay Landlord's cost of such audit within thirty (30) days after
demand, and (b) ten percent (10%), Landlord shall be entitled to interest on the
understated amount at the rate of ten percent (10%) per annum from the date upon
which the understated amount would have been paid if the Transfer Premium had
been accurately determined in the first place to the date Tenant pays to
Landlord in full such understated amounts; Landlord's rights pursuant to the
immediately preceding sentence shall constitute Landlord's sole remedy for any
understatement of the Transfer Premium (in the absence of fraud by Tenant).
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "Transfer"
shall also include (i) if Tenant is a partnership or limited liability company,
the withdrawal or change, voluntary, involuntary or by operation of law, of
fifty percent (50%) or more of the partners or members, or transfer of fifty
percent (50%) or more of partnership or membership interests, within a twelve
(12)-month period, or the dissolution of the partnership or company without
immediate reconstitution thereof, and (ii) except as otherwise provided in
Section 14.7 below, if Tenant is a closely held corporation (I.E., whose stock
is not publicly held and not traded through an exchange or over the counter),
(A) the dissolution, merger, consolidation or other reorganization of Tenant or,
(B) the sale or other transfer of more than an aggregate of fifty percent (50%)
of the voting shares of Tenant (other than to immediate family members by reason
of gift or death) within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 AFFILIATED AND PERMITTED TRANSFERS.
14.7.1 PERMITTED AFFILIATES. Notwithstanding anything contained in
this Lease to the contrary, an assignment, subletting or permitting the use of
all or any portion of the Premises to or by a Permitted Affiliate (as defined
below) of Tenant shall not be deemed a Transfer under this Article 14 and thus
shall not be subject to (i) any requirement of obtaining Landlord's consent
thereto under this Article 14, (ii) Landlord's right to receive fifty percent
(50%) of any Transfer Premium in connection therewith under Section 14.3 or
(iii) Landlord's right to recapture the Premises under Section 14.4, provided
that (a) Tenant notifies Landlord of such assignment or sublease and the
identity of the Permitted Affiliate prior to the effective date thereof and
promptly after request from Landlord supplies Landlord with any documents or
information reasonably requested by Landlord regarding such assignment or
sublease and/or such Permitted Affiliate; and (b) such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14. As used in this
Section 14.7, "PERMITTED AFFILIATE" shall mean (1) any person, corporation or
other entity which is controlled by, controls, or in common control with Tenant,
or (2) any entity which merges with Tenant or acquires substantially all of
Tenant's stock or assets, and in either case of (1) or (2) above, such person,
corporation or other entity has a net worth as of the effective date of the
assignment or sublease at least equal to the net worth of Tenant as of the date
of execution of this Lease. "Control," as used in this Section 14.7, shall mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise.
14.7.2 PERMITTED TRANSFERS. Notwithstanding anything contained in
this Lease to the contrary, any subletting of less than fifty percent (50%) of
the rentable square footage, in the aggregate, of the Building by Tenant for a
term less than the remaining initial Lease Term (or, if during any Extension
Term, for a term less than the remaining Extension Term), shall not require
Landlord's consent and shall not be subject to Landlord's recapture right under
Section 14.4 (unless Tenant's financial performance at the time of such proposed
Transfer has fallen below the minimum Financial Standards set forth in Section
21.2 below), but shall be subject to (a) the
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condition that the sublease does not provide for the subtenant to receive
parking in a ratio per rentable square foot in excess of that to which Tenant is
entitled under this Lease, and (b) Landlord's receipt of the amount described in
Section 14.3. In the event of any such sublease, Tenant shall notify Landlord
at least thirty (30) days prior to the effective date of such sublease, of such
proposed sublease and the identity of the proposed subtenant and supply Landlord
with any documents or information reasonably requested by Landlord in connection
therewith. Any subtenant under any sublease occurring under this Section 14.7.2
may be referred to herein as a "PERMITTED TRANSFEREE."
ARTICLE 15
SURRENDER OF PREMISES:
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to any portion of the Premises to Landlord or any agent or employee of Landlord
shall not constitute a surrender of the Premises or any portion thereof or
effect a termination or partial termination of this Lease, whether or not the
keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, Alterations and Tenant
Improvements which do not conform to the Specifications (provided Landlord
conditioned its approval of their installation under Section 8.5 above upon
Tenant's removal of such Alterations or non-standard Tenant Improvements (as
applicable) upon the expiration or earlier termination of this Lease),
free-standing cabinet work, and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may, in
its sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Building resulting from such removal. Tenant also
shall comply with the provisions of Section 8.5 of this Lease. Notwithstanding
the foregoing, with respect to Tenant's cabling, Landlord shall have the option,
exercisable by written notice to Tenant on or before the day which is thirty
(30) days prior to the expiration or earlier termination of this Lease, to
require Tenant to remove any or all of its cabling from the Premises and to
repair any damage to the Premises resulting from such removal; provided,
however, that if Landlord so requires Tenant to remove such cabling and if,
within six (6) months after the date of expiration or earlier termination of
this Lease, leasehold improvements within the Premises are demolished in a
manner such that the amount expended to remove such cabling as a part of such
demolition would have been less than the amount previously incurred by Tenant to
remove such cabling, Landlord shall promptly rebate to Tenant the difference
between the amount expended by Tenant to remove such cabling and the amount
which would have been incurred by Landlord to remove such cabling as a part of
the demolition process described herein.
15.3 REMOVAL OF TENANT'S PROPERTY BY LANDLORD. Whenever Landlord shall
re-enter the Building as provided in this Lease, any personal property of Tenant
not removed by Tenant upon the expiration of the Lease Term, or within five (5)
days after a termination by reason of Tenant's
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default as provided in this Lease, shall be deemed abandoned by Tenant and may
be disposed of by Landlord in accordance with California Civil Code Sections
1980 through 1991 and California Code of Civil Procedure Section 1174, or in
accordance with any laws or judicial decisions which may supplement or supplant
those provisions from time to time.
15.4 LANDLORD'S ACTIONS ON PREMISES. Excepting any claims for damages or
other liability arising out of Landlord's or its agents' or its representatives'
gross negligence or willful misconduct, Tenant hereby waives, and releases
Landlord from, all claims for damages or other liability in connection with
Landlord's or its agents' or representatives' reentering and taking possession
of the Premises or removing, retaining, storing or selling the property of
Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord
harmless from any such damages or other liability, and no such re-entry shall be
considered or construed to be a forcible entry.
ARTICLE 16
HOLDING OVER
If Tenant provides Landlord with written notice ("HOLDOVER NOTICE") at
least thirty (30) days prior to expiration of the Lease Term (or any applicable
Extension Term) that Tenant will be holding over in the Premises, Tenant shall
have the right (and, subject to the grace periods described below, the
obligation) to hold over after the expiration of the Lease Term until the date
("HOLDOVER NOTICE DATE") specified in such Holdover Notice (but not in excess of
one hundred twenty (120) days after the expiration of the Lease Term or
applicable Extension Term). Any holdover tenancy (including without limitation,
any holdover tenancy pursuant to a Holdover Notice) shall be subject to every
applicable term, covenant and agreement contained herein, except that the Base
Rent payable by Tenant for the Premises (irrespective of the amount of space
Tenant continues to occupy in the Building) shall be escalated to equal one
hundred ten percent (110%) of the then current Base Rent and Direct Expenses
payments for the entire Premises for the first ninety (90) days of such holdover
occupancy and one hundred twenty-five percent (125%) of such amount during the
next succeeding ninety (90) days and from and after such one hundred eighty
(180) day period, Rent shall equal one hundred fifty percent (150%) of such
amount thereafter; provided, however, subject to the next sentence of this
Article 16, such holdover Rent and Additional Rent shall be prorated on a per
diem basis through and including the date ("ACTUAL SURRENDER DATE") Tenant
actually vacates and surrenders the Premises to Landlord in the condition
required under this Lease. If Tenant properly delivers the Holdover Notice and
the Actual Surrender Date (a) is earlier than the Holdover Notice Date by
forty-five (45) days or less, Tenant's obligation to pay such holdover Rent and
Additional Rent shall terminate on a per diem basis as of the Actual Surrender
Date, however if the Actual Surrender Date is earlier than forty-five (45) days
prior to the Holdover Notice Date, Tenant's holdover Rent and Additional Rent
shall cease as of the date which is forty-five (45) days prior to the Holdover
Notice Date, or (b) is later than the Holdover Notice Date, Tenant's obligation
to pay holdover Rent and Additional Rent shall cease as of the Actual Surrender
Date, provided that Tenant shall have no right to holdover beyond the earlier to
occur of fifteen (15) days after the Holdover Notice Date or the expiration of
the one hundred twenty (120) period specified in the first sentence of this
Article 16 above. By way of example only, and not as a limitation upon the
foregoing, if the Holdover Notice indicates that the Holdover Notice Date is
ninety (90) days after the expiration of the Lease Term or applicable Extension
Term, Tenant shall be permitted to holdover until the date which is one hundred
five (105) days after the expiration of the Lease Term or applicable Extension
Term and Tenant's obligation to pay holdover Rent and Additional Rent shall be
prorated on a per diem basis until the later of the forty-fifth (45th) day after
the expiration of the Lease Term or applicable Extension Term or the Actual
Surrender Date. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant (except as expressly provided
in this Article 16 above), and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration of the Lease Term (or the period specified in
clause 16(b) above, as applicable). The provisions of this Article 16 shall not
be deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If
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Tenant fails to surrender the Premises within the period specified in this
Article 16 above, in addition to any other liabilities to Landlord accruing
therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless
from all loss, costs (including reasonable attorneys' fees) and liability
resulting from such failure, including, without limiting the generality of the
foregoing, any claims made by any succeeding tenant founded upon such failure to
surrender (including such tenant's lost profits) and any lost profits to
Landlord resulting therefrom, provided Landlord promptly notified Tenant in
writing of any lease or signed letter of intent for all or any portion of the
Premises.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within fifteen (15) days following a request in writing by either party to
the other, but in no event more frequently than three (3) times in any twelve
(12) month period, the recipient party shall execute and deliver to the
requesting party an estoppel certificate, which shall be substantially in the
form of EXHIBIT "E", attached hereto (or such other form as may be reasonably
required by any prospective mortgagee or purchaser of the Building or other
portion of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of either
party to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises (if addressed to
Tenant) and an acknowledgment by such party that the statements included in the
estoppel certificate in good faith are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord agrees
to provide Tenant, within sixty (60) days after written request by Tenant, with
commercially reasonable nondisturbance agreements(s) in favor of Tenant from any
ground lessors, mortgage holders or deed of trust beneficiaries under any ground
lease, mortgage or deed of trust affecting the Project or any portion thereof
leased by Tenant (whether now existing or coming into existence at any time
after the date of execution of this Lease but prior to the expiration of the
Lease Term) and in consideration of, and as a condition precedent to, Tenant's
agreement to be bound by the terms of this Article 18. Tenant covenants and
agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof, to attorn, without any deductions or set-offs
whatsoever, to the purchaser or any successors thereto upon any such foreclosure
sale or deed in lieu thereof if so requested to do so by such purchaser, and to
recognize such purchaser as the lessor under this Lease. Tenant shall, within
fifteen (15) days of request by Landlord, execute such further instruments or
assurances as Landlord or any mortgage holder or deed of trust beneficiary may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases or other typical provisions contained in Subordination,
Non-Disturbance and Attornment Agreements. Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any foreclosure proceeding
or sale.
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ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due, where such
failure continues for five (5) days after written notice thereof from Landlord
to Tenant; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, if the nature of such a
default is such that the same cannot be reasonably be cured within a thirty (30)
day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as is reasonably possible under the
circumstances; or
19.1.3 To the extent permitted by law, a general assignment by Tenant
or any guarantor of the Lease for the benefit of creditors, or the filing by or
against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.4 The hypothecation or assignment of this Lease or subletting of
the Premises in violation of Article 14 hereof; or
19.1.5 Any default by Tenant (after expiration of any applicable cure
period) under any of the Adjacent Building Leases; provided, however, that any
such default by Tenant under any of the Adjacent Building Leases shall be
treated as a default by Tenant under this Lease only if (i) Landlord and all of
the other landlords under the Adjacent Building Leases all elect to declare a
default, and (ii) all lenders of this Building and the applicable Adjacent
Building consent. However, the restrictions upon Landlord in declaring a
default by Tenant pursuant this Section 19.1.5 are not intended to, and shall
not, restrict Landlord from declaring a default of this Lease by Tenant under
the circumstances described in Sections 19.1.1 through and including 19.1.4
above.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
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(ii) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not limited
to, brokerage commissions and advertising expenses incurred, and an
amortized portion (over the balance of the Lease Term compared to the term
of any new lease) of any expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in
Sections 19.2.1(i) and (ii), above, the "worth at the time of award" shall be
computed by allowing interest at the rate set forth in Article 25 of this Lease,
but in no case greater than the maximum amount of such interest permitted by
law. As used in Section 19.2.1(iii) above, the "worth at the time of award"
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of more than
two (2) monetary events of default by Tenant in any twelve (12) month period
during the Lease Term, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.
19.5 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any violation
or breach of any of the terms, provisions and covenants herein contained shall
be deemed or construed to constitute a waiver of any other or later violation or
breach of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the
remedies herein provided upon an event of default shall not be deemed or
construed
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to constitute a waiver of such default. The acceptance of any Rent hereunder by
Landlord following the occurrence of any default, whether or not known to
Landlord, shall not be deemed a waiver of any such default, except only a
default in the payment of the Rent so accepted.
19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's right
to possession shall not be deemed to have been terminated by efforts of Landlord
to relet the Premises, by its acts of maintenance or preservation with respect
to the Premises, or by appointment of a receiver to protect Landlord's interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant's right to
possession.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
21.1 LETTER OF CREDIT. In addition to its primary obligations under this
Lease, Tenant shall, commencing March 31, 2000, and continuing throughout the
Lease Term (including any Extension Terms), at any time that Tenant fails to
meet or equal the "Financial Standards" set forth below, provide security
against a default by Tenant under this Lease in the form of an unconditional,
irrevocable, standby letter of credit ("LC"), naming Landlord as the payee
thereunder, with terms as described in more detail below. The LC shall be in an
amount equal to six (6) months' then current Base Rent and shall be increased by
the amount of and upon any increase in monthly Base Rent payable under this
Lease. The LC shall be issued by a money center bank (a bank which accepts
deposits, maintains accounts, has a local San Diego office which will negotiate
a letter of credit, and whose deposits are insured by the FDIC) reasonably
acceptable to Landlord, and shall be in a form and content reasonably acceptable
to Landlord and in the form required hereunder. The LC shall be drawable by
Landlord upon presentation of a sight draft or demand to the LC issuer.
Landlord may present such a sight draft or demand if (i) the LC has not been
renewed and replaced by Tenant at least thirty (30) days prior to the expiration
date of the then effective LC, or (ii) Tenant commits a default under this
Lease; provided, however, proceeds of the drawn LC shall be applied to Rent,
damages or charges to which Landlord is entitled under the Lease as a result of
Tenant's default. If Landlord makes a draw upon the LC pursuant to this
Section 21.1 and Tenant fails to replenish the LC (or, if applicable, the CD
described in Section 21.4 below) within ten (10) days thereafter to an amount
equal to six (6) months' then current Base Rent, then Tenant shall be in default
under this Lease. The LC is not intended to represent liquidated damages for
Tenant's default, but only a mechanism for paying the Rent, damages or charges
to which Landlord may be entitled. If allowed by the issuing bank, Landlord
shall be entitled to grant a security interest in, or make a collateral
assignment of, Landlord's rights under the LC in connection with mortgage
indebtedness incurred by Landlord to a bona fide third-party institutional
lender in an arm's-length transaction. The LC shall indicate that it is
transferable in it entirety by Landlord as beneficiary and that upon receiving
written notice of the transfer and upon presentation to the issuer of the LC the
issuer will reissue the LC naming such transferee as beneficiary. Tenant shall
pay all expenses, points, and/or fees incurred in obtaining the LC.
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21.2 FINANCIAL STANDARDS. Such LC shall be required in the event Tenant,
at the end of any calendar quarter (commencing with the calendar quarter ending
March 31, 2000), fails to meet all of the following financial requirements
("FINANCIAL STANDARDS"): (i) Tenant shall have annual gross revenues of not less
than $150,000,000, (ii) Tenant shall have cash on hand of not less than
$15,000,000 and (iii) Tenant's equity-to-debt (which for purposes of this test
shall exclude deferred revenue) ratio shall not be less than 1:1.
21.3 CONDITIONAL RELEASE OF SECURITY. Any LC previously delivered by
Tenant shall be returned to Tenant at such time as Tenant has not been in
default (after expiration of any applicable notice and cure period) under this
Lease and has met or exceeded all of the Financial Standards, for four (4)
consecutive quarters. Notwithstanding the foregoing, in the event the LC has
been returned to Tenant, but Tenant thereafter fails, at the end of any quarter,
to meet all of the Financial Standards then, in such event, Landlord shall be
entitled to require that the LC be reestablished on the terms and provisions set
forth in this Article 21.
21.4 CASH EQUIVALENT. At Tenant's option, but subject to the terms and
conditions hereof and the condition that Landlord determine that Landlord's
ability to draw upon such security in the event of Tenant's bankruptcy is not
impaired, Tenant may , in lieu of the delivery of an LC, pledge a Certificate of
Deposit ("CD") which shall be administered, as practicable, in accordance with
the procedures set forth in this Article 21 with respect to the LC; provided,
however, in the event of such CD any interest accruing on the CD shall be for
the benefit of Tenant. The pledge of any such CD shall be on terms and
conditions approved by Landlord, and the CD shall be issued by a financial
institution reasonably acceptable to Landlord.
ARTICLE 22
ROOF RIGHTS
Subject to all governmental laws, rules and regulations and compliance with
the CC&R's, Tenant and Tenant's contractors (which shall first be approved by
Landlord but which approval shall not be unreasonably withheld or delayed (as
specified in Section 29.4 below)) shall have the nonexclusive right and access,
without further payment of Rent to Landlord, to install, repair, replace,
remove, operate and maintain satellite dishes and/or microwave dishes, and other
radio transmitting and receiving antennae, together with all necessary cable,
wiring, conduits and related equipment (collectively, "COMMUNICATION
EQUIPMENT"), for the purpose of receiving and sending telephone and other
communication signals, at a location on the roof of the Building as reasonably
requested by Tenant and reasonably approved by Landlord in writing. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) Tenant's right to install, replace, repair, remove, operate
and maintain the Communication Equipment shall be subject to all governmental
laws, rules and regulations and Landlord makes no representations that such
laws, rules and regulations permit such installation and operation. Any such
installation shall be under the supervision of Landlord, by a contractor
approved by Landlord and shall be installed in a lien-free manner in accordance
with the provisions of this Lease.
(ii) The exact size, quality, materials and aesthetics of, and any
required screening for, the Communication Equipment shall be subject to
Landlord's prior written consent which shall not be unreasonably withheld or
delayed. In addition, the installation, protection for roof membrane,
specifications for roof penetration and flashing shall be subject to Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
(iii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and of connections to the
Building's electrical system) shall be borne by Tenant. All such Communication
Equipment shall be screened to commercially reasonable standards and to prevent
visual impairment. Tenant shall be responsible for the replacement, repair and
maintenance, at Tenant's sole cost and expense, of those areas on the roof of
the
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Building surrounding Tenant's Communication Equipment to the extent any such
replacement, repair or maintenance is required by virtue of Tenant's
installation, operation or maintenance of Tenant's Communication Equipment,
notwithstanding anything to the contrary contained in this Lease.
(iv) Tenant shall endeavor to use the Communication Equipment so as
not to cause any interference (i) with any other communications from or to the
Project or (ii) to other existing tenants or occupants in the Project who may
use the communication facilities located at the Project and/or related
facilities.
(v) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
(vi) Tenant's rights with respect to such Communication Equipment
shall be personal to the Original Tenant executing this Lease and may not be
assigned or transferred to, or utilized by, any other person or entity with the
exception of any Permitted Transferee under Article 14 which occupies a minimum
of 10,000 rentable square feet of the Building or (ii) any Permitted Affiliate
(collectively, "QUALIFYING TRANSFEREE"); provided, however, such Qualifying
Transferee's rights with respect to Communication Equipment shall be subject to
all the terms and conditions of this Article 22. Other than Qualifying
Transferees, Tenant shall not be permitted to allow any third party to use any
portion of the roof for Communication Equipment or otherwise without Landlord's
consent, which shall not be unreasonably withheld.
(vii) Tenant shall (i) be solely responsible for any damage caused
as a result of the Communication Equipment, (ii) promptly pay any tax, license
or permit fees charged pursuant to any laws or regulations in connection with
the installation, maintenance or use of the Communication Equipment and comply
with all precautions and safeguards recommended by all governmental authorities,
and (iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment and all roof repairs required by the installation and
maintenance of the Communication Equipment.
(viii) The Communication Equipment shall remain the sole property of
Tenant. Tenant shall remove the Communication Equipment and related equipment
at Tenant's sole expense upon the expiration or sooner termination of this Lease
or upon the imposition of any governmental law or regulation which may require
removal, and shall repair the Building upon such removal to the extent required
by such work of removal. If Tenant fails to remove the Communication Equipment
and repair the Building within thirty (30) days after the expiration or earlier
termination of this Lease with respect to such Building, Landlord may do so at
Tenant's expense.
Landlord reserves the right to use a portion of the roof space on the Building
or lease roof space on the Building to other parties; provided, however, any
party to which Landlord leases such roof space shall be subject to similar
restrictions as set forth in this Article 22.
ARTICLE 23
SIGNAGE
23.1 GENERAL. Other than as contemplated by Section 23.2 below, Tenant
shall have no right to install or maintain any Tenant identification signs (or
any other signs, banners or other such displays) in any location on the Building
or in the Project which may be visible from the exterior of the Building, except
as may be approved by Landlord in writing prior to installation (which approval
shall not be unreasonably withheld, and are consistent and compatible with (a)
the restrictions contained in this Article 23, (b) all governmental regulations
and requirements, (c) the Project's signage criteria, a copy of which is
attached hereto as EXHIBIT "J" ("SIGNAGE CRITERIA"), and (d) the CC&R's.
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23.2 TENANT'S EXTERIOR SIGNAGE RIGHTS.
23.2.1 Tenant shall have the right, at Tenant's sole cost and expense
(but chargeable against the Tenant Improvement Allowance described in the Tenant
Work Letter), to install during the Lease Term (i) an identity sign on the
exterior of the Building (the "BUILDING TOP SIGNS") and (ii) certain eyebrow,
directional and monument signage in accordance with the Signage Criteria. As
used herein, "TENANT'S SIGNS" shall mean all Building Signs and any eyebrow,
directional, monument or other signage rights granted to Tenant pursuant to this
Article 23 or EXHIBIT "J". Tenant's Signs shall identify the name of Tenant and
shall not refer to the name of the Project except that monument signage may
refer to the name of the Project.
23.2.2 Tenant's right to Tenant's Signs which are visible from the
exterior of the Building shall be personal to the Original Tenant, any Permitted
Affiliate and any other assignee of Tenant's entire interest in this Lease
(collectively, "PERMITTED SIGNAGE ENTITIES") and may not be transferred to any
other person or entity, except that, subject to the occupancy requirements of
Section 23.2.4 below, Tenant may assign Tenant's rights to any of Tenant's Signs
to any other Transferee occupying at least a full floor in the Building where
Landlord reasonably determines that the name of the Transferee is not an
"Objectionable Name," as that term is defined below. The term "OBJECTIONABLE
NAME" shall mean any name that (i) relates to an entity that is of a character
or reputation, or is associated with a political orientation or faction, that is
inconsistent with the quality of the Project as a first-class, institutional
quality office project, or which a landlord of a first-class, institutional
quality office project would reasonably find to be offensive, taking into
consideration the level and visibility of the applicable Tenant's Signs, or (ii)
conflicts with any exclusive use covenants in other leases of space in the
Project.
23.2.3 Tenant's signage rights shall include exclusive illuminated
and nonilluminated signage for the Building so long as Tenant occupies at least
fifty percent (50%) of the rentable square footage thereof, and Tenant shall
have the right to have its professional name and logo prominently displayed on
any monument signage for the Building so long as Tenant occupies at least fifty
percent (50%) of the rentable square footage thereof.
23.2.4 If Tenant's (or any other Permitted Signage Entity's)
occupancy of the Building falls below fifty percent (50%) of the rentable square
footage thereof, upon notice to Tenant, Tenant's right to Building Top Signs for
such Building shall terminate and Tenant shall remove such signs in accordance
with Section 23.2.8 below.
23.2.5 Any utility costs for illuminated signs shall be charged to
Tenant pursuant to Article 6.
23.2.6 Notwithstanding the foregoing, Landlord hereby reserves and
retains the right to identify Landlord (or its successor) as owner and/or
manager of the Project on monument signage and at the entry to the Building.
Any specifications for such signage not shown on EXHIBIT "J" shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
Tenant's name on the monument signage shall be prominent and at the top of such
signage. The monument signage shall be limited to tenants of the Project except
as described in this Section 23.2.6.
23.2.7 Tenant's Building Top Sign may (but shall not be required to)
face SR56 and shall be located on the skin of the Building in the location shown
on the Signage Criteria. The specifications, plans and elevations for Tenant's
Signs (including the graphics, materials, color, design, lettering, height,
lighting, size and quality) shall be subject to Landlord's approval, which shall
not be unreasonably withheld or delayed and shall be consistent with the Signage
Criteria for the Project. Tenant's Signs shall be installed under the
supervision of Landlord by a contractor reasonably approved by Landlord and
shall be installed in a lien-free manner in accordance with the provisions of
this Lease. Tenant's signs shall be maintained, at the sole cost and expense of
Tenant, pursuant to a maintenance program approved by Landlord.
23.2.8 Tenant shall, at Tenant's sole cost and expense (subject to
Landlord's supervision, but without charge to Tenant for such supervision),
cause Tenant's Signs to be
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removed and the Building and the Project to be restored to the condition
existing prior to the placement of such Tenant's Signs (reasonable wear and tear
excepted) at the expiration or earlier termination of this Lease (or such
earlier time as Tenant elects or is required to remove any such Tenant Signs).
If Tenant fails to remove Tenant's Signs and restore the Building and Project as
provided above within thirty (30) days following Landlord's demand therefor,
then Landlord may perform such work and all costs and expenses incurred by
Landlord in so performing such work shall be reimbursed by Tenant to Landlord
within fifteen (15) days following Landlord's delivery to Tenant of an invoice
therefor.
23.3 TENANT'S INTERIOR SIGNAGE RIGHTS. Tenant shall have the right to
locate in the Building lobby a Building directory board ("DIRECTORY BOARD") the
size, location, design, materials, color and quality of which shall be subject
to Tenant's reasonable discretion, except that if, at any time, the Building is
not one hundred percent (100%) leased by Tenant, the size, location, design,
material, color and quality of the Directory Board shall be subject to
Landlord's reasonable approval. The cost of the Directory Board shall be
included in the Base, Shell and Core for the Building and the cost of Tenant's
listings shall be borne by Tenant. Tenant shall have exclusive use of any such
Directory Board so long as Tenant's lease covers one hundred percent (100%) of
the rentable square footage in the Building; provided, however, Landlord shall
have the right to identify Landlord (or its successor) as owner and/or manager
of the Project on any such Directory Board. In the event Tenant no longer
leases and occupies one hundred percent (100%) of the rentable square footage of
the Building, Tenant and its Permitted Transferees shall be entitled to its
Building pro rata share of the space on such Directory Board. Tenant shall also
have the right to install other signage identifying Tenant within the Building,
which interior signage shall be in compliance with the Signage Criteria.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute, ordinance
or other governmental rule, regulation or requirement now in force or which
may hereafter be enacted or promulgated. At its sole cost and expense,
Tenant shall promptly comply with all such governmental measures, other than
the making of (i) structural changes to the Building or (ii) changes to the
Building's life safety system, or (iii) any capital improvements to the
Project the requirement of which is not related to Tenant's particular use of
the Premises or Alterations made by Tenant. Compliance with the items
described in subsections (i), (ii) and (iii) above shall be Landlord's
responsibility and shall, subject to the terms of Article 4 above, be
included in Operating Expenses. Should any standard or regulation now or
hereafter be imposed on Landlord or Tenant by a state, federal or local
governmental body charged with the establishment, regulation and enforcement
of occupational, health or safety standards for employers, employees,
landlords or tenants, then Tenant agrees, at its sole cost and expense, to
comply promptly with such standards or regulations. The judgment of any
court of competent jurisdiction or the admission of Tenant in any judicial
action, regardless of whether Landlord is a party thereto, that Tenant has
violated any of said governmental measures, shall be conclusive of that fact
as between Landlord and Tenant. Notwithstanding the foregoing or anything to
the contrary contained in this Lease, Landlord hereby warrants to Tenant that
the Building shall be in compliance with the requirements of the Americans
With Disabilities Act ("ADA") and California Administrative Code Title 24
("TITLE 24") in effect at the time Landlord obtains the certificate of
occupancy (or its equivalent) for the Base, Shell and Core; provided,
however, that if the requirements of ADA and/or Title 24 change after the
date upon which Landlord obtains the permit for the initial construction of
the Building and Landlord is not required by law to comply with such change,
Landlord shall not be in violation of this provision so long as Landlord not
making such change does not increase the cost of construction of the Tenant
Improvements or delay the construction of the Tenant Improvements. Landlord
will be fully responsible for making all alterations and repairs to the
Building, at Landlord's cost (which shall not be included in Operating
Expenses) resulting from or necessitated by the failure of Landlord or
Landlord's contractors to comply with the foregoing ADA and Title 24
warranty.
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The obtaining of a Certificate of Occupancy by either Landlord or Tenant
permitting Tenant occupy the Building shall be prima facia evidence that
Landlord has complied with the foregoing requirements of this Article 24
("REQUIREMENTS") as of the date of such Certificate of Occupancy, unless
refuted or reversed by any applicable governmental authorities. However,
notwithstanding anything to the contrary contained in this Article 24,
Tenant, at Tenant's sole cost and expense, shall promptly make all repairs,
replacements, alterations or improvements needed to comply with the
Requirements to the extent that the Requirements relate to or are triggered
by (a) Tenant's particular use of the Building for other than general office
use, or (b) any Alterations made to the Building by Tenant.
ARTICLE 25
LATE PAYMENTS
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to two
percent (2%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum ("INTEREST RATE") equal to
the lesser of (i) two percent (2%) over the rate publicly announced by Wells
Fargo Bank as its prime or reference rate (or the largest state chartered bank
operating in California in the event that Wells Fargo Bank ceases to exist or to
announce a prime or reference rate) or (ii) the highest rate permitted by
applicable law.
ARTICLE 26
LANDLORD'S RIGHTS TO CURE DEFAULT;
PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall fail to perform
any of its obligations under this Lease, within a reasonable time after such
performance is required by the terms of this Lease, Landlord may, but shall not
be obligated to, after reasonable prior notice to Tenant (except in the case of
an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15) days
after delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures reasonably made and obligations incurred by Landlord in collecting
or attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Section 26.2 shall survive the expiration or sooner termination of
the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the
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Premises to prospective purchasers, mortgagees or tenants (but as to prospective
tenants, only during the last twelve (12) months of the initial Lease Term or of
any Extension Term), or to the ground or underlying lessors; (iii) post notices
of nonresponsibility; or (iv) alter, improve or repair the Premises or the
Building if necessary to comply with current building codes or other applicable
laws, or for structural alterations, repairs or improvements to the Building.
Tenant shall be offered an opportunity to accompany Landlord in connection with
any such entry and Landlord shall use reasonable efforts to comply with Tenant's
security procedures in connection with such entry (except that these
restrictions shall not apply in the case of an emergency where Tenant is not
available to accompany Landlord). Notwithstanding anything to the contrary
contained in this Article 27, Landlord may enter the Premises at any time to
(A) perform services required of Landlord; (B) take possession due to any breach
of this Lease in the manner provided herein; and (C) perform any covenants of
Tenant which Tenant fails to perform. Landlord may make any such entries
without the abatement of Rent so long as Tenant can continue to occupy and use
any affected portion of the Premises for the same business purposes as Tenant
had been using such affected portion prior to Landlord's entry, and Landlord may
take such reasonable steps as required to accomplish the stated purposes,
provided, however, that any such entry shall be accomplished as expeditiously as
reasonably possible and in a manner so as to not materially and adversely
interfere with Tenant's normal business functions. Tenant hereby waives any
claims for damages or for any injuries or inconvenience to or interference with
Tenant's business, lost profits, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby except any claims arising out of
Landlord's gross negligence or willful misconduct. For each of the above
purposes, Landlord shall at all times have a key with which to unlock all the
doors in the Premises, excluding Tenant's vaults, safes and special security
areas designated from time to time in advance by Tenant. In an emergency,
Landlord shall have the right to use any means that Landlord may deem proper to
open the doors in and to the Premises. Any entry into the Premises by Landlord
in the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.
ARTICLE 28
TENANT PARKING
Commencing on the Lease Commencement Date, Tenant shall have the right, at
no cost to Tenant during the initial Lease Term (with the parking charge, if
any, during Extension Terms to be determined as a component of Fair Market
Rental Value), to the use of the number of parking permits set forth in
Section 9 of the Summary, which parking permits shall pertain to the Project
parking facilities. Such parking permits shall permit Tenant and its employees
and invitees to use, on a nonexclusive basis, together with other tenants and
their respective employees and invitees, any undesignated, unreserved spaces
available in such parking facility for the Building. If the parking structure
for the Project is not completed as of the Lease Commencement Date, Tenant's
parking specified in Section 9 of the Summary shall be satisfied by surface
parking (some of which may be temporary surface parking) within the Project.
Tenant shall abide by all rules and regulations which are prescribed from time
to time for the orderly operation and use of the Project parking facility,
provided that Landlord shall not prescribe any rules and regulations which
unreasonably and adversely affect Tenant's use of the Project parking facility.
Such rules and regulations shall provide that Tenant shall pay Landlord's then
current nominal charge for any replacement of any Tenant parking pass card, if
any, which is lost, stolen, damaged or destroyed. Tenant understands and agrees
that, pursuant to the CC&R's, other owners of adjacent property to the Project
have been or will be granted reciprocal rights of access and parking over
certain portions of the Project as more particularly set forth in the CC&R's;
provided, however, the use of the parking structure will be limited to tenants
of the Project. Landlord shall not, without Tenant's prior written approval
(which approval shall not be unreasonably withheld), change the size,
configuration, design, layout and all other aspects of the Project parking
facilities at any time, and if Tenant approves any such changes, Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of Rent under this Lease, from time to time,
temporarily restrict access to the Project parking facility for purposes of
permitting any such construction,
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alteration or iprovements so long as Landlord takes all reasonable measures to
minimize any disruption to Tenant's use or access of the Project parking
facilities for the duration of any such construction, alteration or
improvements. Notwithstanding the foregoing, Landlord may, without Tenant's
prior written approval, make such changes to the Project parking facilities to
the extent such changes are mandated by any applicable governmental law, rule or
regulation or any changes to any governmental law, rule or regulation. If
Landlord is forced to relocate Tenant's parking off site of the Project parking
facility, any such relocation shall be temporary and Landlord shall use
commercially reasonable efforts to cause such relocation to be within a
reasonable walking or shuttle distance of the Project. Further, Landlord shall
not knowingly allow any non-tenants of the Project to use the Project parking
facilities in violation of the CC&R's without Tenant's prior written approval.
Landlord agrees that the average number of parking permits granted by Landlord
to any other tenants of the Project shall not exceed four and one-half (4.5)
parking permits per 1,000 usable square feet of space so leased. Landlord may
delegate its responsibilities hereunder to a parking operator in which case such
parking operator shall have all the rights of control attributed hereby to the
Landlord. Tenant's parking permits under this Article 28 are provided to Tenant
solely for use by Tenant's own personnel and such privileges may not be
transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord's prior approval other than on a pro rata basis to Permitted Affiliates
and Permitted Transferees. Tenant's invitees and guests may use parking spaces
in such parking facility which are not allocated or reserved for Tenant or other
occupants or visitors of the Building or Project on a first-come, first-serve
basis. Notwithstanding the foregoing, approximately ten percent (10%) of
Tenant's parking permits for the Building shall be reserved spaces for Tenant's
visitors and employees of the Building, as will be shown on a Project parking
plan prepared by Landlord and acceptable to Tenant. Landlord shall have the
right to relocate such reserved spaces from time to time so long as Landlord
provides Tenant with reserved spaces within the same general proximity of the
Building. The parking permits allocated to Tenant are not for long term (i.e.,
more than ninety-six (96) hours) storage of automobiles, and are not for short
or long term storage of boats, trailers, recreational vehicles, motorcycles or
other vehicles or equipment. Tenant shall have the option to require Landlord
to add, at Tenant's sole cost and expense (other than the cost of card keys for
tenant(s) of Building 4, unless Tenant exercises its option to lease Building
4), a card key entry system to the parking structure (as selected by Tenant and
reasonably approved by Landlord) for the Project and/or security cameras
(including a security desk and console with monitors for each security camera at
the location specified in EXHIBIT "I") within the parking structure for the
Project; if Tenant exercises such option, Tenant shall pay such cost to
Landlord, as Additional Rent, within thirty (30) days after Tenant's receipt of
reasonably detailed invoice(s).
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Subject to all other provisions of this Lease, each
of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Landlord and of Tenant, but
also of their respective successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of this
Lease.
29.2 MODIFICATION OF LEASE/MEMORANDUM OF LEASE. Should any current or
prospective mortgagee or ground lessor for the Building or Project require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way change
the rights and obligations of Tenant hereunder (as reasonably determined by
Tenant), then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. Landlord agrees to pay to Tenant, within thirty (30) days
after invoice, any reasonable attorneys' fees incurred by Tenant in connection
with any modification to this Lease executed by Tenant pursuant to the
immediately preceding sentence. Should Landlord or any such prospective
mortgagee or ground lessor, or should Tenant, request execution of a short form
Memorandum of Lease for recording,
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containing, among other customary provisions, the names of the parties, a
description of the Premises and the Lease Term, each party agrees to execute and
deliver such short form Memorandum of Lease to the other within twenty (20) days
following the request therefor. Either party may record any such Memorandum of
Lease at such party's sole cost and expense; however, if Tenant records a
Memorandum of Lease, Tenant agrees to execute, acknowledge and deliver to
Landlord, within ten (10) days after Landlord's request (which request may be
made by Landlord at any time after the date of expiration or earlier termination
of this Lease), a quitclaim deed prepared by Landlord and in commercially
reasonable form acknowledging the expiration or earlier termination of this
Lease. The immediately preceding sentence shall survive the expiration or
earlier termination of this Lease.
29.3 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project and
in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease for
obligations accruing after the date of transfer and Tenant agrees to look solely
to such transferee for the performance of Landlord's obligations to be performed
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that an assignment shall not release
Landlord from its obligations hereunder and Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.4 CONSENTS BY THE PARTIES. The parties intend that whenever Landlord's
or Tenant's consent or approval is expressly or impliedly required by any
provision of this Lease, the consent or approval may not be unreasonably or
arbitrarily withheld, conditioned or delayed; and on the contrary, shall be
approved or disapproved by a party acting in a commercially reasonable manner.
Notwithstanding anything to the contrary contained in this Lease, except as
expressly provided in Section 14.2 above, an action for declaratory judgment or
specific performance shall be Tenant's or Landlord's sole right and remedy in
any dispute as to whether Tenant or Landlord has breached this Section 29.4
concerning a consent or approval.
29.5 CAPTIONS. The captions of articles and sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such articles and sections.
29.6 TIME OF ESSENCE. Time is of the essence of this Lease and each of its
provisions.
29.7 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 NO WARRANTY. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.
29.9 CONSTRUCTION. Should any provision of this Lease require
interpretation by a court of law, it is agreed that the court interpreting or
construing this Lease shall not apply a presumption that the terms shall be more
strictly construed against one party who by itself or through its agents
prepared this document.
29.10 ENTIRE AGREEMENT. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
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any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises and shall be
considered to be the only agreements between the parties hereto and their
representatives and agents. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.
29.11 RIGHT TO LEASE. Subject to Tenant's rights hereunder, Landlord
reserves the absolute right to effect such other tenancies in the Project as
Landlord in the exercise of its sole business judgment shall determine to best
promote the interests of the Building or Project, provided that Landlord shall
lease space in the Project only to tenants who are consistent with the quality
of the Project as a first-class, institutional quality office project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the Lease Term, occupy any space in
the Building or Project.
29.12 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
29.13 NOTICES. All notices, demands, statements, designations,
approvals or other communications (collectively, "NOTICES") given or required
to be given by either party to the other hereunder shall be in writing, shall be
sent by (i) United States certified or registered mail, postage prepaid, return
receipt requested, (ii) nationally recognized and reputable overnight courier
(e.g., Federal Express and Network Courier), or (iii) delivered personally.
Notice shall be sent (a) to Tenant at the appropriate address set forth in
Section 11 of the Summary, or to such other place as Tenant may from time to
time designate in a Notice to Landlord; or (b) to Landlord at the following
addresses, or to such other firm or to such other place as Landlord may from
time to time designate in a Notice to Tenant:
Kilroy Realty, L.P.
2250 East Imperial Highway, Suite 1200
El Segundo, California 92045
Attention: Legal Department
Facsimile: (310) 322-8790
with a copy to:
Kilroy Realty, L.P.
4370 Executive Drive, Suite 400
San Diego, California 92121
Attention: Asset Manager
Facsimile: (619) 547-4767
Any Notice will be deemed given on the date which is three (3) business days
after the date it is mailed as provided in this Section 29.13, the next business
day if sent by overnight courier, or upon the date personal delivery is made.
If Tenant is notified of the identity and address of the holder of any deed of
trust or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given the same opportunity to cure such
default as is available to Landlord, prior to Tenant's exercising any remedy
available to Tenant.
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29.14 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.15 AUTHORITY. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. If only one (1) officer executes this Lease for Tenant,
Tenant agrees to provide to Landlord evidence reasonably satisfactory to
Landlord confirming the authority of the signing officer of Tenant to bind
Tenant to this Lease.
29.16 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING
ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF
ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW. EACH PARTY HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION (FOR UNLAWFUL DETAINER OR OTHERWISE) BY LANDLORD
TO RECOVER POSSESSION OF THE PREMISES.
29.17 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.18 BROKERS. 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 Lease, excepting only the real estate brokers or
agents specified in Section 10 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. 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, judgments, 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
any dealings with any real estate broker or agent, other than the Brokers (whose
commissions shall be paid by Landlord pursuant to a separate agreement),
occurring by, through, or under the indemnifying party.
29.19 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord except as expressly set forth in this Lease;
provided, however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of
the provisions hereof so long as notice is first given to Landlord.
29.20 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord and Tenant agree
that if Tenant leases on a direct basis (i.e., not including any space leased by
Tenant pursuant to a sublease) at least two-thirds (2/3) of any space then
constructed for lease at the Project, the name of the Project shall be
"Peregrine Systems Corporate Center." However, if at any time (after the Lease
Commencement Date for Building 1) Tenant fails to lease on a direct basis at
least two-thirds (2/3) of such space, Landlord shall have the right, at
Landlord's sole cost and expense, to change the name of the Project to "Carmel
Center", whether or not Tenant subsequently meets the leasing requirement
specified above. Except as provided in this Section 29.20 above, Landlord shall
not have the right at any time to change the name of the Project or Building
without first obtaining Tenant's written consent. Except for signs identifying
the Project or the owner or manager of the Project, Landlord shall not install,
affix and maintain any signs on the exterior or
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on the interior of the Building, except as expressly contemplated by this Lease
and/or may be required by law.
29.21 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future mandatory programs imposed by statute or ordinance intended to
manage parking, transportation or traffic in and around the Project or Building,
and in connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any governmental transportation management
organization or any other transportation-related committees or entities. If any
of the foregoing are not imposed by statute or ordinance, Tenant may
participate, in its discretion, on a voluntary basis. Such programs may
include, without limitation: (i) restrictions on the number of peak-hour vehicle
trips generated by Tenant; (ii) increased vehicle occupancy;
(iii) implementation of an in-house ridesharing program and an employee
transportation coordinator; (iv) working with employees and any Project,
Buildings or area-wide ridesharing program manager; (v) instituting
employer-sponsored incentives (financial or in-kind) to encourage employees to
rideshare; and (vi) utilizing flexible work shifts for employees. Tenant shall
be entitled to the benefit of any governmental incentives (financial or in-kind)
available or otherwise offered to induce compliance with such programs to the
extent such incentives are applicable to Tenant's implementation of any such
programs.
29.22 NO DISCRIMINATION. Tenant covenants by and for itself, its
heirs, executors, administrators and assigns, and all persons claiming under or
through Tenant, and this Lease is made and accepted upon and subject to the
following conditions: that there shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed,
sex, religion, marital status, ancestry or national origin in the leasing,
subleasing, transferring, use, or enjoyment of the Premises, nor shall Tenant
itself, or any person claiming under or through Tenant, establish or permit such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy, of tenants, lessees, sublessees,
subtenants or vendees in the Premises.
29.23 HAZARDOUS MATERIAL. As used herein, the term "HAZARDOUS
MATERIAL" means any hazardous or toxic substance, material or waste which is or
becomes regulated by, or is dealt with in, any local governmental authority, the
State of California or the United States Government. Tenant acknowledges that
Landlord may incur costs (A) for complying with laws, codes, regulations or
ordinances relating to Hazardous Material, or (B) otherwise in connection with
Hazardous Material including, without limitation, the following: (i) Hazardous
Material present in soil or ground water; (ii) Hazardous Material that migrates,
flows, percolates, diffuses or in any way moves onto or under the Project;
(iii) Hazardous Material present on or under the Project as a result of any
discharge, dumping or spilling (whether accidental or otherwise) on the Project
by other tenants of the Project or their agents, employees, contractors or
invitees, or by others; and (iv) material which becomes Hazardous Material due
to a change in laws, codes, regulations or ordinances which relate to hazardous
or toxic material, substances or waste. Tenant agrees that the costs incurred
by Landlord with respect to, or in connection with, the Project for complying
with laws, codes, regulations or ordinances relating to the investigation,
remediation or removal of Hazardous Material shall not be an Operating Expense,
except as indicated in Section 4.2.7(n) above. However, if the cost of such
compliance, as between Landlord and Tenant, is the responsibility of Tenant
under this Lease, Tenant shall bear the cost of such compliance.
29.24 DEVELOPMENT OF THE PROJECT.
29.24.1 SUBDIVISION. Tenant acknowledges that the Project has
been, or is in the process of being, subdivided. Landlord reserves the right to
further subdivide all or a portion of the buildings and Common Areas in the
Project. Tenant agrees to execute and deliver, within ten (10) days after
demand by Landlord and in the form reasonably requested by Landlord, any
additional documents needed to conform this Lease to the circumstances resulting
from a subdivision and any all maps in connection therewith provided Tenant
shall not be required to incur any cost, undue burden or diminution of Tenant's
rights hereunder in connection therewith.
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Notwithstanding anything to the contrary set forth in this Lease, the separate
ownership of any buildings and/or Common Areas of the Project by an entity other
than Landlord shall not affect the calculation of Direct Expenses or Tenant's
payment of Tenant's Share of Direct Expenses.
29.24.2 THE OTHER IMPROVEMENTS. If portions of the Project or
property adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any of the Other Improvements to
provide (i) for reciprocal rights of access, use and/or enjoyment of the Project
and the Other Improvements, (ii) for the common management, operation,
maintenance, improvement and/or repair of all or any portion of the Project and
all or any portion of the Other Improvements, (iii) for the allocation of a
portion of the Project Expenses to the Other Improvements and the allocation of
a portion of the operating expenses and taxes for the Other Improvements to the
Project, (iv) for the use or improvement of the Other Improvements and/or the
Project in connection with the improvement, construction, and/or excavation of
the Other Improvements and/or the Project, and (v) for any other matter which
Landlord deems necessary. Nothing contained herein shall be deemed or construed
to limit or otherwise affect Landlord's right to sell all or any portion of the
Project or any other of Landlord's rights described in this Lease.
29.24.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction, provided that Landlord shall
take all reasonable measures to minimize any interference or disruption to
Tenant's use of the Premises.
29.25 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord hereunder) and any recourse by Tenant against Landlord
from and after Landlord's Substantial Completion of the Building and delivery of
the same to Tenant in accordance with Landlord's obligations under this Lease,
shall be limited solely and exclusively to the lesser of (a) the equity interest
of Landlord in the Buildings then leased by Tenant as of the date upon which any
claim(s) arises or accrues in favor of Tenant or (b) the equity interest
Landlord would have in such Buildings if such Buildings were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Buildings, except to the extent any such claims and liability are covered by
insurance carried by Landlord. None of Landlord's constituent members, owners,
partners or subpartners, shall have any liability for the obligations of
Landlord under this Lease, and Tenant, on behalf of itself and all persons
claiming by, through or under Tenant, hereby expressly waives and releases such
members, owners, partners and subpartners from any and all liability.
29.26 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant, all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
29.27 ATTORNEYS' FEES. If either party commences litigation against
the other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
29.28 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at underground locations in the Project in or
serving the Premises, provided that (i) Tenant shall use an experienced and
qualified contractor approved in writing by Landlord (which approval shall not
be unreasonably withheld or delayed), and comply with all of the other
provisions of Articles
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<PAGE>
7 and 8 of this Lease, (ii) an acceptable number of conduits for additional
Lines shall be maintained for existing and future occupants of the Project, as
determined in Landlord's reasonable opinion, (iii) conduits for the Lines
therefor (including riser cables unless originally installed by Landlord) shall
be appropriately insulated to prevent excessive electromagnetic fields or
radiation, and shall be surrounded by a protective conduit reasonably acceptable
to Landlord, (iv) any new or existing Lines servicing the Premises shall comply
with all applicable governmental laws and regulations, and (v) Tenant shall pay
all costs in connection therewith (except that Tenant shall have no obligation
to remove any Lines between the Buildings upon the expiration or earlier
termination of this Lease). However, Landlord reserves the right to require
that Tenant remove any Lines located in or serving the Premises which are
installed in violation of these provisions, or which are at any time in
violation of any laws or represent a dangerous or potentially dangerous
condition.
29.29 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenant's obligations under this Lease.
29.30 COUNTERPARTS. This Lease may be executed in counterparts with
the same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.31 CONFIDENTIALITY. Landlord and Tenant acknowledge that the
content of this Lease and any related documents are confidential information.
Landlord and Tenant shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any person
or entity other than (i) their financial, legal, and space planning consultants,
(ii) as may be required by any public reporting requirements, and (iii) as may
be required by any applicable governmental law, rule or regulation.
29.32 DISCLOSURES AND MUTUAL RELEASE. Tenant acknowledges that
Landlord has advised Tenant (i) that an earthquake fault may be located under a
portion of the Project, and (ii) of the proximity of the Project to the Miramar
military air base's vectored departure corridors and the potential overflights
and associated noise generated by various military aircraft in the area.
Landlord and Tenant hereby mutually release, acquit and discharge each other
from any and all Claims which either party may have against the other party
arising out of or in connection with (a) any earthquake affecting all or any
portion of the Project (subject to Landlord's and Tenant's rights and
obligations under Article 11 above), and (b) any such overflights and associated
noise.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD": KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By:/s/ Steven L. Black
-------------------------
Name: Steven L. Black
-----------------------
Its: EVP - CDO
-------------------
By:/s/ Jeffrey C. Hawken
-------------------------
Name: Jeffrey C. Hawken
-----------------------
Its: EVP - COO
-------------------
"TENANT": PEREGRINE SYSTEMS, INC., a Delaware corporation
By: [ILLEGIBLE]
-----------------------------------
Sr. V.P., Finance & Administration
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
By:
-----------------------------------
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
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EXHIBIT A
PEREGRINE SYSTEMS CORPORATE CENTER
SITE PLAN
[MAP]
EXHIBIT A
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT B
PEREGRINE SYSTEMS CORPORATE CENTER
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Base, Shell and Core and tenant improvements for the
Building. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Building, in sequence, as such
issues will arise during the actual construction of the Building. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Lease. All references in this Tenant Work Letter to articles or
sections of "this Lease" shall mean the relevant portion of Articles 1 through
29 of this Office Lease to which this Tenant Work Letter is attached as EXHIBIT
"B" and of which this Tenant Work Letter forms a part, and all references in
this Tenant Work Letter to sections of "this Tenant Work Letter" shall mean the
relevant portion of Sections 1 through 7 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION OF BASE, SHELL AND CORE
The base, shell and core for the Building (collectively, the "Base, Shell
and Core") shall be constructed by Landlord, at its sole cost and expense
(except as expressly provided herein), in accordance with this Section 1.
1.1 LANDLORD'S RESPONSIBILITIES. The Base, Shell and Core for the
Building shall consist of only those items reflected on those certain drawings
prepared by the Project Architect as summarized on Schedule 3 to this Tenant
Work Letter, as such drawings may be revised pursuant to this Tenant Work Letter
for reasons other than a Landlord Work Change Order. Such drawings as revised
pursuant to this Tenant Work Letter for reasons other than a Landlord Work
Change Order may be referred to herein as the "BUILDING WORKING DRAWINGS".
Notwithstanding the foregoing, the Base, Shell and Core for the Building shall
(without limitation to the items reflected in the Building Working Drawings)
consist of (i) core walls and elevator lobby areas drywalled and taped ready for
Building-standard surface treatments; (ii) balance of core: exposed structure,
level concrete floors (broom clean) suitable for the installation of general
office improvements and ready to receive floor covering, Building-standard
finish for painted door frames, and Building-standard hardware; (iii) primary
electrical system ready for Tenant's switchgear in main electrical room which
will service the floor of the Building on which the Premises are located
sufficient to provide Tenant with 4 watts per rentable square foot and
sufficient capacity in such distribution to provide an additional 1.5 watts per
rentable square foot; (iv) Building telephone room to have floor sleeves to
allow utility company to distribute service lines onto each floor (Tenant to
locate phone system equipment in the Premises and to provide voice/data cabling
from equipment to termination in telephone room); (v) men's and ladies' restroom
facilities with Building-standard finishes located on each floor; (vi) sprinkler
risers capped at the core walls; (vii) primary heating, ventilating and air
conditioning system, including main water distribution loop (however, any VAV
boxes and ducting including main ducting loop, shall be a Tenant Improvement);
(viii) drinking fountain at core on ground floor; (ix) electrical and janitorial
closets; (x) code required exit stairways; (xi) mechanical shafts; (xii)
life-safety systems as required by applicable building codes on an unoccupied
basis and ground floor lobby improvements including the improvements described
in the Building Working Drawings; and (xiii) card access systems for Building
entrances and elevators. Landlord shall use commercially reasonable efforts to
cause the Base, Shell and Core of the Building to be completed by the date
specified in Section 1.5.2(v) below (the "SHELL COMPLETION DATES") in order to
allow a sufficient period of time for the construction of the Tenant
Improvements prior to the Estimated Lease Commencement Date.
1.1.1 BOOKS AND RECORDS. Landlord shall be responsible for
performing all accounting functions associated with the performance of the
construction of the improvements to the Common Areas and the Base, Shell and
Core and Tenant Improvements (collectively, the
EXHIBIT B
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[Peregrine Systems]
<PAGE>
"WORK") and shall prepare and maintain or cause to be prepared and maintained
detailed and accurate operating and financial records for the Work. Tenant
shall have the right to inspect such records at the offices of Landlord in
Southern California during normal business hours and to make copies thereof at
its expense. Landlord shall preserve, or cause its agents to preserve, copies
of all books and records relating to the Work for a period of three (3) years
after the completion of the Base, Shell and Core.
1.1.2 GOVERNMENTAL APPROVALS. Landlord shall be responsible for
obtaining all necessary agreements with governmental agencies and utility
companies relating to access, traffic control, utility services and other
similar entitlements affecting the construction of the Work.
1.1.3 BIDDING OF CONTRACTS. Landlord shall be responsible for the
bidding (or at Landlord's election the negotiation of fees) of the contract with
the general contractor and all subcontracts to be awarded in connection with the
initial Common Area improvements and the Base, Shell and Core (collectively, the
"LANDLORD WORK") in accordance with Section 1.4 below. Landlord shall be
responsible for negotiating the terms of the agreements with the contractor and
Project Architect with respect to the Landlord Work, both of which shall be
consistent with the terms and provisions of this Section 1. Except as expressly
provided in the Lease or this Tenant Work Letter, Landlord shall be solely
responsible for the payment of the costs of designing and constructing the
Landlord Work.
1.1.4 PERMITS. In addition to Landlord's obligations under
Section 1.1.2 above, Landlord shall be responsible for obtaining, or causing its
contractor to obtain, all building permits and other governmental approvals,
permits and land use entitlements required to complete the Landlord Work.
Landlord shall be responsible for compliance with all laws, rules, regulations
and policies of the City of San Diego, State of California and United States of
America governing completion of the Landlord Work, including without limitation,
the requirements of the ADA and Title 24 in effect as of the Lease Commencement
Date, and shall correct any such violations at no cost to Tenant; however, if
the requirements of any laws change after the date upon which Landlord obtains
the permit for construction of the Base, Shell and Core and Landlord is not
required by law to comply with such change with respect to the Landlord Work,
Landlord shall not be in violation of this Section 1.1.4 so long as Landlord by
electing not to make such change does not increase the cost of construction of
the Tenant Improvements or delay the construction of the Tenant Improvements.
1.1.5 PROJECT ADMINISTRATION. Landlord shall be responsible for
supervising the progress of the Work and for reviewing and approving progress
payment applications before they are processed for payment.
1.1.6 POST-COMPLETION MATTERS. Following the completion of the
Landlord Work, Landlord shall assemble and maintain at the property management
office for the Project copies of (i) all warranties, operating manuals,
specifications and similar items with respect to the Building, and (ii) as-built
architectural and engineering drawings (including the master background) and any
other plans for the Landlord Work. Following the completion of the Work, upon
the request of Tenant and at Landlord's expense, Landlord also shall assemble
and deliver to Tenant copies of reproducible as-built plans and specifications
for the Building (in an auto-cad format, if available).
1.1.7 STATUS REPORTS. Landlord shall inform Tenant of any
problems or developments that may have an adverse impact on the completion of
the Landlord Work in a timely manner promptly after Landlord becomes aware of
such problems or developments.
1.1.8 PERIODIC INSPECTIONS. Landlord shall conduct ongoing
inspections (at least weekly) of the Landlord Work for compliance with plans and
specifications and review of progress of construction, and shall conduct
periodic site meetings with the construction trades. Landlord shall keep Tenant
reasonably informed of such meetings and proposed meetings and provided that
Tenant's participation does not extend the Construction Schedule, Tenant shall
have the right to participate in such meetings if it so desires.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
1.1.9 PARKING. Landlord agrees that Tenant's parking privileges
for the Building (as specified in Section 9 of the Summary) shall be satisfied
within the Project in areas other than those shown as cross-hatched areas on
Exhibit "A".
1.2 DESIGN OF THE LANDLORD WORK. Landlord has entered into an agreement
with Carrier Johnson for the design of the Landlord Work including preparation
of design, development and construction documents. Landlord has entered into or
may enter into other agreements with other consultants for design of other
aspects of the Landlord Work (if applicable). Carrier Johnson and such other
design consultants (if applicable) retained by Landlord shall be collectively
referred to as the "PROJECT ARCHITECT." Landlord's agreement(s) with the
Project Architect shall be collectively referred to herein as the "PROJECT
ARCHITECT AGREEMENT." The specific terms of the Project Architect Agreement
shall be such that it will enable Landlord to perform Landlord's obligations
hereunder.
The Project Architect has prepared and delivered to Tenant, and Tenant has
approved, the Building Working Drawings. Landlord has obtained approval of the
Building Working Drawings as approved by Tenant, from all appropriate
governmental agencies, including all departments of the City of San Diego having
jurisdiction to review the Building Working Drawings. Any revisions or changes
to the Building Working Drawings, if requested by Landlord (but not if required
by the City of San Diego or any other governmental agency), will be subject to
the approval of Tenant (which approval shall not be unreasonably withheld,
conditioned or delayed). Tenant shall approve or disapprove any such revisions
or changes by written notice to Landlord within five (5) days after Tenant's
receipt of such proposed revisions or changes; Tenant's failure to disapprove
any such revisions or changes by written notice to Landlord within said five (5)
day period (which written notice shall include detailed reasons for Tenant's
disapproval) shall be deemed to constitute Tenant's approval of such revisions
or changes.
1.3 CHANGE ORDERS REQUESTED BY TENANT TO THE LANDLORD WORK. Tenant may
request that additions to or deletions from the Landlord Work be made ("LANDLORD
WORK CHANGE ORDERS"). If Tenant desires a Landlord Work Change Order to be
made, Tenant shall so notify Landlord in writing and, within ten (10) days after
such notification, Landlord shall deliver to Tenant (i) written notice that
Landlord has determined, in Landlord's reasonable discretion, to disapprove the
proposed Landlord Work Change Order, or (ii) if Landlord approves the proposed
Landlord Work Change Order, a written estimate of any extension to the
Construction Schedule and any additional costs resulting from such proposed
Landlord Work Change Order. Without limitation on other reasons for Landlord's
disapproval, Landlord may disapprove any such proposed Landlord Work Change
Order if it will cause (a) a material change to the exterior of the Building,
(b) a material change to any of the finish materials, including without
limitation, to the lobby, bathrooms or elevator cabs of the Building, or (c) any
material adverse effect (as reasonably determined by Landlord) on the quality or
adequate functionality of the Landlord Work. If Landlord approves the proposed
Landlord Work Change Order, Tenant shall, within five (5) days following receipt
of such notification from Landlord, then notify Landlord in writing whether or
not Tenant elects to proceed with the Landlord Work Change Order. If Tenant
elects to cause any Landlord Work Change Order to be made, the Shell Completion
Date and other Major Project Milestones shall be appropriately adjusted as a
result of any delays due to such Landlord Work Change Order. If Landlord does
not approve a proposed Landlord Work Change Order, the Landlord Work Change
Order shall not be implemented. Any increased cost resulting from a Landlord
Work Change Order shall be charged to the Tenant Improvement Allowance and any
delay resulting from a Landlord Work Change Order shall, subject to Section 5
below, be deemed to constitute a Tenant Delay and an Excusable Delay. Tenant
acknowledges, however, that the contractor for the Landlord Work shall not be
instructed to stop work during the time taken by Tenant in considering whether
to proceed with any proposed Landlord Work Change Orders and that the cost
charged to the Tenant Improvement Allowance and any potential Tenant Delay and
Excusable Delay resulting from a Landlord Work Change Order shall include any
work necessary to reverse the work performed by the contractor during the
pendency of Tenant's decision whether to proceed with a Landlord Work Change
Order.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
1.4 CONTRACTING. Landlord may, at its option, retain Reno Contracting,
Inc., a California corporation ("RENO") or separately bid and award separate
contracts for the construction of the Base, Shell and Core of the Buildings.
1.5 CONSTRUCTION SCHEDULE.
1.5.1 COMPLETION. The construction of the Base, Shell and Core of
the Building shall be deemed to be completed (the "BASE, SHELL AND CORE
COMPLETION") when (i) the Project Architect determines that the Base, Shell and
Core for such Building has been completed in accordance with the Building
Working Drawings (subject to customary "punch list" items) by issuing a
certificate of substantial completion, and (ii) a certificate of occupancy or an
approval to occupy (or their equivalent) with respect to the Base, Shell and
Core has been issued by the City of San Diego. "Punch list" items, as referred
to in this Section 1.5.1, are items that will require correction but that will
not materially interfere with, or cause a delay to, the construction of the
Tenant Improvements. Landlord agrees to correct all such Base, Shell and Core
punch list items prior to the Lease Commencement Date.
1.5.2 MAJOR PROJECT MILESTONES. Landlord agrees that it shall use
commercially reasonable efforts to complete its duties and tasks specified in
this Tenant Work Letter in accordance with the schedule attached to this Tenant
Work Letter as Schedule 1 and made a part hereof ("CONSTRUCTION SCHEDULE") and
to endeavor to accomplish all "Major Project Milestones" within the time set
forth in the Construction Schedule. As used herein, the term "MAJOR PROJECT
MILESTONES" means:
(i) Completion of Base, Shell and Core Working Drawings and
submittal of same to City of San Diego for permits by:
Done
(ii) Obtaining all building and other permits for the
construction of the Base, Shell and Core by:
Done
(iii) Commencement of construction of the Base, Shell and
Core by:
Done
(iv) Completion of vertical construction of the Base, Shell and
Core by:
December 10, 1999
(v) Base, Shell and Core Completion by the applicable Shell
Completion Date:
May 1, 2000
Landlord shall use its reasonable, good-faith efforts to meet all
milestones by the date set forth for the accomplishment of such milestones in
the Construction Schedule. If Landlord fails to accomplish any milestone by the
date set forth in the Construction Schedule (as may be extended pursuant to the
next sentence below), then Landlord shall authorize and direct its employees,
the Project Architect, the general contractor for the Landlord Work and any
relevant subcontractor to work at an accelerated pace utilizing such "overtime"
hours as may be necessary to bring the Landlord Work back on schedule. The
dates set forth in the Construction Schedule (including, without limitation, any
milestones and any Major Project Milestones) shall be extended by any delay
(collectively, "EXCUSABLE DELAY") attributable to Tenant's failure to comply
with its obligations under Section 1 of this Tenant Work Letter, any Tenant
Delay, any Landlord Work Change Order, and any Force Majeure. However, any
delay necessitated by changes in the Building Working Drawings because the same
do not comply with Code or other applicable laws shall not constitute an
Excusable Delay except to the extent the portion of the Building Working
Drawings which is found to not comply is attributable to Landlord Work Change
Orders made by Tenant.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
SECTION 2
TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a tenant
improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount of Four
Million Three Hundred Forty-Five Thousand One Hundred Twenty-Three Dollars
($4,345,123.00) for the costs relating to the design and construction of
Tenant's improvements (the "TENANT IMPROVEMENTS"). Tenant shall have the right
to defer the construction of Tenant Improvements for space in the Building which
Tenant elects not to initially build-out until no later than three (3) years
after the Lease Commencement Date; however, (i) if Tenant elects to commence
construction of Tenant Improvements for any space in the Building, such
construction may not thereafter be deferred, and (ii) any such deferral shall be
deemed a Tenant Delay so that the Lease Commencement Date shall not be delayed.
In no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Tenant Improvement
Allowance (except as expressly contemplated by this Tenant Work Letter). Any
portion of the Tenant Improvement Allowance remaining after construction of the
Tenant Improvements for the Building may be used by Tenant for Tenant
Improvements for such Building before the first anniversary of the Lease
Commencement Date for such Building; provided, however, Tenant shall have the
right to transfer portions of the Tenant Improvement Allowance among the
Building and Buildings 1 and 5 for Tenant Improvements and space planning costs
only. Further, Tenant shall allocate and use a minimum Tenant Improvement
Allowance for "hard costs" (i.e., costs incurred under the general contract with
Contractor) of Tenant Improvements in an amount not less than Two Million Eight
Hundred Thirty-Nine Thousand One Hundred Forty-Three Dollars ($2,839,143.00).
All Tenant Improvements for which the Tenant Improvement Allowance has been made
available shall be deemed Landlord's property except as described under the
terms of Section 8.5 of this Lease.
2.2 DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE. Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to the
disbursement process described in Section 4.3.1 below) only for the following
items and costs (collectively, the "TENANT IMPROVEMENT ALLOWANCE ITEMS"):
2.2.1 Payment of the fees of all design consultants, project
managers, the "Space Planner," "Architect" and the "Engineers," as those terms
are defined in Section 3.1 of this Tenant Work Letter, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Tenant
Work Letter;
2.2.2 The payment of all governmental and utility service or
connection fees, including, but not limited to, plan check, permit and license
fees relating to construction of the Tenant Improvements; provided, however, the
Tenant Improvement Allowance Items shall not include any costs for utilities or
use of elevators during the construction of the Tenant Improvements;
2.2.3 The cost of construction of the Tenant Improvements within
such Building, including, without limitation, all labor, materials, testing and
inspection costs, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.4 The cost of any changes in the Base, Shell and Core work
when such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural, engineering and/or other
consultant fees and expenses incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings or
Tenant Improvements required by applicable governing codes ("CODE") unless such
changes are required to cause the Base, Shell and Core to comply with applicable
building Code (however,
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changes to the Base, Shell and Core required due to the unique nature of the
Tenant Improvements requested by Tenant shall be charged to the Tenant
Improvement Allowance);
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 The costs incurred (by Landlord or Tenant) in connection
with third party design services prior to Lease execution (which costs shall not
exceed Twenty Cents ($0.20) per rentable square foot of the Building);
2.2.8 "Landlord's Supervision Fee", as that term is defined in
Section 4.3.2 of this Tenant Work Letter;
2.2.9 All other costs to be expended by Landlord and reasonably
approved by Tenant in connection with the construction of the Tenant
Improvements; and
2.2.10 Costs incurred for Tenant's voice/data cabling, network
racks and hardware, furniture, telecom system, keys, locks, security costs,
relocation and interior and exterior signage (including Tenant's Signs);
provided, however, in no event shall the aggregate costs of the items forth in
this Section 2.2.10 exceed Eight Hundred Sixty-Four Thousand Eighty-Seven
Dollars ($864,087.00). Landlord and Tenant acknowledge that the Base Rent for
the Premises includes an amortization (with interest at twelve percent (12%) per
annum) of the amount payable by Landlord pursuant to this Section 2.2.10.
2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord and Tenant have
established specifications (the "SPECIFICATIONS") for some of the Building
standard components which Tenant may elect to construct in the Building
(collectively, the "STANDARD IMPROVEMENT PACKAGE"). The Standard Improvement
Package is attached as Schedule 2 to this Tenant Work Letter. Landlord may only
make changes to the Specifications and the Standard Improvement Package from
time to time with Tenant's prior written approval thereof. Tenant may deviate
from the Specifications with Landlord's approval (as part of the approval of
Construction Drawings).
SECTION 3
CONSTRUCTION DRAWINGS
3.1 SELECTION OF ARCHITECT. Tenant shall retain Carrier Johnson as
architect (the "ARCHITECT") to prepare the architectural plans and drawings for
the Tenant Improvements in the Building in accordance with the Construction
Schedule. Tenant shall have the right to replace Architect with another
architect(s) from time to time at Tenant's discretion and subject to Landlord's
reasonable approval. Tenant shall also retain engineering consultants (the
"ENGINEERS") selected by Tenant and subject to Landlord's reasonable approval to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work of the
Tenant Improvements. The parties acknowledge that Tenant's retention of the
Engineers may be done in connection with a design/build format. The plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the "CONSTRUCTION DRAWINGS." All Construction Drawings shall
comply with the drawing format and specifications as reasonably determined by
Landlord, and shall be subject to Landlord's approval which shall not be
unreasonably withheld or delayed. Tenant shall be deemed to have approved any
Construction Drawings submitted to Landlord for Landlord's approval. Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown in
the relevant portions of Construction Drawings for the Base, Shell and Core.
Landlord shall cause the Contractor to assist Tenant's Architect in identifying
any coordination or other construction issues relating to the Construction
Drawings for the Base, Shell and Core. Landlord's review of the Construction
Drawings, as set forth in this Section 3, shall not imply Landlord's review of
the same for quality, design, Code compliance or other like matters, but
Landlord shall nevertheless inform Tenant of any deficiencies discovered.
Accordingly, notwithstanding any Construction Drawings reviewed by Landlord or
its consultants, and notwithstanding any advice or assistance which may be
rendered to Tenant by
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Landlord or Landlord's consultants, Landlord shall have no liability whatsoever
in connection therewith and shall not be responsible for any omissions or errors
contained in the Construction Drawings unless any omissions or errors are a
result of omissions or errors in the Construction Drawings for the Base, Shell
and Core, and Tenant's waiver and indemnity set forth in Section 10.1 of the
Lease shall specifically apply to the Construction Drawings.
3.2 FINAL SPACE PLAN. On or before the applicable date set forth in the
Construction Schedule, Tenant shall cause the Architect to prepare the final
space plan for Tenant Improvements in the Building (collectively, the "FINAL
SPACE PLAN"), which Final Space Plan shall include a layout and a designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval. Subject to the restrictions specified in Section 2.1
above, Tenant may exclude from the Final Space Plan a layout for any space in
the Building which Tenant elects not to initially build out. Landlord shall
notify Tenant of its approval (which approval shall not be unreasonably
withheld) or disapproval (with reasons for disapproval specified) of the Final
Space Plan for the Premises within ten (10) business days after receipt thereof;
any failure by Landlord to notify Tenant of its approval or disapproval within
such ten (10) business day period shall be deemed to be Landlord's disapproval
thereof. If Landlord disapproves the Final Space Plan, Landlord and Tenant
shall, within two (2) business days thereafter, meet (or telephonically confer)
in an attempt to resolve such disapproval as soon as reasonably possible. If,
in connection with such meeting, Landlord and Tenant conceptually agree upon
revisions to be made to the Final Space Plan, then within ten (10) business days
after such meeting, Tenant shall cause the Final Space Plan to be revised in
accordance with the parties' conceptual agreement and shall resubmit the Final
Space Plan for Landlord's approval. This process shall continue until the Final
Space Plan is approved by Landlord. If Landlord and Tenant are, despite such
meeting, unable to resolve the items disapproved by Landlord in the Final Space
Plan, the parties shall mutually select an architect from Carrier Johnson to
resolve such disagreement (or if Carrier Johnson is unwilling to make a
determination to resolve such dispute or either party objects to Carrier Johnson
playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.3 WORKING DRAWINGS. On or before the applicable date set forth in the
Construction Schedule, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
construction documents in a form which is complete to allow contractors and
subcontractors to bid on the work, to obtain all applicable permits, and to
subsequently construct the work (collectively, the "WORKING DRAWINGS"). Subject
to the restrictions specified in Section 2.1 above, Tenant may exclude from the
Working Drawings any space which Tenant elects not to initially build-out.
Landlord shall notify Tenant of its approval (which approval shall not be
unreasonably withheld) or disapproval (with reasons for such disapproval
specified) of the Working Drawings within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. However, Landlord may not disapprove any details of the
Working Drawings which have already been approved by Landlord in the Final Space
Plan. If Landlord disapproves the Working Drawings, Landlord and Tenant shall,
within two (2) business days thereafter, meet in an attempt to resolve such
disapproval as soon as reasonably possible. If, in connection with such
meeting, Landlord and Tenant conceptually agree upon revisions to be made to the
Working Drawings, then within ten (10) business days after such meeting, Tenant
shall cause the Working Drawings to be revised in accordance with the parties'
conceptual agreement and shall resubmit the Working Drawings for Landlord's
approval. This process shall continue until the Working Drawings are approved
by Landlord. If Landlord and Tenant are, despite such meeting, unable to
resolve the items disapproved by Landlord in the Working Drawings, the parties
shall mutually select an architect from Carrier Johnson to resolve such
disagreement (or if Carrier Johnson is unwilling to make a determination to
resolve such dispute or either party objects to Carrier Johnson playing such
role, then the parties shall mutually agree upon some other reasonably qualified
architect to resolve such issues). Any such resolution by such architect
(whether from Carrier Johnson or
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some other firm) shall be made within ten (10) business days after the meeting
between Landlord and Tenant.
3.4 PERMITS. The Working Drawings shall be approved by Landlord (the
"APPROVED WORKING DRAWINGS") prior to the commencement of construction of the
Tenant Improvements. Landlord shall, in accordance with the Construction
Schedule, submit or cause the Approved Working Drawings to be submitted to the
appropriate municipal authorities for all applicable building permits necessary
to allow the Contractor selected pursuant to Section 4.1 below to commence and
fully complete the construction of the Tenant Improvements (the "PERMITS"), and
in connection therewith, Landlord and Tenant shall coordinate with Contractor to
allow Landlord and Tenant to take part in all phases of the permitting process.
Landlord shall require Contractor to supply Landlord and Tenant, as soon as
possible, with all plan check numbers and dates of submittal with respect to the
Building. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord and Tenant,
which shall not be unreasonably withheld or delayed, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would delay the Substantial Completion of such
Tenant Improvements or the Building unless Tenant agrees in writing to be
responsible for any such delay as in a Tenant Delay and for the costs of any
delay resulting therefrom.
3.5 TIME DEADLINES. Landlord and Tenant shall use good faith, reasonable
efforts and all due diligence to cooperate with each other and the Architect and
the Engineers to complete all phases of the Working Drawings and the permitting
process, and with Contractor for approval of the Cost Proposal (as defined
below), as is necessary to keep such Tenant Improvements on schedule. The
applicable dates for approval of items, plans and drawings as described in this
Tenant Work Letter are set forth and further elaborated upon in the Construction
Schedule (the "TIME DEADLINES"), attached hereto. Landlord and Tenant agree to
use good faith, reasonable efforts to comply with the Time Deadlines.
3.6 DESIGN-BUILD. Landlord and Tenant acknowledge that Tenant may elect
to design and construct the Tenant Improvements using a fast-track design/build
format. If Tenant so elects, Tenant may forward to Landlord, for Landlord's
approval, Construction Drawings for portions of the Tenant Improvement project
rather than Construction Drawings for the entire Premises. Landlord agrees to
advise Tenant within ten (10) business days after Landlord's receipt of any such
drawings if the same are unsatisfactory or incomplete in any respect. Upon
Landlord's approval of any such drawings, the Contractor may be instructed to
submit the same to the applicable governmental authorities for receipt of
Permits. This process may be repeated by Tenant, as necessary, for all portions
of the Tenant Improvement project.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 CONTRACTOR. A general contractor retained by Landlord (the
"CONTRACTOR"), shall construct the Tenant Improvements. The Contractor shall be
selected pursuant to a competitive bidding procedure reasonably determined by
Landlord and Tenant. At least three (3) general contractors approved by
Landlord and Tenant (which list shall, if Landlord so desires, include Reno)
shall competitively bid the Tenant Improvements using the Approved Working
Drawings for such Tenant Improvements. At Tenant's option, Landlord shall
require prospective general contractors reasonably approved by Landlord to
competitively bid the general conditions and fees before competitively bidding
the Tenant Improvements as a procedure for selecting the Contractor; any such
bidding of general conditions and fees shall be completed on or before the date
which is ten (10) days after the date that the Working Drawings are approved.
Landlord shall require Contractor to review the Approved Working Drawings in
order to identify any deficiencies and to promptly notify Landlord and Tenant of
any deficiencies discovered. Landlord shall allow Tenant to assist in
negotiating subcontractor fees and bid costs for labor and materials so long as
Tenant's participation in such negotiation does not extend the Construction
Schedule. Each such prospective general contractor shall be notified in the
bidding package of
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the time schedule for the construction of the applicable Tenant Improvements and
that such contractor shall be required to competitively bid (in accordance with
industry standard bidding procedures) to at least three (3) subcontractors for
each trade (which list of subcontractors shall, if Tenant so desires, include
one (1) subcontractor designated by Tenant for each trade), subject to
Landlord's option to designate certain building subcontractors as described in
this Section 4.1. Each bid shall include a schedule of values including an
itemized bid with unit prices, quantities and labor charges. Promptly after
request from Tenant, Landlord shall provide Tenant with any back-up information
in Landlord's possession regarding such bids. Landlord shall cooperate with
Tenant in evaluating the bid information received from the respective general
contractors. The general contractor bids shall be submitted to Landlord and
Tenant and a reconciliation shall be performed by Landlord's representative to
adjust inconsistent or incorrect assumptions so that a "like kind" comparison
can be made and the lowest qualified bidder determined. The lowest qualified
bidder that commits to the Construction Schedule shall be selected as the
Contractor for the Tenant Improvements. Whenever the lowest subcontractor
bidder is not selected, Contractor shall justify such selection (to Landlord's
and Tenant's satisfaction) by explaining in writing why the lowest bidder was
not selected. At Landlord's option, such Contractor shall use the building
subcontractors as designated by Landlord (the "DESIGNATED SUBCONTRACTORS"),
after having competitively bid the same to at least three (3) qualified and
comparable first-class, reputable and reliable subcontractors selected by
Landlord and reasonably approved by Tenant (which approval shall be granted or
denied within three (3) business days), for any work affecting the Building
structure and/or Building Systems and Equipment; provided, however, that
Landlord shall cause such Designated Contractors to charge for such work
(including any work arising out of Change Orders) an amount equal to the cost
that comparable first class, reputable and reliable subcontractors would have
charged if selected pursuant to competitive bidding procedures. If Reno is
selected as the Contractor, Reno has agreed to a four percent (4%) contracting
fee and a three percent (3%) general conditions fee, both of which fees shall be
based upon the direct costs of the subcontractors.
4.1.1 CONTRACT WITH CONTRACTOR. The contract with the Contractor
shall be consistent with this Tenant Work Letter and shall provide that Tenant
shall have the full benefit of all warranties provided by Contractor and that
such warranties shall be assignable to Tenant. Landlord shall provide Tenant
with an opportunity to review the construction contract with the Contractor to
confirm that such contract is not in conflict with this Tenant Work Letter. In
addition, upon request from Tenant, Landlord shall provide Tenant with a copy of
all Contractor's contracts with the major trade subcontractors in Landlord's
possession at the time of such request.
4.1.2 GENERAL CONDITIONS FEE. The general conditions fee charged
by Contractor shall cover all of the following: project executive, general
superintendent, home office expenses, general overhead, office supplies,
accounting services, computer charges, telephone expenses, fax office/job site,
data processing, secretarial services, mail, express mail, insurance, city
licenses, project manager, estimator, project engineer, scheduling,
superintendent, daily clean up and final clean up, protection of work, petty
cash, safety enforcement and safety signage, small tools, first aid facilities,
general field coordination, project field office, tenant vendor coordination and
job trailer, but shall exclude reconstruction services, general labor, blue
printing and temporary structures. Except as provided herein, Landlord or
Contractor shall not receive any other fee or payment from Tenant in connection
with Contractor's services.
4.1.3 CONTRACT OF WORK. Landlord shall cause its contract with
Contractor to include the provisions set forth in this Section 4.1.3.
Contractor shall take appropriate field measurements and verify field conditions
before commencing construction of Tenant Improvements. Contractor shall review,
approve and submit to the Architect shop drawings, product data, samples and
submittals required by the contract documents with promptness and in sequence as
to cause no delay in the Construction Schedule. During the course of
construction, Contractor shall take all reasonable precautions to maintain
industry safety standards and protect against damage, injury or loss to any
persons or property. Contractor shall supervise and direct the construction of
the Tenant Improvements using Contractor's best skills and attention and
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shall be fully responsible for and have control over construction means,
methods, techniques, sequences and procedures for coordinating all portions of
the work under the contract.
4.2 COST PROPOSAL. After the Approved Working Drawings are approved by
Landlord and Tenant, and the Contractor and subcontractors have been selected
pursuant to Section 4.1 above, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings setting forth the
reconciled bids and copies of all sub-bids, which cost proposal shall include,
as nearly as possible, the cost of all Tenant Improvement Allowance Items to be
incurred in connection with the construction of the Tenant Improvements (the
"COST PROPOSAL"). The Cost Proposal shall reflect bids that will be priced by
Contractor on an individual item-by-item or trade-by-trade basis. Landlord and
Tenant shall work together in good faith in an attempt to agree upon a mutually
acceptable Cost Proposal as soon as reasonably possible. Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the "PARTIAL COST PROPOSAL") for purposes of
facilitating the early purchase of items and construction of the same. Tenant
shall approve and deliver the Cost Proposal to Landlord within seven (7)
business days of the receipt of the same, or, as to a Partial Cost Proposal
within five (5) business days of receipt of the same, and upon receipt of the
same by Landlord, Landlord shall be released by Tenant to purchase the items set
forth in the Cost Proposal or Partial Cost Proposal, as the case may be, and to
commence the construction relating to such items. If Tenant disapproves the
Cost Proposal or Partial Cost Proposal, Tenant shall provide Landlord with a
reasonably sufficient explanation, and in such event, Landlord and Tenant shall
use good faith, diligent efforts to work with each other and Contractor to
address Tenant's reasons for disapproving the Cost Proposal or Partial Cost
Proposal, whichever is the case and a new Cost Proposal (or Partial Cost
Proposal, as applicable) shall be prepared and the process described in this
Section 4.2 shall be repeated. The date by which Tenant must approve and
deliver the Cost Proposal or the last Partial Cost Proposal to Landlord, as the
case may be, shall be known hereafter as the "COST PROPOSAL DELIVERY DATE". The
total of all Partial Cost Proposals, if any, shall be known as the Cost
Proposal.
4.3 CONSTRUCTION OF TENANT IMPROVEMENTS BY LANDLORD'S CONTRACTOR UNDER THE
SUPERVISION OF LANDLORD.
4.3.1 OVER-ALLOWANCE AMOUNT. In connection with Tenant's approval
of the Cost Proposal, Tenant shall be responsible for the amount equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (as adjusted for any transfer to or from
Adjacent Buildings as provided in, and subject to, Section 2.1 of this Tenant
Work Letter above and less any portion thereof already disbursed by Landlord, or
in the process of being disbursed by Landlord, on or before the Cost Proposal
Delivery Date) (which difference is referred to herein as the "OVER-ALLOWANCE
AMOUNT"). All costs for Tenant Improvements shall be fully documented and may
be verified by Tenant. In the event that, after the Cost Proposal Delivery
Date, Tenant shall request any revisions, changes, or substitutions to the
Construction Drawings or the Tenant Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs (in excess of the Tenant Improvement Allowance) shall be
considered to be an addition to the Over-Allowance Amount (which shall result in
a recalculation of the amounts to be paid by Tenant pursuant to Sections
4.3.1.1. and 4.3.1.2 below).
4.3.1.1 PAYMENT OF INITIAL PORTION OF OVER-ALLOWANCE AMOUNT.
Except as provided in Section 4.3.1.2 below, the procedure described in this
Section 4.3.1.1 shall apply to Tenant's payment of the Over-Allowance Amount.
Tenant shall pay ninety percent (90%) of the Over-Allowance Amount and Landlord
shall pay ninety percent (90%) of the Tenant Improvement Allowance, in monthly
progress payments corresponding to the progress of the Tenant Improvement Work
and Tenant and Landlord shall each retain ten percent (10%) thereof to be paid
as part of the final retention, in accordance with the construction contract,
upon completion of such work. During the course of construction of the Tenant
Improvements, Contractor shall deliver to Landlord and Tenant not more than once
for each calendar month a
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written request for payment ("PROGRESS PAYMENT REQUEST") which shall be
accompanied by (i) Contractor's certification of the payment amount requested
and the percentage of completion of each item of work for which payment is
sought and (ii) copies of conditional lien releases (for upcoming payments) and
unconditional lien releases (for the previous month's payments) from all
subcontractors and vendors. Through this monthly process, Tenant shall pay to
Landlord ninety percent (90%) of the completed percentage of the Over-Allowance
Amount, if any, and Landlord shall pay to Contractor ninety percent (90%) of the
Tenant Improvement Allowance due pursuant to the Progress Payment Request, each
month within thirty (30) days after Tenant's and Landlord's receipt of the above
items and approval of the same (which approval shall not be unreasonably
withheld, conditioned or delayed and shall be granted or denied (with detailed
reasons for such denial) within five (5) days after Tenant's receipt of a
Progress Payment Request). Failure to grant or deny any such approval within
said five (5) day period shall be deemed to constitute Tenant's approval
thereof. The Over-Allowance Amount shall be proportionately paid by Landlord
prorata with the Tenant Improvement Allowance, and such disbursement by Landlord
of the Over- Allowance Amount shall be pursuant to the same procedure as
Landlord's disbursement of the Tenant Improvement Allowance.
4.3.1.2 PAYMENT OF ANY EXCESS PORTION OF OVER-ALLOWANCE AMOUNT.
To the extent that the Over-Allowance Amount is One Million Two Hundred
Thirty-Four Thousand Four Hundred Ten Dollars ($1,234,410.00) or more (such
excess to be referred to as the "EXCESS OVER-ALLOWANCE AMOUNT") and/or if as of
the Cost Proposal Delivery Date, Tenant fails to meet all of the Financial
Standards, and if in either such case, Landlord's lender (who is unaffiliated
with Landlord) so requires, Tenant shall pay the Excess Over-Allowance Amount
(or if the Financial Standards are not met, then all of the Over-Allowance
Amount) in accordance with the procedure specified in this Section 4.3.1.2
below. Tenant shall deposit fifty percent (50%) of the Excess Over-Allowance
Amount (or if the Financial Standards are not met, then all of the
Over-Allowance Amount) within ten (10) days after the Cost Proposal Delivery
Date and shall deposit the remaining fifty percent (50%) of the Over-Allowance
Amount within ten (10) days after notice from Landlord that the Contractor has
determined that the Tenant Improvement Work has been fifty percent (50%)
completed. Such deposits from Tenant shall be with Landlord (or with the lender
if so required by such lender) and maintained in a segregated account at a
financial institution reasonably selected by Landlord (if not with the lender).
To the extent permitted by the lender, any amounts so deposited by Tenant shall
earn interest which shall accrue to Tenant at the actual rate earned from the
date of such deposit until the date that such funds are disbursed.
4.3.2 LANDLORD'S RETENTION OF CONTRACTOR. Landlord shall
independently retain Contractor to construct the Tenant Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Tenant
shall pay (as part of the Tenant Improvement Allowance) a construction
supervision fee (the "LANDLORD SUPERVISION FEE") to Landlord in an amount equal
to one percent (1%) of all "hard" Tenant Improvement Allowance Items.
4.3.3 CONTRACTOR'S WARRANTIES AND GUARANTIES. Landlord hereby
assigns to Tenant all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements
(except for any portion of the Tenant Improvements which consist of components
of the Building Systems and Equipment for which Landlord maintains
responsibility for repair pursuant to Section 7.1 of the Lease). Such
warranties and guaranties of Contractor shall guarantee that the Tenant
Improvements shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof, and
Contractor shall be responsible for the replacement or repair, without
additional charge, of the Tenant Improvements that shall become defective within
one (1) year after Substantial Completion of such Tenant Improvements. The
correction of such work shall include, without additional charge, all additional
expenses and damages in connection with such removal or replacement of all or
any part of the Tenant Improvements.
4.3.4 TENANT'S COVENANTS. Tenant hereby indemnifies Landlord for
any loss, claims, damages or delays arising from the actions of the Architect
retained by Tenant pursuant to Section 3.1 of this Tenant Work Letter on the
Premises or in the Building to design or
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construct the Tenant Improvements. Tenant, immediately after the Substantial
Completion of the Building, shall have prepared and delivered to Landlord a copy
of the "as built" plans and specifications (including all working drawings) for
the Tenant Improvements.
4.4 CHANGE ORDERS. Subject to Landlord's reasonable approval, Tenant
shall have the right to order changes in the Tenant Improvements ("CHANGE
ORDERS"). Landlord's contract with Contractor shall provide that, upon request
and prior to Tenant's submitting any binding Change Order, Contractor shall
promptly provide Tenant with a written itemized breakdown of labor and materials
for the estimated cost to implement, the estimated time delay and any other
estimated increased construction costs associated with the proposed Change
Order. Costs related to changes shall include, without limitation, any
architectural or design fees, and Contractor's fee (not to exceed the percentage
rate for Contractor's fee and general conditions fee as previously set forth
herein) for effecting the change. In addition, any Change Order shall be
subject to Landlord's approval, not to be unreasonably withheld, conditioned or
delayed. If ordered by Tenant and so approved by Landlord, Contractor shall
implement such Change Order and the cost of construction of the Tenant
Improvements shall be increased or decreased in accordance with the cost
proposal previously approved by Tenant for any such Change Order, subject to
reconciliation for actual costs.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
Except as provided in this Section 5, the Lease Commencement Date for the
Premises shall occur as set forth in Article 2 of this Lease. Any delay or
delays in the Substantial Completion of the Premises as set forth in Article 2
of this Lease, as a result of any of the following shall be considered "TENANT
DELAYS":
5.1 Tenant's failure to comply with the Time Deadlines which are Tenant's
responsibility to meet in accordance with this Tenant Work Letter;
5.2 Tenant's failure to timely approve any matter requiring Tenant's
approval;
5.3 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
5.4 Changes in any of the Construction Drawings because the same do not
comply with Code or other applicable laws;
5.5 Tenant's request for changes in the Working Drawings or the Approved
Working Drawings including any delay resulting from Tenant's request for
information from the Contractor, the time taken by Tenant in considering any
such information prior to agreeing to proceed (or not to proceed) with such
change and/or the actual Change Order;
5.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the
Lease, or which are different from, or not included in, the Standard Improvement
Package, provided Landlord informed Tenant in writing that any such requirement
would not be available in accordance with the Construction Schedule and would
likely cause a delay in the anticipated date of Substantial Completion of the
Premises;
5.7 Changes to the Base, Shell and Core work required by the Approved
Working Drawings; or
5.8 Any other acts or omissions of Tenant, or its agents, or employees.
Notwithstanding the foregoing, no delay under Sections 5.2, 5.3, 5.5, 5.6,
5.7 or 5.8 above shall be considered a Tenant Delay unless and until Tenant is
(i) provided prior written notice that it is about to suffer a Tenant Delay and
is afforded a one (1) business day opportunity
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to cure the same, and (ii) offered the opportunity to incur premium costs (as an
Over-Allowance Amount if the Tenant Improvement Allowance has been exceeded) to
prevent or minimize such delay if it is possible to do so. Landlord shall not
assess any day towards a Tenant Delay for delays caused by Contractor, Landlord
or any third parties or due to Force Majeure. For purposes of determining
whether a delay by Tenant or Architect constitutes a Tenant Delay, reference
shall be made to the critical path schedule for the construction of Tenant
Improvements set forth in the Construction Schedule. Landlord and Contractor
shall take commercially reasonable actions, remedial or otherwise, to maintain
the Construction Schedule notwithstanding any Tenant Delay, provided that this
requirement shall not require Landlord or Contractor to incur any additional
costs or expenses (e.g., contractor overtime or costs resulting from accelerated
delivery) unless Tenant agrees to pay for such additional costs or expenses.
Notwithstanding anything to the contrary set forth in this Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date for the Premises shall
be deemed to be the date the Lease Commencement Date would have occurred if no
Tenant Delays, as set forth above, had occurred; provided, however, if the
actual date of Substantial Completion of the Tenant Improvements occurs on or
before the estimated Lease Commencement Date specified in Section 5 of the
Summary, no Tenant Delays shall be deemed to have occurred.
SECTION 6
ACCEPTANCE OF TENANT IMPROVEMENTS
Tenant's taking possession of the Premises shall be an acceptance of the
Tenant Improvements except for (i) any "punch list" type items of which Tenant
has given Landlord written notice, (ii) any latent defects in the construction
of the Tenant Improvements, (iii) Landlord's obligation to correct construction
defects, (iv) any warranties made by Landlord and Contractor, and (v) any
noncompliance of the Premises with all laws and codes in effect as of the Lease
Commencement Date. Tenant shall provide Landlord with Tenant's written list of
"punch list" items within ten (10) business days after the Lease Commencement
Date. Landlord shall cause Contractor to correct within thirty (30) days of
Landlord's receipt of notice thereof any construction deficiencies or other
"punch list" items of which Tenant notifies Landlord and Contractor; except that
for minor items (such as minor items on backorder) that cannot reasonably be
corrected in thirty (30) days, Landlord shall cause correction to occur as soon
as reasonably practicable. Any such corrective work shall be performed so as to
reasonably minimize any interference or disruption to Tenant and its activities
on the Premises.
SECTION 7
MISCELLANEOUS
7.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Project and the Building, Contractor shall allow Tenant (and its vendors,
consultants, contractors, and agents) access to the Building during the forty
five (45) day period prior to the estimated Substantial Completion date of the
Tenant Improvements (but if such access is to be prior to the issuance of the
Temporary Certificate of Occupancy for the Building, then such access shall be
only as allowed by the City of San Diego) for the purpose of Tenant installing
equipment, furniture or fixtures (including Tenant's data and telephone
equipment) in the Premises. Tenant's access shall include reasonable use
(subject to scheduling) of any exterior loading and staging areas and the use of
stairs, elevators and hoists, roofs and conduits. Tenant's entry into the
Premises prior to Substantial Completion pursuant to this Section 7.1 shall be
at no cost or charge from Landlord to Tenant including, without limitation, any
charge for utilities. Prior to Tenant's entry into the Premises as permitted by
the terms of this Section 7.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval, which schedule shall detail the timing and
purpose of Tenant's entry. Tenant shall hold Landlord, the Contractor and
subcontractors harmless from and
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
indemnify, protect and defend Landlord against any loss or damage to the Project
or Premises and against injury to any persons caused by Tenant's actions
pursuant to this Section 7.1.
7.2 TENANT'S REPRESENTATIVE. Tenant has designated Robert Urwiler as its
sole representative with respect to the matters relating to cost and schedule
set forth in this Tenant Work Letter, who, until further notice to Landlord,
shall have full authority and responsibility to act on behalf of Tenant in such
matters as required in this Tenant Work Letter. Tenant has designated Michele
Voth as its local representative with respect to daily decisions required under
this Tenant Work Letter that do not relate to cost or schedule, who, until
further notice to Landlord, shall have full authority and responsibility to act
on behalf of Tenant in such matters as required in this Tenant Work Letter.
7.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Randy Jackson as
its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
7.4 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Landlord or Tenant is required to approve
or deliver an item, time is of the essence.
7.5 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in Section 19.1 of
this Lease has occurred at any time on or before the Substantial Completion of
the Tenant Improvements, then (i) in addition to all other rights and remedies
granted to Landlord pursuant to the Lease, Landlord may cause Contractor to
cease the construction of the Premises (in which case, Tenant shall be
responsible for any delay in the Substantial Completion of the Premises caused
by such work stoppage as set forth in Section 5.3 of this Tenant Work Letter),
and (ii) all other obligations of Landlord under the terms of this Tenant Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of the Lease.
SECTION 8
TENANT REMEDIES FOR DELAY
8.1 LIQUIDATED DAMAGES FOR DELAY IN SUBSTANTIAL COMPLETION. If the
Substantial Completion of the Tenant Improvements has not occurred (or been
deemed to have occurred) by the Estimated Lease Commencement Date for such
Tenant Improvements as set forth in Section 5 of the Summary (as such date may
be adjusted for Excusable Delays, then Landlord shall pay Tenant liquidated
damages of One Thousand Five Hundred Dollars ($1,500.00) per day for each day of
delay beyond the Estimated Lease Commencement Date (as may be so adjusted) until
the date of Substantial Completion or the date this Lease is terminated pursuant
to Section 8.2 below. Such liquidated damages shall be paid within thirty (30)
days after the end of each month of delay beyond the applicable Estimated Lease
Commencement Date (as may be so adjusted). If Landlord fails to pay timely to
Tenant the amount representing the liquidated damages owing and if Tenant
obtains a final judgment against Landlord for such liquidated damages, and if
Landlord fails to pay such judgment within thirty (30) days after the date such
judgment is rendered, Tenant shall be entitled to offset such judgment against
Base Rent payable by Tenant together with interest at the Interest Rate
specified in Article 25 of the Lease from the date of expiration of said thirty
(30) day period until the date of offset (up to a maximum offset each month of
twenty percent (20%) of the Base Rent payable for such Building) until the full
amount of such judgment (plus such interest) has been so offset.
LANDLORD AND TENANT AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF
A DELAY IN THE SUBSTANTIAL COMPLETION DATE BEYOND THE ESTIMATED LEASE
COMMENCEMENT DATE (AS MAY BE ADJUSTED), WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICABLE TO DETERMINE AND THAT THE AMOUNTS DESIGNATED ABOVE AS
LIQUIDATED
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DAMAGES PAYABLE BY LANDLORD TO TENANT IN SUCH EVENTS ARE EACH REASONABLE
AMOUNTS TO BE SET AS DAMAGES FOR SUCH EVENTS UNDER THE CIRCUMSTANCES
EXISTING AT THE TIME THIS LEASE HAS BEEN ENTERED INTO. IN CONSIDERATION OF
THE PAYMENT OF LIQUIDATED DAMAGES, EXCEPT AS EXPRESSLY PROVIDED IN SECTION
8.2 BELOW, TENANT SHALL BE DEEMED TO HAVE WAIVED ALL OTHER CLAIMS FOR
DAMAGES OR RELIEF AT LAW OR IN EQUITY DUE TO SUCH DELAY INCLUDING ANY
RIGHTS TO SPECIFIC PERFORMANCE TENANT MAY OTHERWISE HAVE.
Tenant: [ILLEGIBLE] Landlord: /s/ Steven L. Black
----------- -------------------
8.2 TERMINATION RIGHTS.
8.2.1 DEFINITION OF OUTSIDE DATE. The term "OUTSIDE DATE" shall
mean the date which is five (5) months after the date for any Major Project
Milestone specified in the Construction Schedule, as such five (5) month period
may be extended by any Excusable Delay (subject to Section 8.2.4 below).
8.2.2 OUTSIDE DATE TERMINATION. In the event that any Major
Project Milestone has not occurred by the Outside Date for such Major Project
Milestone, then the sole remedy of Tenant (in addition to the remedy specified
in Section 8.1 above) shall be the right to deliver a notice to Landlord (the
"OUTSIDE DATE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Outside Date Termination Notice by Landlord (the "EFFECTIVE
DATE"). However, until the Lease Commencement Date occurs, Tenant may elect to
terminate the leases of any or all of the Adjacent Buildings effective as of the
Effective Date by giving to Landlord notice thereof in the Outside Date
Termination Notice (except that the Effective Date for the termination of the
Building 1 Lease shall be the date so specified in the Outside Date Termination
Notice, which date shall be at least twelve (12) months and not more than
twenty-four (24) months after the date of such notice). Landlord and Tenant
acknowledge that Tenant's right to terminate any of the Adjacent Building Leases
pursuant to this Section 8.2 shall cease as of the Lease Commencement Date. The
Outside Date Termination Notice must be delivered by Tenant to Landlord, if at
all, not earlier than the applicable Outside Date and not later than ten (10)
business days after the applicable Outside Date. If Tenant timely delivers the
Outside Date Termination Notice to Landlord, then Landlord shall have the right
to suspend the Effective Date for a period ending thirty (30) days after the
original Effective Date. In order to suspend the Effective Date, Landlord must
deliver to Tenant, within ten (10) business days after Landlord's receipt of the
Outside Date Termination Notice, a written statement from the general contractor
certifying that it is such contractor's best, good faith judgment that the
applicable Major Project Milestone will occur within thirty (30) days after the
original Effective Date. If the applicable Major Project Milestone occurs
within said thirty (30) day suspension period, then the Outside Date Termination
Notice shall be of no further force or effect; if, however, the applicable Major
Project Milestone does not occur within said thirty (30) day suspension period,
then this Lease (and the other leases so specified in the Outside Date
Termination Notice) shall terminate as of the date of expiration of such thirty
(30) day period (or, for Building 1, as of the date so specified in the Outside
Date Termination Notice).
8.2.3 PROSPECTIVE EXTENSION OF OUTSIDE DATE. If, prior to any
applicable Outside Date, Landlord determines that any particular Major Project
Milestone will not occur by the applicable Outside Date, Landlord shall have the
right to deliver a written notice ("OUTSIDE DATE EXTENSION NOTICE") to Tenant
stating Landlord's opinion as to the date by which the Major Project Milestone
will occur and Tenant shall be required, within ten (10) business days after
receipt of such Outside Date Extension Notice, to either deliver the Outside
Date Termination Notice (in which case this Lease (and the other Adjacent
Building Leases so specified in the Outside Date Termination Notice subject to
the restrictions specified in Section 8.2.2 above)
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
shall terminate) or to agree to extend the applicable Outside Date (and any
subsequent Outside Dates for the Building) to that date which is set by Landlord
in the Outside Date Extension Notice. Failure of Tenant to so respond in
writing within said five (5) business day period shall be deemed to constitute
Tenant's agreement to extend the applicable Outside Date (and any subsequent
Outside Dates for the Building) to that date which is set by Landlord in the
Outside Date Extension Notice. If such Outside Date is so extended, Landlord's
right to request Tenant to elect to either terminate or further extend such
Outside Date shall remain and shall continue to remain, with each of the notice
and response periods set forth above, until the applicable Major Project
Milestone occurs or until this Lease is terminated.
8.2.4 LIMITATION ON FORCE MAJEURE EXTENSIONS. Notwithstanding
anything to the contrary contained in this Section 8.2 above, the date for any
Major Project Milestone specified in the Construction Schedule may only be
extended for Force Majeure (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for up
to a maximum of one (1) year. If Force Majeure extends any Major Project
Milestone for one (1) year, without limitation on Tenant's rights under Section
8.2.2 above, Tenant shall have the right to deliver a notice to Landlord (the
"FORCE MAJEURE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Force Majeure Termination Notice by Landlord (the "FORCE
MAJEURE EFFECTIVE DATE"). However, until the Lease Commencement Date occurs,
Tenant may elect to terminate the leases of any or all of the Adjacent Buildings
effective as of the Force Majeure Effective Date by giving to Landlord notice
thereof in the Force Majeure Termination Notice (except that the Force Majeure
Effective Date for the termination of the Building 1 Lease shall be the date so
specified in the Force Majeure Termination Notice, which date shall be at least
twelve (12) months and not more than twenty-four (24) months after the date of
such notice). Landlord and Tenant acknowledge that Tenant's right to terminate
any Adjacent Building Leases pursuant to this Section 8.2.4 shall cease as of
the Lease Commencement Date. The Force Majeure Termination Notice must be
delivered by Tenant to Landlord, if at all, within thirty (30) calendar days
after the date upon which Tenant's right to deliver the Force Majeure
Termination Notice to Landlord is triggered. However, if Force Majeure extends
for greater than one (1) year, thereby triggering Tenant's right to deliver the
Force Majeure Termination Notice to Landlord, and if Tenant elects not to
deliver such Force Majeure Termination Notice to Landlord, and if Force Majeure
continues for an additional year, then Tenant shall have an additional right to
deliver the Force Majeure Termination Notice to Landlord within thirty (30) days
after the expiration of such two (2) year period based upon the date for any
Major Project Milestone being extended by Force Majeure for two (2) years.
However, if Tenant does not elect to deliver the Force Majeure Termination
Notice to Landlord based upon the two (2) year extension for Force Majeure,
Tenant shall not thereafter have the right to deliver the Force Majeure
Termination Notice to Landlord whether or not Force Majeure continues beyond
such two (2) year period.
8.2.5 ACCELERATION OF TERMINATION RIGHT FOR LACK OF REASONABLE
ASSURANCES. If one (1) or more Force Majeure events extends the date for any
Major Project Milestone (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for a
period in excess of the "Accelerated Force Majeure Period" (as that term is
defined below) and if Landlord does not deliver to Tenant within fifteen (15)
days thereafter a statement providing reasonable assurances to Tenant that the
Force Majeure delay will last for a total period of less than one (1) year,
Tenant shall be entitled to deliver the Force Majeure Termination Notice to
Landlord within ten (10) days after the expiration of such fifteen (15) day
period (rather than waiting until the expiration of the one (1) year period
specified in Section 8.2.4 above). The one (1) year period described in this
Section 8.2.5 above may be referred to as the "AGGREGATE FORCE MAJEURE PERIOD"
and the fifteen (15) day period described in this Section 8.2.5 above may be
referred to as the "DELIVERY PERIOD." The term "ACCELERATED FORCE MAJEURE
PERIOD" shall mean a total of one hundred eighty (180) days of delay for events
of Force Majeure which may affect office construction projects in San Diego
County generally (e.g., labor strikes, material shortages and permit
moratoriums) or a period of one hundred twenty (120) total days of Force Majeure
delay for Force Majeure events which are particular to the Project and do not
apply to office construction in general. Notwithstanding the foregoing,
Landlord shall have five (5) separate options to extend the Accelerated Force
Majeure Period and
EXHIBIT B
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[Peregrine Systems]
<PAGE>
the Aggregate Force Majeure Period for thirty (30) days each ("FORCE MAJEURE
EXTENSION OPTIONS"). In order to exercise a Force Majeure Extension Option,
Landlord must so notify Tenant in writing within the Delivery Period (as to
the first (1st) Force Majeure Extension Option) or prior to the expiration of
the previous thirty (30) day period for extension of the Accelerated Force
Majeure Period (with respect to each of the four (4) subsequent Force Majeure
Extension Options). In addition, in order to properly exercise any such
Force Majeure Extension Option, Landlord must pay to Tenant Forty-Five
Thousand Dollars ($45,000.00) within thirty (30) days after Landlord's notice
to Tenant of the exercise of such option, for each option so exercised. If
Landlord properly exercises any such Force Majeure Extension Option, the
Accelerated Force Majeure Period and the Aggregate Force Majeure Period shall
each be extended for thirty (30) days for each such option so exercised.
SECTION 9
COONTINUITY OF LANDLORDS
Landlord acknowledges and agrees that Tenant has entered into this Lease in
reliance upon Landlord's reputation and ability to do all things necessary for
the proper construction and lien free completion of all Project improvements.
Accordingly, Landlord agrees not to sell its interest in any uncompleted
building in the Project (or otherwise assign its interest and duties hereunder
as to any uncompleted building in the Project) until after the Lease
Commencement Date has occurred for the initial Floor Group in Building 3 (or if
the Lease for Building 3 is terminated, until the termination date for such
Lease) except for (i) transfers between or among entities affiliated with Kilroy
Realty Corporation (i.e., entities controlled, controlled by or under common
control with Kilroy Realty Corporation); (ii) a merger or sale of all or
substantially all of the assets, stock, partnership interests and/or limited
liability company interests of, or owned by, Kilroy Realty Corporation and/or
its affiliates; (iii) a sale, contribution or distribution to a partnership,
corporation, joint venture, limited liability company or other ownership
structure, where Kilroy Realty Corporation or its affiliate(s) retains
responsibility for managing the development of the Project; or (iv) any transfer
resulting from foreclosure, trustee's sale or deed in lieu of foreclosure. Upon
the Lease Commencement Date for the initial Floor Group in Building 3, the
restrictions specified in this Section 9 shall terminate.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 1
CONSTRUCTION SCHEDULE
MILESTONE DATES - BUILDING 2
<TABLE>
<CAPTION>
BASE, SHELL AND CORE
--------------------
Event Date
----- ----
<S> <C>
1 Completion of Schematic Design Done
2 Completion of Base, Shell and Core Drawings Working Done
Drawings
*3 Submittal to City of San Diego for Permits Done
*4 Obtaining all Building and other Permits for
Construction of Base, Shell and Core Done
*5 Commencement of Construction Done
6 Completion of Slab-on-Grade July 23, 1999
*7 Completion of Vertical Construction December 10, 1999
8 Completion of Roof Framing December 24, 1999
*9 Completion of Construction of Base, Shell and
Core/Certificate of Occupancy/Shell Completion Date May 1, 2000
</TABLE>
Notes: Items marked with an "*" are Major Project Milestones
<TABLE>
<CAPTION>
TENANT IMPROVEMENTS
-------------------
<S> <C>
1. Delivery by Tenant of Final Space Plan for Landlord
Approval June 18, 1999
2. Delivery by Tenant of Working Drawings for Landlord
Approval October 27, 1999
</TABLE>
SCHEDULE 1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 2
STANDARD IMPROVEMENT PACKAGE
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.0 PARTITIONS
- --------------------------------------------------------------------------------
1.1 1 HOUR PARTITION: (One-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 20-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.2 2 HOUR PARTITION: (Two-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, two layers each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association. Second layer of gypsum board shall be
installed at right angles over the first layer with joints
staggered.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 90-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
SCHEDULE 2
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.3 STANDARD INTERIOR OFFICE PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend to underside of suspended
acoustical ceiling grid (+10'-0" AFF, nominal); or shall extend 6"
above ceiling grid plane. Refer to wall types and referenced
details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Diagonal bracing shall be installed per details illustrated on
the drawings.
f. Install metal casing beads at all exposed corners and edges, as
applicable.
g. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.4 STANDARD INTERIOR OFFICE ACOUSTICAL PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend from floor slab to underside of
metal or roof deck above (+13'-6" AFF, nominal). Refer to wall
types and referenced details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Provide continuous bead of acoustical sealant between bottom edge
of gypsum board panels and floor slab. Cut gypsum board panels at
top of wall to fit undulations of metal deck structures and seal
all gaps with drywall taping compound.
f. Install R-8 unfaced fiberglass sound batts in cavity between
studs, full height of partition.
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
2.0 COLUMN COVERS, CORE WALLS, PERIMETER SOFFITS
- --------------------------------------------------------------------------------
a. Provide either 1-1/2" or 2-1/2"-25 gage metal studs at 16" O.C.
(or as otherwise noted or configured) per details illustrated on
drawings.
b. Furnish and install 5/8" standard gypsumboard, one layer around
interior and perimeter columns, attached to studs with screws as
required by code and as recommended by the Gypsum Association.
c. Provide and install R-8 unfaced sound batt insulation at all
furred columns where plumbing lines occur, typical.
d. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
3.0 DOORS, FRAMES, HARDWARE
- --------------------------------------------------------------------------------
3.1 ONE-HOUR CORRIDOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 20 minute rated, 3'-0" x 8'-10" x
1-3/4" (U.N.O.). Doors shall conform to A.W.I. standards and carry
a lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness, minimum 20
minute rated with applicable listing labels provided and securely
fastened to frame. Color: Black Anodized.
c. Hardware:
i. Single
4 each Butts
1 each Lockset
1 each Closer
1 each Stop
1 each Smokeseal
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
ii. Pair
8 each Butts
2 each Closer
1 each Lockset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
2 each Smokeseal
1 each Dustproof
Strike
2 each Electro Magnetic
Hold Open
3.2 INTERIOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 3'-0" x 8'-10" x 1-3/4"
(U.N.O.). Doors shall conform to A.W.I. standards and carry a
lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness. Color:
Black Anodized.
c. Hardware.
i. Single
4 each Butts
1 each Latchset
1 each Stop
ii. Single Locking
a. All the above. In place of latchset, provide lockset.
iii. Single with Closer
a. All the above, plus closer.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
iv. Pair
8 each Butts
2 each Closer
1 each Latchset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
1 each Dustproof
Strike
4.0 SUSPENDED GRID CEILINGS
- --------------------------------------------------------------------------------
4.1 GENERAL INSTALLATION REQUIREMENTS:
a. Install ceiling under the supervision of an experienced
superintendent. Consult with and coordinate installation with other
trades. Install ceiling using laser level within a tolerance of
1/8" in 12 feet in any direction.
b. Pattern: Unless otherwise indicated or specified, install
ceilings in a regular pattern without border, joint lines parallel
to walls. Install acoustical units symmetrically about centerlines
of each room or space (unless specifically noted otherwise on
drawings), avoiding narrow units at walls.
c. Framing for Lighting and Mechanical Fixtures: Obtain necessary
data from other trades and provide additional hanger wire and
framing in suspended grids as required to support lighting and
mechanical fixtures.
d. Lateral Bracing: Lateral bracing for suspended ceiling must be
provided (UBC Table 23-j). Where ceiling loads are less than 5PSF
and not supporting interior partitions, ceiling bracing shall be
provided by four (4) No. 12 gauge wires secured to the main runner
within 2 inches from the cross runner intersection and splayed 90
degrees from each other at an angle not exceeding 45 degrees from
the plane of the ceiling. These horizontal restraint points shall
be placed 12 feet o.c. in both directions with the first point
within 4 feet from each wall. Attachment of the restraint wires to
the structure above shall be adequate for the load imposed.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
e. Hanger Wires: Space wires at maximum 48" centers along main tees
and connect to structure above. Provide: 2 safety wires per
mechanical diffuser, 2 per light fixture and 4 at main runner
within 3" of fixture.
f. Ceiling Offsets: Provide trim pieces and/or accessories where
illustrated on drawings or as necessary to properly finish or
transition offsets or ceiling breaks.
g. Seismic Bracing: Provide splayed bracing wires as shown and
required by the Uniform Building Code. Provide compression struts
at 12'-0" o.c., both directions fastened to the main runner and a
structural member above. Repair, Cleaning and Completion: Remove
and replace all discolored, broken or damaged materials. Completed
ceilings shall present a smooth level surface free of edge or corner
offsets, cupping, scratches, gouges or other defects. Clean exposed
surfaces and remove foreign matter.
4.2 2 x 2 ACOUSTICAL CEILING:
a. Suspension Grid: ARMSTRONG, "Suprafine" XL 9/16" Exposed Tee.
b. Ceiling Tile: ARMSTRONG, "Hi-LR Ultima" RH90 2 x 2 #1792 beveled
tegular lay in.
c. Ceiling heights vary and are as noted on plans.
4.3 DRYWALL CEILING:
a. Carrying channel at 24" on center.
b. 1-1/2" cold-rolled carrying channel at 48" on center with hanger
wire spaced a maximum of 48" on center along carrying channel.
c. 5/8" gypsum wallboard.
d. Seismic bracing as required per the Uniform Building Code and as
noted on drawings.
e. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint. (Note: no texture; all painted surfaces
shall be 'smooth').
f. Locate all mechanical and electrical equipment requiring access
in 2' x 2' lay-in ceiling to avoid access doors in gypsum board
ceilings, where possible.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
5.0 FINISHES
- --------------------------------------------------------------------------------
NOTE: PROVIDE CUTTINGS, BRUSH-OUTS, SAMPLES, ETC. OF ACTUAL DYE LOTS,
OR PRODUCTION RUNS FOR ARCHITECT'S AND INTERIOR DESIGNER'S APPROVAL.
5.1 PAINT:
a. Provide paint color as specified on finish plans - one (1) coat
primer base, two (2) coats flat water base latex acrylic.
5.2 CARPET:
a. Standard multicolored loop tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
b. Standard cut pile tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
5.3 VINYL COMPOSITION TILE:
a. Vinyl composition tile (VCT) shall be: ARMSTRONG, "Imperial
Texture". Colors as selected from standard range.
5.4 RESILIENT SHEET FLOORING:
a. Resilient sheet flooring shall be: ARMSTRONG, "Standard
Excelon". Colors as selected from standard range.
5.5 RUBBER BASE:
a. Rubber base shall be: ROPPE, 4" topset; straight base at carpeted
areas and coved at all hard surface areas. Colors as selected from
standard range.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
6.0 MILLWORK
11.0 GENERAL:
a. See millwork plans, details and notes for configuration and
fabrication specifications.
b. Millwork shops drawings shall be WIC approved.
c. All fabrications shall conform to WIC standards for "Premium
Grade" U.N.O. and be certified as such.
d. Submit shop drawings, samples, finishes for Architect's and
Interior Designer's approval prior to fabrication and
installation.
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15300 - FIRE PROTECTION SYSTEMS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall include all work necessary for a
complete automatic fire sprinkler system for the tenant
improvement of the shell building.
b. The shell building includes necessary standpipes, tamper
switches, flow and alarm switches and alarm bell.
B. SYSTEM REQUIREMENTS
1. The entire tenant improvement of the building shall be provided
with a hydraulically calculated automatic fire sprinkler system for
each occupancy classification.
2. Minimum densities for areas of coverage shall be determined by
the City of San Diego Fire Department. Hydraulically calculate water
protection systems. Form sheets, summary sheets, detailed work
sheets and graphs shall be in strict accordance with the required
and advisory provisions of NFPA 13; 7-3.
3. Tenant spaces shall be sized for Ordinary Hazard Group 1.
4. The system shall be designed for earthquakes and shall include
all materials necessary to provide the system complete and ready
for use. Design and install the system to give full consideration
to blind spaces, piping, electrical equipment, ductwork and other
construction and equipment in accordance with detailed drawings to
be submitted for approval.
5. Devices and equipment for fire protection service shall be UL
listed and FM approved for the specific purpose for which the item
is used in sprinkler systems.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
C. MATERIALS
1. Buried pipe and fittings: N/A
2. Above ground pipe and fittings:
a. 2-inch and smaller: ASTM A53 or ASTM A135 Schedule 40 black
steel pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow or equal.
b. 2 1/2-inch and larger: ASTM A135 Schedule 40 black steel
pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow pipe, or rolled groove pipe with mechanical
joint grooved coupling fittings; or ASTM A135 Schedule 10
welded steel pipe with rolled groove ends and mechanical
joint grooved coupling fittings. Cut grooving of pipe will not
be permitted.
c. Flanged fittings: ANSI B16.1 Class 125 cast iron.
d. Flanges: ANSI B16.1 Class 125 cast iron.
3. Gate Valves:
a. 4-inch and larger: UL listed and labeled, FM approved, 175 psi
OS&Y type, iron body, bronze mounted.
b. 3-inch and smaller: UL listed and labeled, FM approved, 175
psi OS&Y type, bronze body gate with solid wedge.
4. Check Valves: UL listed and labeled, FM approved, 175 psi iron
body, bronze mounted, horizontal swing check valve with bolted
bonnet and flanged end connections. Check valves shall be designed
for replacement of internal parts without removal of valve body
from piping with the exception that water check valves may be used
with freestanding Fire Department Connections.
5. Butterfly Valves: UL listed and labeled. FM approved, 175 psi
bronze body, threaded ends, stainless steel disc and stem, two
inch maximum pipe size with integral tamper switch, and geared
slow-close mechanism.
6. Drain Valve: UL listed and labeled, FM approved, 175 psi bronze
body gate valve, OS&Y type, solid wedge bronze disc; or class 150,
400 lb. WWP, conventional port, bronze, two-piece construction ball
valve.
7. Sprinkler Heads:
a. Spacing and number of heads shall comply with recommendations
of NFPA 13 for type of occupancy involved.
b. Sprinkler Heads: UL listed and labeled and FM approved for
installation in the hazard classification as indicated and by
the agencies listed above; 165 degree F rated fusible link,
1/2 inch orifice, standard response.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
.1 Finished ceiling Areas: Recessed, chrome-plated brass
pendant heads, matching chrome plated adjustable metal
escutcheon.
.2 Exposed Piping: Upright or pendant type; natural brass
finish.
D. EQUIPMENT
1. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15400 - PLUMBING SYSTEMS DESCRIPTIONS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall cover all plumbing systems for the tenant
improvement design. Utilities shall be connected to and
extended from points-of-connection from the original building
shell.
b. Piped utilities required by the installation of HVAC
equipment/systems for the tenant improvements to the building.
2. Work Excluded:
a. Plumbing sanitary and vent mains, potable water mains,
condensate drains for building shell rooftop units, roof and
storm water mains, shell toilet rooms and janitors closets.
B. SYSTEM REQUIREMENTS
1. Principal systems to be included in the tenant design:
a. Convenience sinks required by tenant for lunch/coffee rooms.
With local instahot water heater.
b. Potable cold water for drinking fountain system throughout the
building.
c. All drain piping from any HVAC equipment installed as part
of the tenant improvement that would generate condensate.
d. An hydraulically calculated automatic fire sprinkler system,
extended from the building shell to be installed in the tenant
improvement ceilings.
2. Materials:
a. Soil, Waste and Vent Above Ground: Service-weight, no-hub
cast-iron pipe and fittings.
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
b. Soil, Waste and Vent Below Ground and to 5'-0" Outside of
Building: Service-weight, cast-iron hub & spigot pipe and
fittings.
c. Water and Condensate Drain Piping Above Ground: Type "M"
hard-drawn copper type, ASTM B88, and wrought copper fittings,
ANSI B1 6.22. All hot water supply piping shall be insulated
with 1 inch thick fiberglass insulation for sizes up to 2-1/2
inch size, 1-1/2 inch thick above 2-inch size piping.
Condensate drain piping above ceilings shall be insulated.
d. Water Piping Below Ground 4-inches and Smaller: Type "K"
hard-drawn copper tubing, ASTM B88, and wrought copper fittings
ANSI B 16.22, silver brazed joints.
e. Natural Gas Piping: Buried piping shall be Polyethylene
(P.E.) per ASTM D2513. Above grade shall be Schedule 40 black
steel pipe per ASTM D2513.
f. Indirect Drains: Type "M" copper fittings, ANSI B16.22,
solder joint type. Insulate with Manville Micro-Lok 650AP.
3. Equipment:
a. N/A
4. Plumbing Fixtures:
a. Sinks as required and described in architectural floor
plans. If no description is provided, install 20 gage
stainless steel sink with standard single lever faucet.
b. Electric Water Cooler: Barrier-free, wall hung water cooler
with push bar control and equipped for handicap usage.
5. Drains:
a. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15800 - HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS DESCRIPTIONS
A. CODES AND REGULATIONS
All work shall be in strict conformance with, but not limited to:
Uniform Mechanical Code - UMC 1997
Uniform Building Code - UBC 1997
CEC Title 24 Energy Standards
Fire Department Regulation
City of San Diego Requirements
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Tenant Improvement (TI) Work:
a. All main air moving equipment including all air handling
units, exhaust fans, hot water boilers and pumps, variable air
volume with hot water reheat terminals for the building core
and all associated vertical ductwork and heating hot water
piping, and DDC control backbone will be installed as part of
the shell work. Five rooftop VAV units, one per floor are
provided with cooling only, and are based on a nominal 350
sf/ton.
b. Tenant shall provide all extensions of duct, piping,
electronic VAV boxes, DDC thermostats, control power and
wiring, smoke/fire dampers, diffusers and grilles for all
tenant improvements. Any specialty tenant requirement, such as
Kitchen exhaust will be designed and installed during the TI
work.
c. Any controls associated with the operation of the VAV boxes,
reheat coils and equipment added as TI work including
sub-control panels and thermostats required for the
environmental controls will be done as part of the TI work.
C. ENVIRONMENTAL DESIGN CONDITIONS
The following criteria will be used for sizing the heating and
cooling plants:
1. Outdoor Ambient Design Conditions:
Summer (mean 0.5%): 83DEG F dB 69DEG F wB
13DEG F dB outdoor daily range
Winter (0.2%): 42DEG F dB
Note: 88DEG F dB, 70DEG F wB is the 0.1% mean temperature: we
assume the less conservative 0.5% temperature is acceptable
for this project.
2. Indoor Conditions for Air Conditioned Area:
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
All floors 70DEG F dB +/- 2DEG F dB (winter)
72F dB +/- 2F dB (Summer)
60% RH (no low end humidity
control)
Electrical, Telecommunication No Temperature Control -
Rooms: Ventilation only - if Tenant
Equipment mounted within a
room requires a controlled
environment, it shall be
provided as part of the TI
D. VENTILATION AIR REQUIREMENTS
Outdoor air for ventilation will be based on the American Society of
Heating Ventilation and Air Conditioning Engineers (ASHRAE) Standard
62-1989, Ventilation for Acceptable Indoor Air Quality.
E. ENERGY USE AND CONSERVATION
The Energy Efficiency Standard, Title 24, will be used as the basis of
the design.
F. HEATING HOT WATER SYSTEM
1. The heating for the building will be by hot water, generated on
site by a rooftop boiler plant. The boilers, pumps and controls
will be installed as part of the building shell, along with valved
riser system to each floor.
2. Tenant improvement shall extend the heating hot water system to
heating coils at each VAV terminal with automatic flow control
valves, two way solenoids and a three way valve at four of the most
remote VAV boxes on each floor.
3. Heating hot water piping shall be type M copper with wrought
fittings, insulated.
G. MISCELLANEOUS VENTILATION/EXHAUST SYSTEMS
The following exhaust system will be installed within the scope of the
shell building design, it is assumed that ambient outside air (1) and
building air (2) (3) shall provide makeup air to the exhausted area:
(1) Elevator Machinery Room on roof.
(2) Electrical/telecom Rooms
(3) Janitors closets.
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
H. TI CONTROLS
1. An electronic direct digital control (DDC) system shall
incorporate stand alone, remote control units at each of the new
air handling units. Electronic digital control will be provided at
the zone level.
2. The controls will automatically operate the HVAC system and provide
the necessary change-over commands for the occupied and non-occupied
temperature and ventilation schedules. The system shall provide the
necessary monitoring, alarm, and by-pass for efficient energy
management.
I. Specification Sections
The following specification sections will be provided:
1. Division 15
a. Section 15010 Mechanical General Requirements
b. Section 15060 Hangers and Supports
c. Section 15090 Mechanical Identification
d. Section 15240 Vibration and Seismic Isolation
e. Section 15250 Mechanical Insulation
f. Section 15500 HVAC Pumps, Piping, Valves, and Accessories
g. Section 15850 Ductwork and Accessories
h. Section 15900 HVAC Controls
i. Section 15990 Testing, Adjusting and Balancing
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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Section 16050 BASIC ELECTRICAL REQUIREMENTS
PART 1 GENERAL REQUIREMENTS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions and Division 1 are part of this section
and the contract for this work and apply to this section as fully
as if repeated herein. This section, 16050, applies to all
Division 16 categories.
1.1.2 Reference to other sections: The applicable requirements from
other Division 16 sections shall form a part of the electrical
work and each section shall be referenced to the other sections.
1.2 EXPLANATION OF DRAWINGS
1.2.1 These construction documents are intended to be diagrammatic
and reflect the scope, quality, and character of the work to be
performed; all miscellaneous materials and work, though not
specifically mentioned, shall be furnished and installed by the
Contractor.
1.2.2 The Contractor shall confirm sizes, dimensions, weights and
locations of all equipment prior to installation. Dimensioned
architectural drawings shall take precedence over diagrammatic
layouts shown on these contract documents.
1.2.3 The specifications and the drawings are an integral document and
shall be considered complementary to each other. In the case of a
conflict between the specifications and the drawings, the more
constricting condition shall be enforced.
1.2.4 The Contractor shall be responsible for reporting any
discrepancies, errors, or omissions noted prior to bid.
1.2.5 It is the intent of the drawings to indicate schematic routing
and placement of devices, fixtures, equipment and conduit. Exact
locations shall be dimensioned on these documents or in other
trade documents (architectural, mechanical, etc.). Offsets,
elbows, or extensions shall be furnished and installed by the
Contractor as necessary to avoid structure, piping, clearances
and to provide a complete and workmanlike installation.
1.3 QUALITY ASSURANCE
1.3.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.3.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
Section 16050 Basic Electrical Requirements
Master Specs 16050-1
SCHEDULE 2
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.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriters' Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.3.3 All items shall be listed by Underwriter's Laboratories and
shall bear the U.L. label.
1.3.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.3.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the Contractor.
1.4 SUBMITTALS
1.4.1 Shop drawings for materials, equipment, devices, fixtures, and
systems shall be submitted by the Contractor for review within 30
days after award of the contract. In addition to the requirements
for submittals stated herein, the Contractor shall be responsible
for compliance with the requirements of Division 1.
1.4.2 The Contractor shall bear the responsibility for any materials
installed which were not submitted for review or not installed in
compliance with the review comments and the contract documents.
1.4.3 Verbal authorization of submittal documents or changes to the
requirements of the contract documents shall not be acceptable.
All submittal material must be documented in a written format.
1.4.4 All submittal packages must be submitted at one time and in
accordance with the specification section appropriate for the
material. All packages must be identical and clearly labeled
indicating the specification section, project name, submittal
date, Contractor's name, Engineer's name, preparer's name and
submission version (first submission, resubmittal #1, etc.).
1.4.5 Product catalog cutsheets and descriptive literature shall be
cross-referenced to the specification section by paragraph.
1.4.6 All submittal packages shall be permanently bound in brochure
or booklet format. A minimum quantity of six submittal booklets
shall be provided by the Contractor; additional copies may be
required if so noted.
Section 16050 Basic Electrical Requirements
Master Specs 16050-2
SCHEDULE 2
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1.4.7 Materials which bear a certification or approval of a testing
agency, performance criteria, society, agency, or other
organization shall be submitted with all labels identified.
1.4.8 The submittal shall be complete and with catalog data and
information properly marked to show, among other things,
materials, capacity and performance data to meet the specified
requirements.
1.4.9 Incomplete submittals will be rejected at the discretion of the
reviewing Engineer.
1.4.10 Review of the submittal is only for general conformance with
the contract documents. The Contractor is responsible for
confirmation and coordination of dimensions, quantities, sizes,
fabrication, installation methods, and for coordination of work
of other trades with electrical work.
1.4.11 Detailed working drawings shall be prepared and submitted showing
items which are to be fabricated including transformer mounting
racks, unistrut mounting frames, equipment room layouts, pull
boxes, splice boxes, gutters, etc.
1.4.12 Minimum scale for submitted drawings shall be 1/8". Details shall
be drawn to 1/4" scale. All drawings shall be 8.5"x11" or larger.
1.4.13 Submittal brochures shall be complete and descriptive of the
type, make, manufacturer, application, quantity, performance,
capacity, ratings, options, dimensions, clearances, weights,
nameplate data, special installation requirements, mounting
method, NEMA type, NEMA class, environmental restrictions, layout
requirements or other information as may be necessary for review
of the material.
1.4.14 Submittal brochures for switchgear shall include, as a minimum,
the following: singleline diagrams; fault current ratings of
buses and devices; device identification, ratings, layout and
characteristics; dimensions; circuit identification;
identification label type and method of affixing; mounting;
conduit entry point and quantities; NEMA enclosure type; and
additional data as required for a complete review.
1.4.15 Submittal brochures for lighting systems shall include, as a
minimum, the following: manufacturer; detailed drawing or
photograph; dimensions; lamp data; ballast data; certified
photometric data from a third-party testing agency; U.L. label
listing; fixture number or identification from the drawings;
finish color and material; mounting equipment; socket type and
rating; environmental ratings (damp location, watertight,
explosionproof, etc.); voltage; input wattage; and additional
information as necessary for a complete review.
1.4.16 The Contractor shall be responsible for all aspects of
substitutions of material including any additional cost or delay
incurred as a result of the substitution. The Contractor shall
coordinate all substitutions with other trades, verify code
compliance, verify clearances, photometric performance,
appearance, suitability, constructability, and availability of the
material prior to submitting the substitution for review. The
Contractor shall bear the responsibility of any increased costs
to other trades with are directly related to the substitution.
1.5 MATERIAL HANDLING
Section 16050 Basic Electrical Requirements
Master Specs 16050-3
SCHEDULE 2
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1.5.1 The Contractor shall deliver all equipment and material to the site
in the manufacturer's original packaging without seals broken.
1.5.2 The Contractor shall handle, store, and protect all equipment and
materials in accordance with the manufacturer's recommendations.
1.5.3 The Contractor shall immediately replace damaged or defective
equipment or materials with identical new equipment or material at
no cost, inconvenience, or delay to the Owner.
1.6 EXISTING CONDITIONS
1.6.1 The Contractor shall verify all existing conditions prior to bid and
include all costs in bid.
1.6.2 The Contractor shall match the finish and appearance of all existing
conditions where constructing new work adjacent to existing surfaces
or equipment.
1.6.3 Coordinate with the Owner's Representative for all ongoing projects
or the work of other trades which may affect the Contractor's work.
Verify Owner schedule requirements for special or standard events
which may impact the Contractor's work.
1.6.4 Coordinate work to be performed in occupied areas and comply with
the Owner's requirements such that the Owner's work is not disrupted
by the Contractor. Verify the need for work to be performed during
premium hours, evenings, weekends, or holidays prior to bid and
include all costs in bid. Bring to the Owner's attention the need
for all disruptive work prior to commencement of work.
1.7 UTILITY COMPANY REQUIREMENTS
1.7.1 The contractor shall contact the serving utility company for all
utility system requirements prior to commencement of work. Utility
work shall include electric power, telephone, data, fiber optic
cable, cable television or other utilities as may require connections
as a part of this contract. Coordinate and comply with all serving
utility company requirements.
1.7.2 The utility information depicted on the contract documents is for
bidding purposes only and shall not be used for construction
purposes. All construction shall be performed according to
engineered documents from the serving utility company. The
Contractor shall obtain and coordinate with utility company
requirements as a part of this contract and furnish and install all
work as a part of this contract.
1.7.3 Verify all connection points, routing, and requirements with the
serving utility company prior to commencement of work and coordinate
final requirements with other trades.
1.7.4 The Contractor shall be responsible for all costs associated with
his failure to contact or coordinate with utility company
requirements.
1.8 CONSTRUCTION UTILITY REQUIREMENTS
1.8.1 Power, telephone or other temporary construction utility services
required by the Contractor shall be the responsibility of the
Contractor.
Section 16050 Basic Electrical Requirements
Master Specs 16050-4
SCHEDULE 2
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1.8.2 Arrangements for construction utility services shall be made by the
Contractor in coordination with the Owner's Representative and the
serving utility company.
1.9 CONTINUITY OF SERVICE
1.9.1 The Contractor shall coordinate all shutdowns with the Owner's
Representative. Electrical shutdowns shall be kept to the minimum
number necessary to complete the work.
1.9.2 The Contractor shall coordinate all work done on overtime or premium
time with Owner's Representative prior to commencement of work.
1.9.3 All work performed in or through occupied spaces, or other work
disruptive to existing occupants shall be considered as performed
during premium time or as overtime for the purposes of the
bid; include all costs in bid.
1.9.4 The Contractor shall notify Owner's Representative of all shutdowns
or disruptive work minimum of 72 hours prior to commencement of
work. The Contractor shall obtain approval from the Owner's
Representative prior to commencement of work.
1.9.5 The Contractor shall provide all necessary temporary power, including
temporary power generation, to accommodate shutdowns and minimize
disruption of work.
1.9.6 The Owner reserves the right to provide emergency repairs or
temporary power to maintain service continuity at the Contractor's
cost in the event Contractor fails to provide adequate service
continuity.
1.10 RECORD DOCUMENTS
1.10.1 The Contractor shall prepare as-built documents depicting all
revisions to branch circuits, conduit routing, equipment, or
materials. Drawings shall be legible, reproducible, and properly
identified such they may be used as a reference for maintenance or
construction.
1.10.2 The Contractor shall provide a minimum of three copies of the
operation and maintenance manuals to the Owner's Representative at
the completion of the project. Each copy shall be bound in a
three-ring binder and labeled indicating: the project name; system
name; Contractor's name, telephone number, and contact person; and
Owner's name. The Contractor shall provide the following information
within each manual:
.1 List of the Subcontractors performing work on the system
including contact names and telephone numbers.
.2 Routine and emergency service contacts and telephone numbers
for each system.
.3 Description of system operation.
.4 Single line diagrams and control wiring diagrams.
.5 Detailed product literature with technical information.
Section 16050 Basic Electrical Requirements
Master Specs 16050-5
SCHEDULE 2
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.6 Sequence of starting, shutdown and operation.
.7 Installation instructions and safety requirements.
.8 Maintenance schedule, testing instructions and performance
parameters.
.9 Parts list including recommended spare parts.
1.11 GUARANTEE
All electrical work, materials and equipment provided under this
contract shall be guaranteed for a period of one year from the date
of acceptance of the work by the Owner. Any failures, problems, or
deficiencies experienced during this period due to defective
materials or faulty workmanship shall be immediately corrected by
the Contractor without cost to the Owner. The Contractor shall be
responsible for all damages to the Owner's facility due to
deficiencies in the electrical system. Equipment guarantees in
excess of one year shall not be superseded by this guarantee.
PART 2 PRODUCTS
2.1 MATERIALS
2.1.1 All materials shall be new, of prime quality, listed as suitable for
the application, and bear factory-applied U.L. labels.
2.1.2 Materials shall be currently in production and shall be supported by
spare parts, repair service, maintenance, and factory technical
support.
2.1.3 Materials of one assembly (switchboards, substations, motor control
centers, etc.) shall be of one manufacturer unless specifically stated
otherwise in the contract documents.
PART 3 EXECUTION
3.1 INSTALLATION REQUIREMENTS
3.1.1 All work shall conform to National Electrical Contractors
Association standards of installation and the requirements of the
manufacturer, Division 1, Division 16, and the Owner's Representative.
3.1.2 The Contractor shall field-verify all dimensions and coordinate
dimensions with equipment sizes and locations.
3.1.3 The Contractor shall coordinate and install all penetrations, openings,
slots, chases, or sleeves as necessary for the routing and installation
of raceways, conductors, or equipment. The Contractor shall provide
approved fire sealant to maintain fire ratings at all penetrations.
3.1.4 The Contractor shall coordinate the placement and sequence of
installation of all mounting bolts, conduits, sleeves, etc. which are
to be set in poured-in-place concrete slabs per the structural
drawings.
3.1.5 The Contractor shall install access panels in walls or ceilings in
coordination with the Architect for all junction boxes or electrical
equipment which requires access.
Section 16050 Basic Electrical Requirements
Master Specs 16050-6
SCHEDULE 2
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3.1.6 All equipment shall be installed plumb, parallel, or orthogonal to
structure and in a neat orderly fashion. All material shall be
accessible for maintenance, inspection, servicing or replacement.
3.1.7 Verify final locations for devices during the rough-in phase with
dimensioned architectural drawings, fabrication drawings, or other
space planning requirements included in the contract documents.
3.1.8 The Contractor shall coordinate and arrange for the proper sequence
of construction including scheduling of long-lead items, shutdowns,
work of other trades, and Owner-scheduled events.
3.1.9 The Contractor shall provide adequate and qualified supervision for
the work performed: no work shall be performed without the
supervision of a representative of the Contractor.
3.1.10 The Contractor shall coordinate and cooperate with all other trades
for a successful completion of the project.
3.2 SEISMIC BRACING
The Contractor shall seismically brace all equipment in accordance
with Title 24 requirements for Seismic Zone 4 and provide
certification of seismic compliance upon request.
3.3 CUTTING AND PATCHING
3.3.1 The Contractor shall provide cutting and patching as required to
install the electrical system in this contract.
3.3.2 Coordinate the schedule of all cutting such that the work may be
performed in an expeditious manner with minimum inconvenience to
the Owner.
3.3.3 Remove or cut structures or materials as necessary for demolition
prior to the installation of new electrical work.
3.3.4 The Contractor shall protect all surfaces, structure, furnishings,
and finishes not directly affected by cutting or patching.
3.3.5 Provide dust and moisture barriers as required during cutting and
prior to patching openings.
3.3.6 All penetrations through roofs shall be performed per architectural
requirements.
3.3.7 Patching shall be performed with materials which exactly match the
adjacent surfaces in color, texture, character, and appearance.
3.3.8 All patches must maintain the fire ratings of the original surface
and shall be sealed with a U.L. listed and Fire Marshal approved
sealant.
3.4 COMMISSIONING
Section 16050 Basic Electrical Requirements
Master Specs 16050-7
SCHEDULE 2
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3.4.1 The Contractor shall initiate start up of all electrical equipment
including operation of all devices, switches, generators, transfer
switches, overcurrent protection, disconnect switches, etc. to verify
normal operation of all moving parts and electrical performance.
3.4.2 The Contractor shall test, adjust, aim, align, label, clean and
complete all systems prior to acceptance by the Owner's
Representative.
3.4.3 The Contractor shall demonstrate that all systems operate within the
manufacturer's recommended performance characteristics, the
electrical construction documents, system requirements, and Owner
requirements.
3.4.4 The Contractor shall test each system per the manufacturer's
requirements and shall perform the following system tests:
.1 Inspect cables for physical damage and proper connection.
.2 Torque test cable connection and tighten in accordance with
industry standards.
.3 Infrared scan all connections under loaded conditions.
.4 Insulation resistance test of each cable.
.5 Inspect ground system connections.
.6 Voltage drop tests on the main grounding electrode of system.
.7 Determine the ground resistance between the main grounding
system and all major electrical equipment frames, system neutral
points.
.8 Check rated voltage and phase balance at all equipment, motors
and selected devices at full load conditions. Measure no load
voltage conditions at each location.
.9 Furnish all material, equipment, instruments and labor as
required to complete testing.
3.5 TRAINING
3.5.1 Furnish at least one copy operating instructions from the
manufacturer for all electrical equipment to the Owner's
Representative. Instructions shall be clean, legible, and properly
bound.
3.5.2 The Contractor shall provide training for the Owner's staff as
directed by the Owner's Representative for a minimum of one
man-day (eight hours).
3.5.3 Provide classroom training by a qualified instructor for the
operation, installation, and maintenance of designated equipment or
systems including, but not limited to, generation systems, transfer
switches, uninterruptible power supplies, energy management
systems, lighting control systems, power distributions systems, and
other systems which may require instruction.
3.6 CLEANING
Section 16050 Basic Electrical Requirements
Master Specs 16050-8
SCHEDULE 2
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<PAGE>
Contractor shall clean all equipment, panelboard interiors, conduit
interiors, fixtures, devices, etc. of all extraneous paint, drywall
mud, overspray, dust, dirt, debris, trash, grease or markings. All
cleaning shall be performed by the Contractor in accordance with the
appropriate manufacturer's recommendations.
END OF SECTION
Section 16050 Basic Electrical Requirements
Master Specs 16050-9
SCHEDULE 2
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<PAGE>
Section 16110 RACEWAYS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Basic Electrical Requirements
(Section 16050) are part of this section and the contract for this
work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16110 Raceways
Master Specs 16110-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Raceway materials
.2 Fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Rigid Galvanized Steel (RGS) Conduit
2.1.1 Continuous hot-dipped galvanized manufactured per UL and ANSI
requirement.
2.1.2 Rigid aluminum conduit is not acceptable.
2.1.3 Fittings for use with steel conduit, rigid or flexible, shall be
manufactured per UL requirements and shall be cast metal with
gasketed closures.
2.1.4 Fittings for RGS conduit shall be malleable iron or forged steel
with cadmium or zinc coating.
2.1.5 Union couplings for joining rigid conduit at intermediate runs shall
be of the same material as the conduit. Couplings shall be threaded
concrete-tight to permit completing conduit runs when neither
conduit can be turned and to permit breaking the conduit run at the
union.
2.1.6 Set screw connectors or threadless type are not acceptable.
2.1.7 Minimum raceway size shall not be less than 3/4".
2.2 Electrical Metallic Tubing (EMT)
2.2.1 Conduit shall be cold rolled zinc coated steel and manufactured per
UL and ANSI requirements.
2.2.2 Fittings for EMT shall be watertight steel or malleable gripping ring
compression type.
2.2.3 Pressure cast material for nuts of compression ring type fittings
and set screw connections are not acceptable.
2.2.4 Minimum raceway size shall be 1/2".
2.3 Flexible Metallic Conduit
2.3.1 Flexible conduit shall bear the UL label and be zinc coated steel.
2.3.2 Fittings for flexible metallic conduit shall be steel or malleable
iron. Fittings shall clamp to conduit securely.
2.3.3 Screw in type, sheet metal or set screw type fittings are not
acceptable.
Section 16110 Raceways
Master Specs 16110-2
SCHEDULE 2
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2.3.4 Minimum raceway size shall not be less than 3/4".
2.4 Liquid Tight Flexible Conduit
2.4.1 Conduit shall be manufactured in accordance with UL and ANSI
requirements. Conduit shall be approved for grounding and compatible
with approved fittings. Flexible steel conduit shall be hot dipped
galvanized with extruded PVC covering manufactured per UL
requirements.
2.4.2 Fittings shall be liquid tight type with body and gland nut of steel
or malleable iron with provisions for grounding flexible conduit to
fittings.
2.4.3 Minimum raceway size shall be 3/4".
2.5 Polyvinyl Chloride (PVC) Conduit
2.5.1 PVC shall be constructed of a virgin homopolymer PVC compound and be
manufactured according to NEMA and UL specifications. PVC conduit shall
be Schedule 40 or 80.
2.5.2 Minimum raceway size shall be 3/4".
PART 3 EXECUTION
3.1 Rigid Galvanized Steel (RGS) Conduit
3.1.1 RGS shall be used where exposed to weather or where subject to
physical damage in exposed areas below 8'0" above finished floor.
3.1.2 RGS shall be used in NEC classified hazardous locations with seal
connections per NEC requirements.
3.2 Electrical Metallic Tubbing (EMT)
3.2.1 EMT shall be run indoors concealed in drywall type
construction, above suspended ceilings, and exposed indoors not less
than 8'0" above finished floor in unfinished areas.
3.2.2 EMT shall not be installed underground or embedded in concrete.
3.3 Flexible Metallic Conduit
3.3.1 Flexible conduit shall be used for indoor lighting connections in
suspended ceiling areas and shall not exceed 6'0" in length.
3.3.2 Flexible conduit shall be used for final connection to control
equipment and not to exceed 2'0" in length.
3.3.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL approved.
3.4 Liquid Tight Flexible Conduit
Section 16110 Raceways
Master Specs 16110-3
SCHEDULE 2
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3.4.1 Flexible conduit shall be used for final connection to
machines, motors, transformers and equipment that requires vibration
isolation.
3.4.2 Flexible conduit shall be used for final connection to equipment in
wet or damp locations or where exposed to grease, water, dust, or dirt.
3.4.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL requirements.
3.5 Polyvinyl Chloride (PVC) Conduit
3.5.1 All sweeps, bends, and risers shall be concrete encased Schedule 80.
3.5.2 All underground high voltage conduit, telephone conduit, service
entrance conduit and feeders 100A and over shall have 3" of red
mixed concrete cover.
3.5.3 All PVC conduit feeders shall contain a copper green grounding
conductor sized per NEC requirements and continuity shall be
maintained throughout conduit runs and pullboxes.
3.6 All conduit installation methods shall comply with the latest
enforced edition of the National ELectrical Code and the authority
having jurisdiction.
3.7 All conduit installations shall comply with the manufacturer's
installation requirements.
3.8 All spare conduit shall be provided with a pullwire.
END OF SECTION
Section 16110 Raceways
Master Specs 16110-4
SCHEDULE 2
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(Peregrine Systems)
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Section 16120
WIRE AND CABLE
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
Section 16120 Wire and Cable
Master Specs 16120-1
SCHEDULE 2
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<PAGE>
.1 Conductor materials
.2 Connector and fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Conductors shall be copper; conductors size #10AWG and smaller shall
be solid, conductors size #8AWG and larger shall be stranded.
Conductors shall be minimum size #12AWG for power and lighting
circuits; control circuits shall use a minimum conductor size of
#14AWG.
2.2 Insulation shall be type THW or THHN/THWN for all branch circuits up
to and including size #2AWG. Insulation for conductors over size
#2AWG shall be XHHN.
2.3 Jackets shall be nylon of PVC material.
2.4 All cables shall be UL listed for the application.
2.5 All conductors shall be installed in conduit in the field, unless
specifically noted otherwise in these documents. Type AC and type NM
cable is not acceptable; type MC cable may be used where
specifically noted for purposes of flexibility, maintenance, or ease
of installation but shall not be used without permission.
2.6 Multi-conductor flexible cords shall be types SO, SJO, STO, or SJTO.
2.7 Connectors shall be UL listed and suitable for the conductor
material being connected and rated appropriately. Connectors shall
be solderless metal pressure type for conductors #10AWG and smaller.
Connectors shall be compression type for conductors #8AWG and larger.
PART 3 EXECUTION
3.1 All wiring methods shall comply with the latest enforced edition of
the National Electrical Code and the authority having jurisdiction.
3.2 Conductors shall be installed in clean raceways using nylon
cord, polypropylene cord, hemp rope, or other material which will not
damage the conductors or conduit. Do not use metal fish tape. Use
lubricant when necessary for pulling.
3.3 Conductors shall be pulled into conduit simultaneously so as to not
damage conductors during pulling.
3.4 Conductors installed at outlets and switches shall have a minimum of
6" pigtail left in the box for future connections. All conductors
not connected to devices shall be terminated with splice caps or
tape.
3.5 Conductors shall be terminated such that no copper material is
exposed. Conductors shall be trained and labeled at terminations in
a neat and workmanlike manner.
3.6 All terminations shall comply with the manufacturer's installation
and torquing requirements.
3.7 Splices on conductors #10AWG and smaller shall be made with splice
caps twisted
Section 16120 Wire and Cable
Master Specs 16120-2
SCHEDULE 2
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onto the conductors. Tape all splices.
3.8 Splices on conductors #8AWG and larger shall be made with pressure
connectors and terminal lugs. Where exposed to water, damp air, or
moisture splices shall be watertight.
3.9 Splices shall be not be made in feeders; splices to branch circuits
shall not be made within panelboards or similar enclosures.
3.10 When combining homeruns, the Contractor shall derate all conductors
per code requirements including reducing the capacity, using high
temperature insulation where necessary. Conduit sizes shall be
adjusted by the Contractor as suitable for the conductor revisions.
3.11 The Contractor shall provide a code-sized insulated ground
conductor, in addition to the feeder conductors indicated on the
drawings, where non-metallic conduit is used.
3.12 Conductors shall be color-coded as follows:
208Y/120V Phase 480Y/277V
Black A Brown
Red B Orange
Blue C Yellow
White Neutral Gray
Green Ground Green
3.13 Where tape or labels are used for color-coding, apply material at each
end of the conductor, splices, boxes, and all terminations.
END OF SECTION
Section 16120 Wire and Cable
Master Specs 16120-3
SCHEDULE 2
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<PAGE>
Section 16130 BOXES
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3. All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16130 Boxes
Master Specs 16130-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Box materials
.2 Accessory materials
PART 2 PRODUCTS
2.1 Boxes shall be flat rolled steel sized as required by code and as
suitable for the application. Boxes shall have mounting holes and
knock-outs in sides and back. Grounding shall be accommodated by
means of threaded holes.
2.2 Provide accessories, extension rings, gaskets, supports, trim
rings, hangers, straps, and other material as necessary for a
complete code complying installation.
2.3 Boxes installed outdoors shall be weathertight, dusttight, and
corrosion resistant. Provide gaskets and conduit hubs.
2.4 Provide Type FS boxes for surface mounted applications.
2.5 Provide additional support for boxes as necessary when mounting
fixtures or devices from boxes.
2.6 Provide ganged boxes for multiple switches and devices; provide
barriers for boxes served by separate voltages.
2.7 Acceptable manufacturers shall be Appleton, Crouse Hinds, Steel
City, or Raco.
PART 3 EXECUTION
3.1 All box installation method shall comply with the latest enforced
edition of the National Electrical Code and the authority having
jurisdiction.
3.2 Install all boxes plumb, square, and securely fastened to
structure.
3.3 Boxes shall be placed such that they are readily accessible.
3.4 Cover or plug all unused openings in boxes where knockout blanks
have been removed.
3.5 Install boxes such that they are flush with the finished surface
of the wall or surface within which they are mounted.
3.6 Install all boxes at mounting heights per architectural,
electrical code, and ADA requirements.
3.7 Boxes shall not be mounted back to back in walls.
3.8 Boxes in sealed environments shall be sealed with an approved
sealant suitable for the application.
3.9 Boxes penetrating fire rated walls or surfaces shall be sealed
with a Fire Marshall approved fire sealant to maintain the fire
rating of the wall or surface.
Section 16130 Boxes
Master Specs 16130-2
SCHEDULE 2
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<PAGE>
3.10 Boxes located above inaccessible ceilings shall be made accessible
by means of access doors or hatches in the ceiling.
3.11 Install all boxes per manufacturer's recommendations and
requirements.
3.12 Provide for ground continuity at all boxes.
END OF SECTION
Section 16130 Boxes
Master Specs 16130-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
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<PAGE>
Section 16140 WIRING DEVICES AND CONNECTORS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and
the contract for this work and apply to this section as fully
as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-1
SCHEDULE 2
-36-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Receptacles
.2 Switches
.3 Wiring devices
.4 Accessories
PART 2 PRODUCTS
2.1 RECEPTACLES
2.1.1 Wiring devices shall be UL listed and suitable for the application.
2.1.2 Devices shall be color coded per the system to which they are
connected: normal power shall be white; emergency power shall
be red; dedicated outlets shall be grey; unless otherwise noted
on the construction documents.
2.1.3 Receptacles shall be heavy duty with the screw type, side wired,
120V, 20A, duplex type, unless noted otherwise on the contraction
documents. Verify NEMA configuration with construction documents.
2.1.4 Weathertight receptacles shall be gasketed in cast metal boxes
with cast metal coverplates with spring-loaded hinged covers over
each opening.
2.1.5 Ground fault interrupting receptacles shall be duplex type and
capable of detecting a leaking current of 5mA.
2.2 TOGGLE SWITCHES
2.2.1 Toggle wall switches shall be quiet AC type, rated 120/277V, 20A
and UL listed for the application.
2.2.2 Switches shall be single pole, double throw with white finish
unless noted otherwise.
2.3 COVERPLATES
2.3.1 Single, combination coverplates shall be used at all ganged device
locations.
2.3.2 Provide white plastic coverplates with white screws in all office
areas. Provide stainless steel coverplates with matching screws in
laboratory, process, manufacturing, and clean room areas or as
noted on the construction documents.
2.3.3 Provide labeled plates as noted on the construction documents.
2.3.4 Provide labeled plates at all receptacles with circuit and panel
designation. Labeling method shall utilize clear adhesive printed
labels with black bold letters.
2.4 ACCEPTABLE MANUFACTURERS
2.4.1 Acceptable manufacturers shall be Arrow Hart, Hubbell, Leviton, or
Pass and Seymour.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-2
SCHEDULE 2
-37-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of wiring devices shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all devices in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate device mounting height, location and type with
architectural and interior drawings. Coordinate with other
trades to identify conflicts with device locations and notify
the Engineer of any conflicts.
3.4 Install devices only in clean boxes.
3.5 Install all trim rings and coverplates in coordination with other
trades and their installation schedules.
3.6 Tighten and inspect all connections prior to covering devices and
reconnect or repair wiring as necessary.
3.7 Test all devices for voltage level, continuity, ground fault, and
short circuits.
3.8 Install all devices plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to covering device.
3.10 Demonstrate the proper operation of all ground fault interrupting
devices.
END OF SECTION
Section 16140 Wiring Devices and Connectors
Master Specs 16140-3
SCHEDULE 2
-38-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16170 CIRCUIT AND MOTOR DISCONNECTS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-1
SCHEDULE 2
-39-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage and current ratings
.2 NEMA enclosure type
.3 Horsepower rand fault current rating
.4 Dimensions
.5 Fuse type and class
PART 2 PRODUCTS
2.1 Disconnects shall NEMA 1, indoor type, or rated for the location
in which they are installed as noted on the construction documents.
2.2 Disconnects shall be UL listed and suitable for the application.
2.3 Exterior disconnects shall be raintight, dusttight, have raintight
hubs, and be rated NEMA 3R.
2.4 Disconnects shall be heavy duty type, rated 600V with current
capacity as noted on the construction documents. Verify NEMA
configuration with construction documents.
2.5 Disconnects shall have hinged, lockable, dead-front doors wit
permanently marked ON/OFF indicators. Enclosures shall be baked
enamel factory painted steel with conduit knockouts.
2.6 Disconnects shall be operated by a handle accessible from the
exterior of the enclosure. Handles shall have provision to be
padlocked in the OFF position.
2.7 All current carrying parts shall be high conductivity copper
designed to carry rated load without damage from heat and plated
to resist corrosion.
2.8 Switch mechanism shall be a quick-make, quick-break type such that
the operation of the contact is restrained by the handle during the
closing or opening operation.
2.9 Switches shall have a minimum fault current rating of 200,000A RMS.
All switches shall be fused unless specifically noted otherwise.
2.10 The disconnect door cover shall have an interlocking mechanism to
prevent opening the cover when the switch is in the ON position.
2.11 Fuses serving motor loads shall be Class L and Class RK1, 250V and
600V, time delay, dual element unless noted otherwise on the
construction documents.
2.12 Fuses serving non-motor loads shall be Class L and Class RK1, 250V
and 600V, fast acting, dual element unless noted otherwise on the
construction documents.
2.13 Provide built-in fuse pullers.
2.14 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. and Westinghouse. Fuses shall be Gould-Shawmut
or Bussman.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-2
SCHEDULE 2
-40-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of disconnects shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all disconnects in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate disconnect mounting height, location and type with
architectural and interior drawings. Coordinate with other trades
to identify conflicts with device locations and notify the
Engineer of any conflicts. Mount switches 42" above finished
floor unless noted otherwise.
3.4 Provide suitable galvanized metal strut framework where no wall or
structure is available for the mounting of vibrating equipment.
3.5 Provide flexible conduit connections for disconnects mounted to
strut framework, motors, or vibrating equipment.
3.6 Tighten and inspect all connections and reconnect or repair wiring
as necessary.
3.7 Test all disconnects for voltage level, continuity, ground fault,
and short circuits. Check switch mechanism operation under no load
conditions prior to operating under load.
3.8 Install all disconnects plumb and square to structure and adjacent
surfaces.
3.9 Provide and install all fuses sized per the equipment
manufacturer's recommendation.
END OF SECTION
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-3
SCHEDULE 2
-41-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16420 SWITCHBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearance prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16420 Switchboards
Master Specs 16420-1
SCHEDULE 2
-42-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Switchboards
.2 Overcurrent protection
.3 Instrumentation
.4 Dimensions, weights, ratings, and layouts
.5 Device settings and trip ratings
PART 2 PRODUCTS
2.1 Switchboards shall be factory assembled, dead-front, metal
enclosed, self-supporting floor standing sections as noted in the
construction documents.
2.2 Vertical sections shall contain overcurrent protective devices
including circuit breakers and fuses and shall be nominally
90" in height.
2.3 Switchboard finish shall be baked enamel factory paint of
manufacturer's standard color.
2.4 Provide front accessibility for wireways on each side of
overcurrent protective devices for entire height of section.
Provide welded steel framework with screw covers removable from
the front; covers may be hinged.
2.5 All bussing shall be silver-coated copper with ratings as
indicated in the construction documents.
2.6 Switchboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Switchboards shall be equipped with lifting eyes.
2.8 Switchboards shall be suitable for the environment in which they
are located and shall be NEMA 1, indoor, unless noted otherwise on
the construction documents.
2.9 Main circuit breakers shall be provided and shall be solid state
trip with ratings as noted. Distribution circuit breakers shall be
molded case type. All circuit breakers shall be bolt-on type.
2.10 Cross bussing shall be fully rated for the length of the
switchboard.
2.11 Instrumentation shall be provided where noted. Utility company
metering shall be provided in accordance with the serving utility
company requirements.
2.12 The switchgear manufacturer shall submit a coordination and short
circuit study for the entire system provided including long time,
short time, instantaneous, and ground fault.
2.13 Provide permanently adhered bakelite labels indicating the
identification of each device on the switchboard adjacent to the
device and visible on the enclosure exterior.
2.14 Provide a ground bus in each switchboard section with connecting
ground bonds between sections.
Section 16420 Switchboards
Master Specs 16420-2
SCHEDULE 2
-43-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square
D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of switchboards shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all switchboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate switchboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with switchboard locations and notify the Engineer of any conflicts.
3.4 Coordinate switchboard size with concrete housekeeping pads.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Ground fault protective devices shall be testing by an approved
third party testing agency and a written report submitted with the
operation manual for review.
3.7 Test all switchboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all switchboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing switchboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all switchboard interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation. Set ground fault
protective device as per the written report recommendations.
END OF SECTION
Section 16420 Switchboards
Master Specs 16420-3
SCHEDULE 2
-44-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16460 TRANSFORMERS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and contract for
this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electric Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with the applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16460 Transformers
Master Specs 16460-1
SCHEDULE 2
-45-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage, KVA, impedance, frequency, taps, and efficiency
.2 Temperature rating above ambient
.3 Regulation and sound levels
.4 Mounting details and vibration isolation
.5 Nameplate data
PART 2 PRODUCTS
2.1 Transformers shall be general purpose, ventilated dry type, factory
assembled, dead-front, metal enclosed, self-supporting floor standing
as noted in the construction documents.
2.2 Transformers shall be 480V-208Y/120V 3 amps 4W(primary-secondary)
voltage rated, unless noted otherwise.
2.3 Transformers shall be rated for 80DEG. C rise above an ambient
temperature of 40DEG C.
2.4 Coils shall be continuously wound non-hygroscopic type with
thermosetting varnish. Windings shall be aluminum or copper.
2.5 Taps shall be provided at primary windings with (6)2 1/2 % taps,
three above and three below.
2.6 Intergral vibration isolators shall be provided between the core and
coil assembly and the transformer enclosure in addition to the
vibration isolation located between the enclosure and the floor.
2.7 Grounding shall be provided by means of a flexible grounding strap.
2.8 Transformers shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Transformers shall have lifting lugs and be enclosed in a heavy
gauge, sheet steel housing with baked enamel finish. The enclosure
shall be ventilated.
2.10 Transformers located in exterior areas shall be NEMA 3R, with drip
shield and corrosion resistant finish.
2.11 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of transformers shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all transformers in accordance with the manufacturer's
recommendations and requirements.
Section 16460 Transformers
Master Specs 16460-2
SCHEDULE 2
-46-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.3 Coordinate transformer location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with transformer locations and notify the Engineer of any conflicts.
3.4 Coordinate transformer size with concrete housekeeping pads,
structural frames, and mounting hardware.
3.5 Brace transformers per California Code of Regulations, Title 24,
Seismic Zone 4 requirements.
3.6 Provide rubber vibration isolation between transformer and floor,
structure, or any fixed surface (including wireways).
3.7 Test all transformers for voltage level at primary and secondary
windings.
3.8 Install all transformers plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing transformer.
3.10 Install all conduit connections to transformer with liquid tight
flexible conduit.
3.11 Clean all transformer interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Tighten and test all connections prior to energizing the transformer.
END OF SECTION
Section 16460 Transformers
Master Specs 16460-3
SCHEDULE 2
-47-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16470 PANELBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the contract
for this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16470 Panelboards
Master Specs 16470-1
SCHEDULE 2
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Panelboards
.2 Overcurrent protection, bus capacity, main ratings, AIC rating
.3 Mounting, enclosure, dimensions
.4 Dimensions, voltage, ratings and phases
.5 Device settings, trip ratings, and layout
PART 2 PRODUCTS
2.1 Panelboards shall be factory assembled, dead-front, metal enclosed,
wall mounted type as noted in the construction documents.
2.2 Panelboards shall be rated 600VAC and shall not exceed 1200A current
capacity.
2.3 Panelboard finish shall be baked enamel factory paint of manufacturer's
standard color.
2.4 Provide front accessibility for wireways on each side of overcurrent
protective devices for entire height of panelboard.
2.5 All bussing shall be silver-plated copper with ratings as indicated in
the construction documents.
2.6 Panelboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Enclosures shall be galvanized sheet steel cabinet type with hinged
and lockable doors, dead front, and permanently adhered identification
labels on the front.
2.8 Switchboards shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Circuit breakers shall be molded case type; all circuit breakers shall
be bolt-on type.
2.10 Main lugs shall be anti-turn solderless pressure type for use with
copper conductors.
2.11 Instrumentation shall be provided where noted.
2.12 Enclosures, panel interiors, and devices shall be of one manufacture.
2.13 Provide a typewritten panel schedule located in a sleeve on the
interior of the panelboard door indicating loads and areas connected
to each circuit.
2.14 Provide a ground bus in each panelboard.
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square D,
Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of panelboards shall comply with the latest
enforced edition of the
Section 16470 Panelboards
Master Specs 16470-2
SCHEDULE 2
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
National Electrical Code and the authority having jurisdiction.
3.2 Install all panelboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate panelboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with panelboard locations and notify the Engineer of any conflicts.
3.4 Fasten panelboards securely to structural wall or surface to Seismic
Zone 4 requirements. Panelboards shall be mounted no higher than 6'0"
to the highest device from finished floor and no lower than 24" above
finished floor. Provide panel skirts where noted.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Complete the panel schedule card and place in the sleeve on the
interior of the panelboard door.
3.7 Test all panelboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all panelboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing panelboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all panelboard interiors and exteriors prior to handing over to
Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation.
END OF SECTION
Section 16470 Panelboards
Master Specs 16470-3
SCHEDULE 2
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
SCHEDULE 3
SUMMARY OF BUILDING WORKING DRAWINGS
BLDG. ONE - PROJECT NO. 4085.10
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
GRADING PERMIT (WO# 980807)
CIVIL
1D GENERAL NOTES, LEGEND, KEY MAP
2D GRADING/UTILITY PLAN
LANDSCAPE
3D IRRIGATION PLAN
4D PLANTING PLAN
5D ENTRY ROAD IRRIGATION PLAN
6D ENTRY ROAD PLANTING PLAN SEPARATE
7D IRRIGATION DETAILS SITE
8D IRRIGATION DETAILS PACKAGE
9D PLANTING DETAILS
10D LANDSCAPE SPECIFICATIONS
11D LANDSCAPE SPECIFICATIONS
12D LANDSCAPE SPECIFICATIONS
13D LANDSCAPE SPECIFICATIONS
14D LANDSCAPE SPECIFICATIONS
15D RIGHT OF WAY IRRIGATION PLAN
16D RIGHT OF WAY PLANTING PLAN
- -------------------------------------------------------
SHELL ONLY BUILDING PERMIT
(PLAN FILE #A108210-98)
TS-1 TITLE SHEET 12-18-98
TS-2 ACCESSIBILITY NOTES 12-18-98
ARCHITECTURAL-ALL "A" DRAWINGS DATED 12-18-98
A1.1 SITE PLAN
A1.2 SITE DETAILS
A2.1 FIRST FLOOR PLAN
A2.2 SECOND FLOOR PLAN
A2.3 THIRD FLOOR PLAN
A2.4 ROOF PLAN
A3.1 EXTERIOR ELEVATIONS
A3.2 EXTERIOR ELEVATIONS
A3.3 BUILDING SECTIONS
A3.4 BUILDING SECTIONS
A3.5 WALL SECTIONS
A3.6 WALL SECTIONS
A3.7 WALL SECTIONS
A4.1 STAIR PLANS AND SECTIONS
A4.2 ENLARGED PLANS, INTERIOR ELEVATIONS
A4.3 ENLARGED DECK PLAN, REFLECTED SOFFIT PLANS
A4.4 SCHEDULES
A5.1 DETAILS
A5.2 DETAILS
A5.3 DETAILS
A5.4 DETAILS
- -------------------------------------------------------
FOUNDATION/FRAMING PERMIT
(PLAN FILE #A107551-98)
STRUCTURAL--ALL "S" DRAWINGS DATED 11-10-98
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S1.2 TYPICAL DETAILS
S1.4 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 SECOND FLOOR FRAMING PLAN
S2.3 THIRD FLOOR FRAMING PLAN
S2.4 ROOF FRAMING PLAN
S3.1 FRAME ELEVATIONS AND STAIR DETAILS
S4.1 SECTIONS AND DETAILS
S4.2 SECTIONS AND DETAILS
S5.2 PANEL ELEVATIONS
S5.3 PANEL DETAILS
- -------------------------------------------------------
MECHANICAL--ALL "M" DRAWINGS DATED 12-18-98
M1 MECHANICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
M2 TITLE 24
M3 MECHANICAL FIRST FLOOR PLAN
M4 MECHANICAL SECOND FLOOR PLAN
M5 MECHANICAL THIRD FLOOR PLAN
M6 MECHANICAL ROOF PLAN
M7 MECHANICAL DETAILS
M8 MECHANICAL DETAILS
M9 MECHANICAL DETAILS
PLUMBING--ALL "P" DRAWINGS DATED 12-18-98
P1 PLUMBING SYMBOLS, ABBREVIATIONS, SCHEDULES
P2 PLUMBING SITE PLAN
P3 PLUMBING FIRST FLOOR PLAN
P4 PLUMBING SECOND FLOOR PLAN
P5 PLUMBING THIRD FLOOR PLAN
P6 PLUMBING ROOF PLAN
P7 PLUMBING DIAGRAMS
P8 PLUMBING DETAILS
ELECTRICAL--ALL "E" DRAWINGS DATED 12-18-98
E1 ELECTRICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
E2 SINGLE LINE DIAGRAM
E3 ELECTRICAL SITE PLAN
E4 ELECTRICAL FIRST FLOOR PLAN
E5 ELECTRICAL SECOND FLOOR PLAN
E6 ELECTRICAL THIRD FLOOR PLAN
E7 ELECTRICAL ROOF PLAN
E8 ELECTRICAL PANEL SCHEDULES
E9 ELECTRICAL PARTIAL PLAN AND DETAILS
E10 TITLE 24 AND ELECTRICAL DETAILS
- -------------------------------------------------------
SCHEDULE 3
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
BLDG. TWO - PROJECT NO. 4085.20
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
[ILLEGIBLE]
SCHEDULE 3
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT C
PEREGRINE SYSTEMS CORPORATE CENTER
NOTICE OF LEASE TERM DATES
To: ______________________
______________________
______________________
Re: Office Lease dated _________________, ______ between KR-CARMEL
PARTNERS, LLC, a Delaware limited liability company ("LANDLORD"), and
PEREGRINE SYSTEMS, INC., a Delaware corporation ("TENANT") concerning
that certain office building located at ______ Valley Center Drive,
San Diego, California 92130.
Ladies and Gentlemen:
In accordance with the referenced Office Lease (the "LEASE"), we wish to
advise you and/or confirm as follows:
1. The Substantial Completion of the Premises has occurred, and the
Lease Term shall commence on or has commenced on _________________ for a term
of ______________________ ending on __________________.
2. Rent commenced to accrue on ____________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to _________________ at
______________________________________________________.
5. The exact number of rentable and usable square feet within the
Premises are _________ and ___________ square feet, respectively.
6. Base Rent, as adjusted based upon the exact number of rentable
square feet within the Premises, is as follows: ______________________________
_____________________.
7. Tenant's Share, as adjusted based upon the exact number of rentable
square feet within the Building(s), is _________%.
EXHIBIT C
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The street address(es) of the Building is _________________ Valley
Center Drive, San Diego, California 92130.
"LANDLORD":
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: _________________________
Name: _______________________
Its: ___________________
By: _________________________
Name: _______________________
Its: ___________________
Agreed to and Accepted as
of _______________, _____.
"TENANT":
_________________________________,
a _______________________________
By: ____________________________
Its: _______________________
By: ____________________________
Its: _______________________
EXHIBIT C
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT D
PEREGRINE SYSTEMS CORPORATE CENTER
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors, windows or mailboxes of the Premises without
giving to Landlord prior written notice. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to install its own
security system within the Premises in accordance with the provisions of the
Lease.
2. All doors opening to public corridors (other than Building lobbies
(which shall be kept closed if required by law)) shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Any tenant, its employees, agents or any other persons entering or
leaving any Building at any time when it is considered to be after normal
business hours for such Building will be required to sign the Building
register. Access to the Building may be refused unless the person seeking
access has proper identification or has a previously arranged pass for access
to the Building. Landlord and its agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from any
Building of any person. In case of invasion, mob, riot, public excitement,
or other commotion, Landlord reserves the right to prevent access to the
Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.
Notwithstanding the foregoing, Tenant may adopt its own rules and regulations
with respect to access to any building for which Tenant leases the entire
building.
4. All moving activity into or out of the Building shall be done in
such manner as Landlord reasonably designates; Landlord shall at all times
reasonably cooperate with Tenant with respect to such activities. Service
deliveries (other than messenger services) shall be allowed only during hours
reasonably approved by Landlord. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building. Safes and other heavy objects shall stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property in
any case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be
the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be reasonably
designated by Landlord. Landlord shall at all times reasonably cooperate
with Tenant with respect to such activities.
6. Any requests of Tenant shall be directed to the management office
for the Project or at such office location designated by Landlord.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Landlord and its agents to prevent such
activities.
EXHIBIT D
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the tenant who, or whose employees or agents,
shall have caused it.
9. Tenant shall not overload the floor of the Premises, Tenant shall
not mark, drive nails or screws, or drill into the partitions, woodwork or
plaster or deface the Premises without Landlord's prior consent other than in
connection with any Alterations for which Landlord's consent is not required.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. Notwithstanding the foregoing, the
foregoing limitation shall not apply to Tenant's cafeteria, workout facility,
showers and lockers which are contemplated to be a part of Tenant's
improvements.
11. Tenant shall not use or keep in or on the Premises, the Building,
or the Project any kerosene, gasoline or other inflammable or combustible
fluid or material other than as expressly permitted in Section 5.2 of the
Lease.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by
Landlord other than supplemental heating and air conditioning approved by
Landlord, which approval shall not be unreasonably withheld.
13. Tenant shall not use, keep or permit to be used or kept, any foul
or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having
business therein.
14. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals or birds. Bicycles are permitted in
designated areas, and Tenant may install bike racks at appropriate locations
designated by Landlord in the Common Areas to accommodate bicycles.
15. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used
in the Premises for heating food and brewing coffee, tea, hot chocolate and
similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations. The foregoing rule and restriction shall
not apply to any cafeteria facility of Tenant.
16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. Boring or cutting for wires shall be
allowed only at locations reasonably designated by Landlord. The location of
telephone, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
17. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
18. Tenant, its employees, contractors and agents (i) shall not loiter
in the entrances or corridors, nor in any way obstruct the sidewalks, lobby,
halls, stairways or elevators, and shall use them only as a means of ingress
and egress for the Premises, and (ii) shall only be permitted to smoke in the
areas of the Project designated for smoking.
EXHIBIT D
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage
in the "Carmel Valley" area of San Diego, California without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse
disposal shall be made only through entry-ways and elevators provided for
such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises if visible from the
exterior of the Building without the prior written consent of Landlord. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent and/or of a quality, type, design and bulb
color approved by Landlord provided Tenant shall have the right to install
specialty lighting in the Premises not visible from the exterior of the
Building. Tenant shall abide by Landlord's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
25. Any access by Tenant or its agents, employees or contractors to the
roof of any Building shall be subject to coordination with Landlord and
Landlord's reasonable rules and regulations.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein; provided, however, Landlord shall not change
or make any Rules and Regulations which materially adversely affects Tenant's
rights under this Lease, including without limitation Tenant's use and
enjoyment of the Premises. Landlord shall cooperate with Tenant in connection
with changing or making any Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as
a condition of its occupancy of the Premises. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of
such Rules and Regulations in favor of any other tenant, nor prevent Landlord
from thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project.
EXHIBIT D
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT E
PEREGRINE SYSTEMS CORPORATE CENTER
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "LEASE")
made and entered into as of _____________, _____ by and between as Landlord,
and the undersigned as Tenant, for Premises on the ____ floor(s) of the
office building located at ______ Valley Center Drive, San Diego, California
92130, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained
in EXHIBIT A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on __________________, and the Lease Term
expires on __________________.
4. Base Rent became payable on ________________________.
5. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
6. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows: __________________________________________________
______________________________.
7. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of the holder of the first deed of trust on
the Premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$________.
9. All conditions of the Lease to be performed by Landlord necessary
to the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the Security Deposit held by Landlord is
$_________.
11. No rental has been paid more than thirty (30) days in advance and
no security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Landlord nor have any events occurred that
with the passage of time or the giving of notice, or both, would constitute a
default on the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making of such loan or
acquisition of such property.
14. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
EXHIBIT E
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
Executed at ____________________ on the ____ day of _____________, 19__.
"TENANT": ____________________________________,
a __________________________________
By: _______________________________
Name:__________________________
Title:_________________________
By: _______________________________
Name:__________________________
Title:_________________________
EXHIBIT E
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT F
PEREGRINE SYSTEMS CORPORATE CENTER
CC&R'S
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
KR-CARMEL PARTNERS, LLC
4365 Executive Drive, Suite 850
San Diego, California 92121
Attention: Mr. Steven L. Black
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Space Above For Recorder's Use)
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
EXHIBIT F
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS...........................................................3
ARTICLE 2 MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION...........................6
2.1 Membership.....................................................6
2.2 Voting Rights..................................................6
ARTICLE 3 COVENANT FOR PAYMENT OF ASSESSMENTS TO
ASSOCIATION...........................................................7
3.1 Creation of Lien and Personal Obligation for Assessments.......7
3.2 Purpose of Assessments.........................................7
3.3 Budgets........................................................7
3.4 Parcel Area....................................................8
3.5 Parcels Subject to Assessment; Allocation of Assessments ......8
3.6 Regular Assessments............................................8
3.7 Special Assessments............................................9
3.8 Reimbursement Assessments.....................................10
3.9 Effect of Non-Payment of Assessments; Remedies of
Association...................................................10
3.10 Right of Owner to Audit Books and Records of Association......11
3.11 Subordination of the Lien to First Mortgages..................11
3.12 Estoppel Certificate..........................................11
3.13 Personal Liability of Owner...................................11
ARTICLE 4 ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE ......................11
4.1 Committee Composition.........................................12
4.2 Alternate Members.............................................12
4.3 Appointment...................................................12
4.4 Removal.......................................................12
4.5 Terms of Office...............................................12
4.6 Resignations; Vacancies.......................................12
4.7 Duties and Appeals............................................12
4.8 Meetings......................................................12
4.9 Design Guidelines.............................................12
ARTICLE 5 LAND USE.............................................................13
5.1 Permitted Uses................................................13
5.2 Use Restrictions .............................................13
5.3 Prohibited Operations and Uses ...............................14
-i-
EXHIBIT F
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
5.4 Other Operations and Uses.....................................15
5.5 Laws..........................................................15
ARTICLE 6 REGULATION OF IMPROVEMENTS...........................................16
6.1 Approval of Application Required..............................16
6.2 Filing Fee....................................................16
6.3 Basis for Approval............................................17
6.4 Result of Inaction............................................17
6.5 Proceeding With Work..........................................18
6.6 Completion of Work............................................18
6.7 Estoppel Certificate..........................................18
6.8 Indemnity and Limitation of Liability.........................19
6.9 Limitations on Improvements...................................19
6.10 Certain Improvements Exempt from Application..................21
6.11 Disclosure and Waiver of Conflict of Interest.................21
ARTICLE 7 OPERATIONS GENERALLY.................................................22
7.1 Slope and Drainage Easements..................................22
7.2 Shared Parking; Common Parking Areas..........................22
7.3 Storage and Loading Areas.....................................23
7.4 Inspection....................................................23
7.5 Division of Land..............................................23
7.6 Hazardous Materials...........................................23
7.7 Payment of Taxes, Liens.......................................24
ARTICLE 8 COMMON AREA..........................................................25
8.1 Use...........................................................25
8.2 Modification of Common Area...................................26
8.3 Parking Regulations...........................................26
8.4 Construction and Repair.......................................26
8.5 Interim Improvements and Maintenance of Parcels...............27
8.6 Lighting the Common Area......................................28
ARTICLE 9 EMINENT DOMAIN.......................................................28
ARTICLE 10 MUTUAL RELEASE.......................................................29
ARTICLE 11 EASEMENTS............................................................29
11.1 Grants of Reciprocal Easements over Common Areas..............29
11.2 Utility Easements.............................................30
11.3 Construction and Repair.......................................31
11.4 Obstructions Within Common Area...............................31
11.5 Right of Entry by Declarant, Association, Board...............31
-ii-
EXHIBIT F
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
11.6 Entry by Owners...............................................32
11.7 Reservation by Declarant......................................32
11.8 Termination of Former Declaration and Confirmation of
Termination of 1990 Grant of Easements........................32
ARTICLE 12 BUILDING MAINTENANCE.................................................33
12.1 Owner's Maintenance Obligations...............................33
12.2 Closure.......................................................33
12.3 Repair or Replacement of Damaged Building.....................34
ARTICLE 13 COMMON AREA MAINTENANCE..............................................34
13.1 Association Maintenance.......................................34
13.2 Common Area Insurance.........................................35
13.3 Association's Right to Repair Neglected Parcels...............36
13.4 Property Management Company...................................36
ARTICLE 14 THE ASSOCIATION......................................................36
14.1 Organization..................................................36
14.2 Duties........................................................36
14.3 Powers........................................................37
14.4 Election of New Board of Directors............................38
14.5 Subsequent Board of Directors.................................38
14.6 Personal Liability............................................38
14.7 Annual Membership Meetings....................................38
ARTICLE 15 APPROVAL OF OWNERS AND NOTICES.......................................38
ARTICLE 16 MODIFICATION PROVISION...............................................40
ARTICLE 17 NOT A PUBLIC DEDICATION..............................................40
ARTICLE 18 INJUNCTIVE RELIEF....................................................40
ARTICLE 19 BREACH SHALL NOT PERMIT TERMINATION..................................40
ARTICLE 20 INDEMNITY BY OWNERS..................................................41
20.1 Indemnity.....................................................41
20.2 Building Area Liability Insurance.............................41
ARTICLE 21 SEVERABILITY.........................................................41
ARTICLE 22 ENFORCEMENT AND REMEDIES.............................................41
22.1 Right to Enforce..............................................41
-iii-
EXHIBIT F
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
22.2 Owner's Remedies..............................................42
22.3 Waiver........................................................42
ARTICLE 23 LITIGATION EXPENSES..................................................42
ARTICLE 24 NO ASSIGNMENT OR TRANSFER............................................42
ARTICLE 25 SALE BY OWNER........................................................42
25.1 Notice........................................................42
25.2 Constructive Notice and Acceptance............................43
25.3 Release of Owner..............................................43
25.4 Liability of Transferee.......................................43
ARTICLE 26 TERM OF DECLARATION..................................................43
ARTICLE 27 MISCELLANEOUS........................................................43
27.1 Captions......................................................43
27.2 Gender........................................................44
27.3 Declarant's Reserved Rights...................................44
27.4 Exhibits......................................................44
27.5 Governing Law.................................................44
27.6 Mortgage Protection...........................................44
27.7 Mutuality, Reciprocity; Runs With Land........................44
</TABLE>
EXHIBITS
Exhibit "A" Site Plan of the Center
Exhibit "B" Legal Descriptions of Parcels Comprising the Center
Exhibit "C" Table of Parcel Areas
-iv-
EXHIBIT F
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
This AGREEMENT BETWEEN LANDOWNERS INCLUDING COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANTS OF EASEMENTS FOR CARMEL CENTER AND INCLUDING
TERMINATION OF BOTH FORMER DECLARATION AND PRIOR GRANTS OF EASEMENTS is made as
of _________, 1999, with reference to the following:
RECITALS:
A. Declarant (defined in Article 1) owns those certain Parcels (defined in
Article 1) of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels B and E
through K, inclusive (and sometimes referred to herein as the "Carmel Center
Office Campus"). The legal descriptions of such Parcels are also set forth on
EXHIBIT "B".
B. Piazza Partners, L.P., a California limited partnership, owns that
certain Parcel of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcel A. The
legal description of such Parcel is also set forth on EXHIBIT "B".
C. Carmel Valley, LLC, a California limited liability company, owns those
certain Parcels of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels D and M.
The legal descriptions of such Parcels are also set forth on EXHIBIT "B".
D. Acacia Gasoline and Car Wash of Carmel Valley, LLC, a California limited
liability company, owns that certain Parcel of real property located in the City
of San Diego, County of San Diego, California, identified on EXHIBIT "B"
attached hereto as Parcel L. The legal description of such Parcel is also set
forth on EXHIBIT "B".
E. RFS Financing Partnership, L.P., a Tennessee limited partnership, owns
that certain Parcel of real property located in the City of San Diego, County of
San Diego, California, identified on EXHIBIT "B" attached hereto as Parcel C.
The legal description of such Parcel is also set forth on EXHIBIT "B". A hotel
is currently open for business on Parcel C.
EXHIBIT F
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
F. Previous owners of the properties comprising the Center (defined in
Article 1) intended to develop a retail shopping center and an adjacent
commercial complex, and in furtherance of that objective recorded that certain
Agreement Between Landowners Including Easements With Covenants and Restrictions
Affecting Land for Carmel Valley Commercial, recorded in the Office of the
County Recorder of San Diego County, California, on September 29, 1994, as
Document No. 19940579026 ("FORMER DECLARATION"). Except for the hotel on Parcel
C, in most respects the properties comprising the Center have not been
developed as contemplated under the Former Declaration. The Former Declaration
is not consistent with the manner in which the current Owners intend to develop
the property comprising the undeveloped portions of the Center. Therefore, the
Owners intend to terminate the Former Declaration and to replace the Former
Declaration in its entirety with this Declaration.
G. The Owners intend to develop and operate the Center as a commercial
common interest development described in Section 1351(k) of the California
CIVIL CODE as a "Planned Development". The Center will include certain Common
Area which is shown on the Site Plan attached hereto as Exhibit "A". Portions
of the Common Area are or may be designated as Exclusive Use Areas for the
exclusive use of one or more Occupants. "Common Area" and "Exclusive Use
Area" are defined in Article 1.
H. The Association was formed by certain previous owners of portions of the
property comprising the Center. Substantially concurrently with the recordation
of this Declaration, the membership of the Association will be changed so that
the current Owners of the Parcels become the current members of the Association.
Among other things, the Association will maintain, repair and replace the
portions of the Parcels designated as Common Area, except any Exclusive Use
Areas, and except as otherwise provided in this Declaration. Each Owner or
Occupant will maintain, repair and replace the building(s) and any Exclusive Use
Area(s) on the Owner's or Occupant's Parcel(s).
I. The Owners wish to subject the Center, in accordance with a common plan,
to certain covenants, conditions and restrictions for the benefit of the Owners
and any and all future owners of the Center or of a Parcel in the Center. The
purposes of this Declaration are to ensure proper development and use of the
Center, to protect the Owner of each Parcel against any improper development or
use of surrounding Parcels which might depreciate the value of the Parcel, to
prevent the erection on the Center of structures built of improper design or
materials, to encourage the erection of attractive Improvements, to prevent
haphazard and inharmonious Improvements, to secure and maintain proper setbacks
from streets and adequate free spaces between structures, to provide for
reciprocal parking and reciprocal pedestrian and vehicular access, ingress and
egress upon certain portions of the Center for the benefit of certain of the
Parcels, to enhance and protect the value, desirability and attractiveness of
the entire Center, and in general to provide adequately for a high type and
quality of improvement of the Center in accordance with a uniform plan of
development.
J. The Center is presently comprised of thirteen (13) legal parcels as of
the date of this Declaration, which in this Declaration will be designated and
referred to as Parcel A through Parcel M, inclusive. The Owners intend that the
provisions of this Declaration be restrictive
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
covenants made pursuant to Section 1468 of the California CIVIL CODE, and that
this Declaration will bind and inure to the benefit of the Parcels and the
respective Owners of the Parcels during their respective periods of ownership.
Declarant is processing with the City a new Parcel Map (the "New Parcel Map")
which, upon recordation, shall effect a reparcelization and lot line adjustment
of that portion of the Center owned by Declarant and presently described as Lots
1 through 6 and 9 of Piazza Carmel II, Unit No. 1, of Map No. 13138 into seven
(7) newly configured parcels which will be more particularly described as
Parcels 1 through 7 of the New Parcel Map. Exhibit "B" attached hereto sets
forth the tentative description of these Parcels contained within the New Parcel
Map, and upon recordation of the New Parcel Map, the legal description of the
Parcels contained therein shall supersede those descriptions of their
predecessor Parcels.
NOW, THEREFORE, the Owners hereby certify, declare and establish the
following general plan for the protection and benefit of the Center, and hereby
fix the following protective covenants, conditions and restrictions upon each
and every ownership interest in the Center. Each ownership interest in the
Center shall be hereafter held, used, occupied, leased, sold, encumbered,
conveyed and transferred under and pursuant to such covenants, conditions and
restrictions. Each and all of the covenants, conditions and restrictions set
forth herein are for the purpose of protecting the value and desirability of the
Center and shall bind and inure to the benefit of the Parcels and the respective
Owners of the Parcels during their respective periods of ownership.
ARTICLE 1
DEFINITIONS
In addition to any other terms defined in this Declaration, the following
definitions shall apply unless otherwise indicated:
"APPLICATION" - Any plans, specifications and other documentation required
to be submitted to the Committee pursuant to the provisions of Article 6.
"APPROVED DECLARANT IMPROVEMENTS" - Those Improvements more particularly
described and defined in Section 4.9.
"ARCHITECT" - A Person holding a certificate to practice architecture in
the State of California under authority of Division 3, Chapter 3 of the
BUSINESS & PROFESSIONS CODE of the State of California or any successor
legislation thereto.
"ARTICLES" - The Articles of Incorporation of the Association filed with
the California Secretary of State on September 20, 1994, amended in their
entirety by those Restated Articles of Incorporation of Carmel Center
Association filed with the Secretary of State on ___________, 1999, and as
may be further amended from time to time.
"ASSOCIATION" - Carmel Center Association, a California Nonprofit Mutual
Benefit Corporation.
"BOARD" - The Board of Directors of the Association.
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[Peregrine Systems]
<PAGE>
"BYLAWS" - The Restated Bylaws of the Association dated _____, 1999, as
may be further amended from time to time.
"CARMEL CENTER OFFICE CAMPUS" - Parcels B and E through K, inclusive, which
Declarant intends to improve with multi-story buildings primarily for office use
and the Parking Structure.
"CENTER" - All of the Parcels of real property shown on the Site Plan and
described on EXHIBIT "B".
"CITY" - The City of San Diego, California, a municipal corporation.
"COMMITTEE" - The Architectural and Development Review Committee created
pursuant to Article 4.
"COMMON AREA" - Those portions of the Center shown on Exhibit "A" attached
hereto intended for the common use of Owners and Occupants, and comprised of
parking areas, vehicular and pedestrian access areas and driveways, sidewalks,
Common Landscaping, curbs, loading areas and lighting facilities; EXCEPTING
THEREFROM, HOWEVER, portions of the Common Area which are, or from time to
time may be, designated for the exclusive use of one or more Occupants, and as
such are "Exclusive Use Areas" as defined in this Article 1. The Common Area and
Exclusive Use Areas may be modified from time to time to change the location or
configuration thereof or to reflect the requirements of the City or other
governmental authorities by recordation of a supplement to this Declaration by
Declarant or the Association.
"COMMON EXPENSES" - The actual and estimated expenses of maintaining and
operating the Association, including property management fees, maintaining and
operating the Common Areas and the Improvements located thereon (excluding
Exclusive Use Areas), the cost of utility services for the Common Areas
(excluding Exclusive Use Areas), the cost of insurance maintained by the Board
as described herein or in the Bylaws, exercising the powers and performing the
duties of the Association and the Board under this Declaration, the Articles,
the Bylaws and any rules or regulations adopted by the Association, and
maintaining any reasonable reserves for such purposes as determined by the
Board.
"COMMON LANDSCAPING" - The landscaping and related irrigation system
improvements to be maintained by the Association, the approximate location of
which is shown on Exhibit "A" attached hereto.
"DECLARANT" - KR-CARMEL PARTNERS, LLC, a Delaware limited liability company
("KRCP") and its successor-in-interest (defined below). As used in this
definition, a "SUCCESSOR-IN-INTEREST" of KRCP shall mean a Person which, through
a purchase or acquisition of stock or partnership interest(s), amalgamation,
consolidation, reorganization, dissolution, merger or similar transaction (as
opposed to a purchase, transfer or conveyance of one or more Parcels), becomes
vested with the rights and assumes the obligations of KRCP, as "Declarant",
pursuant to this Declaration. "DECLARANT" shall also mean the transferee from
KRCP or its successor-in-interest of three (3) or more Parcels comprising the
Center, provided KRCP or its
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
successor-in-interest assigns to such transferee the rights of "Declarant", and
such transferee assumes the obligations of "Declarant", under this Declaration;
any such assignment and assumption of the rights and obligations of "Declarant"
shall be in writing and signed by both KRCP or its successor-in-interest and by
the transferee in recordable form and shall be recorded by the transferee in the
Office of the County Recorder of San Diego County, California.
"DECLARATION" - This Agreement Between Landowners Including Covenants,
Conditions and Restrictions and Grants of Easements for Carmel Center and
Including Termination of Both Former Declaration and Prior Grants of Easements,
as it may be amended from time to time.
"DESIGN GUIDELINES" - Guidelines, rules and regulations which may be
prepared and issued from time to time (and which may be amended from time to
time) by the Committee, and approved and adopted by the Board for the purpose of
assisting Owners in preparing plans and specifications for Improvements and in
preparing other plans, specifications and other materials (including designs for
signs and the like) which are subject to review by the Committee pursuant to
this Declaration.
"ELIGIBLE OCCUPANT" - An Occupant of an Owner's entire Parcel (or of all of
the usable area within the building(s) on the Parcel): (a) pursuant to a lease
or sublease which, as of the date of the Owner's designation of the Occupant as
an Eligible Occupant, has a remaining term which exceeds five (5) years, not
including periods for which the term thereof may be extended by unexercised
options to extend; and (b) designated as such by the Owner of the Parcel
pursuant to Section 2.1.
"EXCLUSIVE USE AREAS" - Those portions of the Common Area within a Parcel
for the exclusive use of one or more Occupants and either (i) designated as
Exclusive Use Areas on the Site Plan, or (ii) subject to the provisions of
Section 8.2, subsequently designated as Exclusive Use Areas from time to time by
the Board or the Committee in writing.
"IMPROVEMENTS" - Buildings, outbuildings, underground installations, slope
and grade alterations, roads, curbs, gutters, storm drains, utilities,
driveways, parking areas, fences, screening walls and barriers, retaining walls,
stairs, decks, windbreaks, plantings, planted trees and shrubs, sidewalks,
poles, signs, loading areas, docks and all other structures, land development or
landscaping improvements of every type and kind.
"MEMBER" - An Owner entitled to membership in the Association as provided
in this Declaration.
"MORTGAGE" - A deed of trust as well as a mortgage encumbering a Parcel.
"MORTGAGEE" - The beneficiary of a deed of trust as well as the mortgagee
of a mortgage encumbering a Parcel.
"OCCUPANT" - Any Person from time to time entitled by right of ownership or
under any lease, sublease or license to use and occupy any portion of the
building Improvements on any Parcel within the Center.
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[Peregrine Systems]
<PAGE>
"OWNER" - Any Person (including Declarant) who from time to time holds fee
title to any Parcel within the Center.
"PARCEL" - Any separate legal lot or parcel which is a portion of the
Center. Any lot or parcel of real property created after this Declaration is
recorded, whether created by a legal split, subdivision or parcelization of a
Parcel, lot line adjustment, or by combination or merger of one or more Parcels,
shall be included in the definition of Parcel for purposes of this Declaration.
"PARCEL AREA" - The total gross square footage of a Parcel as shown on
EXHIBIT "C".
"PARKING STRUCTURE" - The multi-level parking garage to be constructed by
Declarant, at Declarant's cost and expense, on Parcels E, F and G (Parcels 1, 6,
and 7 of the New Parcel Map). The Parking Structure and the parking spaces
within the Parking Structure are not Common Area and are for the exclusive use
and benefit of the Owners and Occupants of the Carmel Center Office Campus and
their customers, guests and invitees.
"PERSON" - An individual, partnership, association, corporation, limited
liability company, trust, governmental agency, administrative tribunal or any
other form of business or legal entity.
"PROJECT DOCUMENTS" - This Declaration, the exhibits attached hereto, the
Articles and Bylaws, the Sign Plan, and any Design Guidelines and rules and
regulations as may be adopted from time to time by the Board or the Association,
all as amended or supplemented from time to time.
"SIGN PLAN" - The Carmel Center Sign Guidelines and Criteria, dated
February 24, 1999, on file with the Association, as may be amended and
supplemented from time to time.
"SITE PLAN" - The Site Plan attached to this Declaration as EXHIBIT "A".
ARTICLE 2
MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION
2.1 MEMBERSHIP. Every Owner of a Parcel which is subject to assessment by
the Association shall be a Member of the Association. Membership shall be
appurtenant to ownership of any Parcel subject to assessment, and membership
shall not be separated from such ownership or transferred, pledged or alienated
in any way, except that an Owner, upon giving written notice to the Association,
may, at its option, grant to an Eligible Occupant a power coupled with an
interest to act as the Owner's agent in all matters relating to the Association;
any such power shall automatically terminate upon expiration of the Eligible
Occupant's lease or the earlier termination of the Eligible Occupant's tenancy
for any reason. Any attempt to transfer a membership in violation of this
Section shall be void and shall not be reflected in the books and records of the
Association.
2.2 VOTING RIGHTS. The Association shall have one (1) class of voting
membership.
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
Each Owner shall be entitled to one (1) vote for each four hundred (400)
square feet of Parcel Area owned which is subject to assessment, rounded down to
the next lowest whole four hundred (400) square feet of Parcel Area subject to
assessment; PROVIDED, HOWEVER, any Owner of a Parcel comprised of less than four
hundred (400) square feet of Parcel Area subject to assessment shall be entitled
to one (1) vote for such Parcel. (For example and illustration only, the Owner
of a Parcel comprised of 16,000 square feet of Parcel Area subject to assessment
would be entitled to 40 votes, and the Owner of a Parcel comprised of 15,950
square feet of Parcel Area subject to assessment would be entitled to 39 votes.)
When more than one (1) Person holds an ownership interest in any Parcel subject
to assessment, all such Persons shall be Members, the vote(s) for such Parcel
shall be exercised as they among themselves determine, and the authorized voter
shall be designated in a writing delivered to the Association signed by a
majority of the co-Owners.
ARTICLE 3
COVENANT FOR PAYMENT OF ASSESSMENTS TO ASSOCIATION
3.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Each Owner,
for each Parcel owned which is subject to assessment hereunder, hereby covenants
and agrees to pay to the Association: (a) annual Regular Assessments described
in Section 3.6 for the periodic maintenance, repair and replacement of the
Common Area (except any Exclusive Use Areas); (b) Special Assessments described
in Section 3.7; (c) Reimbursement Assessments described in Section 3.8; and (d)
such other assessments which the Board is authorized to levy pursuant to this
Declaration or the Bylaws, such assessments to be established and collected as
provided in this Declaration. Assessments, together with interest pursuant to
Section 3.9, reasonable collection costs and attorney's fees, shall (except as
otherwise provided in Section 3.8) be a charge on the Parcel and shall be a
continuing lien upon the Parcel against which each such assessment is made, the
lien to be effective upon recordation of a notice of delinquent assessment. Each
such assessment, together with interest pursuant to Section 3.9, reasonable
collection costs and attorney's fees, shall also be the personal obligation of
the Person who was the Owner of such Parcel at the time the assessment fell due.
If more than one Person is the Owner of a Parcel subject to assessment, the
personal obligation to pay such assessment shall be joint and several. The
personal obligation for delinquent assessments shall not pass to an Owner's
successors in title, however, unless expressly assumed by them, but any lien
established hereunder shall remain a charge against the Parcel except to
bonafide purchasers or encumbrancers for value without notice and further except
as set forth in Section 3.11.
3.2 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall
be used exclusively to pay the Common Expenses (as defined in Article 1),
reimburse the Association for the costs incurred in bringing an Owner into
compliance with the Project Documents and only such other purposes expressly set
forth in this Declaration.
3.3 BUDGETS. At least thirty (30) days prior to the date for commencement
of Regular Assessments pursuant to Section 3.6, and at least thirty (30) days
prior to each calendar year thereafter, the Board shall prepare or cause to be
prepared and distribute to all Members of the
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
Association a pro forma operating budget ("Budget") for such first or successive
calendar year setting forth the estimated revenue and expenses on an accrual
basis. The Budget shall include a reasonable allowance for contingencies,
replacements and reserves. The Association shall deliver, together with the
Budget: (a) notice of the Members' right to obtain copies of minutes of Board
meetings, to the extent required under California Civil Code Section 1363; and
(b) the summary of the provisions of California Civil Code Section 1354, as
required by such Section.
3.4 PARCEL AREA. The Parcel Area of each Parcel subject to assessment as of
the date of recordation of this Declaration is indicated on EXHIBIT C. The
Parcel Area of one or more Parcels shall be redetermined and shall be subject to
the approval of Declarant and the Board in the event of: (a) resubdivision of
any Parcel or a merger affecting two or more Parcels, in which event the Parcel
Area shall be redetermined for each resulting Parcel; (b) a lot line or boundary
adjustment affecting two or more Parcels; or (c) any other change in the gross
square footage of any Parcel. The Board shall maintain a current schedule of the
Parcel Area of the Parcels, which shall be available for inspection by any Owner
upon request. From time to time, as deemed appropriate by the Board, Declarant
or the Board shall have the right to execute and record a supplement to this
Declaration, which includes the modified Parcel Areas in an updated EXHIBIT C.
Such supplement need only be executed by the Board and the EXHIBIT C
incorporated in such supplement shall replace the EXHIBIT C hereto or in any
previously recorded supplement.
3.5 PARCELS SUBJECT TO ASSESSMENT; ALLOCATION OF ASSESSMENTS. Except as
provided below, all Parcels within the Center are subject to Regular Assessments
and to Special Assessments. All assessments (except for Reimbursement
Assessments described in Section 3.8) shall be allocated among the Owners in the
proportion the Parcel Area of each Owner's Parcel or Parcels subject to
assessment bears to the total Parcel Area of all Parcels then subject to
assessment under this Declaration. The Parking Structure Parcels shall not be
subject to any assessments levied by the Association or otherwise under this
Declaration. Parcels L and M shall not be assessed for any expenses of
maintenance and repair of the Common Parking Area.
3.6 REGULAR ASSESSMENTS.
(a) PURPOSE. Regular Assessments shall be used to defray the
Common Expenses.
(b) DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES. The
Regular Assessments shall commence for Parcel C upon recordation of this
Declaration. The Regular Assessments shall commence for each Parcel other than
Parcel C on the date on which construction of any building Improvements on the
Parcel have been substantially completed, and the Regular Assessments for all
Parcels then subject to assessment shall be recalculated, on a going forward
basis, as Parcels are added to the assessment roll. The first Regular Assessment
for a Parcel shall be adjusted according to the number of months and any
partial month (prorated on the basis of a 30-day month) remaining in the
calendar year. The Board shall fix the amount of the Regular Assessment against
each Parcel at least thirty (30) days in advance of each Regular Assessment
period. Written notice of the Regular Assessment shall be sent to every Owner of
a Parcel subject thereto.
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
(c) REVISED REGULAR ASSESSMENT. If the Board reasonably
determines that the Regular Assessment established for any year is, or will
become, insufficient to meet all Common Expenses, it may determine the
approximate amount of such deficiency and revise the amount of the Regular
Assessments for each Owner for the balance of such year to reduce or avoid the
deficiency. After the end of each calendar year, the Board shall cause an
accounting to be made of all Common Expenses for such year and the amount of
Regular Assessments paid for such year. If the Regular Assessments collected
exceed the Common Expenses, the Board may refund the excess to Owners, or apply
such excess toward Regular Assessments next becoming due from Owners, in either
event in the same proportion as the Regular Assessments were paid.
(d) PAYMENT OF ASSESSMENTS. Regular Assessments shall be due and
payable by the Owners to the Association in advance in four (4) equal quarterly
installments, on or before the first (1st) day of January, April, July and
October of each calendar year, or in such other manner as the Board shall
designate.
3.7 SPECIAL ASSESSMENTS.
(a) PURPOSE. Special Assessments may be levied by the Board:
(i) If the Board determines that the Regular Assessments
are or will be insufficient to defray actual Common Expenses of the
Association for a given year due to unanticipated delinquencies or cost
increases or unexpected repairs, replacements or reconstruction of any
Improvements in those Common Areas maintained by the Association;
(ii) If funds are otherwise required for any authorized
activity of the Association; or
(iii) For the purpose of defraying, in whole or in part, the
cost of construction of any capital improvements within the Common Area
(excluding Exclusive Use Areas) deemed reasonably necessary by the Board
for the benefit of the Center, provided that any such capital improvement
assessment in excess of five percent (5%) of all Regular Assessments
budgeted for that calendar year shall require approval by the vote or
written consent of Members holding a majority of the voting power of the
Association Members, and the Declarant for so long as Declarant owns any
portion of the Center.
(b) ESTABLISHMENT. The Board shall determine the approximate
amount necessary to defray the expenses set forth in Section 3.7(a), and, if the
amount is approved by the Board, it shall become a Special Assessment; provided,
however, that the Board may, in its discretion, prorate such Special Assessment
over the remaining months of the calendar year or levy the full assessment
immediately against each Parcel subject to assessment. Any Special Assessment in
excess of ten percent (10%) of the budgeted Common Expenses of the Association
for the calendar year in which a Special Assessment is levied shall require
approval by Members holding a majority of the voting power of the Association
Members, and the Declarant for so long as Declarant owns any portion of the
Center.
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[Peregrine Systems]
<PAGE>
(c) PAYMENT OF ASSESSMENTS. Special Assessments shall be due and
payable within thirty (30) days after a Member receives written notice from the
Board specifying the amount of the Special Assessment, unless the Board
specifies in such notice a later date for payment.
3.8 REIMBURSEMENT ASSESSMENTS. The Association may also impose a
Reimbursement Assessment against any Owner to reimburse the Association for
costs incurred in bringing the Owner and the Owner's Parcel into compliance with
the provisions of this Declaration, the Articles, the Bylaws and the rules and
regulations of the Association, which assessment may be imposed upon the vote of
the Board after notice and an opportunity for a hearing which satisfy the
requirements of Section 7341 of the California CORPORATIONS CODE, as set forth
in the Bylaws; PROVIDED, HOWEVER, except to the extent such Reimbursement
Assessment is to reimburse the Association for the cost of (i) repairing damage
to Common Areas for which the Owner or its Occupants, guests or invitees are
responsible, or (ii) collecting assessments, any Reimbursement Assessment shall
not constitute a lien on the Owner's Parcel.
3.9 EFFECT OF NON-PAYMENT OF ASSESSMENTS; REMEDIES OF ASSOCIATION. Any
assessment made in accordance with this Declaration shall be a debt of the Owner
of a Parcel from the time the assessment is due. Any assessment not paid within
thirty (30) days after the due date shall bear interest from thirty (30) days
following the due date at the rate of the greater of (a) twelve percent (12%)
per annum, or (b) two percent (2%) per annum over the Prime Rate published in
the California Edition of the Wall Street Journal most recently before the due
date. The Association may bring an action at law against the Owner personally
obligated to pay the assessment, and in addition thereto, or in lieu thereof,
may foreclose the lien against the Parcel. Any assessment not paid within
fifteen (15) days after the due date shall be delinquent. Except as otherwise
provided in Section 3.8, the amount of any such delinquent assessment plus costs
of collection, late charges, penalties, interest and attorneys' fees, shall be
and become a lien upon the Parcel when the Association causes to be recorded in
the Office of the County Recorder of San Diego County, California, a Notice of
Delinquent Assessment, which shall state the amount of such delinquent
assessment and such other charges thereon as may be authorized by this
Declaration, a description of the Parcel against which the same has been
assessed, the name of the record owner of the Parcel and, in order for the lien
to be foreclosed by non-judicial foreclosure, the name and address of the
trustee authorized by the Association to enforce the lien by sale. The Notice of
Delinquent Assessment shall be signed by the person designated by the
Association for that purpose or, if no one is designated, by the President of
the Association. Upon payment of the delinquent assessment and charges in
connection with which the Notice of Delinquent Assessment has been recorded, or
other satisfaction thereof, the Association shall cause to be recorded a further
notice stating the satisfaction and the release of the lien thereof. Such lien
may be enforced by sale by the Association after failure of the Owner to pay
such assessment in accordance with its terms, such sale to be conducted in
accordance with the provisions of Section 2924, Section 2924b and Section 2924c
of the California CIVIL CODE applicable to the exercise of powers of sale in
mortgages or in any other manner permitted by law. The Association shall have
the power to purchase the Parcel at the foreclosure sale and to hold, lease,
mortgage and convey the same. Suit to recover a money judgment for unpaid
assessments, interest and attorney's fees may be commenced and maintained
without foreclosing or waiving the lien
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EXHIBIT F
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[Peregrine Systems]
<PAGE>
securing the same. Any sale or transfer of any Parcel pursuant to this Section
3.9 shall not disturb the possession, or otherwise diminish the rights or
enlarge the obligations, of any Occupant under any then-existing lease.
3.10 RIGHT OF OWNER TO AUDIT BOOKS AND RECORDS OF ASSOCIATION. Each year,
each Owner shall have the right, exercisable by delivering ten (10) days advance
written notice to the Chief Financial Officer of the Association, to have
conducted, at such Owner's cost and expense, one (1) audit of the books and
records of the Association. Any such audit may encompass any or all of the three
(3) previous years of the operation of the Association; provided, however, any
Owner shall be entitled to audit any given year only once. If any such audit
discloses any error in the determination of the proportionate share of Regular
Assessments of any Owner or in the composition of any cost comprising the
Regular Assessments: (a) an appropriate adjustment shall be made promptly
between the Owner(s) and the Association to correct the error; and (b) if the
error is greater than ten percent (10%) of the auditing Owner's actual
proportionate share of the Regular Assessments, then the Association shall
reimburse the auditing Owner for the reasonable auditor's fees and costs
incurred by the auditing Owner in having the audit performed.
3.11 SUBORDINATION OF THE LIEN TO FIRST MORTGAGES. The lien of any
assessment levied upon a Parcel pursuant to this Declaration shall be
subordinate to the lien of any first Mortgage upon such Parcel, and the sale or
transfer of such Parcel pursuant to judicial or nonjudicial foreclosure of a
first Mortgage shall extinguish the lien of such assessments as to payments
which became due prior to such sale or transfer. No sale or transfer shall
relieve such Parcel from lien rights for any assessments thereafter becoming
due. Where the Mortgagee of a first Mortgage or other purchaser of a Parcel
obtains title to the same as a result of foreclosure, such acquirer of title,
its successors and assigns, shall not be liable for the share of assessments
chargeable to such Parcel which became due prior to the acquisition of title to
such Parcel by such acquirer.
3.12 ESTOPPEL CERTIFICATE. The Association shall furnish or cause an
appropriate officer to furnish, within ten (10) days of a written demand by any
person, a certificate signed by an officer of the Association setting forth
whether the assessments on a specified Parcel have been paid. A properly signed
certificate of the Association with respect to the status of assessments on a
Parcel is binding upon the Association as of the date of its issuance.
3.13 PERSONAL LIABILITY OF OWNER. No Owner may exempt itself from personal
liability for assessments, nor any part thereof, levied by the Association, nor
release the Parcel it owns from the liens and charges of assessments pursuant to
this Declaration, by waiving the use and enjoyment of the Common Area and
facilities thereof, or by abandonment of its Parcel(s).
ARTICLE 4
ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE
Declarant hereby creates an architectural and development review Committee,
which shall be organized as follows:
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4.1 COMMITTEE COMPOSITION. The Committee shall consist of three (3)
individuals, at least one (1) of which shall not be an employee, contractor or
other affiliate of Declarant.
4.2 ALTERNATE MEMBERS. There shall also be two (2) alternate members,
either of whom may be designated by the Committee to act as a substitute for any
member of the Committee in the event of the member's unavailability or
disability.
4.3 APPOINTMENT. The Board shall have the right to appoint all members and
alternate members of the Committee.
4.4 REMOVAL. The right to remove any member or alternate member of the
Committee shall be and is hereby vested solely in the Board.
4.5 TERMS OF OFFICE. The term of all Committee members appointed shall be
one (1) year. Any new member appointed to replace a member who has resigned or
has been removed shall serve such member's unexpired term. Members whose terms
have expired may be reappointed.
4.6 RESIGNATIONS; VACANCIES. Any member of the Committee may, at any time,
resign from the Committee upon written notice to the Board.
4.7 DUTIES AND APPEALS. It shall be the duty of the Committee to perform
the functions required of it pursuant to this Declaration; to consider and
act upon each Application which is submitted to it pursuant to the terms of
this Declaration; to enforce the Design Guidelines if any are adopted; and to
perform all other duties delegated to it by the Board or imposed upon it by
this Declaration. Any Owner may appeal any decision of the Committee to the
Board.
4.8 MEETINGS. The Committee shall meet as often as it, in its sole,
absolute and unfettered discretion, considers necessary or proper to perform
properly its duties and obligations pursuant to this Declaration. The vote,
written consent or written approval of any two (2) members shall constitute an
act by the Committee, unless the unanimous decision of its members is otherwise
required pursuant to this Declaration. The Committee shall keep written records
of all actions the Committee takes.
4.9 DESIGN GUIDELINES. The Committee may, from time to time, and in its
sole, absolute and unfettered discretion, adopt Design Guidelines and amend
the Sign Plan and any Design Guidelines adopted by the Committee, provided,
however, that no such amendment shall apply to any previously approved (or
deemed approved) Improvement within the Center. The Design Guidelines may
include (a) standards and procedures for Committee review; and (b) guidelines
for Improvements, which may include, but not necessarily be limited to,
guidelines for the architectural design of Improvements, site plans, floor
plans and exterior elevations, the size and location of buildings (including
setback requirements), the height of buildings (including architectural
features), the location and pitch of slopes, requirements for grading,
excavation and drainage, the location and capacity of facilities for
utilities, parking areas, loading areas and docks, trash areas (including
compactor pads), Exclusive Use Areas, landscaping designs and
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irrigation plans, color schemes, signs, exterior lighting, and finishes and
materials for use in the Center. Notwithstanding the foregoing, and
notwithstanding anything in the Design Guidelines to the contrary (or which may
be interpreted as being to the contrary), the following are exempt from the
Design Guidelines: (i) Improvements existing or under construction on the date
of this Declaration; and (ii) Improvements for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration including, without limitation, the five office buildings and the
Parking Structure comprising the Carmel Center Office Campus and related
Improvements (herein the "Approved Declarant Improvements") approved by the City
for construction upon Parcel B and Parcels E, F, G, H, I, J and K pursuant to
Carmel Valley Planned District and Coastal Development Permit No. 98-0227
(Amendment to Carmel Valley Planned District, Coastal Development and
Conditional Use Permit No. 93-0451) for Kilroy Carmel Center (the "KILROY CARMEL
CENTER PERMIT").
4.10 EXERCISE OF RIGHTS. Exercise of the Board's right of appointment and
removal, as set forth in this Declaration, shall be evidenced by the Board's
recording among the Committee's regular records a declaration identifying each
new Committee member appointed and each member replaced or removed from the
Committee.
ARTICLE 5
LAND USE
5.1 PERMITTED USES. The following Parcels and the Improvements constructed
or to be constructed thereon may be used for those purposes set forth below
provided such uses comply with all Laws as defined in Section 5.5 in effect as
of the date of this Declaration and the provisions of this Declaration and the
other Project Documents:
(a) With respect to Parcels B and Parcels E through K, inclusive,
those uses set forth in the Kilroy Carmel Center Permit.
(b) With respect to Parcel C, hotel and other related uses as set
forth in North City West Planned District Development Plan Permit No. 88-0941
("PERMIT NO. 88-0941").
(c) With respect to Parcel A, restaurant use pursuant to Permit No.
88-0941.
(d) With respect to Parcel L, those uses set forth in that certain
Carmel Valley Planned District Development/Conditional Use/Coastal Development
Permit Amendment No. 96-7784 issued to Acacia Gasoline and Car Wash of Carmel
Valley, LLC (the "PARCEL L PERMIT")
5.2 USE RESTRICTIONS. Except as otherwise consented to in writing by the
Declarant (or the Board, after there is no longer a Declarant), which may be
withheld in its sole, absolute and unfettered discretion:
(a) There shall be no children's play areas or day care facilities in
the Center, except that (i) a play area may be located and operated on
Parcel M in connection with any fast-food restaurant located and operated
thereon; (ii) the hotel on Parcel C may
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contain related recreational facilities; and (iii) a day care center and
related play areas may be located within the Carmel Center Office Campus.
(b) There shall be no tavern, night club or bar in the Center, except
that a bar may be located in a restaurant or a hotel.
(c) Neither Parcels B nor D may be used for a fast food or
drive-through restaurant.
(d) No portion of the Center or any Improvements constructed thereon
may be put to any use which is not allowed pursuant to the Laws applicable
to the Center and in effect as of the date of this Declaration.
To be effective, any written consent of Declarant for the purpose of this
Section 5.2 must be (i) signed by Declarant in recordable form; and (ii)
recorded in the Office of the County Recorder of San Diego County. After there
is no longer a Declarant, to be effective, any written consent of the Board for
the purpose of this Section must be (A) evidenced by a duly adopted resolution
of the Board, certified as such in writing by the Secretary or an Assistant
Secretary of the Association in recordable form; and (B) recorded in the Office
of the County Recorder of San Diego County.
5.3 PROHIBITED OPERATIONS AND USES. No use or operation will be made,
conducted or permitted on or with respect to all or any part of any Parcel or
Improvement which is obnoxious to, or out of harmony with the development or
operation of the business conducted on any other Parcel or on other sites in the
general vicinity of the Center. Included among the uses or operations which are
prohibited because of their obvious detrimental effect on the general appearance
of the Parcels and their conflict with the reasonable standards of appearance
and maintenance required by Declarant and the Board, are uses or operations
which produce, or are accompanied by, the following characteristics:
(a) Any public or private nuisance;
(b) Any use which, in the Board's sole and absolute discretion, is
considered to be objectionable as an intrusion into the environment of
sound, odor, visual effect or physical impact or that will disturb or tend
to disturb the other Owners or Occupants or their customers or invitees in
the Center;
(c) Any use that produces intense glare or heat, unless such use is
performed only within an enclosed or screened area in a manner such that
the glare or heat emitted will not be discernible from any property line of
the Parcel;
(d) Any use or operation that results in a discharge or release of
Hazardous Materials (defined in Section 7.7) on or under the surface of a
Parcel or into the surface or ground water of the Center, unless such
discharge or release is in compliance with all applicable Laws relating to
Hazardous Materials;
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(e) Any use or operation that results in air omissions of pollutants
or contaminants unless such emissions are in compliance with all applicable
laws relating to Hazardous Materials;
(f) Any emission of odorous, noxious, caustic or corrosive matter or
gas, whether toxic or non-toxic;
(g) Any unusual litter, dust, dirt or debris, except as generated
during construction of Improvements;
(h) Any unusual firing, explosion or other damaging or dangerous
hazard, including, but not limited to, storage, display or sale of
explosives or fireworks;
(i) Any mobile home or trailer court, labor camp, junk yard, stock
yard, distillation of bones, or raising, storing, slaughtering or disposing
of animals of any kind;
(j) Any drilling for, excavation, refining and/or removal of earth
materials, oil, gas, hydrocarbon substance, water, geothermal steam or any
other subsurface substance of any nature whatsoever, except as part of
normal grading operations in connection with construction of
approved Improvements;
(k) Any dumping, disposal, incineration or reduction of garbage or
reuse of the same, other than handling or reducing such garbage in a
reasonably clean and sanitary manner;
(l) Any auction, public sale (except as may be conducted inside the
hotel Improvements located on Parcel C by clients or patrons of the hotel)
or other auction house operation;
(m) Any display or sale of merchandise or any storage or placement of
merchandise, portable signs or other objects belonging to an Owner or
Occupant of the Center outside the defined exterior walls, roof and
permanent doorways of any building.
(n) Any commercial excavation of building or construction materials;
and
(o) Any smelting of iron, tin, zinc or other metals or ores.
5.4 OTHER OPERATIONS AND USES. Operations and uses which are neither
specifically prohibited nor specifically authorized by this Declaration may
be permitted in a specific case if an Application containing operational
plans and specifications are submitted to and approved in writing by the
Committee. Approval or disapproval of and compatibility with such operational
plans and specifications shall be based upon the effect of such proposal
operations or uses on the balance of the Center and the Owners and Occupants
thereof, but shall be in the sole discretion of the Committee.
5.5 LAWS. As used herein, "Laws" means, collectively, all laws, statutes,
ordinances, rules, regulations, requirements, permits, approvals, or
certificates of occupancy promulgated by
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any federal, state or local governmental entity with jurisdiction over the
Center or any business, use or operation thereon. No Owner or Occupant shall
permit any activity, use or operation on any portion of the Center in violation
of any Law. Each Owner and Occupant shall, upon written notice from Declarant,
or the Board, discontinue any use which is finally determined by any
governmental entity having such jurisdiction to be a violation of any Law. Each
Owner and Occupant shall, immediately upon receipt from any governmental entity
of an alleged violation of any Law, provide a copy of such allegation to the
Board, notwithstanding such party's belief that meritorious defenses to such
allegations exist.
ARTICLE 6
REGULATION OF IMPROVEMENTS
6.1 APPROVAL OF APPLICATION REQUIRED. Subject to Section 6.10, no
Improvement shall be constructed, reconstructed, rebuilt, erected, placed,
altered, used, maintained or permitted to remain in the Center (i) unless the
Improvement and intended use thereof conforms with all applicable Laws; and (ii)
until plans, specifications and other documentation required by the Committee
(or as otherwise specified in any Design Guidelines adopted by the Committee)
for the Improvement and the intended use thereof ("APPLICATION") have been
submitted to and approved in writing by the Committee. Each Application,
including all exhibits and supporting materials and documentation, must be
submitted in duplicate. Such Applications shall be in such form and shall
contain such information as may be required by the Committee, but shall in any
event include the following:
(a) A site development plan of the Parcel showing the nature, grading
scheme, kind, shape, composition, and location of all structures with respect to
the particular Parcel (including proposed front, rear and side setback lines),
and with respect to structures on adjoining Parcels, and the number and location
of all parking spaces and driveways on the Parcel;
(b) A landscaping plan for the particular Parcel;
(c) A plan for the location of signs and lighting; and
(d) A building elevation plan showing dimensions, materials and
exterior color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit.
Material changes to previously approved plans must be similarly
submitted to and approved by the Committee.
6.2 FILING FEE. As a means of defraying its costs and expenses, the
Committee may institute and require that a reasonable filing and review fee
("REVIEW FEE") accompany an Application. The initial schedule of Review Fees is
set forth in the following schedule:
(a) If an Application is prepared by an Architect, the Review Fee
shall be Two Hundred Fifty Dollars ($250) per building per Parcel.
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(b) In all other cases, the Review Fee shall be Five Hundred Dollars
($500) per building per Parcel.
(c) If an Application is resubmitted, the Committee may require an
additional Review Fee in an amount not to exceed One Hundred Dollars ($100)
for each resubmission.
(d) The schedule of Review Fees may be modified from time to time by
the Committee to reflect increased costs and expenses or changed
circumstances, such as, but not limited to, inflation.
6.3 BASIS FOR APPROVAL. The Committee shall have the right to disapprove an
Application submitted to it in the event any part of the Application: (a) is not
in accordance with this Declaration, the Sign Plan and any Design Guidelines or
other requirements adopted by the Committee; or (b) is incomplete; or (c) is not
in compliance with the applicable governmental approvals and regulations for the
Center; or (d) is deemed by the Committee to be contrary to the best interests
of the Center or the Owners; or (e) any combination of the foregoing. The
Committee shall not unreasonably withhold its approval of an Application
submitted to it, but may condition its approval on the satisfaction of one or
more conditions set forth in writing. In this regard, the Committee may base its
approval or disapproval on criteria which may include, but are not limited to,
the following: (i) the adequacy of the building locations and dimensions on the
Parcel; (ii) the adequacy of the parking to be provided; (iii) conformity and
harmony of external design with neighboring structures; (iv) effect of location
and proposed use of proposed Improvements on neighboring Parcels and the types
of operations and uses thereof; (v) relation of topography, grade and finish
ground elevation of the Parcel being improved to that of neighboring Parcels;
(vi) proper facing of main elevation with respect to nearby streets and other
buildings; (vii) adequacy of screening trash facilities and mechanical, air
conditioning or other rooftop installations; (viii) adequacy of landscaping; and
(ix) conformity of the Application to the purpose and general plan and intent of
this Declaration. No Application shall be approved which does not provide for
the underground installation of all utility services. The Committee may
condition its approval of an Application on such changes therein as it deems
appropriate such as, and without limitation, the approval of such Improvements
by a holder of an easement which may be impaired thereby or upon approval of any
such Improvements by the appropriate governmental entity. Any Committee approval
conditioned upon the approval by a governmental entity shall not imply the
Association is enforcing any government codes or regulations, nor shall the
failure to make such conditional approval imply that any such governmental
entity approval is not required.
6.4 RESULT OF INACTION. The Committee shall approve or disapprove an
Application within thirty (30) days after receipt of a complete Application
and the Review Fee. If the Committee fails either to approve or disapprove an
Application within such thirty-day (30-day) period, then it shall be
conclusively presumed that the Committee has disapproved the Application,
unless the applicant has delivered to the Committee, within fifteen (15) days
after the expiration of the thirty-day (30-day) period, a notice in writing
setting forth a date of initial submittal of the complete Application to the
Committee and the fact that no approval or
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disapproval has been given as of the date of such notice. If the Committee
thereafter fails to either approve or disapprove the Application on or before
the fifteenth (15th) day after the Committee's receipt of such notice, the
provisions of this Declaration requiring approval of such Application shall be
deemed to have been waived by the Committee with respect to such Improvements;
provided, however, that such waiver shall not be deemed to be a waiver of any
other covenant, condition or restriction provided herein. One (1) set of the
Application shall, with the approval or disapproval of the Committee endorsed
thereon, be returned to the Owner submitting it, and the other set shall be
retained by the Committee for its permanent files. In the case of a conditional
approval of an Application, the written conditions shall accompany the
Committee's written conditional approval.
6.5 PROCEEDING WITH WORK. Upon the Committee's approval of an Application
pursuant to this Article 6, the Owner to whom the approval is granted and
delivered, shall, as soon as practicable, satisfy all conditions thereof (if
any) and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations, excavations and landscaping so that no
Improvement remains in a partly-finished condition any longer than reasonably
necessary for completion thereof. In addition, each Owner shall cause all work
to be as nondisruptive as practicable to the Center and the guests, invitees,
tenants, employees and Owners who use the Center. Each Owner shall disrupt
traffic flow and parking as little as possible during construction and shall
clean up daily any construction debris to the extent reasonably practicable. In
all cases, work shall be commenced within one (1) year following the date of
such approval. If work is not commenced within one (1) year following the date
of such approval, then the approval given pursuant to this Article 6 shall be
deemed revoked; PROVIDED, HOWEVER, upon written request made prior to the
expiration of said one (1) year period, the Committee may, in its sole, absolute
and unfettered discretion, extend the time for commencing work.
6.6 COMPLETION OF WORK. Construction, refinishing, alteration or excavation
of any Improvements previously approved under this Article 6 shall be completed
within two (2) years following the commencement thereof, except for so long as
such completion is rendered impossible or would result in hardship due to action
of the elements, fire or other casualty, war, riot, labor dispute, inability to
procure or general shortage of labor or material in the normal channels of
trade, delay in transportation, delay in inspections, governmental action or
inaction or moratorium or any other cause beyond the reasonable control of the
Owner so obligated, whether similar or dissimilar to the foregoing, financial
inability excepted. Failure to comply with this Section 6.6 shall constitute a
breach of this Declaration and subject the defaulting Owner or Owners to all
enforcement procedures set forth in this Declaration or any other remedies
provided by law or in equity. Upon completion of construction of any
Improvement, one complete set of as-built plans shall be submitted to and
maintained by the Committee.
6.7 ESTOPPEL CERTIFICATE. The Committee shall deliver to any Owner an
estoppel certificate within thirty (30) days following receipt of a written
request therefor. If the Committee does not have an as-built survey of the
Owner's Parcel in its files, then any such request shall be accompanied by an
ALTA map of survey or a certified as-built survey of the Owner's Parcel. The
estoppel certificate shall certify that as of the date of the certificate either
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(a) all Improvements made or work done on or within the Owner's Parcel
comply with this Declaration; or (b) such Improvements or work do not
so comply, in which event the certificate shall identify the
non-complying Improvements and shall set forth the cause or causes for
such noncompliance. Any existing or prospective Owner, Occupant or
Mortgagee in good faith for value shall be entitled to rely on the
certificate with respect to the matters set forth therein, such matters
being conclusive as between the Committee and all such subsequent
parties in interest.
6.8 INDEMNITY AND LIMITATION OF LIABILITY. Neither Declarant, the
Association, the Board nor the Committee, nor any member of the Board or the
Committee, nor any agents, employees or contractors of Declarant, the
Association, the Members, Occupants, the Board or the Committee (individually or
collectively, "INDEMNITEE") shall be liable for any liability, damage, loss,
cost, expense or prejudice suffered, incurred or claimed by any Owner, Occupant
or other person (an "Applicant") who submits an Application, or by any other
Person (including any other Owner or Occupant); and each Applicant who submits
an Application shall forever hold each and every Indemnitee harmless from and
against any liability, damage, loss, cost, expense or prejudice suffered,
incurred or claimed by such Applicant, and shall forever indemnify, defend,
protect and hold each Indemnitee harmless for any liability, damage, loss, cost,
expense or prejudice suffered, incurred or claimed by any other Person
(including any other Owner or Occupant), arising from, our of or in connection
with (a) any defects in any plans, drawings, specifications or other
documentation submitted in any Application, revised or approved in accordance
with this Declaration, or for any structural or other defects in any work done
according to such plans, drawings, specifications or other documentation; (b)
the approval or disapproval of any Application, whether or not defective; (c)
the construction or performance of any work, whether or not constructed or
performed pursuant to an approved Application; (d) the development of any Parcel
within the Center; (e) the execution and filing of an estoppel certificate
pursuant to Section 6.7, whether or not the facts therein are correct, provided
that the Committee has acted in good faith in issuing such estoppel certificate
on the basis of such information as may be possessed by it; or (f) any
combination of the foregoing.
6.9 LIMITATIONS ON IMPROVEMENTS. All limitations contained in this
Declaration supplement the controls established by applicable zoning, land
use-related entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules and
regulations; and of the foregoing, the more restrictive shall apply. Each Owner
and Occupant is responsible for identifying and conforming with all Laws.
(a) SETBACK LINES. Buildings, structures of any kind (or any part
thereof), Exclusive Use Areas and parking areas shall be subject to the
minimum setback requirements of applicable zoning, land use-related
entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules
and regulations.
(b) LANDSCAPING. Every Parcel on which a building is constructed in
the Center shall be landscaped by the Owner in accordance with the
Application approved by the Committee pursuant to this Article 6; and, if
not previously installed, the Owner shall
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also install the Common Landscaping upon the Parcel in accordance with the
plans and specifications adopted by the Declarant, or as otherwise approved
by the Committee. Landscaping for each Parcel, as approved by the
Committee, shall be installed before the earlier of (a) the date on which
the first Occupant occupies the building (or any portion thereof) on the
Parcel; or (b) the date of substantial completion of the building;
PROVIDED, HOWEVER, the Committee may, in its sole, absolute and unfettered
discretion, approve in writing another final date of landscape
installation. As used in this Section, "SUBSTANTIAL COMPLETION" means the
date on which final City inspection is obtained for the building shell.
Once installed, landscaping in the Center shall be maintained, repaired and
replaced as provided in Section 12.1 and Section 13.1 of this Declaration.
(c) EXCLUSIVE USE AREAS. Any Exclusive Use Areas within a Parcel shall
be as designated on the Site Plan, or as otherwise approved by the Board or
by the Committee in its written approval of an Application pursuant to this
Article 6. Exclusive Use Areas shall be maintained, repaired and replaced
in accordance with Article 12.
(d) SIGNS. Except for street and traffic control signs and such other
signs as may be required by applicable law, no sign, billboard or other
advertising shall be erected, placed or maintained within the Center
without written approval by the Committee, which, unless such signage is
consistent with the Sign Plan, may be withheld in its sole, absolute and
unfettered discretion. Nothing contained herein shall preclude Declarant or
any subsequent Owner of the Carmel Center Office Campus from renaming it
after such Owner, an Eligible Occupant, or a major tenant that leases in
excess of twenty-five percent (25%) of the space within the buildings
comprising the Carmel Center Office Campus, and installing signage
consistent with the Sign Plan to reflect such name change.
(e) PARKING AREAS. The Committee shall have the authority to
disapprove any Application for the construction of any building on a Parcel
in the Center if the Application does not provide for parking substantially
in accordance with the Site Plan and in compliance with applicable
ordinances, rules and regulations of the City. The purpose and intent of
this requirement is to ensure that all development and parking arrangements
comply with the Site Plan and that this Declaration satisfies any
City-imposed requirements for shared parking existing on the date of this
Declaration.
(f) EXTERIOR LIGHTING. Exterior lighting shall conform to the Design
Guidelines and shall not be of such intensity, size, color or location as
to be a nuisance to Owners or the public.
(g) UTILITY LINES AND ANTENNAS. No sewer, drainage or utility
lines, cables or wires or other devices for the communication or
transmission of electric current, power or signals (including, but not
limited to, telephone, television, microwave or radio signals) shall be
constructed, placed or maintained anywhere in or upon any Parcel other than
within buildings or structures unless contained in underground conduits;
PROVIDED, HOWEVER, transformers and terminal equipment related thereto may
be installed above
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ground if screened from view of adjacent streets and Parcels in a manner
satisfactory to the Committee. No antenna, satellite dish or disc for
transmitting or receiving telephone, television, microwave or radio signals
shall be placed on any Parcel unless (i) such antenna, dish or disc,
whether on the ground or on a building, is screened from view of adjacent
streets and Parcels in a manner satisfactory to the Committee; and (ii) the
prior written consent of the Committee is obtained. Nothing contained in
this Section shall prohibit (x) the erection or use of temporary power or
telephone facilities incidental to the construction or repair of
Improvements on any Parcel, or (y) the installation and maintenance of
security and surveillance devices upon the exterior of buildings, within
Common Areas adjacent to such buildings or elsewhere upon an Owner's Parcel
and Exclusive Use Areas. No Owner shall enter into any contract or
agreement with the City, the County of San Diego or any other governmental
agency or entity or public utility with respect to sewer lines or
connections, water lines or connections, or street improvements (including,
but not limited to, curbs, gutters, parkways, street lighting or other
utility connections, lines or easements) relating to the Center or any
Parcel without the prior written consent of the Committee (including the
Committee's approval of the contract or agreement proposed to be entered
into), which may be withheld if the Committee determines such contract or
agreement, or the improvements to be constructed pursuant thereto, are not
consistent with the Declaration or any of the other Project Documents.
(h) EXCAVATION AND UNDERGROUND UTILITIES. No excavation shall be made
except in connection with construction of an Improvement, and upon
completion thereof, exposed openings shall be back filled and disturbed
ground shall be graded, leveled and restored to its original or approved
similar condition.
6.10 CERTAIN IMPROVEMENTS EXEMPT FROM APPLICATION. Notwithstanding
anything in this Declaration to the contrary (or which may be interpreted as
being to the contrary), the following Improvements shall be exempt from the
provisions of this Article 6 and are not required to be the subject of an
Application pursuant to this Article 6: (i) Improvements existing or under
construction on the date of this Declaration; (ii) Improvements which are
substantially consistent with the Site Plan and for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration which include, without limitation, the Approved Declarant
Improvements; and (iii) Improvements within the interior of a building such as
tenant improvements, lobbies and other interior space.
6.11 DISCLOSURE AND WAIVER OF CONFLICT OF INTEREST. Committee members may
be appointed by, affiliated with or employed by Declarant. If Declarant submits
an Application to the Committee for approval, Committee members appointed by
Declarant may have a conflict of interest in rendering their decisions. Neither
Declarant nor any Committee member shall have any liability to any Owner,
Occupant or other Person as a result of decisions which may benefit Declarant
rendered in good faith by the Committee or any Committee member, and each Owner
hereby waives any claim of liability against Declarant, the Committee or any
Committee member, based upon such conflict of interest. Nothing in this Section
6.11 is intended to limit the application or meaning of Section 14.6.
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ARTICLE 7
OPERATIONS GENERALLY
7.1 SLOPE AND DRAINAGE EASEMENTS. The Owner of each Parcel will permit free
access by Owners of adjacent or adjoining Parcels and by Declarant to slopes or
drainageways located on the Owner's Parcel which affect such adjacent or
adjoining Parcels when such access is required for the maintenance of permanent
stabilization on said slopes, or maintenance of the drainage facilities for the
protection and use of property other than the Parcel on which the slope or
drainageway is located. No Owner shall in any way interfere with the established
drainage pattern over the Owner's Parcel from adjoining or other Parcels, and
each Owner shall make adequate provisions for proper drainage in the event it is
necessary to change the established drainage over the Owner's Parcel. For the
purpose of this paragraph, "ESTABLISHED" drainage is defined as the drainage
patterns at the time the overall grading of each Parcel is completed in
accordance with the City-approved grading plans therefor. Upon completion of
final grading of a Parcel, no surface drainage shall be directed across any
portion of an adjoining Building Area, all surface drainage shall be directed to
a public street or into the underground drainage system.
7.2 SHARED PARKING; COMMON PARKING AREAS.
(a) The Owners intend that this Declaration satisfies any City-imposed
requirements for shared parking existing on the date of this Declaration.
(b) Those portions of the Common Area improved, or to be improved,
with parking spaces as generally shown on the Site Plan and not designated
or subsequently designated as Exclusive Use or Exclusive Parking Area or,
with respect to Parcel D, improved with a building (herein "Common Parking
Area") shall be reciprocal parking area for the common use and enjoyment of
all Parcels (excluding Parcels L and M) and their respective Owners,
Occupants, customers, guests and invitees. The Owners of Parcels L and M
shall have no rights to use any of the Common Parking Area.
(c) The Parking Structure, the parking spaces included therein and
those additional surface parking areas within the Carmel Center Office
Campus and shown on the Site Plan as Exclusive Parking Area shall be for
the exclusive use and enjoyment of the Carmel Center Office Campus and
their respective Owners, Occupants, customers, guests and invitees (herein
"Exclusive Parking Area").
(d) In addition to the Exclusive Parking Areas described in subsection
(c) above, Declarant (and the Board when there no longer is a Declarant)
may designate other portions of a Parcel improved as parking as Exclusive
Parking Area, subject to the provisions of Section 8.2.
(e) No commercial truck is permitted to be parked on any Parcel unless
hidden from view from other Parcels within the Center and from public
streets by attractive visual barriers. Notwithstanding the immediately
preceding sentence, commercial trucks may park for the purpose of loading
and unloading on all Parcels; PROVIDED HOWEVER, reasonable restrictions
concerning permitted times for parking,
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loading and unloading commercial trucks, which may be applicable to one or
more Parcels, may be adopted by the Board.
(f) No charge of any kind shall ever be made for ingress to, egress
from or parking in the Center, unless ordered or permitted by governmental
authority. The Owner of the Carmel Center Office Campus may install a card
access system in the Parking Structure and receive reimbursement from the
Occupants of the Carmel Center Office Campus for the cost of installing
such system and the cost of access cards and replacement cards.
7.3 STORAGE AND LOADING AREAS. Subject to Committee approval, which may be
withheld in its sole, absolute and unfettered discretion:
(a) No materials, supplies or equipment, including any trucks, shall
be stored in any area on a Parcel, except inside a closed building or on a
temporary basis behind a Committee approved visual barrier which screens
such areas from the view of adjoining Parcels and public streets.
(b) Loading areas and docks shall be set back and screened to
minimize the visual and noise effects from the street. All loading areas
shall be hidden from view from public streets by visual barriers approved
by the Committee. Notwithstanding the foregoing, it may not be practical or
feasible for all loading areas and docks to comply with this restriction,
in which event, as to those loading areas and docks, the Committee shall
have the right to designate hours for loading and unloading and the rules
reasonably necessary to minimize the visual and noise effects thereof.
7.4 INSPECTION. Declarant, members of the Board, members of the Committee
and their authorized representatives may from time to time, at any reasonable
hours, enter upon and inspect any Parcel, or any portion thereof, or
Improvements thereon, to ascertain compliance with this Declaration and other
Project Documents, but without obligation to do so or liability therefor
provided, however, no such entry shall be permitted to inspect the interior or
exterior of any building improvements without at least five (5) business days'
prior written notice and a statement for the reasons such entry is permitted or
required under the Project Documents.
7.5 DIVISION OF LAND. No Parcel shall be subdivided or resubdivided without
the prior written approval of Declarant (or the Board, if there is no
Declarant), which may be withheld in its sole, absolute and unfettered
discretion. The creation of a "condominium project" on any Parcel or Parcels
pursuant to Section 1351, ET SEQ. of the California CIVIL CODE shall not
constitute a subdivision or resubdivision of a Parcel which is prohibited by the
provisions of this Section.
7.6 HAZARDOUS MATERIALS. Each Owner with respect to the Parcel(s) owned by
such Owner covenants to do as follows:
(a) At all times and in all respects to comply, and cause all of its
Occupants to comply, with all federal, state and local laws, ordinances and
regulations, including, but
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not limited to, the Federal Water Pollution Control Act (33 U.S.C. Section
1251, ET SEQ.), Resource Conservation & Recovery Act (42 U.S.C. Section
6901, ET SEQ.), Safe Drinking Water Act (42 U.S.C. Section 3000f, ET SEQ.),
Toxic Substances Control Act (15 U.S.C. Section 2601, ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401, ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, ET
SEQ.), California Health & Safety Code (Section 25100, ET SEQ.; Section
39000, ET SEQ.), California Safe Drinking Water & Toxic Enforcement Act of
1986 (California Health & Safety Code Section 25249.5, ET SEQ.), California
Water Code (Section 13000, ET SEQ.), and other comparable state and federal
laws, currently in force or enacted in the future ("HAZARDOUS MATERIALS
LAWS"), relating to industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"HAZARDOUS MATERIALS").
(b) Each Owner, Occupant and all other users of a Parcel shall, at its
own expense, procure, maintain in effect and comply with all conditions of
any and all permits, licenses, and other governmental and regulatory
approvals required for its or its use of the Center, including, without
limitation, discharge of (appropriately treated) materials or wastes into
or through any sanitary sewer serving the Center. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, no Person shall cause any and all Hazardous
Materials removed from the Center to be removed and transported except
solely by duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Each Owner, Occupant and user shall
in all respects handle, treat, deal with and manage any and all Hazardous
Materials in, on, under or about the Center in total conformity with all
applicable Hazardous Materials Laws and prudent industry practices
regarding management of such Hazardous Materials.
7.7 PAYMENT OF TAXES, LIENS. Each Owner shall pay or cause to be paid prior
to delinquency the real estate taxes, assessments, special district charges and
all other public, governmental, quasi-public or quasi-governmental charges which
are or may become a lien upon the Owner's Parcel or Parcels ("Impositions"), and
all other liens or charges which may be or become superior to this Declaration
or any amendments thereto. If any Owner fails to pay any Imposition or other
lien or charge as provided herein, the Association shall have the right, but no
obligation, to cure such default. All costs and expenses, including attorneys'
fees and costs, incurred by the Association in connection with any such cure may
be recovered by the Association as a Reimbursement Assessment against said Owner
and its Parcel or Parcels. An Owner shall have the right, at its own cost and
expense, and in its own name, to contest or protest or seek to have reviewed,
reduced, equalized or abated any Imposition levied upon its Parcel(s) by first
paying such Imposition and thereafter filing a claim for refund or pursuing
such other remedy as may then be available under and in accordance with
California law. Upon final determination of any such proceeding, the protesting
Owner shall pay the Impositions for which
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it is responsible pursuant to this Section as they are finally determined and
all penalties, interest, costs and expense which may thereupon be due or have
resulted therefrom. An Owner shall notify the Association in writing of any
contest or protest so filed by an Owner, and shall provide the Association,
upon request, with any and all documents pertaining thereto.
ARTICLE 8
COMMON AREA
8.1 USE. Subject to the provisions of this Article 8 and such other
provisions of the Declaration regarding restrictions upon use, the Common Area
of each Parcel shall be used solely for the purposes specified in Sections
7.2(b) and 11.1. In addition, no Owner or Occupant shall use or permit to be
used the Common Area for any use other than the following:
(a) Parking motor vehicles, and pedestrian and vehicular ingress and
egress by Occupants, their agents, employees, customers and other invitees,
to and from buildings, the Common Area and adjacent public streets;
(b) Parking stalls, sidewalks, walls, ramps, driveways, lanes, curbs,
gutters, seating areas, flagpoles, bike racks, kiosks, automatic teller
machines, bus stops and similar facilities for accommodating public
transportation, traffic control areas, signals, traffic islands, landscaped
areas, traffic and parking lighting facilities and monument signs with
appropriate underground electrical connections, and all things incidental
thereto, all as approved by the Committee and only in locations approved by
the Committee;
(c) Public utility installations serving buildings or the Common Area;
(d) Ingress and egress of delivery and service vehicles to and from
the Center or any portion thereof and adjacent public streets, and parking
thereof only in unloading and truck loading and unloading areas;
(e) Delivery of goods, wares, merchandise and providing services to
Occupants of the Center;
(f) Perimeter walls and fences shown on the Site Plan;
(g) If required by law, recycling facilities or pickup points, the
location of which are approved by the Committee; and
(h) Lighting standards, Common Landscaping, and any other landscaping
or Common Area Improvements as may be required under applicable controls
and regulations of the City. The Owners and/or Eligible Occupants of
Parcels may also install and maintain security and surveillance devices
upon the Common Areas within their respective Parcels.
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The Common Area shall be used reasonably for the foregoing purposes so as not to
interfere with parking.
8.2 MODIFICATION OF COMMON AREA. The initial design of the Common Parking
Areas and pattern of traffic flow over the Common Area within the Center shall
be as shown on the Site Plan, and there shall be no material change thereto
unless:
(a) In the case of any material change to the Common Area located on
Parcels A, B, C, D, E and H, the prior written consent of Declarant and the
Owners of all such Parcels, which shall not be unreasonably withheld, has
been obtained;
(b) With respect to any material change to the Common Area (excluding
Common Parking Area) within Parcels G, K, L or M, the prior written consent
of Declarant and the Owners of all such Parcels, which shall not be
unreasonably withheld, has been obtained;
(c) With respect to any material change to the Common Parking Area
within Parcels E through K, the prior written consent of the Declarant and
the Owners of all such Parcels, which shall not be unreasonably withheld by
any of them, has been obtained;
(d) In all other cases, the prior written consent of Declarant (or the
Board, after there is no longer a Declarant), which may be withheld in its
sole, absolute and unfettered discretion, has been obtained; and
(e) In all cases, the resulting Common Parking Area layout and pattern
of traffic flow over the Common Area comply with all applicable Laws.
8.3 PARKING REGULATIONS. Occupants within the Center will have widely
varying parking requirements. To ensure Common Parking Areas are used in the
most efficient manner and in the best interest of all Occupants entitled to the
use thereof, the Board may adopt reasonable rules and regulations governing
the use of the Common Parking Areas; PROVIDED, HOWEVER, that no such rule or
regulation shall diminish the parking rights of any Occupant under any lease
existing at the time such rule or regulation is adopted; and PROVIDED FURTHER,
any and all such rules or regulations shall be subject to Section 8.2.
8.4 CONSTRUCTION AND REPAIR. All construction, alteration or repair work
requiring workers to perform activity or to use or locate materials, tools or
equipment (such as, but not limited to, compressors, sawhorses, tool boxes,
scaffolds, ladders and barricades) in the Common Area (other than Exclusive Use
Areas) during the course of performing such work, whether such work is
undertaken with respect to building Improvements located on a Parcel or in the
Common Area, shall be subject to the prior written approval of the Board (or any
committee of the Board established in accordance with the Bylaws for the purpose
of administering this Section) and shall be accomplished in the most expeditious
and speedy manner consistent with ongoing business operations within the Center.
The Owner or Occupant undertaking such work shall take all measures necessary to
minimize any disruption or inconvenience caused by such work. Such work shall be
accomplished by the Owner or Occupant undertaking it in a reasonable manner so
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that any damage or adverse effect which might be caused by such work to any
other Owner or Occupant or to any Parcel (including the Parcel on which the work
is being accomplished) is minimized. The Owner or Occupant undertaking such work
shall repair at its own cost any and all damage caused by such work and shall
restore the affected portion of any Parcel (including the Parcel upon which such
work is performed) to a condition which is equal to or better than the condition
which existed prior to the beginning of such work. In addition, the Owner or
Occupant undertaking such work shall pay all costs and expenses associated
therewith and shall indemnify, protect, defend and hold the Association and all
other Owners and Occupants harmless from all liabilities, damages, losses,
costs, expenses or claims arising out of, in connection with or attributable to
the performance of such work. Except in cases of emergency, all such work
shall be undertaken only after giving the Board ten (10) days prior written
notice of the work to be undertaken, the scope and nature of the work, the
duration of the work and the area in which the work is to be performed.
Notwithstanding the foregoing, construction, alteration or repair work to be
accomplished outside the Common Area may be made without the consent of or
prior written notice to the Board (or committee thereof) required under this
Section.
8.5 INTERIM IMPROVEMENTS AND MAINTENANCE OF PARCELS.
(a) Commencing as required in paragraph (b) of this Section and
continuing until such time as the commencement of construction of a building
or buildings upon a Parcel in the Center, the Owner of such Parcel shall, at its
sole cost, and subject to the discretion and approval of the Committee, pave
with asphalt for parking or landscape with ground cover (or both) and take such
other measures as are reasonably necessary to control weeds, blowing dirt and
sand, accumulation of refuse and other matters with respect to the undeveloped
portions of such Parcel. The cost of design and construction of such interim
parking or landscaping improvements (or, if applicable, both) shall be borne
solely by the Owners of the respective Parcels upon which such improvements are
constructed. Once constructed, the Association shall maintain any such interim
improvements within the Common Area and the cost and expense thereof shall be
Common Expenses; and the Owner shall maintain such other interim improvements.
Each Owner's paving plans or landscaping plans (or, if applicable, both) for the
Parcel shall be subject to the Committee's written approval to ensure
consistency and harmony with (a) the landscaping plan and theme of the Center;
and (b) the parking configuration and pattern of traffic flow in the Center. The
Committee's approval shall not be unreasonably withheld or delayed, and neither
paving nor landscaping the Parcel shall commence unless and until the
Committee's written approval has been obtained. After the Committee's written
approval has been obtained, the Parcel shall be paved and landscaped pursuant to
and in accordance with the plans approved by the Committee. Nothing contained in
this Section 8.5 regarding interim improvements of Parcels shall restrict or
impair the Owners' rights to fully develop and improve their respective Parcels
with buildings and other Improvements consistent with the Project Documents.
(b) The Owners of all Parcels shall pave with asphalt or landscape
with ground cover, or a combination of both as provided in subsection (a)
above, the otherwise unimproved portions of their respective Parcels within
six (6) months after the first Occupant of any building constructed within
the Carmel Center Office Campus opens for business in its
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premises; PROVIDED, HOWEVER, the Owner of any Parcel on which construction of a
building and related improvements has commenced before or during such six (6)
month period shall not be bound by this subparagraph (b) as to such Parcel.
(c) At least ten (10) days before commencing construction of any
Improvements upon a Parcel, the Owner of the Parcel must deliver written notice
to the Board of its intent to commence construction, and the Association shall
have the right to remove any Association property from the Parcel.
8.6 LIGHTING THE COMMON AREA. The provisions of this Section shall be
subject to any resolution or resolutions to the contrary which may be adopted by
the Board from time to time. Lighting for the Common Area (other than lighting
necessary for security of the Center or portions thereof) shall be turned on at
least thirty (30) minutes before sunset (but not more than one (1) hour before
sunset) and shall remain on each day until at least 11:00 p.m., unless to do so
is contrary to any law, rule, statute or ordinance then in effect, in which
event, the standard so prescribed shall be adhered to while in effect. Lighting
representing not less than twenty-five percent (25%) of full intensity of the
Common Area lighting system, uniformly distributed throughout the Common Area,
shall remain on each day after 11:00 p.m. until dawn for security purposes,
unless all of the Owners consent to a lesser amount of lighting in writing, or
unless to do so is contrary to any law, rule, statute or ordinance then in
effect, in which event, the standard so prescribed shall be adhered to while in
effect. If "special" lighting (other than lighting necessary for security of the
Center) is required or if regular lighting is required for a time later than the
foregoing by any Owner or Occupant of the Center, then the electricity to
service such lighting requirements shall, if reasonably feasible, be separately
metered and all expenses thereof shall be paid by the Owner(s) or Occupant(s)
who requires the special service. If such separate metering is not reasonably
feasible, then the cost of such special lighting shall be determined and
equitably prorated based on the amount of time required by each such Owner or
Occupant and the Parcel Area of each Owner or Occupant in relation to the Parcel
Area of all of the Owners or Occupants requiring the special service; all such
prorated expenses shall be paid by the Owners or Occupants which require the
special service.
ARTICLE 9
EMINENT DOMAIN
In the event the whole or any part of the Center is taken by right of
eminent domain or any similar authority of law, the entire award for the value
of the land and improvements so taken shall belong to the Owner(s) of the
property so taken or to their Occupants, as their interest may appear, and no
other Owner of land in the Center shall claim any portion of such award by
virtue of any interest, easement or other right created by this Declaration;
PROVIDED, HOWEVER, any such other Owner may file a collateral claim with the
condemning authority over and above the value of the land and improvements being
so taken to the extent of any damage suffered by such Owner resulting from the
severance of the area so taken, provided such collateral claim does not diminish
the amount recoverable by the Owner(s) of the property so taken. In the event of
a partial taking, the Owner(s) of the portion of the Center so condemned shall
restore the remaining portion of the Center owned by such Owner(s), including
improvements in the
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Common Area, as nearly as possible to the condition existing just prior to such
condemnation, without contribution from the Owners of the area not so taken and
any condemnation award necessary therefore shall be held in trust and applied
for such purpose; PROVIDED, HOWEVER, that if any Mortgagee of any property in
the Center makes the requirement pursuant to a provision in a Mortgage that the
portion of the award representing compensation for severance damage to property
not taken be paid to the Mortgagee, then the party required to make such payment
to such Mortgagee shall not be obligated to restore the remaining portion of its
Parcel(s) so taken, except to the extent necessary to clear and pave for parking
and/or landscape in accordance with plans approved by the Committee.
ARTICLE 10
MUTUAL RELEASE
Each Owner, for itself and, to the extent it is legally possible for it to
do so, on behalf of its insurer, hereby releases the other Owners from any
liability for (a) any loss or damage to the property of each Owner located upon
or in the Center, including buildings or other improvements in the Center or the
contents thereof caused by fire or other risks of the type generally covered by
a standard policy insuring against "all risk" perils (also known as "special
causes of loss"); and (b) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is of the type generally covered by a
standard policy insuring against "all risk" perils (also known as "special
causes of loss").
ARTICLE 11
EASEMENTS
11.1 GRANTS OF RECIPROCAL EASEMENTS OVER COMMON AREAS. Each Owner, as
grantor, grants to and reserves from all other Owners, for the benefit of the
Association and each other Owner and their respective successors, assigns,
Occupants, customers and invitees, and for the benefit of the respective
Parcel(s) belonging to said other Owners, as grantees, the following
non-exclusive easements upon, over, under, across and through that portion of
the Common Area lying within the grantor's Parcel(s):
(a) For ingress and egress by vehicular and pedestrian traffic and
vehicle parking upon, over and through the Common Area and the entryways,
driveways, roads, pedestrian pathways and parking areas as may be
constructed thereon for those purposes, provided, that, Parcels L and M and
their Owners, Occupants, guests, customers and invitees shall have no
rights hereunder to use the Common Parking Areas;
(b) For grading and installation of utilities, landscaping, irrigation
and drainage facilities, and other Improvements, as necessary or
appropriate to complete the improvement of such Common Areas within the
Center pursuant to City approvals and other applicable Laws;
(c) To the Declarant and Association, and their agents and
representatives, an easement over all Common Areas for the purpose of
operation, maintenance, repair,
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reconstruction, restoration and landscaping, and, as necessary, to exercise
the rights and to perform the duties set forth in this Declaration.
(d) For the installation, maintenance, repair and replacement from
time to time of any monument or other freestanding sign permitted under
this Declaration and in accordance with the Sign Plan, including any
permitted Occupant identification signs which have been placed thereon or
made a part thereof;
(e) For construction staging, storage of construction materials and
equipment, temporary construction trailers, erection of ladders,
scaffolding and barricades upon Common Areas owned by the Owner during
construction, remodeling or repair of buildings and building appurtenances
upon such Owner's Parcel or Parcels; and
(f) For the purpose of entering onto the grantor's Parcel(s) to cure
any default or breach under this Declaration.
11.2 UTILITY EASEMENTS. There is hereby reserved for the use and benefit of
the Association and all Owners, non-exclusive easements within the Common Areas
for the location, installation and maintenance of utilities and drainage
facilities of convenience or necessity as may be requested or required by the
Association or any Owner provided that the grant thereof does not unreasonably
interfere with the normal operation, improvement, and use of the Common Area and
the buildings constructed within the Center, and no affirmative monetary
obligation is imposed upon the Owners (other than the Owner benefiting from such
easement). The Declarant (and the Board where there no longer is a Declarant)
shall have the authority to grant easements or rights-of-way for utilities over
the Common Areas as necessary to serve the Common Areas and/or the Parcels. The
Owner of any Parcel and any of his Occupants or licensees shall have the right
at all reasonable times to enter upon the land subject to said easements and to
install, maintain, operate, repair and service utilities and drainage facilities
thereon for the use and benefit of his Parcel; provided, however, any such
Person shall restore said land, at his own expense, as nearly as practicable, to
the same condition as existed prior to such entry and shall comply with the
provisions of Section 11.6. The Owner of any Parcel shall have the right to
assign the benefit and use of any such easement to any public or private utility
company, agency or district for the purpose of installing, operating, repairing,
servicing and maintaining utilities or drainage facilities and enforcing the
easement rights. For purposes hereof, "utilities" shall include electricity, gas
mains and lines, water distribution lines, storm water sewers, sanitary sewers,
telephone, fiberoptic, cable TV, and telegraph cables and lines, and other
similar or related facilities commonly regarded as utilities.
All storm drains, utility lines, transformers and meters shall be
maintained under the terms of this Declaration in a safe and good working
condition by the party responsible therefor. No grantee of a utility easement
shall in the use, construction, reconstruction, operation, maintenance or repair
of any storm drains, utility lines, transformers and meters in any way
interfere, obstruct or delay the business of the grantor of said easement or any
other Owner or Occupant, or the public access to and from said business or
interfere, obstruct or delay in any way the receiving of merchandise by said
grantor or any Owner or Occupant.
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11.3 CONSTRUCTION AND REPAIR. In addition to the foregoing and in
connection with any work performed upon a Parcel, incidental encroachments into
or upon the Common Area within that Parcel shall be permitted in connection with
the use of ladders, scaffolding, storefront barricades and similar facilities
resulting in temporary obstruction of portions of the Common Area, all of which
are permitted under this Section so long as their use is kept within reasonable
requirements of construction work expeditiously pursued. The Common Area may be
used for ingress and egress of vehicles transporting construction materials,
equipment and Persons employed in connection with any work provided for in this
Declaration and that Common Area within the Parcel upon which the construction
is taking place may also be used for temporary storage of material and vehicles
being used in connection with such construction, subject to all of the other
terms of this Declaration. Reasonable precautions and measures shall be taken so
that any disturbance to the use of the Common Area generated by such
encroachments will be minimized.
11.4 OBSTRUCTIONS WITHIN COMMON AREA. Except as otherwise expressly
provided in Sections 8.1, 8.4, 11.1 and 11.3, no walls, fences, barriers or
obstructions of any sort or kind shall be constructed or maintained in the
Center, or any portion thereof, by any Owner, its agent or Occupant, which
prevent or impair the use or exercise of any of the easements granted in this
Article 11, including, but not limited to, the ingress and egress of vehicular
and pedestrian traffic and parking within the Common Area and the Common Parking
Area; PROVIDED, HOWEVER, reasonable traffic controls (including speed bumps) as
may be necessary to guide and control the orderly flow of traffic may be
installed so long as access driveways to the Common Parking Area are not closed
or blocked and the traffic circulation pattern of the Common Area, as shown on
the Site Plan, is not changed or affected in a substantial way; AND PROVIDED
FURTHER, temporary fences made of security chain link may be erected to cordon
off areas of construction activity (including staging areas for equipment and
materials). The Owners and Occupants of the Parking Structure and the Exclusive
Parking Areas may also establish and install control devices and measures such
as a card entry system to the Parking Structure, restricted parking signs,
security gates, or other mechanisms to secure the Parking Structure and
Exclusive Parking Areas from unauthorized use and traffic.
11.5 RIGHT OF ENTRY BY DECLARANT, ASSOCIATION, BOARD. Declarant, the
Association, the Board, and their employees, agents, and contractors are hereby
granted the right to enter upon the Common Areas and upon any other portion of
the Center, to the extent reasonably necessary, to repair, improve, maintain and
operate the Common Areas and to exercise the rights and to perform the duties
imposed by this Declaration on the Board or the Association. Such right of entry
upon portions of the Center other than the Common Areas shall be exercised so as
to interfere as little as reasonably possible with the possession, use and
enjoyment of the Owner or Occupants of such portion and shall be subject to the
provisions of Section 7.4. The Association shall indemnify, protect, hold
harmless and defend the Owner and Occupants of each Parcel over which the
foregoing easements are reserved from and against all liabilities, losses,
liens, damages, claims, costs and expenses and arising from or caused by the use
of such Common Areas by the Declarant, Association, and Board.
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11.6 ENTRY BY OWNERS. In connection with any entry by an Owner onto any
Common Areas for purposes of exercising such Owner's rights pursuant to utility
or drainage easements pursuant to Section 11.2, or performing any other work on
the Common Areas (not including Exclusive Use Areas within such Owner's Parcel)
permitted under this Declaration or otherwise approved by the Board, such Owner
shall, at its expense:
(a) Maintain, at all times during such period of entry, commercial
general liability insurance with a combined single limit per occurrence of
at least $1,000,000, naming the Association (and the Owner and Occupants
of such Common Areas if not owned by the entering Owner) as additional
insureds, and providing that such coverage shall not be terminated or
modified without at least thirty (30) days' prior written notice to the
Board;
(b) Deliver to the Board a certificate evidencing that such insurance
is in full force and effect prior to entry onto such Common Areas;
(c) Perform all work in a safe manner, insure that no hazardous
condition remains on such Common Areas, and repair any damage thereto;
(d) Keep such Common Areas free and clear of all mechanics' or
materialmen's liens arising out of such Owner's activities;
(e) Comply with all applicable Laws in connection with such work;
and
(f) Indemnify, protect, hold harmless and defend the Association, the
Board and the Owner and Occupants of such Common Areas from and against all
liabilities, losses, liens, claims, damages, costs and expenses (including
attorneys' fees and court costs) for labor or services performed
or materials furnished to or for such Owner, or for personal injury, death
or property damage, arising out of or related to such Owner's entry or
breach of the provisions of this Section 11.6.
11.7 RESERVATION BY DECLARANT. The Declarant hereby reserves the right to
subsequently grant and create additional easements over one or more of the
Parcels owned by Declarant, including the Common Areas contained therein, for
the benefit of one or more other Parcels owned by Declarant provided, and upon
condition that, the grant of any such additional easements shall not materially
interfere or impede with the grant and use of the other easements established
hereunder.
11.8 TERMINATION OF FORMER DECLARATION AND CONFIRMATION OF TERMINATION OF
1990 GRANT OF EASEMENTS. The Former Declaration (defined in Recital F) is hereby
terminated in its entirety and is declared to be of no further force or effect;
PROVIDED, HOWEVER, the termination of the 1990 Grant of Easements (as defined in
Section X(e) of the Former Declaration), which is set forth in Section X(e) of
the Former Declaration, shall remain in effect (I.E., the 1990 Grant of
Easements are hereby confirmed previously terminated and of no further force or
effect). The easements granted in this Article 11 replace and supersede the
easements
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granted in that Grant of Easement dated February 12, 1990 and recorded in the
Office of the County Recorder at San Diego County on February 13, 1990 as
Document No. 1990-080110, and that Grant of Easement and the easements granted
thereunder are hereby terminated and declared to be of no further force or
effect.
ARTICLE 12
BUILDING MAINTENANCE
12.1 OWNER'S MAINTENANCE OBLIGATIONS. Subject to Section 12.3, each Owner
shall maintain, repair and replace (or cause to be maintained, repaired and
replaced) the following:
(a) All exterior surfaces and roofs of buildings and other structures
located on the Owner's Parcel(s), so that the exterior walls, exterior
signs, roofing materials and painted surfaces, are at all times maintained
in a first-class condition. All painted portions of building exteriors
shall be repainted no less frequently than once each five (5) years with
the same colors as such portions were originally painted or stained, unless
the Committee approves a change in color, which approval may be withheld in
the Committee's sole, absolute and unfettered discretion.
(b) All other portions of the Owner's Parcel, other than Common Area,
in a neat, clean, sightly and well-kept condition, free and clear of
weeds, debris and rubbish. All landscaping, other than Common Landscaping,
shall be maintained in a first-class condition and, as and when necessary,
replaced.
(c) Any and all monument signs on which the name of an Occupant of the
Owner's Parcel appears, even if the monument sign is located on another
Owner's Parcel.
(d) Those portions of facilities for water, sewer, gas, telephone,
electricity and other utilities serving such Owners' buildings so as to not
interfere, interrupt or otherwise impair delivery of utilities required for
maintenance of the Common Areas and by other buildings within the Center.
(e) Each Owner and or its Occupants shall also contract for the
removal of trash from its buildings.
Each Owner shall also adopt and maintain such standards of property maintenance,
appearance and housekeeping as are necessary or appropriate to keep and maintain
the foregoing in first-class condition, repair and appearance.
12.2 CLOSURE. The Owner of a Parcel shall, following the permanent closure
or cessation of any business operation which is expected to continue for any
extended period of time take such measures as may be reasonably required under
the circumstances to prevent vandalism, including preventing graffiti and
preventing windows from being broken, and to keep the vacant building or
premises in a reasonably attractive manner.
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12.3 REPAIR OR REPLACEMENT OF DAMAGED BUILDING. In the event of any damage
to or destruction of any building within the Center, the Owner of the Parcel
upon which such building is located shall, subject to the requirements and
limitations stated in this Declaration and any Mortgage encumbering such Parcel,
(a) repair, restore and rebuild such building as quickly as reasonably
practicable subject to the requirements and limitations stated in this
Declaration; (b) tear down and remove all parts of said damaged or destroyed
building then remaining and the debris resulting therefrom and otherwise clean
and restore the Building Area affected by such casualty to a level and clean
condition; or (c) any combination of the above in a manner satisfactory to the
Committee. The Owner of any Parcel on which damaged building improvements are
located shall be obligated to proceed with all due diligence hereunder, and such
Owner shall cause cleanup and/or reconstruction to commence within three (3)
months after the damage occurs and to be completed within twelve (12) months
thereafter, unless prevented by causes beyond such Owner's reasonable control.
ARTICLE 13
COMMON AREA MAINTENANCE
13.1 ASSOCIATION MAINTENANCE. Upon completion of construction of the
Improvements on a Parcel (which as of the date of this Declaration includes only
Parcel C), the Association shall manage, maintain, repair and replace (or cause
to be managed, maintained, repaired and replaced) the Common Area on such Parcel
(except any portion thereof which is an Exclusive Use Area) and all Improvements
within the Common Area on such Parcel (except in any portion of the Common Area
which is an Exclusive Use Area) in good repair and appearance, including, but
not limited to, contracting for and paying costs of or related to (i) utility
services provided to such Common Area including, but not limited to, water,
electricity and natural gas (if applicable); (ii) sweeping and cleaning
(including steam cleaning) the parking areas, sidewalks and other hardscape, as
necessary; (iii) repairing and replacing asphalt paving using materials equal to
or better than those originally installed; (iv) bumpers; (v) parking lot
striping and directional signs; (vi) light bulbs and light standards; (vii)
perimeter walls; (viii) electrical lines, gas lines (if applicable), storm
drains, water lines and sanitary sewers which serve such Common Area or which
are within such Common Area; (ix) planters, landscaping and sprinkler systems
comprising the Common Landscaping; (x) hiring and supervising private security,
if any; (xi) the insurance for which Section 13.2 provides; and (xii) all other
items of maintenance, repair or replacement that may be needed from time to time
to maintain such Common Area properly and in a first-class condition.
The foregoing notwithstanding, the following exceptions shall apply:
(a) During the period of construction or repair of any building on any
Parcel, the Owner of such Parcel shall maintain (or cause to be maintained)
those portions of the Common Area within its Parcel, if any, which are
affected by such building construction or repair and shall be responsible
for controlling blowing dust and debris resulting from such construction or
repair activity.
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(b) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving more than one
building with different Owners and lying beneath the Common Area (e.g., an
electric trunk line from which individual lateral lines are routed to serve
different individual buildings), the Association will perform any required
maintenance, repair or replacement (or cause the same to be performed), and
will bill each Owner's share of the cost of the work to the Owners of the
Parcels whose buildings are served by the facilities. Each Owner's share of
the total bill shall be determined by multiplying the total bill by a
fraction, the numerator of which is the Parcel Area of the Owner's Parcel
or Parcels served by the facility, and the denominator of which is the
Parcel Area of all Parcels served by the facility. Each Owner shall be
responsible for maintenance and repair of the lateral lines serving his
Parcel or Parcels.
(c) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving one or more
buildings owned by the same Owner and lying beneath the Common Area, the
Association will perform any required maintenance, repair or replacement
(or cause the same to be performed), and will bill the Owner of the
Parcel(s) whose building(s) is served by the facilities. With the consent
of the Association, the Owner of the affected building or buildings may
contract directly for any such required maintenance, repair or replacement
work to be performed at the sole cost and expense of such Owner.
13.2 COMMON AREA INSURANCE.
(a) As part of its obligation to maintain the Common Area within
the Center except those portions designated Exclusive Use Areas, the
Association shall at all times maintain in force and effect commercial or
comprehensive general liability insurance insuring the Association and, as
additional insureds, all Owners and Eligible Occupants who now or hereafter
own or hold any Parcel or any qualifying leasehold estate (I.E., qualifying the
lessee thereunder to be an Eligible Occupant) or other interest therein as
their respective interests may appear (provided that the Association is given
prior written notice of such interest), against claims for bodily injury,
personal injury, death or property damage occurring in, upon or about the
Common Area. Such insurance shall be written with an insurer licensed to do
business in the State of California. All such insurance shall be primary
coverage, endorsed to name as additional insureds all Owners and Eligible
Occupants under leases of which the Association has been notified in writing,
and shall not require that any other insurance be called upon to contribute
to a loss under such coverage, and shall have liability limits of not less
than Three Million Dollars ($3,000,000) combined single limit coverage for
bodily injury, personal injury, death and/or property damage arising out of
any single occurrence, which amount shall be reviewed annually and changed to
reflect the current practice in mixed use commercial centers in San Diego
County, California which are of a similar size and which have a similar mix
of Occupants. The Association shall cause certificates of insurance to be
issued by the insurer to each of the Owners and Eligible Occupants of whom
the Association has been notified in writing, certifying that such insurance
is in full force and effect and shall not be canceled or materially amended
without thirty (30) days prior written notice thereof to each of such Owners
and Eligible Occupants.
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(b) Association shall obtain and maintain in force property damage
insurance under a standard form policy or policies of all-risk insurance
then in use in California, covering retaining walls and other walls,
lighting facilities and lighting standards, landscaping (in the reasonable
business judgment of the Association), and other improvements in the Common
Area (excluding Exclusive Use Areas);
(c) Worker's compensation insurance, as required by law;
(d) Association Directors' and Officers' errors and omissions
insurance, in form and amount determined by the Board; and
(e) Insurance against any other risk which the Board considers
appropriate.
13.3 ASSOCIATION'S RIGHT TO REPAIR NEGLECTED PARCELS. In addition to
maintaining the Common Area, if an Owner fails to maintain the Improvements, and
other portions of Owner's Parcel so as to violate Section 12.1, then the
Association, after approval of the Board, shall have the right, through its
agents, contractors and employees, to enter onto the Owner's Parcel to repair,
maintain and restore the Parcel, any Exclusive Use Areas, and the exteriors of
any building and other Improvements erected thereon. However, entry into a
Building Area or Exclusive Use Area may be made only after not less than five
(5) business days notice has been given to the Owner and any Eligible Occupant.
Entry shall be made with as little inconvenience to the Owner and Occupants as
possible and any damage caused thereby shall be repaired by the Association at
its cost and expense. The cost of such exterior maintenance shall be levied as a
Reimbursement Assessment against such Parcel pursuant to Section 3.8.
13.4 PROPERTY MANAGEMENT COMPANY. Nothing in this Article 13 or in this
Declaration shall preclude or be interpreted as precluding the Association from
retaining a "managing agent" within the meaning of Section 1363.1 of the
California CIVIL CODE, as it may be amended or replaced from time to time. In
the event the Association so retains such a "managing agent", then the "managing
agent" and the Association shall make all arrangements necessary or proper to
ensure that funds accepted or received by the "managing agent" and belonging to
the Association are deposited and handled in compliance with Section 1363.2 of
the California CIVIL CODE, as it may be amended or replaced from time to time.
The Association may retain the Declarant or an affiliate of the Declarant as
managing agent.
ARTICLE 14
THE ASSOCIATION
14.1 ORGANIZATION. The Association is a California nonprofit mutual benefit
corporation.
14.2 DUTIES. The Association shall be charged with the duties set forth in
the Articles, the Bylaws and this Declaration, including, but not limited to,
the following:
(a) ASSESSMENTS. The Association shall fix, levy, collect and
enforce Assessments as further described in Article 3.
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(b) COMMON AREAS. The Association shall maintain, repair,
replace, restore, operate, control and manage the Common Areas (excluding
Exclusive Use Areas) and all facilities, Improvements and equipment located
thereon, as further described in Article 13, except to the extent such
maintenance has been assumed by a governmental agency or public or private
utility, and except as otherwise set forth herein.
(c) PAYMENT OF EXPENSES. The Association shall pay all expenses
and obligations incurred by the Association in the conduct of its business,
including, without limitation, all licenses, taxes or governmental charges
levied or imposed against the property of the Association.
14.3 POWERS. The Association shall have the following powers, rights and
duties, in addition to those provided elsewhere in this Declaration, the
Articles and the Bylaws and those powers granted to a nonprofit mutual benefit
corporation pursuant to the California Corporations Code:
(a) ACQUISITION OF PROPERTY. The Association shall have the power
to acquire (by gift, purchase or otherwise), own, hold, improve, operate,
maintain, convey, sell, lease, transfer, dedicate for public use or otherwise
dispose of real or personal property in connection with the affairs of the
Association.
(b) ASSESSMENTS, LIENS. The Association shall have the power to
levy and collect assessments pursuant to Article 3 and to perfect and enforce
liens in accordance with the provisions of Article 3.
(c) BORROWING. The Association shall have the power to borrow
funds to pay costs of operation, secured by assessment revenues due for
succeeding years or by assignment or pledge of rights against delinquent Owners;
provided, however, that the affirmative vote or written consent of Declarant and
other Owners holding a majority of the total voting power of the Class A Members
shall be required to borrow, during any calendar year, in excess of an amount
equal to Ten Thousand Dollars ($10,000) multiplied by the number of Parcels
within the Center subject to assessment. Such borrowing may be from Declarant if
Declarant agrees to advance funds; and, in such event, Declarant shall receive,
as interest, no more than the published Wall Street Journal Prime Rate, as
modified from time to time, plus two percent (2%).
(d) CONTRACTS. The Association shall have the power to contract
for goods and/or services for the Common Areas or for the performance of any
power or duty of the Association, subject to limitations set forth elsewhere in
this Declaration, the Articles or the Bylaws. The Association's power to
contract shall include, but is not limited to, the right to enter into
agreements with one or more other owners' associations for the purposes
described in this Section.
(e) DELEGATION. The Association shall have the power to delegate
its authority and powers to committees, officers or employees of the
Association.
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(f) ENFORCEMENT. The Association shall have the power to enforce
this Declaration pursuant to the provisions hereof.
(g) SECURITY SERVICES. The Association shall have the power to
provide, or to contract for the provision of, security patrols or other security
measures, or both, as the Board deems necessary.
(h) VARIANCES. The Board, acting for the Association, shall have
the power to grant reasonable variances from the provisions of this Declaration
from time to time, as the Board may deem, in its sole discretion, to be in the
best interests of the Center, in order to overcome practical difficulties and to
prevent unnecessary hardship in the application of the provisions contained
herein; provided, however, that: (a) a variance shall not materially injure any
of the Parcels or Improvements in the Center; and (b) the Owner seeking the
variance shall otherwise be subject to and conform with all applicable
governmental laws, ordinances, regulations and requirements. No variance granted
pursuant to the authority granted herein shall constitute a waiver of any
provision of this Declaration as applied to any person or real property.
14.4 ELECTION OF NEW BOARD OF DIRECTORS. Concurrently with the recordation
of this Declaration, the Members shall elect a new Board of Directors of the
Association consisting of three (3) directors who shall hold office until the
next annual meeting of Members pursuant to Section 14.7.
14.5 SUBSEQUENT BOARD OF DIRECTORS. At each annual meeting of Members, a
new Board consisting of three (3) directors shall be elected, and such Board
shall serve until the next annual meeting. The Bylaws may provide for staggered
terms and lengths of terms for directors different from those initially set
forth in this Declaration and may provide for a greater or lesser number of
directors than set forth herein; provided, however, in no event shall there be
more than seven (7) directors or less than three (3) directors. The Board shall
undertake all duties and responsibilities of the Association and the management
and conduct of the affairs thereof, except as expressly reserved herein to a
vote of the Members.
14.6 PERSONAL LIABILITY. No member of the Board, or of any committee of the
Association, or any officer or manager of the Association shall be personally
liable to any Owner, or to any other party, including the Association, for any
damage, loss or prejudice suffered or claimed on account of any act, omission,
error or negligence of any such Person.
14.7 ANNUAL MEMBERSHIP MEETINGS. The Association shall hold annual meetings
of the Members in accordance with the Bylaws of the Association.
ARTICLE 15
APPROVAL OF OWNERS AND NOTICES
All notices, demands or requests for consent or approval of any kind which
the Association or any Owner or Occupant is required or desires to give or make
upon the
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Association or any other Owner or Occupant shall (a) be in writing; (b) specify
the Section of this Declaration which requires or authorizes that such notice be
given or requires that such consent or approval be obtained; and (c) be given or
made (subject to the right of the Association or any Owner or Occupant to
designate a different address by giving notice of such change in the manner
provided in this Section) by personal delivery, private express courier, or by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed, in the case of Declarant and the consenting parties, as
follows:
DECLARANT: KR-Carmel Partners, LLC
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
PIAZZA PARTNERS, L.P.: Piazza Partners, L.P.
c/o The Allen Group
401 "B" Street, Suite 2150
San Diego, CA 9101
Attention: Mr. David L. Dick
CARMEL VALLEY, LLC: Carmel Valley, LLC
___________________________________
___________________________________
Attention:_________________________
ACACIA GASOLINE AND CAR WASH Acacia Gasoline and Car Wash of
OF CARMEL VALLEY, LLC Carmel Valley, LLC
___________________________________
___________________________________
___________________________________
Attention:_________________________
RFS FINANCING PARTNERSHIP, L.P.: RFS Financing Partnership, L.P.
___________________________________
___________________________________
Attention:_________________________
ASSOCIATION: Carmel Center Association
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
When given in the manner prescribed in this Section, all notices, demands
or requests for consent or approval shall be deemed given, received, made or
communicated on the date
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personal delivery is effected or, if mailed, on the delivery date or the date on
which delivery is refused by the addressee.
ARTICLE 16
MODIFICATION PROVISION
This Declaration may not be modified in any respect whatsoever, or
rescinded, in whole or in part, except by written instrument duly recorded in
the Office of the County Recorder of San Diego County, after first being duly
signed and acknowledged by Declarant for so long as there is a Declarant, and by
those Owners (which may include Declarant) holding at least seventy-five percent
(75%) of the Members' voting power. Notwithstanding the foregoing, any
modification or rescission of any of the provisions of Section 8.2 regarding the
Common Area and the provisions of Article 11 regarding the grant of easements
with respect to the Common Area shall require the written consent of those
Owners as set forth in Section 8.2.
ARTICLE 17
NOT A PUBLIC DEDICATION
Nothing contained in this Declaration shall be deemed to be a gift or
dedication of any portion of the Center to the general public or for the benefit
of the general public or for any public purposes whatsoever, it being the intent
of Declarant that this Declaration shall be strictly limited to and for the
purposes expressed in this Declaration. The right of the public or any Person to
make any use whatsoever of the Center or any portion thereof (other than any use
expressly allowed by a written or recorded map, agreement, deed or dedication)
is by permission and subject to control of the Owners.
ARTICLE 18
INJUNCTIVE RELIEF
In the event of any violation or threatened violation by any Owner or
Occupant of any portion of the Center of any of the terms, covenants, conditions
and obligations of this Declaration, in addition to the other remedies for which
this Declaration provides, any or all of the Owners shall have the right to
enjoin such violation or threatened violation in a court of competent
jurisdiction.
ARTICLE 19
BREACH SHALL NOT PERMIT TERMINATION
No breach of this Declaration shall entitle any Owner to cancel, rescind or
otherwise terminate this Declaration, but such limitation shall not affect in
any manner any other rights or remedies which such Owner may have under this
Declaration by reason of any breach of this Declaration. Any breach of any of
the covenants, conditions or restrictions set forth in this Declaration,
however, shall not defeat or render invalid the lien of any Mortgage made in
good faith and for value, but such covenants, conditions or restrictions shall
be binding upon and be effective against such Owner of any of said property or
any portion thereof whose title thereto is acquired by foreclosure, trustee's
sale or otherwise.
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ARTICLE 20
INDEMNITY BY OWNERS
20.1 INDEMNITY. Each Owner shall indemnify, protect, defend and hold the
Association and the other Owners harmless from and against all claims, expenses,
liabilities, loss, damage and costs, including any actions or proceedings in
connection therewith and including reasonable attorneys' fees and costs,
incurred in connection with, arising from, due to or as a result of the death of
or any accident, injury, loss or damage, howsoever caused, to any Person or loss
or damage to the property of any Person as shall occur on the indemnifying
Owner's Parcel (excluding Common Areas), except claims resulting from the
negligence or willful act or omission of (a) the Association or the indemnified
Owner, whichever is applicable; (b) any Occupant of the indemnified Owner's
Parcel (including such Occupant's agents, servants and employees); or (c) the
agent, servants or employees of such indemnified Owner, wherever such negligence
or willful act or omission may occur.
20.2 BUILDING AREA LIABILITY INSURANCE. Each Owner shall at all times
during the term of this Declaration maintain or cause to be maintained
commercial or comprehensive general liability insurance covering the Owner's
Parcel (excluding Common Area) insuring against the risks of bodily injury,
property damage and personal injury liability, with a limit of not less than
Three Million Dollars ($3,000,000) per occurrence, which amount shall be
reviewed and adjusted by the Board every three (3) years for increases
recommended by insurance industry-recommended standards for mixed use commercial
centers in San Diego County, California.
ARTICLE 21
SEVERABILITY
If any provision of this Declaration is held by a court of competent
jurisdiction to be invalid, the invalidity of such provision shall not affect
the validity of the remaining provisions of this Declaration, and all remaining
provisions shall continue unimpaired, in full force and effect.
ARTICLE 22
ENFORCEMENT AND REMEDIES
22.1 RIGHT TO ENFORCE. The Declarant or the Association shall have the
right to enforce, by all appropriate legal and equitable proceedings, all
conditions, covenants, restrictions, reservations, liens, and charges now or
hereafter imposed by the provisions of this Declaration. It is hereby agreed
that money damages are an inadequate remedy for breach of any of the conditions,
covenants and restrictions contained herein, other than a default in the payment
of any assessment when due. Every Owner and Occupant of a Parcel subject to
these restrictions expressly waives the benefit of California Code of Civil
Procedure Section 731 (a) and any other comparable statute or rule, and agrees
that such violation or breach may be enjoined whether or not monetary damages
may be provided or provable. Prior to commencing litigation, the requirements of
California Civil Code Section 1354 relating to alternative dispute resolution
shall be satisfied.
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22.2 OWNER'S REMEDIES. After written request to the Association to prevent
any violation of this Declaration, and failure to act by Declarant or the
Association within fifteen (15) days after receipt of such request, any Owner
shall additionally have all enforcement rights provided for in this Declaration.
In addition, any other party to whose benefit this Declaration inures shall have
the right, in the event of violation or breach of this Declaration, to prosecute
a proceeding at law or in equity against the Person or Persons who have violated
or are attempting to violate this Declaration, to enjoin or prevent them from
doing so, to cause said violation to be remedied and to recover damages for said
violation.
22.3 WAIVER. The failure of any Owner, Declarant or the Association to
enforce any provision of this Declaration shall in no event be deemed a waiver
of the right to do so thereafter, and neither any Owner, Declarant nor the
Association shall have any liability for such failure of such Owner, Declarant
or the Association to enforce any provision of this Declaration.
ARTICLE 23
LITIGATION EXPENSES
If any Owner or the Association brings an action against any other Owner or
Occupant by reason of a breach or alleged violation of any covenant, term or
obligation of this Declaration, or for the enforcement of any provision of this
Declaration or otherwise arising out of this Declaration, the prevailing party
in such action shall be entitled to its cost of suit and reasonable attorneys'
fees, which shall be made part of any judgment rendered in such action.
ARTICLE 24
NO ASSIGNMENT OR TRANSFER
The rights, powers, duties and obligations conferred upon the Owners
pursuant to this Declaration shall not at any time be transferred or assigned by
any Owner, except (a) in the case of the rights, powers, duties and obligations
of Declarant, by Declarant pursuant to the definition of "Declarant" set forth
in Article 1; or (b) in the case of any Owner, (i) through a transfer of the
Owner's interest in its Parcel in the manner provided in Article 25, or (ii) to
an Eligible Occupant pursuant to Section 2.1.
ARTICLE 25
SALE BY OWNER
Upon the sale, transfer, conveyance or assignment by any Owner of its
right, title and interest in its Parcel, the following shall apply:
25.1 NOTICE. The transferring Owner shall give prompt written notice of the
sale, transfer, conveyance or assignment to the Association, Declarant and each
other Owner. Such notice shall set forth the name of the transferee and the
transferor, the description of the affected Parcel, the nature of the interest
transferred, the transferee's mailing address and the date of transfer. Prior to
receipt of such notification, any and all communications required or permitted
to be given under the Project Documents shall be deemed to be duly given to the
transferee if duly and timely given to said transferee's transferor.
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25.2 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Each Owner and Occupant, and every
other person who now or hereafter owns or acquires any right, title, estate or
interest in or to any portion of the Center, by acceptance of a deed, lease or
other interest therein, shall be conclusively deemed to have consented and
agreed to hold such title, leasehold or interest subject to and to comply with
every covenant, condition and restriction contained herein and to the rights of
Declarant and the Association hereunder, whether or not any reference to this
Declaration is contained in the deed, lease or other instrument by which such
person acquired said interest in the Center. Every provision of this
Declaration, regardless of its characterization herein, shall be deemed a
covenant, condition, restriction, reservation, easement or servitude, as the
circumstances may require, to permit the enforcement thereof and to carry out
the intent of this Declaration.
25.3 RELEASE OF OWNER. A transferring Owner shall be released from all
obligations of this Declaration as of the effective date of the transfer;
provided that with respect to the period before the effective date of the
transfer, such Owner is not in default in the performance of any duties or
obligations arising under this Declaration or in the payment of any amounts due
and payable under this Declaration.
25.4 LIABILITY OF TRANSFEREE. In no event shall any transferee of any Owner
be liable for any default of the transferring Owner under this Declaration which
occurred prior to the effective date of the transfer; PROVIDED, HOWEVER, nothing
contained in this Section shall affect the existence, priority, validity or
enforceability of any lien placed upon the transferred Parcel or portion thereof
pursuant to Section 3.9.
ARTICLE 26
TERM OF DECLARATION
This Declaration shall continue for a period of fifty (50) years and
thereafter year to year, unless, before the expiration of the term (as it may be
so extended), this Declaration is terminated or modified by written instrument
duly signed and acknowledged by the Declarant, if the Declarant still owns a
Parcel within the Center, and Owners (which may include Declarant) holding at
least seventy-five percent (75%) of the Members voting power, and such
instrument is recorded in the Office of the County Recorder of San Diego County,
California. This Declaration shall terminate upon the expiration of the term
following such recordation. Notwithstanding any such termination, the provisions
of Section 8.2 regarding the Common Area and the provisions of Article 11
regarding the grant of easements with respect to the Common Area shall survive
and remain in full force and effect unless terminated or otherwise modified by
the requisite written consent of the Owners as set forth in Section 8.2.
ARTICLE 27
MISCELLANEOUS
27.1 CAPTIONS. Captions and Section headings, where used in this
Declaration, are for convenience of reference only, are not intended to be a
part of this Declaration and in no way
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
define, limit, amplify, change, alter or describe the scope or intent of the
particular paragraphs to which they refer.
27.2 GENDER. For the purpose of this Declaration, the neuter gender
includes the feminine or masculine and the singular number includes the plural.
27.3 DECLARANT'S RESERVED RIGHTS. Wherever it appears in this Declaration
that the Declarant has the right to waive compliance with certain provisions,
the right to approve or deny certain matters or the right to exercise its
discretion in various areas, these rights of the Declarant are expressly
reserved or retained by the Declarant, and all of the provisions of this
Declaration are subject to such retained and reserved rights.
27.4 EXHIBITS. All exhibits referred to herein are attached hereto and
incorporated by reference.
27.5 GOVERNING LAW. This Declaration shall be governed, construed and
enforced in accordance with the laws of the State of California.
27.6 MORTGAGE PROTECTION. No breach of this Declaration shall affect,
impair, defeat or render invalid the lien of any Mortgage now or hereafter
executed in good faith and for value upon any part of the Center. However, if
any portion of the Center is sold under a foreclosure of any Mortgage or is
conveyed to the party so secured in lieu of foreclosure, any purchaser at such
sale, and his successors and assigns, shall hold any and all property so
acquired subject to all of the restrictions and other provisions of this
Declaration. Such a purchaser shall not be obligated to cure any preexisting
breach of this Declaration which is non-curable by payment of money (subject to
the provisions of Section 3.11 subordinating the lien of delinquent assessments
to the lien of a first priority Mortgage) or of a type which is not practical or
feasible to cure. Any loan to facilitate the resale of any portion of the
Property after a foreclosure sale or deed in lieu of foreclosure is a loan made
in good faith and for value. If a Mortgagee delivers written notice of its
Mortgage to the Board together with a request for notices of default with
respect to the Parcel or Parcels encumbered by the Mortgage, the Association
shall deliver copies of all such notices of default to such Mortgagee (a
"Requesting Mortgagee") concurrently with delivery to the Owner or Owners. A
Requesting Mortgagee shall also be entitled to timely written notice of any
destruction, taking or threatened taking that affects a material portion of the
Common Area (including without limitation any Common Parking Area) benefiting a
Parcel securing the Mortgage, and any lapse, cancellation or material
modification of any insurance policy maintained by the Association. Mortgagees
are hereby authorized to furnish information to the Board concerning the status
of any Mortgage. Nothing contained in this Declaration or the other Project
Documents shall give the Association, any Owner, or any other party priority
over the rights of a first Mortgagee with respect to distributions of insurance
proceeds or condemnation awards for losses to or a taking of a Parcel, or any
portion thereof, encumbered by a Mortgage held by such Mortgagee.
27.7 MUTUALITY, RECIPROCITY; RUNS WITH LAND. This Declaration is made for
the direct, mutual and reciprocal benefit of each and every Parcel; shall create
mutual, equitable servitudes upon each Parcel in favor of every other Parcel;
shall create reciprocal rights and
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
obligations between and among the respective Owners during their respective
periods of ownership and privity of contract and estate between and among all
grantees of each Parcel, their respective heirs, successors and assigns; and
shall, with respect to the Owner of each Parcel, its heirs, successors and
assigns during their respective periods of ownership, operate as covenants
running with the land, for the benefit of all other Parcels.
IN WITNESS WHEREOF, the Owners have signed and made this Declaration as of
the date first above written.
-45-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DECLARANT KR-CARMEL PARTNERS, LLC, a Delaware
limited liability company
By: Kilroy Realty, L.P., a Delaware limited
partnership, Managing Member
By: Kilroy Realty Corporation, a
Maryland corporation, its
General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIAZZA PARTNERS, L.P. PIAZZA PARTNERS, L.P.,
a California
limited partnership
By: Allen Development, Inc., a California
corporation, Its General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-46-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ACACIA GASOLINE AND CAR WASH ACACIA GASOLINE AND CAR WASH OF
OF CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RFS FINANCING PARTNERSHIP, L.P. RFS FINANCING PARTNERSHIP, L.P., a
Tennessee limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSENT OF ASSOCIATION
The Association hereby manifests its assent to the foregoing Declaration as
of the date of its recordation in the Office of the County Recorder of San Diego
County, California.
CARMEL CENTER ASSOCIATION, a California
nonprofit mutual benefit corporation
-47-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-48-
EXHIBIT F
-53-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-49-
EXHIBIT F
-54-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ____________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-50-
EXHIBIT F
-55-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-51-
EXHIBIT F
-56-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-52-
EXHIBIT F
-57-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-53-
EXHIBIT F
-58-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-54-
EXHIBIT F
-59-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SUBORDINATION AGREEMENT
_______________________________________________________, being the
beneficiary under that certain deed of trust dated _____________________, 199__
and recorded in the Office of the County Recorder of San Diego County,
California on ____________, 1999__ as Document No. ________________, hereby
declares that the lien and charge of said deed of trust are and shall be
subordinate and inferior to the Agreement Between Landowners Including
Covenants, Conditions and Restrictions and Grants of Easements for Carmel Center
and Including Termination of Both Former Declaration and Prior Grants of
Easements to which this Subordination Agreement is attached.
[NAME OF LENDER]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
EXHIBIT F
-60-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "A"
SITE PLAN OF THE CENTER
[MAP]
EXHIBIT F
-61-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTIONS OF PARCELS COMPRISING THE CENTER
<TABLE>
<S> <C>
PARCEL A: Parcel 2 of Parcel Map 15957 (NW corner site)
PARCEL B: Parcel 1 of Parcel Map 17382 (office building - west of parking garage)
PARCEL C: Parcel 1 of Parcel Map 18098 (hotel)
PARCEL D: Parcel 2 of Parcel Map 18098 (Frank's pad immediately east of hotel)
PARCEL E: Parcel 1 of New Parcel Map (parking garage)*
PARCEL F: Parcel 6 of New Parcel Map (parking garage)*
PARCEL G: Parcel 7 of New Parcel Map (parking garage)*
PARCEL H: Parcel 2 of New Parcel Map (office building - most westerly)*
PARCEL I: Parcel 3 of New Parcel Map (office building)*
PARCEL J: Parcel 4 of New Parcel Map (office building)*
PARCEL K: Parcel 5 of New Parcel Map (office building - most easterly)*
PARCEL L: Lot 7 of Parcel Map 13138 (gas station - car wash)
PARCEL M: Lot 8 of Parcel Map 13138 (Frank's pad at far east end of site)
</TABLE>
EXHIBIT "B"
EXHIBIT F
-62-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
* - These Parcels are presently described as Lots 1 through 6 and 9 of
Piazza Carmel II, Unit No. 1, in the City of San Diego, County of San Diego,
State of California, according to map thereof No. 13138, filed in the Office of
the County Recorder of San Diego County, September 13, 1994.
EXHIBIT F
-63-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "C"
TABLE OF PARCEL AREAS (PRELIMINARY)
<TABLE>
<S> <C>
PARCEL A: 47,568 square feet of Parcel Area
PARCEL B: 104,326 square feet of Parcel Area
PARCEL C: 168,839 square feet of Parcel Area
PARCEL D: 18,861 square feet of Parcel Area
PARCEL E: N/A (Parking Garage) square feet of Parcel Area
PARCEL F: N/A (Parking Garage) square feet of Parcel Area
PARCEL G: N/A (Parking Garage) square feet of Parcel Area
PARCEL H: 756,677 (total for Parcels H-K) square feet of Parcel Area
PARCEL I: _________________ square feet of Parcel Area
PARCEL J: _________________ square feet of Parcel Area
PARCEL K: _________________ square feet of Parcel Area
PARCEL L: 76,404 square feet of Parcel Area
PARCEL M: 58,501 square feet of Parcel Area
----------------------------
Total Parcel Area 1,229,176 square feet
Subject to Assessment
</TABLE>
EXHIBIT F
-64-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
HVAC AND ELECTRICAL STANDARDS
HEATING, VENTILATING & AIR CONDITIONING
Description of System: The system design
shall include roof-top mounted variable air
column (VAV) cooling units with associated
valves, pipes and fittings. Capacity and
number of units as indicated on the plans.
Ductwork stubbed to each floor. Medium
pressure duct loop provided as a Tenant
Improvement.
A. Five (5) VAV rooftop package units
variable frequency drive motors per
Building.
B. Controls: The controls will be an
electronic type and give individual zone
control.
C. Exhaust System: Provide all toilet rooms
with acceptable exhaust systems with
quiet operation. Exhaust to roof.
Exhausting to meet code requirements.
Provide exhaust in stair enclosures as
required by code.
ELECTRICAL
Main Service Main service to each building to be 277/480
volt, 3 phase 4 wire, 4000 amp located
within an electric room with distribution
and subpanel for core functions only to
each floor as a part of the Base, Shell and
Core improvements.
Building Power and Lighting Electrical work shall include metering
facilities, conduit, conductors, main
switch board, subpanels, branch circuits,
J-boxes, lighting fixtures, wall light
switches, power receptacles, etc. for the
site common areas, Base, Shell and Core
improvements and parking structure.
Switchgear and conductors, for conduits,
subpanels, etc. for Tenant access in Tenant
Improvements.
Power & Utility Core Electrical for the Base, Shell and Core
improvements and parking structure work
shall include a service and distribution
including conduit, conductors, switch
board, subpanels, branch circuits, J-boxes,
lighting fixtures, wall light switches,
power receptacles, etc.
Power for Equipment Power wiring and connection to air
condition equipment as well as control
wiring and control devices to be included
in Tenant Improvements.
Telephone & Data Communication Telephone and data communication cabling
provided by Tenant. Provide (4) 4" conduit
between Buildings.
Installation All electrical work to be in accordance
with applicable codes. All necessary
outlets, conduit, wiring, trenching and
concrete encasing shall be provided as
required.
Interior Lighting Fluorescent lighting (exit corridors,
janitor closet): Provide 2' x 4' recessed
fixtures with parabolic lens and electronic
ballast in suspended ceilings. Provide
recessed down lighting in lobbies. Provide
1' x 4' recess mounted fixtures at toilet
rooms, electrical and telephone rooms. All
lighting in lobby and exit enclosures to be
controlled by wall mounted motion sensors
with override switch as required by Title
24.
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-1
PEREGRINE SYSTEMS CORPORATE CENTER
JANITORIAL SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 6
--------------
SPECIFICATIONS
ENTRANCE LOBBIES/BUILDING CORRIDORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum carpets completely.
3. Empty all waste containers and spot-clean.
4. Spot clean carpeted floor surface.
5. Dust ledges within reach.
6. Damp mop spillage as needed.
7. Empty cigarette receptacles.
8. Spot clean walls and doors.
9. Clean entrance mats as necessary.
10. Clean all metal door frames and thresholds.
11. Clean building directory board glass.
12. Vacuum entrance mats as necessary.
13. Only designated lights will be left on.
Weekly Services:
1. Spot clean walls, woodwork, and doors.
2. Perform high dusting.
3. Edge all carpets.
4. Polish entrance metals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 6
--------------
SPECIFICATIONS - CONTINUED
5. Dust all baseboards.
6. Dust all horizontal surfaces.
Monthly Services:
1. Dust and vacuum air supply and exhaust diffusers.
2. Vacuum all furniture in lobby area.
ELEVATORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum and spot clean carpets.
3. Clean and polish doors.
4. Clean and polish interior of cab.
5. Vacuum tracks thoroughly.
6. Clean all bright work.
Weekly Services:
1. Polish all bright work.
2. Clean tracks thoroughly.
Monthly Services:
1. Vacuum ceiling grate.
STAIRWAYS AND LANDINGS
Daily Services: Five (5) Days Per Week
1. Police area to remove refuse.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 3 OF 6
--------------
SPECIFICATIONS - CONTINUED
2. Damp mop to remove spillage as needed.
3. Spot sweep stairs as needed.
Weekly Services:
1. Sweep stairways and landings.
2. Dust all handrails.
3. Wet mop as needed.
OFFICE/TENANT AREAS
Daily services: Five (5) Days Per Week
1. Sweep with chemically treated dust-mop or vacuum all high traffic
areas.
2. Spot clean composition floors.
3. Dust desks, chairs, and all other office furniture.
4. Clean all ash trays and sand urns.
5. Empty all waste baskets and carry trash to pick up area.
6. Spot clean partition door glass.
7. Clean and polish drinking fountains.
8. Install plastic waste basket liners furnished by customer, replace as
necessary.
Weekly Services:
1. Dust ledges and window sills.
2. Perform High Dusting.
3. Dust picture frames and book shelves.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 4 OF 6
--------------
SPECIFICATIONS - CONTINUED
4. Remove fingerprints from woodwork, walls and partitions.
5. Dust vertical surfaces of office furniture.
6. Dust chair rungs and furniture legs.
7. All in suite carpet to be vacuumed completely.
8. Spot clean around wall switches.
9. Spot clean doors, door frames, and counters.
10. Dust all horizontal surfaces.
11. Spot clean all glass partitions.
Monthly Services:
1. Perform high dusting, i.e. door sashes and tops of partitions.
2. Wipe down plastic and leather furniture.
3. Dust venetian blinds.
4. Dust and vacuum ceiling and wall vents.
RESTROOM AND LOUNGES
Daily Services: Five (5) Days Per Week
1. Empty and wipe out all waste paper containers.
2. Empty sanitary napkin containers and replace insert.
3. Polish all metal and mirrors.
4. Clean all dispensers.
5. Clean and disinfect wash basins, toilets and urinals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 5 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Disinfect undersides and tops of toilet seats.
7. Clean floors with germicidal solution.
8. Vacuum carpets.
9. Refill soap, towel, and tissue dispensers.
10. Report to Building Manager any fixture not working.
Weekly Services:
1. Perform high dusting.
2. Dust all air supply and exhaust diffusers.
3. Polish all dispensers.
4. Spot clean tile walls and toilet partitions.
5. Spot clean walls around wash basins.
Monthly Services:
1. Wash down toilet compartment partitions.
KITCHEN, VENDING OR LUNCHROOM
Daily Services: Five (5) Days Per Week
1. Clean sink if empty.
2. Clean counter top.
3. Empty trash.
4. Damp mop floor.
5. Wipe off tables and chairs and arrange.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 6 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Wipe off fronts of vending machines.
7. Vacuum carpeting.
8. Wipe down microwaves.
FLOOR CARE
ENTRANCE LOBBIES AND BUILDING CORRIDORS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
OFFICE/TENANT AREAS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
RESTROOMS
1. Scrub and seal floors monthly.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-2
PEREGRINE SYSTEMS CORPORATE CENTER
DAY PORTER SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 2
--------------
SPECIFICATIONS
DAY PORTER JOB DESCRIPTION
A. ENTRANCE LOBBY AND BUILDING CORRIDORS
1. Spot clean entrance door glass and lobby glass.
2. Wipe down all interior and exterior window sills at lobby level.
3. Dust lobby, including guard station and vacuum as needed. Empty trash
at guard station and clean counters.
4. Remove trash from receptacles in elevator lobbies on each floor.
5. Clean lobby directory as necessary throughout the day.
6. Empty and clean sand urns and replace sand as needed.
7. Polish and clean all metal and brightwork as necessary.
8. Spot clean carpets for spills.
9. Spot vacuum carpets as necessary.
10. Clean drinking fountains.
B. BUILDING EXTERIOR
1. Police for trash, sidewalks, curbs, around trees, planters and pots
around entire building.
2. Damp mop walkway for spills and stains.
3. Clean hose bib cover plates, as needed.
4. Sweep entrance sidewalks as needed.
5. Police balconies daily for leaves and debris.
6. Sweep balconies as needed.
7. Wipe down handrails on balconies.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 2
--------------
SPECIFICATIONS - CONTINUED
C. PARKING GARAGE AND TRASH ENCLOSURES
1. Police and clean around trash bins.
2. Empty and break down all boxes before disposing in dumpsters.
3. Clean pay phones in garage and keep area around them clean.
4. Spot clean garage lobby door and glass.
5. Dust exterior of lobby doors and wall in garage.
6. Check mail room daily, and wipe down counters and mail boxes.
Vacuum as needed.
D. STAIRWELLS, LANDINGS AND ELEVATORS
1. Police stairwells daily for trash and debris.
2. Damp mop for spills and stains.
3. Thoroughly sweep two flights of stairs per day.
4. Check stairwells for cobwebs, dustballs and burned out lights.
5. Dust and wipe handrails after sweeping.
6. Check elevator cabs several times daily.
7. Spot vacuum elevator cabs as necessary.
8. Spot clean elevator doors and walls.
9. Keep elevator cab emergency phones clean and sanitary at all times.
E. RESTROOMS
1. Empty trash containers if necessary.
2. Clean and restock restroom supplies after the noon hour.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
SECURITY SYSTEMS AND PERSONNEL
A card key access system will be included in the Base, Shell and Core. One
(1) security guard will be on duty at the Project on a twenty-four (24) hour
per day, seven (7) days per week basis commencing upon the Lease Commencement
Date for Building 1. Security rounds will be made at applicable shift
changes. If Tenant constructs a security desk and security console (as a
Tenant Improvement or as an Alteration), Tenant shall have the option to
cause such security guard to be stationed at such desk and console; however,
if Tenant elects to construct such desk and console on a permanent basis at
Building 1, and if Tenant's occupancy in the Project falls below 182,000
rentable square feet, Landlord shall have the option, at Landlord's sole cost
and expense, to relocate such security desk and console to a location in the
Building reasonably designated by Landlord. An additional security guard will
be hired to patrol the Project during the hours of 6:00 a.m. to 10:00 p.m.
Monday through Friday and 8:00 a.m. to 12:00 noon on Saturday (except
Holidays) commencing upon the Lease Commencement Date; the cost of such
additional security guard will be included in Operating Expenses and
Operating Expenses for the Base Year shall be grossed up to include such
guard's services as if provided throughout the Base Year.
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT J
PEREGRINE SYSTEMS CORPORATE CENTER
SIGNAGE CRITERIA
CARMEL CENTER
SIGN GUIDELINES AND CRITERIA
February 24, 1999
EXHIBIT J
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SUBMITTALS AND APPROVALS.....................................................1
RESTRICTIONS.................................................................2
NONCONFORMING SIGNS.......................................................4
ILLEGAL SIGNS.............................................................4
ABANDONED SIGNS...........................................................4
GENERAL PROVISIONS...........................................................5
CONSTRUCTION REQUIREMENTS....................................................7
DESIGN GUIDELINES............................................................9
SIGN CRITERIA...............................................................12
PROJECT AND TENANT SIGNAGE...............................................12
GAS STATION IDENTIFICATION SIGNS.........................................14
SECONDARY SITE SIGNS.....................................................15
ANCILLARY SIGNAGE........................................................15
TEMPORARY SIGNAGE: .........................................................16
PROJECT LEASING / CONSTRUCTION / FUTURE FACILITIES.......................16
TENANT LEASE SPACE BANNERS...............................................16
SEASONAL / SPECIAL EVENT SIGNAGE.........................................16
EXHIBITS....................................................................17
</TABLE>
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
OBJECTIVE
The objective of The Carmel Center Sign Guidelines and Criteria is to provide
design standards and specifications that assure consistency in quality,
color, size, placement, and configuration for signage throughout the project,
and to provide signage that will be an integral part of the overall
architectural character and design theme suitable for the prestigious
corporate image of the Carmel Center project.
SUBMITTALS AND APPROVALS
1. There is a formal process for the creation, review and approval of
signage throughout The Carmel Center project. Prior to sign fabrication,
plans for all proposed signage shall be submitted to the Owner who will
review plans for conformance with the Sign Guidelines and Criteria. All plans
submitted for approval must conform to requirements of the criteria contained
in The Carmel Center Sign Guidelines and Criteria. Only those sign types
specifically approved in writing by the Owner will be allowed. The Owner
shall have the discretionary authority to deny approval for any submittal
which does not comply with the intent or purpose of the sign criteria.
The Tenant shall submit all sign designs to Owner and obtain his written
approval prior to sign fabrication. Approval or disapproval shall remain the
sole right and discretion of the Owner. The Tenant must continue to revise
and resubmit rejected designs until approval is obtained.
Prior to sign fabrication, the Tenant or his sign contractor shall submit for
Owner approval three (3) sets of complete and fully-dimensioned shop drawings
reflecting the sign design approved by the Owner. The shop drawings submittal
shall include:
a. Name, address and phone number of tenant / user
b. Name, address and phone number of Sign Contractor, Designer.
c. Elevation of structure showing all proposed signs indicating sign
type, design, location, size and layout of sign drawn to scale and
indicating dimensions, attachment devices and construction details,
colors, materials and lighting details.
d. Section detail of letters and/or sign element showing the
dimensioned projection of the face of letters, method and intensity
of illumination.
e. Color board with actual sample colors (8-1/2" x 11" format).
f. Site plan showing property lines, buildings, location and
dimensions from public right of way.
1
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. Requests to establish signs that vary from the provisions of this sign
program shall be submitted to the Owner for approval in writing prior to
being submitted to the City of San Diego.
4. Following approval of proposed signage by the Owner, applications for all
permits for fabrication and installation by Sign Contractor may be submitted
to the City of San Diego for approval, along with applicable sign permit
applications.
5. Fabrication and installation of all signs shall be performed in accordance
with the standards and specifications outlined in these guidelines and in the
final approved plans and working drawings.
RESTRICTIONS
Only those sign types provided for herein and specifically approved in writing
by the Owner will be allowed. The following signs are prohibited:
1. PROHIBITED SIGNS
a. Exposed junction boxes, transformers, lamps, tubing, conduits,
raceways or neon crossovers of any type.
b. Signs using "Trim Cap" retainers that do not match the color of the
letter returns and logo returns.
c. Rooftop signs.
d. Rotating, revolving, flashing or moving signs, except as provided in
this text.
e. Advertising or promotional signs on parked vehicles.
f. Advertising signs on bus benches, within or outside of the public
right-of-way.
g. Off-premise signs (other than directional signs) installed for the
purpose of advertising a project, event, person or subject not related
to the premises upon which said sign is located.
h. No signs, decals or advertising may be placed on windows except as
provided for in the Sign Guidelines and Criteria and specifically
approved in writing by the Owner.
i. No temporary promotional signs, appliances, or advertising shall be
permitted such as banners, pennants, streamers, temporary wall signs,
portable signs, including
2
EXHIBIT J
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
signs on vehicles, sandwich boards, inflatable displays or any other
attention getting devices except as provided for herein.
3
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
2. NONCONFORMING SIGNS
The Owner may, at its sole discretion, correct, replace or remove any
sign that is installed without written approval and/or that is deemed not to
be in conformance with the plans as submitted and with the Carmel Center
Signage Plan.
3. ILLEGAL SIGNS
Any sign that is deemed not to be in conformance with the approved
guidelines or erected without government approval or permits is considered
an illegal sign. The Owner may, at its sole discretion, correct, replace or
remove any illegal sign.
4. ABANDONED SIGNS
An abandoned sign is one whose use is discontinued because the premises
upon which it is located becomes vacated and unoccupied for a period of more
than 90 days. The Owner may, at its sole discretion, replace or remove any
abandoned sign.
4
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
GENERAL PROVISIONS
1. Signs shall be designed in a manner that is compatible with and
complementary to the overall project and adjacent facades.
2. Only those sign types provided for in the Sign Guidelines and Criteria
and/or specifically approved in writing by the Owner will be allowed.
3. Signage that incorporates logos, business identity, and/or images
denoting the type of business shall be encouraged. Logo design and colors
to be approved by the Owner.
4. Logo, letter heights and sign square footages, where specified, shall be
determined by measuring the normal capital letter of type exclusive of
typographic swashes, ascenders, descenders or exaggerated initial capitals.
Maximum copy areas shall be calculated exclusive of display surfaces,
backings, architectural elements, and mounting devices.
Logos and/or images that are in use on similar buildings operated by the
tenant in California may be used, provided that said images are
architecturally compatible and approved by the Owner and shall be counted in
overall allowable square footage for tenant signs.
5. Notwithstanding the maximum square footages specified for copy area
allowances, signs and typography in all cases shall appear balanced and in
scale within the context of the sign spaces - monuments and building walls -
as a whole. Thickness, height, and color of sign lettering shall be visually
balanced and in proportion to other signs on the building.
6. Wall signs shall be affixed without visible means of attachment, unless
attachments make an intentional statement. Wall signs need not be attached
directly to the lease space to which they refer.
5
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
7. Ground signs or monument signs may be located within landscaped zones
between property lines and building setback lines, allowing for adequate
site-lines for approaching vehicular traffic at street intersections and
project entries, but may not be located in the public right-of-way. Ground
signs identifying any tenant or use within the project area may be located
on any lot within the project area.
8. All sign fabrication work shall be of excellent quality. All logo images
and typestyles shall be accurately reproduced. Lettering that approximates
typestyles shall not be acceptable. The Owner reserves the right to reject
any fabrication work deemed to be below standard.
6
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
CONSTRUCTION REQUIREMENTS
1. All formed metal, such as letter forms, shall be fabricated using
full-weld construction.
2. All ferrous and non-ferrous metals shall be separated with non-conductive
gaskets to prevent electrolysis. In addition to gaskets, stainless steel
fasteners shall be used to secure ferrous to non-ferrous metals.
3. Threaded rods or anchor bolts shall be used to mount sign letters which
are spaced out from background panel. Angle clips attached to letter sides
will not be permitted.
4. Surfaces with color mixes and hues prone to fading (e.g., pastels,
fluorescent, complex mixtures, and intense reds, yellows and purples) shall
be coated with ultraviolet-inhibiting clear coat in a matte, gloss, or
semi-gloss finish.
5. Joining of materials (e.g., seams) shall be finished in such a way as to
be unnoticeable. Visible welds shall be continuous and ground smooth.
Rivets, screws, and other fasteners that extend to visible surfaces shall
be flush, filled, and finished so as to be unnoticeable.
6. Finished surfaces of metal shall be free from canning and warping. All
sign finishes shall be free of dust, San Diego peel, drips, and runs and
shall have a uniform surface conforming to the highest standards of the
industry.
7. Reverse channel letters shall be pinned 2" off building wall. Return
depth shall be 2-1/4", maximum, for letters less than 12" in height, and
such signs shall have a clear acrylic backing. Double tube neon shall be
used where width of letter stroke exceeds 2-1/4".
8. Depth of open channel letters shall not exceed 2". All hardware and neon
tube supports inside open channel letters shall be painted to match interior
letter color. Neon tubing shall be sufficient to make letters read "solid"
and shall be installed so that top surface of neon is flush with front edges
of open channel.
9. Signs illuminated with neon shall use 30 m.a. transformers. The ballast
for fluorescent lighting shall be 430 m.a. Fluorescent lamps shall be single
pin (slimline) with 12" center-to-center lamp separation. All lighting must
match the exact specifications of the approved shop drawings.
10. Surface brightness of all illuminated materials shall be consistent in
all letters and components of the sign. Light leaks will not be permitted.
7
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
11. The back side of all bare neon used for signage shall be painted to
provide an opaque finish. Paint color shall exactly match the
Owner-approved specification.
12. All conduit, raceways, crossovers, wiring, ballast boxes, transformers,
and other equipment necessary for sign connection shall be concealed. All
bolts, fastenings and clips shall consist of enameling iron with porcelain
enamel finish, stainless steel, anodized aluminum, brass or bronze; or
carbon-bearing steel with painted finish. No black iron materials will be
allowed.
13. Underwriter's Laboratory-approved labels shall be affixed to all
electrical fixtures. Fabrication and installation of electrical signs shall
comply with all national and local building and electrical codes.
14. Penetrations into building walls, where required, shall be made
waterproof.
15. Location of all openings for conduit sleeves and support in sign panels
and building walls shall be indicated by the sign contractor on drawings
submitted to the Owner. Sign contractor shall install same in accordance
with the approved drawings.
16. In no case shall any manufacturer's label be visible from normal viewing
angles.
17. Sign permit stickers shall be affixed to the bottom edge of signs, and
only that portion of the permit sticker that is legally required to be
visible shall be exposed.
8
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
DESIGN GUIDELINES
1. DESIGN OBJECTIVE
The primary objective of these guidelines is to generate signage of the
highest quality design, fabrication and installation, consistent with the
project architecture and design theme.
2. ACCEPTABLE SIGN TREATMENTS
The following treatments are considered appropriate:
- painted metal
- etched or polished metal
- dimensional letter forms with seamless edge treatment
- opaque acrylic materials with matte finishes
- internally illuminated channel or reverse channel letters
9
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. LIGHTING
The following treatments are considered appropriate:
- reverse channel neon with silhouette illumination
- open channel neon
- exposed neon
- internal illumination
- front lighting
- area lighting
All front lighting should be baffled and obscured in channels where
possible. Where fixtures, shades, or other elements are exposed, they
should contribute to the design of the tenant's lease space.
All exposed or skeletal neon must be backed with a opaque coating,
unless otherwise specified herein or approved in writing by the Owner. All
housings and posts for exposed neon signs must be painted out to match the
building background immediately behind and adjacent to the sign.
The following shall be prohibited:
- animated lights
- exposed conduits and raceways
- front lighting fixtures that compete with the storefront design
4. COLORS
The following guidelines are to be adhered to in selecting colors for
tenant signage:
- sign colors should be selected to provide sufficient contrast against
building background colors
- colors within each sign should be harmoniously blended
- sign colors should be compatible with building background colors
- color of letter returns should contrast with face colors for good
daytime readability
- interior of open channel letters should be painted dark when against
light backgrounds
- neon colors should complement related signage elements
All sign colors are subject to review and approval by the Owner as part
of the tenant sign submittal.
10
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
5. TYPESTYLES AND LOGOS
Tenants may adapt established typestyles, logos and/or images that are in
use on similar buildings operated by them in California, provided that
said images are architecturally compatible and approved by the Owner. Type
may be arranged in one or more lines of copy and may consist of upper
and/or lower case letters.
6. SIZES AND QUANTITIES
Sizes and quantities for tenant signs shall be as outlined in the
criteria for each sign type. Notwithstanding the maximum square footage
specified for copy area allowances, adequate amounts of visual open space
shall be provided around wall signs so that signs appear balanced and in
scale in relation to their backgrounds.
11
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
SIGN CRITERIA
PROJECT AND TENANT SIGNAGE
Signs shall be designed to be harmonious with the overall project design
theme and architecture, and shall be consistent with the provisions of the
Sign Guidelines and Criteria for the project. Minor tenant or directional
signs not oriented towards the public right-of-way are allowed with Owner's
prior written approval in addition to the signs below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Sign Type Max. Qty. Single-Faced/ Dimensions, Wall/ Max. Copy Copy Location
Double-faced Monument Height Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(B) Building (1) sign per bldg. s.f. 24" max. letter Building address/ Address
Address Wall elevation, not to height street number locations to
Signs exceed four signs satisfy Fire
max. per bldg. Dept.
regulations
- -----------------------------------------------------------------------------------------------------------------------------------
(C) Directional As required for s.f. or d.f. 5' 12 sq. ft. + - Directional As necessary
Signs facilitating project logo per information and
traffic sign face arrows
- Project name
and logo
- -----------------------------------------------------------------------------------------------------------------------------------
(D) Secondary As required/
Site Signs see general
guidelines and
provisions for
secondary site
signage
- -----------------------------------------------------------------------------------------------------------------------------------
(E) Restaurant (1) sign per s.f., d.f. 6' 40 sq. ft. Restaurant name As shown on
Identification restaurant and/or logo sign location
Monument Sign frontage plan
- -----------------------------------------------------------------------------------------------------------------------------------
(E2)Restaurant 2 signs per s.f. 50 sq. ft. Restaurant name On
Identification restaurant each and logo restaurant
Wall Sign building
wall
- -----------------------------------------------------------------------------------------------------------------------------------
(H1)Carmel Center 2 along El s.f. 6 ft max. ht. 60 sq. ft. - Project name, As shown on
Project Camino Real each logo and address site map
Identification
Monument
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Sign Type Max Qty. Single- Dimensions. Max. Copy Location
Faced / Wall / Copy
Double- Monument Area
faced Height
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(H2) Office Project 2 per entry s.f. or 5 ft. max ht. 32 sq. ft. - Project As shown on
Entry d.f. each Identification sign location
Identification logo and address plan
Monument - Tenant
Identification and
/or logo
- -------------------------------------------------------------------------------------------------------------------------------
(H3) Tenant 2 signs s.f. -- 100 sq. Building As shown on
Identification total each ft. identification sign location
Wall Signs building; 1 Max. and/or tenant name plan
max. per each and/or logo
tenant each
building
elevation
- -------------------------------------------------------------------------------------------------------------------------------
(H4) Office Building (1) sign per s.f. or 4' max. ht. 32 sq. ft. Building and/or
Monument building d.f. each tenant
Sign identification
Note: Where signs
orient to the
public right of
way, tenant
listings will not
be allowed.
- -------------------------------------------------------------------------------------------------------------------------------
(H5) Tenant (1) sign per s.f. 4 ft. 12 sq. ft. Tenant name As shown on
Identification tenant with Max. and/or logo sign location
Signs individual each plan. May be
entry wall or ground
sign
- -------------------------------------------------------------------------------------------------------------------------------
(H6) Project 1 on s.f. Project name and On retaining
Identification retaining logo wall south side
Sign (on wall south of project
retaining wall) side of
project
- -------------------------------------------------------------------------------------------------------------------------------
(J5) Retail Pad 2 per pad s.f. 32 sq. ft. Tenant name and/or On exterior
Tenant tenant logo building wall
Identification (a third wall
Wall Sign sign may be
allowed in
lieu of Sign
Type J6
monument
sign)
- -------------------------------------------------------------------------------------------------------------------------------
(J6) Retail Pad 1 per pad s.f., d.f. 5 ft. 25 sq. ft. Tenant name and/or As shown on
Tenant tenant 12" max logo sign location
Identification letter ht. plan.
Monument
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
GAS STATION IDENTIFICATION SIGNS
G1. Gas Station Identification Wall Sign
1 per each street frontage, single or double-faced; 50 sq. ft. each maximum
copy area. Copy limited to name and logo of company and product/service.
Color, letter style and logo may be used with Owner's prior written approval.
Signs for associated uses (e.g. car wash) shall conform to criteria for
Tenant Identification Sign Type H5.
G2. Gas Station Identification Monument Sign
1 per street frontage, single or double-faced; 6 ft max. ht., 60 sq. ft. each
face maximum copy area. Copy limited to name and logo of company, associated
uses and gas pricing information.
14
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
SECONDARY SITE SIGNS
Secondary Site Signs are signs other than the primary project or tenant
identification signs and include:
- address signage
- entrance signs
- directory maps and listings
- directional signs, both pedestrian and automobile-oriented
- unit number signs
- parking and traffic control signs
- informational signs such as identification for public restrooms
- building entrance signs
- restaurant menuboards
- other code required signs
Secondary site signs are not to be visible from the public right-of-way, with
the exception of entrance signs, parking control signs, and address signs
which should be oriented toward the public right-of-way. All secondary site
signs shall be designed as a family of signs. Selected elements such as
typestyle, layout, form, detail, colors and materials, shall remain
consistent within each sign "family".
A strong connection shall be maintained between secondary site signs and the
project architecture and landscaping. Elements of color, material, scale,
form and detail shall be reflected in the signage. Signs shall fit
comfortably, never crowding the architectural and landscape elements in the
immediate vicinity.
Secondary signs may be freestanding or wall-mounted. Freestanding signs
should generally be less than (4) feet in height, with the exception of
tow-away, handicapped, address, clearance and traffic regulatory signs, which
shall conform to the regulations and safety standards established by the City
of San Diego. Traffic regulatory signs may be reduced in scale where viewing
distances are diminished. Maximum copy area for all secondary site signs shall
be 12 square feet.
ANCILLARY SIGNAGE
Ancillary signage are signs other than primary tenant identification signs,
and are not included in maximum tenant signage area. Ancillary signage is
subject to Owner's prior written approval. Typical ancillary signage includes:
- Window Signs
- Suite Identification Signs
- Tenant Door Signs
- Delivery Entrance Identification Signs
15
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TEMPORARY SIGNAGE:
PROJECT LEASING/CONSTRUCTION/FUTURE FACILITIES
Temporary signs will be required for various activities at Carmel Center
during and after completion of the development phase. Shapes, base colors and
proportions of the signage must be consistent with sign design guidelines
(see Exhibit for specific sign type).
- - may be ground-mounted.
- - may be externally illuminated.
TENANT LEASE SPACE BANNERS
- - temporary signs may be allowed at individual lease spaces displaying
"for lease", "coming soon" and similar messages.
- - tenants will be allowed use of a temporary identification banner for a
period of time not to exceed 60 days with prior written approval of the
Owner:
- one sign per street frontage
- 32 square feet maximum copy area per banner
- placed below roof eave
SEASONAL/SPECIAL EVENT SIGNAGE
Cooperative seasonal or special event signage will be permitted upon review
and approval by the Owner.
- - Typical message:
- "Now Open"
- "Grand Opening"
- Themes related to seasonal, holiday or community events
- Design to be compatible with project design theme
- 50 square feet maximum copy area per banner
- placed below roof eave
- use of special event signage for a period of time not to exceed 45
days per event
16
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<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
EXHIBITS
NOTE: All maps and figures indicate typical design concepts and locations.
Exhibits are not intended to suggest final sign designs or exact locations
17
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
[MAP]
19
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
[MAP]
20
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
OFFICE LEASE
PEREGRINE SYSTEMS CORPORATE CENTER
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
as Landlord,
and
PEREGRINE SYSTEMS, INC.
a Delaware corporation
as Tenant
BUILDING 3
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER OFFICE LEASE
SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "SUMMARY"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "OFFICE LEASE") which
pertains to the "Project," as that term is defined in the Office Lease, to be
known as "PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 of the
Office Lease). This Summary and the Office Lease are collectively referred to
herein as the "LEASE". Each reference in the Office Lease to any term of this
Summary shall have the meaning set forth in this Summary for such term. In the
event of a conflict between the terms of this Summary and the Office Lease, the
terms of the Office Lease shall prevail. Any capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the Office
Lease.
<TABLE>
<CAPTION>
TERMS OF LEASE
(REFERENCES ARE TO THE OFFICE DESCRIPTION
LEASE)
<S> <C>
1. Date: June 9, 1999.
2. Landlord: KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company.
3. Tenant: PEREGRINE SYSTEMS, INC., a Delaware
corporation.
4. Premises (Article 1). The Premises is defined as the entire building to be
constructed by Landlord, consisting of approximately
127,853 rentable square feet as generally depicted on
EXHIBIT "A" to the Office Lease ("BUILDING"). The
parties hereby stipulate that the Building will contain a
usable square footage of 115,200 usable square feet.
5. Lease Term (Article 2). The Lease Term for Tenant's lease of the Building shall
be twelve (12) years commencing on the Lease
Commencement Date for the initial Floor Group. The
Lease Commencement Date is estimated to be
May 1, 2001 for Floors 4 and 5, November 1, 2001 for
Floors 2 and 3, and May 1, 2002 for Floor 1.
6. Initial Base Rent (Article 3): The initial Base Rent payable with respect to the
Building shall be calculated as follows:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Monthly Monthly Rental Rate Per
Estimated Building Installment of Rentable
Rentable Square Base Rent Square Foot*
Footage
- ------------------------------------------------------------------------------
<S> <C> <C>
127,853 $301,733.08 $2.36
- ------------------------------------------------------------------------------
</TABLE>
*Plus electricity (as indicated in Section 6.2 of the Office Lease)
7. Additional Rent (Article 4).
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<TABLE>
<S> <C>
7.1 Base Year: The calendar year during which the Lease
Commencement Date for the initial Floor Group
occurs.
7.2 Tenant's Share: See Article 4.
8. Security Deposit: See Article 21.
9. Parking Privileges Four and one-half (4 1/2) parking permits for
(Article 28): every 1,000 usable square feet of the Premises
as such square footage is specified in Section
4 of the Summary. Each permit shall entitle
Tenant to utilize one (1) parking space on an
un reserved basis in the Project parking
facilities.
10. Brokers (Section 29.18): John Burnham & Company (representing Landlord
and Tenant) and CB Richard Ellis, Inc.
(representing Tenant only)
11. Address of Tenant 12670 High Bluff Drive
(Section 29.13): San Diego, CA 92130
Attention: Richard T. Nelson, Esq.
with a copy to:
12670 High Bluff Drive
San Diego, CA 92130
Attention: Mr. Robert Urwiler
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT MATTER PAGE
- ------- -------------- ----
<S><C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS . . . . . . . . . . 1
1.1 Premises, Building, Project and Common Areas. . . . . . . . . . . 1
1.2 Verification of Rentable and Usable Square Feet of Premises,
Building, and Project . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 LEASE TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Initial Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Initial Base Rent . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Adjustments to Base Rent. . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Definitions of Key Terms Relating to Additional Rent. . . . . . . 7
4.3 Allocation of Direct Expenses . . . . . . . . . . . . . . . . . . 14
4.4 Calculation and Payment of Additional Rent. . . . . . . . . . . . 14
4.5 Taxes and Other Charges for Which Tenant Is Directly
Responsible . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 USE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Prohibited Uses . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 CC&R's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6 SERVICES AND UTILITIES. . . . . . . . . . . . . . . . . . . . . . 19
6.1 Standard Tenant Services. . . . . . . . . . . . . . . . . . . . . 19
6.2 Utilities Costs; Overstandard Tenant Use. . . . . . . . . . . . . 20
6.3 Interruption of Use . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Additional Services . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Utility Deregulation. . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Emergency Generator . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Substitution of Vendors.. . . . . . . . . . . . . . . . . . . . . 23
6.8 Abatement Event . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 7 REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Tenant's Failure to Comply. . . . . . . . . . . . . . . . . . . . 24
7.3 Landlord's Failure to Comply. . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 ADDITIONS AND ALTERATIONS . . . . . . . . . . . . . . . . . . . . 25
8.1 Landlord's Consent to Alterations . . . . . . . . . . . . . . . . 25
8.2 Manner of Construction. . . . . . . . . . . . . . . . . . . . . . 26
8.3 Payment for Improvements. . . . . . . . . . . . . . . . . . . . . 26
8.4 Construction Insurance. . . . . . . . . . . . . . . . . . . . . . 27
8.5 Landlord's Property . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9 COVENANT AGAINST LIENS. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 10 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Indemnification and Waiver. . . . . . . . . . . . . . . . . . . . 28
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10.2 Tenant's Compliance with Landlord's Fire and Casualty
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Tenant's Insurance. . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Fire and Casualty Insurance of Landlord . . . . . . . . . . . . . 29
10.5 Form of Policies. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Additional Insurance Obligations. . . . . . . . . . . . . . . . . 30
ARTICLE 11 DAMAGE AND DESTRUCTION . . . . . . . . . . . . . . . . . . . . . 30
11.1 Repair of Damage to Premises by Landlord. . . . . . . . . . . . . 30
11.2 Landlord's Option to Repair . . . . . . . . . . . . . . . . . . . 31
11.3 Landlord's or Tenant's Option to Repair . . . . . . . . . . . . . 31
11.4 Waiver of Statutory Provisions. . . . . . . . . . . . . . . . . . 31
11.5 Damage Near End of Term . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 12 NONWAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 13 CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.1 Permanent Taking. . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Temporary Taking. . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 14 ASSIGNMENT AND SUBLETTING. . . . . . . . . . . . . . . . . . . . 33
14.1 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.2 Landlord's Consent. . . . . . . . . . . . . . . . . . . . . . . . 33
14.3 Transfer Premium. . . . . . . . . . . . . . . . . . . . . . . . . 34
14.4 Landlord's Option as to Subject Space . . . . . . . . . . . . . . 35
14.5 Effect of Transfer. . . . . . . . . . . . . . . . . . . . . . . . 36
14.6 Additional Transfers. . . . . . . . . . . . . . . . . . . . . . . 36
14.7 Affiliated and Permitted Transfers. . . . . . . . . . . . . . . . 37
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES . . . . . . . . 37
15.1 Surrender of Premises . . . . . . . . . . . . . . . . . . . . . . 37
15.2 Removal of Tenant Property by Tenant. . . . . . . . . . . . . . . 38
15.3 Removal of Tenant's Property by Landlord. . . . . . . . . . . . . 38
15.4 Landlord's Actions on Premises. . . . . . . . . . . . . . . . . . 38
ARTICLE 16 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 17 ESTOPPEL CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 18 SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 19 DEFAULTS; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 40
19.1 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.2 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . 41
19.3 Sublessees of Tenant. . . . . . . . . . . . . . . . . . . . . . . 42
19.4 Form of Payment After Default . . . . . . . . . . . . . . . . . . 42
19.5 Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . 42
19.6 Efforts to Relet. . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 20 COVENANT OF QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . 42
ARTICLE 21 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . 43
21.1 Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 43
21.2 Financial Standards . . . . . . . . . . . . . . . . . . . . . . . 43
21.3 Conditional Release of Security . . . . . . . . . . . . . . . . . 43
21.4 Cash Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 22 ROOF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE 23 SIGNAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.2 Tenant's Exterior Signage Rights. . . . . . . . . . . . . . . . . 45
23.3 Tenant's Interior Signage Rights. . . . . . . . . . . . . . . . . 46
ARTICLE 24 COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 25 LATE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT . . . . . . 48
26.1 Landlord's Cure . . . . . . . . . . . . . . . . . . . . . . . . . 48
26.2 Tenant's Reimbursement. . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 27 ENTRY BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 28 TENANT PARKING . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 29 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 50
29.1 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . 50
29.2 Modification of Lease/Memorandum of Lease . . . . . . . . . . . . 50
29.3 Transfer of Landlord's Interest . . . . . . . . . . . . . . . . . 50
29.4 Consents by the Parties . . . . . . . . . . . . . . . . . . . . . 50
29.5 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.6 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.7 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . 51
29.8 No Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.9 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 51
29.11 Right to Lease. . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.12 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
29.14 Joint and Several . . . . . . . . . . . . . . . . . . . . . . . . 52
29.15 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
29.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 52
29.17 Submission of Lease . . . . . . . . . . . . . . . . . . . . . . . 52
29.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
29.19 Independent Covenants . . . . . . . . . . . . . . . . . . . . . . 53
29.20 Project or Building Name and Signage. . . . . . . . . . . . . . . 53
29.21 Transportation Management . . . . . . . . . . . . . . . . . . . . 53
29.22 No Discrimination . . . . . . . . . . . . . . . . . . . . . . . . 53
29.23 Hazardous Material. . . . . . . . . . . . . . . . . . . . . . . . 54
29.24 Development of the Project. . . . . . . . . . . . . . . . . . . . 54
29.25 Landlord Exculpation. . . . . . . . . . . . . . . . . . . . . . . 54
29.26 Waiver of Redemption by Tenant. . . . . . . . . . . . . . . . . . 55
29.27 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 55
29.28 Communications and Computer Lines . . . . . . . . . . . . . . . . 55
29.29 No Air Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 55
29.30 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
29.31 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 55
29.32 Disclosures and Mutual Release. . . . . . . . . . . . . . . . . . 56
EXHIBIT "A" SITE PLAN
EXHIBIT "B" TENANT WORK LETTER
EXHIBIT "C" NOTICE OF LEASE TERM DATES
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" FORM OF TENANT'S ESTOPPEL CERTIFICATE
EXHIBIT "F" CC&R'S
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EXHIBIT "G" HVAC AND ELECTRICAL STANDARDS
EXHIBIT "H-1" JANITORIAL SPECIFICATIONS
EXHIBIT "H-2" DAY PORTER SPECIFICATIONS
EXHIBIT "I" SECURITY SYSTEMS AND PERSONNEL
EXHIBIT "J" SIGNAGE CRITERIA
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
<S><C>
Abatement Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Abatement Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Accelerated Force Majeure Period. . . . . . . . . . . . . . . . . . . . . . .17
Acceptable Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Actual Surrender Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Adjacent Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjacent Building Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjacent Building Working Drawings. . . . . . . . . . . . . . . . . . EXHIBIT B
Adjustment Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Aggregate Force Majeure Period. . . . . . . . . . . . . . . . . . . . . . . .16
Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Approved Working Drawings . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Base Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Base, Shell and Core. . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Base, Shell and Core Completion . . . . . . . . . . . . . . . . . . . EXHIBIT B
BOMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Building 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Building 1 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Building 2 Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Building 4 Lease Option Agreement . . . . . . . . . . . . . . . . . . . . . . 2
Building 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 5 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building Direct Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Building Hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Building Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 8
Building Systems and Equipment. . . . . . . . . . . . . . . . . . . . . . . .20
Building Tax Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Building Top Signs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
CAD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CC&R's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
CD .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Change Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35. EXHIBIT B
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Common Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Communication Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Comparable Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Construction Schedule . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Contractor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Cost Pools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Cost Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Cost Proposal Delivery Date . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Delivery Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Designated Subcontractors . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Direct Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Director Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Electric Service Provider . . . . . . . . . . . . . . . . . . . . . . . . . .22
Eligibility Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
vii
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[Peregrine Systems]
<PAGE>
Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Estimate Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Estimated Excess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Excess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Excess Over-Allowance Amount. . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Excusable Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Expense Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Extension Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extension Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extension Reminder Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extension Term Base Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Extension Term Commencement Date. . . . . . . . . . . . . . . . . . . . . . . 4
Extension Term(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fair Market Rental Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Final Space Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Financial Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Floor Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Force Majeure Effective Date. . . . . . . . . . . . . . . . . . . . . . . . .16
Force Majeure Extension Options . . . . . . . . . . . . . . . . . . . . . . .17
Force Majeure Termination Notice. . . . . . . . . . . . . . . . . . . . . . .16
Hazardous Material. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Holdover Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Holdover Notice Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
HVAC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
KRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Landlord. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Landlord Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Landlord Supervision Fee. . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Landlord Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Landlord Work Change Orders . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lease Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lease Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lease Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lease Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Major Project Milestones. . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Objectionable Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Office Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Operating Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Original Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Other Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Outside Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Outside Date Extension Notice . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Outside Date Termination Notice . . . . . . . . . . . . . . . . . . . EXHIBIT B
Over-Allowance Amount . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Package Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Partial Cost Proposal . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Peregrine Center. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Permitted Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Permitted Signage Entities. . . . . . . . . . . . . . . . . . . . . . . . . .45
Permitted Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Pre-Judgment Offset Amount . . . . . . . . . . . . . . . . . . . . . . . . .25
Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Premium Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Premium Guidance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Progress Payment Request. . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Project Architect . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project Architect Agreement . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project Common Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
viii
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[Peregrine Systems]
<PAGE>
Proposition 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Qualifying Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Qualifying Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Qualifying Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Readjustment Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Reassessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Recapture Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
REIT Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reno . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Review Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Shell Completion Dates . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Signage Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Single Appraiser Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Site Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
space comparable to the Building . . . . . . . . . . . . . . . . . . . . . . .5
Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Standard Improvement Package . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Subject Space. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Subleasing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Substantial Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Tax Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Tenant Delays. . . . . . . . . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Tenant Improvement Allowance . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Tenant Improvement Allowance Items . . . . . . . . . . . . . . . . . .EXHIBIT B
Tenant Improvements. . . . . . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Tenant Work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Tenant Work Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Tenant's Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Tenant's Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Threshold Level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Time Deadlines . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Title 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Transfer Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Transfer Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Withdrawal Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Working Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . .EXHIBIT B
Y2K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
ix
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "SUMMARY") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "LEASE"), dated as of the date set forth in Section 1 of the
Summary is made by and between KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company ("LANDLORD"), and PEREGRINE SYSTEMS, INC., a Delaware
corporation ("TENANT").
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Upon and subject to the terms hereinafter set
forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 4 of the Summary (the
"PREMISES"), consisting of the Building described therein and more particularly
depicted on the Site Plan attached hereto as EXHIBIT "A" (the "SITE PLAN"). The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of the Site Plan is to show the
location of the Building and the Adjacent Buildings only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the Common Areas, as that term is defined in Section 1.1.3 below and the
elements thereof or of the accessways to the Premises or the "Project," as that
term is defined in Section 1.1.2 below. Landlord will not make material changes
to the Site Plan without the prior written approval of Tenant, which consent
shall not be unreasonably withheld or delayed. However, notwithstanding the
foregoing, Landlord may make changes to the Site Plan due to topography,
underground conditions, and governmental requirements in order to resolve issues
which arise during construction of the Project without the prior written
approval of Tenant, provided that (i) any such changes to the Site Plan due to
topography may be made to landscaping only (and not to other Site Plan items)
without the prior written approval of Tenant, and (ii) with respect to changes
that do not require the approval of Tenant pursuant to this sentence, Landlord
shall notify Tenant of any material changes made to the Site Plan. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as EXHIBIT "B" (the "TENANT WORK LETTER"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building, the Adjacent Buildings or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 THE PROJECT. The Premises are located in the City and
County of San Diego, California, and are a part of the project to be known as
"PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 below). The term
"PROJECT," as used in this Lease, shall mean (i) the Building, the Adjacent
Buildings and the "Common Areas", as that term is defined in Section 1.1.3
below, and (ii) the land (which is or will be improved with landscaping, parking
facilities and other improvements) upon which the Buildings and the Common Areas
are to be located. For purposes of this Lease, the term "BUILDING 1" shall mean
that building to be constructed by Landlord at the location so designated
on the Site Plan, "BUILDING 2" shall mean that building to be constructed by
Landlord at the location so designated on the Site Plan, "BUILDING 4" shall mean
that building to be constructed by Landlord at the location so designated
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
on the Site Plan, and "BUILDING 5" shall mean that building to be constructed
by Landlord at the location so designated on the Site Plan. Building 1,
Building 2, Building 4 and Building 5 may be collectively referred to herein
as the "ADJACENT BUILDINGS." Landlord and Tenant hereby acknowledge that,
concurrently with the execution and delivery of this Lease, Landlord and
Tenant are entering into separate leases for Building 1 (the "BUILDING 1
LEASE"), Building 2 (the "BUILDING 2 LEASE"), and Building 5 (the "BUILDING 5
LEASE") and a Lease Option Agreement for Building 4 (the "BUILDING 4 LEASE
OPTION AGREEMENT") whereby Tenant shall lease from Landlord all of Building
1, all of Building 2, and all of Building 5 and shall have an option to lease
all of Building 4. The Building 1 Lease, Building 2 Lease, Building 5 Lease
and Building 4 Lease Option Agreement may be collectively referred to herein
as the "ADJACENT BUILDING LEASES."
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas are collectively referred to herein as the
"COMMON AREAS"). The Common Areas shall consist of the Project Common Areas and
the Building Common Areas. The term "PROJECT COMMON AREAS," as used in this
Lease, shall mean the portion of the Project designated as such in the Site
Plan. The Project Common Areas shall consist of all parking facilities,
entrances and exits, driveways, exterior walkways, first-class landscaped and
hardscaped areas which are generally consistent with the quality of landscaped
and hardscaped areas of Comparable Buildings in existence as of the date of this
Lease, open space areas and plazas on the real property comprising the Project.
The term "BUILDING COMMON AREAS," as used in this Lease, shall mean the portions
of the Common Areas located within any building in the Project not entirely
leased by Tenant, which Building Common Areas shall be reasonably designated as
such by Landlord. Notwithstanding the foregoing and subject to (i) Landlord's
approval, which approval (as indicated in Section 29.4 below) shall not be
unreasonably withheld or delayed, (ii) the CC&R's, and (iii) all terms of this
Lease regarding Hazardous Materials, Tenant may install or locate such items as
benches, patio tables, bike racks, above-ground generators, security cameras and
the like (collectively, "MISCELLANEOUS COMMON AREA ITEMS") at Tenant's sole cost
in the Common Areas or on the exterior of the Building, as applicable, provided
that Tenant removes such items upon the expiration or earlier termination of
this Lease and repairs any damage to the Common Areas or the exterior of the
Building (as applicable) resulting from such removal. If Tenant fails to remove
any Miscellaneous Common Area Item or to repair any damage resulting from such
removal upon the expiration or earlier termination of this Lease, Landlord may
do so and may charge Landlord's actual cost thereof to Tenant. The manner in
which the Common Areas are maintained and operated shall be in accordance with a
standard which is not less than that customarily followed in the operation and
maintenance of first class mid-rise office buildings located within the
University Towne Center (i.e., the area from two (2) blocks to the North of La
Jolla Village Drive to two (2) blocks to the South of La Jolla Village Drive
between the I-5 and I-805 freeways), Del Mar, Carmel Valley and Torrey Hills
geographical areas, provided that Landlord shall manage, maintain and operate
the same in a manner consistent with that of Comparable Buildings, and the use
thereof shall be subject to such rules and regulations as Landlord reasonably
may make from time to time. As used herein, "COMPARABLE BUILDINGS" shall mean
the first class mid-rise office buildings (now existing or subsequently
constructed) within the projects located within the University Towne Center, Del
Mar, Carmel Valley and Torrey Hills geographical areas and having substantially
similar characteristics to the Building pertaining to size, age, accessibility,
design, quality, amenities and tenancies. Landlord reserves the right to make
alterations or additions to, or to change the location of, elements of the
Project and the Common Areas, provided that if any such changes might affect
Tenant's use of the Premises (in other than an immaterial manner), Landlord
obtains Tenant's prior written approval of any such alterations, additions and
changes and such alterations, additions and changes do not unreasonably
interfere with Tenant's access to the Premises. Except when and where Tenant's
right of access is specifically excluded in this Lease, Tenant shall have the
right of access to the Building and the parking facilities twenty-four (24)
hours per day, seven (7) days per week during the Lease Term.
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES, BUILDING, AND
PROJECT. The number of rentable square feet in the Premises and the Building
shall be determined pursuant to the Standard Method for Measuring Floor Area
in Office Buildings, ANSI Z65.1 - 1996 ("BOMA"). The number of rentable
square feet of the Building shall be initially determined by Landlord from
the "as-built" drawings for the Building utilizing Landlord's computer
assisted design ("CAD") system. Tenant shall have the option, exercisable by
written notice to Landlord within thirty (30) days following Tenant's receipt
of such initial determination by Landlord, to cause the number of rentable
square feet of the Building to be verified by an architect, planner, designer
or consultant specializing in measuring square footage selected by Landlord
and reasonably approved by Tenant and such verification shall be made in
accordance with the provisions of this Article 1. In addition, the number of
rentable square feet of any other buildings within the Project not leased by
Tenant are subject to verification by an architect, planner, designer or
consultant specializing in measuring square footage selected by Landlord and
such verification shall be made in accordance with the provisions of this
Article 1. The cost of any such verification of square footage figures as
specified in this Section 1.2 above shall be borne fifty percent (50%) by
Landlord and fifty percent (50%) by Tenant. In the event that such
architect, planner, designer or consultant determines that the amounts
thereof are different from those set forth in this Lease, all amounts,
percentages and figures appearing or referred to in this Lease based upon
such incorrect amount (including, without limitation, the amount of the Rent
and Tenant's Share as those terms are defined in this Lease) shall be
modified in accordance with such determination. Absent manifest error, such
determination shall be final and conclusive. As such determination is made,
it will be confirmed in writing by Landlord and Tenant, and Landlord and
Tenant shall execute an amendment to this Lease confirming the changed
amounts of Rent, Tenant's Share and the Tenant Improvement Allowance.
ARTICLE 2
LEASE TERM
2.1 INITIAL TERM. The terms, covenants and conditions and provisions of
this Lease shall be effective as of the date of this Lease. The term of this
Lease (the "LEASE TERM") shall be as set forth in Section 5 of the Summary and
shall commence ("LEASE COMMENCEMENT DATE") on the earlier of (i) the date
Tenant's work stations are installed and cabled with respect to the initial
Floor Group (i.e., Floors 4 and 5) or (ii) eight (8) business days after
"Substantial Completion" by Landlord of the Tenant Improvements for such initial
Floor Group in the Building, provided Landlord has given to Tenant at least
sixty (60) days' prior written notice of the date Landlord estimates for
Substantial Completion for such initial Floor Group in the Building (if such
date is more than thirty (30) days different from the estimated date specified
in the Summary). The Lease Commencement Date for each Floor Group shall not
under any circumstances occur earlier than the day which is thirty (30) days
earlier than the Estimated Lease Commencement Date set forth in Section 5 of the
Summary unless Tenant elects to commence business operations within such
Building as of an earlier date. The Lease Term shall terminate (the "LEASE
EXPIRATION DATE") on the last day of the month in which the twelfth (12th)
anniversary of the Lease Commencement Date for the initial Floor Group occurs,
unless this Lease is sooner terminated or extended as hereinafter provided. For
purposes of this Lease, the term "LEASE YEAR" shall mean each consecutive twelve
(12) month period during the Lease Term; provided, however, that the first Lease
Year shall commence on the Lease Commencement Date and the last Lease Year shall
end on the Lease Expiration Date. For purposes of this Lease, "SUBSTANTIAL
COMPLETION" shall occur upon the completion of construction of the Tenant
Improvements in the Building pursuant to the plans and drawings which are
prepared pursuant to the terms of the Tenant Work Letter (provided, however,
Substantial Completion shall occur with respect to the Tenant Improvements for
each phased Floor Group as more particularly set forth in Section 5 of the
Summary). The completion of the construction with respect to any such Tenant
Improvements shall not be deemed to have occurred unless and until (i) Landlord
has delivered the portion of the Premises covered by such Tenant Improvements to
Tenant in broom-clean condition subject only to punch list items and any tenant
fixtures, workstations or equipment to be installed by Tenant in the Premises
pursuant to the terms of the Tenant Work Letter (the "TENANT WORK") (i.e., the
completion of punchlist items
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and Tenant Work shall not affect Substantial Completion), (ii) a temporary
certificate of occupancy or its equivalent permitting occupancy of such portion
of the Premises improved with such Tenant Improvements has been issued by the
City of San Diego or other applicable governmental agency, (iii) all essential
building systems to be installed by Landlord (including, but not limited to,
electrical, plumbing, heat, air conditioning systems, and their distribution
into such portions of the Premises) are operational to the extent reasonably
necessary to service the portion of the Premises covered by such Tenant
Improvements, and (iv) Tenant has been provided with the parking to which it is
entitled under this Lease . If a temporary certificate of occupancy or its
equivalent is issued by the City of San Diego, Landlord shall use commercially
reasonable efforts to obtain a permanent certificate of occupancy within three
(3) months after the Lease Commencement Date (except to the extent the receipt
of such permanent certificate is delayed as a result of the Tenant Work or any
actions of Tenant, its agents, employees or contractors). At any time during
the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth
in EXHIBIT "C" attached hereto, which notice (so long as it contains accurate
information) Tenant shall execute and return to Landlord within ten (10) days of
receipt thereof. If Tenant contends that such notice contains inaccurate
information, Tenant shall modify such notice as appropriate and return such
notice to Landlord within said ten (10) day period.
2.2 OPTIONS TO EXTEND. Tenant shall have two (2) option(s) to extend (the
"EXTENSION OPTIONS") the Lease Term for consecutive five (5) year period(s) (the
foregoing option term(s) shall be referred to hereinafter sometimes as the
"EXTENSION TERM(s)"), by delivering a written notice of exercise to Landlord
("EXTENSION NOTICE") with respect to the applicable Extension Term, which
Extension Notice may not be delivered earlier than the date which is eighteen
(18) months prior to the end of the initial Lease Term or first Extension Term
(as applicable) and may not be delivered later than the date which is thirty
(30) days after the Reminder Notice. If Landlord has not received an applicable
Extension Notice by the date which is twelve (12) months prior to the end of the
initial Lease Term or first Extension Term (as applicable), Landlord may provide
written notice ("EXTENSION REMINDER NOTICE") to Tenant that the Extension Option
will expire if Tenant fails to deliver the Extension Notice to Landlord within
thirty (30) days after the date of such notice from Landlord. If Tenant fails
to deliver the Extension Notice within said thirty (30) day period, Tenant shall
be deemed to have waived its right to exercise such Extension Option. The
parties acknowledge that Tenant's Extension Option will not lapse until the date
which is thirty (30) days after Landlord's delivery of the Extension Reminder
Notice pursuant to this Section 2.2. The Extension Option shall apply to all
space (and not a portion of the space) then leased by Tenant in the Building.
Tenant may exercise the Extension Option(s) only if this Lease is in full force
and effect and there is no uncured Event of Default under this Lease, at the
time of exercise of such Extension Option and/or at the time of the commencement
of the Extension Term, but Landlord shall have the right to waive such
conditions herein. Tenant's exercise of the second (2nd) Extension Option shall
be conditioned upon Tenant's exercise of the first Extension Option. The rights
of Tenant contained in this Section 2.2 shall be personal to the original Tenant
named in the Summary ("ORIGINAL TENANT") and any Permitted Affiliate and may
only be exercised by the Original Tenant or such Permitted Affiliate if Tenant,
at the date of Tenant's Extension Notice, meets or exceeds the Financial
Standards set forth in Section 21.2 below. The Base Rent during each Extension
Term ("EXTENSION TERM BASE RENT") shall be an amount equal to ninety-five
percent (95%) of the then "Fair Market Rental Value" of the Building (as such
term is defined in Section 2.2(e) below), as stated on a monthly basis and
determined pursuant to this Section 2.2 as of the first (1st) day of the
applicable Extension Term ("EXTENSION TERM COMMENCEMENT DATE"); provided,
however, in no event shall the Base Rent payable during any Extension Term for
the Building be less than the Base Rent payable during the period immediately
preceding such Extension Term for the Building and provided further that, on the
first anniversary of the Extension Term Commencement Date, and on each
subsequent anniversary thereof during such Extension Term, the then payable
monthly Extension Term Base Rent shall be increased in accordance with market
rate increases, as mutually agreed to by Landlord and Tenant or, if Landlord and
Tenant cannot agree, as determined by the appraisal process described below.
Upon receipt by Landlord of Tenant's Extension Notice under this Section 2.2,
above, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the applicable Extension Term Base Rent which shall become effective as of the
respective Extension Term Commencement Date. If
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Landlord and Tenant have not agreed upon the Extension Term Base Rent (including
the annual market rate increases) on or before the "Withdrawal Date" (as that
term is defined below), Tenant may elect to withdraw the Extension Notice
thereby canceling Tenant's exercise of the Extension Option. The term
"WITHDRAWAL DATE" shall mean (i) if Landlord delivers the Reminder Notice prior
to Tenant's delivery of the Extension Notice, the date which is thirty (30) days
after the date of the Reminder Notice, or (ii) if Landlord has not yet delivered
a Reminder Notice at the time of Tenant's delivery of the Extension Notice, the
date which is the earlier of (1) the date which is eleven (11) months prior to
the end of the initial Lease Term or first Extension Term (as applicable), or
(2) the date which is sixty (60) days after the date of Tenant's delivery of the
Extension Notice. If Tenant fails to deliver written notice to Landlord so
withdrawing the Extension Notice on or before the Withdrawal Date and if
Landlord and Tenant have not agreed upon the Extension Term Base Rent (including
the annual market rate increases) within sixty (60) days after the delivery of
Tenant's Extension Notice, the Extension Term Base Rent shall be determined as
follows:
(a) Landlord and Tenant shall attempt to agree in good faith
upon a single appraiser not later than the date ("SINGLE APPRAISER DATE") which
is forty-five (45) days after delivery of Tenant's Extension Notice. If
Landlord and Tenant are unable to agree upon a single appraiser within such time
period, then Landlord and Tenant shall each appoint one appraiser not later than
five (5) days after the deadline for selecting a single appraiser. Landlord and
Tenant shall each give written notice to the other as to the name of the
appraiser it has selected, within five (5) days after the deadline for selecting
a single appraiser. Within ten (10) days thereafter, the two (2) appointed
appraisers shall appoint a third appraiser. All appraisers shall be independent
from, and disinterested in, both Landlord and Tenant.
(b) The only tasks which the appraiser(s) shall perform shall be
forming and reporting to Landlord and Tenant an opinion of the Fair Market
Rental Value (including annual market rate increases) of the Premises for use in
determining the Extension Term Base Rent.
(c) If either Landlord or Tenant fails to appoint its appraiser
within the prescribed time period, the single appraiser appointed shall
determine the Fair Market Rental Value of the Building. If both parties fail to
appoint appraisers within the prescribed time periods, or if the two (2)
appointed appraisers cannot agree on a third appraiser then either party shall
have the right to apply to the presiding judge of the Superior Court of San
Diego County for the appointment of an appraiser meeting the qualifications
hereof to determine the Fair Market Rental Value of such Building.
(d) Each party shall bear the cost of its own appraiser and the
parties shall share equally the cost of any single or third appraiser, if
applicable. All appraisers so designated herein shall have at least ten (10)
years' experience in the appraisal of commercial properties similar to the
Premises and Comparable Buildings and shall be members of professional
organizations such as MAI or its equivalent.
(e) For the purpose of such appraisal and this subsection (e),
the term "FAIR MARKET RENTAL VALUE" shall mean the price that a ready and
willing, non-equity, non-sublease tenant would pay as annual rent as of the
Extension Term Commencement Date (taking into consideration the annual market
rate increases specified in Section 2.2(b) above) and a ready and willing
landlord would accept on a non-sublease, non-renewal basis, at arm's length,
from creditworthy tenants (provided Tenant is then in compliance with the
Financial Standards specified in Section 21.2) for a five (5) year term for
unencumbered "space comparable to the Building" in Comparable Buildings. Such
"space comparable to the Building" shall mean office space consisting of an
entire building, with tenant improvements of substantially similar quality and
layout as the Premises. Fair Market Rental Value shall include or take into
consideration any lease concessions offered by landlords in lease transactions
from and after the date which is twelve (12) months prior to the Single
Appraiser Date (the "QUALIFYING PERIOD") for space comparable to the Building
within such Comparable Buildings, including, without limitation, free rent,
tenant improvement allowances or any other payments or concessions; however,
Fair Market Rental Value shall also take into consideration (i) the market trend
(i.e., all other factors
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being equal, comparable transactions entered into earlier in the Qualifying
Period shall be accorded less weight than comparable transactions entered into
later in the Qualifying Period), and (ii) the value in the market of the
existing improvements in the Building, as compared to the value in the market of
the existing improvements in such space comparable to the Building. Further, in
calculating the Fair Market Rental Rate, no consideration shall be given to the
fact that Landlord is or is not required to pay a real estate brokerage
commission in connection with the Extension Term or the fact that comparable
deals do or do not involve the payment of real estate brokerage commissions. If
there are less than two (2) lease transactions for "space comparable to the
Building," as defined in this Section 2.2(e), entered into during the Qualifying
Period, then the term "space comparable to the Building" shall be expanded as
necessary to allow appraiser(s) to consider lease transactions covering multiple
floors in a building (but less than an entire building) with the appraiser(s)
making appropriate economic adjustments to compensate for such lease
transactions in which less than the entire building is leased by the tenant.
(f) If a single appraiser is chosen, then such appraiser shall
determine the Fair Market Rental Value of the Building. Otherwise, the Fair
Market Rental Value of the Building shall be the arithmetic average of the two
(2) appraisals which are closest in amount, and the third appraisal shall be
disregarded.
(g) Landlord and Tenant shall instruct the appraiser(s), in
writing, to complete their written determination of the Fair Market Rental Value
not later than thirty (30) days after their selection. If the Fair Market
Rental Value has not been determined by such date, then the Fair Market Rental
Value shall be determined thereafter, and if it has not been determined by the
Extension Term Commencement Date, then Tenant shall continue to pay Landlord
monthly installments of Base Rent in the amount applicable to the Building
immediately prior to the Extension Term Commencement Date until the Fair Market
Rental Value is determined. When the Fair Market Rental Value of the Building
is determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between the monthly installments of Base Rent actually paid by Tenant
to Landlord subsequent to the Extension Term Commencement Date and the new
monthly installments of Base Rent which are determined to have been actually
owing during such period in accordance with this Section 2.2, plus interest at
the Interest Rate from the date the applicable monthly installments were due
until such difference is actually paid.
ARTICLE 3
BASE RENT
3.1 INITIAL BASE RENT. Tenant shall pay, without notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or at such
other place as Landlord may from time to time designate in writing, in currency
or a check for currency which, at the time of payment, is legal tender for
private or public debts in the United States of America, base rent ("BASE RENT")
as set forth in Section 6 of the Summary, payable in equal monthly installments
as set forth in Section 6 of the Summary in advance on or before the first day
of each and every month during the Lease Term, without any offset or deduction
whatsoever except as otherwise expressly set forth in this Lease. Base Rent
shall commence on the Lease Commencement Date; provided, however, it is
anticipated that the Tenant Improvements will be built-out in phases consisting
of groups of floors ("FLOOR GROUP") as more particularly set forth in Section 5
of the Summary. Accordingly, and notwithstanding anything to the contrary
contained in this Lease, Tenant's obligation to commence payment of Base Rent
(and Additional Rent) shall commence on the Lease Commencement Date for each
Floor Group, as specified in Section 5 of the Summary. Tenant may decide the
exact phasing of the Floor Groups within the Building as Tenant prepares the
Final Space Plan for the Building pursuant to the Tenant Work Letter (e.g.,
Tenant may elect to have the Estimated Lease Commencement Date for floors 2 and
5 be May 1, 2001 and the Estimated Lease Commencement Date for floors 3 and 4 be
November 1, 2001); provided, however, such phasing shall have no impact on the
Lease Commencement Date for the number of floors in each Floor Group and each
Floor Group shall have the same number of floors as specified in Section 5 of
the Summary. As more particularly set forth in Section 2.1,
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the Lease Commencement Date for the Building shall occur upon the Lease
Commencement Date for the initial first Floor Group within the Building, it
being the intent of Landlord and Tenant that the Lease Term shall expire on the
last day of the month in which the twelfth (12th) anniversary of Tenant's lease
of the initial Floor Group within the Buildings occurs. The Base Rent for the
first full month of the Lease Term shall be paid on or before the date which is
ninety (90) days after Landlord notifies Tenant in writing that it has commenced
construction of the Base Shell and Core with respect to such Building. Landlord
shall invest such payment of the first month's Base Rent in a Certificate of
Deposit with a maturity date approximately that of the Lease Commencement Date
in a financial institution selected by Landlord, and any interest accruing
thereon shall be credited to Tenant's Base Rent obligations for the second (2nd)
full month of the Lease Term. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the Rent.
All other payments or adjustments required to be made under the terms of this
Lease that require proration on a time basis shall be prorated on the same
basis.
3.2 ADJUSTMENTS TO BASE RENT. The Base Rent rate payable (per rentable
square foot) with respect to each Floor Group shall be increased on the second
(2nd) anniversary of the Lease Commencement Date for the initial Floor Group and
on each subsequent second (2nd) anniversary thereof during the initial Lease
Term to an amount equal to 106.5% of the Base Rent rate payable (per rentable
square foot) during the immediately prior period, subject to further adjustment
during any Extension Term in accordance with Section 2.2 above.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.9 and
4.2.2 of this Lease, respectively, which are in excess of the amount of Building
Direct Expenses applicable to the "Base Year" for such Building, as that term is
defined in Section 4.2.1, below; provided, however, if the Lease Commencement
Date for the initial Floor Group occurs after January 1 of the Base Year, the
amount of Building Direct Expenses applicable to the Base Year shall be
increased in order to reflect Building Direct Expenses for an entire twelve (12)
month period. Further, in no event shall any decrease in Building Direct
Expenses for such Building for any "Expense Year" for the Building as that term
is defined in Section 4.2.6 below, below Building Direct Expenses for the Base
Year entitle Tenant to any decrease in Base Rent for the Building or any credit
against sums due under this Lease. It is the intent of Landlord and Tenant
hereunder that Building Direct Expenses be calculated for the Building
separately based on the Building Direct Expenses allocated to such Building.
Such payments by Tenant, together with any and all other amounts payable by
Tenant to Landlord pursuant to the terms of this Lease, are collectively
referred to in this Lease as the "ADDITIONAL RENT", and the Base Rent and the
Additional Rent are collectively referred to in this Lease as "RENT." All
amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner as the Base Rent. Without limitation on
other obligations of Tenant which survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4,
and the obligation of Landlord to refund to Tenant any overpayment of Building
Direct Expenses pursuant to Section 4.2 below, shall survive the expiration of
the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 7.1
of the Summary.
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4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses," as those terms are defined in Sections
4.2.3 and 4.2.4 below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses," as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts which Landlord pays or accrues during any Expense Year because of or in
connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof.
Without limiting the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the cost of supplying
all utilities to the Project (except that electricity supplied to the Premises
shall be separately paid for by Tenant pursuant to Section 6.2.2 below), the
cost of operating, repairing, maintaining, and renovating the utility,
telephone, mechanical, sanitary, storm drainage, and elevator systems, and the
cost of maintenance and service contracts in connection therewith; (ii) the cost
of licenses, certificates, permits and inspections (other than those obtained in
connection with the initial construction of the Building and the Tenant
Improvements) and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project as reasonably determined by Landlord; (iv) the cost of landscaping,
relamping, and supplies, tools, equipment and materials used in the operation,
repair and maintenance of the Project, or any portion thereof; (v) the cost of
parking area (including any parking structures) repair, restoration, and
maintenance; (vi) reasonable fees and other costs, including reasonable
management, consulting, legal and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental agreements and the
fair rental value of any on-site or off-site management office space for the
Project (as described in Section 6.1.4 below) not to exceed 2,000 rentable
square feet (which fair rental value for the purpose of determining the Direct
Expenses for the Base Year and any subsequent Expense Years shall be the same
rate per rentable square foot as the monthly rental rate per rentable square
foot paid by Tenant to Landlord from time to time for Building 1 under the
Building 1 Lease); (viii) wages, salaries and other compensation and benefits,
including taxes levied thereon, of all non-executive persons reasonably engaged
in the operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the reasonable sharing of costs by the Project
(including, without limitation, any assessments and association dues under the
CC&R's); (x) operation, repair, maintenance and replacement of all systems and
equipment and components thereof of the Project including, but not limited to
HVAC systems, electrical, plumbing and life-safety systems, elevators, any
Project locker rooms and workout facilities (except that the cost of electricity
used to operate the HVAC system shall be paid by Tenant directly pursuant to
Section 6.2.2 below); (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
common areas, maintenance and replacement of curbs, roadways, driveways, and
walkways, repair to roofs and re-roofing; (xii) amortization (including interest
on the unamortized cost) over the useful life as Landlord shall reasonably
determine, of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, or any portion
thereof; (xiii) the cost of capital improvements or other costs incurred in
connection with the Project (A) which are intended, in good faith, to
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effect economies in the operation or maintenance of the Project, or any portion
thereof, and only to the extent such anticipated economies exceed the cost of
such item, (B) that are required to comply with present or anticipated
conservation programs, (C) required by laws, ordinances or regulations enacted
after the date permits for the construction of the Building were obtained, and
(D) includable in Operating Expenses pursuant to consistently applied and sound
accounting and management principles (including, but not limited to, the repair,
resurfacing and replacement of parking lots and Project roadways and driveways);
provided, however, that any capital expenditure shall be amortized (including
interest on the amortized cost at Landlord's actual cost of funds) over its
useful life as Landlord shall reasonably determine; and (xiv) costs, fees,
charges or assessments imposed by, or resulting from any mandate imposed on
Landlord by, any federal, state or local government for fire and police
protection, trash removal, community services, or other services which do not
constitute "Tax Expenses" as that term is defined in Section 4.2.8 below.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:
(a) costs incurred in connection with the original construction
of the Building and costs of repairing, replacing or otherwise correcting
latent defects, the cost of any "tap fees" or one-time lump sum sewer or
water connection fees for the Building payable in connection with the
original construction of the Building, costs incurred (less costs of
recovery) for any item to the extent covered by a manufacturer's,
materialman's, vendor's or contractor's warranty and paid by such
manufacturer, materialman, vendor or contractor (provided, however, the
costs incurred for any normal repair or maintenance item (not attributable
to the correction of start-up problems, repairs or replacements) to the
extent covered by a manufacturer's, materialman's, vendor's or contractor's
warranty in the Base Year (and not in a subsequent Expense Year) and paid
by such manufacturer, materialman, vendor or contractor during the Base
Year shall be included in Operating Expenses); non-cash items such as
deductions for depreciation and amortization of the Building and the
Building Systems and Equipment;
(b) costs, including marketing costs, legal fees, space
planners' fees, and brokerage fees incurred in connection with the original
construction or development of the Project or the original or future
leasing of the Project, and costs, including permit, license and inspection
costs and allowances and other concessions, incurred with respect to the
installation of tenant improvements made for new tenants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space for tenants or other occupants (or
prospective tenants or occupants) of the Project;
(c) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(d) costs for which Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's
carrier (or if Landlord fails to carry the insurance required to be carried
by Landlord pursuant to Section 10.4 below, costs which would have been
covered by insurance had Landlord obtained the coverage required to be
carried under this Lease) or by the Association under the CC&R's or by
anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;
(e) any bad debt loss, rent loss, or reserves for bad debts or
rent loss;
(f) costs associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated
with the operation of the Project). Costs associated with the operation of
the business of the partnership or entity which constitutes Landlord
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including costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of the
Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, and
costs incurred in connection with any disputes between Landlord and its
employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord's general corporate overhead and
general and administrative expenses;
(g) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and
managing the Project vis-a-vis time spent on matters unrelated to operating
and managing the Project; provided, that in no event shall Operating
Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of regional Project manager or
Project engineer;
(h) amount paid as ground rental for the Project by Landlord;
(i) any compensation paid to clerks, attendants or other persons
in commercial concessions operated by Landlord, provided that any
compensation paid to any concierge at the Project and any compensation paid
regarding parking operations shall be includable as an Operating Expense;
(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Expenses as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an emergency
condition in the Project, or during periods when the systems or equipment
is being repaired;
(k) all items and services for which Tenant or any other tenant
in the Project reimburses Landlord or which Landlord provides selectively
to one or more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;
(n) costs incurred to comply with laws or otherwise relating to
the removal or abatement of hazardous material in the soil and costs
incurred to comply with laws or otherwise relating to the removal or
abatement of hazardous material in the Building or any Common Area
improvements except where such removal or abatement in the Building or
Common Area improvements is required to be performed during the Lease Term
by laws not in effect as of the Lease Commencement Date (in which case an
amount not exceeding twenty-five cents (.25 CENTS) per rentable square foot
of the Building for the cost of such removal or abatement may be included
in Operating Expenses and any remaining costs shall be capitalized and
amortized over a useful life determined in accordance with generally
accepted accounting principles (but in no event less than ten (10) years)
but only fifty percent (50%) of such amortized amount may be included in
Operating Expenses in each calendar year during such amortization term);
(o) costs arising from Landlord's charitable or political
contributions;
(p) expenses directly resulting from the active or gross
negligence of Landlord, its agents, servants or employees;
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(q) rental for any space in the Building set aside for
conference facilities, storage facilities or exercise facilities;
(r) the amounts of any payments by Landlord or to its affiliates
for goods or services in the Project in excess of a competitive (but not
necessarily the lowest) rate;
(s) costs (not including Tax Expenses), incurred in connection
with the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building, including brokerage commissions, consultant's,
attorneys' and accountant's fees, closing costs, title insurance premiums,
transfer taxes and interest charges;
(t) costs incurred by Landlord to correct any Year 2000 ("Y2K")
problems incurred as a direct result of any Y2K problems (provided that
this exclusion shall not apply to Y2K problems of utility providers to
Landlord);
(u) costs attributable to increases in expenses during the Lease
Term for management fees unless the total management fees for such Expense
Year (including any such increases therein) are not in excess of a
competitive (but not necessarily the lowest) rate for Comparable Buildings;
and
(v) assessments, charges, and dues under the CC&R's which would
result in a duplicative charge to Tenant or a charge which is otherwise
precluded under this Section 4.2.7 or other provisions of this Lease
including without limitation (1) any expense, cost or charge which would be
duplicative of a charge for which Tenant already is responsible under this
Lease; (2) any expense for property management which would be duplicative
of a charge for which Tenant already is responsible under this Lease; (3)
special assessments levied under the CC&R's which would be precluded by
subsection 4.2.7(c) above; and (4) any expense precluded by Section 5.3
below.
With respect to Landlord's regional Project manager, such individual's
wages and benefits may be included in Operating Expenses; provided, however,
that (1) the amount so included in Operating Expenses for the Project shall not
increase by more than Two Thousand Dollars ($2,000.00) in the first Expense Year
after the Base Year and (2) the maximum amount includable in Operating Expenses
in each Expense Year thereafter shall be one hundred five percent (105%) of the
maximum amount includable in Operating Expenses for the immediately preceding
Expense Year, except that in no event shall such amount included in Operating
Expenses in any such subsequent Expense Year be more than one hundred ten
percent (110%) of the average amount so included in the immediately preceding
two (2) Expense Years. By way of example only, and not as a limitation upon the
foregoing, if the amount of such wages and benefits included in Operating
Expenses for the Project in the Base Year is Forty Thousand Dollars
($40,000.00), such wages and benefits are Forty-Two Thousand Dollars
($42,000.00) in the first (1st), second (2nd) and third (3rd) Expense Years
after the Base Year, but in the fourth (4th) Expense Year after the Base Year
such wages and benefits are increased to Forty-Eight Thousand Dollars
($48,000.00), the maximum amount includable in Operating Expenses for the fourth
(4th) Expense Year after Base Year shall be Forty-Six Thousand Two Hundred
Dollars ($46,200.00) (i.e., 110% of $42,000.00) and the maximum amount
includable in the Operating Expenses for the fifth (5th) Expense Year after Base
Year shall be Forty-Eight Thousand Five Hundred Ten Dollars ($48,510.00) (i.e.,
110% of the average of $42,000.00 and $46,200.00).
There shall be deducted from Operating Expenses the following items in the
year in which they are applicable: (i) insurance and condemnation proceeds to
the extent that such proceeds relate to costs and expenses previously included
in Operating Expenses, (ii) all other funds recovered from any tenant of the
Building, contractors, or other parties as payment for expenses which were
previously included in Operating Expenses, other than tenants' contributions for
their proportionate share of Operating Expenses, and (iii) all funds available
through the CC&R's which were previously included in Operating Expenses.
Operating Expenses shall reflect reductions for cash discounts and trade
discounts taken by Landlord.
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If Landlord does not carry a form of insurance coverage (e.g., earthquake
insurance) for the Building during any part of the Base Year but subsequently
obtains such insurance for the Building during the Lease Term, then from and
after the date upon which Landlord obtains such insurance coverage and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent
calendar year. Conversely, if Landlord carries a form of insurance coverage
(e.g., earthquake insurance) for the Building during any part of the Base Year
but subsequently no longer carries such form of insurance coverage, then from
and after the date upon which Landlord no longer carries such insurance coverage
and continuing throughout the period during which Landlord no longer maintains
such insurance coverage, Operating Expenses for the Base Year shall be deemed to
be decreased by the amount of premium Landlord incurred for such insurance for
the same period of time during the Base Year as such insurance was no longer
maintained by Landlord during such subsequent calendar year.
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, then Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Building is
not at least ninety-five percent (95%) occupied during all or a portion of the
Base Year or any Expense Year, Landlord shall make an appropriate adjustment to
the components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been paid had such Building been ninety-five
percent (95%) occupied; and the amount reasonably so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, or utility rate increases due to extraordinary circumstances including,
but not limited to, conservation surcharges, boycotts, embargoes or other
shortages (unless such labor rate or utility rate increases remain in effect
after the Base Year, in which event the Operating Expenses for the Base Year
shall be adjusted when the labor rate increases or utility rate increases adjust
following the cessation of the extraordinary circumstances causing such
increases in the first place), or amortized costs relating to capital
improvements.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof. Tax Expenses for the Base
Year of the Lease Term for the Building (and the underlying land for the tax
parcel) shall be calculated as if the value of such Building, the Base, Shell
and Core of such Building and the Tenant Improvements thereto and related
improvements to the Common Area as reasonably allocated to such Building were
fully assessed. With respect to Tenant Improvements in each Building, such Tax
Expenses shall be calculated to include the actual "soft" and "hard" costs of
such improvements (commencing as of the Lease Commencement Date for the
applicable Floor Group, any Floor Groups not improved in the Base Year of the
Lease Term for such Building shall be fully assessed based on the Tenant
Improvement Allowance available therefor). If Tenant fails to utilize the
entire Tenant Improvement Allowance for any particular Building for
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Tenant Improvements, thereupon Tax Expenses shall be adjusted to the actual
amount so utilized.
4.2.8.2 Tax Expenses shall include, without limitation: (i) any
tax on the rent, right to rent or other income from the Project, or any portion
thereof, or as against the business of leasing the Project, or any portion
thereof; (ii) any assessment, tax, fee, levy or charge in addition to, or in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax or
business license tax with respect to the receipt of or measured by the amount of
such rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; and (iv) any assessment, tax, fee, levy or
charge, upon this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises.
4.2.8.3 Any costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such
expenses are paid. Tax refunds shall be credited against Tax Expenses and
refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.8.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.8.4 If in any Expense Year subsequent to the Base Year (the
"ADJUSTMENT YEAR"), the amount of Tax Expenses decreases below the amount of Tax
Expenses for the Base Year as a result of a Proposition 8 reduction, then for
purposes of all subsequent Expense Years, including the Expense Year in which
such decrease in Tax Expenses occurs, the Building Direct Expenses for the Base
Year shall be decreased by an amount equal to such decrease in assessed value or
direct assessments, as applicable, in the Adjustment Year. Conversely, if the
Tax Expenses thereafter are decreased by a lesser amount during any comparison
year subsequent to the Adjustment Year (the "READJUSTMENT YEAR") as a result of
Landlord's failure to secure a Proposition 8 reduction which is greater than or
equal to the Proposition 8 reduction secured during the Adjustment Year, then
for purposes of all subsequent comparison years, including the comparison year
in which such lesser decrease in Tax Expenses occurs, the Building Direct
Expenses for the Base Year shall only be decreased by an amount equal to the
decrease in assessed value or direct assessments, as applicable, during such
Readjustment Year which resulted from Landlord's failure to secure a Proposition
8 reduction
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greater than or equal to the Proposition 8 reduction secured during the
Adjustment Year; provided that any costs and expenses incurred by Landlord in
securing any Proposition 8 reduction shall not be included in Building Direct
Expenses for purposes of this Lease. Landlord and Tenant acknowledge that this
Section 4.2.8.4 is not intended to in any way affect (A) the inclusion in Tax
Expenses of the statutory two percent (2%) annual increase in Tax Expenses (as
such statutory increase may be modified by subsequent legislation), or (B) the
inclusion or exclusion of Tax Expenses pursuant to the terms of Proposition 13,
which shall be governed pursuant to the terms of Sections 4.2.8.1 through
4.2.8.3, above and Section 4.4.4 below. Notwithstanding the foregoing, in the
event that the Project is reassessed (the "REASSESSMENT") for real estate tax
purposes by the appropriate governmental authority pursuant to the terms of
Proposition 13, and such Reassessment results in a decrease in Tax Expenses, the
component of Tax Expenses for the Base Year which is attributable to the
assessed value of the Project under Proposition 13 prior to the Reassessment
(without taking into account any Proposition 8 reductions) shall be reduced for
the purposes of comparison to all subsequent Expense Years (commencing with the
Expense Year for which the Reassessment is first attributable) to an amount
equal to the real estate taxes based upon such Reassessment.
4.2.9 "TENANT'S SHARE" with respect to Building Direct Expenses,
shall equal the percentage which the total rentable square footage of the space
leased by Tenant in such Building bears to the total rentable square footage of
the Building. In the event either the rentable square feet of the Premises
and/or the total rentable square feet of the Building is remeasured pursuant to
Section 1.2 above, Tenant's Share shall be appropriately adjusted, and, as to
the Expense Year in which such change occurs, Tenant's Share for such Expense
Year shall be determined on the basis of the number of days during such Expense
Year that each such Tenant's Share was in effect.
4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the
Building will be a part of a multi-building project and that the costs and
expenses incurred in connection with the Project (I.E. the Direct Expenses)
should be shared among the tenants of the Building and the tenants of the
Adjacent Buildings in the Project. Such allocation shall be made in accordance
with the CC&R's; provided, however, that to the extent such allocation is not
addressed in the CC&R's, Landlord shall, in Landlord's reasonable judgment,
determine which Direct Expenses are properly allocable to an individual building
(because the expense applies to only such building) and which Direct Expenses
shall be allocable to tenants of more than one (1) building (in which case
Building Direct Expenses shall include those expenses so allocated to the
Building based upon the relative square footages of the affected buildings).
4.3.2 COST POOLS. Notwithstanding anything to the contrary
contained herein, Landlord shall have the right, from time to time, to equitably
allocate some or all of the Direct Expenses for the Project among different
portions or occupants of the Project (the "COST POOLS"), in Landlord's
reasonable judgment. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building of the Project or of the Project, and the
retail space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Building Direct
Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "EXCESS").
4.4.1 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. By May 1 of
each year, Landlord shall give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "ESTIMATED
EXCESS") as calculated by comparing the Building Direct Expenses for such
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Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish
the Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary but Landlord shall not do
so more than twice during any Expense Year. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the next
to last sentence of this Section 4.4.1). Such fraction shall have as its
numerator the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator. Until
a new Estimate Statement is furnished (which Landlord shall have the right to
deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12th) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant. Landlord shall maintain books and records with respect to
Building Direct Expenses in accordance with generally accepted and sound
accounting and management practices, consistently applied.
4.4.2 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. In addition, Landlord shall give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year for the
Building, and which shall indicate the amount of the Excess. Upon receipt of
the Statement for each Expense Year commencing or ending during the Lease Term,
if an Excess is present, Tenant shall pay, with its next installment of Base
Rent due, the full amount of the Excess for such Expense Year, less the amounts,
if any, paid during such Expense Year as Estimated Excess, and if Tenant paid
more as Estimated Excess than the actual Excess, Tenant shall receive a credit
in the amount of Tenant's overpayment against Rent next due under this Lease.
In addition, Landlord shall, within ten (10) days after written request from
Tenant, distribute (or if Landlord does not control the Association, request the
Association to distribute) to Tenant a copy of (1) the budget, notice and
summary prepared pursuant to Section 3.3 of the CC&R's and (2) the accounting
prepared pursuant to Section 3.6(c) of the CC&R's. The failure of Landlord to
timely furnish the Statement, or any other information required under this
Section 4.4.2, for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4. Even though the Lease Term has
expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Share of Building Direct Expenses for the Expense Year in which
this Lease terminates, if an Excess if present, Tenant shall pay to Landlord
such amount within thirty (30) days, and if Tenant paid more as Estimated Excess
than the actual Excess, Landlord shall, within thirty (30) days, deliver a check
payable to Tenant in the amount of the overpayment. The provisions of this
Section 4.4.2 shall survive the expiration or earlier termination of the Lease
Term.
4.4.3 TENANT'S AUDIT RIGHT. Within six (6) months after receipt
of a Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set
forth in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default in the payment of Base Rent
or Building Direct Expenses after expiration of all applicable cure periods and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord's records in strict confidence. Landlord shall cooperate with Tenant
in obtaining all necessary or appropriate information from the Association.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement by written notice to
Landlord within thirty (30) days after the Review Period shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement. If after such
inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing that Tenant still disputes such amounts, a certification as
to the proper amount shall be made by an independent certified public accountant
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selected by Landlord and reasonably approved by Tenant who is a member of a
nationally or regionally recognized accounting firm. Landlord shall cooperate
in good faith with Tenant and the accountant to show Tenant and the accountant
the information upon which the certification is to be based. If such
certification by the accountant proves that the Building Direct Expenses set
forth in the Statement were (i) overstated by less than two percent (2%), then
the cost of the accountant and the cost of such certification shall be paid for
by Tenant, (ii) overstated by two percent (2%) or more but less than three
percent (3%), then the cost of the accountant and the cost of certification
shall be split evenly between Landlord and Tenant, or (iii) overstated by three
percent (3%) or more, then the cost of the accountant and the cost of such
certification shall be paid for by Landlord. Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification.
4.4.4 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease in the event that at any time
during the first seven (7) years of the Lease Term, any sale, refinancing, or
change in ownership of such Building is consummated, and as a result thereof,
and to the extent that in connection therewith, a Reassessment occurs pursuant
to the terms of Proposition 13, then the terms of this Section 4.4.4 shall apply
to such Reassessment for the Building.
4.4.4.1 THE TAX INCREASE. For purposes of this Article 4, the
term "Tax Increase" shall mean that portion of the Tax Expenses, as calculated
immediately following the Reassessment, which is attributable solely to the
Reassessment. Accordingly, the term Tax Increase shall not include any portion
of the Tax Expenses, as calculated immediately following the Reassessment, which
is attributable to (i) the initial assessment of the value of the land
associated with the Building, the Base, Shell and Core of such Building,
improvements in the Project or any "soft" costs, permit costs, site improvement
costs or entrepreneurial profit added by the assessor due to construction of the
Project, (ii) assessments which were pending immediately prior to the
Reassessment which assessments were conducted during, and included in, such
Reassessment, or which assessments were otherwise rendered unnecessary following
the Reassessment, or (iii) the annual inflationary increase of real estate taxes
permitted to be assessed annually under Proposition 13.
4.4.4.2 TAX INCREASE PROTECTION. During the first seven (7)
years of the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase. Notwithstanding the foregoing, Landlord shall be
permitted to pass through to Tenant any Tax Increase resulting from a change in
ownership of the Project arising out of the sale, financing or merger of all or
substantially all of the assets or stock of and/or partnership interests and/or
limited liability company interests owned by Kilroy Realty Corporation and/or
its affiliates.
4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13
PROTECTION AMOUNT ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax
Expenses which Tenant is not obligated to pay or will not be obligated to pay
during the Lease Term in connection with a particular Reassessment pursuant to
the terms of this Section 4.4.4, shall be sometimes referred to hereinafter as
"Proposition 13 Protection Amount." If the occurrence of a Reassessment is
reasonably foreseeable by Landlord and the Proposition 13 Protection Amount
attributable to such Reassessment can be reasonably quantified or estimated for
each Lease Year commencing with the Lease Year in which the Reassessment will
occur, the terms of this Section 4.4.4.3. shall apply to each such Reassessment.
Upon notice to Tenant, Landlord shall have the right to purchase the Proposition
13 Protection Amount relating to the applicable Reassessment (the "Applicable
Reassessment"), at any time during the Lease Term, by paying to Tenant an amount
equal to the "Proposition 13 Purchase Price," as that term is defined below,
provided that the right of any successor of Landlord to exercise its right of
repurchase hereunder shall not apply to any Reassessment which results from the
event pursuant to which such successor of Landlord became the landlord under
this Lease. As used herein, "Proposition 13 Purchase Price" shall mean the
present value of the Proposition 13 Protection Amount remaining during the Lease
Term, as of the date of payment of the Proposition 13 Purchase Price by
Landlord. Such present value shall be calculated (i) by using the portion of
the Proposition 13 Protection Amount
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attributable to each remaining Lease Year (assuming for purposes of this
computation that the amount of such Proposition 13 Protection Amount benefited
Tenant on an equal monthly basis at the end of each month during each Lease
Year), as the amount to be discounted, and (ii) by using an eight percent (8%)
discount rate, compounded annually, for each monthly amount to be discounted.
Upon such payment of the Proposition 13 Purchase Price, the provisions of
Section 4.4.4.2 of this Lease shall not apply to any Tax Increase attributable
to the Applicable Reassessment. Since Landlord is estimating the Proposition 13
Purchase Price because a Reassessment has not yet occurred, then when such
Reassessment occurs, if Landlord has underestimated the Proposition 13 Purchase
Price, then upon notice by Landlord to Tenant, Tenant's Rent next due shall be
credited with the amount of such under-estimation, and if Landlord overestimates
the Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Rent
next due shall be increased by the amount of the overestimation. The amount of
any such underestimate or overestimate shall be calculated by taking the
difference between the Proposition 13 Purchase Price for the Applicable
Reassessment actually paid to Tenant and the Proposition 13 Purchase Price for
the Applicable Reassessment as it should have been computed had all relevant
facts concerning the Applicable Reassessment been known at the time such
Purchase Price was originally computed, and adding interest thereto at a rate
per annum equal to ten percent (10%), compounded annually, from the date such
Purchase Price was paid to Tenant through the date that the amount of the
underestimate or overestimate is to be credited or debited (as the case may be)
against Rent next due hereunder.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the Tenant Improvement Allowance actually
used to build-out the Premises then the Tax Expenses levied against Landlord or
the property by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facilities; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises for office, software
development, training, research and development, storage, distribution and other
lawful uses permitted under the CC&R's (as defined below) and the Project's
permitted zoning and for no other purpose or
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purposes whatsoever without Landlord's consent, which may be withheld in
Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in EXHIBIT "D," attached hereto, or in violation of
the laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project.
Tenant shall not do or permit anything to be done in or about the Premises which
will obstruct or interfere with the rights of other tenants or occupants of the
Buildings or Project, or injure them or use or allow the Premises to be used for
any unlawful purpose, nor shall Tenant cause or maintain any nuisance in, on or
about the Premises. Tenant shall not use or knowingly allow another person or
entity to use any part of the Premises for the storage, use, treatment,
manufacture or sale of "Hazardous Material," (as that term is defined in Section
29.23 of this Lease); provided, however, Tenant may use commercially reasonable
amounts of any Hazardous Material as is normal and customary for general office
use so long as Tenant complies, at Tenant's sole cost and expense, with all
Applicable Laws relating thereto.
5.3 CC&R'S. Tenant acknowledges that Landlord intends to record an
Agreement Between Land Owners Including Covenants, Conditions and Restrictions
and Grants of Easements for Carmel Center and Including Termination of Both
Former Declaration and Prior Grants of Easements (the "CC&R'S") over the
Project. Tenant hereby approves the draft of CC&R's attached hereto as Exhibit
"F" and made a part hereof and hereby subordinates this Lease to the CC&R's and
any amendments or modifications thereto; provided, however, that any
modifications to the draft of the CC&R's attached as EXHIBIT "F" which may have
a material effect on Tenant's use or enjoyment of, or access to, the Premises or
Project shall be subject to Tenant's prior approval, which approval shall not be
unreasonably withheld or delayed. Tenant shall, within fifteen (15) days after
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination of this
Lease to the CC&R's. As of the date of execution of this Lease, Landlord
contemplates that it will be the declarant under the CC&R's and a California
nonprofit mutual benefit corporation has been, or will be, established (the
"ASSOCIATION") and charged with certain duties under the CC&R's. Certain
individuals who are directors, officers or employees of Landlord, the members of
Landlord, or affiliates thereof, are, or will be, members of the board of
directors of the Association. The board shall have the right to appoint members
and alternatives members of the Architectural and Development Review Committee
(the "COMMITTEE") contemplated by the CC&R's. As an owner of property subject
to the CC&R's, Landlord is a member of the Association for each parcel within
the Project which is subject to assessments under the CC&R's. With respect to
Landlord's respective capacities as declarant, member of the board, and a member
of the Committee under the CC&R's, Landlord covenants not to do any of the
following without Tenant's consent (which shall not be unreasonably withheld)
(i) take any action which in Landlord's reasonable opinion will jeopardize or be
detrimental to Tenant's rights under this Lease and Tenant's use and enjoyment
of its leasehold estate, (ii) take any action which has the effect of materially
increasing assessments or costs incurred by Landlord under the CC&R's, which
will result in an unreasonable increase in Direct Expenses in Expense Years
after the Base Year, (iii) vote in favor of or approve any new improvements,
operation or use on any of the properties covered by the CC&R's without first
consulting with Tenant, and (iv) knowingly allow any use of the parking
facilities within the Project (as defined in this Lease) that is not allowed
pursuant to the reciprocal parking rights described in the CC&R's. Landlord
shall provide (or if Landlord does not control the Association, Landlord will
request the Association to provide) to Tenant the draft budget prepared from
time to time in connection with the CC&R's for Tenant's review and comment, and
Landlord will reasonably consider Tenant's comments in preparing the budget.
Further, Landlord represents and warrants that the signage contemplated by this
Lease is in compliance with the CC&R's and the Sign Plan defined therein.
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ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating, ventilation and
air conditioning ("HVAC") , pursuant to the HVAC service levels set forth in
EXHIBIT "G" attached hereto, from Monday through Friday, during the period from
6:00 A.M. to 7:00 P.M. and on Saturday during the period from 8:00 A.M. to 12:00
P.M. (the "BUILDING HOURS"), except for the dates of observation of New Year's
Day, Presidents Day, Independence Day, Labor Day, Memorial Day, Thanksgiving
Day, and Christmas Day and other nationally recognized holidays that are not
nationally recognized as of the date of this Lease (collectively, the
"HOLIDAYS"). Notwithstanding the foregoing, Landlord shall change the Building
Hours as requested by Tenant from time to time (but not more than two (2) times
per calendar year) so long as (i) the total Building Hours for the weekly period
(i.e., Monday through Sunday) do not exceed sixty-nine (69) hours, (ii) Tenant
leases the entire Building, (iii) any such Building Hours so designated by
Tenant for any day must be consecutive hours, and (iv) Tenant shall be
responsible for any additional reasonable costs incurred by Landlord as a result
of such change in hours requested by Tenant (which costs shall be payable as
Additional Rent within thirty (30) days after Tenant's receipt of invoice
therefor). Tenant shall be entitled to install, as an initial Tenant
Improvement or as an Alteration, dedicated heating, ventilation and air
conditioning units ("PACKAGE UNITS") within or serving the Premises at Tenant's
sole cost and expense (but not window units). The plans and specifications for
any Package Units shall, as indicated in Article 8 below and the Tenant Work
Letter (as applicable), be subject to Landlord's reasonable approval and the
electricity required to power such Package Units shall be included within the
allotment set forth in Section 6.1.2 below and such electricity and any other
utilities used by such Package Units shall be payable by Tenant in accordance
with Section 6.2 below. Tenant shall be solely responsible for maintenance and
repair of the Package Units and such units shall be considered to be a fixture
within the Premises and shall remain upon the Premises upon the expiration or
earlier termination of Lease Term unless Landlord requires Tenant to remove such
items upon expiration or earlier termination of this Lease pursuant to the
provisions of Section 8.5 below. Notwithstanding the foregoing, Tenant may
remove any "Libert" or similar type HVAC units from the Premises at any time
prior to expiration or earlier termination of the Lease Term provided that
Tenant removes all associated wiring and cabling, repairs any damage resulting
from such removal and restores the Premises to the condition prior to the
placement of such unit(s), reasonable wear and tear excepted.
6.1.2 Landlord shall provide adequate electrical wiring,
facilities and power sufficient to provide Tenant with four (4) watts per
rentable square foot of connected electrical load for Tenant's equipment and
sufficient to provide an additional one point five (1.5) watts per rentable
square foot of connected electrical load for Tenant's lighting fixtures. Any
such electrical usage shall be subject to applicable laws and regulations.
Tenant shall bear the cost of replacement of any non-Building standard lamps,
starters and ballasts for lighting fixtures within the Premises; replacement of
any such Building standard items (as shown on the Specifications) shall be
included in Operating Expenses.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall manage the Project and employ qualified
property management personnel and maintenance personnel to operate and manage
the Project in accordance with a standard which is not less than customarily
observed in the operation and management of Comparable Buildings. Such
management personnel and maintenance personnel shall, at a minimum, include the
following: upon completion of Building 5, on-site management shall include a
full-time property manager, an assistant property manager and an allocation of
time for a regional property manager; engineering staff will include one (1)
senior full-time
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engineer as of the Lease Commencement Date for Building 1 and an additional
journeyman level engineer to be hired upon the Lease Commencement Date for the
initial Floor Group in the Building and stationed at the Project; and one (1)
full-time day porter will be stationed at the Project upon the Lease
Commencement Date for Building 1 whose duties shall be as specified in EXHIBIT
"H-2." The management office for the Project shall be located in the Del Mar
Heights area until such time as Building 5 has been completed, at which time the
management office for the Project shall be located within the Project for the
remainder of the Lease Term. Landlord shall at all times comply with the
service levels and performance standards specifically described in EXHIBIT "G"
and EXHIBIT "H-1" and EXHIBIT "H-2", attached hereto, which may be modified by
Landlord from time to time so long as an equivalent or better level of service
is provided and such modification is reasonable and customary for Comparable
Buildings; provided, however, that if any such modification is made by Landlord
and results in an increase in Operating Expenses, then from and after the date
upon which such modification is effective and continuing throughout the period
during which such modification is effective, Operating Expenses for the Base
Year shall be increased by the amount Landlord reasonably determines it would
have incurred had the modification been in effect throughout the Base Year.
6.1.5 Landlord shall provide janitorial services five (5) days per
week except the date of observation of the Holidays, in and about the Building
in accordance with the standards described in EXHIBIT "H-1" attached hereto and
window washing services in accordance with a standard which is not less than
that customarily observed in other Comparable Buildings. Notwithstanding the
foregoing, Tenant may elect upon reasonable prior notice to Landlord to require
Landlord to change the provider of such janitorial services in the Building in
accordance with, and subject to, Section 6.7 below.
6.1.6 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours; Landlord shall have one
elevator available at all other times, including Holidays.
6.1.7 Landlord, at its sole cost but includable as an Operating
Expense, shall provide a security system for the Project, including equipment,
on-site personnel, procedures and systems as provided in Exhibit "I" attached
hereto and made a part hereof. Security procedures shall be implemented to
regulate access to the Project during certain hours provided that, subject to
such restrictions and subject to the other provisions of this Lease, Tenant
shall have access to the Premises seven (7) days a week, twenty-four (24) hours
per day. Subject to Landlord's reasonable approval of Tenant's plans and
specifications and Tenant's compliance with the terms and conditions of Article
8, Tenant shall be entitled to install its own security systems for the
Premises, which shall be located within the Premises and shall not interfere
with the Project systems.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems (collectively, "BUILDING SYSTEMS AND EQUIPMENT") .
6.2 UTILITIES COSTS; OVERSTANDARD TENANT USE.
6.2.1 If Tenant uses heat-generating machines, machines other than
normal office machines, or equipment or lighting other than Building standard
lights in the Building, which adversely and materially affects the temperature
otherwise maintained by the air conditioning system or materially increase the
water normally furnished for such Building by Landlord pursuant to the terms of
Section 6.1 of this Lease, Landlord shall have the right to install
supplementary air conditioning units or other facilities in such Building,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance shall be paid by
Tenant to Landlord within thirty (30) days after billing by Landlord.
6.2.2 The Tenant Improvements to be constructed for the Building
shall include an electrical meter section and switchgear to measure electricity
supplied to the Premises
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(including, without limitation, electricity required in order to provide HVAC to
the Premises). Tenant shall contract directly with an electricity service
provider for electrical service to the Premises (including, without limitation,
electricity required in order to provide HVAC to the Premises) and Tenant shall
timely pay all charges for such service from such provider and Landlord shall
have no obligation with respect to the provision of such service. The actual
cost of electricity provided to the Premises (including, without limitation,
electricity required in order to provide HVAC to the Premises) shall,
notwithstanding anything to the contrary contained in this Lease, not be
included in Operating Expenses (including, without limitation, Operating
Expenses for the Base Year) for the Building (except for electricity relating to
the Common Areas, which shall be included in Operating Expenses (including,
without limitation, Operating Expenses for the Base Year) and paid by Tenant as
part of Building Direct Expenses).
6.2.3 If Tenant desires to use HVAC during hours other than those
for which Landlord is obligated to supply such HVAC pursuant to the terms of
Section 6.1 of this Lease (i.e., in excess of sixty-nine (69) hours in any
week), Tenant shall not be required to give Landlord prior notice of Tenant's
desired use but rather Tenant may control its after-hours HVAC use from within
the Premises. Landlord shall supply such after-hours HVAC to Tenant subject to
Tenant's payment to Landlord of an amount reasonably determined by Landlord to
be attributable to increased wear and tear on existing Building Systems and
Equipment caused by such after-hours use, any engineer's over-time and a nominal
amount attributable to overhead and accounting costs. Amounts payable by Tenant
to Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be paid within thirty (30) days after Tenant's receipt of
invoice therefor.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent (except for abatement as specifically provided
in Section 6.8 below), or otherwise, for failure to furnish or delay in
furnishing any service (including telephone, electrical and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
the Project after diligent and reasonable efforts to do so, by any accident or
casualty whatsoever, by act or default of Tenant or other parties, or by any
other cause beyond Landlord's reasonable control; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
(except for abatement as specifically provided in Section 6.8 below), or
performing any of its obligations under this Lease. Furthermore, Landlord shall
not be liable under any circumstances for a loss of, or injury to, property or
for injury to, or interference with, Tenant's business, including, without
limitation, loss of profits, however occurring, through or in connection with or
incidental to a failure to furnish any of the services or utilities as set forth
in this Article 6, except in any circumstances where the failure to furnish any
such services or utilities arises out of or is a result of, Landlord's sole or
gross negligence or intentional misconduct (in which case Landlord shall be
responsible to the extent such item is not covered by insurance required to be
carried by Tenant under this Lease or actually carried by Tenant). Landlord
shall be entitled to cooperate in a reasonable manner with the mandatory
requirements of national, state or local governmental agencies or utilities
suppliers in reducing the consumption of energy or other resources (including
temporary stoppages in the supply of any utilities), and Landlord shall not be
in default hereunder or be liable for any damages directly or indirectly
resulting from, nor shall the Rent herein reserved be abated (except as
expressly provided in Section 6.8 below) by reason of such cooperation by
Landlord.
6.4 ADDITIONAL SERVICES. Landlord shall also provide any additional
services which may be reasonably requested by Tenant, including, without
limitation, locksmithing, lamp replacement, additional janitorial service, and
additional repairs and maintenance, provided that Tenant shall pay to Landlord
within fifteen (15) days after receipt of written notice from Landlord, the sum
of all costs to Landlord of such additional services plus a reasonable
administration fee. Charges for any service for which Tenant is required to pay
from time to time hereunder shall be deemed Additional Rent hereunder and shall
be billed on a monthly basis. Tenant shall not be required to use Landlord for
such any additional services; provided,
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however, that Landlord shall have the right to reasonably approve any other
provider of such services should Tenant elect not to use Landlord for the
providing of such services. However, nothing in this Section 6.4 shall be
construed as requiring Landlord to provide any such service which would, in
Landlord's reasonable judgment, result in the receipt by Landlord of amounts
that would fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Internal Revenue Code of 1986, as amended, or any
successor section thereto.
6.5 UTILITY DEREGULATION.
6.5.1 SELECTION OF SERVICE PROVIDER. Landlord has advised Tenant
that presently San Diego Gas and Electric ("ELECTRIC SERVICE PROVIDER") is the
utility company selected by Landlord to provide electricity service for the
Project. Notwithstanding the foregoing, if permitted by Applicable Law, upon
mutual agreement of Tenant and Landlord, the contract for service to the Common
Areas will be let to a different company or companies providing electricity
service (each such company shall hereinafter be referred to as an "ALTERNATE
SERVICE PROVIDER"). Any and all rebates or discounts enjoyed or realized as a
result of the selection of an Alternate Service Provider or the continued use of
the Electric Service Provider shall be reflected in the payments to be made by
Tenant pursuant to Article 4 above. However, if, after the Base Year, the
parties agree to utilize an Alternate Service Provider, then from and after the
date upon which the Alternate Service Provider is retained and continuing
throughout the period during which the Alternate Service Provider is retained,
Operating Expenses for the Base Year shall be reduced by the amount Landlord
reasonably estimates it would have saved had the Alternate Service Provider been
retained throughout the Base Year (for service to the Common Areas) based upon
the rates of the Alternate Service Provider prevailing throughout the Base Year.
Landlord and Tenant acknowledge that, with respect to electricity service to be
provided to the Premises, Tenant shall be entitled to retain any provider
(including, without limitation, an Alternate Service Provider) and that Tenant
will be contracting directly with such provider as indicated in Section 6.2.2
above.
6.5.2 TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate
with Landlord, the Electric Service Provider, and any Alternate Service Provider
at all times and, as reasonably necessary, shall allow Landlord, Electric
Service Provider, and any Alternate Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring and any other machinery
within the Premises, provided Landlord shall take all reasonable measures to
minimize any interference or disruption to Tenant's use of the Premises. In
addition, Landlord shall cooperate with Tenant and Tenant's provider of
electrical service to the Premises at all times and as reasonably necessary to
allow access to the facilities of the Building necessary for the provision of
such service.
6.6 EMERGENCY GENERATOR. Subject to Tenant's compliance with all
Applicable Laws and Landlord's prior approval of all plans and specifications,
which approval shall not be unreasonably withheld, Landlord shall permit Tenant
to install, at Tenant's sole cost and expense, an above-ground emergency
generator (as a Miscellaneous Common Area Item) for Tenant's use in the
Building. Such emergency generator shall be used by Tenant only during (i)
testing and regular maintenance, and (ii) any period of electrical power outage
in the Building. Tenant shall be entitled to operate the emergency generator
for testing and regular maintenance only upon notice to Landlord and at times
reasonably approved by Landlord. Landlord's consent to Tenant's plans for the
emergency generator may be conditioned on Tenant complying with such reasonable
requirements imposed by Landlord, based on the advice of Landlord's engineers,
so that the systems and equipment of the Building are not adversely affected.
Any repairs and maintenance of such generator shall be the sole responsibility
of Tenant. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, remove the emergency generator and all
associated cabling and wiring and repair all damage resulting from such removal.
Landlord makes no representation or warranty with respect to the emergency
generator or its suitability for use by Tenant and Article 10 of the Lease shall
apply with respect to Tenant's use, maintenance, repair and operation of the
emergency generator.
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6.7 SUBSTITUTION OF VENDORS. Upon request from Tenant, Landlord shall
review with Tenant the performance and cost of vendors and contract service
providers for the Project and except for the property manager and the property
management staff and engineers, Tenant shall have the right to require Landlord
to substitute other vendors or contract service providers reasonably designated
by Tenant provided that (i) Tenant then leases on a direct basis (i.e., not
including any space leased by Tenant pursuant to a sublease) at least fifty
percent (50%) of the space then constructed for lease at the Project, (ii) such
substitution does not result in any increase in Operating Expenses during the
Base Year, (iii) such substitution does not result in any invalidation or
reduction in coverage of any warranties for the Project (unless Tenant agrees to
be responsible for the costs which would have otherwise been covered by such
warranties), and (iv) Landlord reasonably approves such substitute vendor or
contract service provider. If a vendor or contract service provider is
substituted pursuant to this Section 6.7 above and if the annual cost of such
substitute vendor or contract service provider is less than the amount included
in Operating Expenses during the Base Year for the same service, effective upon
the date of such substitution, Operating Expenses for the Base Year shall be
reduced by the amount of such difference.
6.8 ABATEMENT EVENT. An "ABATEMENT EVENT" shall be defined as an event
that prevents Tenant from using the Premises or any portion thereof, as a result
of any failure to provide services or access to the Premises, where (i) Tenant
does not actually use the Premises or such portion thereof, and (ii) such event
is not caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. In addition, an "Abatement Event" shall not be deemed
to have occurred where such failure is caused by (a) an Alternate Service
Provider for the Premises where such failure would generally not have occurred
had Tenant utilized the Electric Service Provider (or its successor), or (b) an
Alternate Service Provider for service to the Common Areas where Landlord
reasonably conditioned its approval of the use of such Alternate Service
Provider pursuant to Section 6.5.1 upon Tenant assuming the risk that any
failures to provide services or access to the Premises caused by such Alternate
Service Provider would not be deemed to constitute an "Abatement Event" pursuant
to this Section 6.8. Tenant shall give Landlord notice ("ABATEMENT NOTICE") of
any such Abatement Event, and if such Abatement Event continues beyond the
"Eligibility Period" (as that term is defined below), then the Base Rent and
Tenant's Share of Direct Expenses shall be abated entirely or reduced, as the
case may be, after expiration of the Eligibility Period for such time that
Tenant continues to be so prevented from using, and does not use, the Premises
or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises leased by Tenant; provided, however, in the
event that Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period and the
remaining portion of the Premises is not sufficient to allow Tenant to
effectively conduct its business therein, and if Tenant does not conduct its
business from such remaining portion, then for such time after expiration of the
Eligibility Period during which Tenant is so prevented from effectively
conducting its business therein, the Base Rent and Tenant's Share of Direct
Expenses for the entire Premises shall be abated entirely for such time as
Tenant continues to be so prevented from using, and does not use, the Premises
for Tenant's business purposes. If, however, Tenant reoccupies any portion of
the Premises during such period, the Base Rent and Tenant's Share of Direct
Expenses allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date Tenant
reoccupies such portion of the Premises. The term "ELIGIBILITY PERIOD" shall
mean a period of five (5) consecutive business days after Landlord's receipt of
any Abatement Notice(s). If the Abatement Event is caused by the negligence or
willful misconduct of Tenant, or by the circumstances described in the second
(2nd) sentence of this Section 6.8 with respect to an Alternate Service
Provider, the Abatement described in this Section 6.8 shall not apply; however,
Tenant may seek recovery from its business interruption insurance. Except as
provided in Article 11 and Article 13, such right to abate Base Rent and
Tenant's Share of Direct Expenses shall be Tenant's sole and exclusive remedy at
law or in equity for an Abatement Event.
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ARTICLE 7
REPAIRS
7.1 OBLIGATIONS. Landlord shall maintain and repair any and all defects
in the Base, Shell and Core of the Building, including, without limitation, the
foundations, floor/ceiling slabs, structural portions of the roof (including the
roof membrane), curtain wall, exterior glass, columns, beams, shafts, stairs,
stairwells, and elevator cabs, and shall also maintain and repair the basic
mechanical, electrical, life safety, plumbing, sprinkler systems and heating,
ventilating and air conditioning systems of the Building (i.e., all of such
systems except for distribution within the Premises, in which case (i) Landlord
shall be responsible for repair of construction defects, (ii) with respect to
design defects, that party that retained the consultant to design such
distribution shall be responsible for repair of the defect and any additional
costs incurred as a result of such defect (to the extent not covered by warranty
or insurance), and (iii) Tenant shall be responsible for all other repairs and
maintenance), the exterior portions of the Building and the Common Areas of the
Project. In addition, Landlord shall make repairs necessitated by the acts or
omissions of Landlord or its respective agents, employees or contractors.
Tenant shall, at Tenant's own expense, keep the Premises and specifically all
tenant improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term, and in this regard, Tenant shall
at Tenant's own expense within a reasonable period of time but under the
supervision and subject to the prior approval of Landlord with respect to any
repairs for which a building permit is required, adequately repair all such
damage thereto. Except with respect to the express maintenance and repair
obligations of Tenant under this Lease, Landlord shall maintain and repair the
Building and the Project (including the Common Areas) and replace or repair all
damaged, broken, or worn fixtures and appurtenances, the cost of which shall be
included in Operating Expenses (subject t the provisions of Article 4 above).
Landlord may enter the Premises at all reasonable times upon reasonable prior
notice to Tenant (except that no notice will be required in case of emergency)
to make such repairs, alterations, improvements or additions to the Buildings or
to the Project or to any equipment located in the Project as Landlord is
obligated under this Lease or Landlord shall deem reasonably necessary or as
Landlord may be required to do by governmental or quasi-governmental authority
or court order or decree.
7.2 TENANT'S FAILURE TO COMPLY. If Tenant fails to make any repairs
required of Tenant under this Lease, after written notice to Tenant and the
expiration of a reasonable cure period, Landlord may (but need not) enter the
Premises pursuant to Section 7.1 above to make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage (not to
exceed five percent (5%)) of the cost thereof to compensate Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements within fifteen (15)
days of being billed for same. Except as expressly provided in Section 7.3
below, Tenant hereby waives and releases its right to make repairs at Landlord's
expense under Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
7.3 LANDLORD'S FAILURE TO COMPLY. If Tenant provides notice to Landlord
of an event or circumstance which requires the action of Landlord with respect
to the provision of repairs as set forth in Section 7.1 of this Lease, and
Landlord fails to provide such action as required by the terms of this Lease
within thirty (30) days after the date of such notice from Tenant (or if such
repair is reasonably expected to require longer than thirty (30) days to
complete, if Landlord shall fail to commence such repair within said thirty (30)
day period or to diligently prosecute such repair to completion), then Tenant
may proceed to take the required action upon delivery of an additional ten (10)
business days notice and cure period to Landlord specifying that Tenant is
taking such required action, and if such action was required under the terms of
this Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action including a percentage (not to exceed five percent (5%) of the cost
thereof to compensate Tenant for all overhead, general conditions, fees and
other costs or expenses arising from Tenant's involvement with such repairs and
replacement) in which case the reimbursed amount shall be included in Operating
Expenses to the extent the action, if taken by Landlord, would have been
includable in Operating Expenses
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pursuant to Section 4.2.7 above. In the event Tenant takes such action, and
such work will affect the Building Systems and Equipment, structural integrity
of the Building or exterior appearance of the Building, Tenant shall use only
those contractors used by Landlord in the Project for such work unless such
contractors are unwilling or unable to perform such work or their pricing is
unreasonable, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
comparable first-class, institutional quality, office buildings in the San
Diego, California area whose pricing is reasonable. If Tenant is entitled to
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
any action pursuant to this Section 7.3, Tenant shall so notify Landlord in
writing (the "REIMBURSEMENT NOTICE"), which Reimbursement Notice shall specify
in detail such costs and expenses. Within thirty (30) days after Landlord's
receipt of a Reimbursement Notice, Landlord shall pay to Tenant any undisputed
portion of such costs and expenses and shall notify Tenant in writing of those
costs and expenses specified by Tenant in the Reimbursement Notice which
Landlord disputes (the "DISPUTED AMOUNTS") and the reasons for such dispute.
Any amounts which are not so identified by Landlord as Disputed Amounts within
said thirty (30) day period shall be considered to be undisputed. To the extent
Landlord fails to reimburse Tenant for the costs and expenses specified in the
Reimbursement Notice within thirty (30) days after demand therefor, Tenant shall
be entitled to offset the sum of (i) the amount of any undisputed portion of
such costs and expenses and (ii) one-half of the amount of any Disputed Amount
(which total sum may be referred to as the "PRE-JUDGMENT OFFSET AMOUNT") against
Base Rent payable by Tenant under this Lease together with interest at the
Interest Rate specified in Article 25 of this Lease from the date of expiration
of said thirty (30) day period until the date of offset (up to a maximum offset
each month of twenty percent (20%) of the Base Rent payable for the Building)
until the full Pre-Judgment Offset Amount (plus such interest) has been so
offset. If Tenant obtains a final judgment against Landlord for the remaining
portion of the Disputed Amount and if Landlord fails to pay such judgment within
thirty (30) days after the date such judgment is rendered, Tenant shall be
entitled to offset such judgment against Base Rent payable by Tenant under this
Lease together with interest at the Interest Rate specified in Article 25 of
this Lease from the date Landlord failed to timely reimburse Tenant for such
costs and expenses until the date of offset (up to a maximum offset each month
of twenty percent (20%) of the Base Rent payable for the Building) until the
full amount of such judgment (plus such interest) has been so offset. If
Landlord obtains a final judgment against Tenant for the Disputed Amount, Tenant
shall pay to Landlord such judgment (as it relates to the Disputed Amount plus
interest Tenant has previously offset with respect to the Disputed Amount)
within thirty (30) days after the date such judgment is rendered.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent (as
indicated in Section 29.4 below) shall not be unreasonably withheld by Landlord.
However, Tenant may make (i) cosmetic changes to the finish work in the
Premises, not requiring any structural or other substantial modifications to the
Premises (e.g., voice/data cabling), without Landlord's prior consent, (ii)
cosmetic changes to the interior of any Tenant space within the Building (e.g.,
changes to the carpet, wallcovering and paint) and (iii) nonstructural changes
to the interior of any Tenant space within the Building (such cosmetic and
nonstructural changes to be referred to hereafter collectively as the
"ACCEPTABLE CHANGES") upon at least ten (10) days prior notice to Landlord but
without Landlord's prior consent provided (a) with respect to the changes
described in Subsection 8.1(iii) above only, such changes do not cost in excess
of Two Dollars ($2.00) per usable square foot of the Premises for any one (1)
job, (b) such Acceptable Changes do not affect the exterior appearance of the
Building or Common Areas, the structural aspects of the Building, or any
Building System or Equipment, and (c) Tenant shall perform such Acceptable
Changes in a good and workmanlike manner and in conformance with any and all
applicable federal, state, county or municipal laws, rules or
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regulations (collectively, "APPLICABLE LAWS"). At any time Tenant proposes to
make Alterations which require the consent of Landlord pursuant to this
Section 8.1, Tenant's notice regarding the proposed Alterations shall be
provided together with plans and specifications for the Alterations, and
Landlord shall approve or disapprove of the same within fifteen (15) days after
Landlord's receipt thereof. The construction of the initial improvements to the
Premises shall be governed by the terms of the Tenant Work Letter and not the
terms of this Article 8, and therefore, as used herein, the term "Alterations"
does not refer to any tenant improvements installed pursuant to the Tenant Work
Letter.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord may reasonably require, including, but
not limited to, the requirement that Tenant shall, at Tenant's expense, remove
such Alterations upon the expiration or any early termination of the Lease Term,
provided Landlord imposed such removal requirement as a condition to consenting
to such Alterations when they are installed, and/or the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials, mechanics
and materialmen approved by Landlord (which approval (as indicated in Section
29.4 below) shall not be unreasonably withheld or delayed). In any event,
Tenant shall utilize subcontractors of Landlord's selection to perform any and
all work that may affect the Building Systems and Equipment, structural aspects
of the Building, the Base Shell or Core or exterior appearance of the Building
or Common Areas provided that (i) if such subcontractors are unwilling or unable
to perform such work, Tenant may utilize the services of any other qualified
subcontractor which normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San Diego,
California area, and (ii) Landlord shall cause such subcontractor selected by
Landlord to charge Tenant for such work in an amount equal to the cost that a
comparable, first-class, reputable and reliable subcontractor would have charged
Tenant if selected pursuant to competitive bidding procedures (and if such
subcontractor refuses to meet such pricing requirements, Landlord shall have the
option to either pay the excess charges of such subcontractor or to permit
Tenant to utilize any other qualified subcontractor which meets the requirements
of subsection 8.2(i) above). Tenant shall construct such Alterations and
perform such repairs in conformance with any and all Applicable Laws and
pursuant to a valid building permit, issued by the City of San Diego, all in
conformance with Landlord's construction rules and regulations. All work with
respect to any Alterations must be done in a good and workmanlike manner and
diligently prosecuted to completion to the end that the Premises shall at all
times be a complete unit except during the period of work. In performing the
work of any such Alterations, Tenant shall have the work performed in such
manner so as not to obstruct access to the Project or any portion thereof by any
other tenant of the Project, and so as not to obstruct the business of other
tenants in the Project. In addition to Tenant's obligations under Article 9 of
this Lease, upon completion of any Alterations, Tenant agrees to cause a Notice
of Completion to be recorded in the office of the Recorder of the County of San
Diego in accordance with California Civil Code Section 3093 or any successor
statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. The Cost of all Alterations shall be paid
for by Tenant. In the event Tenant orders any Alterations or repair work
directly from Landlord, the charges for such work shall be deemed Additional
Rent under this Lease, payable within fifteen (15) days of billing therefor,
either periodically during construction in reasonable progress payments or upon
the substantial completion of such work, at Landlord's option. Upon completion
of such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for labor, services or
materials. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord a percentage of the cost of such work not to exceed three percent
(3%) of such cost to compensate Landlord for all overhead, general conditions,
fees and other costs and expenses arising from Landlord's involvement with such
work. If Tenant does not order such work directly from Landlord, Tenant shall
pay to Landlord a fee equal to one percent (1%) of the cost of such work and
shall reimburse Landlord for Landlord's reasonable out-of-pocket costs and
expenses actually incurred in connection with
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review of such work; provided, however, that this sentence shall not apply to
Acceptable Changes.
8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any
Alterations (other than work described in Subsections 8.1(i) and (ii) above),
Tenant agrees to carry "Builder's All Risk" insurance in a reasonable amount
covering the construction of such Alterations, and such other insurance as
Landlord may reasonably require, it being understood and agreed that all of such
Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof. In addition, if Tenant fails to meet the
Financial Standards (described in Section 21.2 below) and the cost of the
Alteration exceeds One Hundred Thousand Dollars ($100,000.00), Landlord may, in
its reasonable discretion, require Tenant to obtain a lien and completion bond
or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any fixtures, equipment and/or other personal property
owned by Tenant (including, without limitation, items purchased by Tenant
pursuant to Section 2.2.10 of the Tenant Work Letter), provided Tenant repairs
any damage to the Premises and Building caused by such removal. Furthermore,
Landlord may require Tenant, at Tenant's expense, to remove any Alterations (or
any Tenant Improvements which do not conform to the Specifications) and to
repair any damage to the Premises and Building caused by such removal provided
Landlord gave to Tenant written notice (prior to the installation of any such
Alterations or Tenant Improvement) that Landlord would require such removal at
the end of the Lease Term or following any earlier termination of this Lease.
If Tenant fails to complete such removal and/or to repair any damage caused by
the removal of such Alterations or Tenant Improvements, Landlord may do so and
may charge the actual cost thereof to Tenant.
ARTICLE 9
COVENANT AGAINST LIENS
Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from mechanics'
liens. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project, the
Building or the Premises, or any portion thereof, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be promptly
released and removed of record. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed by
bond or otherwise on or before the date occurring thirty (30) days after notice
of such lien is delivered by Landlord to Tenant (which thirty (30) day period
shall be subject to reduction as provided in the next sentence below), Landlord,
at its sole option, may immediately take all action necessary to release and
remove such lien, without any duty to investigate the validity thereof, and all
sums, costs and expenses, including reasonable attorneys' fees and costs,
incurred by Landlord in connection with such lien shall be deemed Additional
Rent under this Lease and shall immediately be due and payable by Tenant.
However, if Landlord's notice of such lien to Tenant indicates that Landlord is
in escrow to sell or finance the Building or has an executed letter of intent to
sell or a commitment letter to finance the Building (or a substantially similar
document), Landlord may indicate in such notice that such thirty (30) day period
shall be reduced to a period designated by Landlord which is not less than ten
(10) business days.
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ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its members, partners, subpartners and affiliates and their respective
officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability,
including without limitation court costs and reasonable attorneys' fees
(collectively, "CLAIMS") incurred in connection with or arising from any cause
in, on or about the Premises during the Lease Term, provided that the terms of
the foregoing indemnity by Tenant shall not apply to the gross negligence or
willful misconduct of Landlord or its agents, contractors, servants, employees
or licensees in connection with Landlord's activities in the Project and
Landlord shall indemnify, defend, protect and hold Tenant, its officers,
directors, agents, servants and employees harmless from any such Claims (except
for damage to the Tenant Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises, to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease). The provisions
of this Section 10.1 shall survive the expiration or sooner termination of this
Lease with respect to any claims or liability occurring prior to such expiration
or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Commercial/Comprehensive General Liability Insurance
covering the insured against claims of bodily injury, personal injury and
property damage arising out of Tenant's operations, assumed liabilities or use
of the Premises, including a Broad Form Commercial/Comprehensive General
Liability endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:
Bodily Injury and
Property Damage Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
10.3.2 Property Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant
Improvements, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include sprinkler leakage
coverage and earthquake sprinkler leakage coverage.
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10.3.3 Worker's Compensation and Employer's Liability Insurance,
with a waiver of subrogation endorsement, with minimum limits of $1,000,000 per
employee and $1,000,000 per occurrence.
10.3.4 Business Interruption, loss of income and extra expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings for up to one (1) year attributable to the risks outlined in
Section 10.3.2 above; however, Tenant shall be entitled to self-insure the
coverage described in this Section 10.3.4 only, in which case such
self-insurance shall be deemed to contain all of the terms and conditions
applicable to the coverage described in this Section 10.3.4 including, without
limitation, a deemed waiver of subrogation and, consequently, Landlord shall be
treated, for all purposes, as if Tenant had actually purchased such insurance
from a third party.
10.4 FIRE AND CASUALTY INSURANCE OF LANDLORD. Landlord shall maintain
during the Lease Term and as an Operating Expense, a policy or policies of
insurance insuring the Building and Landlord's remaining interest in the Tenant
Improvements and Alterations against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage. Such coverage shall be in the amount of full
replacement cost for the Building (including coverages for enforcement of
Applicable Laws requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Building as the result of a covered loss) and
other improvements and may include, at the option of Landlord, the risks of
earthquakes and/or flood damage and additional hazards, a rental loss
endorsement for a period of one (1) year and one or more loss payee endorsements
in favor of the holders of any mortgages or deeds of trust encumbering the
interest of Landlord in the Building or any ground or underlying lessors of the
Building.
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. All insurance shall be issued on an occurrence basis
and shall be (i) be issued by an insurance company having a rating of not less
than A-X in BEST'S INSURANCE GUIDE or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; and (ii) provide that
said insurance shall not be canceled or coverage changed unless thirty (30)
days' prior written notice shall have been given to Landlord and any mortgagee
or ground or underlying lessor of Landlord. In addition, the insurance
described in Section 10.3.1 above shall (a) name Landlord, and any other party
reasonably specified by Landlord, as an additional insured; (b) specifically
cover the liability assumed by Tenant under this Lease including, but not
limited to, Tenant's obligations under Section 10.1 of this Lease; (c) be
primary insurance as to all claims thereunder and provide that any insurance
obtained by Landlord is excess and is non-contributing with any insurance
requirement of Tenant; and (d) contain a cross-liability endorsement or
severability of interest clause acceptable to Landlord. Tenant shall deliver
said policy or policies or certificates thereof to Landlord before the Lease
Commencement Date (or Tenant's entry into the Building pursuant to the Tenant
Work Letter, if earlier) and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such certificate, Landlord may, at its option, procure such policies for
the account of Tenant, and the costs of it shall be paid to Landlord as
Additional Rent within fifteen (15) days after delivery to Tenant of bills
therefor. Tenant may satisfy the insurance coverage described in this Article
10 through one or more blanket policies so long as such policies otherwise meet
the requirements specified above.
10.6 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage and loss of insurance and extra
expense insurance waive any rights of subrogation that such companies may have
against Landlord or Tenant, as the case may be, so long as the insurance carried
by Landlord and Tenant, respectively, is not invalidated thereby. As long as
such waivers of subrogation are contained in their respective insurance policies
(or are deemed to be contained in any self-insurance maintained by Tenant
pursuant to the provisions of Section 10.3.4 above), Landlord and Tenant hereby
waive any right that either
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may have against the other on account of any loss or damage to the extent such
loss or damage is insurable under such policies of insurance.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord. Notwithstanding the foregoing, Landlord's
request shall only be considered reasonable if such increased amounts and any
such other coverages are standard amounts and coverages for Comparable
Buildings, and Landlord shall not increase amounts and require additional
coverages during the first five (5) years of the Lease Term and thereafter not
more often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Building or other portion of the Project
resulting from fire or any other casualty. If such Building or any Common Areas
serving or providing access to such Building shall be damaged by fire or other
casualty, Landlord shall promptly and diligently, subject to reasonable delays
for insurance adjustment or other matters beyond Landlord's reasonable control,
and subject to all other terms of this Article 11, restore the Base, Shell, and
Core of such Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base, Shell, and Core of the Premises
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord and reasonably approved by Tenant, provided that access to
the Building shall not be materially impaired. Upon the occurrence of any
damage to such Building, Tenant shall assign to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under Tenant's
physical damage and property damage insurance required under Section 10.3 of
this Lease (excluding, however, proceeds payable with respect to any damage to
Tenant's furniture, equipment and other personal property on the Premises), and
Landlord shall repair any injury or damage to the Tenant Improvements installed
in the Premises and shall return such Tenant Improvements and Alterations to
their original condition; provided that if the cost of such repair by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant's
insurance carrier, as assigned by Tenant, plus the amount of insurance proceeds
received by Landlord from Landlord's insurance carrier to the extent allocable
to damage of such Tenant Improvements and Alterations, the cost of such repairs
shall be paid by Tenant to Landlord in reasonable progress payments as Landlord
repairs the damage (provided that if any mortgage holder or deed of trust
beneficiary so requires, Tenant shall deposit such cost of repairs with such
mortgage holder or deed of trust beneficiary prior to the commencement of repair
by Landlord of such injury or damage, in which case Tenant shall be entitled to
interest on such funds to the extent permitted by such lender). In connection
with such repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors (subject to Tenant's approval thereof, not to be unreasonable
withheld or delayed (as indicated in Section 29.4 below)) to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Building or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Base Rent during the time and to the extent the Building is unfit for occpancy
for the purposes permitted under this Lease, and not occupied by Tenant as a
result thereof for the conduct of Tenant's business; provided, however, that if
such damage is the result of the negligence or willful misconduct of Tenant or
Tenant's employees, contractors, licensees or invitees, such abatement of Base
Rent shall apply only to the extent Landlord is reimbursed from
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the proceeds of rental interruption insurance purchased by Landlord as a part of
Operating Expenses.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Building; and instead terminate this Lease by notifying Tenant in writing of
such termination within ninety (90) days after the date Landlord learns of the
necessity for repairs as the result of damage, such notice to include a
termination date giving Tenant ninety (90) days to vacate the Building, but
Landlord may so elect only if (i) the Building shall be damaged by fire or other
casualty or cause, and the damage is not fully covered, except for deductible
amounts, by insurance policies required to be carried by Landlord under this
Lease and (ii) Tenant is not willing to fund the amount of the shortfall in
excess of deductible amounts.
11.3 LANDLORD'S OR TENANT'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, either Landlord or Tenant may elect to terminate
this Lease by notifying the other in writing of such termination with ninety
(90) days after the date Landlord learns of the necessity for repairs as a
result of such damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Building, but Landlord or Tenant, whichever is
the case, may so elect only if the Building shall be damaged by fire or other
casualty or cause and one or more of the following conditions is present: (i)
the repair or restoration is reasonably estimated to cost more than sixty
percent (60%) of the replacement cost of such Building, or (ii) repairs cannot
reasonably be substantially completed within three hundred sixty (360) days
after the date Landlord learns of the necessity for repairs as the result of
damage (when such repairs are made without the payment of overtime or other
premiums). Notwithstanding the foregoing, if this Lease is terminated by
Landlord and Landlord thereafter elects to commence the rebuilding of the
Building prior to the sooner to occur of the third (3rd) anniversary of the
termination date or the expiration of this Lease, Tenant shall have the right to
reinstate this Lease by written notice to Landlord within forty-five (45) days
after Tenant's receipt of notice from Landlord that Landlord so elects to
rebuild. Tenant's failure to so notify Landlord within said forty-five (45) day
period shall be deemed to constitute Tenant's waiver of the right to so
reinstate this Lease. Tenant hereby specifically acknowledges that its right to
reinstatement contained in this Section 11.3 shall not be applicable to any
assignee or transferee of Landlord to whom the Premises is transferred after
this Lease is terminated pursuant to this Section 11.3 as a result of a
foreclosure, trustee's sale or bona-fide deed in lieu of foreclosure.
11.4 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, California Civil Code
Sections 1932(2) and 1933(4), with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Buildings or the Project.
11.5 DAMAGE NEAR END OF TERM. In the event that the Building is destroyed
or damaged during the last twelve (12) months of the Lease Term or any Extension
Term and the repair or restoration is reasonably estimated to cost more than the
"Threshold Level" (as that term is defined below), then notwithstanding anything
contained in this Article 11, Landlord shall have the option to terminate this
Lease by giving written termination notice to Tenant of the exercise of such
option within thirty (30) days after Landlord learns of the necessity for
repairs as the result of such damage or destruction, and, to the extent such
damage or destruction was not caused as a result of the negligence or willful
misconduct of Tenant or any of Tenant's employees, agents, contractors,
licensees or invitees and the repair of same is reasonably expected by Landlord
to require more than three (3) months to complete, Tenant shall have the option
to terminate this Lease by giving written termination notice to Landlord of the
exercise of such option within thirty (30) days after Landlord learns of the
necessity for repairs as the result of such damage or destruction. The term
"THRESHOLD LEVEL" shall mean twenty percent (20%) of the replacement cost of the
Building where the damage occurs during the period from the first
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day of the ninth (9th) month prior to the scheduled date of expiration of the
Lease Term or any Extension Term to the last day of the twelfth (12th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term, fifteen percent (15%) of the replacement cost of the Building where the
damage occurs during the period from the first day of the fifth (5th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term until the last day of the eighth (8th) month prior to the scheduled date of
expiration of the Lease Term or any Extension Term, and ten percent (10%) of the
replacement cost of the Building where the damage occurs during the last four
(4) months of the Lease Term or any Extension Term. If either Landlord or
Tenant exercises such option to terminate this Lease as provided above (i) this
Lease shall cease and terminate as of the earlier of (1) the date ninety (90)
days after the date of such notice, or (2) the expiration date of this Lease,
(ii) Tenant shall pay the Base Rent and Additional Rent, properly apportioned up
to such date of termination, and (iii) both parties hereto shall thereafter be
freed and discharged of all further obligations hereunder, except as provided
for in provisions of this Lease which by their terms survive the expiration or
earlier termination of the Lease Term. Notwithstanding the foregoing, if Tenant
exercises an upcoming option to extend the term of this Lease, neither Landlord
nor Tenant shall not have any right to terminate this Lease under this
Section 11.5.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
either party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently.
Any waiver by either party of any provision of this Lease may only be in
writing. Additionally, no express waiver shall affect any provision other than
the one specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE13
CONDEMNATION
13.1 PERMANENT TAKING. If more than twenty-five percent (25%) of the
rentable square feet of the Building shall be taken by power of eminent domain
or condemned by any competent authority for any public or quasi-public use or
purpose, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease upon ninety (90) days' notice, provided such notice is
given no later than one hundred twenty (120) days after the date of such taking,
condemnation, reconfiguration, vacation, deed or other instrument. If more than
twenty-five percent (25%) of the rentable square feet of the Building is taken,
Tenant shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred twenty (120)
days after the date of such taking. Landlord shall be entitled to the entire
award or payment in connection therewith, except that Tenant shall have the
right to file any separate claim available to Tenant for any taking of Tenant's
personal property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to such Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination, or the date of such taking,
whichever shall first occur. If any part of the Premises shall be taken, and
this Lease is not terminated pursuant to this Section 13.1, the Rent shall be
abated proportionately based on the percentage of the rentable square feet of
the Building which
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is taken. Tenant hereby waives any and all rights it might otherwise have
pursuant to California Code of Civil Procedure Section 1265.130.
13.2 TEMPORARY TAKING. Notwithstanding anything to the contrary contained
in this Article 13, in the event of a temporary taking of all or any portion of
the Premises for a period of one (1) year or less, then this Lease shall not
terminate but the Base Rent shall be abated for the period of such taking for
the number of rentable square feet of the Premises so taken. Landlord shall be
entitled to receive the entire award made in connection with any such temporary
taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, except as otherwise expressly provided herein, assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise
transfer, this Lease or any interest hereunder, permit any assignment, or other
transfer of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as "TRANSFERS" and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"TRANSFEREE"). Where Landlord's consent to a proposed Transfer is required
under this Article 14, if Tenant desires Landlord's consent to any Transfer,
Tenant shall notify Landlord in writing, which notice (the "TRANSFER NOTICE")
shall include (i) the proposed effective date of the Transfer, which shall not
be less than fifteen (15) business days nor more than one hundred eighty (180)
days after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii) all
of the material terms of the proposed Transfer and the consideration therefor
(including calculation of the "Transfer Premium," as that term is defined in
Section 14.3 below, in connection with such Transfer), the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) current financial statements of
the proposed Transferee certified by an officer, partner or owner thereof, and
any other information reasonably required by Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space, and such other
information as Landlord may reasonably require. Landlord shall approve or
disapprove of the proposed Transfer within fifteen (15) business days after
Landlord's receipt of the applicable Transfer Notice including all items
required pursuant to the immediately preceding sentence. Where Landlord's
consent to a proposed Transfer is required under this Article 14, any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under Section 19.1.2 of this Lease. Where Landlord's consent
to a proposed Transfer is required under this Article 14, whether or not
Landlord consents to such proposed Transfer, for each proposed Transfer Tenant
shall pay to Landlord a review and processing fee in an amount equal to $500.00
and any reasonable legal fees incurred by Landlord (which legal fees shall not
exceed $1,000 per proposed Transfer during the initial Lease Term), upon request
by Landlord.
14.2 LANDLORD'S CONSENT. Where Landlord's consent to a proposed Transfer
is required under this Article 14, Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in
a business which Landlord reasonably determines is not consistent with the
quality of the Project as a first-class, institutional quality office project;
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14.2.2 The Transferee is either a governmental agency or
instrumentality thereof which Landlord reasonably determines is not consistent
with the quality of the Project as a first-class, institutional quality office
project;
14.2.3 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;
14.2.4 The Transfer will result in more than a reasonable and safe
number of occupants per floor within the Subject Space;
14.2.5 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Transfer on the date consent is requested (provided, however, that this Section
14.2.5 shall only apply if the Transfer is for a full floor or more of the
Building); or
14.2.6 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease or bring an action against Landlord, provided that (i) the
foregoing provisions of this Section 14.2.6 shall only apply (a) to restrictions
in other leases in the Project to the extent Tenant has received written notice
of such restrictions prior to the proposed Transfer, and (b) if (at the time
Tenant gives Landlord any Transfer Notice) Tenant is leasing less than eighty
percent (80%) of the rentable square feet of the Project; and (ii) this Section
14.2.6 shall not apply to any proposed food service use by the proposed
Transferee (i.e., Landlord may not grant an exclusive within the Project for a
food service use that would restrict Tenant's ability to enter into a Transfer).
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to Tenant than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding any contrary provisions of this Lease, if Tenant claims
that Landlord has unreasonably withheld or delayed its consent to a proposed
Transfer or otherwise has breached its obligations under this Article, Tenant's
only remedies shall be to seek a declaratory judgment and/or injunctive relief
and/or monetary damages, and Tenant waives the right to terminate this Lease as
to all or any portion of the Premises.
14.3 TRANSFER PREMIUM.
14.3.1 DEFINITION OF TRANSFER PREMIUM. If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall, except as otherwise provided in this Article 14, pay to Landlord
fifty percent (50%) of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee (the amount which may be
so payable to Landlord may be referred to herein as the "PREMIUM BASE AMOUNT").
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Landlord or Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any brokerage commissions,
reasonable attorneys' and architectural fees and reasonable advertising costs
incurred in connection with the Transfer, (iii) any Rent and Additional Rent
paid by Tenant for the portion of the Premises transferred while such space is
being actively marketed for sublease or assignment to the extent Tenant is not
occupying such space, and (iv) any other out-of-pocket
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costs reasonably incurred by Tenant in connection with such Transfer
(collectively, the "SUBLEASING COSTS"). "Transfer Premium" shall also include,
but not be limited to, key money and bonus money paid by Transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer.
14.3.2 PAYMENT OF TRANSFER PREMIUMS. The determination of the
amount of the Transfer Premium shall be made on an annual basis in accordance
with the terms of this Section 14.3.2, but an estimate of the amount of the
Transfer Premium shall be made each month and one-twelfth (1/12th) of such
estimated amount shall be paid to Landlord promptly, but in no event later than
the next date for payment of Base Rent hereunder, subject to an annual
reconciliation on each anniversary date of the Transfer. If the payments to
Landlord under this Section 14.3.2 during the twelve (12) months preceding each
annual reconciliation exceed the amount of Transfer Premium determined on an
annual basis and actually received by Tenant, then Landlord shall promptly
refund the excess to Tenant. If Tenant has underpaid the Transfer Premium, as
determined by such annual reconciliation, Tenant shall pay the amount of such
deficiency to Landlord promptly, but in no event later than the next date for
payment of Basic Rent hereunder. For purposes of calculating the Transfer
Premium on an annual basis, Tenant's Subleasing Costs shall be amortized on a
straight-line basis over the term of the Transfer.
14.3.3 LIMITATION ON AMOUNT AND TIMING. Notwithstanding the
foregoing provisions of this Section 14, Tenant shall have no obligation to pay,
and shall not pay, any percentage of the foregoing Transfer Premium under this
or any other section of this Lease in any calendar year, to the extent Tenant is
advised by Landlord that such payment would exceed the sum of: (A) the maximum
amount (if any) that can be paid to Landlord without causing Kilroy Realty
Corporation, a Maryland corporation ("KRC") to fail to meet the requirements of
sections 856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"CODE") for such year determined as if (i) the payment of such amount did not
constitute income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of
the Code ("QUALIFYING INCOME"), (ii) the payment of such amount resulted in all
other amounts received by Landlord from Tenant pursuant to this Lease during
such year failing to constitute Qualifying Income, and (iii) KRC had $1,000,000
of income from unknown sources during such year which was not Qualifying Income
(in addition to any known or anticipated income of KRC which was not Qualifying
Income), in each case as determined by KRC's independent accountants, and (B)
the Premium Base Amount less the amounts paid under clause (A) in the event KRC
receives and provides Tenant with a copy of a reasoned opinion from outside
counsel or a ruling from the Internal Revenue Service (the "PREMIUM GUIDANCE")
indicating that Landlord's receipt of the Premium Base Amount would constitute
Qualifying Income and would not cause other amounts paid by Tenant to Landlord
to fail to constitute Qualifying Income (the "REIT REQUIREMENTS"). In the event
that Landlord is not able to receive the full Premium Base Amount due to the
above limitation, Tenant shall not pay any amounts in excess of such limit
unless and until KRC receives (and delivers to Tenant) any one or combination of
the following, once or more often: (i) a letter from KRC's independent
accountants indicating the maximum amount that can be paid by Tenant to Landlord
at that time without causing KRC to fail to meet the REIT Requirements
(calculated as described above) or (ii) the Premium Guidance; in which event
Tenant shall pay to Landlord the lesser of the unpaid Transfer Premium or the
maximum amount stated in the letter referred to in (i) above. Tenant's
obligation to pay any unpaid portion of the Transfer Premium shall terminate on
the December 31 following the date which is three (3) years after the date such
payment would (without regard to the limitations in this subparagraph) have
initially been due. Any amounts paid shall first be applied to the Transfer
Premium which is the oldest. Tenant shall cooperate with Landlord and KRC and
provide them with any information or documents that are necessary or helpful to
Landlord or KRC in obtaining any Premium Guidance or in calculating the amount
of any payment due hereunder.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. In the event that, following
any proposed Transfer, Tenant and its Permitted Affiliates do not or will not
occupy at least fifty percent (50%) of the rentable square footage of the
Building or should Tenant's financial performance at the
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time of such proposed Transfer have fallen below the minimum Financial Standards
set forth in Section 21.2 below, Landlord shall have the option, by giving
written notice ("RECAPTURE NOTICE") to Tenant within fifteen (15) days after
receipt of any Transfer Notice, to recapture the Subject Space. Such recapture
shall cancel and terminate this Lease, with respect to the Subject Space as of
the date stated in the Transfer Notice as the effective date of the proposed
Transfer until the last day of the term of the Transfer as set forth in the
Transfer Notice. However, if Landlord delivers a Recapture Notice to Tenant,
Tenant may, within ten (10) days after Tenant's receipt of the Recapture Notice,
deliver written notice to Landlord indicating that Tenant is rescinding its
request for consent to the proposed Transfer, in which case such Transfer shall
not be consummated and this Lease shall remain in full force and effect as to
the portion of the Premises that was the subject of the Transfer. Tenant's
failure to so notify Landlord in writing within said ten (10) day period shall
be deemed to constitute Tenant's election to allow the Recapture Notice to be
effective. In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than all of the rentable square feet within the
Building, the Rent reserved herein shall be prorated on the basis of the number
of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Building, and this Lease as so amended
shall continue thereafter in full force and effect, and upon request of either
party, the parties shall execute written confirmation of the same. If Landlord
declines, or fails to timely elect to recapture the Subject Space under this
Section 14.4, then, provided Landlord has consented to the proposed Transfer
with respect to any Transfer which such consent is required, Tenant shall be
entitled to transfer the Subject Space to the proposed Transferee, subject to
the provisions of this Article 14. If, as a result of Landlord's exercise of
its recapture rights, the Building is converted to a multi-tenant building,
Landlord and Tenant will amend this Lease in order to reflect appropriate
modifications necessary for a multi-tenant building.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord, (iv)
Tenant shall furnish upon Landlord's request a complete statement, certified by
an independent certified public accountant, or Tenant's chief financial officer,
setting forth in detail the computation of any Transfer Premium Tenant has
derived and shall derive from such Transfer, and (v) no Transfer relating to
this Lease or agreement entered into with respect thereto, whether with or
without Landlord's consent, shall relieve Tenant from liability under this
Lease. Landlord or its authorized representatives shall have the right at all
reasonable times (but no more than one (1) timer per calendar year) to audit the
books, records and papers of Tenant relating to any Transfer, and shall have the
right to make copies thereof. If the Transfer Premium respecting any Transfer
shall be found understated, Tenant shall, within thirty (30) days after demand,
pay the deficiency and, in addition, if understated by more than (a) two percent
(2%), Tenant shall pay Landlord's cost of such audit within thirty (30) days
after demand, and (b) ten percent (10%), Landlord shall be entitled to interest
on the understated amount at the rate of ten percent (10%) per annum from the
date upon which the understated amount would have been paid if the Transfer
Premium had been accurately determined in the first place to the date Tenant
pays to Landlord in full such understated amounts; Landlord's rights pursuant to
the immediately preceding sentence shall constitute Landlord's sole remedy for
any understatement of the Transfer Premium (in the absence of fraud by Tenant).
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "Transfer"
shall also include (i) if Tenant is a partnership or limited liability company,
the withdrawal or change, voluntary, involuntary or by operation of law, of
fifty percent (50%) or more of the partners or members, or transfer of fifty
percent (50%) or more of partnership or membership interests, within a twelve
(12)-month period, or the dissolution of the partnership or company without
immediate reconstitution thereof, and (ii) except as otherwise provided in
Section 14.7 below, if Tenant is a closely held corporation (I.E., whose stock
is not publicly held and not traded through an exchange or over the counter),
(A) the dissolution, merger, consolidation or other reorganization of Tenant or,
(B) the sale or other transfer of more than an aggregate of fifty percent (50%)
of the voting shares of Tenant (other than to immediate family members by reason
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of gift or death) within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 AFFILIATED AND PERMITTED TRANSFERS.
14.7.1 PERMITTED AFFILIATES. Notwithstanding anything contained in
this Lease to the contrary, an assignment, subletting or permitting the use of
all or any portion of the Premises to or by a Permitted Affiliate (as defined
below) of Tenant shall not be deemed a Transfer under this Article 14 and thus
shall not be subject to (i) any requirement of obtaining Landlord's consent
thereto under this Article 14, (ii) Landlord's right to receive fifty percent
(50%) of any Transfer Premium in connection therewith under Section 14.3 or
(iii) Landlord's right to recapture the Premises under Section 14.4, provided
that (a) Tenant notifies Landlord of such assignment or sublease and the
identity of the Permitted Affiliate prior to the effective date thereof and
promptly after request from Landlord supplies Landlord with any documents or
information reasonably requested by Landlord regarding such assignment or
sublease and/or such Permitted Affiliate; and (b) such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14. As used in this
Section 14.7, "PERMITTED AFFILIATE" shall mean (1) any person, corporation or
other entity which is controlled by, controls, or in common control with Tenant,
or (2) any entity which merges with Tenant or acquires substantially all of
Tenant's stock or assets, and in either case of (1) or (2) above, such person,
corporation or other entity has a net worth as of the effective date of the
assignment or sublease at least equal to the net worth of Tenant as of the date
of execution of this Lease. "Control," as used in this Section 14.7, shall mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise.
14.7.2 PERMITTED TRANSFERS. Notwithstanding anything contained in
this Lease to the contrary, any subletting of less than fifty percent (50%) of
the rentable square footage, in the aggregate, of the Building by Tenant for a
term less than the remaining initial Lease Term (or, if during any Extension
Term, for a term less than the remaining Extension Term), shall not require
Landlord's consent and shall not be subject to Landlord's recapture right under
Section 14.4 (unless Tenant's financial performance at the time of such proposed
Transfer has fallen below the minimum Financial Standards set forth in Section
21.2 below), but shall be subject to (a) the condition that the sublease does
not provide for the subtenant to receive parking in a ratio per rentable square
foot in excess of that to which Tenant is entitled under this Lease, and
(b) Landlord's receipt of the amount described in Section 14.3. In the event of
any such sublease, Tenant shall notify Landlord at least thirty (30) days prior
to the effective date of such sublease, of such proposed sublease and the
identity of the proposed subtenant and supply Landlord with any documents or
information reasonably requested by Landlord in connection therewith. Any
subtenant under any sublease occurring under this Section 14.7.2 may be referred
to herein as a "PERMITTED TRANSFEREE."
ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to any portion of the Premises to Landlord or any agent or employee of Landlord
shall not constitute a surrender of the Premises or any portion thereof or
effect a termination or partial termination of this Lease, whether or not the
keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by
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Landlord or not, or a mutual termination hereof, shall not work a merger, and at
the option of Landlord shall operate as an assignment to Landlord of all
subleases or subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, Alterations and Tenant
Improvements which do not conform to the Specifications (provided Landlord
conditioned its approval of their installation under Section 8.5 above upon
Tenant's removal of such Alterations or non-standard Tenant Improvements (as
applicable) upon the expiration or earlier termination of this Lease),
free-standing cabinet work, and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may, in
its sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Building resulting from such removal. Tenant also
shall comply with the provisions of Section 8.5 of this Lease. Notwithstanding
the foregoing, with respect to Tenant's cabling, Landlord shall have the option,
exercisable by written notice to Tenant on or before the day which is thirty
(30) days prior to the expiration or earlier termination of this Lease, to
require Tenant to remove any or all of its cabling from the Premises and to
repair any damage to the Premises resulting from such removal; provided,
however, that if Landlord so requires Tenant to remove such cabling and if,
within six (6) months after the date of expiration or earlier termination of
this Lease, leasehold improvements within the Premises are demolished in a
manner such that the amount expended to remove such cabling as a part of such
demolition would have been less than the amount previously incurred by Tenant to
remove such cabling, Landlord shall promptly rebate to Tenant the difference
between the amount expended by Tenant to remove such cabling and the amount
which would have been incurred by Landlord to remove such cabling as a part of
the demolition process described herein.
15.3 REMOVAL OF TENANT'S PROPERTY BY LANDLORD. Whenever Landlord shall
re-enter the Building as provided in this Lease, any personal property of Tenant
not removed by Tenant upon the expiration of the Lease Term, or within five (5)
days after a termination by reason of Tenant's default as provided in this
Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord in
accordance with California Civil Code Sections 1980 through 1991 and California
Code of Civil Procedure Section 1174, or in accordance with any laws or judicial
decisions which may supplement or supplant those provisions from time to time.
15.4 LANDLORD'S ACTIONS ON PREMISES. Excepting any claims for damages or
other liability arising out of Landlord's or its agents' or its representatives'
gross negligence or willful misconduct, Tenant hereby waives, and releases
Landlord from, all claims for damages or other liability in connection with
Landlord's or its agents' or representatives' reentering and taking possession
of the Premises or removing, retaining, storing or selling the property of
Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord
harmless from any such damages or other liability, and no such re-entry shall be
considered or construed to be a forcible entry.
ARTICLE 16
HOLDING OVER
If Tenant provides Landlord with written notice ("HOLDOVER NOTICE") at
least thirty (30) days prior to expiration of the Lease Term (or any applicable
Extension Term) that Tenant will be holding over in the Premises, Tenant shall
have the right (and, subject to the grace periods described below, the
obligation) to hold over after the expiration of the Lease Term until the date
("HOLDOVER NOTICE DATE") specified in such Holdover Notice (but not in excess of
one hundred
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twenty (120) days after the expiration of the Lease Term or applicable Extension
Term). Any holdover tenancy (including without limitation, any holdover tenancy
pursuant to a Holdover Notice) shall be subject to every applicable term,
covenant and agreement contained herein, except that the Base Rent payable by
Tenant for the Premises (irrespective of the amount of space Tenant continues to
occupy in the Building) shall be escalated to equal one hundred ten percent
(110%) of the then current Base Rent and Direct Expenses payments for the entire
Premises for the first ninety (90) days of such holdover occupancy and one
hundred twenty-five percent (125%) of such amount during the next succeeding
ninety (90) days and from and after such one hundred eighty (180) day period,
Rent shall equal one hundred fifty percent (150%) of such amount thereafter;
provided, however, subject to the next sentence of this Article 16, such
holdover Rent and Additional Rent shall be prorated on a per diem basis through
and including the date ("ACTUAL SURRENDER DATE") Tenant actually vacates and
surrenders the Premises to Landlord in the condition required under this Lease.
If Tenant properly delivers the Holdover Notice and the Actual Surrender Date
(a) is earlier than the Holdover Notice Date by forty-five (45) days or less,
Tenant's obligation to pay such holdover Rent and Additional Rent shall
terminate on a per diem basis as of the Actual Surrender Date, however if the
Actual Surrender Date is earlier than forty-five (45) days prior to the Holdover
Notice Date, Tenant's holdover Rent and Additional Rent shall cease as of the
date which is forty-five (45) days prior to the Holdover Notice Date, or (b) is
later than the Holdover Notice Date, Tenant's obligation to pay holdover Rent
and Additional Rent shall cease as of the Actual Surrender Date, provided that
Tenant shall have no right to holdover beyond the earlier to occur of fifteen
(15) days after the Holdover Notice Date or the expiration of the one hundred
twenty (120) period specified in the first sentence of this Article 16 above.
By way of example only, and not as a limitation upon the foregoing, if the
Holdover Notice indicates that the Holdover Notice Date is ninety (90) days
after the expiration of the Lease Term or applicable Extension Term, Tenant
shall be permitted to holdover until the date which is one hundred five (105)
days after the expiration of the Lease Term or applicable Extension Term and
Tenant's obligation to pay holdover Rent and Additional Rent shall be prorated
on a per diem basis until the later of the forty-fifth (45th) day after the
expiration of the Lease Term or applicable Extension Term or the Actual
Surrender Date. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant (except as expressly provided
in this Article 16 above), and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration of the Lease Term (or the period specified in
clause 16(b) above, as applicable). The provisions of this Article 16 shall not
be deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
within the period specified in this Article 16 above, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys' fees) and liability resulting from such failure, including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender (including such tenant's lost
profits) and any lost profits to Landlord resulting therefrom, provided Landlord
promptly notified Tenant in writing of any lease or signed letter of intent for
all or any portion of the Premises.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within fifteen (15) days following a request in writing by either party to
the other, but in no event more frequently than three (3) times in any twelve
(12) month period, the recipient party shall execute and deliver to the
requesting party an estoppel certificate, which shall be substantially in the
form of EXHIBIT "E", attached hereto (or such other form as may be reasonably
required by any prospective mortgagee or purchaser of the Building or other
portion of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of either
party to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance
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of the Premises (if addressed to Tenant) and an acknowledgment by such party
that the statements included in the estoppel certificate in good faith are true
and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord agrees
to provide Tenant, within sixty (60) days after written request by Tenant, with
commercially reasonable nondisturbance agreements(s) in favor of Tenant from any
ground lessors, mortgage holders or deed of trust beneficiaries under any ground
lease, mortgage or deed of trust affecting the Project or any portion thereof
leased by Tenant (whether now existing or coming into existence at any time
after the date of execution of this Lease but prior to the expiration of the
Lease Term) and in consideration of, and as a condition precedent to, Tenant's
agreement to be bound by the terms of this Article 18. Tenant covenants and
agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof, to attorn, without any deductions or set-offs
whatsoever, to the purchaser or any successors thereto upon any such foreclosure
sale or deed in lieu thereof if so requested to do so by such purchaser, and to
recognize such purchaser as the lessor under this Lease. Tenant shall, within
fifteen (15) days of request by Landlord, execute such further instruments or
assurances as Landlord or any mortgage holder or deed of trust beneficiary may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases or other typical provisions contained in Subordination,
Non-Disturbance and Attornment Agreements. Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any foreclosure proceeding
or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due, where such
failure continues for five (5) days after written notice thereof from Landlord
to Tenant; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, if the nature of such a
default is such that the same cannot be reasonably be cured within a thirty (30)
day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as is reasonably possible under the
circumstances; or
19.1.3 To the extent permitted by law, a general assignment by
Tenant or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within
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thirty (30) days, or any execution or other judicially authorized seizure of all
or substantially all of Tenant's assets located upon the Premises or of Tenant's
interest in this Lease, unless such seizure is discharged within thirty (30)
days; or
19.1.4 The hypothecation or assignment of this Lease or subletting
of the Premises in violation of Article 14 hereof; or
19.1.5 Any default by Tenant (after expiration of any applicable
cure period) under any of the Adjacent Building Leases; provided, however, that
any such default by Tenant under any of the Adjacent Building Leases shall be
treated as a default by Tenant under this Lease only if (i) Landlord and all of
the other landlords under the Adjacent Building Leases all elect to declare a
default, and (ii) all lenders of this Building and the applicable Adjacent
Building consent. However, the restrictions upon Landlord in declaring a
default by Tenant pursuant this Section 19.1.5 are not intended to, and shall
not, restrict Landlord from declaring a default of this Lease by Tenant under
the circumstances described in Sections 19.1.1 through and including 19.1.4
above.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which has
been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not limited
to, brokerage commissions and advertising expenses incurred, and an
amortized portion (over the balance of the Lease Term compared to the term
of any new lease) of any expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Sections
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Section 19.2.1(iii) above, the "worth at the time of award" shall be computed
by discounting such
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amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of more than
two (2) monetary events of default by Tenant in any twelve (12) month period
during the Lease Term, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.
19.5 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any violation
or breach of any of the terms, provisions and covenants herein contained shall
be deemed or construed to constitute a waiver of any other or later violation or
breach of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the
remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. The acceptance of any Rent
hereunder by Landlord following the occurrence of any default, whether or not
known to Landlord, shall not be deemed a waiver of any such default, except only
a default in the payment of the Rent so accepted.
19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's right
to possession shall not be deemed to have been terminated by efforts of Landlord
to relet the Premises, by its acts of maintenance or preservation with respect
to the Premises, or by appointment of a receiver to protect Landlord's interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant's right to
possession.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
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ARTICLE 21
SECURITY DEPOSIT
21.1 LETTER OF CREDIT. In addition to its primary obligations under this Lease,
Tenant shall, commencing March 31, 2000, and continuing throughout the Lease
Term (including any Extension Terms), at any time that Tenant fails to meet or
equal the "Financial Standards" set forth below, provide security against a
default by Tenant under this Lease in the form of an unconditional, irrevocable,
standby letter of credit ("LC"), naming Landlord as the payee thereunder, with
terms as described in more detail below. The LC shall be in an amount equal to
six (6) months' then current Base Rent and shall be increased by the amount of
and upon any increase in monthly Base Rent payable under this Lease. The LC
shall be issued by a money center bank (a bank which accepts deposits, maintains
accounts, has a local San Diego office which will negotiate a letter of credit,
and whose deposits are insured by the FDIC) reasonably acceptable to Landlord,
and shall be in a form and content reasonably acceptable to Landlord and in the
form required hereunder. The LC shall be drawable by Landlord upon presentation
of a sight draft or demand to the LC issuer. Landlord may present such a sight
draft or demand if (i) the LC has not been renewed and replaced by Tenant at
least thirty (30) days prior to the expiration date of the then effective LC, or
(ii) Tenant commits a default under this Lease; provided, however, proceeds of
the drawn LC shall be applied to Rent, damages or charges to which Landlord is
entitled under the Lease as a result of Tenant's default. If Landlord makes a
draw upon the LC pursuant to this Section 21.1 and Tenant fails to replenish the
LC (or, if applicable, the CD described in Section 21.4 below) within ten (10)
days thereafter to an amount equal to six (6) months' then current Base Rent,
then Tenant shall be in default under this Lease. The LC is not intended to
represent liquidated damages for Tenant's default, but only a mechanism for
paying the Rent, damages or charges to which Landlord may be entitled. If
allowed by the issuing bank, Landlord shall be entitled to grant a security
interest in, or make a collateral assignment of, Landlord's rights under the LC
in connection with mortgage indebtedness incurred by Landlord to a bona fide
third-party institutional lender in an arm's-length transaction. The LC shall
indicate that it is transferable in it entirety by Landlord as beneficiary and
that upon receiving written notice of the transfer and upon presentation to the
issuer of the LC the issuer will reissue the LC naming such transferee as
beneficiary. Tenant shall pay all expenses, points, and/or fees incurred in
obtaining the LC.
21.2 FINANCIAL STANDARDS. Such LC shall be required in the event Tenant,
at the end of any calendar quarter (commencing with the calendar quarter ending
March 31, 2000), fails to meet all of the following financial requirements
("FINANCIAL STANDARDS"): (i) Tenant shall have annual gross revenues of not less
than $150,000,000, (ii) Tenant shall have cash on hand of not less than
$15,000,000 and (iii) Tenant's equity-to-debt (which for purposes of this test
shall exclude deferred revenue) ratio shall not be less than 1:1.
21.3 CONDITIONAL RELEASE OF SECURITY. Any LC previously delivered by
Tenant shall be returned to Tenant at such time as Tenant has not been in
default (after expiration of any applicable notice and cure period) under this
Lease and has met or exceeded all of the Financial Standards, for four (4)
consecutive quarters. Notwithstanding the foregoing, in the event the LC has
been returned to Tenant, but Tenant thereafter fails, at the end of any quarter,
to meet all of the Financial Standards then, in such event, Landlord shall be
entitled to require that the LC be reestablished on the terms and provisions set
forth in this Article 21.
21.4 CASH EQUIVALENT. At Tenant's option, but subject to the terms and
conditions hereof and the condition that Landlord determine that Landlord's
ability to draw upon such security in the event of Tenant's bankruptcy is not
impaired, Tenant may , in lieu of the delivery of an LC, pledge a Certificate of
Deposit ("CD") which shall be administered, as practicable, in accordance with
the procedures set forth in this Article 21 with respect to the LC; provided,
however, in the event of such CD any interest accruing on the CD shall be for
the benefit of Tenant. The pledge of any such CD shall be on terms and
conditions approved by Landlord, and the CD shall be issued by a financial
institution reasonably acceptable to Landlord.
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ARTICLE 22
ROOF RIGHTS
Subject to all governmental laws, rules and regulations and compliance with
the CC&R's, Tenant and Tenant's contractors (which shall first be approved by
Landlord but which approval shall not be unreasonably withheld or delayed (as
specified in Section 29.4 below)) shall have the nonexclusive right and access,
without further payment of Rent to Landlord, to install, repair, replace,
remove, operate and maintain satellite dishes and/or microwave dishes, and other
radio transmitting and receiving antennae, together with all necessary cable,
wiring, conduits and related equipment (collectively, "COMMUNICATION
EQUIPMENT"), for the purpose of receiving and sending telephone and other
communication signals, at a location on the roof of the Building as reasonably
requested by Tenant and reasonably approved by Landlord in writing. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) Tenant's right to install, replace, repair, remove, operate
and maintain the Communication Equipment shall be subject to all governmental
laws, rules and regulations and Landlord makes no representations that such
laws, rules and regulations permit such installation and operation. Any such
installation shall be under the supervision of Landlord, by a contractor
approved by Landlord and shall be installed in a lien-free manner in accordance
with the provisions of this Lease.
(ii) The exact size, quality, materials and aesthetics of, and
any required screening for, the Communication Equipment shall be subject to
Landlord's prior written consent which shall not be unreasonably withheld or
delayed. In addition, the installation, protection for roof membrane,
specifications for roof penetration and flashing shall be subject to Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
(iii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and of connections to the
Building's electrical system) shall be borne by Tenant. All such Communication
Equipment shall be screened to commercially reasonable standards and to prevent
visual impairment. Tenant shall be responsible for the replacement, repair and
maintenance, at Tenant's sole cost and expense, of those areas on the roof of
the Building surrounding Tenant's Communication Equipment to the extent any such
replacement, repair or maintenance is required by virtue of Tenant's
installation, operation or maintenance of Tenant's Communication Equipment,
notwithstanding anything to the contrary contained in this Lease.
(iv) Tenant shall endeavor to use the Communication Equipment so
as not to cause any interference (i) with any other communications from or to
the Project or (ii) to other existing tenants or occupants in the Project who
may use the communication facilities located at the Project and/or related
facilities.
(v) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
(vi) Tenant's rights with respect to such Communication Equipment
shall be personal to the Original Tenant executing this Lease and may not be
assigned or transferred to, or utilized by, any other person or entity with the
exception of any Permitted Transferee under Article 14 which occupies a minimum
of 10,000 rentable square feet of the Building or (ii) any Permitted Affiliate
(collectively, "QUALIFYING TRANSFEREE"); provided, however, such Qualifying
Transferee's rights with respect to Communication Equipment shall be subject to
all the terms and conditions of this Article 22. Other than Qualifying
Transferees, Tenant shall not be permitted to allow any third party to use any
portion of the roof for Communication Equipment or otherwise without Landlord's
consent, which shall not be unreasonably withheld.
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(vii) Tenant shall (i) be solely responsible for any damage caused
as a result of the Communication Equipment, (ii) promptly pay any tax, license
or permit fees charged pursuant to any laws or regulations in connection with
the installation, maintenance or use of the Communication Equipment and comply
with all precautions and safeguards recommended by all governmental authorities,
and (iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment and all roof repairs required by the installation and
maintenance of the Communication Equipment.
(viii) The Communication Equipment shall remain the sole property
of Tenant. Tenant shall remove the Communication Equipment and related
equipment at Tenant's sole expense upon the expiration or sooner termination of
this Lease or upon the imposition of any governmental law or regulation which
may require removal, and shall repair the Building upon such removal to the
extent required by such work of removal. If Tenant fails to remove the
Communication Equipment and repair the Building within thirty (30) days after
the expiration or earlier termination of this Lease with respect to such
Building, Landlord may do so at Tenant's expense.
Landlord reserves the right to use a portion of the roof space on the Building
or lease roof space on the Building to other parties; provided, however, any
party to which Landlord leases such roof space shall be subject to similar
restrictions as set forth in this Article 22.
ARTICLE 23
SIGNAGE
23.1 GENERAL. Other than as contemplated by Section 23.2 below, Tenant
shall have no right to install or maintain any Tenant identification signs (or
any other signs, banners or other such displays) in any location on the Building
or in the Project which may be visible from the exterior of the Building, except
as may be approved by Landlord in writing prior to installation (which approval
shall not be unreasonably withheld, and are consistent and compatible with (a)
the restrictions contained in this Article 23, (b) all governmental regulations
and requirements, (c) the Project's signage criteria, a copy of which is
attached hereto as EXHIBIT "J" ("SIGNAGE CRITERIA"), and (d) the CC&R's.
23.2 TENANT'S EXTERIOR SIGNAGE RIGHTS.
23.2.1 Tenant shall have the right, at Tenant's sole cost and
expense (but chargeable against the Tenant Improvement Allowance described in
the Tenant Work Letter), to install during the Lease Term (i) an identity sign
on the exterior of the Building (the "BUILDING TOP SIGNS") and (ii) certain
eyebrow, directional and monument signage in accordance with the Signage
Criteria. As used herein, "TENANT'S SIGNS" shall mean all Building Signs and
any eyebrow, directional, monument or other signage rights granted to Tenant
pursuant to this Article 23 or EXHIBIT "J". Tenant's Signs shall identify the
name of Tenant and shall not refer to the name of the Project except that
monument signage may refer to the name of the Project.
23.2.2 Tenant's right to Tenant's Signs which are visible from the
exterior of the Building shall be personal to the Original Tenant, any Permitted
Affiliate and any other assignee of Tenant's entire interest in this Lease
(collectively, "PERMITTED SIGNAGE ENTITIES") and may not be transferred to any
other person or entity, except that, subject to the occupancy requirements of
Section 23.2.4 below, Tenant may assign Tenant's rights to any of Tenant's Signs
to any other Transferee occupying at least a full floor in the Building where
Landlord reasonably determines that the name of the Transferee is not an
"Objectionable Name," as that term is defined below. The term "OBJECTIONABLE
NAME" shall mean any name that (i) relates to an entity that is of a character
or reputation, or is associated with a political orientation or faction, that is
inconsistent with the quality of the Project as a first-class, institutional
quality office project, or which a landlord of a first-class, institutional
quality office project would reasonably find to be offensive, taking into
consideration the level and visibility of the applicable Tenant's Signs, or (ii)
conflicts with any exclusive use covenants in other leases of space in the
Project.
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23.2.3 Tenant's signage rights shall include exclusive illuminated
and nonilluminated signage for the Building so long as Tenant occupies at least
fifty percent (50%) of the rentable square footage thereof, and Tenant shall
have the right to have its professional name and logo prominently displayed on
any monument signage for the Building so long as Tenant occupies at least fifty
percent (50%) of the rentable square footage thereof.
23.2.4 If Tenant's (or any other Permitted Signage Entity's)
occupancy of the Building falls below fifty percent (50%) of the rentable square
footage thereof, upon notice to Tenant, Tenant's right to Building Top Signs for
such Building shall terminate and Tenant shall remove such signs in accordance
with Section 23.2.8 below.
23.2.5 Any utility costs for illuminated signs shall be charged to
Tenant pursuant to Article 6.
23.2.6 Notwithstanding the foregoing, Landlord hereby reserves and
retains the right to identify Landlord (or its successor) as owner and/or
manager of the Project on monument signage and at the entry to the Building.
Any specifications for such signage not shown on EXHIBIT "J" shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
Tenant's name on the monument signage shall be prominent and at the top of such
signage. The monument signage shall be limited to tenants of the Project except
as described in this Section 23.2.6.
23.2.7 Tenant's Building Top Sign may (but shall not be required
to) face SR56 and shall be located on the skin of the Building in the location
shown on the Signage Criteria. The specifications, plans and elevations for
Tenant's Signs (including the graphics, materials, color, design, lettering,
height, lighting, size and quality) shall be subject to Landlord's approval,
which shall not be unreasonably withheld or delayed and shall be consistent with
the Signage Criteria for the Project. Tenant's Signs shall be installed under
the supervision of Landlord by a contractor reasonably approved by Landlord and
shall be installed in a lien-free manner in accordance with the provisions of
this Lease. Tenant's signs shall be maintained, at the sole cost and expense of
Tenant, pursuant to a maintenance program approved by Landlord.
23.2.8 Tenant shall, at Tenant's sole cost and expense (subject to
Landlord's supervision, but without charge to Tenant for such supervision),
cause Tenant's Signs to be removed and the Building and the Project to be
restored to the condition existing prior to the placement of such Tenant's Signs
(reasonable wear and tear excepted) at the expiration or earlier termination of
this Lease (or such earlier time as Tenant elects or is required to remove any
such Tenant Signs). If Tenant fails to remove Tenant's Signs and restore the
Building and Project as provided above within thirty (30) days following
Landlord's demand therefor, then Landlord may perform such work and all costs
and expenses incurred by Landlord in so performing such work shall be reimbursed
by Tenant to Landlord within fifteen (15) days following Landlord's delivery to
Tenant of an invoice therefor.
23.3 TENANT'S INTERIOR SIGNAGE RIGHTS. Tenant shall have the right to
locate in the Building lobby a Building directory board ("DIRECTORY BOARD") the
size, location, design, materials, color and quality of which shall be subject
to Tenant's reasonable discretion, except that if, at any time, the Building is
not one hundred percent (100%) leased by Tenant, the size, location, design,
material, color and quality of the Directory Board shall be subject to
Landlord's reasonable approval. The cost of the Directory Board shall be
included in the Base, Shell and Core for the Building and the cost of Tenant's
listings shall be borne by Tenant. Tenant shall have exclusive use of any such
Directory Board so long as Tenant's lease covers one hundred percent (100%) of
the rentable square footage in the Building; provided, however, Landlord shall
have the right to identify Landlord (or its successor) as owner and/or manager
of the Project on any such Directory Board. In the event Tenant no longer
leases and occupies one hundred percent (100%) of the rentable square footage of
the Building, Tenant and its Permitted Transferees shall be entitled to its
Building pro rata share of the space on such Directory Board. Tenant shall also
have the right to install other signage identifying Tenant within the Building,
which interior signage shall be in compliance with the Signage Criteria.
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ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
(i) structural changes to the Building or (ii) changes to the Building's life
safety system, or (iii) any capital improvements to the Project the requirement
of which is not related to Tenant's particular use of the Premises or
Alterations made by Tenant. Compliance with the items described in
subsections (i), (ii) and (iii) above shall be Landlord's responsibility and
shall, subject to the terms of Article 4 above, be included in Operating
Expenses. Should any standard or regulation now or hereafter be imposed on
Landlord or Tenant by a state, federal or local governmental body charged with
the establishment, regulation and enforcement of occupational, health or safety
standards for employers, employees, landlords or tenants, then Tenant agrees, at
its sole cost and expense, to comply promptly with such standards or
regulations. The judgment of any court of competent jurisdiction or the
admission of Tenant in any judicial action, regardless of whether Landlord is a
party thereto, that Tenant has violated any of said governmental measures, shall
be conclusive of that fact as between Landlord and Tenant. Notwithstanding the
foregoing or anything to the contrary contained in this Lease, Landlord hereby
warrants to Tenant that the Building shall be in compliance with the
requirements of the Americans With Disabilities Act ("ADA") and California
Administrative Code Title 24 ("TITLE 24") in effect at the time Landlord obtains
the certificate of occupancy (or its equivalent) for the Base, Shell and Core;
provided, however, that if the requirements of ADA and/or Title 24 change after
the date upon which Landlord obtains the permit for the initial construction of
the Building and Landlord is not required by law to comply with such change,
Landlord shall not be in violation of this provision so long as Landlord not
making such change does not increase the cost of construction of the Tenant
Improvements or delay the construction of the Tenant Improvements. Landlord
will be fully responsible for making all alterations and repairs to the
Building, at Landlord's cost (which shall not be included in Operating Expenses)
resulting from or necessitated by the failure of Landlord or Landlord's
contractors to comply with the foregoing ADA and Title 24 warranty. The
obtaining of a Certificate of Occupancy by either Landlord or Tenant permitting
Tenant occupy the Building shall be prima facia evidence that Landlord has
complied with the foregoing requirements of this Article 24 ("REQUIREMENTS") as
of the date of such Certificate of Occupancy, unless refuted or reversed by any
applicable governmental authorities. However, notwithstanding anything to the
contrary contained in this Article 24, Tenant, at Tenant's sole cost and
expense, shall promptly make all repairs, replacements, alterations or
improvements needed to comply with the Requirements to the extent that the
Requirements relate to or are triggered by (a) Tenant's particular use of the
Building for other than general office use, or (b) any Alterations made to the
Building by Tenant.
ARTICLE 25
LATE PAYMENTS
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to two
percent (2%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum ("INTEREST RATE") equal to
the lesser of (i) two percent (2%) over the rate publicly announced by Wells
Fargo Bank as its prime or reference rate (or the largest state chartered bank
operating in California in the event that Wells Fargo Bank ceases to exist or to
announce a prime or reference rate) or (ii) the highest rate permitted by
applicable law.
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ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall fail to perform
any of its obligations under this Lease, within a reasonable time after such
performance is required by the terms of this Lease, Landlord may, but shall not
be obligated to, after reasonable prior notice to Tenant (except in the case of
an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15) days
after delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures reasonably made and obligations incurred by Landlord in collecting
or attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Section 26.2 shall survive the expiration or sooner termination of
the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants (but as to prospective tenants, only during the last twelve (12)
months of the initial Lease Term or of any Extension Term), or to the ground or
underlying lessors; (iii) post notices of nonresponsibility; or (iv) alter,
improve or repair the Premises or the Building if necessary to comply with
current building codes or other applicable laws, or for structural alterations,
repairs or improvements to the Building. Tenant shall be offered an opportunity
to accompany Landlord in connection with any such entry and Landlord shall use
reasonable efforts to comply with Tenant's security procedures in connection
with such entry (except that these restrictions shall not apply in the case of
an emergency where Tenant is not available to accompany Landlord).
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord;
(B) take possession due to any breach of this Lease in the manner provided
herein; and (C) perform any covenants of Tenant which Tenant fails to perform.
Landlord may make any such entries without the abatement of Rent so long as
Tenant can continue to occupy and use any affected portion of the Premises for
the same business purposes as Tenant had been using such affected portion prior
to Landlord's entry, and Landlord may take such reasonable steps as required to
accomplish the stated purposes, provided, however, that any such entry shall be
accomplished as expeditiously as reasonably possible and in a manner so as to
not materially and adversely interfere with Tenant's normal business functions.
Tenant hereby waives any claims for damages or for any injuries or inconvenience
to or interference with Tenant's business, lost profits, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby except
any claims arising out of Landlord's gross negligence or willful misconduct.
For each of the above purposes, Landlord shall at all times have a key with
which to unlock all the doors in the Premises, excluding Tenant's vaults, safes
and special security areas designated from time to time in advance by Tenant.
In an emergency, Landlord shall have the right to use any means that Landlord
may deem proper to open the doors in and to the Premises. Any entry into the
Premises by Landlord in the manner hereinbefore described shall not be
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deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an actual or constructive eviction of Tenant from any portion of the
Premises.
ARTICLE 28
TENANT PARKING
Commencing on the Lease Commencement Date, Tenant shall have the right, at no
cost to Tenant during the initial Lease Term (with the parking charge, if any,
during Extension Terms to be determined as a component of Fair Market Rental
Value), to the use of the number of parking permits set forth in Section 9 of
the Summary, which parking permits shall pertain to the Project parking
facilities. Such parking permits shall permit Tenant and its employees and
invitees to use, on a nonexclusive basis, together with other tenants and their
respective employees and invitees, any undesignated, unreserved spaces available
in such parking facility for the Building. Tenant shall abide by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the Project parking facility, provided that Landlord shall not prescribe
any rules and regulations which unreasonably and adversely affect Tenant's use
of the Project parking facility. Such rules and regulations shall provide that
Tenant shall pay Landlord's then current nominal charge for any replacement of
any Tenant parking pass card, if any, which is lost, stolen, damaged or
destroyed. Tenant understands and agrees that, pursuant to the CC&R's, other
owners of adjacent property to the Project have been or will be granted
reciprocal rights of access and parking over certain portions of the Project as
more particularly set forth in the CC&R's; provided, however, the use of the
parking structure will be limited to tenants of the Project. Landlord shall
not, without Tenant's prior written approval (which approval shall not be
unreasonably withheld), change the size, configuration, design, layout and all
other aspects of the Project parking facilities at any time, and if Tenant
approves any such changes, Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, temporarily restrict access to the Project
parking facility for purposes of permitting any such construction, alteration or
improvements so long as Landlord takes all reasonable measures to minimize any
disruption to Tenant's use or access of the Project parking facilities for the
duration of any such construction, alteration or improvements. Notwithstanding
the foregoing, Landord may, without Tenant's prior written approval, make such
changes to the Project parking facilities to the extent such changes are
mandated by any applicable governmental law, rule or regulation or any changes
to any governmental law, rule or regulation. If Landlord is forced to relocate
Tenant's parking off site of the Project parking facility, any such relocation
shall be temporary and Landlord shall use commercially reasonable efforts to
cause such relocation to be within a reasonable walking or shuttle distance of
the Project. Further, Landlord shall not knowingly allow any non-tenants of the
Project to use the Project parking facilities in violation of the CC&R's without
Tenant's prior written approval. Landlord agrees that the average number of
parking permits granted by Landlord to any other tenants of the Project shall
not exceed four and one-half (4.5) parking permits per 1,000 usable square feet
of space so leased. Landlord may delegate its responsibilities hereunder to a
parking operator in which case such parking operator shall have all the rights
of control attributed hereby to the Landlord. Tenant's parking permits under
this Article 28 are provided to Tenant solely for use by Tenant's own personnel
and such privileges may not be transferred, assigned, subleased or otherwise
alienated by Tenant without Landlord's prior approval other than on a pro rata
basis to Permitted Affiliates and Permitted Transferees. Tenant's invitees and
guests may use parking spaces in such parking facility which are not allocated
or reserved for Tenant or other occupants or visitors of the Building or Project
on a first-come, first-serve basis. Notwithstanding the foregoing,
approximately ten percent (10%) of Tenant's parking permits for the Building
shall be reserved spaces for Tenant's visitors and employees of the Building, as
will be shown on a Project parking plan prepared by Landlord and acceptable to
Tenant. Landlord shall have the right to relocate such reserved spaces from time
to time so long as Landlord provides Tenant with reserved spaces within the same
general proximity of the Building. The parking permits allocated to Tenant are
not for long term (i.e., more than ninety-six (96) hours) storage of
automobiles, and are not for short or long term storage of boats, trailers,
recreational vehicles, motorcycles or other vehicles or equipment. Tenant shall
have the option to require Landlord to add, at Tenant's sole cost and expense
(other
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than the cost of card keys for tenant(s) of Building 4, unless Tenant
exercises its option to lease Building 4), a card key entry system to the
parking structure (as selected by Tenant and reasonably approved by Landlord)
for the Project and/or security cameras (including a security desk and
console with monitors for each security camera at the location specified in
EXHIBIT "I") within the parking structure for the Project; if Tenant
exercises such option, Tenant shall pay such cost to Landlord, as Additional
Rent, within thirty (30) days after Tenant's receipt of reasonably detailed
invoice(s).
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Subject to all other provisions of this Lease, each
of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Landlord and of Tenant, but
also of their respective successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of this
Lease.
29.2 MODIFICATION OF LEASE/MEMORANDUM OF LEASE. Should any current or
prospective mortgagee or ground lessor for the Building or Project require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way change
the rights and obligations of Tenant hereunder (as reasonably determined by
Tenant), then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. Landlord agrees to pay to Tenant, within thirty (30) days
after invoice, any reasonable attorneys' fees incurred by Tenant in connection
with any modification to this Lease executed by Tenant pursuant to the
immediately preceding sentence. Should Landlord or any such prospective
mortgagee or ground lessor, or should Tenant, request execution of a short form
Memorandum of Lease for recording, containing, among other customary provisions,
the names of the parties, a description of the Premises and the Lease Term, each
party agrees to execute and deliver such short form Memorandum of Lease to the
other within twenty (20) days following the request therefor. Either party may
record any such Memorandum of Lease at such party's sole cost and expense;
however, if Tenant records a Memorandum of Lease, Tenant agrees to execute,
acknowledge and deliver to Landlord, within ten (10) days after Landlord's
request (which request may be made by Landlord at any time after the date of
expiration or earlier termination of this Lease), a quitclaim deed prepared by
Landlord and in commercially reasonable form acknowledging the expiration or
earlier termination of this Lease. The immediately preceding sentence shall
survive the expiration or earlier termination of this Lease.
29.3 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project and
in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease for
obligations accruing after the date of transfer and Tenant agrees to look solely
to such transferee for the performance of Landlord's obligations to be performed
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that an assignment shall not release
Landlord from its obligations hereunder and Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.4 CONSENTS BY THE PARTIES. The parties intend that whenever Landlord's
or Tenant's consent or approval is expressly or impliedly required by any
provision of this Lease, the consent or approval may not be unreasonably or
arbitrarily withheld, conditioned or delayed; and on the contrary, shall be
approved or disapproved by a party acting in a commercially reasonable manner.
Notwithstanding anything to the contrary contained in this Lease, except as
expressly provided in Section 14.2 above, an action for declaratory judgment or
specific performance shall be Tenant's or Landlord's sole right and remedy in
any dispute as to whether Tenant or Landlord has breached this Section 29.4
concerning a consent or approval.
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29.5 CAPTIONS. The captions of articles and sections are for
convenience only and shall not be deemed to limit, construe, affect or alter the
meaning of such articles and sections.
29.6 TIME OF ESSENCE. Time is of the essence of this Lease and each of
its provisions.
29.7 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.9 CONSTRUCTION. Should any provision of this Lease require
interpretation by a court of law, it is agreed that the court interpreting or
construing this Lease shall not apply a presumption that the terms shall be more
strictly construed against one party who by itself or through its agents
prepared this document.
29.10 ENTIRE AGREEMENT. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises and shall be
considered to be the only agreements between the parties hereto and their
representatives and agents. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.
29.11 RIGHT TO LEASE. Subject to Tenant's rights hereunder, Landlord
reserves the absolute right to effect such other tenancies in the Project as
Landlord in the exercise of its sole business judgment shall determine to best
promote the interests of the Building or Project, provided that Landlord shall
lease space in the Project only to tenants who are consistent with the quality
of the Project as a first-class, institutional quality office project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the Lease Term, occupy any space in
the Building or Project.
29.12 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
29.13 NOTICES. All notices, demands, statements, designations,
approvals or other communications (collectively, "NOTICES") given or required
to be given by either party to the other hereunder shall be in writing, shall be
sent by (i) United States certified or registered mail, postage prepaid, return
receipt requested, (ii) nationally recognized and reputable overnight
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courier (e.g., Federal Express and Network Courier), or (iii) delivered
personally. Notice shall be sent (a) to Tenant at the appropriate address set
forth in Section 11 of the Summary, or to such other place as Tenant may from
time to time designate in a Notice to Landlord; or (b) to Landlord at the
following addresses, or to such other firm or to such other place as Landlord
may from time to time designate in a Notice to Tenant:
Kilroy Realty, L.P.
2250 East Imperial Highway, Suite 1200
El Segundo, California 92045
Attention: Legal Department
Facsimile: (310) 322-8790
with a copy to:
Kilroy Realty, L.P.
4370 Executive Drive, Suite 400
San Diego, California 92121
Attention: Asset Manager
Facsimile: (619) 547-4767
Any Notice will be deemed given on the date which is three (3) business days
after the date it is mailed as provided in this Section 29.13, the next business
day if sent by overnight courier, or upon the date personal delivery is made.
If Tenant is notified of the identity and address of the holder of any deed of
trust or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given the same opportunity to cure such
default as is available to Landlord, prior to Tenant's exercising any remedy
available to Tenant.
29.14 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.15 AUTHORITY. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. If only one (1) officer executes this Lease for Tenant,
Tenant agrees to provide to Landlord evidence reasonably satisfactory to
Landlord confirming the authority of the signing officer of Tenant to bind
Tenant to this Lease.
29.16 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING
ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF
ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW. EACH PARTY HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION (FOR UNLAWFUL DETAINER OR OTHERWISE) BY LANDLORD
TO RECOVER POSSESSION OF THE PREMISES.
29.17 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.18 BROKERS. 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 Lease, excepting only the real estate brokers or
agents specified in Section 10 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Each party agrees to indemnify and defend the other
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party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, 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
any dealings with any real estate broker or agent, other than the Brokers (whose
commissions shall be paid by Landlord pursuant to a separate agreement),
occurring by, through, or under the indemnifying party.
29.19 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord except as expressly set forth in this Lease;
provided, however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of
the provisions hereof so long as notice is first given to Landlord.
29.20 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord and Tenant agree
that if Tenant leases on a direct basis (i.e., not including any space leased by
Tenant pursuant to a sublease) at least two-thirds (2/3) of any space then
constructed for lease at the Project, the name of the Project shall be
"Peregrine Systems Corporate Center." However, if at any time (after the Lease
Commencement Date for Building 1) Tenant fails to lease on a direct basis at
least two-thirds (2/3) of such space, Landlord shall have the right, at
Landlord's sole cost and expense, to change the name of the Project to "Carmel
Center", whether or not Tenant subsequently meets the leasing requirement
specified above. Except as provided in this Section 29.20 above, Landlord shall
not have the right at any time to change the name of the Project or Building
without first obtaining Tenant's written consent. Except for signs identifying
the Project or the owner or manager of the Project, Landlord shall not install,
affix and maintain any signs on the exterior or on the interior of the Building,
except as expressly contemplated by this Lease and/or may be required by law.
29.21 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future mandatory programs imposed by statute or ordinance intended to
manage parking, transportation or traffic in and around the Project or Building,
and in connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any governmental transportation management
organization or any other transportation-related committees or entities. If any
of the foregoing are not imposed by statute or ordinance, Tenant may
participate, in its discretion, on a voluntary basis. Such programs may
include, without limitation: (i) restrictions on the number of peak-hour vehicle
trips generated by Tenant; (ii) increased vehicle occupancy; (iii)
implementation of an in-house ridesharing program and an employee transportation
coordinator; (iv) working with employees and any Project, Buildings or area-wide
ridesharing program manager; (v) instituting employer-sponsored incentives
(financial or in-kind) to encourage employees to rideshare; and (vi) utilizing
flexible work shifts for employees. Tenant shall be entitled to the benefit of
any governmental incentives (financial or in-kind) available or otherwise
offered to induce compliance with such programs to the extent such incentives
are applicable to Tenant's implementation of any such programs.
29.22 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
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<PAGE>
29.23 HAZARDOUS MATERIAL. As used herein, the term "HAZARDOUS MATERIAL"
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Tenant acknowledges that
Landlord may incur costs (A) for complying with laws, codes, regulations or
ordinances relating to Hazardous Material, or (B) otherwise in connection with
Hazardous Material including, without limitation, the following: (i) Hazardous
Material present in soil or ground water; (ii) Hazardous Material that migrates,
flows, percolates, diffuses or in any way moves onto or under the Project; (iii)
Hazardous Material present on or under the Project as a result of any discharge,
dumping or spilling (whether accidental or otherwise) on the Project by other
tenants of the Project or their agents, employees, contractors or invitees, or
by others; and (iv) material which becomes Hazardous Material due to a change in
laws, codes, regulations or ordinances which relate to hazardous or toxic
material, substances or waste. Tenant agrees that the costs incurred by
Landlord with respect to, or in connection with, the Project for complying with
laws, codes, regulations or ordinances relating to the investigation,
remediation or removal of Hazardous Material shall not be an Operating Expense,
except as indicated in Section 4.2.7(n) above. However, if the cost of such
compliance, as between Landlord and Tenant, is the responsibility of Tenant
under this Lease, Tenant shall bear the cost of such compliance.
29.24 DEVELOPMENT OF THE PROJECT.
29.24.1 SUBDIVISION. Tenant acknowledges that the Project has been,
or is in the process of being, subdivided. Landlord reserves the right to
further subdivide all or a portion of the buildings and Common Areas in the
Project. Tenant agrees to execute and deliver, within ten (10) days after
demand by Landlord and in the form reasonably requested by Landlord, any
additional documents needed to conform this Lease to the circumstances resulting
from a subdivision and any all maps in connection therewith provided Tenant
shall not be required to incur any cost, undue burden or diminution of Tenant's
rights hereunder in connection therewith. Notwithstanding anything to the
contrary set forth in this Lease, the separate ownership of any buildings and/or
Common Areas of the Project by an entity other than Landlord shall not affect
the calculation of Direct Expenses or Tenant's payment of Tenant's Share of
Direct Expenses.
29.24.2 THE OTHER IMPROVEMENTS. If portions of the Project or
property adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any of the Other Improvements to
provide (i) for reciprocal rights of access, use and/or enjoyment of the Project
and the Other Improvements, (ii) for the common management, operation,
maintenance, improvement and/or repair of all or any portion of the Project and
all or any portion of the Other Improvements, (iii) for the allocation of a
portion of the Project Expenses to the Other Improvements and the allocation of
a portion of the operating expenses and taxes for the Other Improvements to the
Project, (iv) for the use or improvement of the Other Improvements and/or the
Project in connection with the improvement, construction, and/or excavation of
the Other Improvements and/or the Project, and (v) for any other matter which
Landlord deems necessary. Nothing contained herein shall be deemed or construed
to limit or otherwise affect Landlord's right to sell all or any portion of the
Project or any other of Landlord's rights described in this Lease.
29.24.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction, provided that Landlord shall
take all reasonable measures to minimize any interference or disruption to
Tenant's use of the Premises.
29.25 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord hereunder) and any
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[Peregrine Systems]
<PAGE>
recourse by Tenant against Landlord from and after Landlord's Substantial
Completion of the Building and delivery of the same to Tenant in accordance with
Landlord's obligations under this Lease, shall be limited solely and exclusively
to the lesser of (a) the equity interest of Landlord in the Buildings then
leased by Tenant as of the date upon which any claim(s) arises or accrues in
favor of Tenant or (b) the equity interest Landlord would have in such Buildings
if such Buildings were encumbered by third-party debt in an amount equal to
eighty percent (80%) of the value of the Buildings, except to the extent any
such claims and liability are covered by insurance carried by Landlord. None of
Landlord's constituent members, owners, partners or subpartners, shall have any
liability for the obligations of Landlord under this Lease, and Tenant, on
behalf of itself and all persons claiming by, through or under Tenant, hereby
expressly waives and releases such members, owners, partners and subpartners
from any and all liability.
29.26 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant, all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
29.27 ATTORNEYS' FEES. If either party commences litigation against the
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
29.28 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at underground locations in the Project in or
serving the Premises, provided that (i) Tenant shall use an experienced and
qualified contractor approved in writing by Landlord (which approval shall not
be unreasonably withheld or delayed), and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of
conduits for additional Lines shall be maintained for existing and future
occupants of the Project, as determined in Landlord's reasonable opinion, (iii)
conduits for the Lines therefor (including riser cables unless originally
installed by Landlord) shall be appropriately insulated to prevent excessive
electromagnetic fields or radiation, and shall be surrounded by a protective
conduit reasonably acceptable to Landlord, (iv) any new or existing Lines
servicing the Premises shall comply with all applicable governmental laws and
regulations, and (v) Tenant shall pay all costs in connection therewith (except
that Tenant shall have no obligation to remove any Lines between the Buildings
upon the expiration or earlier termination of this Lease). However, Landlord
reserves the right to require that Tenant remove any Lines located in or serving
the Premises which are installed in violation of these provisions, or which are
at any time in violation of any laws or represent a dangerous or potentially
dangerous condition.
29.29 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenant's obligations under this Lease.
29.30 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.31 CONFIDENTIALITY. Landlord and Tenant acknowledge that the content
of this Lease and any related documents are confidential information. Landlord
and Tenant shall keep such confidential information strictly confidential and
shall not disclose such confidential information to any person or entity other
than (i) their financial, legal, and space planning consultants, (ii) as may be
required by any public reporting requirements, and (iii) as may be required by
any applicable governmental law, rule or regulation.
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[Peregrine Systems]
<PAGE>
29.32 DISCLOSURES AND MUTUAL RELEASE. Tenant acknowledges that Landlord
has advised Tenant (i) that an earthquake fault may be located under a portion
of the Project, and (ii) of the proximity of the Project to the Miramar military
air base's vectored departure corridors and the potential overflights and
associated noise generated by various military aircraft in the area. Landlord
and Tenant hereby mutually release, acquit and discharge each other from any and
all Claims which either party may have against the other party arising out of or
in connection with (a) any earthquake affecting all or any portion of the
Project (subject to Landlord's and Tenant's rights and obligations under
Article 11 above), and (b) any such overflights and associated noise.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD": KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By:/s/ Steven L. Black
-------------------------
Name: Steven L. Black
-----------------------
Its: EVP - CDO
-------------------
By:/s/ Jeffrey C. Hawken
-------------------------
Name: Jeffrey C. Hawken
-----------------------
Its: EVP - COO
-------------------
"TENANT": PEREGRINE SYSTEMS, INC., a Delaware corporation
By: [ILLEGIBLE]
-----------------------------------
Sr. V.P., Finance and Administration
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
By:
-----------------------------------
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
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[Peregrine Systems]
<PAGE>
EXHIBIT A
PEREGRINE SYSTEMS CORPORATE CENTER
SITE PLAN
[MAP]
EXHIBIT A
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT B
PEREGRINE SYSTEMS CORPORATE CENTER
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Base, Shell and Core and tenant improvements for the
Building. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Building, in sequence, as such
issues will arise during the actual construction of the Building. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Lease. All references in this Tenant Work Letter to articles or
sections of "this Lease" shall mean the relevant portion of Articles 1 through
29 of this Office Lease to which this Tenant Work Letter is attached as EXHIBIT
B and of which this Tenant Work Letter forms a part, and all references in this
Tenant Work Letter to sections of "this Tenant Work Letter" shall mean the
relevant portion of Sections 1 through 7 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION OF BASE, SHELL AND CORE
The base, shell and core for the Building (collectively, the "BASE, SHELL
AND CORE") shall be constructed by Landlord, at its sole cost and expense
(except as expressly provided herein), in accordance with this Section 1.
1.1 LANDLORD'S RESPONSIBILITIES. The Base, Shell and Core for the
Building shall consist of only those items reflected on the final working
drawings to be prepared for the Building as a logical evolution of those certain
drawings prepared by the Project Architect for Building 1 and Building 2 as
summarized on Schedule 3 to this Tenant Work Letter, (as such drawings may be
revised pursuant to the Tenant Work Letter for the Building 1 Lease for reasons
other than a Landlord Work Change Order) (as so-revised, the "ADJACENT BUILDING
WORKING DRAWINGS") and the existing schematic design drawings for the Building
and shall be consistent with the design of, and quality of materials specified
in, the Adjacent Building Working Drawings. Notwithstanding the foregoing, the
Base, Shell and Core for the Building shall (without limitation to the items
reflected in the Adjacent Building Working Drawings) consist of (i) core walls
and elevator lobby areas drywalled and taped ready for Building-standard surface
treatments; (ii) balance of core: exposed structure, level concrete floors
(broom clean) suitable for the installation of general office improvements and
ready to receive floor covering, Building-standard finish for painted door
frames, and Building-standard hardware; (iii) primary electrical system ready
for Tenant's switchgear in main electrical room which will service the floor of
the Building on which the Premises are located sufficient to provide Tenant with
4 watts per rentable square foot and sufficient capacity in such distribution to
provide an additional 1.5 watts per rentable square foot; (iv) Building
telephone room to have floor sleeves to allow utility company to distribute
service lines onto each floor (Tenant to locate phone system equipment in the
Premises and to provide voice/data cabling from equipment to termination in
telephone room); (v) men's and ladies' restroom facilities with
Building-standard finishes located on each floor; (vi) sprinkler risers capped
at the core walls; (vii) primary heating, ventilating and air conditioning
system, including main water distribution loop (however, any VAV boxes and
ducting including main ducting loop, shall be a Tenant Improvement); (viii)
drinking fountain at core on ground floor; (ix) electrical and janitorial
closets; (x) code required exit stairways; (xi) mechanical shafts; (xii)
life-safety systems as required by applicable building codes on an unoccupied
basis and ground floor lobby improvements including the improvements described
in the Building Working Drawings; and (xiii) card access systems for Building
entrances and elevators. Landlord shall use commercially reasonable efforts to
cause the Base, Shell and Core of the Building to be completed by the date
specified in Section 1.5.2(v) below (the "SHELL COMPLETION DATES") in order to
allow a sufficient period of time for the construction of the Tenant
Improvements prior to the Estimated Lease Commencement Date.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
1.1.1 BOOKS AND RECORDS. Landlord shall be responsible for
performing all accounting functions associated with the performance of the
construction of the improvements to the Common Areas and the Base, Shell and
Core and Tenant Improvements (collectively, the "WORK") and shall prepare and
maintain or cause to be prepared and maintained detailed and accurate operating
and financial records for the Work. Tenant shall have the right to inspect such
records at the offices of Landlord in Southern California during normal business
hours and to make copies thereof at its expense. Landlord shall preserve, or
cause its agents to preserve, copies of all books and records relating to the
Work for a period of three (3) years after the completion of the Base, Shell and
Core.
1.1.2 GOVERNMENTAL APPROVALS. Landlord shall be responsible for
obtaining all necessary agreements with governmental agencies and utility
companies relating to access, traffic control, utility services and other
similar entitlements affecting the construction of the Work.
1.1.3 BIDDING OF CONTRACTS. Landlord shall be responsible for the
bidding (or at Landlord's election the negotiation of fees) of the contract with
the general contractor and all subcontracts to be awarded in connection with the
initial Common Area improvements and the Base, Shell and Core (collectively, the
"LANDLORD WORK ") in accordance with Section 1.4 below. Landlord shall be
responsible for negotiating the terms of the agreements with the contractor and
Project Architect with respect to the Landlord Work, both of which shall be
consistent with the terms and provisions of this Section 1. Except as expressly
provided in the Lease or this Tenant Work Letter, Landlord shall be solely
responsible for the payment of the costs of designing and constructing the
Landlord Work.
1.1.4 PERMITS. In addition to Landlord's obligations under
Section 1.1.2 above, Landlord shall be responsible for obtaining, or causing its
contractor to obtain, all building permits and other governmental approvals,
permits and land use entitlements required to complete the Landlord Work.
Landlord shall be responsible for compliance with all laws, rules, regulations
and policies of the City of San Diego, State of California and United States of
America governing completion of the Landlord Work, including without limitation,
the requirements of the ADA and Title 24 in effect as of the Lease Commencement
Date, and shall correct any such violations at no cost to Tenant; however, if
the requirements of any laws change after the date upon which Landlord obtains
the permit for construction of the Base, Shell and Core and Landlord is not
required by law to comply with such change with respect to the Landlord Work,
Landlord shall not be in violation of this Section 1.1.4 so long as Landlord by
electing not to make such change does not increase the cost of construction of
the Tenant Improvements or delay the construction of the Tenant Improvements.
1.1.5 PROJECT ADMINISTRATION. Landlord shall be responsible for
supervising the progress of the Work and for reviewing and approving progress
payment applications before they are processed for payment.
1.1.6 POST-COMPLETION MATTERS. Following the completion of the
Landlord Work, Landlord shall assemble and maintain at the property management
office for the Project copies of (i) all warranties, operating manuals,
specifications and similar items with respect to the Building, and (ii) as-built
architectural and engineering drawings (including the master background) and any
other plans for the Landlord Work. Following the completion of the Work, upon
the request of Tenant and at Landlord's expense, Landlord also shall assemble
and deliver to Tenant copies of reproducible as-built plans and specifications
for the Building (in an auto-cad format, if available).
1.1.7 STATUS REPORTS. Landlord shall inform Tenant of any
problems or developments that may have an adverse impact on the completion of
the Landlord Work in a timely manner promptly after Landlord becomes aware of
such problems or developments.
1.1.8 PERIODIC INSPECTIONS. Landlord shall conduct ongoing
inspections (at least weekly) of the Landlord Work for compliance with plans and
specifications and review of progress of construction, and shall conduct
periodic site meetings with the construction trades.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Landlord shall keep Tenant reasonably informed of such meetings and proposed
meetings and provided that Tenant's participation does not extend the
Construction Schedule, Tenant shall have the right to participate in such
meetings if it so desires.
1.2 DESIGN OF THE LANDLORD WORK. Landlord has entered into an agreement
with Carrier Johnson for the design of the Landlord Work including preparation
of design, development and construction documents. Landlord has entered into or
may enter into other agreements with other consultants for design of other
aspects of the Landlord Work (if applicable). Carrier Johnson and such other
design consultants (if applicable) retained by Landlord shall be collectively
referred to as the "PROJECT ARCHITECT." Landlord's agreement(s) with the
Project Architect shall be collectively referred to herein as the "PROJECT
ARCHITECT AGREEMENT." The specific terms of the Project Architect Agreement
shall be such that it will enable Landlord to perform Landlord's obligations
hereunder.
Landlord shall cause the Project Architect to prepare the Building Working
Drawings in accordance with the requirements of Section 1.1 above. Upon
preparation of the Building Working Drawings, Landlord shall identify in writing
to Tenant any "Material Changes," as defined in this Section 1.2, reflected in
the Building Working Drawing from the Adjacent Building Working Drawings.
"MATERIAL CHANGES" shall mean any changes or deviations which will or may cause
(i) interference with or delay of the Tenant Improvements proposed by Tenant for
the Building, (ii) a material change to the exterior of the Building, (iii) a
material change to any of the finish materials, including without limitation, to
the lobby, bathrooms, and elevator cabs of the Building, or (iv) any adverse
effect (as reasonably determined by Landlord) on the quality of the Landlord
Work. Tenant shall give written notice to Landlord of Tenant's approval or
disapproval of any Material Changes (or any revisions to the Building Working
Drawings arising out of Material Changes or out of Tenant's disapproval of any
proposed Material Changes) within five (5) days following Tenant's receipt of
Landlord's notice of any such Material Changes (or revisions, as applicable);
any such notice of disapproval shall be accompanied by detailed reasons for such
disapproval. Failure of Tenant to approve or disapprove by written notice to
Landlord within such time frame shall constitute Tenant's approval of same. In
a time and manner consistent with the Construction Schedule, Landlord shall
request the Project Architect to obtain approval of the Building Working
Drawings from all appropriate governmental agencies, including all departments
of the City of San Diego having jurisdiction to review the Building Working
Drawings. Landlord shall be solely responsible for any additional costs
incurred as a result of a Material Change unless mutually agreed upon by
Landlord and Tenant; however, Tenant shall be responsible for additional costs
resulting from Landlord Work Change Orders pursuant to Section 1.3 below.
Nothing contained in this Section 1.2 is intended to, nor shall, provide Tenant
with the right to require changes to the Base, Shell and Core Working Drawings
without Landlord's approval.
1.3 CHANGE ORDERS REQUESTED BY TENANT TO THE LANDLORD WORK. Tenant may
request that additions to or deletions from the Landlord Work be made ("LANDLORD
WORK CHANGE ORDERS"). If Tenant desires a Landlord Work Change Order to be
made, Tenant shall so notify Landlord in writing and, within ten (10) days after
such notification, Landlord shall deliver to Tenant (i) written notice that
Landlord has determined, in Landlord's reasonable discretion, to disapprove the
proposed Landlord Work Change Order, or (ii) if Landlord approves the proposed
Landlord Work Change Order, a written estimate of any extension to the
Construction Schedule and any additional costs resulting from such proposed
Landlord Work Change Order. Without limitation on other reasons for Landlord's
disapproval, Landlord may disapprove any such proposed Landlord Work Change
Order if it will cause (a) a material change to the exterior of the Building,
(b) a material change to any of the finish materials, including without
limitation, to the lobby, bathrooms or elevator cabs of the Building, or (c) any
material adverse effect (as reasonably determined by Landlord) on the quality or
adequate functionality of the Landlord Work. If Landlord approves the proposed
Landlord Work Change Order, Tenant shall, within five (5) days following receipt
of such notification from Landlord, then notify Landlord in writing whether or
not Tenant elects to proceed with the Landlord Work Change Order. If Tenant
elects to cause any Landlord Work Change Order to be made, the Shell Completion
Date and other Major Project Milestones shall be appropriately adjusted as a
result of any delays due
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to such Landlord Work Change Order. If Landlord does not approve a proposed
Landlord Work Change Order, the Landlord Work Change Order shall not be
implemented. Any increased cost resulting from a Landlord Work Change Order
shall be charged to the Tenant Improvement Allowance and any delay resulting
from a Landlord Work Change Order shall, subject to Section 5 below, be deemed
to constitute a Tenant Delay and an Excusable Delay. Tenant acknowledges,
however, that the contractor for the Landlord Work shall not be instructed to
stop work during the time taken by Tenant in considering whether to proceed with
any proposed Landlord Work Change Orders and that the cost charged to the Tenant
Improvement Allowance and any potential Tenant Delay and Excusable Delay
resulting from a Landlord Work Change Order shall include any work necessary to
reverse the work performed by the contractor during the pendency of Tenant's
decision whether to proceed with a Landlord Work Change Order.
1.4 CONTRACTING. Landlord may, at its option, retain Reno Contacting,
Inc., a California corporation ("RENO") or separately bid and award separate
contracts for the construction of the Base, Shell and Core of the Buildings.
1.5 CONSTRUCTION SCHEDULE.
1.5.1 COMPLETION. The construction of the Base, Shell and Core of
the Building shall be deemed to be completed (the "BASE, SHELL AND CORE
COMPLETION") when (i) the Project Architect determines that the Base, Shell and
Core for such Building has been completed in accordance with the Building
Working Drawings (subject to customary "punch list" items) by issuing a
certificate of substantial completion, and (ii) a certificate of occupancy or an
approval to occupy (or their equivalent) with respect to the Base, Shell and
Core has been issued by the City of San Diego. "Punch list" items, as referred
to in this Section 1.5.1, are items that will require correction but that will
not materially interfere with, or cause a delay to, the construction of the
Tenant Improvements. Landlord agrees to correct all such Base, Shell and Core
punch list items prior to the Lease Commencement Date.
1.5.2 MAJOR PROJECT MILESTONES. Landlord agrees that it shall use
commercially reasonable efforts to complete its duties and tasks specified in
this Tenant Work Letter in accordance with the schedule attached to this Tenant
Work Letter as Schedule 1 and made a part hereof ("CONSTRUCTION SCHEDULE") and
to endeavor to accomplish all "Major Project Milestones" within the time set
forth in the Construction Schedule. As used herein, the term "MAJOR PROJECT
MILESTONES" means:
(i) Completion of Base, Shell and Core Working Drawings and
submittal of same to City of San Diego for permits by:
May 1, 2000
(ii) Obtaining all building and other permits for the
construction of the Base, Shell and Core by:
May 1, 2000
(iii) Commencement of construction of the Base, Shell and Core by:
May 1, 2000
(iv) Completion of vertical construction of the Base, Shell and
Core by:
December 8, 2000
(v) Base, Shell and Core Completion by the applicable Shell
Completion Date:
May 1, 2001
Landlord shall use its reasonable, good-faith efforts to meet all
milestones by the date set forth for the accomplishment of such milestones in
the Construction Schedule. If Landlord fails to accomplish any milestone by
the date set forth in the Construction Schedule (as may be extended pursuant
to the next sentence below), then Landlord shall authorize and direct its
employees, the Project Architect, the general contractor for the Landlord Work
and any relevant
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
subcontractor to work at an accelerated pace utilizing such "overtime" hours
as may be necessary to bring the Landlord Work back on schedule. The dates
set forth in the Construction Schedule (including, without limitation, any
milestones and any Major Project Milestones) shall be extended by any delay
(collectively, "EXCUSABLE DELAY") attributable to Tenant's failure to comply
with its obligations under Section 1 of this Tenant Work Letter, any Tenant
Delay, any Landlord Work Change Order, and any Force Majeure. However, any
delay necessitated by changes in the Building Working Drawings because the
same do not comply with Code or other applicable laws shall not constitute an
Excusable Delay except to the extent the portion of the Building Working
Drawings which is found to not comply is attributable to Landlord Work Change
Orders made by Tenant.
SECTION 2
TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a tenant
improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount of Four
Million Two Hundred Seventy-Eight Thousand Four Hundred Nineteen Dollars
($4,278,419.00) for the costs relating to the design and construction of
Tenant's improvements (the "TENANT IMPROVEMENTS"). Tenant shall have the right
to defer the construction of Tenant Improvements for space in the Building which
Tenant elects not to initially build-out until no later than three (3) years
after the Lease Commencement Date for the applicable Floor Group; however,
(i) if Tenant elects to commence construction of Tenant Improvements for any
space in the Building, such construction may not thereafter be deferred, and
(ii) any such deferral shall be deemed a Tenant Delay so that the Lease
Commencement Date shall not be delayed. In no event shall Landlord be obligated
to make disbursements pursuant to this Tenant Work Letter in a total amount
which exceeds the Tenant Improvement Allowance (except as expressly
contemplated by this Tenant Work Letter). Any portion of the Tenant Improvement
Allowance remaining after construction of the Tenant Improvements for each Floor
Group may be used by Tenant for Tenant Improvements for such Floor Group before
the first anniversary of the Lease Commencement Date for such Floor Group.
Further, Tenant shall allocate and use a minimum Tenant Improvement Allowance
for "hard costs" (i.e., costs incurred under the general contract with
Contractor) of Tenant Improvements in an amount not less than Two Million Seven
Hundred Ninety-Five Thousand Five Hundred Fifty-Eight Dollars ($2,795,558.00).
All Tenant Improvements for which the Tenant Improvement Allowance has been made
available shall be deemed Landlord's property except as described under the
terms of Section 8.5 of this Lease.
2.2 DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE. Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to the
disbursement process described in Section 4.3.1 below) only for the following
items and costs (collectively, the "TENANT IMPROVEMENT ALLOWANCE ITEMS"):
2.2.1 Payment of the fees of all design consultants, project
managers, the "Space Planner," "Architect" and the "Engineers," as those terms
are defined in Section 3.1 of this Tenant Work Letter, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Tenant
Work Letter;
2.2.2 The payment of all governmental and utility service or
connection fees, including, but not limited to, plan check, permit and license
fees relating to construction of the Tenant Improvements; provided, however, the
Tenant Improvement Allowance Items shall not include any costs for utilities or
use of elevators during the construction of the Tenant Improvements;
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2.2.3 The cost of construction of the Tenant Improvements within
such Building, including, without limitation, all labor, materials, testing and
inspection costs, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.4 The cost of any changes in the Base, Shell and Core work
when such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural, engineering and/or other
consultant fees and expenses incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings or
Tenant Improvements required by applicable governing codes ("CODE") unless such
changes are required to cause the Base, Shell and Core to comply with applicable
building Code (however, changes to the Base, Shell and Core required due to the
unique nature of the Tenant Improvements requested by Tenant shall be charged to
the Tenant Improvement Allowance);
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 "Landlord's Supervision Fee", as that term is defined in
Section 4.3.2 of this Tenant Work Letter;
2.2.8 All other costs to be expended by Landlord and reasonably
approved by Tenant in connection with the construction of the Tenant
Improvements; and
2.2.9 Costs incurred for Tenant's voice/data cabling, network
racks and hardware, furniture, telecom system, keys, locks, security costs,
relocation and interior and exterior signage (including Tenant's Signs);
provided, however, in no event shall the aggregate costs of the items forth in
this Section 2.2.9 exceed Eight Hundred Fifty Thousand Eight Hundred Twenty-Two
Dollars ($850,822.00). Landlord and Tenant acknowledge that the Base Rent for
the Premises includes an amortization (with interest at twelve percent (12%) per
annum) of the amount payable by Landlord pursuant to this Section 2.2.9.
2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord and Tenant have
established specifications (the "SPECIFICATIONS") for some of the Building
standard components which Tenant may elect to construct in the Building
(collectively, the "STANDARD IMPROVEMENT PACKAGE"). The Standard Improvement
Package is attached as Schedule 2 to this Tenant Work Letter. Landlord may only
make changes to the Specifications and the Standard Improvement Package from
time to time with Tenant's prior written approval thereof. Tenant may deviate
from the Specifications with Landlord's approval (as part of the approval of
Construction Drawings).
SECTION 3
CONSTRUCTION DRAWINGS
3.1 SELECTION OF ARCHITECT. Tenant shall retain Carrier Johnson as
architect (the "ARCHITECT") to prepare the architectural plans and drawings for
the Tenant Improvements in the Building in accordance with the Construction
Schedule. Tenant shall have the right to replace Architect with another
architect(s) from time to time at Tenant's discretion and subject to Landlord's
reasonable approval. Tenant shall also retain engineering consultants (the
"ENGINEERS") selected by Tenant and subject to Landlord's reasonable approval to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work of the
Tenant Improvements. The parties acknowledge that Tenant's retention of the
Engineers may be done in connection with a design/build format. The plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the "CONSTRUCTION DRAWINGS." All Construction Drawings shall
comply with the drawing format and specifications as reasonably determined by
Landlord, and shall be subject to Landlord's approval which shall not be
unreasonably withheld or delayed. Tenant shall be deemed to have approved any
Construction Drawings submitted to Landlord for Landlord's approval. Tenant and
Architect shall verify, in the field, the dimensions
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and conditions as shown in the relevant portions of Construction Drawings for
the Base, Shell and Core. Landlord shall cause the Contractor to assist
Tenant's Architect in identifying any coordination or other construction issues
relating to the Construction Drawings for the Base, Shell and Core. Landlord's
review of the Construction Drawings, as set forth in this Section 3, shall not
imply Landlord's review of the same for quality, design, Code compliance or
other like matters, but Landlord shall nevertheless inform Tenant of any
deficiencies discovered. Accordingly, notwithstanding any Construction Drawings
reviewed by Landlord or its consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord's
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings unless any omissions or errors are a result of omissions
or errors in the Construction Drawings for the Base, Shell and Core, and
Tenant's waiver and indemnity set forth in Section 10.1 of the Lease shall
specifically apply to the Construction Drawings.
3.2 FINAL SPACE PLAN. On or before the applicable date set forth in the
Construction Schedule, Tenant shall cause the Architect to prepare the final
space plan for Tenant Improvements in the Building (collectively, the "FINAL
SPACE PLAN "), which Final Space Plan shall include a layout and a designation
of all offices, rooms and other partitioning, their intended use, and equipment
to be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval. Subject to the restrictions specified in Section 2.1
above, Tenant may exclude from the Final Space Plan a layout for any space in
the Building which Tenant elects not to initially build out. Landlord shall
notify Tenant of its approval (which approval shall not be unreasonably
withheld) or disapproval (with reasons for disapproval specified) of the Final
Space Plan for each Floor Group within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. If Landlord disapproves the Final Space Plan, Landlord and
Tenant shall, within two (2) business days thereafter, meet (or telephonically
confer) in an attempt to resolve such disapproval as soon as reasonably
possible. If, in connection with such meeting, Landlord and Tenant conceptually
agree upon revisions to be made to the Final Space Plan, then within ten (10)
business days after such meeting, Tenant shall cause the Final Space Plan to be
revised in accordance with the parties' conceptual agreement and shall resubmit
the Final Space Plan for Landlord's approval. This process shall continue until
the Final Space Plan is approved by Landlord. If Landlord and Tenant are,
despite such meeting, unable to resolve the items disapproved by Landlord in the
Final Space Plan, the parties shall mutually select an architect from Carrier
Johnson to resolve such disagreement (or if Carrier Johnson is unwilling to make
a determination to resolve such dispute or either party objects to Carrier
Johnson playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.3 WORKING DRAWINGS. On or before the applicable date set forth in the
Construction Schedule, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
construction documents in a form which is complete to allow contractors and
subcontractors to bid on the work, to obtain all applicable permits, and to
subsequently construct the work (collectively, the "WORKING DRAWINGS"). Subject
to the restrictions specified in Section 2.1 above, Tenant may exclude from the
Working Drawings any space which Tenant elects not to initially build-out.
Landlord shall notify Tenant of its approval (which approval shall not be
unreasonably withheld) or disapproval (with reasons for such disapproval
specified) of the Working Drawings within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. However, Landlord may not disapprove any details of the
Working Drawings which have already been approved by Landlord in the Final Space
Plan. If Landlord disapproves the Working Drawings, Landlord and Tenant shall,
within two (2) business days thereafter, meet in an attempt to resolve such
disapproval as soon as reasonably possible. If, in connection with such
meeting, Landlord and Tenant conceptually agree upon revisions to be made to the
Working Drawings, then within ten (10) business days after such meeting, Tenant
shall cause the Working Drawings to be
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revised in accordance with the parties' conceptual agreement and shall resubmit
the Working Drawings for Landlord's approval. This process shall continue until
the Working Drawings are approved by Landlord. If Landlord and Tenant are,
despite such meeting, unable to resolve the items disapproved by Landlord in the
Working Drawings, the parties shall mutually select an architect from Carrier
Johnson to resolve such disagreement (or if Carrier Johnson is unwilling to make
a determination to resolve such dispute or either party objects to Carrier
Johnson playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.4 PERMITS. The Working Drawings shall be approved by Landlord (the
"APPROVED WORKING DRAWINGS") prior to the commencement of construction of the
Tenant Improvements. Landlord shall, in accordance with the Construction
Schedule, submit or cause the Approved Working Drawings to be submitted to the
appropriate municipal authorities for all applicable building permits necessary
to allow the Contractor selected pursuant to Section 4.1 below to commence and
fully complete the construction of the Tenant Improvements (the "PERMITS"), and
in connection therewith, Landlord and Tenant shall coordinate with Contractor to
allow Landlord and Tenant to take part in all phases of the permitting process.
Landlord shall require Contractor to supply Landlord and Tenant, as soon as
possible, with all plan check numbers and dates of submittal with respect to the
Building. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord and Tenant,
which shall not be unreasonably withheld or delayed, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would delay the Substantial Completion of such
Tenant Improvements or the Building unless Tenant agrees in writing to be
responsible for any such delay as in a Tenant Delay and for the costs of any
delay resulting therefrom.
3.5 TIME DEADLINES. Landlord and Tenant shall use good faith, reasonable
efforts and all due diligence to cooperate with each other and the Architect and
the Engineers to complete all phases of the Working Drawings and the permitting
process, and with Contractor for approval of the Cost Proposal (as defined
below), as is necessary to keep such Tenant Improvements on schedule. The
applicable dates for approval of items, plans and drawings as described in this
Tenant Work Letter are set forth and further elaborated upon in the Construction
Schedule (the "TIME DEADLINES"), attached hereto. Landlord and Tenant agree to
use good faith, reasonable efforts to comply with the Time Deadlines.
3.6 DESIGN-BUILD. Landlord and Tenant acknowledge that Tenant may elect
to design and construct the Tenant Improvements using a fast-track design/build
format. If Tenant so elects, Tenant may forward to Landlord, for Landlord's
approval, Construction Drawings for portions of the Tenant Improvement project
rather than Construction Drawings for the entire Premises. Landlord agrees to
advise Tenant within ten (10) business days after Landlord's receipt of any such
drawings if the same are unsatisfactory or incomplete in any respect. Upon
Landlord's approval of any such drawings, the Contractor may be instructed to
submit the same to the applicable governmental authorities for receipt of
Permits. This process may be repeated by Tenant, as necessary, for all portions
of the Tenant Improvement project.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 CONTRACTOR. A general contractor retained by Landlord (the
"CONTRACTOR"), shall construct the Tenant Improvements. The Contractor shall be
selected pursuant to a competitive bidding procedure reasonably determined by
Landlord and Tenant. At least three (3) general contractors approved by
Landlord and Tenant (which list shall, if Landlord so desires, include Reno)
shall competitively bid the Tenant Improvements using the Approved Working
Drawings for such Tenant Improvements. At Tenant's option, Landlord shall
require prospective general contractors reasonably approved by Landlord to
competitively bid the general conditions and
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fees before competitively bidding the Tenant Improvements as a procedure for
selecting the Contractor; any such bidding of general conditions and fees shall
be completed on or before the date which is ten (10) days after the date that
the Working Drawings are approved. Landlord shall require Contractor to review
the Approved Working Drawings in order to identify any deficiencies and to
promptly notify Landlord and Tenant of any deficiencies discovered. Landlord
shall allow Tenant to assist in negotiating subcontractor fees and bid costs for
labor and materials so long as Tenant's participation in such negotiation does
not extend the Construction Schedule. Each such prospective general contractor
shall be notified in the bidding package of the time schedule for the
construction of the applicable Tenant Improvements and that such contractor
shall be required to competitively bid (in accordance with industry standard
bidding procedures) to at least three (3) subcontractors for each trade (which
list of subcontractors shall, if Tenant so desires, include one
(1) subcontractor designated by Tenant for each trade), subject to Landlord's
option to designate certain building subcontractors as described in this
Section 4.1. Each bid shall include a schedule of values including an itemized
bid with unit prices, quantities and labor charges. Promptly after request from
Tenant, Landlord shall provide Tenant with any back-up information in Landlord's
possession regarding such bids. Landlord shall cooperate with Tenant in
evaluating the bid information received from the respective general contractors.
The general contractor bids shall be submitted to Landlord and Tenant and a
reconciliation shall be performed by Landlord's representative to adjust
inconsistent or incorrect assumptions so that a "like kind" comparison can be
made and the lowest qualified bidder determined. The lowest qualified bidder
that commits to the Construction Schedule shall be selected as the Contractor
for the Tenant Improvements. Whenever the lowest subcontractor bidder is not
selected, Contractor shall justify such selection (to Landlord's and Tenant's
satisfaction) by explaining in writing why the lowest bidder was not selected.
At Landlord's option, such Contractor shall use the building subcontractors as
designated by Landlord (the "DESIGNATED SUBCONTRACTORS"), after having
competitively bid the same to at least three (3) qualified and comparable
first-class, reputable and reliable subcontractors selected by Landlord and
reasonably approved by Tenant (which approval shall be granted or denied within
three (3) business days), for any work affecting the Building structure and/or
Building Systems and Equipment; provided, however, that Landlord shall cause
such Designated Contractors to charge for such work (including any work arising
out of Change Orders) an amount equal to the cost that comparable first class,
reputable and reliable subcontractors would have charged if selected pursuant to
competitive bidding procedures. If Reno is selected as the Contractor, Reno has
agreed to a four percent (4%) contracting fee and a three percent (3%) general
conditions fee, both of which fees shall be based upon the direct costs of the
subcontractors.
4.1.1 CONTRACT WITH CONTRACTOR. The contract with the Contractor
shall be consistent with this Tenant Work Letter and shall provide that Tenant
shall have the full benefit of all warranties provided by Contractor and that
such warranties shall be assignable to Tenant. Landlord shall provide Tenant
with an opportunity to review the construction contract with the Contractor to
confirm that such contract is not in conflict with this Tenant Work Letter. In
addition, upon request from Tenant, Landlord shall provide Tenant with a copy of
all Contractor's contracts with the major trade subcontractors in Landlord's
possession at the time of such request.
4.1.2 GENERAL CONDITIONS FEE. The general conditions fee charged
by Contractor shall cover all of the following: project executive, general
superintendent, home office expenses, general overhead, office supplies,
accounting services, computer charges, telephone expenses, fax office/job site,
data processing, secretarial services, mail, express mail, insurance, city
licenses, project manager, estimator, project engineer, scheduling,
superintendent, daily clean up and final clean up, protection of work, petty
cash, safety enforcement and safety signage, small tools, first aid facilities,
general field coordination, project field office, tenant vendor coordination and
job trailer, but shall exclude reconstruction services, general labor, blue
printing and temporary structures. Except as provided herein, Landlord or
Contractor shall not receive any other fee or payment from Tenant in connection
with Contractor's services.
4.1.3 CONTRACT OF WORK. Landlord shall cause its contract with
Contractor to include the provisions set forth in this Section 4.1.3.
Contractor shall take appropriate field
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measurements and verify field conditions before commencing construction of
Tenant Improvements. Contractor shall review, approve and submit to the
Architect shop drawings, product data, samples and submittals required by the
contract documents with promptness and in sequence as to cause no delay in the
Construction Schedule. During the course of construction, Contractor shall take
all reasonable precautions to maintain industry safety standards and protect
against damage, injury or loss to any persons or property. Contractor shall
supervise and direct the construction of the Tenant Improvements using
Contractor's best skills and attention and shall be fully responsible for and
have control over construction means, methods, techniques, sequences and
procedures for coordinating all portions of the work under the contract.
4.2 COST PROPOSAL. After the Approved Working Drawings are approved by
Landlord and Tenant, and the Contractor and subcontractors have been selected
pursuant to Section 4.1 above, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings setting forth the
reconciled bids and copies of all sub-bids, which cost proposal shall include,
as nearly as possible, the cost of all Tenant Improvement Allowance Items to be
incurred in connection with the construction of the Tenant Improvements (the
"COST PROPOSAL"). The Cost Proposal shall reflect bids that will be priced by
Contractor on an individual item-by-item or trade-by-trade basis. Landlord and
Tenant shall work together in good faith in an attempt to agree upon a mutually
acceptable Cost Proposal as soon as reasonably possible. Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the "PARTIAL COST PROPOSAL") for purposes of
facilitating the early purchase of items and construction of the same. Tenant
shall approve and deliver the Cost Proposal to Landlord within seven (7)
business days of the receipt of the same, or, as to a Partial Cost Proposal
within five (5) business days of receipt of the same, and upon receipt of the
same by Landlord, Landlord shall be released by Tenant to purchase the items set
forth in the Cost Proposal or Partial Cost Proposal, as the case may be, and to
commence the construction relating to such items. If Tenant disapproves the
Cost Proposal or Partial Cost Proposal, Tenant shall provide Landlord with a
reasonably sufficient explanation, and in such event, Landlord and Tenant shall
use good faith, diligent efforts to work with each other and Contractor to
address Tenant's reasons for disapproving the Cost Proposal or Partial Cost
Proposal, whichever is the case and a new Cost Proposal (or Partial Cost
Proposal, as applicable) shall be prepared and the process described in this
Section 4.2 shall be repeated. The date by which Tenant must approve and
deliver the Cost Proposal or the last Partial Cost Proposal to Landlord, as the
case may be, shall be known hereafter as the "COST PROPOSAL DELIVERY DATE". The
total of all Partial Cost Proposals, if any, shall be known as the Cost
Proposal.
4.3 CONSTRUCTION OF TENANT IMPROVEMENTS BY LANDLORD'S CONTRACTOR UNDER THE
SUPERVISION OF LANDLORD.
4.3.1 OVER-ALLOWANCE AMOUNT. In connection with Tenant's approval
of the Cost Proposal, Tenant shall be responsible for the amount equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (less any portion thereof already disbursed by
Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date) (which difference is referred to herein as the
"OVER-ALLOWANCE AMOUNT"). All costs for Tenant Improvements shall be fully
documented and may be verified by Tenant. In the event that, after the Cost
Proposal Delivery Date, Tenant shall request any revisions, changes, or
substitutions to the Construction Drawings or the Tenant Improvements, any
additional costs which arise in connection with such revisions, changes or
substitutions or any other additional costs (in excess of the Tenant Improvement
Allowance) shall be considered to be an addition to the Over-Allowance Amount
(which shall result in a recalculation of the amounts to be paid by Tenant
pursuant to Sections 4.3.1.1. and 4.3.1.2 below).
4.3.1.1 PAYMENT OF INITIAL PORTION OF OVER-ALLOWANCE AMOUNT.
Except as provided in Section 4.3.1.2 below, the procedure described in this
Section 4.3.1.1 shall apply to Tenant's payment of the Over-Allowance Amount.
Tenant shall pay ninety percent (90%) of the
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Over-Allowance Amount and Landlord shall pay ninety percent (90%) of the Tenant
Improvement Allowance, in monthly progress payments corresponding to the
progress of the Tenant Improvement Work and Tenant and Landlord shall each
retain ten percent (10%) thereof to be paid as part of the final retention, in
accordance with the construction contract, upon completion of such work. During
the course of construction of the Tenant Improvements, Contractor shall deliver
to Landlord and Tenant not more than once for each calendar month a written
request for payment ("PROGRESS PAYMENT REQUEST") which shall be accompanied by
(i) Contractor's certification of the payment amount requested and the
percentage of completion of each item of work for which payment is sought and
(ii) copies of conditional lien releases (for upcoming payments) and
unconditional lien releases (for the previous month's payments) from all
subcontractors and vendors. Through this monthly process, Tenant shall pay to
Landlord ninety percent (90%) of the completed percentage of the Over-Allowance
Amount, if any, and Landlord shall pay to Contractor ninety percent (90%) of the
Tenant Improvement Allowance due pursuant to the Progress Payment Request, each
month within thirty (30) days after Tenant's and Landlord's receipt of the above
items and approval of the same (which approval shall not be unreasonably
withheld, conditioned or delayed and shall be granted or denied (with detailed
reasons for such denial) within five (5) days after Tenant's receipt of a
Progress Payment Request). Failure to grant or deny any such approval within
said five (5) day period shall be deemed to constitute Tenant's approval
thereof. The Over-Allowance Amount shall be proportionately paid by Landlord
prorata with the Tenant Improvement Allowance, and such disbursement by Landlord
of the Over- Allowance Amount shall be pursuant to the same procedure as
Landlord's disbursement of the Tenant Improvement Allowance.
4.3.1.2 PAYMENT OF ANY EXCESS PORTION OF OVER-ALLOWANCE AMOUNT.
To the extent that the Over-Allowance Amount is One Million Two Hundred Fifteen
Thousand Four Hundred Sixty Dollars ($1,215,460.00) or more (such excess to be
referred to as the "EXCESS OVER-ALLOWANCE AMOUNT") and/or if as of the Cost
Proposal Delivery Date, Tenant fails to meet all of the Financial Standards, and
if in either such case, Landlord's lender (who is unaffiliated with Landlord) so
requires, Tenant shall pay the Excess Over-Allowance Amount (or if the Financial
Standards are not met, then all of the Over-Allowance Amount) in accordance with
the procedure specified in this Section 4.3.1.2 below. Tenant shall deposit
fifty percent (50%) of the Excess Over-Allowance Amount (or if the Financial
Standards are not met, then all of the Over-Allowance Amount) within ten (10)
days after the Cost Proposal Delivery Date and shall deposit the remaining fifty
percent (50%) of the Over-Allowance Amount within ten (10) days after notice
from Landlord that the Contractor has determined that the Tenant Improvement
Work has been fifty percent (50%) completed. Such deposits from Tenant shall be
with Landlord (or with the lender if so required by such lender) and maintained
in a segregated account at a financial institution reasonably selected by
Landlord (if not with the lender). To the extent permitted by the lender, any
amounts so deposited by Tenant shall earn interest which shall accrue to Tenant
at the actual rate earned from the date of such deposit until the date that such
funds are disbursed.
4.3.2 LANDLORD'S RETENTION OF CONTRACTOR. Landlord shall
independently retain Contractor to construct the Tenant Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Tenant
shall pay (as part of the Tenant Improvement Allowance) a construction
supervision fee (the "LANDLORD SUPERVISION FEE") to Landlord in an amount equal
to one percent (1%) of all "hard" Tenant Improvement Allowance Items.
4.3.3 CONTRACTOR'S WARRANTIES AND GUARANTIES. Landlord hereby
assigns to Tenant all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements
(except for any portion of the Tenant Improvements which consist of components
of the Building Systems and Equipment for which Landlord maintains
responsibility for repair pursuant to Section 7.1 of the Lease). Such
warranties and guaranties of Contractor shall guarantee that the Tenant
Improvements shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof, and
Contractor shall be responsible for the replacement or repair, without
additional charge, of the Tenant Improvements that shall become defective within
one (1) year after Substantial Completion of such Tenant Improvements. The
correction of such work shall
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include, without additional charge, all additional expenses and damages in
connection with such removal or replacement of all or any part of the Tenant
Improvements.
4.3.4 TENANT'S COVENANTS. Tenant hereby indemnifies Landlord for
any loss, claims, damages or delays arising from the actions of the Architect
retained by Tenant pursuant to Section 3.1 of this Tenant Work Letter on the
Premises or in the Building to design or construct the Tenant Improvements.
Tenant, immediately after the Substantial Completion of the Building, shall have
prepared and delivered to Landlord a copy of the "as built" plans and
specifications (including all working drawings) for the Tenant Improvements.
4.4 CHANGE ORDERS. Subject to Landlord's reasonable approval, Tenant
shall have the right to order changes in the Tenant Improvements ("CHANGE
ORDERS"). Landlord's contract with Contractor shall provide that, upon request
and prior to Tenant's submitting any binding Change Order, Contractor shall
promptly provide Tenant with a written itemized breakdown of labor and materials
for the estimated cost to implement, the estimated time delay and any other
estimated increased construction costs associated with the proposed Change
Order. Costs related to changes shall include, without limitation, any
architectural or design fees, and Contractor's fee (not to exceed the percentage
rate for Contractor's fee and general conditions fee as previously set forth
herein) for effecting the change. In addition, any Change Order shall be
subject to Landlord's approval, not to be unreasonably withheld, conditioned or
delayed. If ordered by Tenant and so approved by Landlord, Contractor shall
implement such Change Order and the cost of construction of the Tenant
Improvements shall be increased or decreased in accordance with the cost
proposal previously approved by Tenant for any such Change Order, subject to
reconciliation for actual costs.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
Except as provided in this Section 5, the Lease Commencement Date for each
Floor Group of the Premises shall occur as set forth in Article 2 of this Lease.
Any delay or delays in the Substantial Completion of a Floor Group of the
Premises as set forth in Article 2 of this Lease, as a result of any of the
following shall be considered "TENANT DELAYS ":
5.1 Tenant's failure to comply with the Time Deadlines which are Tenant's
responsibility to meet in accordance with this Tenant Work Letter;
5.2 Tenant's failure to timely approve any matter requiring Tenant's
approval;
5.3 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
5.4 Changes in any of the Construction Drawings because the same do not
comply with Code or other applicable laws;
5.5 Tenant's request for changes in the Working Drawings or the Approved
Working Drawings including any delay resulting from Tenant's request for
information from the Contractor, the time taken by Tenant in considering any
such information prior to agreeing to proceed (or not to proceed) with such
change and/or the actual Change Order;
5.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the applicable Floor Group, as set
forth in the Lease, or which are different from, or not included in, the
Standard Improvement Package, provided Landlord informed Tenant in writing that
any such requirement would not be available in accordance with the Construction
Schedule and would likely cause a delay in the anticipated date of Substantial
Completion of the applicable Floor Group;
EXHIBIT B
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[Peregrine Systems]
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5.7 Changes to the Base, Shell and Core work required by the Approved
Working Drawings; or
5.8 Any other acts or omissions of Tenant, or its agents, or employees.
Notwithstanding the foregoing, no delay under Sections 5.2, 5.3, 5.5, 5.6,
5.7 or 5.8 above shall be considered a Tenant Delay unless and until Tenant is
(i) provided prior written notice that it is about to suffer a Tenant Delay and
is afforded a one (1) business day opportunity to cure the same, and (ii)
offered the opportunity to incur premium costs (as an Over-Allowance Amount if
the Tenant Improvement Allowance has been exceeded) to prevent or minimize such
delay if it is possible to do so. Landlord shall not assess any day towards a
Tenant Delay for delays caused by Contractor, Landlord or any third parties or
due to Force Majeure. For purposes of determining whether a delay by Tenant or
Architect constitutes a Tenant Delay, reference shall be made to the critical
path schedule for the construction of Tenant Improvements set forth in the
Construction Schedule. Landlord and Contractor shall take commercially
reasonable actions, remedial or otherwise, to maintain the Construction Schedule
notwithstanding any Tenant Delay, provided that this requirement shall not
require Landlord or Contractor to incur any additional costs or expenses (e.g.,
contractor overtime or costs resulting from accelerated delivery) unless Tenant
agrees to pay for such additional costs or expenses.
Notwithstanding anything to the contrary set forth in this Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the applicable Floor Group, the Lease Commencement Date for the
applicable Floor Group shall be deemed to be the date the Lease Commencement
Date would have occurred if no Tenant Delays, as set forth above, had occurred;
provided, however, if the actual date of Substantial Completion of the Tenant
Improvements occurs on or before the estimated Lease Commencement Date specified
in Section 5 of the Summary, no Tenant Delays shall be deemed to have occurred.
SECTION 6
ACCEPTANCE OF TENANT IMPROVEMENTS
Tenant's taking possession of the applicable Floor Group shall be an
acceptance of the Tenant Improvements except for (i) any "punch list" type items
of which Tenant has given Landlord written notice, (ii) any latent defects in
the construction of the Tenant Improvements, (iii) Landlord's obligation to
correct construction defects, (iv) any warranties made by Landlord and
Contractor, and (v) any noncompliance of the Premises with all laws and codes in
effect as of the Lease Commencement Date. Tenant shall provide Landlord with
Tenant's written list of "punch list" items within ten (10) business days after
the Lease Commencement Date. Landlord shall cause Contractor to correct within
thirty (30) days of Landlord's receipt of notice thereof any construction
deficiencies or other "punch list" items of which Tenant notifies Landlord and
Contractor; except that for minor items (such as minor items on backorder) that
cannot reasonably be corrected in thirty (30) days, Landlord shall cause
correction to occur as soon as reasonably practicable. Any such corrective work
shall be performed so as to reasonably minimize any interference or disruption
to Tenant and its activities on the Premises.
SECTION 7
MISCELLANEOUS
7.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Project and the Building, Contractor shall allow Tenant (and its vendors,
consultants, contractors, and agents) access to the Building during the forty
five (45) day period prior to the estimated Substantial Completion date of the
Tenant Improvements (but if such access is to be prior to the issuance of the
Temporary Certificate of Occupancy for the Building, then such access shall be
only as allowed by the City of San Diego) for the purpose of Tenant installing
equipment, furniture or fixtures (including Tenant's data and telephone
equipment) in the Premises. Tenant's access shall include reasonable use
(subject to scheduling) of any exterior loading and staging areas and the use of
stairs,
EXHIBIT B
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[Peregrine Systems]
<PAGE>
elevators and hoists, roofs and conduits. Tenant's entry into the Premises
prior to Substantial Completion pursuant to this Section 7.1 shall be at no cost
or charge from Landlord to Tenant including, without limitation, any charge for
utilities. Prior to Tenant's entry into the Premises as permitted by the terms
of this Section 7.1, Tenant shall submit a schedule to Landlord and Contractor,
for their approval, which schedule shall detail the timing and purpose of
Tenant's entry. Tenant shall hold Landlord, the Contractor and subcontractors
harmless from and indemnify, protect and defend Landlord against any loss or
damage to the Project or Premises and against injury to any persons caused by
Tenant's actions pursuant to this Section 7.1.
7.2 TENANT'S REPRESENTATIVE. Tenant has designated Robert Urwiler as its
sole representative with respect to the matters relating to cost and schedule
set forth in this Tenant Work Letter, who, until further notice to Landlord,
shall have full authority and responsibility to act on behalf of Tenant in such
matters as required in this Tenant Work Letter. Tenant has designated Michele
Voth as its local representative with respect to daily decisions required under
this Tenant Work Letter that do not relate to cost or schedule, who, until
further notice to Landlord, shall have full authority and responsibility to act
on behalf of Tenant in such matters as required in this Tenant Work Letter.
7.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Randy Jackson as
its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
7.4 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Landlord or Tenant is required to approve
or deliver an item, time is of the essence.
7.5 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in Section 19.1 of
this Lease has occurred at any time on or before the Substantial Completion of
the Tenant Improvements, then (i) in addition to all other rights and remedies
granted to Landlord pursuant to the Lease, Landlord may cause Contractor to
cease the construction of the Premises (in which case, Tenant shall be
responsible for any delay in the Substantial Completion of the Premises caused
by such work stoppage as set forth in Section 5.3 of this Tenant Work Letter),
and (ii) all other obligations of Landlord under the terms of this Tenant Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of the Lease.
SECTION 8
TENANT REMEDIES FOR DELAY
8.1 LIQUIDATED DAMAGES FOR DELAY IN SUBSTANTIAL COMPLETION. If the Substantial
Completion of the Tenant Improvements has not occurred (or been deemed to have
occurred) by the Estimated Lease Commencement Date for such Tenant Improvements
as set forth in Section 5 of the Summary (as such date may be adjusted for
Excusable Delays, then Landlord shall pay Tenant liquidated damages of One
Thousand Five Hundred Dollars ($1,500.00) per day for each day of delay beyond
the Estimated Lease Commencement Date (as may be so adjusted) until the date of
Substantial Completion or the date this Lease is terminated pursuant to Section
8.2 below. Such liquidated damages shall be paid within thirty (30) days after
the end of each month of delay beyond the applicable Estimated Lease
Commencement Date (as may be so adjusted). If Landlord fails to pay timely to
Tenant the amount representing the liquidated damages owing and if Tenant
obtains a final judgment against Landlord for such liquidated damages, and if
Landlord fails to pay such judgment within thirty (30) days after the date such
judgment is rendered, Tenant shall be entitled to offset such judgment against
Base Rent payable by Tenant together with interest at the Interest Rate
specified in Article 25 of the Lease from the date of expiration of said thirty
(30) day period until the date of offset (up to a maximum offset each month of
twenty percent (20%) of the Base Rent payable for such Building) until the full
amount of such judgment (plus such interest) has been so offset.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
LANDLORD AND TENANT AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF
A DELAY IN THE SUBSTANTIAL COMPLETION DATE BEYOND THE ESTIMATED LEASE
COMMENCEMENT DATE (AS MAY BE ADJUSTED), WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICABLE TO DETERMINE AND THAT THE AMOUNTS DESIGNATED ABOVE AS
LIQUIDATED DAMAGES PAYABLE BY LANDLORD TO TENANT IN SUCH EVENTS ARE
EACH REASONABLE AMOUNTS TO BE SET AS DAMAGES FOR SUCH EVENTS UNDER THE
CIRCUMSTANCES EXISTING AT THE TIME THIS LEASE HAS BEEN ENTERED INTO.
IN CONSIDERATION OF THE PAYMENT OF LIQUIDATED DAMAGES, EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 8.2 BELOW, TENANT SHALL BE DEEMED TO
HAVE WAIVED ALL OTHER CLAIMS FOR DAMAGES OR RELIEF AT LAW OR IN EQUITY
DUE TO SUCH DELAY INCLUDING ANY RIGHTS TO SPECIFIC PERFORMANCE TENANT
MAY OTHERWISE HAVE.
Tenant: [ILLEGIBLE] Landlord: /s/ Steven L. Black
----------- ------------------
8.2 TERMINATION RIGHTS.
8.2.1 DEFINITION OF OUTSIDE DATE. The term "OUTSIDE DATE" shall
mean the date which is five (5) months after the date for any Major Project
Milestone specified in the Construction Schedule, as such five (5) month period
may be extended by any Excusable Delay (subject to Section 8.2.4 below).
8.2.2 OUTSIDE DATE TERMINATION. In the event that any Major
Project Milestone has not occurred by the Outside Date for such Major Project
Milestone, then the sole remedy of Tenant (in addition to the remedy specified
in Section 8.1 above) shall be the right to deliver a notice to Landlord (the
"OUTSIDE DATE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Outside Date Termination Notice by Landlord (the "EFFECTIVE
DATE"). However, until the Lease Commencement Date for Building 2 occurs,
Tenant may elect to terminate the leases of any or all of the Adjacent Buildings
effective as of the Effective Date by giving to Landlord notice thereof in the
Outside Date Termination Notice (except that the Effective Date for the
termination of the Building 1 Lease shall be the date so specified in the
Outside Date Termination Notice, which date shall be at least twelve (12) months
and not more than twenty-four (24) months after the date of such notice).
Landlord and Tenant acknowledge that Tenant's right to terminate any of the
Adjacent Building Leases pursuant to this Section 8.2 shall cease as of the
Lease Commencement Date for Building 2. The Outside Date Termination Notice
must be delivered by Tenant to Landlord, if at all, not earlier than the
applicable Outside Date and not later than ten (10) business days after the
applicable Outside Date. If Tenant timely delivers the Outside Date Termination
Notice to Landlord, then Landlord shall have the right to suspend the Effective
Date for a period ending thirty (30) days after the original Effective Date. In
order to suspend the Effective Date, Landlord must deliver to Tenant, within ten
(10) business days after Landlord's receipt of the Outside Date Termination
Notice, a written statement from the general contractor certifying that it is
such contractor's best, good faith judgment that the applicable Major Project
Milestone will occur within thirty (30) days after the original Effective Date.
If the applicable Major Project Milestone occurs within said thirty (30) day
suspension period, then the Outside Date Termination Notice shall be of no
further force or effect; if, however, the applicable Major Project Milestone
does not occur within said thirty (30) day suspension period, then this Lease
(and the other leases so specified in the Outside Date Termination Notice) shall
terminate as of the date of expiration of such thirty (30) day period (or, for
Building 1, as of the date so specified in the Outside Date Termination Notice).
8.2.3 PROSPECTIVE EXTENSION OF OUTSIDE DATE. If, prior to any
applicable Outside Date, Landlord determines that any particular Major Project
Milestone will not occur by the
EXHIBIT B
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[Peregrine Systems]
<PAGE>
applicable Outside Date, Landlord shall have the right to deliver a written
notice ("OUTSIDE DATE EXTENSION NOTICE") to Tenant stating Landlord's opinion as
to the date by which the Major Project Milestone will occur and Tenant shall be
required, within ten (10) business days after receipt of such Outside Date
Extension Notice, to either deliver the Outside Date Termination Notice (in
which case this Lease (and the other Adjacent Building Leases so specified in
the Outside Date Termination Notice subject to the restrictions specified in
Section 8.2.2 above) shall terminate) or to agree to extend the applicable
Outside Date (and any subsequent Outside Dates for the Building) to that date
which is set by Landlord in the Outside Date Extension Notice. Failure of
Tenant to so respond in writing within said five (5) business day period shall
be deemed to constitute Tenant's agreement to extend the applicable Outside Date
(and any subsequent Outside Dates for the Building) to that date which is set by
Landlord in the Outside Date Extension Notice. If such Outside Date is so
extended, Landlord's right to request Tenant to elect to either terminate or
further extend such Outside Date shall remain and shall continue to remain, with
each of the notice and response periods set forth above, until the applicable
Major Project Milestone occurs or until this Lease is terminated.
8.2.4 LIMITATION ON FORCE MAJEURE EXTENSIONS. Notwithstanding
anything to the contrary contained in this Section 8.2 above, the date for any
Major Project Milestone specified in the Construction Schedule may only be
extended for Force Majeure (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for up
to a maximum of one (1) year. If Force Majeure extends any Major Project
Milestone for one (1) year, without limitation on Tenant's rights under Section
8.2.2 above, Tenant shall have the right to deliver a notice to Landlord (the
"FORCE MAJEURE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Force Majeure Termination Notice by Landlord (the "FORCE
MAJEURE EFFECTIVE DATE"). However, until the Lease Commencement Date for
Building 2 occurs, Tenant may elect to terminate the leases of any or all of the
Adjacent Buildings effective as of the Force Majeure Effective Date by giving to
Landlord notice thereof in the Force Majeure Termination Notice (except that the
Force Majeure Effective Date for the termination of the Building 1 Lease shall
be the date so specified in the Force Majeure Termination Notice, which date
shall be at least twelve (12) months and not more than twenty-four (24) months
after the date of such notice). Landlord and Tenant acknowledge that Tenant's
right to terminate any Adjacent Building Leases pursuant to this Section 8.2.4
shall cease as of the Lease Commencement Date for Building 2. The Force Majeure
Termination Notice must be delivered by Tenant to Landlord, if at all, within
thirty (30) calendar days after the date upon which Tenant's right to deliver
the Force Majeure Termination Notice to Landlord is triggered. However, if
Force Majeure extends for greater than one (1) year, thereby triggering Tenant's
right to deliver the Force Majeure Termination Notice to Landlord, and if Tenant
elects not to deliver such Force Majeure Termination Notice to Landlord, and if
Force Majeure continues for an additional year, then Tenant shall have an
additional right to deliver the Force Majeure Termination Notice to Landlord
within thirty (30) days after the expiration of such two (2) year period based
upon the date for any Major Project Milestone being extended by Force Majeure
for two (2) years. However, if Tenant does not elect to deliver the Force
Majeure Termination Notice to Landlord based upon the two (2) year extension for
Force Majeure, Tenant shall not thereafter have the right to deliver the Force
Majeure Termination Notice to Landlord whether or not Force Majeure continues
beyond such two (2) year period.
8.2.5 ACCELERATION OF TERMINATION RIGHT FOR LACK OF REASONABLE
ASSURANCES. If one (1) or more Force Majeure events extends the date for any
Major Project Milestone (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for a
period in excess of the "Accelerated Force Majeure Period" (as that term is
defined below) and if Landlord does not deliver to Tenant within fifteen (15)
days thereafter a statement providing reasonable assurances to Tenant that the
Force Majeure delay will last for a total period of less than one (1) year,
Tenant shall be entitled to deliver the Force Majeure Termination Notice to
Landlord within ten (10) days after the expiration of such fifteen (15) day
period (rather than waiting until the expiration of the one (1) year period
specified in Section 8.2.4 above). The one (1) year period described in this
Section 8.2.5 above may be referred to as the "AGGREGATE FORCE MAJEURE PERIOD"
and the fifteen (15) day period described in this Section 8.2.5 above may be
referred to as the "DELIVERY PERIOD." The term "ACCELERATED
EXHIBIT B
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[Peregrine Systems]
<PAGE>
FORCE MAJEURE PERIOD" shall mean a total of one hundred eighty (180) days of
delay for events of Force Majeure which may affect office construction projects
in San Diego County generally (e.g., labor strikes, material shortages and
permit moratoriums) or a period of one hundred twenty (120) total days of Force
Majeure delay for Force Majeure events which are particular to the Project and
do not apply to office construction in general. Notwithstanding the foregoing,
Landlord shall have five (5) separate options to extend the Accelerated Force
Majeure Period and the Aggregate Force Majeure Period for thirty (30) days each
("FORCE MAJEURE EXTENSION OPTIONS"). In order to exercise a Force Majeure
Extension Option, Landlord must so notify Tenant in writing within the Delivery
Period (as to the first (1st) Force Majeure Extension Option) or prior to the
expiration of the previous thirty (30) day period for extension of the
Accelerated Force Majeure Period (with respect to each of the four (4)
subsequent Force Majeure Extension Options). In addition, in order to properly
exercise any such Force Majeure Extension Option, Landlord must pay to Tenant
Forty-Five Thousand Dollars ($45,000.00) within thirty (30) days after
Landlord's notice to Tenant of the exercise of such option, for each option so
exercised. If Landlord properly exercises any such Force Majeure Extension
Option, the Accelerated Force Majeure Period and the Aggregate Force Majeure
Period shall each be extended for thirty (30) days for each such option so
exercised.
SECTION 9
CONTINUITY OF LANDLORD
Landlord acknowledges and agrees that Tenant has entered into this Lease in
reliance upon Landlord's reputation and ability to do all things necessary for
the proper construction and lien free completion of all Project improvements.
Accordingly, Landlord agrees not to sell its interest in any uncompleted
building in the Project (or otherwise assign its interest and duties hereunder
as to any uncompleted building in the Project) until after the Lease
Commencement Date has occurred for the initial Floor Group in Building 3 (or if
the Lease for Building 3 is terminated, until the termination date for such
Lease) except for (i) transfers between or among entities affiliated with Kilroy
Realty Corporation (i.e., entities controlled, controlled by or under common
control with Kilroy Realty Corporation); (ii) a merger or sale of all or
substantially all of the assets, stock, partnership interests and/or limited
liability company interests of, or owned by, Kilroy Realty Corporation and/or
its affiliates; (iii) a sale, contribution or distribution to a partnership,
corporation, joint venture, limited liability company or other ownership
structure, where Kilroy Realty Corporation or its affiliate(s) retains
responsibility for managing the development of the Project; or (iv) any transfer
resulting from foreclosure, trustee's sale or deed in lieu of foreclosure. Upon
the Lease Commencement Date for the initial Floor Group in the Building, the
restrictions specified in this Section 9 shall terminate.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
SCHEDULE 1
CONSTRUCTION SCHEDULE
MILESTONE DATES - BUILDING 3
BASE, SHELL AND CORE
EVENT DATE
1 Completion of Schematic Design October 15, 1999
2 Completion of Base, Shell and Core Working
Drawings February 15, 2000
*3 Submittal to City of San Diego for Permits May 1, 2000
*4 Obtaining all Building and other Permits for
Construction of Base, Shell and Core May 1, 2000
*5 Commencement of Construction May 1, 2000
6 Completion of Slab-on-Grade July 21, 2000
*7 Completion of Vertical Construction December 8, 2000
8 Completion of Roof Framing December 22, 2000
*9 Completion of Construction of Base, Shell and
Core/Certificate of Occupancy/Shell Completion May 1, 2001
Date
Notes: Items marked with an "*" are Major Project Milestones
TENANT IMPROVEMENTS
1. Delivery by Tenant of Final Space Plan for
Landlord Approval
- Initial Floor Group September 1, 2000
- Second Floor Group March 1, 2001
- Third Floor Group September 1, 2001
2. Delivery by Tenant of Working Drawings for
Landlord Approval
- Initial Floor Group December 1, 2000
- Second Floor Group June 1, 2001
- Third Floor Group December 1, 2001
SCHEDULE 1
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[Peregrine Systems]
<PAGE>
SCHEDULE 2
STANDARD IMPROVEMENT PACKAGE
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.0 PARTITIONS
- --------------------------------------------------------------------------------
1.1 1 HOUR PARTITION: (One-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 20-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.2 2 HOUR PARTITION: (Two-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, two layers each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association. Second layer of gypsum board shall be
installed at right angles over the first layer with joints
staggered.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 90-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.3 STANDARD INTERIOR OFFICE PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend to underside of suspended
acoustical ceiling grid (+10'-0" AFF, nominal); or shall extend 6"
above ceiling grid plane. Refer to wall types and referenced
details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Diagonal bracing shall be installed per details illustrated on
the drawings.
f. Install metal casing beads at all exposed corners and edges, as
applicable.
g. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.4 STANDARD INTERIOR OFFICE ACOUSTICAL PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend from floor slab to underside of
metal or roof deck above (+13'-6" AFF, nominal). Refer to wall
types and referenced details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Provide continuous bead of acoustical sealant between bottom edge
of gypsum board panels and floor slab. Cut gypsum board panels at
top of wall to fit undulations of metal deck structures and seal
all gaps with drywall taping compound.
f. Install R-8 unfaced fiberglass sound batts in cavity between
studs, full height of partition.
SCHEDULE 2
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[Peregrine Systems]
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
2.0 COLUMN COVERS, CORE WALLS, PERIMETER SOFFITS
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a. Provide either 1-1/2" or 2-1/2"-25 gage metal studs at 16" O.C.
(or as otherwise noted or configured) per details illustrated on
drawings.
b. Furnish and install 5/8" standard gypsumboard, one layer around
interior and perimeter columns, attached to studs with screws as
required by code and as recommended by the Gypsum Association.
c. Provide and install R-8 unfaced sound batt insulation at all
furred columns where plumbing lines occur, typical.
d. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
3.0 DOORS, FRAMES, HARDWARE
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3.1 ONE-HOUR CORRIDOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 20 minute rated, 3'-0" x 8'-10" x
1-3/4" (U.N.O.). Doors shall conform to A.W.I. standards and carry
a lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness, minimum 20
minute rated with applicable listing labels provided and securely
fastened to frame. Color: Black Anodized.
c. Hardware:
i. Single
4 each Butts
1 each Lockset
1 each Closer
1 each Stop
1 each Smokeseal
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
ii. Pair
8 each Butts
2 each Closer
1 each Lockset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
2 each Smokeseal
1 each Dustproof
Strike
2 each Electro Magnetic
Hold Open
3.2 INTERIOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 3'-0" x 8'-10" x 1-3/4"
(U.N.O.). Doors shall conform to A.W.I. standards and carry a
lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness. Color:
Black Anodized.
c. Hardware.
i. Single
4 each Butts
1 each Latchset
1 each Stop
ii. Single Locking
a. All the above. In place of latchset, provide lockset.
iii. Single with Closer
a. All the above, plus closer.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
iv. Pair
8 each Butts
2 each Closer
1 each Latchset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
1 each Dustproof
Strike
4.0 SUSPENDED GRID CEILINGS
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4.1 GENERAL INSTALLATION REQUIREMENTS:
a. Install ceiling under the supervision of an experienced
superintendent. Consult with and coordinate installation with other
trades. Install ceiling using laser level within a tolerance of
1/8" in 12 feet in any direction.
b. Pattern: Unless otherwise indicated or specified, install
ceilings in a regular pattern without border, joint lines parallel
to walls. Install acoustical units symmetrically about centerlines
of each room or space (unless specifically noted otherwise on
drawings), avoiding narrow units at walls.
c. Framing for Lighting and Mechanical Fixtures: Obtain necessary
data from other trades and provide additional hanger wire and
framing in suspended grids as required to support lighting and
mechanical fixtures.
d. Lateral Bracing: Lateral bracing for suspended ceiling must be
provided (UBC Table 23-j). Where ceiling loads are less than 5PSF
and not supporting interior partitions, ceiling bracing shall be
provided by four (4) No. 12 gauge wires secured to the main runner
within 2 inches from the cross runner intersection and splayed 90
degrees from each other at an angle not exceeding 45 degrees from
the plane of the ceiling. These horizontal restraint points shall
be placed 12 feet o.c. in both directions with the first point
within 4 feet from each wall. Attachment of the restraint wires to
the structure above shall be adequate for the load imposed.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
e. Hanger Wires: Space wires at maximum 48" centers along main tees
and connect to structure above. Provide: 2 safety wires per
mechanical diffuser, 2 per light fixture and 4 at main runner
within 3" of fixture.
f. Ceiling Offsets: Provide trim pieces and/or accessories where
illustrated on drawings or as necessary to properly finish or
transition offsets or ceiling breaks.
g. Seismic Bracing: Provide splayed bracing wires as shown and
required by the Uniform Building Code. Provide compression struts
at 12'-0" o.c., both directions fastened to the main runner and a
structural member above. Repair, Cleaning and Completion: Remove
and replace all discolored, broken or damaged materials. Completed
ceilings shall present a smooth level surface free of edge or corner
offsets, cupping, scratches, gouges or other defects. Clean exposed
surfaces and remove foreign matter.
4.2 2 x 2 ACOUSTICAL CEILING:
a. Suspension Grid: ARMSTRONG, "Suprafine" XL 9/16" Exposed Tee.
b. Ceiling Tile: ARMSTRONG, "Hi-LR Ultima" RH90 2 x 2 #1792 beveled
tegular lay in.
c. Ceiling heights vary and are as noted on plans.
4.3 DRYWALL CEILING:
a. Carrying channel at 24" on center.
b. 1-1/2" cold-rolled carrying channel at 48" on center with hanger
wire spaced a maximum of 48" on center along carrying channel.
c. 5/8" gypsum wallboard.
d. Seismic bracing as required per the Uniform Building Code and as
noted on drawings.
e. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint. (Note: no texture; all painted surfaces
shall be 'smooth').
f. Locate all mechanical and electrical equipment requiring access
in 2' x 2' lay-in ceiling to avoid access doors in gypsum board
ceilings, where possible.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
5.0 FINISHES
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NOTE: PROVIDE CUTTINGS, BRUSH-OUTS, SAMPLES, ETC. OF ACTUAL DYE LOTS,
OR PRODUCTION RUNS FOR ARCHITECT'S AND INTERIOR DESIGNER'S APPROVAL.
5.1 PAINT:
a. Provide paint color as specified on finish plans - one (1) coat
primer base, two (2) coats flat water base latex acrylic.
5.2 CARPET:
a. Standard multicolored loop tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
b. Standard cut pile tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
5.3 VINYL COMPOSITION TILE:
a. Vinyl composition tile (VCT) shall be: ARMSTRONG, "Imperial
Texture". Colors as selected from standard range.
5.4 RESILIENT SHEET FLOORING:
a. Resilient sheet flooring shall be: ARMSTRONG, "Standard
Excelon". Colors as selected from standard range.
5.5 RUBBER BASE:
a. Rubber base shall be: ROPPE, 4" topset; straight base at carpeted
areas and coved at all hard surface areas. Colors as selected from
standard range.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
6.0 MILLWORK
11.0 GENERAL:
a. See millwork plans, details and notes for configuration and
fabrication specifications.
b. Millwork shops drawings shall be WIC approved.
c. All fabrications shall conform to WIC standards for "Premium
Grade" U.N.O. and be certified as such.
d. Submit shop drawings, samples, finishes for Architect's and
Interior Designer's approval prior to fabrication and
installation.
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15300 - FIRE PROTECTION SYSTEMS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall include all work necessary for a
complete automatic fire sprinkler system for the tenant
improvement of the shell building.
b. The shell building includes necessary standpipes, tamper
switches, flow and alarm switches and alarm bell.
B. SYSTEM REQUIREMENTS
1. The entire tenant improvement of the building shall be provided
with a hydraulically calculated automatic fire sprinkler system for
each occupancy classification.
2. Minimum densities for areas of coverage shall be determined by
the City of San Diego Fire Department. Hydraulically calculate water
protection systems. Form sheets, summary sheets, detailed work
sheets and graphs shall be in strict accordance with the required
and advisory provisions of NFPA 13; 7-3.
3. Tenant spaces shall be sized for Ordinary Hazard Group 1.
4. The system shall be designed for earthquakes and shall include
all materials necessary to provide the system complete and ready
for use. Design and install the system to give full consideration
to blind spaces, piping, electrical equipment, ductwork and other
construction and equipment in accordance with detailed drawings to
be submitted for approval.
5. Devices and equipment for fire protection service shall be UL
listed and FM approved for the specific purpose for which the item
is used in sprinkler systems.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
C. MATERIALS
1. Buried pipe and fittings: N/A
2. Above ground pipe and fittings:
a. 2-inch and smaller: ASTM A53 or ASTM A135 Schedule 40 black
steel pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow or equal.
b. 2 1/2-inch and larger: ASTM A135 Schedule 40 black steel
pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow pipe, or rolled groove pipe with mechanical
joint grooved coupling fittings; or ASTM A135 Schedule 10
welded steel pipe with rolled groove ends and mechanical
joint grooved coupling fittings. Cut grooving of pipe will not
be permitted.
c. Flanged fittings: ANSI B16.1 Class 125 cast iron.
d. Flanges: ANSI B16.1 Class 125 cast iron.
3. Gate Valves:
a. 4-inch and larger: UL listed and labeled, FM approved, 175 psi
OS&Y type, iron body, bronze mounted.
b. 3-inch and smaller: UL listed and labeled, FM approved, 175
psi OS&Y type, bronze body gate with solid wedge.
4. Check Valves: UL listed and labeled, FM approved, 175 psi iron
body, bronze mounted, horizontal swing check valve with bolted
bonnet and flanged end connections. Check valves shall be designed
for replacement of internal parts without removal of valve body
from piping with the exception that water check valves may be used
with freestanding Fire Department Connections.
5. Butterfly Valves: UL listed and labeled. FM approved, 175 psi
bronze body, threaded ends, stainless steel disc and stem, two
inch maximum pipe size with integral tamper switch, and geared
slow-close mechanism.
6. Drain Valve: UL listed and labeled, FM approved, 175 psi bronze
body gate valve, OS&Y type, solid wedge bronze disc; or class 150,
400 lb. WWP, conventional port, bronze, two-piece construction ball
valve.
7. Sprinkler Heads:
a. Spacing and number of heads shall comply with recommendations
of NFPA 13 for type of occupancy involved.
b. Sprinkler Heads: UL listed and labeled and FM approved for
installation in the hazard classification as indicated and by
the agencies listed above; 165 degree F rated fusible link,
1/2 inch orifice, standard response.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
.1 Finished ceiling Areas: Recessed, chrome-plated brass
pendant heads, matching chrome plated adjustable metal
escutcheon.
.2 Exposed Piping: Upright or pendant type; natural brass
finish.
D. EQUIPMENT
1. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15400 - PLUMBING SYSTEMS DESCRIPTIONS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall cover all plumbing systems for the tenant
improvement design. Utilities shall be connected to and
extended from points-of-connection from the original building
shell.
b. Piped utilities required by the installation of HVAC
equipment/systems for the tenant improvements to the building.
2. Work Excluded:
a. Plumbing sanitary and vent mains, potable water mains,
condensate drains for building shell rooftop units, roof and
storm water mains, shell toilet rooms and janitors closets.
B. SYSTEM REQUIREMENTS
1. Principal systems to be included in the tenant design:
a. Convenience sinks required by tenant for lunch/coffee rooms.
With local instahot water heater.
b. Potable cold water for drinking fountain system throughout the
building.
c. All drain piping from any HVAC equipment installed as part
of the tenant improvement that would generate condensate.
d. An hydraulically calculated automatic fire sprinkler system,
extended from the building shell to be installed in the tenant
improvement ceilings.
2. Materials:
a. Soil, Waste and Vent Above Ground: Service-weight, no-hub
cast-iron pipe and fittings.
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
b. Soil, Waste and Vent Below Ground and to 5'-0" Outside of
Building: Service-weight, cast-iron hub & spigot pipe and
fittings.
c. Water and Condensate Drain Piping Above Ground: Type "M"
hard-drawn copper type, ASTM B88, and wrought copper fittings,
ANSI B1 6.22. All hot water supply piping shall be insulated
with 1 inch thick fiberglass insulation for sizes up to 2-1/2
inch size, 1-1/2 inch thick above 2-inch size piping.
Condensate drain piping above ceilings shall be insulated.
d. Water Piping Below Ground 4-inches and Smaller: Type "K"
hard-drawn copper tubing, ASTM B88, and wrought copper fittings
ANSI B 16.22, silver brazed joints.
e. Natural Gas Piping: Buried piping shall be Polyethylene
(P.E.) per ASTM D2513. Above grade shall be Schedule 40 black
steel pipe per ASTM D2513.
f. Indirect Drains: Type "M" copper fittings, ANSI B16.22,
solder joint type. Insulate with Manville Micro-Lok 650AP.
3. Equipment:
a. N/A
4. Plumbing Fixtures:
a. Sinks as required and described in architectural floor
plans. If no description is provided, install 20 gage
stainless steel sink with standard single lever faucet.
b. Electric Water Cooler: Barrier-free, wall hung water cooler
with push bar control and equipped for handicap usage.
5. Drains:
a. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15800 - HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS DESCRIPTIONS
A. CODES AND REGULATIONS
All work shall be in strict conformance with, but not limited to:
Uniform Mechanical Code - UMC 1997
Uniform Building Code - UBC 1997
CEC Title 24 Energy Standards
Fire Department Regulation
City of San Diego Requirements
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Tenant Improvement (TI) Work:
a. All main air moving equipment including all air handling
units, exhaust fans, hot water boilers and pumps, variable air
volume with hot water reheat terminals for the building core
and all associated vertical ductwork and heating hot water
piping, and DDC control backbone will be installed as part of
the shell work. Five rooftop VAV units, one per floor are
provided with cooling only, and are based on a nominal 350
sf/ton.
b. Tenant shall provide all extensions of duct, piping,
electronic VAV boxes, DDC thermostats, control power and
wiring, smoke/fire dampers, diffusers and grilles for all
tenant improvements. Any specialty tenant requirement, such as
Kitchen exhaust will be designed and installed during the TI
work.
c. Any controls associated with the operation of the VAV boxes,
reheat coils and equipment added as TI work including
sub-control panels and thermostats required for the
environmental controls will be done as part of the TI work.
C. ENVIRONMENTAL DESIGN CONDITIONS
The following criteria will be used for sizing the heating and
cooling plants:
1. Outdoor Ambient Design Conditions:
Summer (mean 0.5%): 83DEG F dB 69DEG F wB
13DEG F dB outdoor daily range
Winter (0.2%): 42DEG F dB
Note: 88DEG F dB, 70DEG F wB is the 0.1% mean temperature: we
assume the less conservative 0.5% temperature is acceptable
for this project.
2. Indoor Conditions for Air Conditioned Area:
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
All floors 70DEG F dB +/- 2DEG F dB (winter)
72F dB +/- 2F dB (Summer)
60% RH (no low end humidity
control)
Electrical, Telecommunication No Temperature Control -
Rooms: Ventilation only - if Tenant
Equipment mounted within a
room requires a controlled
environment, it shall be
provided as part of the TI
D. VENTILATION AIR REQUIREMENTS
Outdoor air for ventilation will be based on the American Society of
Heating Ventilation and Air Conditioning Engineers (ASHRAE) Standard
62-1989, Ventilation for Acceptable Indoor Air Quality.
E. ENERGY USE AND CONSERVATION
The Energy Efficiency Standard, Title 24, will be used as the basis of
the design.
F. HEATING HOT WATER SYSTEM
1. The heating for the building will be by hot water, generated on
site by a rooftop boiler plant. The boilers, pumps and controls
will be installed as part of the building shell, along with valved
riser system to each floor.
2. Tenant improvement shall extend the heating hot water system to
heating coils at each VAV terminal with automatic flow control
valves, two way solenoids and a three way valve at four of the most
remote VAV boxes on each floor.
3. Heating hot water piping shall be type M copper with wrought
fittings, insulated.
G. MISCELLANEOUS VENTILATION/EXHAUST SYSTEMS
The following exhaust system will be installed within the scope of the
shell building design, it is assumed that ambient outside air (1) and
building air (2) (3) shall provide makeup air to the exhausted area:
(1) Elevator Machinery Room on roof.
(2) Electrical/telecom Rooms
(3) Janitors closets.
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
H. TI CONTROLS
1. An electronic direct digital control (DDC) system shall
incorporate stand alone, remote control units at each of the new
air handling units. Electronic digital control will be provided at
the zone level.
2. The controls will automatically operate the HVAC system and provide
the necessary change-over commands for the occupied and non-occupied
temperature and ventilation schedules. The system shall provide the
necessary monitoring, alarm, and by-pass for efficient energy
management.
I. Specification Sections
The following specification sections will be provided:
1. Division 15
a. Section 15010 Mechanical General Requirements
b. Section 15060 Hangers and Supports
c. Section 15090 Mechanical Identification
d. Section 15240 Vibration and Seismic Isolation
e. Section 15250 Mechanical Insulation
f. Section 15500 HVAC Pumps, Piping, Valves, and Accessories
g. Section 15850 Ductwork and Accessories
h. Section 15900 HVAC Controls
i. Section 15990 Testing, Adjusting and Balancing
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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Section 16050 BASIC ELECTRICAL REQUIREMENTS
PART 1 GENERAL REQUIREMENTS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions and Division 1 are part of this section
and the contract for this work and apply to this section as fully
as if repeated herein. This section, 16050, applies to all
Division 16 categories.
1.1.2 Reference to other sections: The applicable requirements from
other Division 16 sections shall form a part of the electrical
work and each section shall be referenced to the other sections.
1.2 EXPLANATION OF DRAWINGS
1.2.1 These construction documents are intended to be diagrammatic
and reflect the scope, quality, and character of the work to be
performed; all miscellaneous materials and work, though not
specifically mentioned, shall be furnished and installed by the
Contractor.
1.2.2 The Contractor shall confirm sizes, dimensions, weights and
locations of all equipment prior to installation. Dimensioned
architectural drawings shall take precedence over diagrammatic
layouts shown on these contract documents.
1.2.3 The specifications and the drawings are an integral document and
shall be considered complementary to each other. In the case of a
conflict between the specifications and the drawings, the more
constricting condition shall be enforced.
1.2.4 The Contractor shall be responsible for reporting any
discrepancies, errors, or omissions noted prior to bid.
1.2.5 It is the intent of the drawings to indicate schematic routing
and placement of devices, fixtures, equipment and conduit. Exact
locations shall be dimensioned on these documents or in other
trade documents (architectural, mechanical, etc.). Offsets,
elbows, or extensions shall be furnished and installed by the
Contractor as necessary to avoid structure, piping, clearances
and to provide a complete and workmanlike installation.
1.3 QUALITY ASSURANCE
1.3.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.3.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
Section 16050 Basic Electrical Requirements
Master Specs 16050-1
SCHEDULE 2
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.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriters' Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.3.3 All items shall be listed by Underwriter's Laboratories and
shall bear the U.L. label.
1.3.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.3.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the Contractor.
1.4 SUBMITTALS
1.4.1 Shop drawings for materials, equipment, devices, fixtures, and
systems shall be submitted by the Contractor for review within 30
days after award of the contract. In addition to the requirements
for submittals stated herein, the Contractor shall be responsible
for compliance with the requirements of Division 1.
1.4.2 The Contractor shall bear the responsibility for any materials
installed which were not submitted for review or not installed in
compliance with the review comments and the contract documents.
1.4.3 Verbal authorization of submittal documents or changes to the
requirements of the contract documents shall not be acceptable.
All submittal material must be documented in a written format.
1.4.4 All submittal packages must be submitted at one time and in
accordance with the specification section appropriate for the
material. All packages must be identical and clearly labeled
indicating the specification section, project name, submittal
date, Contractor's name, Engineer's name, preparer's name and
submission version (first submission, resubmittal #1, etc.).
1.4.5 Product catalog cutsheets and descriptive literature shall be
cross-referenced to the specification section by paragraph.
1.4.6 All submittal packages shall be permanently bound in brochure
or booklet format. A minimum quantity of six submittal booklets
shall be provided by the Contractor; additional copies may be
required if so noted.
Section 16050 Basic Electrical Requirements
Master Specs 16050-2
SCHEDULE 2
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1.4.7 Materials which bear a certification or approval of a testing
agency, performance criteria, society, agency, or other
organization shall be submitted with all labels identified.
1.4.8 The submittal shall be complete and with catalog data and
information properly marked to show, among other things,
materials, capacity and performance data to meet the specified
requirements.
1.4.9 Incomplete submittals will be rejected at the discretion of the
reviewing Engineer.
1.4.10 Review of the submittal is only for general conformance with
the contract documents. The Contractor is responsible for
confirmation and coordination of dimensions, quantities, sizes,
fabrication, installation methods, and for coordination of work
of other trades with electrical work.
1.4.11 Detailed working drawings shall be prepared and submitted showing
items which are to be fabricated including transformer mounting
racks, unistrut mounting frames, equipment room layouts, pull
boxes, splice boxes, gutters, etc.
1.4.12 Minimum scale for submitted drawings shall be 1/8". Details shall
be drawn to 1/4" scale. All drawings shall be 8.5"x11" or larger.
1.4.13 Submittal brochures shall be complete and descriptive of the
type, make, manufacturer, application, quantity, performance,
capacity, ratings, options, dimensions, clearances, weights,
nameplate data, special installation requirements, mounting
method, NEMA type, NEMA class, environmental restrictions, layout
requirements or other information as may be necessary for review
of the material.
1.4.14 Submittal brochures for switchgear shall include, as a minimum,
the following: singleline diagrams; fault current ratings of
buses and devices; device identification, ratings, layout and
characteristics; dimensions; circuit identification;
identification label type and method of affixing; mounting;
conduit entry point and quantities; NEMA enclosure type; and
additional data as required for a complete review.
1.4.15 Submittal brochures for lighting systems shall include, as a
minimum, the following: manufacturer; detailed drawing or
photograph; dimensions; lamp data; ballast data; certified
photometric data from a third-party testing agency; U.L. label
listing; fixture number or identification from the drawings;
finish color and material; mounting equipment; socket type and
rating; environmental ratings (damp location, watertight,
explosionproof, etc.); voltage; input wattage; and additional
information as necessary for a complete review.
1.4.16 The Contractor shall be responsible for all aspects of
substitutions of material including any additional cost or delay
incurred as a result of the substitution. The Contractor shall
coordinate all substitutions with other trades, verify code
compliance, verify clearances, photometric performance,
appearance, suitability, constructability, and availability of the
material prior to submitting the substitution for review. The
Contractor shall bear the responsibility of any increased costs
to other trades with are directly related to the substitution.
1.5 MATERIAL HANDLING
Section 16050 Basic Electrical Requirements
Master Specs 16050-3
SCHEDULE 2
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1.5.1 The Contractor shall deliver all equipment and material to the site
in the manufacturer's original packaging without seals broken.
1.5.2 The Contractor shall handle, store, and protect all equipment and
materials in accordance with the manufacturer's recommendations.
1.5.3 The Contractor shall immediately replace damaged or defective
equipment or materials with identical new equipment or material at
no cost, inconvenience, or delay to the Owner.
1.6 EXISTING CONDITIONS
1.6.1 The Contractor shall verify all existing conditions prior to bid and
include all costs in bid.
1.6.2 The Contractor shall match the finish and appearance of all existing
conditions where constructing new work adjacent to existing surfaces
or equipment.
1.6.3 Coordinate with the Owner's Representative for all ongoing projects
or the work of other trades which may affect the Contractor's work.
Verify Owner schedule requirements for special or standard events
which may impact the Contractor's work.
1.6.4 Coordinate work to be performed in occupied areas and comply with
the Owner's requirements such that the Owner's work is not disrupted
by the Contractor. Verify the need for work to be performed during
premium hours, evenings, weekends, or holidays prior to bid and
include all costs in bid. Bring to the Owner's attention the need
for all disruptive work prior to commencement of work.
1.7 UTILITY COMPANY REQUIREMENTS
1.7.1 The contractor shall contact the serving utility company for all
utility system requirements prior to commencement of work. Utility
work shall include electric power, telephone, data, fiber optic
cable, cable television or other utilities as may require connections
as a part of this contract. Coordinate and comply with all serving
utility company requirements.
1.7.2 The utility information depicted on the contract documents is for
bidding purposes only and shall not be used for construction
purposes. All construction shall be performed according to
engineered documents from the serving utility company. The
Contractor shall obtain and coordinate with utility company
requirements as a part of this contract and furnish and install all
work as a part of this contract.
1.7.3 Verify all connection points, routing, and requirements with the
serving utility company prior to commencement of work and coordinate
final requirements with other trades.
1.7.4 The Contractor shall be responsible for all costs associated with
his failure to contact or coordinate with utility company
requirements.
1.8 CONSTRUCTION UTILITY REQUIREMENTS
1.8.1 Power, telephone or other temporary construction utility services
required by the Contractor shall be the responsibility of the
Contractor.
Section 16050 Basic Electrical Requirements
Master Specs 16050-4
SCHEDULE 2
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[Peregrine Systems]
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1.8.2 Arrangements for construction utility services shall be made by the
Contractor in coordination with the Owner's Representative and the
serving utility company.
1.9 CONTINUITY OF SERVICE
1.9.1 The Contractor shall coordinate all shutdowns with the Owner's
Representative. Electrical shutdowns shall be kept to the minimum
number necessary to complete the work.
1.9.2 The Contractor shall coordinate all work done on overtime or premium
time with Owner's Representative prior to commencement of work.
1.9.3 All work performed in or through occupied spaces, or other work
disruptive to existing occupants shall be considered as performed
during premium time or as overtime for the purposes of the
bid; include all costs in bid.
1.9.4 The Contractor shall notify Owner's Representative of all shutdowns
or disruptive work minimum of 72 hours prior to commencement of
work. The Contractor shall obtain approval from the Owner's
Representative prior to commencement of work.
1.9.5 The Contractor shall provide all necessary temporary power, including
temporary power generation, to accommodate shutdowns and minimize
disruption of work.
1.9.6 The Owner reserves the right to provide emergency repairs or
temporary power to maintain service continuity at the Contractor's
cost in the event Contractor fails to provide adequate service
continuity.
1.10 RECORD DOCUMENTS
1.10.1 The Contractor shall prepare as-built documents depicting all
revisions to branch circuits, conduit routing, equipment, or
materials. Drawings shall be legible, reproducible, and properly
identified such they may be used as a reference for maintenance or
construction.
1.10.2 The Contractor shall provide a minimum of three copies of the
operation and maintenance manuals to the Owner's Representative at
the completion of the project. Each copy shall be bound in a
three-ring binder and labeled indicating: the project name; system
name; Contractor's name, telephone number, and contact person; and
Owner's name. The Contractor shall provide the following information
within each manual:
.1 List of the Subcontractors performing work on the system
including contact names and telephone numbers.
.2 Routine and emergency service contacts and telephone numbers
for each system.
.3 Description of system operation.
.4 Single line diagrams and control wiring diagrams.
.5 Detailed product literature with technical information.
Section 16050 Basic Electrical Requirements
Master Specs 16050-5
SCHEDULE 2
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.6 Sequence of starting, shutdown and operation.
.7 Installation instructions and safety requirements.
.8 Maintenance schedule, testing instructions and performance
parameters.
.9 Parts list including recommended spare parts.
1.11 GUARANTEE
All electrical work, materials and equipment provided under this
contract shall be guaranteed for a period of one year from the date
of acceptance of the work by the Owner. Any failures, problems, or
deficiencies experienced during this period due to defective
materials or faulty workmanship shall be immediately corrected by
the Contractor without cost to the Owner. The Contractor shall be
responsible for all damages to the Owner's facility due to
deficiencies in the electrical system. Equipment guarantees in
excess of one year shall not be superseded by this guarantee.
PART 2 PRODUCTS
2.1 MATERIALS
2.1.1 All materials shall be new, of prime quality, listed as suitable for
the application, and bear factory-applied U.L. labels.
2.1.2 Materials shall be currently in production and shall be supported by
spare parts, repair service, maintenance, and factory technical
support.
2.1.3 Materials of one assembly (switchboards, substations, motor control
centers, etc.) shall be of one manufacturer unless specifically stated
otherwise in the contract documents.
PART 3 EXECUTION
3.1 INSTALLATION REQUIREMENTS
3.1.1 All work shall conform to National Electrical Contractors
Association standards of installation and the requirements of the
manufacturer, Division 1, Division 16, and the Owner's Representative.
3.1.2 The Contractor shall field-verify all dimensions and coordinate
dimensions with equipment sizes and locations.
3.1.3 The Contractor shall coordinate and install all penetrations, openings,
slots, chases, or sleeves as necessary for the routing and installation
of raceways, conductors, or equipment. The Contractor shall provide
approved fire sealant to maintain fire ratings at all penetrations.
3.1.4 The Contractor shall coordinate the placement and sequence of
installation of all mounting bolts, conduits, sleeves, etc. which are
to be set in poured-in-place concrete slabs per the structural
drawings.
3.1.5 The Contractor shall install access panels in walls or ceilings in
coordination with the Architect for all junction boxes or electrical
equipment which requires access.
Section 16050 Basic Electrical Requirements
Master Specs 16050-6
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
3.1.6 All equipment shall be installed plumb, parallel, or orthogonal to
structure and in a neat orderly fashion. All material shall be
accessible for maintenance, inspection, servicing or replacement.
3.1.7 Verify final locations for devices during the rough-in phase with
dimensioned architectural drawings, fabrication drawings, or other
space planning requirements included in the contract documents.
3.1.8 The Contractor shall coordinate and arrange for the proper sequence
of construction including scheduling of long-lead items, shutdowns,
work of other trades, and Owner-scheduled events.
3.1.9 The Contractor shall provide adequate and qualified supervision for
the work performed: no work shall be performed without the
supervision of a representative of the Contractor.
3.1.10 The Contractor shall coordinate and cooperate with all other trades
for a successful completion of the project.
3.2 SEISMIC BRACING
The Contractor shall seismically brace all equipment in accordance
with Title 24 requirements for Seismic Zone 4 and provide
certification of seismic compliance upon request.
3.3 CUTTING AND PATCHING
3.3.1 The Contractor shall provide cutting and patching as required to
install the electrical system in this contract.
3.3.2 Coordinate the schedule of all cutting such that the work may be
performed in an expeditious manner with minimum inconvenience to
the Owner.
3.3.3 Remove or cut structures or materials as necessary for demolition
prior to the installation of new electrical work.
3.3.4 The Contractor shall protect all surfaces, structure, furnishings,
and finishes not directly affected by cutting or patching.
3.3.5 Provide dust and moisture barriers as required during cutting and
prior to patching openings.
3.3.6 All penetrations through roofs shall be performed per architectural
requirements.
3.3.7 Patching shall be performed with materials which exactly match the
adjacent surfaces in color, texture, character, and appearance.
3.3.8 All patches must maintain the fire ratings of the original surface
and shall be sealed with a U.L. listed and Fire Marshal approved
sealant.
3.4 COMMISSIONING
Section 16050 Basic Electrical Requirements
Master Specs 16050-7
SCHEDULE 2
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<PAGE>
3.4.1 The Contractor shall initiate start up of all electrical equipment
including operation of all devices, switches, generators, transfer
switches, overcurrent protection, disconnect switches, etc. to verify
normal operation of all moving parts and electrical performance.
3.4.2 The Contractor shall test, adjust, aim, align, label, clean and
complete all systems prior to acceptance by the Owner's
Representative.
3.4.3 The Contractor shall demonstrate that all systems operate within the
manufacturer's recommended performance characteristics, the
electrical construction documents, system requirements, and Owner
requirements.
3.4.4 The Contractor shall test each system per the manufacturer's
requirements and shall perform the following system tests:
.1 Inspect cables for physical damage and proper connection.
.2 Torque test cable connection and tighten in accordance with
industry standards.
.3 Infrared scan all connections under loaded conditions.
.4 Insulation resistance test of each cable.
.5 Inspect ground system connections.
.6 Voltage drop tests on the main grounding electrode of system.
.7 Determine the ground resistance between the main grounding
system and all major electrical equipment frames, system neutral
points.
.8 Check rated voltage and phase balance at all equipment, motors
and selected devices at full load conditions. Measure no load
voltage conditions at each location.
.9 Furnish all material, equipment, instruments and labor as
required to complete testing.
3.5 TRAINING
3.5.1 Furnish at least one copy operating instructions from the
manufacturer for all electrical equipment to the Owner's
Representative. Instructions shall be clean, legible, and properly
bound.
3.5.2 The Contractor shall provide training for the Owner's staff as
directed by the Owner's Representative for a minimum of one
man-day (eight hours).
3.5.3 Provide classroom training by a qualified instructor for the
operation, installation, and maintenance of designated equipment or
systems including, but not limited to, generation systems, transfer
switches, uninterruptible power supplies, energy management
systems, lighting control systems, power distributions systems, and
other systems which may require instruction.
3.6 CLEANING
Section 16050 Basic Electrical Requirements
Master Specs 16050-8
SCHEDULE 2
-24-
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[Peregrine Systems]
<PAGE>
Contractor shall clean all equipment, panelboard interiors, conduit
interiors, fixtures, devices, etc. of all extraneous paint, drywall
mud, overspray, dust, dirt, debris, trash, grease or markings. All
cleaning shall be performed by the Contractor in accordance with the
appropriate manufacturer's recommendations.
END OF SECTION
Section 16050 Basic Electrical Requirements
Master Specs 16050-9
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
Section 16110 RACEWAYS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Basic Electrical Requirements
(Section 16050) are part of this section and the contract for this
work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16110 Raceways
Master Specs 16110-1
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Raceway materials
.2 Fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Rigid Galvanized Steel (RGS) Conduit
2.1.1 Continuous hot-dipped galvanized manufactured per UL and ANSI
requirement.
2.1.2 Rigid aluminum conduit is not acceptable.
2.1.3 Fittings for use with steel conduit, rigid or flexible, shall be
manufactured per UL requirements and shall be cast metal with
gasketed closures.
2.1.4 Fittings for RGS conduit shall be malleable iron or forged steel
with cadmium or zinc coating.
2.1.5 Union couplings for joining rigid conduit at intermediate runs shall
be of the same material as the conduit. Couplings shall be threaded
concrete-tight to permit completing conduit runs when neither
conduit can be turned and to permit breaking the conduit run at the
union.
2.1.6 Set screw connectors or threadless type are not acceptable.
2.1.7 Minimum raceway size shall not be less than 3/4".
2.2 Electrical Metallic Tubing (EMT)
2.2.1 Conduit shall be cold rolled zinc coated steel and manufactured per
UL and ANSI requirements.
2.2.2 Fittings for EMT shall be watertight steel or malleable gripping ring
compression type.
2.2.3 Pressure cast material for nuts of compression ring type fittings
and set screw connections are not acceptable.
2.2.4 Minimum raceway size shall be 1/2".
2.3 Flexible Metallic Conduit
2.3.1 Flexible conduit shall bear the UL label and be zinc coated steel.
2.3.2 Fittings for flexible metallic conduit shall be steel or malleable
iron. Fittings shall clamp to conduit securely.
2.3.3 Screw in type, sheet metal or set screw type fittings are not
acceptable.
Section 16110 Raceways
Master Specs 16110-2
SCHEDULE 2
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<PAGE>
2.3.4 Minimum raceway size shall not be less than 3/4".
2.4 Liquid Tight Flexible Conduit
2.4.1 Conduit shall be manufactured in accordance with UL and ANSI
requirements. Conduit shall be approved for grounding and compatible
with approved fittings. Flexible steel conduit shall be hot dipped
galvanized with extruded PVC covering manufactured per UL
requirements.
2.4.2 Fittings shall be liquid tight type with body and gland nut of steel
or malleable iron with provisions for grounding flexible conduit to
fittings.
2.4.3 Minimum raceway size shall be 3/4".
2.5 Polyvinyl Chloride (PVC) Conduit
2.5.1 PVC shall be constructed of a virgin homopolymer PVC compound and be
manufactured according to NEMA and UL specifications. PVC conduit shall
be Schedule 40 or 80.
2.5.2 Minimum raceway size shall be 3/4".
PART 3 EXECUTION
3.1 Rigid Galvanized Steel (RGS) Conduit
3.1.1 RGS shall be used where exposed to weather or where subject to
physical damage in exposed areas below 8'0" above finished floor.
3.1.2 RGS shall be used in NEC classified hazardous locations with seal
connections per NEC requirements.
3.2 Electrical Metallic Tubbing (EMT)
3.2.1 EMT shall be run indoors concealed in drywall type
construction, above suspended ceilings, and exposed indoors not less
than 8'0" above finished floor in unfinished areas.
3.2.2 EMT shall not be installed underground or embedded in concrete.
3.3 Flexible Metallic Conduit
3.3.1 Flexible conduit shall be used for indoor lighting connections in
suspended ceiling areas and shall not exceed 6'0" in length.
3.3.2 Flexible conduit shall be used for final connection to control
equipment and not to exceed 2'0" in length.
3.3.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL approved.
3.4 Liquid Tight Flexible Conduit
Section 16110 Raceways
Master Specs 16110-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
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<PAGE>
3.4.1 Flexible conduit shall be used for final connection to
machines, motors, transformers and equipment that requires vibration
isolation.
3.4.2 Flexible conduit shall be used for final connection to equipment in
wet or damp locations or where exposed to grease, water, dust, or dirt.
3.4.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL requirements.
3.5 Polyvinyl Chloride (PVC) Conduit
3.5.1 All sweeps, bends, and risers shall be concrete encased Schedule 80.
3.5.2 All underground high voltage conduit, telephone conduit, service
entrance conduit and feeders 100A and over shall have 3" of red
mixed concrete cover.
3.5.3 All PVC conduit feeders shall contain a copper green grounding
conductor sized per NEC requirements and continuity shall be
maintained throughout conduit runs and pullboxes.
3.6 All conduit installation methods shall comply with the latest
enforced edition of the National ELectrical Code and the authority
having jurisdiction.
3.7 All conduit installations shall comply with the manufacturer's
installation requirements.
3.8 All spare conduit shall be provided with a pullwire.
END OF SECTION
Section 16110 Raceways
Master Specs 16110-4
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16120
WIRE AND CABLE
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
Section 16120 Wire and Cable
Master Specs 16120-1
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
.1 Conductor materials
.2 Connector and fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Conductors shall be copper; conductors size #10AWG and smaller shall
be solid, conductors size #8AWG and larger shall be stranded.
Conductors shall be minimum size #12AWG for power and lighting
circuits; control circuits shall use a minimum conductor size of
#14AWG.
2.2 Insulation shall be type THW or THHN/THWN for all branch circuits up
to and including size #2AWG. Insulation for conductors over size
#2AWG shall be XHHN.
2.3 Jackets shall be nylon of PVC material.
2.4 All cables shall be UL listed for the application.
2.5 All conductors shall be installed in conduit in the field, unless
specifically noted otherwise in these documents. Type AC and type NM
cable is not acceptable; type MC cable may be used where
specifically noted for purposes of flexibility, maintenance, or ease
of installation but shall not be used without permission.
2.6 Multi-conductor flexible cords shall be types SO, SJO, STO, or SJTO.
2.7 Connectors shall be UL listed and suitable for the conductor
material being connected and rated appropriately. Connectors shall
be solderless metal pressure type for conductors #10AWG and smaller.
Connectors shall be compression type for conductors #8AWG and larger.
PART 3 EXECUTION
3.1 All wiring methods shall comply with the latest enforced edition of
the National Electrical Code and the authority having jurisdiction.
3.2 Conductors shall be installed in clean raceways using nylon
cord, polypropylene cord, hemp rope, or other material which will not
damage the conductors or conduit. Do not use metal fish tape. Use
lubricant when necessary for pulling.
3.3 Conductors shall be pulled into conduit simultaneously so as to not
damage conductors during pulling.
3.4 Conductors installed at outlets and switches shall have a minimum of
6" pigtail left in the box for future connections. All conductors
not connected to devices shall be terminated with splice caps or
tape.
3.5 Conductors shall be terminated such that no copper material is
exposed. Conductors shall be trained and labeled at terminations in
a neat and workmanlike manner.
3.6 All terminations shall comply with the manufacturer's installation
and torquing requirements.
3.7 Splices on conductors #10AWG and smaller shall be made with splice
caps twisted
Section 16120 Wire and Cable
Master Specs 16120-2
SCHEDULE 2
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<PAGE>
onto the conductors. Tape all splices.
3.8 Splices on conductors #8AWG and larger shall be made with pressure
connectors and terminal lugs. Where exposed to water, damp air, or
moisture splices shall be watertight.
3.9 Splices shall be not be made in feeders; splices to branch circuits
shall not be made within panelboards or similar enclosures.
3.10 When combining homeruns, the Contractor shall derate all conductors
per code requirements including reducing the capacity, using high
temperature insulation where necessary. Conduit sizes shall be
adjusted by the Contractor as suitable for the conductor revisions.
3.11 The Contractor shall provide a code-sized insulated ground
conductor, in addition to the feeder conductors indicated on the
drawings, where non-metallic conduit is used.
3.12 Conductors shall be color-coded as follows:
208Y/120V Phase 480Y/277V
Black A Brown
Red B Orange
Blue C Yellow
White Neutral Gray
Green Ground Green
3.13 Where tape or labels are used for color-coding, apply material at each
end of the conductor, splices, boxes, and all terminations.
END OF SECTION
Section 16120 Wire and Cable
Master Specs 16120-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16130 BOXES
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3. All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16130 Boxes
Master Specs 16130-1
SCHEDULE 2
-33-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Box materials
.2 Accessory materials
PART 2 PRODUCTS
2.1 Boxes shall be flat rolled steel sized as required by code and as
suitable for the application. Boxes shall have mounting holes and
knock-outs in sides and back. Grounding shall be accommodated by
means of threaded holes.
2.2 Provide accessories, extension rings, gaskets, supports, trim
rings, hangers, straps, and other material as necessary for a
complete code complying installation.
2.3 Boxes installed outdoors shall be weathertight, dusttight, and
corrosion resistant. Provide gaskets and conduit hubs.
2.4 Provide Type FS boxes for surface mounted applications.
2.5 Provide additional support for boxes as necessary when mounting
fixtures or devices from boxes.
2.6 Provide ganged boxes for multiple switches and devices; provide
barriers for boxes served by separate voltages.
2.7 Acceptable manufacturers shall be Appleton, Crouse Hinds, Steel
City, or Raco.
PART 3 EXECUTION
3.1 All box installation method shall comply with the latest enforced
edition of the National Electrical Code and the authority having
jurisdiction.
3.2 Install all boxes plumb, square, and securely fastened to
structure.
3.3 Boxes shall be placed such that they are readily accessible.
3.4 Cover or plug all unused openings in boxes where knockout blanks
have been removed.
3.5 Install boxes such that they are flush with the finished surface
of the wall or surface within which they are mounted.
3.6 Install all boxes at mounting heights per architectural,
electrical code, and ADA requirements.
3.7 Boxes shall not be mounted back to back in walls.
3.8 Boxes in sealed environments shall be sealed with an approved
sealant suitable for the application.
3.9 Boxes penetrating fire rated walls or surfaces shall be sealed
with a Fire Marshall approved fire sealant to maintain the fire
rating of the wall or surface.
Section 16130 Boxes
Master Specs 16130-2
SCHEDULE 2
-34-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.10 Boxes located above inaccessible ceilings shall be made accessible
by means of access doors or hatches in the ceiling.
3.11 Install all boxes per manufacturer's recommendations and
requirements.
3.12 Provide for ground continuity at all boxes.
END OF SECTION
Section 16130 Boxes
Master Specs 16130-3
SCHEDULE 2
-35-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16140 WIRING DEVICES AND CONNECTORS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and
the contract for this work and apply to this section as fully
as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-1
SCHEDULE 2
-36-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Receptacles
.2 Switches
.3 Wiring devices
.4 Accessories
PART 2 PRODUCTS
2.1 RECEPTACLES
2.1.1 Wiring devices shall be UL listed and suitable for the application.
2.1.2 Devices shall be color coded per the system to which they are
connected: normal power shall be white; emergency power shall
be red; dedicated outlets shall be grey; unless otherwise noted
on the construction documents.
2.1.3 Receptacles shall be heavy duty with the screw type, side wired,
120V, 20A, duplex type, unless noted otherwise on the contraction
documents. Verify NEMA configuration with construction documents.
2.1.4 Weathertight receptacles shall be gasketed in cast metal boxes
with cast metal coverplates with spring-loaded hinged covers over
each opening.
2.1.5 Ground fault interrupting receptacles shall be duplex type and
capable of detecting a leaking current of 5mA.
2.2 TOGGLE SWITCHES
2.2.1 Toggle wall switches shall be quiet AC type, rated 120/277V, 20A
and UL listed for the application.
2.2.2 Switches shall be single pole, double throw with white finish
unless noted otherwise.
2.3 COVERPLATES
2.3.1 Single, combination coverplates shall be used at all ganged device
locations.
2.3.2 Provide white plastic coverplates with white screws in all office
areas. Provide stainless steel coverplates with matching screws in
laboratory, process, manufacturing, and clean room areas or as
noted on the construction documents.
2.3.3 Provide labeled plates as noted on the construction documents.
2.3.4 Provide labeled plates at all receptacles with circuit and panel
designation. Labeling method shall utilize clear adhesive printed
labels with black bold letters.
2.4 ACCEPTABLE MANUFACTURERS
2.4.1 Acceptable manufacturers shall be Arrow Hart, Hubbell, Leviton, or
Pass and Seymour.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-2
SCHEDULE 2
-37-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of wiring devices shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all devices in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate device mounting height, location and type with
architectural and interior drawings. Coordinate with other
trades to identify conflicts with device locations and notify
the Engineer of any conflicts.
3.4 Install devices only in clean boxes.
3.5 Install all trim rings and coverplates in coordination with other
trades and their installation schedules.
3.6 Tighten and inspect all connections prior to covering devices and
reconnect or repair wiring as necessary.
3.7 Test all devices for voltage level, continuity, ground fault, and
short circuits.
3.8 Install all devices plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to covering device.
3.10 Demonstrate the proper operation of all ground fault interrupting
devices.
END OF SECTION
Section 16140 Wiring Devices and Connectors
Master Specs 16140-3
SCHEDULE 2
-38-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16170 CIRCUIT AND MOTOR DISCONNECTS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-1
SCHEDULE 2
-39-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage and current ratings
.2 NEMA enclosure type
.3 Horsepower rand fault current rating
.4 Dimensions
.5 Fuse type and class
PART 2 PRODUCTS
2.1 Disconnects shall NEMA 1, indoor type, or rated for the location
in which they are installed as noted on the construction documents.
2.2 Disconnects shall be UL listed and suitable for the application.
2.3 Exterior disconnects shall be raintight, dusttight, have raintight
hubs, and be rated NEMA 3R.
2.4 Disconnects shall be heavy duty type, rated 600V with current
capacity as noted on the construction documents. Verify NEMA
configuration with construction documents.
2.5 Disconnects shall have hinged, lockable, dead-front doors wit
permanently marked ON/OFF indicators. Enclosures shall be baked
enamel factory painted steel with conduit knockouts.
2.6 Disconnects shall be operated by a handle accessible from the
exterior of the enclosure. Handles shall have provision to be
padlocked in the OFF position.
2.7 All current carrying parts shall be high conductivity copper
designed to carry rated load without damage from heat and plated
to resist corrosion.
2.8 Switch mechanism shall be a quick-make, quick-break type such that
the operation of the contact is restrained by the handle during the
closing or opening operation.
2.9 Switches shall have a minimum fault current rating of 200,000A RMS.
All switches shall be fused unless specifically noted otherwise.
2.10 The disconnect door cover shall have an interlocking mechanism to
prevent opening the cover when the switch is in the ON position.
2.11 Fuses serving motor loads shall be Class L and Class RK1, 250V and
600V, time delay, dual element unless noted otherwise on the
construction documents.
2.12 Fuses serving non-motor loads shall be Class L and Class RK1, 250V
and 600V, fast acting, dual element unless noted otherwise on the
construction documents.
2.13 Provide built-in fuse pullers.
2.14 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. and Westinghouse. Fuses shall be Gould-Shawmut
or Bussman.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-2
SCHEDULE 2
-40-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of disconnects shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all disconnects in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate disconnect mounting height, location and type with
architectural and interior drawings. Coordinate with other trades
to identify conflicts with device locations and notify the
Engineer of any conflicts. Mount switches 42" above finished
floor unless noted otherwise.
3.4 Provide suitable galvanized metal strut framework where no wall or
structure is available for the mounting of vibrating equipment.
3.5 Provide flexible conduit connections for disconnects mounted to
strut framework, motors, or vibrating equipment.
3.6 Tighten and inspect all connections and reconnect or repair wiring
as necessary.
3.7 Test all disconnects for voltage level, continuity, ground fault,
and short circuits. Check switch mechanism operation under no load
conditions prior to operating under load.
3.8 Install all disconnects plumb and square to structure and adjacent
surfaces.
3.9 Provide and install all fuses sized per the equipment
manufacturer's recommendation.
END OF SECTION
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-3
SCHEDULE 2
-41-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16420 SWITCHBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearance prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16420 Switchboards
Master Specs 16420-1
SCHEDULE 2
-42-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Switchboards
.2 Overcurrent protection
.3 Instrumentation
.4 Dimensions, weights, ratings, and layouts
.5 Device settings and trip ratings
PART 2 PRODUCTS
2.1 Switchboards shall be factory assembled, dead-front, metal
enclosed, self-supporting floor standing sections as noted in the
construction documents.
2.2 Vertical sections shall contain overcurrent protective devices
including circuit breakers and fuses and shall be nominally
90" in height.
2.3 Switchboard finish shall be baked enamel factory paint of
manufacturer's standard color.
2.4 Provide front accessibility for wireways on each side of
overcurrent protective devices for entire height of section.
Provide welded steel framework with screw covers removable from
the front; covers may be hinged.
2.5 All bussing shall be silver-coated copper with ratings as
indicated in the construction documents.
2.6 Switchboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Switchboards shall be equipped with lifting eyes.
2.8 Switchboards shall be suitable for the environment in which they
are located and shall be NEMA 1, indoor, unless noted otherwise on
the construction documents.
2.9 Main circuit breakers shall be provided and shall be solid state
trip with ratings as noted. Distribution circuit breakers shall be
molded case type. All circuit breakers shall be bolt-on type.
2.10 Cross bussing shall be fully rated for the length of the
switchboard.
2.11 Instrumentation shall be provided where noted. Utility company
metering shall be provided in accordance with the serving utility
company requirements.
2.12 The switchgear manufacturer shall submit a coordination and short
circuit study for the entire system provided including long time,
short time, instantaneous, and ground fault.
2.13 Provide permanently adhered bakelite labels indicating the
identification of each device on the switchboard adjacent to the
device and visible on the enclosure exterior.
2.14 Provide a ground bus in each switchboard section with connecting
ground bonds between sections.
Section 16420 Switchboards
Master Specs 16420-2
SCHEDULE 2
-43-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square
D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of switchboards shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all switchboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate switchboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with switchboard locations and notify the Engineer of any conflicts.
3.4 Coordinate switchboard size with concrete housekeeping pads.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Ground fault protective devices shall be testing by an approved
third party testing agency and a written report submitted with the
operation manual for review.
3.7 Test all switchboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all switchboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing switchboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all switchboard interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation. Set ground fault
protective device as per the written report recommendations.
END OF SECTION
Section 16420 Switchboards
Master Specs 16420-3
SCHEDULE 2
-44-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16460 TRANSFORMERS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and contract for
this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electric Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with the applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16460 Transformers
Master Specs 16460-1
SCHEDULE 2
-45-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage, KVA, impedance, frequency, taps, and efficiency
.2 Temperature rating above ambient
.3 Regulation and sound levels
.4 Mounting details and vibration isolation
.5 Nameplate data
PART 2 PRODUCTS
2.1 Transformers shall be general purpose, ventilated dry type, factory
assembled, dead-front, metal enclosed, self-supporting floor standing
as noted in the construction documents.
2.2 Transformers shall be 480V-208Y/120V 3 amps 4W(primary-secondary)
voltage rated, unless noted otherwise.
2.3 Transformers shall be rated for 80DEG. C rise above an ambient
temperature of 40DEG C.
2.4 Coils shall be continuously wound non-hygroscopic type with
thermosetting varnish. Windings shall be aluminum or copper.
2.5 Taps shall be provided at primary windings with (6)2 1/2 % taps,
three above and three below.
2.6 Intergral vibration isolators shall be provided between the core and
coil assembly and the transformer enclosure in addition to the
vibration isolation located between the enclosure and the floor.
2.7 Grounding shall be provided by means of a flexible grounding strap.
2.8 Transformers shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Transformers shall have lifting lugs and be enclosed in a heavy
gauge, sheet steel housing with baked enamel finish. The enclosure
shall be ventilated.
2.10 Transformers located in exterior areas shall be NEMA 3R, with drip
shield and corrosion resistant finish.
2.11 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of transformers shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all transformers in accordance with the manufacturer's
recommendations and requirements.
Section 16460 Transformers
Master Specs 16460-2
SCHEDULE 2
-46-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.3 Coordinate transformer location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with transformer locations and notify the Engineer of any conflicts.
3.4 Coordinate transformer size with concrete housekeeping pads,
structural frames, and mounting hardware.
3.5 Brace transformers per California Code of Regulations, Title 24,
Seismic Zone 4 requirements.
3.6 Provide rubber vibration isolation between transformer and floor,
structure, or any fixed surface (including wireways).
3.7 Test all transformers for voltage level at primary and secondary
windings.
3.8 Install all transformers plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing transformer.
3.10 Install all conduit connections to transformer with liquid tight
flexible conduit.
3.11 Clean all transformer interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Tighten and test all connections prior to energizing the transformer.
END OF SECTION
Section 16460 Transformers
Master Specs 16460-3
SCHEDULE 2
-47-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16470 PANELBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the contract
for this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16470 Panelboards
Master Specs 16470-1
SCHEDULE 2
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Panelboards
.2 Overcurrent protection, bus capacity, main ratings, AIC rating
.3 Mounting, enclosure, dimensions
.4 Dimensions, voltage, ratings and phases
.5 Device settings, trip ratings, and layout
PART 2 PRODUCTS
2.1 Panelboards shall be factory assembled, dead-front, metal enclosed,
wall mounted type as noted in the construction documents.
2.2 Panelboards shall be rated 600VAC and shall not exceed 1200A current
capacity.
2.3 Panelboard finish shall be baked enamel factory paint of manufacturer's
standard color.
2.4 Provide front accessibility for wireways on each side of overcurrent
protective devices for entire height of panelboard.
2.5 All bussing shall be silver-plated copper with ratings as indicated in
the construction documents.
2.6 Panelboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Enclosures shall be galvanized sheet steel cabinet type with hinged
and lockable doors, dead front, and permanently adhered identification
labels on the front.
2.8 Switchboards shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Circuit breakers shall be molded case type; all circuit breakers shall
be bolt-on type.
2.10 Main lugs shall be anti-turn solderless pressure type for use with
copper conductors.
2.11 Instrumentation shall be provided where noted.
2.12 Enclosures, panel interiors, and devices shall be of one manufacture.
2.13 Provide a typewritten panel schedule located in a sleeve on the
interior of the panelboard door indicating loads and areas connected
to each circuit.
2.14 Provide a ground bus in each panelboard.
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square D,
Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of panelboards shall comply with the latest
enforced edition of the
Section 16470 Panelboards
Master Specs 16470-2
SCHEDULE 2
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
National Electrical Code and the authority having jurisdiction.
3.2 Install all panelboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate panelboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with panelboard locations and notify the Engineer of any conflicts.
3.4 Fasten panelboards securely to structural wall or surface to Seismic
Zone 4 requirements. Panelboards shall be mounted no higher than 6'0"
to the highest device from finished floor and no lower than 24" above
finished floor. Provide panel skirts where noted.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Complete the panel schedule card and place in the sleeve on the
interior of the panelboard door.
3.7 Test all panelboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all panelboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing panelboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all panelboard interiors and exteriors prior to handing over to
Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation.
END OF SECTION
Section 16470 Panelboards
Master Specs 16470-3
SCHEDULE 2
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
SCHEDULE 3
SUMMARY OF BUILDING WORKING DRAWINGS
BLDG. ONE - PROJECT NO. 4085.10
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
GRADING PERMIT (WO# 980807)
CIVIL
1D GENERAL NOTES, LEGEND, KEY MAP
2D GRADING/UTILITY PLAN
LANDSCAPE
3D IRRIGATION PLAN
4D PLANTING PLAN
5D ENTRY ROAD IRRIGATION PLAN
6D ENTRY ROAD PLANTING PLAN SEPARATE
7D IRRIGATION DETAILS SITE
8D IRRIGATION DETAILS PACKAGE
9D PLANTING DETAILS
10D LANDSCAPE SPECIFICATIONS
11D LANDSCAPE SPECIFICATIONS
12D LANDSCAPE SPECIFICATIONS
13D LANDSCAPE SPECIFICATIONS
14D LANDSCAPE SPECIFICATIONS
15D RIGHT OF WAY IRRIGATION PLAN
16D RIGHT OF WAY PLANTING PLAN
- -------------------------------------------------------
SHELL ONLY BUILDING PERMIT
(PLAN FILE #A108210-98)
TS-1 TITLE SHEET 12-18-98
TS-2 ACCESSIBILITY NOTES 12-18-98
ARCHITECTURAL-ALL "A" DRAWINGS DATED 12-18-98
A1.1 SITE PLAN
A1.2 SITE DETAILS
A2.1 FIRST FLOOR PLAN
A2.2 SECOND FLOOR PLAN
A2.3 THIRD FLOOR PLAN
A2.4 ROOF PLAN
A3.1 EXTERIOR ELEVATIONS
A3.2 EXTERIOR ELEVATIONS
A3.3 BUILDING SECTIONS
A3.4 BUILDING SECTIONS
A3.5 WALL SECTIONS
A3.6 WALL SECTIONS
A3.7 WALL SECTIONS
A4.1 STAIR PLANS AND SECTIONS
A4.2 ENLARGED PLANS, INTERIOR ELEVATIONS
A4.3 ENLARGED DECK PLAN, REFLECTED SOFFIT PLANS
A4.4 SCHEDULES
A5.1 DETAILS
A5.2 DETAILS
A5.3 DETAILS
A5.4 DETAILS
- -------------------------------------------------------
FOUNDATION/FRAMING PERMIT
(PLAN FILE #A107551-98)
STRUCTURAL--ALL "S" DRAWINGS DATED 11-10-98
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S1.2 TYPICAL DETAILS
S1.4 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 SECOND FLOOR FRAMING PLAN
S2.3 THIRD FLOOR FRAMING PLAN
S2.4 ROOF FRAMING PLAN
S3.1 FRAME ELEVATIONS AND STAIR DETAILS
S4.1 SECTIONS AND DETAILS
S4.2 SECTIONS AND DETAILS
S5.2 PANEL ELEVATIONS
S5.3 PANEL DETAILS
- -------------------------------------------------------
MECHANICAL--ALL "M" DRAWINGS DATED 12-18-98
M1 MECHANICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
M2 TITLE 24
M3 MECHANICAL FIRST FLOOR PLAN
M4 MECHANICAL SECOND FLOOR PLAN
M5 MECHANICAL THIRD FLOOR PLAN
M6 MECHANICAL ROOF PLAN
M7 MECHANICAL DETAILS
M8 MECHANICAL DETAILS
M9 MECHANICAL DETAILS
PLUMBING--ALL "P" DRAWINGS DATED 12-18-98
P1 PLUMBING SYMBOLS, ABBREVIATIONS, SCHEDULES
P2 PLUMBING SITE PLAN
P3 PLUMBING FIRST FLOOR PLAN
P4 PLUMBING SECOND FLOOR PLAN
P5 PLUMBING THIRD FLOOR PLAN
P6 PLUMBING ROOF PLAN
P7 PLUMBING DIAGRAMS
P8 PLUMBING DETAILS
ELECTRICAL--ALL "E" DRAWINGS DATED 12-18-98
E1 ELECTRICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
E2 SINGLE LINE DIAGRAM
E3 ELECTRICAL SITE PLAN
E4 ELECTRICAL FIRST FLOOR PLAN
E5 ELECTRICAL SECOND FLOOR PLAN
E6 ELECTRICAL THIRD FLOOR PLAN
E7 ELECTRICAL ROOF PLAN
E8 ELECTRICAL PANEL SCHEDULES
E9 ELECTRICAL PARTIAL PLAN AND DETAILS
E10 TITLE 24 AND ELECTRICAL DETAILS
- -------------------------------------------------------
SCHEDULE 3
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
BLDG. TWO - PROJECT NO. 4085.20
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
[ILLEGIBLE]
SCHEDULE 3
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT C
PEREGRINE SYSTEMS CORPORATE CENTER
NOTICE OF LEASE TERM DATES
To: ______________________
______________________
______________________
Re: Office Lease dated _________________, ______ between KR-CARMEL
PARTNERS, LLC, a Delaware limited liability company ("LANDLORD"), and
PEREGRINE SYSTEMS, INC., a Delaware corporation ("TENANT") concerning
that certain office building located at ______ Valley Center Drive,
San Diego, California 92130.
Ladies and Gentlemen:
In accordance with the referenced Office Lease (the "LEASE"), we wish to
advise you and/or confirm as follows:
1. The Substantial Completion of the Premises or Floor Group) has
occurred, and the Lease Term shall commence on or has commenced on
_________________ for a term of ______________________ ending on
__________________.
2. Rent commenced to accrue on ____________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to _________________ at
______________________________________________________.
5. The exact number of rentable and usable square feet within the
Premises (or Floor Group) are _________ and ___________ square feet,
respectively.
6. Base Rent, as adjusted based upon the exact number of rentable
square feet within the Premises (or Floor Group), is as follows:
___________________________________________________.
7. Tenant's Share, as adjusted based upon the exact number of rentable
square feet within the Building(s), is _________%.
EXHIBIT C
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The street address(es) of the Building is _________________ Valley
Center Drive, San Diego, California 92130.
"LANDLORD":
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: _________________________
Name: _______________________
Its: ___________________
By: _________________________
Name: _______________________
Its: ___________________
Agreed to and Accepted as
of _______________, _____.
"TENANT":
_________________________________,
a _______________________________
By: ____________________________
Its: _______________________
By: ____________________________
Its: _______________________
EXHIBIT C
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT D
PEREGRINE SYSTEMS CORPORATE CENTER
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors, windows or mailboxes of the Premises without
giving to Landlord prior written notice. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to install its own
security system within the Premises in accordance with the provisions of the
Lease.
2. All doors opening to public corridors (other than Building lobbies
(which shall be kept closed if required by law)) shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Any tenant, its employees, agents or any other persons entering or
leaving any Building at any time when it is considered to be after normal
business hours for such Building will be required to sign the Building
register. Access to the Building may be refused unless the person seeking
access has proper identification or has a previously arranged pass for access
to the Building. Landlord and its agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from any
Building of any person. In case of invasion, mob, riot, public excitement,
or other commotion, Landlord reserves the right to prevent access to the
Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.
Notwithstanding the foregoing, Tenant may adopt its own rules and regulations
with respect to access to any building for which Tenant leases the entire
building.
4. All moving activity into or out of the Building shall be done in
such manner as Landlord reasonably designates; Landlord shall at all times
reasonably cooperate with Tenant with respect to such activities. Service
deliveries (other than messenger services) shall be allowed only during hours
reasonably approved by Landlord. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building. Safes and other heavy objects shall stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property in
any case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be
the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be reasonably
designated by Landlord. Landlord shall at all times reasonably cooperate
with Tenant with respect to such activities.
6. Any requests of Tenant shall be directed to the management office
for the Project or at such office location designated by Landlord.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Landlord and its agents to prevent such
activities.
EXHIBIT D
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the tenant who, or whose employees or agents,
shall have caused it.
9. Tenant shall not overload the floor of the Premises, Tenant shall
not mark, drive nails or screws, or drill into the partitions, woodwork or
plaster or deface the Premises without Landlord's prior consent other than in
connection with any Alterations for which Landlord's consent is not required.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. Notwithstanding the foregoing, the
foregoing limitation shall not apply to Tenant's cafeteria, workout facility,
showers and lockers which are contemplated to be a part of Tenant's
improvements.
11. Tenant shall not use or keep in or on the Premises, the Building,
or the Project any kerosene, gasoline or other inflammable or combustible
fluid or material other than as expressly permitted in Section 5.2 of the
Lease.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by
Landlord other than supplemental heating and air conditioning approved by
Landlord, which approval shall not be unreasonably withheld.
13. Tenant shall not use, keep or permit to be used or kept, any foul
or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having
business therein.
14. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals or birds. Bicycles are permitted in
designated areas, and Tenant may install bike racks at appropriate locations
designated by Landlord in the Common Areas to accommodate bicycles.
15. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used
in the Premises for heating food and brewing coffee, tea, hot chocolate and
similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations. The foregoing rule and restriction shall
not apply to any cafeteria facility of Tenant.
16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. Boring or cutting for wires shall be
allowed only at locations reasonably designated by Landlord. The location of
telephone, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
17. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
18. Tenant, its employees, contractors and agents (i) shall not loiter
in the entrances or corridors, nor in any way obstruct the sidewalks, lobby,
halls, stairways or elevators, and shall use them only as a means of ingress
and egress for the Premises, and (ii) shall only be permitted to smoke in the
areas of the Project designated for smoking.
EXHIBIT D
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage
in the "Carmel Valley" area of San Diego, California without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse
disposal shall be made only through entry-ways and elevators provided for
such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises if visible from the
exterior of the Building without the prior written consent of Landlord. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent and/or of a quality, type, design and bulb
color approved by Landlord provided Tenant shall have the right to install
specialty lighting in the Premises not visible from the exterior of the
Building. Tenant shall abide by Landlord's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
25. Any access by Tenant or its agents, employees or contractors to the
roof of any Building shall be subject to coordination with Landlord and
Landlord's reasonable rules and regulations.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein; provided, however, Landlord shall not change
or make any Rules and Regulations which materially adversely affects Tenant's
rights under this Lease, including without limitation Tenant's use and
enjoyment of the Premises. Landlord shall cooperate with Tenant in connection
with changing or making any Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as
a condition of its occupancy of the Premises. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of
such Rules and Regulations in favor of any other tenant, nor prevent Landlord
from thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project.
EXHIBIT D
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT E
PEREGRINE SYSTEMS CORPORATE CENTER
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "LEASE")
made and entered into as of _____________, _____ by and between as Landlord,
and the undersigned as Tenant, for Premises on the ____ floor(s) of the
office building located at ______ Valley Center Drive, San Diego, California
92130, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained
in EXHIBIT A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on __________________, and the Lease Term
expires on __________________.
4. Base Rent became payable on ________________________.
5. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
6. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows: __________________________________________________
______________________________.
7. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of the holder of the first deed of trust on
the Premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$________.
9. All conditions of the Lease to be performed by Landlord necessary
to the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the Security Deposit held by Landlord is
$_________.
11. No rental has been paid more than thirty (30) days in advance and
no security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Landlord nor have any events occurred that
with the passage of time or the giving of notice, or both, would constitute a
default on the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making of such loan or
acquisition of such property.
14. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
EXHIBIT E
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
Executed at ____________________ on the ____ day of _____________, 19__.
"TENANT": ____________________________________,
a __________________________________
By: _______________________________
Name:__________________________
Title:_________________________
By: _______________________________
Name:__________________________
Title:_________________________
EXHIBIT E
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT F
PEREGRINE SYSTEMS CORPORATE CENTER
CC&R'S
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
KR-CARMEL PARTNERS, LLC
4365 Executive Drive, Suite 850
San Diego, California 92121
Attention: Mr. Steven L. Black
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Space Above For Recorder's Use)
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
EXHIBIT F
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS...........................................................3
ARTICLE 2 MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION...........................6
2.1 Membership.....................................................6
2.2 Voting Rights..................................................6
ARTICLE 3 COVENANT FOR PAYMENT OF ASSESSMENTS TO
ASSOCIATION...........................................................7
3.1 Creation of Lien and Personal Obligation for Assessments.......7
3.2 Purpose of Assessments.........................................7
3.3 Budgets........................................................7
3.4 Parcel Area....................................................8
3.5 Parcels Subject to Assessment; Allocation of Assessments ......8
3.6 Regular Assessments............................................8
3.7 Special Assessments............................................9
3.8 Reimbursement Assessments.....................................10
3.9 Effect of Non-Payment of Assessments; Remedies of
Association...................................................10
3.10 Right of Owner to Audit Books and Records of Association......11
3.11 Subordination of the Lien to First Mortgages..................11
3.12 Estoppel Certificate..........................................11
3.13 Personal Liability of Owner...................................11
ARTICLE 4 ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE ......................11
4.1 Committee Composition.........................................12
4.2 Alternate Members.............................................12
4.3 Appointment...................................................12
4.4 Removal.......................................................12
4.5 Terms of Office...............................................12
4.6 Resignations; Vacancies.......................................12
4.7 Duties and Appeals............................................12
4.8 Meetings......................................................12
4.9 Design Guidelines.............................................12
ARTICLE 5 LAND USE.............................................................13
5.1 Permitted Uses................................................13
5.2 Use Restrictions .............................................13
5.3 Prohibited Operations and Uses ...............................14
-i-
EXHIBIT F
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
5.4 Other Operations and Uses.....................................15
5.5 Laws..........................................................15
ARTICLE 6 REGULATION OF IMPROVEMENTS...........................................16
6.1 Approval of Application Required..............................16
6.2 Filing Fee....................................................16
6.3 Basis for Approval............................................17
6.4 Result of Inaction............................................17
6.5 Proceeding With Work..........................................18
6.6 Completion of Work............................................18
6.7 Estoppel Certificate..........................................18
6.8 Indemnity and Limitation of Liability.........................19
6.9 Limitations on Improvements...................................19
6.10 Certain Improvements Exempt from Application..................21
6.11 Disclosure and Waiver of Conflict of Interest.................21
ARTICLE 7 OPERATIONS GENERALLY.................................................22
7.1 Slope and Drainage Easements..................................22
7.2 Shared Parking; Common Parking Areas..........................22
7.3 Storage and Loading Areas.....................................23
7.4 Inspection....................................................23
7.5 Division of Land..............................................23
7.6 Hazardous Materials...........................................23
7.7 Payment of Taxes, Liens.......................................24
ARTICLE 8 COMMON AREA..........................................................25
8.1 Use...........................................................25
8.2 Modification of Common Area...................................26
8.3 Parking Regulations...........................................26
8.4 Construction and Repair.......................................26
8.5 Interim Improvements and Maintenance of Parcels...............27
8.6 Lighting the Common Area......................................28
ARTICLE 9 EMINENT DOMAIN.......................................................28
ARTICLE 10 MUTUAL RELEASE.......................................................29
ARTICLE 11 EASEMENTS............................................................29
11.1 Grants of Reciprocal Easements over Common Areas..............29
11.2 Utility Easements.............................................30
11.3 Construction and Repair.......................................31
11.4 Obstructions Within Common Area...............................31
11.5 Right of Entry by Declarant, Association, Board...............31
-ii-
EXHIBIT F
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
11.6 Entry by Owners...............................................32
11.7 Reservation by Declarant......................................32
11.8 Termination of Former Declaration and Confirmation of
Termination of 1990 Grant of Easements........................32
ARTICLE 12 BUILDING MAINTENANCE.................................................33
12.1 Owner's Maintenance Obligations...............................33
12.2 Closure.......................................................33
12.3 Repair or Replacement of Damaged Building.....................34
ARTICLE 13 COMMON AREA MAINTENANCE..............................................34
13.1 Association Maintenance.......................................34
13.2 Common Area Insurance.........................................35
13.3 Association's Right to Repair Neglected Parcels...............36
13.4 Property Management Company...................................36
ARTICLE 14 THE ASSOCIATION......................................................36
14.1 Organization..................................................36
14.2 Duties........................................................36
14.3 Powers........................................................37
14.4 Election of New Board of Directors............................38
14.5 Subsequent Board of Directors.................................38
14.6 Personal Liability............................................38
14.7 Annual Membership Meetings....................................38
ARTICLE 15 APPROVAL OF OWNERS AND NOTICES.......................................38
ARTICLE 16 MODIFICATION PROVISION...............................................40
ARTICLE 17 NOT A PUBLIC DEDICATION..............................................40
ARTICLE 18 INJUNCTIVE RELIEF....................................................40
ARTICLE 19 BREACH SHALL NOT PERMIT TERMINATION..................................40
ARTICLE 20 INDEMNITY BY OWNERS..................................................41
20.1 Indemnity.....................................................41
20.2 Building Area Liability Insurance.............................41
ARTICLE 21 SEVERABILITY.........................................................41
ARTICLE 22 ENFORCEMENT AND REMEDIES.............................................41
22.1 Right to Enforce..............................................41
-iii-
EXHIBIT F
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
22.2 Owner's Remedies..............................................42
22.3 Waiver........................................................42
ARTICLE 23 LITIGATION EXPENSES..................................................42
ARTICLE 24 NO ASSIGNMENT OR TRANSFER............................................42
ARTICLE 25 SALE BY OWNER........................................................42
25.1 Notice........................................................42
25.2 Constructive Notice and Acceptance............................43
25.3 Release of Owner..............................................43
25.4 Liability of Transferee.......................................43
ARTICLE 26 TERM OF DECLARATION..................................................43
ARTICLE 27 MISCELLANEOUS........................................................43
27.1 Captions......................................................43
27.2 Gender........................................................44
27.3 Declarant's Reserved Rights...................................44
27.4 Exhibits......................................................44
27.5 Governing Law.................................................44
27.6 Mortgage Protection...........................................44
27.7 Mutuality, Reciprocity; Runs With Land........................44
</TABLE>
EXHIBITS
Exhibit "A" Site Plan of the Center
Exhibit "B" Legal Descriptions of Parcels Comprising the Center
Exhibit "C" Table of Parcel Areas
-iv-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
This AGREEMENT BETWEEN LANDOWNERS INCLUDING COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANTS OF EASEMENTS FOR CARMEL CENTER AND INCLUDING
TERMINATION OF BOTH FORMER DECLARATION AND PRIOR GRANTS OF EASEMENTS is made as
of _________, 1999, with reference to the following:
RECITALS:
A. Declarant (defined in Article 1) owns those certain Parcels (defined in
Article 1) of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels B and E
through K, inclusive (and sometimes referred to herein as the "Carmel Center
Office Campus"). The legal descriptions of such Parcels are also set forth on
EXHIBIT "B".
B. Piazza Partners, L.P., a California limited partnership, owns that
certain Parcel of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcel A. The
legal description of such Parcel is also set forth on EXHIBIT "B".
C. Carmel Valley, LLC, a California limited liability company, owns those
certain Parcels of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels D and M.
The legal descriptions of such Parcels are also set forth on EXHIBIT "B".
D. Acacia Gasoline and Car Wash of Carmel Valley, LLC, a California limited
liability company, owns that certain Parcel of real property located in the City
of San Diego, County of San Diego, California, identified on EXHIBIT "B"
attached hereto as Parcel L. The legal description of such Parcel is also set
forth on EXHIBIT "B".
E. RFS Financing Partnership, L.P., a Tennessee limited partnership, owns
that certain Parcel of real property located in the City of San Diego, County of
San Diego, California, identified on EXHIBIT "B" attached hereto as Parcel C.
The legal description of such Parcel is also set forth on EXHIBIT "B". A hotel
is currently open for business on Parcel C.
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
F. Previous owners of the properties comprising the Center (defined in
Article 1) intended to develop a retail shopping center and an adjacent
commercial complex, and in furtherance of that objective recorded that certain
Agreement Between Landowners Including Easements With Covenants and Restrictions
Affecting Land for Carmel Valley Commercial, recorded in the Office of the
County Recorder of San Diego County, California, on September 29, 1994, as
Document No. 19940579026 ("FORMER DECLARATION"). Except for the hotel on Parcel
C, in most respects the properties comprising the Center have not been
developed as contemplated under the Former Declaration. The Former Declaration
is not consistent with the manner in which the current Owners intend to develop
the property comprising the undeveloped portions of the Center. Therefore, the
Owners intend to terminate the Former Declaration and to replace the Former
Declaration in its entirety with this Declaration.
G. The Owners intend to develop and operate the Center as a commercial
common interest development described in Section 1351(k) of the California
CIVIL CODE as a "Planned Development". The Center will include certain Common
Area which is shown on the Site Plan attached hereto as Exhibit "A". Portions
of the Common Area are or may be designated as Exclusive Use Areas for the
exclusive use of one or more Occupants. "Common Area" and "Exclusive Use
Area" are defined in Article 1.
H. The Association was formed by certain previous owners of portions of the
property comprising the Center. Substantially concurrently with the recordation
of this Declaration, the membership of the Association will be changed so that
the current Owners of the Parcels become the current members of the Association.
Among other things, the Association will maintain, repair and replace the
portions of the Parcels designated as Common Area, except any Exclusive Use
Areas, and except as otherwise provided in this Declaration. Each Owner or
Occupant will maintain, repair and replace the building(s) and any Exclusive Use
Area(s) on the Owner's or Occupant's Parcel(s).
I. The Owners wish to subject the Center, in accordance with a common plan,
to certain covenants, conditions and restrictions for the benefit of the Owners
and any and all future owners of the Center or of a Parcel in the Center. The
purposes of this Declaration are to ensure proper development and use of the
Center, to protect the Owner of each Parcel against any improper development or
use of surrounding Parcels which might depreciate the value of the Parcel, to
prevent the erection on the Center of structures built of improper design or
materials, to encourage the erection of attractive Improvements, to prevent
haphazard and inharmonious Improvements, to secure and maintain proper setbacks
from streets and adequate free spaces between structures, to provide for
reciprocal parking and reciprocal pedestrian and vehicular access, ingress and
egress upon certain portions of the Center for the benefit of certain of the
Parcels, to enhance and protect the value, desirability and attractiveness of
the entire Center, and in general to provide adequately for a high type and
quality of improvement of the Center in accordance with a uniform plan of
development.
J. The Center is presently comprised of thirteen (13) legal parcels as of
the date of this Declaration, which in this Declaration will be designated and
referred to as Parcel A through Parcel M, inclusive. The Owners intend that the
provisions of this Declaration be restrictive
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EXHIBIT F
-7-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
covenants made pursuant to Section 1468 of the California CIVIL CODE, and that
this Declaration will bind and inure to the benefit of the Parcels and the
respective Owners of the Parcels during their respective periods of ownership.
Declarant is processing with the City a new Parcel Map (the "New Parcel Map")
which, upon recordation, shall effect a reparcelization and lot line adjustment
of that portion of the Center owned by Declarant and presently described as Lots
1 through 6 and 9 of Piazza Carmel II, Unit No. 1, of Map No. 13138 into seven
(7) newly configured parcels which will be more particularly described as
Parcels 1 through 7 of the New Parcel Map. Exhibit "B" attached hereto sets
forth the tentative description of these Parcels contained within the New Parcel
Map, and upon recordation of the New Parcel Map, the legal description of the
Parcels contained therein shall supersede those descriptions of their
predecessor Parcels.
NOW, THEREFORE, the Owners hereby certify, declare and establish the
following general plan for the protection and benefit of the Center, and hereby
fix the following protective covenants, conditions and restrictions upon each
and every ownership interest in the Center. Each ownership interest in the
Center shall be hereafter held, used, occupied, leased, sold, encumbered,
conveyed and transferred under and pursuant to such covenants, conditions and
restrictions. Each and all of the covenants, conditions and restrictions set
forth herein are for the purpose of protecting the value and desirability of the
Center and shall bind and inure to the benefit of the Parcels and the respective
Owners of the Parcels during their respective periods of ownership.
ARTICLE 1
DEFINITIONS
In addition to any other terms defined in this Declaration, the following
definitions shall apply unless otherwise indicated:
"APPLICATION" - Any plans, specifications and other documentation required
to be submitted to the Committee pursuant to the provisions of Article 6.
"APPROVED DECLARANT IMPROVEMENTS" - Those Improvements more particularly
described and defined in Section 4.9.
"ARCHITECT" - A Person holding a certificate to practice architecture in
the State of California under authority of Division 3, Chapter 3 of the
BUSINESS & PROFESSIONS CODE of the State of California or any successor
legislation thereto.
"ARTICLES" - The Articles of Incorporation of the Association filed with
the California Secretary of State on September 20, 1994, amended in their
entirety by those Restated Articles of Incorporation of Carmel Center
Association filed with the Secretary of State on ___________, 1999, and as
may be further amended from time to time.
"ASSOCIATION" - Carmel Center Association, a California Nonprofit Mutual
Benefit Corporation.
"BOARD" - The Board of Directors of the Association.
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EXHIBIT F
-8-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
"BYLAWS" - The Restated Bylaws of the Association dated _____, 1999, as
may be further amended from time to time.
"CARMEL CENTER OFFICE CAMPUS" - Parcels B and E through K, inclusive, which
Declarant intends to improve with multi-story buildings primarily for office use
and the Parking Structure.
"CENTER" - All of the Parcels of real property shown on the Site Plan and
described on EXHIBIT "B".
"CITY" - The City of San Diego, California, a municipal corporation.
"COMMITTEE" - The Architectural and Development Review Committee created
pursuant to Article 4.
"COMMON AREA" - Those portions of the Center shown on Exhibit "A" attached
hereto intended for the common use of Owners and Occupants, and comprised of
parking areas, vehicular and pedestrian access areas and driveways, sidewalks,
Common Landscaping, curbs, loading areas and lighting facilities; EXCEPTING
THEREFROM, HOWEVER, portions of the Common Area which are, or from time to
time may be, designated for the exclusive use of one or more Occupants, and as
such are "Exclusive Use Areas" as defined in this Article 1. The Common Area and
Exclusive Use Areas may be modified from time to time to change the location or
configuration thereof or to reflect the requirements of the City or other
governmental authorities by recordation of a supplement to this Declaration by
Declarant or the Association.
"COMMON EXPENSES" - The actual and estimated expenses of maintaining and
operating the Association, including property management fees, maintaining and
operating the Common Areas and the Improvements located thereon (excluding
Exclusive Use Areas), the cost of utility services for the Common Areas
(excluding Exclusive Use Areas), the cost of insurance maintained by the Board
as described herein or in the Bylaws, exercising the powers and performing the
duties of the Association and the Board under this Declaration, the Articles,
the Bylaws and any rules or regulations adopted by the Association, and
maintaining any reasonable reserves for such purposes as determined by the
Board.
"COMMON LANDSCAPING" - The landscaping and related irrigation system
improvements to be maintained by the Association, the approximate location of
which is shown on Exhibit "A" attached hereto.
"DECLARANT" - KR-CARMEL PARTNERS, LLC, a Delaware limited liability company
("KRCP") and its successor-in-interest (defined below). As used in this
definition, a "SUCCESSOR-IN-INTEREST" of KRCP shall mean a Person which, through
a purchase or acquisition of stock or partnership interest(s), amalgamation,
consolidation, reorganization, dissolution, merger or similar transaction (as
opposed to a purchase, transfer or conveyance of one or more Parcels), becomes
vested with the rights and assumes the obligations of KRCP, as "Declarant",
pursuant to this Declaration. "DECLARANT" shall also mean the transferee from
KRCP or its successor-in-interest of three (3) or more Parcels comprising the
Center, provided KRCP or its
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EXHIBIT F
-9-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
successor-in-interest assigns to such transferee the rights of "Declarant", and
such transferee assumes the obligations of "Declarant", under this Declaration;
any such assignment and assumption of the rights and obligations of "Declarant"
shall be in writing and signed by both KRCP or its successor-in-interest and by
the transferee in recordable form and shall be recorded by the transferee in the
Office of the County Recorder of San Diego County, California.
"DECLARATION" - This Agreement Between Landowners Including Covenants,
Conditions and Restrictions and Grants of Easements for Carmel Center and
Including Termination of Both Former Declaration and Prior Grants of Easements,
as it may be amended from time to time.
"DESIGN GUIDELINES" - Guidelines, rules and regulations which may be
prepared and issued from time to time (and which may be amended from time to
time) by the Committee, and approved and adopted by the Board for the purpose of
assisting Owners in preparing plans and specifications for Improvements and in
preparing other plans, specifications and other materials (including designs for
signs and the like) which are subject to review by the Committee pursuant to
this Declaration.
"ELIGIBLE OCCUPANT" - An Occupant of an Owner's entire Parcel (or of all of
the usable area within the building(s) on the Parcel): (a) pursuant to a lease
or sublease which, as of the date of the Owner's designation of the Occupant as
an Eligible Occupant, has a remaining term which exceeds five (5) years, not
including periods for which the term thereof may be extended by unexercised
options to extend; and (b) designated as such by the Owner of the Parcel
pursuant to Section 2.1.
"EXCLUSIVE USE AREAS" - Those portions of the Common Area within a Parcel
for the exclusive use of one or more Occupants and either (i) designated as
Exclusive Use Areas on the Site Plan, or (ii) subject to the provisions of
Section 8.2, subsequently designated as Exclusive Use Areas from time to time by
the Board or the Committee in writing.
"IMPROVEMENTS" - Buildings, outbuildings, underground installations, slope
and grade alterations, roads, curbs, gutters, storm drains, utilities,
driveways, parking areas, fences, screening walls and barriers, retaining walls,
stairs, decks, windbreaks, plantings, planted trees and shrubs, sidewalks,
poles, signs, loading areas, docks and all other structures, land development or
landscaping improvements of every type and kind.
"MEMBER" - An Owner entitled to membership in the Association as provided
in this Declaration.
"MORTGAGE" - A deed of trust as well as a mortgage encumbering a Parcel.
"MORTGAGEE" - The beneficiary of a deed of trust as well as the mortgagee
of a mortgage encumbering a Parcel.
"OCCUPANT" - Any Person from time to time entitled by right of ownership or
under any lease, sublease or license to use and occupy any portion of the
building Improvements on any Parcel within the Center.
-5-
EXHIBIT F
-10-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
"OWNER" - Any Person (including Declarant) who from time to time holds fee
title to any Parcel within the Center.
"PARCEL" - Any separate legal lot or parcel which is a portion of the
Center. Any lot or parcel of real property created after this Declaration is
recorded, whether created by a legal split, subdivision or parcelization of a
Parcel, lot line adjustment, or by combination or merger of one or more Parcels,
shall be included in the definition of Parcel for purposes of this Declaration.
"PARCEL AREA" - The total gross square footage of a Parcel as shown on
EXHIBIT "C".
"PARKING STRUCTURE" - The multi-level parking garage to be constructed by
Declarant, at Declarant's cost and expense, on Parcels E, F and G (Parcels 1, 6,
and 7 of the New Parcel Map). The Parking Structure and the parking spaces
within the Parking Structure are not Common Area and are for the exclusive use
and benefit of the Owners and Occupants of the Carmel Center Office Campus and
their customers, guests and invitees.
"PERSON" - An individual, partnership, association, corporation, limited
liability company, trust, governmental agency, administrative tribunal or any
other form of business or legal entity.
"PROJECT DOCUMENTS" - This Declaration, the exhibits attached hereto, the
Articles and Bylaws, the Sign Plan, and any Design Guidelines and rules and
regulations as may be adopted from time to time by the Board or the Association,
all as amended or supplemented from time to time.
"SIGN PLAN" - The Carmel Center Sign Guidelines and Criteria, dated
February 24, 1999, on file with the Association, as may be amended and
supplemented from time to time.
"SITE PLAN" - The Site Plan attached to this Declaration as EXHIBIT "A".
ARTICLE 2
MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION
2.1 MEMBERSHIP. Every Owner of a Parcel which is subject to assessment by
the Association shall be a Member of the Association. Membership shall be
appurtenant to ownership of any Parcel subject to assessment, and membership
shall not be separated from such ownership or transferred, pledged or alienated
in any way, except that an Owner, upon giving written notice to the Association,
may, at its option, grant to an Eligible Occupant a power coupled with an
interest to act as the Owner's agent in all matters relating to the Association;
any such power shall automatically terminate upon expiration of the Eligible
Occupant's lease or the earlier termination of the Eligible Occupant's tenancy
for any reason. Any attempt to transfer a membership in violation of this
Section shall be void and shall not be reflected in the books and records of the
Association.
2.2 VOTING RIGHTS. The Association shall have one (1) class of voting
membership.
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EXHIBIT F
-11-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
Each Owner shall be entitled to one (1) vote for each four hundred (400)
square feet of Parcel Area owned which is subject to assessment, rounded down to
the next lowest whole four hundred (400) square feet of Parcel Area subject to
assessment; PROVIDED, HOWEVER, any Owner of a Parcel comprised of less than four
hundred (400) square feet of Parcel Area subject to assessment shall be entitled
to one (1) vote for such Parcel. (For example and illustration only, the Owner
of a Parcel comprised of 16,000 square feet of Parcel Area subject to assessment
would be entitled to 40 votes, and the Owner of a Parcel comprised of 15,950
square feet of Parcel Area subject to assessment would be entitled to 39 votes.)
When more than one (1) Person holds an ownership interest in any Parcel subject
to assessment, all such Persons shall be Members, the vote(s) for such Parcel
shall be exercised as they among themselves determine, and the authorized voter
shall be designated in a writing delivered to the Association signed by a
majority of the co-Owners.
ARTICLE 3
COVENANT FOR PAYMENT OF ASSESSMENTS TO ASSOCIATION
3.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Each Owner,
for each Parcel owned which is subject to assessment hereunder, hereby covenants
and agrees to pay to the Association: (a) annual Regular Assessments described
in Section 3.6 for the periodic maintenance, repair and replacement of the
Common Area (except any Exclusive Use Areas); (b) Special Assessments described
in Section 3.7; (c) Reimbursement Assessments described in Section 3.8; and (d)
such other assessments which the Board is authorized to levy pursuant to this
Declaration or the Bylaws, such assessments to be established and collected as
provided in this Declaration. Assessments, together with interest pursuant to
Section 3.9, reasonable collection costs and attorney's fees, shall (except as
otherwise provided in Section 3.8) be a charge on the Parcel and shall be a
continuing lien upon the Parcel against which each such assessment is made, the
lien to be effective upon recordation of a notice of delinquent assessment. Each
such assessment, together with interest pursuant to Section 3.9, reasonable
collection costs and attorney's fees, shall also be the personal obligation of
the Person who was the Owner of such Parcel at the time the assessment fell due.
If more than one Person is the Owner of a Parcel subject to assessment, the
personal obligation to pay such assessment shall be joint and several. The
personal obligation for delinquent assessments shall not pass to an Owner's
successors in title, however, unless expressly assumed by them, but any lien
established hereunder shall remain a charge against the Parcel except to
bonafide purchasers or encumbrancers for value without notice and further except
as set forth in Section 3.11.
3.2 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall
be used exclusively to pay the Common Expenses (as defined in Article 1),
reimburse the Association for the costs incurred in bringing an Owner into
compliance with the Project Documents and only such other purposes expressly set
forth in this Declaration.
3.3 BUDGETS. At least thirty (30) days prior to the date for commencement
of Regular Assessments pursuant to Section 3.6, and at least thirty (30) days
prior to each calendar year thereafter, the Board shall prepare or cause to be
prepared and distribute to all Members of the
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EXHIBIT F
-12-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
Association a pro forma operating budget ("Budget") for such first or successive
calendar year setting forth the estimated revenue and expenses on an accrual
basis. The Budget shall include a reasonable allowance for contingencies,
replacements and reserves. The Association shall deliver, together with the
Budget: (a) notice of the Members' right to obtain copies of minutes of Board
meetings, to the extent required under California Civil Code Section 1363; and
(b) the summary of the provisions of California Civil Code Section 1354, as
required by such Section.
3.4 PARCEL AREA. The Parcel Area of each Parcel subject to assessment as of
the date of recordation of this Declaration is indicated on EXHIBIT C. The
Parcel Area of one or more Parcels shall be redetermined and shall be subject to
the approval of Declarant and the Board in the event of: (a) resubdivision of
any Parcel or a merger affecting two or more Parcels, in which event the Parcel
Area shall be redetermined for each resulting Parcel; (b) a lot line or boundary
adjustment affecting two or more Parcels; or (c) any other change in the gross
square footage of any Parcel. The Board shall maintain a current schedule of the
Parcel Area of the Parcels, which shall be available for inspection by any Owner
upon request. From time to time, as deemed appropriate by the Board, Declarant
or the Board shall have the right to execute and record a supplement to this
Declaration, which includes the modified Parcel Areas in an updated EXHIBIT C.
Such supplement need only be executed by the Board and the EXHIBIT C
incorporated in such supplement shall replace the EXHIBIT C hereto or in any
previously recorded supplement.
3.5 PARCELS SUBJECT TO ASSESSMENT; ALLOCATION OF ASSESSMENTS. Except as
provided below, all Parcels within the Center are subject to Regular Assessments
and to Special Assessments. All assessments (except for Reimbursement
Assessments described in Section 3.8) shall be allocated among the Owners in the
proportion the Parcel Area of each Owner's Parcel or Parcels subject to
assessment bears to the total Parcel Area of all Parcels then subject to
assessment under this Declaration. The Parking Structure Parcels shall not be
subject to any assessments levied by the Association or otherwise under this
Declaration. Parcels L and M shall not be assessed for any expenses of
maintenance and repair of the Common Parking Area.
3.6 REGULAR ASSESSMENTS.
(a) PURPOSE. Regular Assessments shall be used to defray the
Common Expenses.
(b) DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES. The
Regular Assessments shall commence for Parcel C upon recordation of this
Declaration. The Regular Assessments shall commence for each Parcel other than
Parcel C on the date on which construction of any building Improvements on the
Parcel have been substantially completed, and the Regular Assessments for all
Parcels then subject to assessment shall be recalculated, on a going forward
basis, as Parcels are added to the assessment roll. The first Regular Assessment
for a Parcel shall be adjusted according to the number of months and any
partial month (prorated on the basis of a 30-day month) remaining in the
calendar year. The Board shall fix the amount of the Regular Assessment against
each Parcel at least thirty (30) days in advance of each Regular Assessment
period. Written notice of the Regular Assessment shall be sent to every Owner of
a Parcel subject thereto.
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EXHIBIT F
-13-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
(c) REVISED REGULAR ASSESSMENT. If the Board reasonably
determines that the Regular Assessment established for any year is, or will
become, insufficient to meet all Common Expenses, it may determine the
approximate amount of such deficiency and revise the amount of the Regular
Assessments for each Owner for the balance of such year to reduce or avoid the
deficiency. After the end of each calendar year, the Board shall cause an
accounting to be made of all Common Expenses for such year and the amount of
Regular Assessments paid for such year. If the Regular Assessments collected
exceed the Common Expenses, the Board may refund the excess to Owners, or apply
such excess toward Regular Assessments next becoming due from Owners, in either
event in the same proportion as the Regular Assessments were paid.
(d) PAYMENT OF ASSESSMENTS. Regular Assessments shall be due and
payable by the Owners to the Association in advance in four (4) equal quarterly
installments, on or before the first (1st) day of January, April, July and
October of each calendar year, or in such other manner as the Board shall
designate.
3.7 SPECIAL ASSESSMENTS.
(a) PURPOSE. Special Assessments may be levied by the Board:
(i) If the Board determines that the Regular Assessments
are or will be insufficient to defray actual Common Expenses of the
Association for a given year due to unanticipated delinquencies or cost
increases or unexpected repairs, replacements or reconstruction of any
Improvements in those Common Areas maintained by the Association;
(ii) If funds are otherwise required for any authorized
activity of the Association; or
(iii) For the purpose of defraying, in whole or in part, the
cost of construction of any capital improvements within the Common Area
(excluding Exclusive Use Areas) deemed reasonably necessary by the Board
for the benefit of the Center, provided that any such capital improvement
assessment in excess of five percent (5%) of all Regular Assessments
budgeted for that calendar year shall require approval by the vote or
written consent of Members holding a majority of the voting power of the
Association Members, and the Declarant for so long as Declarant owns any
portion of the Center.
(b) ESTABLISHMENT. The Board shall determine the approximate
amount necessary to defray the expenses set forth in Section 3.7(a), and, if the
amount is approved by the Board, it shall become a Special Assessment; provided,
however, that the Board may, in its discretion, prorate such Special Assessment
over the remaining months of the calendar year or levy the full assessment
immediately against each Parcel subject to assessment. Any Special Assessment in
excess of ten percent (10%) of the budgeted Common Expenses of the Association
for the calendar year in which a Special Assessment is levied shall require
approval by Members holding a majority of the voting power of the Association
Members, and the Declarant for so long as Declarant owns any portion of the
Center.
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
(c) PAYMENT OF ASSESSMENTS. Special Assessments shall be due and
payable within thirty (30) days after a Member receives written notice from the
Board specifying the amount of the Special Assessment, unless the Board
specifies in such notice a later date for payment.
3.8 REIMBURSEMENT ASSESSMENTS. The Association may also impose a
Reimbursement Assessment against any Owner to reimburse the Association for
costs incurred in bringing the Owner and the Owner's Parcel into compliance with
the provisions of this Declaration, the Articles, the Bylaws and the rules and
regulations of the Association, which assessment may be imposed upon the vote of
the Board after notice and an opportunity for a hearing which satisfy the
requirements of Section 7341 of the California CORPORATIONS CODE, as set forth
in the Bylaws; PROVIDED, HOWEVER, except to the extent such Reimbursement
Assessment is to reimburse the Association for the cost of (i) repairing damage
to Common Areas for which the Owner or its Occupants, guests or invitees are
responsible, or (ii) collecting assessments, any Reimbursement Assessment shall
not constitute a lien on the Owner's Parcel.
3.9 EFFECT OF NON-PAYMENT OF ASSESSMENTS; REMEDIES OF ASSOCIATION. Any
assessment made in accordance with this Declaration shall be a debt of the Owner
of a Parcel from the time the assessment is due. Any assessment not paid within
thirty (30) days after the due date shall bear interest from thirty (30) days
following the due date at the rate of the greater of (a) twelve percent (12%)
per annum, or (b) two percent (2%) per annum over the Prime Rate published in
the California Edition of the Wall Street Journal most recently before the due
date. The Association may bring an action at law against the Owner personally
obligated to pay the assessment, and in addition thereto, or in lieu thereof,
may foreclose the lien against the Parcel. Any assessment not paid within
fifteen (15) days after the due date shall be delinquent. Except as otherwise
provided in Section 3.8, the amount of any such delinquent assessment plus costs
of collection, late charges, penalties, interest and attorneys' fees, shall be
and become a lien upon the Parcel when the Association causes to be recorded in
the Office of the County Recorder of San Diego County, California, a Notice of
Delinquent Assessment, which shall state the amount of such delinquent
assessment and such other charges thereon as may be authorized by this
Declaration, a description of the Parcel against which the same has been
assessed, the name of the record owner of the Parcel and, in order for the lien
to be foreclosed by non-judicial foreclosure, the name and address of the
trustee authorized by the Association to enforce the lien by sale. The Notice of
Delinquent Assessment shall be signed by the person designated by the
Association for that purpose or, if no one is designated, by the President of
the Association. Upon payment of the delinquent assessment and charges in
connection with which the Notice of Delinquent Assessment has been recorded, or
other satisfaction thereof, the Association shall cause to be recorded a further
notice stating the satisfaction and the release of the lien thereof. Such lien
may be enforced by sale by the Association after failure of the Owner to pay
such assessment in accordance with its terms, such sale to be conducted in
accordance with the provisions of Section 2924, Section 2924b and Section 2924c
of the California CIVIL CODE applicable to the exercise of powers of sale in
mortgages or in any other manner permitted by law. The Association shall have
the power to purchase the Parcel at the foreclosure sale and to hold, lease,
mortgage and convey the same. Suit to recover a money judgment for unpaid
assessments, interest and attorney's fees may be commenced and maintained
without foreclosing or waiving the lien
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securing the same. Any sale or transfer of any Parcel pursuant to this Section
3.9 shall not disturb the possession, or otherwise diminish the rights or
enlarge the obligations, of any Occupant under any then-existing lease.
3.10 RIGHT OF OWNER TO AUDIT BOOKS AND RECORDS OF ASSOCIATION. Each year,
each Owner shall have the right, exercisable by delivering ten (10) days advance
written notice to the Chief Financial Officer of the Association, to have
conducted, at such Owner's cost and expense, one (1) audit of the books and
records of the Association. Any such audit may encompass any or all of the three
(3) previous years of the operation of the Association; provided, however, any
Owner shall be entitled to audit any given year only once. If any such audit
discloses any error in the determination of the proportionate share of Regular
Assessments of any Owner or in the composition of any cost comprising the
Regular Assessments: (a) an appropriate adjustment shall be made promptly
between the Owner(s) and the Association to correct the error; and (b) if the
error is greater than ten percent (10%) of the auditing Owner's actual
proportionate share of the Regular Assessments, then the Association shall
reimburse the auditing Owner for the reasonable auditor's fees and costs
incurred by the auditing Owner in having the audit performed.
3.11 SUBORDINATION OF THE LIEN TO FIRST MORTGAGES. The lien of any
assessment levied upon a Parcel pursuant to this Declaration shall be
subordinate to the lien of any first Mortgage upon such Parcel, and the sale or
transfer of such Parcel pursuant to judicial or nonjudicial foreclosure of a
first Mortgage shall extinguish the lien of such assessments as to payments
which became due prior to such sale or transfer. No sale or transfer shall
relieve such Parcel from lien rights for any assessments thereafter becoming
due. Where the Mortgagee of a first Mortgage or other purchaser of a Parcel
obtains title to the same as a result of foreclosure, such acquirer of title,
its successors and assigns, shall not be liable for the share of assessments
chargeable to such Parcel which became due prior to the acquisition of title to
such Parcel by such acquirer.
3.12 ESTOPPEL CERTIFICATE. The Association shall furnish or cause an
appropriate officer to furnish, within ten (10) days of a written demand by any
person, a certificate signed by an officer of the Association setting forth
whether the assessments on a specified Parcel have been paid. A properly signed
certificate of the Association with respect to the status of assessments on a
Parcel is binding upon the Association as of the date of its issuance.
3.13 PERSONAL LIABILITY OF OWNER. No Owner may exempt itself from personal
liability for assessments, nor any part thereof, levied by the Association, nor
release the Parcel it owns from the liens and charges of assessments pursuant to
this Declaration, by waiving the use and enjoyment of the Common Area and
facilities thereof, or by abandonment of its Parcel(s).
ARTICLE 4
ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE
Declarant hereby creates an architectural and development review Committee,
which shall be organized as follows:
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4.1 COMMITTEE COMPOSITION. The Committee shall consist of three (3)
individuals, at least one (1) of which shall not be an employee, contractor or
other affiliate of Declarant.
4.2 ALTERNATE MEMBERS. There shall also be two (2) alternate members,
either of whom may be designated by the Committee to act as a substitute for any
member of the Committee in the event of the member's unavailability or
disability.
4.3 APPOINTMENT. The Board shall have the right to appoint all members and
alternate members of the Committee.
4.4 REMOVAL. The right to remove any member or alternate member of the
Committee shall be and is hereby vested solely in the Board.
4.5 TERMS OF OFFICE. The term of all Committee members appointed shall be
one (1) year. Any new member appointed to replace a member who has resigned or
has been removed shall serve such member's unexpired term. Members whose terms
have expired may be reappointed.
4.6 RESIGNATIONS; VACANCIES. Any member of the Committee may, at any time,
resign from the Committee upon written notice to the Board.
4.7 DUTIES AND APPEALS. It shall be the duty of the Committee to perform
the functions required of it pursuant to this Declaration; to consider and
act upon each Application which is submitted to it pursuant to the terms of
this Declaration; to enforce the Design Guidelines if any are adopted; and to
perform all other duties delegated to it by the Board or imposed upon it by
this Declaration. Any Owner may appeal any decision of the Committee to the
Board.
4.8 MEETINGS. The Committee shall meet as often as it, in its sole,
absolute and unfettered discretion, considers necessary or proper to perform
properly its duties and obligations pursuant to this Declaration. The vote,
written consent or written approval of any two (2) members shall constitute an
act by the Committee, unless the unanimous decision of its members is otherwise
required pursuant to this Declaration. The Committee shall keep written records
of all actions the Committee takes.
4.9 DESIGN GUIDELINES. The Committee may, from time to time, and in its
sole, absolute and unfettered discretion, adopt Design Guidelines and amend
the Sign Plan and any Design Guidelines adopted by the Committee, provided,
however, that no such amendment shall apply to any previously approved (or
deemed approved) Improvement within the Center. The Design Guidelines may
include (a) standards and procedures for Committee review; and (b) guidelines
for Improvements, which may include, but not necessarily be limited to,
guidelines for the architectural design of Improvements, site plans, floor
plans and exterior elevations, the size and location of buildings (including
setback requirements), the height of buildings (including architectural
features), the location and pitch of slopes, requirements for grading,
excavation and drainage, the location and capacity of facilities for
utilities, parking areas, loading areas and docks, trash areas (including
compactor pads), Exclusive Use Areas, landscaping designs and
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irrigation plans, color schemes, signs, exterior lighting, and finishes and
materials for use in the Center. Notwithstanding the foregoing, and
notwithstanding anything in the Design Guidelines to the contrary (or which may
be interpreted as being to the contrary), the following are exempt from the
Design Guidelines: (i) Improvements existing or under construction on the date
of this Declaration; and (ii) Improvements for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration including, without limitation, the five office buildings and the
Parking Structure comprising the Carmel Center Office Campus and related
Improvements (herein the "Approved Declarant Improvements") approved by the City
for construction upon Parcel B and Parcels E, F, G, H, I, J and K pursuant to
Carmel Valley Planned District and Coastal Development Permit No. 98-0227
(Amendment to Carmel Valley Planned District, Coastal Development and
Conditional Use Permit No. 93-0451) for Kilroy Carmel Center (the "KILROY CARMEL
CENTER PERMIT").
4.10 EXERCISE OF RIGHTS. Exercise of the Board's right of appointment and
removal, as set forth in this Declaration, shall be evidenced by the Board's
recording among the Committee's regular records a declaration identifying each
new Committee member appointed and each member replaced or removed from the
Committee.
ARTICLE 5
LAND USE
5.1 PERMITTED USES. The following Parcels and the Improvements constructed
or to be constructed thereon may be used for those purposes set forth below
provided such uses comply with all Laws as defined in Section 5.5 in effect as
of the date of this Declaration and the provisions of this Declaration and the
other Project Documents:
(a) With respect to Parcels B and Parcels E through K, inclusive,
those uses set forth in the Kilroy Carmel Center Permit.
(b) With respect to Parcel C, hotel and other related uses as set
forth in North City West Planned District Development Plan Permit No. 88-0941
("PERMIT NO. 88-0941").
(c) With respect to Parcel A, restaurant use pursuant to Permit No.
88-0941.
(d) With respect to Parcel L, those uses set forth in that certain
Carmel Valley Planned District Development/Conditional Use/Coastal Development
Permit Amendment No. 96-7784 issued to Acacia Gasoline and Car Wash of Carmel
Valley, LLC (the "PARCEL L PERMIT")
5.2 USE RESTRICTIONS. Except as otherwise consented to in writing by the
Declarant (or the Board, after there is no longer a Declarant), which may be
withheld in its sole, absolute and unfettered discretion:
(a) There shall be no children's play areas or day care facilities in
the Center, except that (i) a play area may be located and operated on
Parcel M in connection with any fast-food restaurant located and operated
thereon; (ii) the hotel on Parcel C may
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contain related recreational facilities; and (iii) a day care center and
related play areas may be located within the Carmel Center Office Campus.
(b) There shall be no tavern, night club or bar in the Center, except
that a bar may be located in a restaurant or a hotel.
(c) Neither Parcels B nor D may be used for a fast food or
drive-through restaurant.
(d) No portion of the Center or any Improvements constructed thereon
may be put to any use which is not allowed pursuant to the Laws applicable
to the Center and in effect as of the date of this Declaration.
To be effective, any written consent of Declarant for the purpose of this
Section 5.2 must be (i) signed by Declarant in recordable form; and (ii)
recorded in the Office of the County Recorder of San Diego County. After there
is no longer a Declarant, to be effective, any written consent of the Board for
the purpose of this Section must be (A) evidenced by a duly adopted resolution
of the Board, certified as such in writing by the Secretary or an Assistant
Secretary of the Association in recordable form; and (B) recorded in the Office
of the County Recorder of San Diego County.
5.3 PROHIBITED OPERATIONS AND USES. No use or operation will be made,
conducted or permitted on or with respect to all or any part of any Parcel or
Improvement which is obnoxious to, or out of harmony with the development or
operation of the business conducted on any other Parcel or on other sites in the
general vicinity of the Center. Included among the uses or operations which are
prohibited because of their obvious detrimental effect on the general appearance
of the Parcels and their conflict with the reasonable standards of appearance
and maintenance required by Declarant and the Board, are uses or operations
which produce, or are accompanied by, the following characteristics:
(a) Any public or private nuisance;
(b) Any use which, in the Board's sole and absolute discretion, is
considered to be objectionable as an intrusion into the environment of
sound, odor, visual effect or physical impact or that will disturb or tend
to disturb the other Owners or Occupants or their customers or invitees in
the Center;
(c) Any use that produces intense glare or heat, unless such use is
performed only within an enclosed or screened area in a manner such that
the glare or heat emitted will not be discernible from any property line of
the Parcel;
(d) Any use or operation that results in a discharge or release of
Hazardous Materials (defined in Section 7.7) on or under the surface of a
Parcel or into the surface or ground water of the Center, unless such
discharge or release is in compliance with all applicable Laws relating to
Hazardous Materials;
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(e) Any use or operation that results in air omissions of pollutants
or contaminants unless such emissions are in compliance with all applicable
laws relating to Hazardous Materials;
(f) Any emission of odorous, noxious, caustic or corrosive matter or
gas, whether toxic or non-toxic;
(g) Any unusual litter, dust, dirt or debris, except as generated
during construction of Improvements;
(h) Any unusual firing, explosion or other damaging or dangerous
hazard, including, but not limited to, storage, display or sale of
explosives or fireworks;
(i) Any mobile home or trailer court, labor camp, junk yard, stock
yard, distillation of bones, or raising, storing, slaughtering or disposing
of animals of any kind;
(j) Any drilling for, excavation, refining and/or removal of earth
materials, oil, gas, hydrocarbon substance, water, geothermal steam or any
other subsurface substance of any nature whatsoever, except as part of
normal grading operations in connection with construction of
approved Improvements;
(k) Any dumping, disposal, incineration or reduction of garbage or
reuse of the same, other than handling or reducing such garbage in a
reasonably clean and sanitary manner;
(l) Any auction, public sale (except as may be conducted inside the
hotel Improvements located on Parcel C by clients or patrons of the hotel)
or other auction house operation;
(m) Any display or sale of merchandise or any storage or placement of
merchandise, portable signs or other objects belonging to an Owner or
Occupant of the Center outside the defined exterior walls, roof and
permanent doorways of any building.
(n) Any commercial excavation of building or construction materials;
and
(o) Any smelting of iron, tin, zinc or other metals or ores.
5.4 OTHER OPERATIONS AND USES. Operations and uses which are neither
specifically prohibited nor specifically authorized by this Declaration may
be permitted in a specific case if an Application containing operational
plans and specifications are submitted to and approved in writing by the
Committee. Approval or disapproval of and compatibility with such operational
plans and specifications shall be based upon the effect of such proposal
operations or uses on the balance of the Center and the Owners and Occupants
thereof, but shall be in the sole discretion of the Committee.
5.5 LAWS. As used herein, "Laws" means, collectively, all laws, statutes,
ordinances, rules, regulations, requirements, permits, approvals, or
certificates of occupancy promulgated by
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any federal, state or local governmental entity with jurisdiction over the
Center or any business, use or operation thereon. No Owner or Occupant shall
permit any activity, use or operation on any portion of the Center in violation
of any Law. Each Owner and Occupant shall, upon written notice from Declarant,
or the Board, discontinue any use which is finally determined by any
governmental entity having such jurisdiction to be a violation of any Law. Each
Owner and Occupant shall, immediately upon receipt from any governmental entity
of an alleged violation of any Law, provide a copy of such allegation to the
Board, notwithstanding such party's belief that meritorious defenses to such
allegations exist.
ARTICLE 6
REGULATION OF IMPROVEMENTS
6.1 APPROVAL OF APPLICATION REQUIRED. Subject to Section 6.10, no
Improvement shall be constructed, reconstructed, rebuilt, erected, placed,
altered, used, maintained or permitted to remain in the Center (i) unless the
Improvement and intended use thereof conforms with all applicable Laws; and (ii)
until plans, specifications and other documentation required by the Committee
(or as otherwise specified in any Design Guidelines adopted by the Committee)
for the Improvement and the intended use thereof ("APPLICATION") have been
submitted to and approved in writing by the Committee. Each Application,
including all exhibits and supporting materials and documentation, must be
submitted in duplicate. Such Applications shall be in such form and shall
contain such information as may be required by the Committee, but shall in any
event include the following:
(a) A site development plan of the Parcel showing the nature, grading
scheme, kind, shape, composition, and location of all structures with respect to
the particular Parcel (including proposed front, rear and side setback lines),
and with respect to structures on adjoining Parcels, and the number and location
of all parking spaces and driveways on the Parcel;
(b) A landscaping plan for the particular Parcel;
(c) A plan for the location of signs and lighting; and
(d) A building elevation plan showing dimensions, materials and
exterior color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit.
Material changes to previously approved plans must be similarly
submitted to and approved by the Committee.
6.2 FILING FEE. As a means of defraying its costs and expenses, the
Committee may institute and require that a reasonable filing and review fee
("REVIEW FEE") accompany an Application. The initial schedule of Review Fees is
set forth in the following schedule:
(a) If an Application is prepared by an Architect, the Review Fee
shall be Two Hundred Fifty Dollars ($250) per building per Parcel.
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(b) In all other cases, the Review Fee shall be Five Hundred Dollars
($500) per building per Parcel.
(c) If an Application is resubmitted, the Committee may require an
additional Review Fee in an amount not to exceed One Hundred Dollars ($100)
for each resubmission.
(d) The schedule of Review Fees may be modified from time to time by
the Committee to reflect increased costs and expenses or changed
circumstances, such as, but not limited to, inflation.
6.3 BASIS FOR APPROVAL. The Committee shall have the right to disapprove an
Application submitted to it in the event any part of the Application: (a) is not
in accordance with this Declaration, the Sign Plan and any Design Guidelines or
other requirements adopted by the Committee; or (b) is incomplete; or (c) is not
in compliance with the applicable governmental approvals and regulations for the
Center; or (d) is deemed by the Committee to be contrary to the best interests
of the Center or the Owners; or (e) any combination of the foregoing. The
Committee shall not unreasonably withhold its approval of an Application
submitted to it, but may condition its approval on the satisfaction of one or
more conditions set forth in writing. In this regard, the Committee may base its
approval or disapproval on criteria which may include, but are not limited to,
the following: (i) the adequacy of the building locations and dimensions on the
Parcel; (ii) the adequacy of the parking to be provided; (iii) conformity and
harmony of external design with neighboring structures; (iv) effect of location
and proposed use of proposed Improvements on neighboring Parcels and the types
of operations and uses thereof; (v) relation of topography, grade and finish
ground elevation of the Parcel being improved to that of neighboring Parcels;
(vi) proper facing of main elevation with respect to nearby streets and other
buildings; (vii) adequacy of screening trash facilities and mechanical, air
conditioning or other rooftop installations; (viii) adequacy of landscaping; and
(ix) conformity of the Application to the purpose and general plan and intent of
this Declaration. No Application shall be approved which does not provide for
the underground installation of all utility services. The Committee may
condition its approval of an Application on such changes therein as it deems
appropriate such as, and without limitation, the approval of such Improvements
by a holder of an easement which may be impaired thereby or upon approval of any
such Improvements by the appropriate governmental entity. Any Committee approval
conditioned upon the approval by a governmental entity shall not imply the
Association is enforcing any government codes or regulations, nor shall the
failure to make such conditional approval imply that any such governmental
entity approval is not required.
6.4 RESULT OF INACTION. The Committee shall approve or disapprove an
Application within thirty (30) days after receipt of a complete Application
and the Review Fee. If the Committee fails either to approve or disapprove an
Application within such thirty-day (30-day) period, then it shall be
conclusively presumed that the Committee has disapproved the Application,
unless the applicant has delivered to the Committee, within fifteen (15) days
after the expiration of the thirty-day (30-day) period, a notice in writing
setting forth a date of initial submittal of the complete Application to the
Committee and the fact that no approval or
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disapproval has been given as of the date of such notice. If the Committee
thereafter fails to either approve or disapprove the Application on or before
the fifteenth (15th) day after the Committee's receipt of such notice, the
provisions of this Declaration requiring approval of such Application shall be
deemed to have been waived by the Committee with respect to such Improvements;
provided, however, that such waiver shall not be deemed to be a waiver of any
other covenant, condition or restriction provided herein. One (1) set of the
Application shall, with the approval or disapproval of the Committee endorsed
thereon, be returned to the Owner submitting it, and the other set shall be
retained by the Committee for its permanent files. In the case of a conditional
approval of an Application, the written conditions shall accompany the
Committee's written conditional approval.
6.5 PROCEEDING WITH WORK. Upon the Committee's approval of an Application
pursuant to this Article 6, the Owner to whom the approval is granted and
delivered, shall, as soon as practicable, satisfy all conditions thereof (if
any) and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations, excavations and landscaping so that no
Improvement remains in a partly-finished condition any longer than reasonably
necessary for completion thereof. In addition, each Owner shall cause all work
to be as nondisruptive as practicable to the Center and the guests, invitees,
tenants, employees and Owners who use the Center. Each Owner shall disrupt
traffic flow and parking as little as possible during construction and shall
clean up daily any construction debris to the extent reasonably practicable. In
all cases, work shall be commenced within one (1) year following the date of
such approval. If work is not commenced within one (1) year following the date
of such approval, then the approval given pursuant to this Article 6 shall be
deemed revoked; PROVIDED, HOWEVER, upon written request made prior to the
expiration of said one (1) year period, the Committee may, in its sole, absolute
and unfettered discretion, extend the time for commencing work.
6.6 COMPLETION OF WORK. Construction, refinishing, alteration or excavation
of any Improvements previously approved under this Article 6 shall be completed
within two (2) years following the commencement thereof, except for so long as
such completion is rendered impossible or would result in hardship due to action
of the elements, fire or other casualty, war, riot, labor dispute, inability to
procure or general shortage of labor or material in the normal channels of
trade, delay in transportation, delay in inspections, governmental action or
inaction or moratorium or any other cause beyond the reasonable control of the
Owner so obligated, whether similar or dissimilar to the foregoing, financial
inability excepted. Failure to comply with this Section 6.6 shall constitute a
breach of this Declaration and subject the defaulting Owner or Owners to all
enforcement procedures set forth in this Declaration or any other remedies
provided by law or in equity. Upon completion of construction of any
Improvement, one complete set of as-built plans shall be submitted to and
maintained by the Committee.
6.7 ESTOPPEL CERTIFICATE. The Committee shall deliver to any Owner an
estoppel certificate within thirty (30) days following receipt of a written
request therefor. If the Committee does not have an as-built survey of the
Owner's Parcel in its files, then any such request shall be accompanied by an
ALTA map of survey or a certified as-built survey of the Owner's Parcel. The
estoppel certificate shall certify that as of the date of the certificate either
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(a) all Improvements made or work done on or within the Owner's Parcel
comply with this Declaration; or (b) such Improvements or work do not
so comply, in which event the certificate shall identify the
non-complying Improvements and shall set forth the cause or causes for
such noncompliance. Any existing or prospective Owner, Occupant or
Mortgagee in good faith for value shall be entitled to rely on the
certificate with respect to the matters set forth therein, such matters
being conclusive as between the Committee and all such subsequent
parties in interest.
6.8 INDEMNITY AND LIMITATION OF LIABILITY. Neither Declarant, the
Association, the Board nor the Committee, nor any member of the Board or the
Committee, nor any agents, employees or contractors of Declarant, the
Association, the Members, Occupants, the Board or the Committee (individually or
collectively, "INDEMNITEE") shall be liable for any liability, damage, loss,
cost, expense or prejudice suffered, incurred or claimed by any Owner, Occupant
or other person (an "Applicant") who submits an Application, or by any other
Person (including any other Owner or Occupant); and each Applicant who submits
an Application shall forever hold each and every Indemnitee harmless from and
against any liability, damage, loss, cost, expense or prejudice suffered,
incurred or claimed by such Applicant, and shall forever indemnify, defend,
protect and hold each Indemnitee harmless for any liability, damage, loss, cost,
expense or prejudice suffered, incurred or claimed by any other Person
(including any other Owner or Occupant), arising from, our of or in connection
with (a) any defects in any plans, drawings, specifications or other
documentation submitted in any Application, revised or approved in accordance
with this Declaration, or for any structural or other defects in any work done
according to such plans, drawings, specifications or other documentation; (b)
the approval or disapproval of any Application, whether or not defective; (c)
the construction or performance of any work, whether or not constructed or
performed pursuant to an approved Application; (d) the development of any Parcel
within the Center; (e) the execution and filing of an estoppel certificate
pursuant to Section 6.7, whether or not the facts therein are correct, provided
that the Committee has acted in good faith in issuing such estoppel certificate
on the basis of such information as may be possessed by it; or (f) any
combination of the foregoing.
6.9 LIMITATIONS ON IMPROVEMENTS. All limitations contained in this
Declaration supplement the controls established by applicable zoning, land
use-related entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules and
regulations; and of the foregoing, the more restrictive shall apply. Each Owner
and Occupant is responsible for identifying and conforming with all Laws.
(a) SETBACK LINES. Buildings, structures of any kind (or any part
thereof), Exclusive Use Areas and parking areas shall be subject to the
minimum setback requirements of applicable zoning, land use-related
entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules
and regulations.
(b) LANDSCAPING. Every Parcel on which a building is constructed in
the Center shall be landscaped by the Owner in accordance with the
Application approved by the Committee pursuant to this Article 6; and, if
not previously installed, the Owner shall
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also install the Common Landscaping upon the Parcel in accordance with the
plans and specifications adopted by the Declarant, or as otherwise approved
by the Committee. Landscaping for each Parcel, as approved by the
Committee, shall be installed before the earlier of (a) the date on which
the first Occupant occupies the building (or any portion thereof) on the
Parcel; or (b) the date of substantial completion of the building;
PROVIDED, HOWEVER, the Committee may, in its sole, absolute and unfettered
discretion, approve in writing another final date of landscape
installation. As used in this Section, "SUBSTANTIAL COMPLETION" means the
date on which final City inspection is obtained for the building shell.
Once installed, landscaping in the Center shall be maintained, repaired and
replaced as provided in Section 12.1 and Section 13.1 of this Declaration.
(c) EXCLUSIVE USE AREAS. Any Exclusive Use Areas within a Parcel shall
be as designated on the Site Plan, or as otherwise approved by the Board or
by the Committee in its written approval of an Application pursuant to this
Article 6. Exclusive Use Areas shall be maintained, repaired and replaced
in accordance with Article 12.
(d) SIGNS. Except for street and traffic control signs and such other
signs as may be required by applicable law, no sign, billboard or other
advertising shall be erected, placed or maintained within the Center
without written approval by the Committee, which, unless such signage is
consistent with the Sign Plan, may be withheld in its sole, absolute and
unfettered discretion. Nothing contained herein shall preclude Declarant or
any subsequent Owner of the Carmel Center Office Campus from renaming it
after such Owner, an Eligible Occupant, or a major tenant that leases in
excess of twenty-five percent (25%) of the space within the buildings
comprising the Carmel Center Office Campus, and installing signage
consistent with the Sign Plan to reflect such name change.
(e) PARKING AREAS. The Committee shall have the authority to
disapprove any Application for the construction of any building on a Parcel
in the Center if the Application does not provide for parking substantially
in accordance with the Site Plan and in compliance with applicable
ordinances, rules and regulations of the City. The purpose and intent of
this requirement is to ensure that all development and parking arrangements
comply with the Site Plan and that this Declaration satisfies any
City-imposed requirements for shared parking existing on the date of this
Declaration.
(f) EXTERIOR LIGHTING. Exterior lighting shall conform to the Design
Guidelines and shall not be of such intensity, size, color or location as
to be a nuisance to Owners or the public.
(g) UTILITY LINES AND ANTENNAS. No sewer, drainage or utility
lines, cables or wires or other devices for the communication or
transmission of electric current, power or signals (including, but not
limited to, telephone, television, microwave or radio signals) shall be
constructed, placed or maintained anywhere in or upon any Parcel other than
within buildings or structures unless contained in underground conduits;
PROVIDED, HOWEVER, transformers and terminal equipment related thereto may
be installed above
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ground if screened from view of adjacent streets and Parcels in a manner
satisfactory to the Committee. No antenna, satellite dish or disc for
transmitting or receiving telephone, television, microwave or radio signals
shall be placed on any Parcel unless (i) such antenna, dish or disc,
whether on the ground or on a building, is screened from view of adjacent
streets and Parcels in a manner satisfactory to the Committee; and (ii) the
prior written consent of the Committee is obtained. Nothing contained in
this Section shall prohibit (x) the erection or use of temporary power or
telephone facilities incidental to the construction or repair of
Improvements on any Parcel, or (y) the installation and maintenance of
security and surveillance devices upon the exterior of buildings, within
Common Areas adjacent to such buildings or elsewhere upon an Owner's Parcel
and Exclusive Use Areas. No Owner shall enter into any contract or
agreement with the City, the County of San Diego or any other governmental
agency or entity or public utility with respect to sewer lines or
connections, water lines or connections, or street improvements (including,
but not limited to, curbs, gutters, parkways, street lighting or other
utility connections, lines or easements) relating to the Center or any
Parcel without the prior written consent of the Committee (including the
Committee's approval of the contract or agreement proposed to be entered
into), which may be withheld if the Committee determines such contract or
agreement, or the improvements to be constructed pursuant thereto, are not
consistent with the Declaration or any of the other Project Documents.
(h) EXCAVATION AND UNDERGROUND UTILITIES. No excavation shall be made
except in connection with construction of an Improvement, and upon
completion thereof, exposed openings shall be back filled and disturbed
ground shall be graded, leveled and restored to its original or approved
similar condition.
6.10 CERTAIN IMPROVEMENTS EXEMPT FROM APPLICATION. Notwithstanding
anything in this Declaration to the contrary (or which may be interpreted as
being to the contrary), the following Improvements shall be exempt from the
provisions of this Article 6 and are not required to be the subject of an
Application pursuant to this Article 6: (i) Improvements existing or under
construction on the date of this Declaration; (ii) Improvements which are
substantially consistent with the Site Plan and for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration which include, without limitation, the Approved Declarant
Improvements; and (iii) Improvements within the interior of a building such as
tenant improvements, lobbies and other interior space.
6.11 DISCLOSURE AND WAIVER OF CONFLICT OF INTEREST. Committee members may
be appointed by, affiliated with or employed by Declarant. If Declarant submits
an Application to the Committee for approval, Committee members appointed by
Declarant may have a conflict of interest in rendering their decisions. Neither
Declarant nor any Committee member shall have any liability to any Owner,
Occupant or other Person as a result of decisions which may benefit Declarant
rendered in good faith by the Committee or any Committee member, and each Owner
hereby waives any claim of liability against Declarant, the Committee or any
Committee member, based upon such conflict of interest. Nothing in this Section
6.11 is intended to limit the application or meaning of Section 14.6.
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ARTICLE 7
OPERATIONS GENERALLY
7.1 SLOPE AND DRAINAGE EASEMENTS. The Owner of each Parcel will permit free
access by Owners of adjacent or adjoining Parcels and by Declarant to slopes or
drainageways located on the Owner's Parcel which affect such adjacent or
adjoining Parcels when such access is required for the maintenance of permanent
stabilization on said slopes, or maintenance of the drainage facilities for the
protection and use of property other than the Parcel on which the slope or
drainageway is located. No Owner shall in any way interfere with the established
drainage pattern over the Owner's Parcel from adjoining or other Parcels, and
each Owner shall make adequate provisions for proper drainage in the event it is
necessary to change the established drainage over the Owner's Parcel. For the
purpose of this paragraph, "ESTABLISHED" drainage is defined as the drainage
patterns at the time the overall grading of each Parcel is completed in
accordance with the City-approved grading plans therefor. Upon completion of
final grading of a Parcel, no surface drainage shall be directed across any
portion of an adjoining Building Area, all surface drainage shall be directed to
a public street or into the underground drainage system.
7.2 SHARED PARKING; COMMON PARKING AREAS.
(a) The Owners intend that this Declaration satisfies any City-imposed
requirements for shared parking existing on the date of this Declaration.
(b) Those portions of the Common Area improved, or to be improved,
with parking spaces as generally shown on the Site Plan and not designated
or subsequently designated as Exclusive Use or Exclusive Parking Area or,
with respect to Parcel D, improved with a building (herein "Common Parking
Area") shall be reciprocal parking area for the common use and enjoyment of
all Parcels (excluding Parcels L and M) and their respective Owners,
Occupants, customers, guests and invitees. The Owners of Parcels L and M
shall have no rights to use any of the Common Parking Area.
(c) The Parking Structure, the parking spaces included therein and
those additional surface parking areas within the Carmel Center Office
Campus and shown on the Site Plan as Exclusive Parking Area shall be for
the exclusive use and enjoyment of the Carmel Center Office Campus and
their respective Owners, Occupants, customers, guests and invitees (herein
"Exclusive Parking Area").
(d) In addition to the Exclusive Parking Areas described in subsection
(c) above, Declarant (and the Board when there no longer is a Declarant)
may designate other portions of a Parcel improved as parking as Exclusive
Parking Area, subject to the provisions of Section 8.2.
(e) No commercial truck is permitted to be parked on any Parcel unless
hidden from view from other Parcels within the Center and from public
streets by attractive visual barriers. Notwithstanding the immediately
preceding sentence, commercial trucks may park for the purpose of loading
and unloading on all Parcels; PROVIDED HOWEVER, reasonable restrictions
concerning permitted times for parking,
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loading and unloading commercial trucks, which may be applicable to one or
more Parcels, may be adopted by the Board.
(f) No charge of any kind shall ever be made for ingress to, egress
from or parking in the Center, unless ordered or permitted by governmental
authority. The Owner of the Carmel Center Office Campus may install a card
access system in the Parking Structure and receive reimbursement from the
Occupants of the Carmel Center Office Campus for the cost of installing
such system and the cost of access cards and replacement cards.
7.3 STORAGE AND LOADING AREAS. Subject to Committee approval, which may be
withheld in its sole, absolute and unfettered discretion:
(a) No materials, supplies or equipment, including any trucks, shall
be stored in any area on a Parcel, except inside a closed building or on a
temporary basis behind a Committee approved visual barrier which screens
such areas from the view of adjoining Parcels and public streets.
(b) Loading areas and docks shall be set back and screened to
minimize the visual and noise effects from the street. All loading areas
shall be hidden from view from public streets by visual barriers approved
by the Committee. Notwithstanding the foregoing, it may not be practical or
feasible for all loading areas and docks to comply with this restriction,
in which event, as to those loading areas and docks, the Committee shall
have the right to designate hours for loading and unloading and the rules
reasonably necessary to minimize the visual and noise effects thereof.
7.4 INSPECTION. Declarant, members of the Board, members of the Committee
and their authorized representatives may from time to time, at any reasonable
hours, enter upon and inspect any Parcel, or any portion thereof, or
Improvements thereon, to ascertain compliance with this Declaration and other
Project Documents, but without obligation to do so or liability therefor
provided, however, no such entry shall be permitted to inspect the interior or
exterior of any building improvements without at least five (5) business days'
prior written notice and a statement for the reasons such entry is permitted or
required under the Project Documents.
7.5 DIVISION OF LAND. No Parcel shall be subdivided or resubdivided without
the prior written approval of Declarant (or the Board, if there is no
Declarant), which may be withheld in its sole, absolute and unfettered
discretion. The creation of a "condominium project" on any Parcel or Parcels
pursuant to Section 1351, ET SEQ. of the California CIVIL CODE shall not
constitute a subdivision or resubdivision of a Parcel which is prohibited by the
provisions of this Section.
7.6 HAZARDOUS MATERIALS. Each Owner with respect to the Parcel(s) owned by
such Owner covenants to do as follows:
(a) At all times and in all respects to comply, and cause all of its
Occupants to comply, with all federal, state and local laws, ordinances and
regulations, including, but
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not limited to, the Federal Water Pollution Control Act (33 U.S.C. Section
1251, ET SEQ.), Resource Conservation & Recovery Act (42 U.S.C. Section
6901, ET SEQ.), Safe Drinking Water Act (42 U.S.C. Section 3000f, ET SEQ.),
Toxic Substances Control Act (15 U.S.C. Section 2601, ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401, ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, ET
SEQ.), California Health & Safety Code (Section 25100, ET SEQ.; Section
39000, ET SEQ.), California Safe Drinking Water & Toxic Enforcement Act of
1986 (California Health & Safety Code Section 25249.5, ET SEQ.), California
Water Code (Section 13000, ET SEQ.), and other comparable state and federal
laws, currently in force or enacted in the future ("HAZARDOUS MATERIALS
LAWS"), relating to industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"HAZARDOUS MATERIALS").
(b) Each Owner, Occupant and all other users of a Parcel shall, at its
own expense, procure, maintain in effect and comply with all conditions of
any and all permits, licenses, and other governmental and regulatory
approvals required for its or its use of the Center, including, without
limitation, discharge of (appropriately treated) materials or wastes into
or through any sanitary sewer serving the Center. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, no Person shall cause any and all Hazardous
Materials removed from the Center to be removed and transported except
solely by duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Each Owner, Occupant and user shall
in all respects handle, treat, deal with and manage any and all Hazardous
Materials in, on, under or about the Center in total conformity with all
applicable Hazardous Materials Laws and prudent industry practices
regarding management of such Hazardous Materials.
7.7 PAYMENT OF TAXES, LIENS. Each Owner shall pay or cause to be paid prior
to delinquency the real estate taxes, assessments, special district charges and
all other public, governmental, quasi-public or quasi-governmental charges which
are or may become a lien upon the Owner's Parcel or Parcels ("Impositions"), and
all other liens or charges which may be or become superior to this Declaration
or any amendments thereto. If any Owner fails to pay any Imposition or other
lien or charge as provided herein, the Association shall have the right, but no
obligation, to cure such default. All costs and expenses, including attorneys'
fees and costs, incurred by the Association in connection with any such cure may
be recovered by the Association as a Reimbursement Assessment against said Owner
and its Parcel or Parcels. An Owner shall have the right, at its own cost and
expense, and in its own name, to contest or protest or seek to have reviewed,
reduced, equalized or abated any Imposition levied upon its Parcel(s) by first
paying such Imposition and thereafter filing a claim for refund or pursuing
such other remedy as may then be available under and in accordance with
California law. Upon final determination of any such proceeding, the protesting
Owner shall pay the Impositions for which
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it is responsible pursuant to this Section as they are finally determined and
all penalties, interest, costs and expense which may thereupon be due or have
resulted therefrom. An Owner shall notify the Association in writing of any
contest or protest so filed by an Owner, and shall provide the Association,
upon request, with any and all documents pertaining thereto.
ARTICLE 8
COMMON AREA
8.1 USE. Subject to the provisions of this Article 8 and such other
provisions of the Declaration regarding restrictions upon use, the Common Area
of each Parcel shall be used solely for the purposes specified in Sections
7.2(b) and 11.1. In addition, no Owner or Occupant shall use or permit to be
used the Common Area for any use other than the following:
(a) Parking motor vehicles, and pedestrian and vehicular ingress and
egress by Occupants, their agents, employees, customers and other invitees,
to and from buildings, the Common Area and adjacent public streets;
(b) Parking stalls, sidewalks, walls, ramps, driveways, lanes, curbs,
gutters, seating areas, flagpoles, bike racks, kiosks, automatic teller
machines, bus stops and similar facilities for accommodating public
transportation, traffic control areas, signals, traffic islands, landscaped
areas, traffic and parking lighting facilities and monument signs with
appropriate underground electrical connections, and all things incidental
thereto, all as approved by the Committee and only in locations approved by
the Committee;
(c) Public utility installations serving buildings or the Common Area;
(d) Ingress and egress of delivery and service vehicles to and from
the Center or any portion thereof and adjacent public streets, and parking
thereof only in unloading and truck loading and unloading areas;
(e) Delivery of goods, wares, merchandise and providing services to
Occupants of the Center;
(f) Perimeter walls and fences shown on the Site Plan;
(g) If required by law, recycling facilities or pickup points, the
location of which are approved by the Committee; and
(h) Lighting standards, Common Landscaping, and any other landscaping
or Common Area Improvements as may be required under applicable controls
and regulations of the City. The Owners and/or Eligible Occupants of
Parcels may also install and maintain security and surveillance devices
upon the Common Areas within their respective Parcels.
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The Common Area shall be used reasonably for the foregoing purposes so as not to
interfere with parking.
8.2 MODIFICATION OF COMMON AREA. The initial design of the Common Parking
Areas and pattern of traffic flow over the Common Area within the Center shall
be as shown on the Site Plan, and there shall be no material change thereto
unless:
(a) In the case of any material change to the Common Area located on
Parcels A, B, C, D, E and H, the prior written consent of Declarant and the
Owners of all such Parcels, which shall not be unreasonably withheld, has
been obtained;
(b) With respect to any material change to the Common Area (excluding
Common Parking Area) within Parcels G, K, L or M, the prior written consent
of Declarant and the Owners of all such Parcels, which shall not be
unreasonably withheld, has been obtained;
(c) With respect to any material change to the Common Parking Area
within Parcels E through K, the prior written consent of the Declarant and
the Owners of all such Parcels, which shall not be unreasonably withheld by
any of them, has been obtained;
(d) In all other cases, the prior written consent of Declarant (or the
Board, after there is no longer a Declarant), which may be withheld in its
sole, absolute and unfettered discretion, has been obtained; and
(e) In all cases, the resulting Common Parking Area layout and pattern
of traffic flow over the Common Area comply with all applicable Laws.
8.3 PARKING REGULATIONS. Occupants within the Center will have widely
varying parking requirements. To ensure Common Parking Areas are used in the
most efficient manner and in the best interest of all Occupants entitled to the
use thereof, the Board may adopt reasonable rules and regulations governing
the use of the Common Parking Areas; PROVIDED, HOWEVER, that no such rule or
regulation shall diminish the parking rights of any Occupant under any lease
existing at the time such rule or regulation is adopted; and PROVIDED FURTHER,
any and all such rules or regulations shall be subject to Section 8.2.
8.4 CONSTRUCTION AND REPAIR. All construction, alteration or repair work
requiring workers to perform activity or to use or locate materials, tools or
equipment (such as, but not limited to, compressors, sawhorses, tool boxes,
scaffolds, ladders and barricades) in the Common Area (other than Exclusive Use
Areas) during the course of performing such work, whether such work is
undertaken with respect to building Improvements located on a Parcel or in the
Common Area, shall be subject to the prior written approval of the Board (or any
committee of the Board established in accordance with the Bylaws for the purpose
of administering this Section) and shall be accomplished in the most expeditious
and speedy manner consistent with ongoing business operations within the Center.
The Owner or Occupant undertaking such work shall take all measures necessary to
minimize any disruption or inconvenience caused by such work. Such work shall be
accomplished by the Owner or Occupant undertaking it in a reasonable manner so
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that any damage or adverse effect which might be caused by such work to any
other Owner or Occupant or to any Parcel (including the Parcel on which the work
is being accomplished) is minimized. The Owner or Occupant undertaking such work
shall repair at its own cost any and all damage caused by such work and shall
restore the affected portion of any Parcel (including the Parcel upon which such
work is performed) to a condition which is equal to or better than the condition
which existed prior to the beginning of such work. In addition, the Owner or
Occupant undertaking such work shall pay all costs and expenses associated
therewith and shall indemnify, protect, defend and hold the Association and all
other Owners and Occupants harmless from all liabilities, damages, losses,
costs, expenses or claims arising out of, in connection with or attributable to
the performance of such work. Except in cases of emergency, all such work
shall be undertaken only after giving the Board ten (10) days prior written
notice of the work to be undertaken, the scope and nature of the work, the
duration of the work and the area in which the work is to be performed.
Notwithstanding the foregoing, construction, alteration or repair work to be
accomplished outside the Common Area may be made without the consent of or
prior written notice to the Board (or committee thereof) required under this
Section.
8.5 INTERIM IMPROVEMENTS AND MAINTENANCE OF PARCELS.
(a) Commencing as required in paragraph (b) of this Section and
continuing until such time as the commencement of construction of a building
or buildings upon a Parcel in the Center, the Owner of such Parcel shall, at its
sole cost, and subject to the discretion and approval of the Committee, pave
with asphalt for parking or landscape with ground cover (or both) and take such
other measures as are reasonably necessary to control weeds, blowing dirt and
sand, accumulation of refuse and other matters with respect to the undeveloped
portions of such Parcel. The cost of design and construction of such interim
parking or landscaping improvements (or, if applicable, both) shall be borne
solely by the Owners of the respective Parcels upon which such improvements are
constructed. Once constructed, the Association shall maintain any such interim
improvements within the Common Area and the cost and expense thereof shall be
Common Expenses; and the Owner shall maintain such other interim improvements.
Each Owner's paving plans or landscaping plans (or, if applicable, both) for the
Parcel shall be subject to the Committee's written approval to ensure
consistency and harmony with (a) the landscaping plan and theme of the Center;
and (b) the parking configuration and pattern of traffic flow in the Center. The
Committee's approval shall not be unreasonably withheld or delayed, and neither
paving nor landscaping the Parcel shall commence unless and until the
Committee's written approval has been obtained. After the Committee's written
approval has been obtained, the Parcel shall be paved and landscaped pursuant to
and in accordance with the plans approved by the Committee. Nothing contained in
this Section 8.5 regarding interim improvements of Parcels shall restrict or
impair the Owners' rights to fully develop and improve their respective Parcels
with buildings and other Improvements consistent with the Project Documents.
(b) The Owners of all Parcels shall pave with asphalt or landscape
with ground cover, or a combination of both as provided in subsection (a)
above, the otherwise unimproved portions of their respective Parcels within
six (6) months after the first Occupant of any building constructed within
the Carmel Center Office Campus opens for business in its
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premises; PROVIDED, HOWEVER, the Owner of any Parcel on which construction of a
building and related improvements has commenced before or during such six (6)
month period shall not be bound by this subparagraph (b) as to such Parcel.
(c) At least ten (10) days before commencing construction of any
Improvements upon a Parcel, the Owner of the Parcel must deliver written notice
to the Board of its intent to commence construction, and the Association shall
have the right to remove any Association property from the Parcel.
8.6 LIGHTING THE COMMON AREA. The provisions of this Section shall be
subject to any resolution or resolutions to the contrary which may be adopted by
the Board from time to time. Lighting for the Common Area (other than lighting
necessary for security of the Center or portions thereof) shall be turned on at
least thirty (30) minutes before sunset (but not more than one (1) hour before
sunset) and shall remain on each day until at least 11:00 p.m., unless to do so
is contrary to any law, rule, statute or ordinance then in effect, in which
event, the standard so prescribed shall be adhered to while in effect. Lighting
representing not less than twenty-five percent (25%) of full intensity of the
Common Area lighting system, uniformly distributed throughout the Common Area,
shall remain on each day after 11:00 p.m. until dawn for security purposes,
unless all of the Owners consent to a lesser amount of lighting in writing, or
unless to do so is contrary to any law, rule, statute or ordinance then in
effect, in which event, the standard so prescribed shall be adhered to while in
effect. If "special" lighting (other than lighting necessary for security of the
Center) is required or if regular lighting is required for a time later than the
foregoing by any Owner or Occupant of the Center, then the electricity to
service such lighting requirements shall, if reasonably feasible, be separately
metered and all expenses thereof shall be paid by the Owner(s) or Occupant(s)
who requires the special service. If such separate metering is not reasonably
feasible, then the cost of such special lighting shall be determined and
equitably prorated based on the amount of time required by each such Owner or
Occupant and the Parcel Area of each Owner or Occupant in relation to the Parcel
Area of all of the Owners or Occupants requiring the special service; all such
prorated expenses shall be paid by the Owners or Occupants which require the
special service.
ARTICLE 9
EMINENT DOMAIN
In the event the whole or any part of the Center is taken by right of
eminent domain or any similar authority of law, the entire award for the value
of the land and improvements so taken shall belong to the Owner(s) of the
property so taken or to their Occupants, as their interest may appear, and no
other Owner of land in the Center shall claim any portion of such award by
virtue of any interest, easement or other right created by this Declaration;
PROVIDED, HOWEVER, any such other Owner may file a collateral claim with the
condemning authority over and above the value of the land and improvements being
so taken to the extent of any damage suffered by such Owner resulting from the
severance of the area so taken, provided such collateral claim does not diminish
the amount recoverable by the Owner(s) of the property so taken. In the event of
a partial taking, the Owner(s) of the portion of the Center so condemned shall
restore the remaining portion of the Center owned by such Owner(s), including
improvements in the
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Common Area, as nearly as possible to the condition existing just prior to such
condemnation, without contribution from the Owners of the area not so taken and
any condemnation award necessary therefore shall be held in trust and applied
for such purpose; PROVIDED, HOWEVER, that if any Mortgagee of any property in
the Center makes the requirement pursuant to a provision in a Mortgage that the
portion of the award representing compensation for severance damage to property
not taken be paid to the Mortgagee, then the party required to make such payment
to such Mortgagee shall not be obligated to restore the remaining portion of its
Parcel(s) so taken, except to the extent necessary to clear and pave for parking
and/or landscape in accordance with plans approved by the Committee.
ARTICLE 10
MUTUAL RELEASE
Each Owner, for itself and, to the extent it is legally possible for it to
do so, on behalf of its insurer, hereby releases the other Owners from any
liability for (a) any loss or damage to the property of each Owner located upon
or in the Center, including buildings or other improvements in the Center or the
contents thereof caused by fire or other risks of the type generally covered by
a standard policy insuring against "all risk" perils (also known as "special
causes of loss"); and (b) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is of the type generally covered by a
standard policy insuring against "all risk" perils (also known as "special
causes of loss").
ARTICLE 11
EASEMENTS
11.1 GRANTS OF RECIPROCAL EASEMENTS OVER COMMON AREAS. Each Owner, as
grantor, grants to and reserves from all other Owners, for the benefit of the
Association and each other Owner and their respective successors, assigns,
Occupants, customers and invitees, and for the benefit of the respective
Parcel(s) belonging to said other Owners, as grantees, the following
non-exclusive easements upon, over, under, across and through that portion of
the Common Area lying within the grantor's Parcel(s):
(a) For ingress and egress by vehicular and pedestrian traffic and
vehicle parking upon, over and through the Common Area and the entryways,
driveways, roads, pedestrian pathways and parking areas as may be
constructed thereon for those purposes, provided, that, Parcels L and M and
their Owners, Occupants, guests, customers and invitees shall have no
rights hereunder to use the Common Parking Areas;
(b) For grading and installation of utilities, landscaping, irrigation
and drainage facilities, and other Improvements, as necessary or
appropriate to complete the improvement of such Common Areas within the
Center pursuant to City approvals and other applicable Laws;
(c) To the Declarant and Association, and their agents and
representatives, an easement over all Common Areas for the purpose of
operation, maintenance, repair,
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reconstruction, restoration and landscaping, and, as necessary, to exercise
the rights and to perform the duties set forth in this Declaration.
(d) For the installation, maintenance, repair and replacement from
time to time of any monument or other freestanding sign permitted under
this Declaration and in accordance with the Sign Plan, including any
permitted Occupant identification signs which have been placed thereon or
made a part thereof;
(e) For construction staging, storage of construction materials and
equipment, temporary construction trailers, erection of ladders,
scaffolding and barricades upon Common Areas owned by the Owner during
construction, remodeling or repair of buildings and building appurtenances
upon such Owner's Parcel or Parcels; and
(f) For the purpose of entering onto the grantor's Parcel(s) to cure
any default or breach under this Declaration.
11.2 UTILITY EASEMENTS. There is hereby reserved for the use and benefit of
the Association and all Owners, non-exclusive easements within the Common Areas
for the location, installation and maintenance of utilities and drainage
facilities of convenience or necessity as may be requested or required by the
Association or any Owner provided that the grant thereof does not unreasonably
interfere with the normal operation, improvement, and use of the Common Area and
the buildings constructed within the Center, and no affirmative monetary
obligation is imposed upon the Owners (other than the Owner benefiting from such
easement). The Declarant (and the Board where there no longer is a Declarant)
shall have the authority to grant easements or rights-of-way for utilities over
the Common Areas as necessary to serve the Common Areas and/or the Parcels. The
Owner of any Parcel and any of his Occupants or licensees shall have the right
at all reasonable times to enter upon the land subject to said easements and to
install, maintain, operate, repair and service utilities and drainage facilities
thereon for the use and benefit of his Parcel; provided, however, any such
Person shall restore said land, at his own expense, as nearly as practicable, to
the same condition as existed prior to such entry and shall comply with the
provisions of Section 11.6. The Owner of any Parcel shall have the right to
assign the benefit and use of any such easement to any public or private utility
company, agency or district for the purpose of installing, operating, repairing,
servicing and maintaining utilities or drainage facilities and enforcing the
easement rights. For purposes hereof, "utilities" shall include electricity, gas
mains and lines, water distribution lines, storm water sewers, sanitary sewers,
telephone, fiberoptic, cable TV, and telegraph cables and lines, and other
similar or related facilities commonly regarded as utilities.
All storm drains, utility lines, transformers and meters shall be
maintained under the terms of this Declaration in a safe and good working
condition by the party responsible therefor. No grantee of a utility easement
shall in the use, construction, reconstruction, operation, maintenance or repair
of any storm drains, utility lines, transformers and meters in any way
interfere, obstruct or delay the business of the grantor of said easement or any
other Owner or Occupant, or the public access to and from said business or
interfere, obstruct or delay in any way the receiving of merchandise by said
grantor or any Owner or Occupant.
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11.3 CONSTRUCTION AND REPAIR. In addition to the foregoing and in
connection with any work performed upon a Parcel, incidental encroachments into
or upon the Common Area within that Parcel shall be permitted in connection with
the use of ladders, scaffolding, storefront barricades and similar facilities
resulting in temporary obstruction of portions of the Common Area, all of which
are permitted under this Section so long as their use is kept within reasonable
requirements of construction work expeditiously pursued. The Common Area may be
used for ingress and egress of vehicles transporting construction materials,
equipment and Persons employed in connection with any work provided for in this
Declaration and that Common Area within the Parcel upon which the construction
is taking place may also be used for temporary storage of material and vehicles
being used in connection with such construction, subject to all of the other
terms of this Declaration. Reasonable precautions and measures shall be taken so
that any disturbance to the use of the Common Area generated by such
encroachments will be minimized.
11.4 OBSTRUCTIONS WITHIN COMMON AREA. Except as otherwise expressly
provided in Sections 8.1, 8.4, 11.1 and 11.3, no walls, fences, barriers or
obstructions of any sort or kind shall be constructed or maintained in the
Center, or any portion thereof, by any Owner, its agent or Occupant, which
prevent or impair the use or exercise of any of the easements granted in this
Article 11, including, but not limited to, the ingress and egress of vehicular
and pedestrian traffic and parking within the Common Area and the Common Parking
Area; PROVIDED, HOWEVER, reasonable traffic controls (including speed bumps) as
may be necessary to guide and control the orderly flow of traffic may be
installed so long as access driveways to the Common Parking Area are not closed
or blocked and the traffic circulation pattern of the Common Area, as shown on
the Site Plan, is not changed or affected in a substantial way; AND PROVIDED
FURTHER, temporary fences made of security chain link may be erected to cordon
off areas of construction activity (including staging areas for equipment and
materials). The Owners and Occupants of the Parking Structure and the Exclusive
Parking Areas may also establish and install control devices and measures such
as a card entry system to the Parking Structure, restricted parking signs,
security gates, or other mechanisms to secure the Parking Structure and
Exclusive Parking Areas from unauthorized use and traffic.
11.5 RIGHT OF ENTRY BY DECLARANT, ASSOCIATION, BOARD. Declarant, the
Association, the Board, and their employees, agents, and contractors are hereby
granted the right to enter upon the Common Areas and upon any other portion of
the Center, to the extent reasonably necessary, to repair, improve, maintain and
operate the Common Areas and to exercise the rights and to perform the duties
imposed by this Declaration on the Board or the Association. Such right of entry
upon portions of the Center other than the Common Areas shall be exercised so as
to interfere as little as reasonably possible with the possession, use and
enjoyment of the Owner or Occupants of such portion and shall be subject to the
provisions of Section 7.4. The Association shall indemnify, protect, hold
harmless and defend the Owner and Occupants of each Parcel over which the
foregoing easements are reserved from and against all liabilities, losses,
liens, damages, claims, costs and expenses and arising from or caused by the use
of such Common Areas by the Declarant, Association, and Board.
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11.6 ENTRY BY OWNERS. In connection with any entry by an Owner onto any
Common Areas for purposes of exercising such Owner's rights pursuant to utility
or drainage easements pursuant to Section 11.2, or performing any other work on
the Common Areas (not including Exclusive Use Areas within such Owner's Parcel)
permitted under this Declaration or otherwise approved by the Board, such Owner
shall, at its expense:
(a) Maintain, at all times during such period of entry, commercial
general liability insurance with a combined single limit per occurrence of
at least $1,000,000, naming the Association (and the Owner and Occupants
of such Common Areas if not owned by the entering Owner) as additional
insureds, and providing that such coverage shall not be terminated or
modified without at least thirty (30) days' prior written notice to the
Board;
(b) Deliver to the Board a certificate evidencing that such insurance
is in full force and effect prior to entry onto such Common Areas;
(c) Perform all work in a safe manner, insure that no hazardous
condition remains on such Common Areas, and repair any damage thereto;
(d) Keep such Common Areas free and clear of all mechanics' or
materialmen's liens arising out of such Owner's activities;
(e) Comply with all applicable Laws in connection with such work;
and
(f) Indemnify, protect, hold harmless and defend the Association, the
Board and the Owner and Occupants of such Common Areas from and against all
liabilities, losses, liens, claims, damages, costs and expenses (including
attorneys' fees and court costs) for labor or services performed
or materials furnished to or for such Owner, or for personal injury, death
or property damage, arising out of or related to such Owner's entry or
breach of the provisions of this Section 11.6.
11.7 RESERVATION BY DECLARANT. The Declarant hereby reserves the right to
subsequently grant and create additional easements over one or more of the
Parcels owned by Declarant, including the Common Areas contained therein, for
the benefit of one or more other Parcels owned by Declarant provided, and upon
condition that, the grant of any such additional easements shall not materially
interfere or impede with the grant and use of the other easements established
hereunder.
11.8 TERMINATION OF FORMER DECLARATION AND CONFIRMATION OF TERMINATION OF
1990 GRANT OF EASEMENTS. The Former Declaration (defined in Recital F) is hereby
terminated in its entirety and is declared to be of no further force or effect;
PROVIDED, HOWEVER, the termination of the 1990 Grant of Easements (as defined in
Section X(e) of the Former Declaration), which is set forth in Section X(e) of
the Former Declaration, shall remain in effect (I.E., the 1990 Grant of
Easements are hereby confirmed previously terminated and of no further force or
effect). The easements granted in this Article 11 replace and supersede the
easements
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granted in that Grant of Easement dated February 12, 1990 and recorded in the
Office of the County Recorder at San Diego County on February 13, 1990 as
Document No. 1990-080110, and that Grant of Easement and the easements granted
thereunder are hereby terminated and declared to be of no further force or
effect.
ARTICLE 12
BUILDING MAINTENANCE
12.1 OWNER'S MAINTENANCE OBLIGATIONS. Subject to Section 12.3, each Owner
shall maintain, repair and replace (or cause to be maintained, repaired and
replaced) the following:
(a) All exterior surfaces and roofs of buildings and other structures
located on the Owner's Parcel(s), so that the exterior walls, exterior
signs, roofing materials and painted surfaces, are at all times maintained
in a first-class condition. All painted portions of building exteriors
shall be repainted no less frequently than once each five (5) years with
the same colors as such portions were originally painted or stained, unless
the Committee approves a change in color, which approval may be withheld in
the Committee's sole, absolute and unfettered discretion.
(b) All other portions of the Owner's Parcel, other than Common Area,
in a neat, clean, sightly and well-kept condition, free and clear of
weeds, debris and rubbish. All landscaping, other than Common Landscaping,
shall be maintained in a first-class condition and, as and when necessary,
replaced.
(c) Any and all monument signs on which the name of an Occupant of the
Owner's Parcel appears, even if the monument sign is located on another
Owner's Parcel.
(d) Those portions of facilities for water, sewer, gas, telephone,
electricity and other utilities serving such Owners' buildings so as to not
interfere, interrupt or otherwise impair delivery of utilities required for
maintenance of the Common Areas and by other buildings within the Center.
(e) Each Owner and or its Occupants shall also contract for the
removal of trash from its buildings.
Each Owner shall also adopt and maintain such standards of property maintenance,
appearance and housekeeping as are necessary or appropriate to keep and maintain
the foregoing in first-class condition, repair and appearance.
12.2 CLOSURE. The Owner of a Parcel shall, following the permanent closure
or cessation of any business operation which is expected to continue for any
extended period of time take such measures as may be reasonably required under
the circumstances to prevent vandalism, including preventing graffiti and
preventing windows from being broken, and to keep the vacant building or
premises in a reasonably attractive manner.
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12.3 REPAIR OR REPLACEMENT OF DAMAGED BUILDING. In the event of any damage
to or destruction of any building within the Center, the Owner of the Parcel
upon which such building is located shall, subject to the requirements and
limitations stated in this Declaration and any Mortgage encumbering such Parcel,
(a) repair, restore and rebuild such building as quickly as reasonably
practicable subject to the requirements and limitations stated in this
Declaration; (b) tear down and remove all parts of said damaged or destroyed
building then remaining and the debris resulting therefrom and otherwise clean
and restore the Building Area affected by such casualty to a level and clean
condition; or (c) any combination of the above in a manner satisfactory to the
Committee. The Owner of any Parcel on which damaged building improvements are
located shall be obligated to proceed with all due diligence hereunder, and such
Owner shall cause cleanup and/or reconstruction to commence within three (3)
months after the damage occurs and to be completed within twelve (12) months
thereafter, unless prevented by causes beyond such Owner's reasonable control.
ARTICLE 13
COMMON AREA MAINTENANCE
13.1 ASSOCIATION MAINTENANCE. Upon completion of construction of the
Improvements on a Parcel (which as of the date of this Declaration includes only
Parcel C), the Association shall manage, maintain, repair and replace (or cause
to be managed, maintained, repaired and replaced) the Common Area on such Parcel
(except any portion thereof which is an Exclusive Use Area) and all Improvements
within the Common Area on such Parcel (except in any portion of the Common Area
which is an Exclusive Use Area) in good repair and appearance, including, but
not limited to, contracting for and paying costs of or related to (i) utility
services provided to such Common Area including, but not limited to, water,
electricity and natural gas (if applicable); (ii) sweeping and cleaning
(including steam cleaning) the parking areas, sidewalks and other hardscape, as
necessary; (iii) repairing and replacing asphalt paving using materials equal to
or better than those originally installed; (iv) bumpers; (v) parking lot
striping and directional signs; (vi) light bulbs and light standards; (vii)
perimeter walls; (viii) electrical lines, gas lines (if applicable), storm
drains, water lines and sanitary sewers which serve such Common Area or which
are within such Common Area; (ix) planters, landscaping and sprinkler systems
comprising the Common Landscaping; (x) hiring and supervising private security,
if any; (xi) the insurance for which Section 13.2 provides; and (xii) all other
items of maintenance, repair or replacement that may be needed from time to time
to maintain such Common Area properly and in a first-class condition.
The foregoing notwithstanding, the following exceptions shall apply:
(a) During the period of construction or repair of any building on any
Parcel, the Owner of such Parcel shall maintain (or cause to be maintained)
those portions of the Common Area within its Parcel, if any, which are
affected by such building construction or repair and shall be responsible
for controlling blowing dust and debris resulting from such construction or
repair activity.
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(b) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving more than one
building with different Owners and lying beneath the Common Area (e.g., an
electric trunk line from which individual lateral lines are routed to serve
different individual buildings), the Association will perform any required
maintenance, repair or replacement (or cause the same to be performed), and
will bill each Owner's share of the cost of the work to the Owners of the
Parcels whose buildings are served by the facilities. Each Owner's share of
the total bill shall be determined by multiplying the total bill by a
fraction, the numerator of which is the Parcel Area of the Owner's Parcel
or Parcels served by the facility, and the denominator of which is the
Parcel Area of all Parcels served by the facility. Each Owner shall be
responsible for maintenance and repair of the lateral lines serving his
Parcel or Parcels.
(c) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving one or more
buildings owned by the same Owner and lying beneath the Common Area, the
Association will perform any required maintenance, repair or replacement
(or cause the same to be performed), and will bill the Owner of the
Parcel(s) whose building(s) is served by the facilities. With the consent
of the Association, the Owner of the affected building or buildings may
contract directly for any such required maintenance, repair or replacement
work to be performed at the sole cost and expense of such Owner.
13.2 COMMON AREA INSURANCE.
(a) As part of its obligation to maintain the Common Area within
the Center except those portions designated Exclusive Use Areas, the
Association shall at all times maintain in force and effect commercial or
comprehensive general liability insurance insuring the Association and, as
additional insureds, all Owners and Eligible Occupants who now or hereafter
own or hold any Parcel or any qualifying leasehold estate (I.E., qualifying the
lessee thereunder to be an Eligible Occupant) or other interest therein as
their respective interests may appear (provided that the Association is given
prior written notice of such interest), against claims for bodily injury,
personal injury, death or property damage occurring in, upon or about the
Common Area. Such insurance shall be written with an insurer licensed to do
business in the State of California. All such insurance shall be primary
coverage, endorsed to name as additional insureds all Owners and Eligible
Occupants under leases of which the Association has been notified in writing,
and shall not require that any other insurance be called upon to contribute
to a loss under such coverage, and shall have liability limits of not less
than Three Million Dollars ($3,000,000) combined single limit coverage for
bodily injury, personal injury, death and/or property damage arising out of
any single occurrence, which amount shall be reviewed annually and changed to
reflect the current practice in mixed use commercial centers in San Diego
County, California which are of a similar size and which have a similar mix
of Occupants. The Association shall cause certificates of insurance to be
issued by the insurer to each of the Owners and Eligible Occupants of whom
the Association has been notified in writing, certifying that such insurance
is in full force and effect and shall not be canceled or materially amended
without thirty (30) days prior written notice thereof to each of such Owners
and Eligible Occupants.
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(b) Association shall obtain and maintain in force property damage
insurance under a standard form policy or policies of all-risk insurance
then in use in California, covering retaining walls and other walls,
lighting facilities and lighting standards, landscaping (in the reasonable
business judgment of the Association), and other improvements in the Common
Area (excluding Exclusive Use Areas);
(c) Worker's compensation insurance, as required by law;
(d) Association Directors' and Officers' errors and omissions
insurance, in form and amount determined by the Board; and
(e) Insurance against any other risk which the Board considers
appropriate.
13.3 ASSOCIATION'S RIGHT TO REPAIR NEGLECTED PARCELS. In addition to
maintaining the Common Area, if an Owner fails to maintain the Improvements, and
other portions of Owner's Parcel so as to violate Section 12.1, then the
Association, after approval of the Board, shall have the right, through its
agents, contractors and employees, to enter onto the Owner's Parcel to repair,
maintain and restore the Parcel, any Exclusive Use Areas, and the exteriors of
any building and other Improvements erected thereon. However, entry into a
Building Area or Exclusive Use Area may be made only after not less than five
(5) business days notice has been given to the Owner and any Eligible Occupant.
Entry shall be made with as little inconvenience to the Owner and Occupants as
possible and any damage caused thereby shall be repaired by the Association at
its cost and expense. The cost of such exterior maintenance shall be levied as a
Reimbursement Assessment against such Parcel pursuant to Section 3.8.
13.4 PROPERTY MANAGEMENT COMPANY. Nothing in this Article 13 or in this
Declaration shall preclude or be interpreted as precluding the Association from
retaining a "managing agent" within the meaning of Section 1363.1 of the
California CIVIL CODE, as it may be amended or replaced from time to time. In
the event the Association so retains such a "managing agent", then the "managing
agent" and the Association shall make all arrangements necessary or proper to
ensure that funds accepted or received by the "managing agent" and belonging to
the Association are deposited and handled in compliance with Section 1363.2 of
the California CIVIL CODE, as it may be amended or replaced from time to time.
The Association may retain the Declarant or an affiliate of the Declarant as
managing agent.
ARTICLE 14
THE ASSOCIATION
14.1 ORGANIZATION. The Association is a California nonprofit mutual benefit
corporation.
14.2 DUTIES. The Association shall be charged with the duties set forth in
the Articles, the Bylaws and this Declaration, including, but not limited to,
the following:
(a) ASSESSMENTS. The Association shall fix, levy, collect and
enforce Assessments as further described in Article 3.
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(b) COMMON AREAS. The Association shall maintain, repair,
replace, restore, operate, control and manage the Common Areas (excluding
Exclusive Use Areas) and all facilities, Improvements and equipment located
thereon, as further described in Article 13, except to the extent such
maintenance has been assumed by a governmental agency or public or private
utility, and except as otherwise set forth herein.
(c) PAYMENT OF EXPENSES. The Association shall pay all expenses
and obligations incurred by the Association in the conduct of its business,
including, without limitation, all licenses, taxes or governmental charges
levied or imposed against the property of the Association.
14.3 POWERS. The Association shall have the following powers, rights and
duties, in addition to those provided elsewhere in this Declaration, the
Articles and the Bylaws and those powers granted to a nonprofit mutual benefit
corporation pursuant to the California Corporations Code:
(a) ACQUISITION OF PROPERTY. The Association shall have the power
to acquire (by gift, purchase or otherwise), own, hold, improve, operate,
maintain, convey, sell, lease, transfer, dedicate for public use or otherwise
dispose of real or personal property in connection with the affairs of the
Association.
(b) ASSESSMENTS, LIENS. The Association shall have the power to
levy and collect assessments pursuant to Article 3 and to perfect and enforce
liens in accordance with the provisions of Article 3.
(c) BORROWING. The Association shall have the power to borrow
funds to pay costs of operation, secured by assessment revenues due for
succeeding years or by assignment or pledge of rights against delinquent Owners;
provided, however, that the affirmative vote or written consent of Declarant and
other Owners holding a majority of the total voting power of the Class A Members
shall be required to borrow, during any calendar year, in excess of an amount
equal to Ten Thousand Dollars ($10,000) multiplied by the number of Parcels
within the Center subject to assessment. Such borrowing may be from Declarant if
Declarant agrees to advance funds; and, in such event, Declarant shall receive,
as interest, no more than the published Wall Street Journal Prime Rate, as
modified from time to time, plus two percent (2%).
(d) CONTRACTS. The Association shall have the power to contract
for goods and/or services for the Common Areas or for the performance of any
power or duty of the Association, subject to limitations set forth elsewhere in
this Declaration, the Articles or the Bylaws. The Association's power to
contract shall include, but is not limited to, the right to enter into
agreements with one or more other owners' associations for the purposes
described in this Section.
(e) DELEGATION. The Association shall have the power to delegate
its authority and powers to committees, officers or employees of the
Association.
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(f) ENFORCEMENT. The Association shall have the power to enforce
this Declaration pursuant to the provisions hereof.
(g) SECURITY SERVICES. The Association shall have the power to
provide, or to contract for the provision of, security patrols or other security
measures, or both, as the Board deems necessary.
(h) VARIANCES. The Board, acting for the Association, shall have
the power to grant reasonable variances from the provisions of this Declaration
from time to time, as the Board may deem, in its sole discretion, to be in the
best interests of the Center, in order to overcome practical difficulties and to
prevent unnecessary hardship in the application of the provisions contained
herein; provided, however, that: (a) a variance shall not materially injure any
of the Parcels or Improvements in the Center; and (b) the Owner seeking the
variance shall otherwise be subject to and conform with all applicable
governmental laws, ordinances, regulations and requirements. No variance granted
pursuant to the authority granted herein shall constitute a waiver of any
provision of this Declaration as applied to any person or real property.
14.4 ELECTION OF NEW BOARD OF DIRECTORS. Concurrently with the recordation
of this Declaration, the Members shall elect a new Board of Directors of the
Association consisting of three (3) directors who shall hold office until the
next annual meeting of Members pursuant to Section 14.7.
14.5 SUBSEQUENT BOARD OF DIRECTORS. At each annual meeting of Members, a
new Board consisting of three (3) directors shall be elected, and such Board
shall serve until the next annual meeting. The Bylaws may provide for staggered
terms and lengths of terms for directors different from those initially set
forth in this Declaration and may provide for a greater or lesser number of
directors than set forth herein; provided, however, in no event shall there be
more than seven (7) directors or less than three (3) directors. The Board shall
undertake all duties and responsibilities of the Association and the management
and conduct of the affairs thereof, except as expressly reserved herein to a
vote of the Members.
14.6 PERSONAL LIABILITY. No member of the Board, or of any committee of the
Association, or any officer or manager of the Association shall be personally
liable to any Owner, or to any other party, including the Association, for any
damage, loss or prejudice suffered or claimed on account of any act, omission,
error or negligence of any such Person.
14.7 ANNUAL MEMBERSHIP MEETINGS. The Association shall hold annual meetings
of the Members in accordance with the Bylaws of the Association.
ARTICLE 15
APPROVAL OF OWNERS AND NOTICES
All notices, demands or requests for consent or approval of any kind which
the Association or any Owner or Occupant is required or desires to give or make
upon the
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Association or any other Owner or Occupant shall (a) be in writing; (b) specify
the Section of this Declaration which requires or authorizes that such notice be
given or requires that such consent or approval be obtained; and (c) be given or
made (subject to the right of the Association or any Owner or Occupant to
designate a different address by giving notice of such change in the manner
provided in this Section) by personal delivery, private express courier, or by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed, in the case of Declarant and the consenting parties, as
follows:
DECLARANT: KR-Carmel Partners, LLC
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
PIAZZA PARTNERS, L.P.: Piazza Partners, L.P.
c/o The Allen Group
401 "B" Street, Suite 2150
San Diego, CA 9101
Attention: Mr. David L. Dick
CARMEL VALLEY, LLC: Carmel Valley, LLC
___________________________________
___________________________________
Attention:_________________________
ACACIA GASOLINE AND CAR WASH Acacia Gasoline and Car Wash of
OF CARMEL VALLEY, LLC Carmel Valley, LLC
___________________________________
___________________________________
___________________________________
Attention:_________________________
RFS FINANCING PARTNERSHIP, L.P.: RFS Financing Partnership, L.P.
___________________________________
___________________________________
Attention:_________________________
ASSOCIATION: Carmel Center Association
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
When given in the manner prescribed in this Section, all notices, demands
or requests for consent or approval shall be deemed given, received, made or
communicated on the date
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personal delivery is effected or, if mailed, on the delivery date or the date on
which delivery is refused by the addressee.
ARTICLE 16
MODIFICATION PROVISION
This Declaration may not be modified in any respect whatsoever, or
rescinded, in whole or in part, except by written instrument duly recorded in
the Office of the County Recorder of San Diego County, after first being duly
signed and acknowledged by Declarant for so long as there is a Declarant, and by
those Owners (which may include Declarant) holding at least seventy-five percent
(75%) of the Members' voting power. Notwithstanding the foregoing, any
modification or rescission of any of the provisions of Section 8.2 regarding the
Common Area and the provisions of Article 11 regarding the grant of easements
with respect to the Common Area shall require the written consent of those
Owners as set forth in Section 8.2.
ARTICLE 17
NOT A PUBLIC DEDICATION
Nothing contained in this Declaration shall be deemed to be a gift or
dedication of any portion of the Center to the general public or for the benefit
of the general public or for any public purposes whatsoever, it being the intent
of Declarant that this Declaration shall be strictly limited to and for the
purposes expressed in this Declaration. The right of the public or any Person to
make any use whatsoever of the Center or any portion thereof (other than any use
expressly allowed by a written or recorded map, agreement, deed or dedication)
is by permission and subject to control of the Owners.
ARTICLE 18
INJUNCTIVE RELIEF
In the event of any violation or threatened violation by any Owner or
Occupant of any portion of the Center of any of the terms, covenants, conditions
and obligations of this Declaration, in addition to the other remedies for which
this Declaration provides, any or all of the Owners shall have the right to
enjoin such violation or threatened violation in a court of competent
jurisdiction.
ARTICLE 19
BREACH SHALL NOT PERMIT TERMINATION
No breach of this Declaration shall entitle any Owner to cancel, rescind or
otherwise terminate this Declaration, but such limitation shall not affect in
any manner any other rights or remedies which such Owner may have under this
Declaration by reason of any breach of this Declaration. Any breach of any of
the covenants, conditions or restrictions set forth in this Declaration,
however, shall not defeat or render invalid the lien of any Mortgage made in
good faith and for value, but such covenants, conditions or restrictions shall
be binding upon and be effective against such Owner of any of said property or
any portion thereof whose title thereto is acquired by foreclosure, trustee's
sale or otherwise.
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ARTICLE 20
INDEMNITY BY OWNERS
20.1 INDEMNITY. Each Owner shall indemnify, protect, defend and hold the
Association and the other Owners harmless from and against all claims, expenses,
liabilities, loss, damage and costs, including any actions or proceedings in
connection therewith and including reasonable attorneys' fees and costs,
incurred in connection with, arising from, due to or as a result of the death of
or any accident, injury, loss or damage, howsoever caused, to any Person or loss
or damage to the property of any Person as shall occur on the indemnifying
Owner's Parcel (excluding Common Areas), except claims resulting from the
negligence or willful act or omission of (a) the Association or the indemnified
Owner, whichever is applicable; (b) any Occupant of the indemnified Owner's
Parcel (including such Occupant's agents, servants and employees); or (c) the
agent, servants or employees of such indemnified Owner, wherever such negligence
or willful act or omission may occur.
20.2 BUILDING AREA LIABILITY INSURANCE. Each Owner shall at all times
during the term of this Declaration maintain or cause to be maintained
commercial or comprehensive general liability insurance covering the Owner's
Parcel (excluding Common Area) insuring against the risks of bodily injury,
property damage and personal injury liability, with a limit of not less than
Three Million Dollars ($3,000,000) per occurrence, which amount shall be
reviewed and adjusted by the Board every three (3) years for increases
recommended by insurance industry-recommended standards for mixed use commercial
centers in San Diego County, California.
ARTICLE 21
SEVERABILITY
If any provision of this Declaration is held by a court of competent
jurisdiction to be invalid, the invalidity of such provision shall not affect
the validity of the remaining provisions of this Declaration, and all remaining
provisions shall continue unimpaired, in full force and effect.
ARTICLE 22
ENFORCEMENT AND REMEDIES
22.1 RIGHT TO ENFORCE. The Declarant or the Association shall have the
right to enforce, by all appropriate legal and equitable proceedings, all
conditions, covenants, restrictions, reservations, liens, and charges now or
hereafter imposed by the provisions of this Declaration. It is hereby agreed
that money damages are an inadequate remedy for breach of any of the conditions,
covenants and restrictions contained herein, other than a default in the payment
of any assessment when due. Every Owner and Occupant of a Parcel subject to
these restrictions expressly waives the benefit of California Code of Civil
Procedure Section 731 (a) and any other comparable statute or rule, and agrees
that such violation or breach may be enjoined whether or not monetary damages
may be provided or provable. Prior to commencing litigation, the requirements of
California Civil Code Section 1354 relating to alternative dispute resolution
shall be satisfied.
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22.2 OWNER'S REMEDIES. After written request to the Association to prevent
any violation of this Declaration, and failure to act by Declarant or the
Association within fifteen (15) days after receipt of such request, any Owner
shall additionally have all enforcement rights provided for in this Declaration.
In addition, any other party to whose benefit this Declaration inures shall have
the right, in the event of violation or breach of this Declaration, to prosecute
a proceeding at law or in equity against the Person or Persons who have violated
or are attempting to violate this Declaration, to enjoin or prevent them from
doing so, to cause said violation to be remedied and to recover damages for said
violation.
22.3 WAIVER. The failure of any Owner, Declarant or the Association to
enforce any provision of this Declaration shall in no event be deemed a waiver
of the right to do so thereafter, and neither any Owner, Declarant nor the
Association shall have any liability for such failure of such Owner, Declarant
or the Association to enforce any provision of this Declaration.
ARTICLE 23
LITIGATION EXPENSES
If any Owner or the Association brings an action against any other Owner or
Occupant by reason of a breach or alleged violation of any covenant, term or
obligation of this Declaration, or for the enforcement of any provision of this
Declaration or otherwise arising out of this Declaration, the prevailing party
in such action shall be entitled to its cost of suit and reasonable attorneys'
fees, which shall be made part of any judgment rendered in such action.
ARTICLE 24
NO ASSIGNMENT OR TRANSFER
The rights, powers, duties and obligations conferred upon the Owners
pursuant to this Declaration shall not at any time be transferred or assigned by
any Owner, except (a) in the case of the rights, powers, duties and obligations
of Declarant, by Declarant pursuant to the definition of "Declarant" set forth
in Article 1; or (b) in the case of any Owner, (i) through a transfer of the
Owner's interest in its Parcel in the manner provided in Article 25, or (ii) to
an Eligible Occupant pursuant to Section 2.1.
ARTICLE 25
SALE BY OWNER
Upon the sale, transfer, conveyance or assignment by any Owner of its
right, title and interest in its Parcel, the following shall apply:
25.1 NOTICE. The transferring Owner shall give prompt written notice of the
sale, transfer, conveyance or assignment to the Association, Declarant and each
other Owner. Such notice shall set forth the name of the transferee and the
transferor, the description of the affected Parcel, the nature of the interest
transferred, the transferee's mailing address and the date of transfer. Prior to
receipt of such notification, any and all communications required or permitted
to be given under the Project Documents shall be deemed to be duly given to the
transferee if duly and timely given to said transferee's transferor.
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[Peregrine Systems]
<PAGE>
25.2 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Each Owner and Occupant, and every
other person who now or hereafter owns or acquires any right, title, estate or
interest in or to any portion of the Center, by acceptance of a deed, lease or
other interest therein, shall be conclusively deemed to have consented and
agreed to hold such title, leasehold or interest subject to and to comply with
every covenant, condition and restriction contained herein and to the rights of
Declarant and the Association hereunder, whether or not any reference to this
Declaration is contained in the deed, lease or other instrument by which such
person acquired said interest in the Center. Every provision of this
Declaration, regardless of its characterization herein, shall be deemed a
covenant, condition, restriction, reservation, easement or servitude, as the
circumstances may require, to permit the enforcement thereof and to carry out
the intent of this Declaration.
25.3 RELEASE OF OWNER. A transferring Owner shall be released from all
obligations of this Declaration as of the effective date of the transfer;
provided that with respect to the period before the effective date of the
transfer, such Owner is not in default in the performance of any duties or
obligations arising under this Declaration or in the payment of any amounts due
and payable under this Declaration.
25.4 LIABILITY OF TRANSFEREE. In no event shall any transferee of any Owner
be liable for any default of the transferring Owner under this Declaration which
occurred prior to the effective date of the transfer; PROVIDED, HOWEVER, nothing
contained in this Section shall affect the existence, priority, validity or
enforceability of any lien placed upon the transferred Parcel or portion thereof
pursuant to Section 3.9.
ARTICLE 26
TERM OF DECLARATION
This Declaration shall continue for a period of fifty (50) years and
thereafter year to year, unless, before the expiration of the term (as it may be
so extended), this Declaration is terminated or modified by written instrument
duly signed and acknowledged by the Declarant, if the Declarant still owns a
Parcel within the Center, and Owners (which may include Declarant) holding at
least seventy-five percent (75%) of the Members voting power, and such
instrument is recorded in the Office of the County Recorder of San Diego County,
California. This Declaration shall terminate upon the expiration of the term
following such recordation. Notwithstanding any such termination, the provisions
of Section 8.2 regarding the Common Area and the provisions of Article 11
regarding the grant of easements with respect to the Common Area shall survive
and remain in full force and effect unless terminated or otherwise modified by
the requisite written consent of the Owners as set forth in Section 8.2.
ARTICLE 27
MISCELLANEOUS
27.1 CAPTIONS. Captions and Section headings, where used in this
Declaration, are for convenience of reference only, are not intended to be a
part of this Declaration and in no way
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
define, limit, amplify, change, alter or describe the scope or intent of the
particular paragraphs to which they refer.
27.2 GENDER. For the purpose of this Declaration, the neuter gender
includes the feminine or masculine and the singular number includes the plural.
27.3 DECLARANT'S RESERVED RIGHTS. Wherever it appears in this Declaration
that the Declarant has the right to waive compliance with certain provisions,
the right to approve or deny certain matters or the right to exercise its
discretion in various areas, these rights of the Declarant are expressly
reserved or retained by the Declarant, and all of the provisions of this
Declaration are subject to such retained and reserved rights.
27.4 EXHIBITS. All exhibits referred to herein are attached hereto and
incorporated by reference.
27.5 GOVERNING LAW. This Declaration shall be governed, construed and
enforced in accordance with the laws of the State of California.
27.6 MORTGAGE PROTECTION. No breach of this Declaration shall affect,
impair, defeat or render invalid the lien of any Mortgage now or hereafter
executed in good faith and for value upon any part of the Center. However, if
any portion of the Center is sold under a foreclosure of any Mortgage or is
conveyed to the party so secured in lieu of foreclosure, any purchaser at such
sale, and his successors and assigns, shall hold any and all property so
acquired subject to all of the restrictions and other provisions of this
Declaration. Such a purchaser shall not be obligated to cure any preexisting
breach of this Declaration which is non-curable by payment of money (subject to
the provisions of Section 3.11 subordinating the lien of delinquent assessments
to the lien of a first priority Mortgage) or of a type which is not practical or
feasible to cure. Any loan to facilitate the resale of any portion of the
Property after a foreclosure sale or deed in lieu of foreclosure is a loan made
in good faith and for value. If a Mortgagee delivers written notice of its
Mortgage to the Board together with a request for notices of default with
respect to the Parcel or Parcels encumbered by the Mortgage, the Association
shall deliver copies of all such notices of default to such Mortgagee (a
"Requesting Mortgagee") concurrently with delivery to the Owner or Owners. A
Requesting Mortgagee shall also be entitled to timely written notice of any
destruction, taking or threatened taking that affects a material portion of the
Common Area (including without limitation any Common Parking Area) benefiting a
Parcel securing the Mortgage, and any lapse, cancellation or material
modification of any insurance policy maintained by the Association. Mortgagees
are hereby authorized to furnish information to the Board concerning the status
of any Mortgage. Nothing contained in this Declaration or the other Project
Documents shall give the Association, any Owner, or any other party priority
over the rights of a first Mortgagee with respect to distributions of insurance
proceeds or condemnation awards for losses to or a taking of a Parcel, or any
portion thereof, encumbered by a Mortgage held by such Mortgagee.
27.7 MUTUALITY, RECIPROCITY; RUNS WITH LAND. This Declaration is made for
the direct, mutual and reciprocal benefit of each and every Parcel; shall create
mutual, equitable servitudes upon each Parcel in favor of every other Parcel;
shall create reciprocal rights and
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
obligations between and among the respective Owners during their respective
periods of ownership and privity of contract and estate between and among all
grantees of each Parcel, their respective heirs, successors and assigns; and
shall, with respect to the Owner of each Parcel, its heirs, successors and
assigns during their respective periods of ownership, operate as covenants
running with the land, for the benefit of all other Parcels.
IN WITNESS WHEREOF, the Owners have signed and made this Declaration as of
the date first above written.
-45-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DECLARANT KR-CARMEL PARTNERS, LLC, a Delaware
limited liability company
By: Kilroy Realty, L.P., a Delaware limited
partnership, Managing Member
By: Kilroy Realty Corporation, a
Maryland corporation, its
General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIAZZA PARTNERS, L.P. PIAZZA PARTNERS, L.P.,
a California
limited partnership
By: Allen Development, Inc., a California
corporation, Its General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ACACIA GASOLINE AND CAR WASH ACACIA GASOLINE AND CAR WASH OF
OF CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RFS FINANCING PARTNERSHIP, L.P. RFS FINANCING PARTNERSHIP, L.P., a
Tennessee limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSENT OF ASSOCIATION
The Association hereby manifests its assent to the foregoing Declaration as
of the date of its recordation in the Office of the County Recorder of San Diego
County, California.
CARMEL CENTER ASSOCIATION, a California
nonprofit mutual benefit corporation
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ____________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-51-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-52-
EXHIBIT F
-57-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-53-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SUBORDINATION AGREEMENT
_______________________________________________________, being the
beneficiary under that certain deed of trust dated _____________________, 199__
and recorded in the Office of the County Recorder of San Diego County,
California on ____________, 1999__ as Document No. ________________, hereby
declares that the lien and charge of said deed of trust are and shall be
subordinate and inferior to the Agreement Between Landowners Including
Covenants, Conditions and Restrictions and Grants of Easements for Carmel Center
and Including Termination of Both Former Declaration and Prior Grants of
Easements to which this Subordination Agreement is attached.
[NAME OF LENDER]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "A"
SITE PLAN OF THE CENTER
[MAP]
EXHIBIT F
-61-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTIONS OF PARCELS COMPRISING THE CENTER
PARCEL A: Parcel 2 of Parcel Map 15957 (NW corner site)
PARCEL B: Parcel 1 of Parcel Map 17382 (office building - west of parking
garage)
PARCEL C: Parcel 1 of Parcel Map 18098 (hotel)
PARCEL D: Parcel 2 of Parcel Map 18098 (Frank's pad immediately east of
hotel)
PARCEL E: Parcel 1 of New Parcel Map (parking garage)*
PARCEL F: Parcel 6 of New Parcel Map (parking garage)*
PARCEL G: Parcel 7 of New Parcel Map (parking garage)*
PARCEL H: Parcel 2 of New Parcel Map (office building - most westerly)*
PARCEL I: Parcel 3 of New Parcel Map (office building)*
PARCEL J: Parcel 4 of New Parcel Map (office building)*
PARCEL K: Parcel 5 of New Parcel Map (office building - most easterly)*
PARCEL L: Lot 7 of Parcel Map 13138 (gas station - car wash)
PARCEL M: Lot 8 of Parcel Map 13138 (Frank's pad at far east end of site)
EXHIBIT "B"
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
* - These Parcels are presently described as Lots 1 through 6 and 9 of
Piazza Carmel II, Unit No. 1, in the City of San Diego, County of San Diego,
State of California, according to map thereof No. 13138, filed in the Office of
the County Recorder of San Diego County, September 13, 1994.
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "C"
TABLE OF PARCEL AREAS (PRELIMINARY)
PARCEL A: 47,568 square feet of Parcel Area
PARCEL B: 104,326 square feet of Parcel Area
PARCEL C: 168,839 square feet of Parcel Area
PARCEL D: 18,861 square feet of Parcel Area
PARCEL E: N/A (Parking Garage) square feet of Parcel Area
PARCEL F: N/A (Parking Garage) square feet of Parcel Area
PARCEL G: N/A (Parking Garage) square feet of Parcel Area
PARCEL H: 756,677 (total for Parcels H-K) square feet of Parcel Area
PARCEL I: _________________ square feet of Parcel Area
PARCEL J: _________________ square feet of Parcel Area
PARCEL K: _________________ square feet of Parcel Area
PARCEL L: 76,404 square feet of Parcel Area
PARCEL M: 58,501 square feet of Parcel Area
----------------------------
Total Parcel Area 1,229,176 square feet
Subject to Assessment
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
HVAC AND ELECTRICAL STANDARDS
HEATING, VENTILATING & AIR CONDITIONING
Description of System: The system design
shall include roof-top mounted variable air
column (VAV) cooling units with associated
valves, pipes and fittings. Capacity and
number of units as indicated on the plans.
Ductwork stubbed to each floor. Medium
pressure duct loop provided as a Tenant
Improvement.
A. Five (5) VAV rooftop package units
variable frequency drive motors per
Building.
B. Controls: The controls will be an
electronic type and give individual zone
control.
C. Exhaust System: Provide all toilet rooms
with acceptable exhaust systems with
quiet operation. Exhaust to roof.
Exhausting to meet code requirements.
Provide exhaust in stair enclosures as
required by code.
ELECTRICAL
Main Service Main service to each building to be 277/480
volt, 3 phase 4 wire, 4000 amp located
within an electric room with distribution
and subpanel for core functions only to
each floor as a part of the Base, Shell and
Core improvements.
Building Power and Lighting Electrical work shall include metering
facilities, conduit, conductors, main
switch board, subpanels, branch circuits,
J-boxes, lighting fixtures, wall light
switches, power receptacles, etc. for the
site common areas, Base, Shell and Core
improvements and parking structure.
Switchgear and conductors, for conduits,
subpanels, etc. for Tenant access in Tenant
Improvements.
Power & Utility Core Electrical for the Base, Shell and Core
improvements and parking structure work
shall include a service and distribution
including conduit, conductors, switch
board, subpanels, branch circuits, J-boxes,
lighting fixtures, wall light switches,
power receptacles, etc.
Power for Equipment Power wiring and connection to air
condition equipment as well as control
wiring and control devices to be included
in Tenant Improvements.
Telephone & Data Communication Telephone and data communication cabling
provided by Tenant. Provide (4) 4" conduit
between Buildings.
Installation All electrical work to be in accordance
with applicable codes. All necessary
outlets, conduit, wiring, trenching and
concrete encasing shall be provided as
required.
Interior Lighting Fluorescent lighting (exit corridors,
janitor closet): Provide 2' x 4' recessed
fixtures with parabolic lens and electronic
ballast in suspended ceilings. Provide
recessed down lighting in lobbies. Provide
1' x 4' recess mounted fixtures at toilet
rooms, electrical and telephone rooms. All
lighting in lobby and exit enclosures to be
controlled by wall mounted motion sensors
with override switch as required by Title
24.
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-1
PEREGRINE SYSTEMS CORPORATE CENTER
JANITORIAL SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 6
--------------
SPECIFICATIONS
ENTRANCE LOBBIES/BUILDING CORRIDORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum carpets completely.
3. Empty all waste containers and spot-clean.
4. Spot clean carpeted floor surface.
5. Dust ledges within reach.
6. Damp mop spillage as needed.
7. Empty cigarette receptacles.
8. Spot clean walls and doors.
9. Clean entrance mats as necessary.
10. Clean all metal door frames and thresholds.
11. Clean building directory board glass.
12. Vacuum entrance mats as necessary.
13. Only designated lights will be left on.
Weekly Services:
1. Spot clean walls, woodwork, and doors.
2. Perform high dusting.
3. Edge all carpets.
4. Polish entrance metals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 6
--------------
SPECIFICATIONS - CONTINUED
5. Dust all baseboards.
6. Dust all horizontal surfaces.
Monthly Services:
1. Dust and vacuum air supply and exhaust diffusers.
2. Vacuum all furniture in lobby area.
ELEVATORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum and spot clean carpets.
3. Clean and polish doors.
4. Clean and polish interior of cab.
5. Vacuum tracks thoroughly.
6. Clean all bright work.
Weekly Services:
1. Polish all bright work.
2. Clean tracks thoroughly.
Monthly Services:
1. Vacuum ceiling grate.
STAIRWAYS AND LANDINGS
Daily Services: Five (5) Days Per Week
1. Police area to remove refuse.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 3 OF 6
--------------
SPECIFICATIONS - CONTINUED
2. Damp mop to remove spillage as needed.
3. Spot sweep stairs as needed.
Weekly Services:
1. Sweep stairways and landings.
2. Dust all handrails.
3. Wet mop as needed.
OFFICE/TENANT AREAS
Daily services: Five (5) Days Per Week
1. Sweep with chemically treated dust-mop or vacuum all high traffic
areas.
2. Spot clean composition floors.
3. Dust desks, chairs, and all other office furniture.
4. Clean all ash trays and sand urns.
5. Empty all waste baskets and carry trash to pick up area.
6. Spot clean partition door glass.
7. Clean and polish drinking fountains.
8. Install plastic waste basket liners furnished by customer, replace as
necessary.
Weekly Services:
1. Dust ledges and window sills.
2. Perform High Dusting.
3. Dust picture frames and book shelves.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 4 OF 6
--------------
SPECIFICATIONS - CONTINUED
4. Remove fingerprints from woodwork, walls and partitions.
5. Dust vertical surfaces of office furniture.
6. Dust chair rungs and furniture legs.
7. All in suite carpet to be vacuumed completely.
8. Spot clean around wall switches.
9. Spot clean doors, door frames, and counters.
10. Dust all horizontal surfaces.
11. Spot clean all glass partitions.
Monthly Services:
1. Perform high dusting, i.e. door sashes and tops of partitions.
2. Wipe down plastic and leather furniture.
3. Dust venetian blinds.
4. Dust and vacuum ceiling and wall vents.
RESTROOM AND LOUNGES
Daily Services: Five (5) Days Per Week
1. Empty and wipe out all waste paper containers.
2. Empty sanitary napkin containers and replace insert.
3. Polish all metal and mirrors.
4. Clean all dispensers.
5. Clean and disinfect wash basins, toilets and urinals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 5 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Disinfect undersides and tops of toilet seats.
7. Clean floors with germicidal solution.
8. Vacuum carpets.
9. Refill soap, towel, and tissue dispensers.
10. Report to Building Manager any fixture not working.
Weekly Services:
1. Perform high dusting.
2. Dust all air supply and exhaust diffusers.
3. Polish all dispensers.
4. Spot clean tile walls and toilet partitions.
5. Spot clean walls around wash basins.
Monthly Services:
1. Wash down toilet compartment partitions.
KITCHEN, VENDING OR LUNCHROOM
Daily Services: Five (5) Days Per Week
1. Clean sink if empty.
2. Clean counter top.
3. Empty trash.
4. Damp mop floor.
5. Wipe off tables and chairs and arrange.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 6 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Wipe off fronts of vending machines.
7. Vacuum carpeting.
8. Wipe down microwaves.
FLOOR CARE
ENTRANCE LOBBIES AND BUILDING CORRIDORS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
OFFICE/TENANT AREAS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
RESTROOMS
1. Scrub and seal floors monthly.
- -------------------------------------------------------------------------------
EXHIBIT H-1
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-2
PEREGRINE SYSTEMS CORPORATE CENTER
DAY PORTER SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 2
--------------
SPECIFICATIONS
DAY PORTER JOB DESCRIPTION
A. ENTRANCE LOBBY AND BUILDING CORRIDORS
1. Spot clean entrance door glass and lobby glass.
2. Wipe down all interior and exterior window sills at lobby level.
3. Dust lobby, including guard station and vacuum as needed. Empty trash
at guard station and clean counters.
4. Remove trash from receptacles in elevator lobbies on each floor.
5. Clean lobby directory as necessary throughout the day.
6. Empty and clean sand urns and replace sand as needed.
7. Polish and clean all metal and brightwork as necessary.
8. Spot clean carpets for spills.
9. Spot vacuum carpets as necessary.
10. Clean drinking fountains.
B. BUILDING EXTERIOR
1. Police for trash, sidewalks, curbs, around trees, planters and pots
around entire building.
2. Damp mop walkway for spills and stains.
3. Clean hose bib cover plates, as needed.
4. Sweep entrance sidewalks as needed.
5. Police balconies daily for leaves and debris.
6. Sweep balconies as needed.
7. Wipe down handrails on balconies.
- -------------------------------------------------------------------------------
EXHIBIT H-2
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
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- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 2
--------------
SPECIFICATIONS - CONTINUED
C. PARKING GARAGE AND TRASH ENCLOSURES
1. Police and clean around trash bins.
2. Empty and break down all boxes before disposing in dumpsters.
3. Clean pay phones in garage and keep area around them clean.
4. Spot clean garage lobby door and glass.
5. Dust exterior of lobby doors and wall in garage.
6. Check mail room daily, and wipe down counters and mail boxes.
Vacuum as needed.
D. STAIRWELLS, LANDINGS AND ELEVATORS
1. Police stairwells daily for trash and debris.
2. Damp mop for spills and stains.
3. Thoroughly sweep two flights of stairs per day.
4. Check stairwells for cobwebs, dustballs and burned out lights.
5. Dust and wipe handrails after sweeping.
6. Check elevator cabs several times daily.
7. Spot vacuum elevator cabs as necessary.
8. Spot clean elevator doors and walls.
9. Keep elevator cab emergency phones clean and sanitary at all times.
E. RESTROOMS
1. Empty trash containers if necessary.
2. Clean and restock restroom supplies after the noon hour.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
SECURITY SYSTEMS AND PERSONNEL
A card key access system will be included in the Base, Shell and Core. One
(1) security guard will be on duty at the Project on a twenty-four (24) hour
per day, seven (7) days per week basis commencing upon the Lease Commencement
Date for Building 1. Security rounds will be made at applicable shift
changes. If Tenant constructs a security desk and security console (as a
Tenant Improvement or as an Alteration), Tenant shall have the option to
cause such security guard to be stationed at such desk and console; however,
if Tenant elects to construct such desk and console on a permanent basis at
Building 1, and if Tenant's occupancy in the Project falls below 182,000
rentable square feet, Landlord shall have the option, at Landlord's sole cost
and expense, to relocate such security desk and console to a location in
Building 2 reasonably designated by Landlord. An additional security guard
will be hired to patrol the Project during the hours of 6:00 a.m. to 10:00
p.m. Monday through Friday and 8:00 a.m. to 12:00 noon on Saturday (except
Holidays) commencing upon the Lease Commencement Date for Building 2; the
cost of such additional security guard will be included in Operating Expenses
and Operating Expenses for the Base Year shall be grossed up to include such
guard's services as if provided throughout the Base Year.
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT J
PEREGRINE SYSTEMS CORPORATE CENTER
SIGNAGE CRITERIA
CARMEL CENTER
SIGN GUIDELINES AND CRITERIA
February 24, 1999
EXHIBIT J
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SUBMITTALS AND APPROVALS.....................................................1
RESTRICTIONS.................................................................2
NONCONFORMING SIGNS.......................................................4
ILLEGAL SIGNS.............................................................4
ABANDONED SIGNS...........................................................4
GENERAL PROVISIONS...........................................................5
CONSTRUCTION REQUIREMENTS....................................................7
DESIGN GUIDELINES............................................................9
SIGN CRITERIA...............................................................12
PROJECT AND TENANT SIGNAGE...............................................12
GAS STATION IDENTIFICATION SIGNS.........................................14
SECONDARY SITE SIGNS.....................................................15
ANCILLARY SIGNAGE........................................................15
TEMPORARY SIGNAGE: .........................................................16
PROJECT LEASING / CONSTRUCTION / FUTURE FACILITIES.......................16
TENANT LEASE SPACE BANNERS...............................................16
SEASONAL / SPECIAL EVENT SIGNAGE.........................................16
EXHIBITS....................................................................17
</TABLE>
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
OBJECTIVE
The objective of The Carmel Center Sign Guidelines and Criteria is to provide
design standards and specifications that assure consistency in quality,
color, size, placement, and configuration for signage throughout the project,
and to provide signage that will be an integral part of the overall
architectural character and design theme suitable for the prestigious
corporate image of the Carmel Center project.
SUBMITTALS AND APPROVALS
1. There is a formal process for the creation, review and approval of
signage throughout The Carmel Center project. Prior to sign fabrication,
plans for all proposed signage shall be submitted to the Owner who will
review plans for conformance with the Sign Guidelines and Criteria. All plans
submitted for approval must conform to requirements of the criteria contained
in The Carmel Center Sign Guidelines and Criteria. Only those sign types
specifically approved in writing by the Owner will be allowed. The Owner
shall have the discretionary authority to deny approval for any submittal
which does not comply with the intent or purpose of the sign criteria.
The Tenant shall submit all sign designs to Owner and obtain his written
approval prior to sign fabrication. Approval or disapproval shall remain the
sole right and discretion of the Owner. The Tenant must continue to revise
and resubmit rejected designs until approval is obtained.
Prior to sign fabrication, the Tenant or his sign contractor shall submit for
Owner approval three (3) sets of complete and fully-dimensioned shop drawings
reflecting the sign design approved by the Owner. The shop drawings submittal
shall include:
a. Name, address and phone number of tenant / user
b. Name, address and phone number of Sign Contractor, Designer.
c. Elevation of structure showing all proposed signs indicating sign
type, design, location, size and layout of sign drawn to scale and
indicating dimensions, attachment devices and construction details,
colors, materials and lighting details.
d. Section detail of letters and/or sign element showing the
dimensioned projection of the face of letters, method and intensity
of illumination.
e. Color board with actual sample colors (8-1/2" x 11" format).
f. Site plan showing property lines, buildings, location and
dimensions from public right of way.
1
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. Requests to establish signs that vary from the provisions of this sign
program shall be submitted to the Owner for approval in writing prior to
being submitted to the City of San Diego.
4. Following approval of proposed signage by the Owner, applications for all
permits for fabrication and installation by Sign Contractor may be submitted
to the City of San Diego for approval, along with applicable sign permit
applications.
5. Fabrication and installation of all signs shall be performed in accordance
with the standards and specifications outlined in these guidelines and in the
final approved plans and working drawings.
RESTRICTIONS
Only those sign types provided for herein and specifically approved in writing
by the Owner will be allowed. The following signs are prohibited:
1. PROHIBITED SIGNS
a. Exposed junction boxes, transformers, lamps, tubing, conduits,
raceways or neon crossovers of any type.
b. Signs using "Trim Cap" retainers that do not match the color of the
letter returns and logo returns.
c. Rooftop signs.
d. Rotating, revolving, flashing or moving signs, except as provided in
this text.
e. Advertising or promotional signs on parked vehicles.
f. Advertising signs on bus benches, within or outside of the public
right-of-way.
g. Off-premise signs (other than directional signs) installed for the
purpose of advertising a project, event, person or subject not related
to the premises upon which said sign is located.
h. No signs, decals or advertising may be placed on windows except as
provided for in the Sign Guidelines and Criteria and specifically
approved in writing by the Owner.
i. No temporary promotional signs, appliances, or advertising shall be
permitted such as banners, pennants, streamers, temporary wall signs,
portable signs, including
2
EXHIBIT J
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
signs on vehicles, sandwich boards, inflatable displays or any other
attention getting devices except as provided for herein.
3
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
2. NONCONFORMING SIGNS
The Owner may, at its sole discretion, correct, replace or remove any
sign that is installed without written approval and/or that is deemed not to
be in conformance with the plans as submitted and with the Carmel Center
Signage Plan.
3. ILLEGAL SIGNS
Any sign that is deemed not to be in conformance with the approved
guidelines or erected without government approval or permits is considered
an illegal sign. The Owner may, at its sole discretion, correct, replace or
remove any illegal sign.
4. ABANDONED SIGNS
An abandoned sign is one whose use is discontinued because the premises
upon which it is located becomes vacated and unoccupied for a period of more
than 90 days. The Owner may, at its sole discretion, replace or remove any
abandoned sign.
4
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
GENERAL PROVISIONS
1. Signs shall be designed in a manner that is compatible with and
complementary to the overall project and adjacent facades.
2. Only those sign types provided for in the Sign Guidelines and Criteria
and/or specifically approved in writing by the Owner will be allowed.
3. Signage that incorporates logos, business identity, and/or images
denoting the type of business shall be encouraged. Logo design and colors
to be approved by the Owner.
4. Logo, letter heights and sign square footages, where specified, shall be
determined by measuring the normal capital letter of type exclusive of
typographic swashes, ascenders, descenders or exaggerated initial capitals.
Maximum copy areas shall be calculated exclusive of display surfaces,
backings, architectural elements, and mounting devices.
Logos and/or images that are in use on similar buildings operated by the
tenant in California may be used, provided that said images are
architecturally compatible and approved by the Owner and shall be counted in
overall allowable square footage for tenant signs.
5. Notwithstanding the maximum square footages specified for copy area
allowances, signs and typography in all cases shall appear balanced and in
scale within the context of the sign spaces - monuments and building walls -
as a whole. Thickness, height, and color of sign lettering shall be visually
balanced and in proportion to other signs on the building.
6. Wall signs shall be affixed without visible means of attachment, unless
attachments make an intentional statement. Wall signs need not be attached
directly to the lease space to which they refer.
5
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
7. Ground signs or monument signs may be located within landscaped zones
between property lines and building setback lines, allowing for adequate
site-lines for approaching vehicular traffic at street intersections and
project entries, but may not be located in the public right-of-way. Ground
signs identifying any tenant or use within the project area may be located
on any lot within the project area.
8. All sign fabrication work shall be of excellent quality. All logo images
and typestyles shall be accurately reproduced. Lettering that approximates
typestyles shall not be acceptable. The Owner reserves the right to reject
any fabrication work deemed to be below standard.
6
EXHIBIT J
-8-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
CONSTRUCTION REQUIREMENTS
1. All formed metal, such as letter forms, shall be fabricated using
full-weld construction.
2. All ferrous and non-ferrous metals shall be separated with non-conductive
gaskets to prevent electrolysis. In addition to gaskets, stainless steel
fasteners shall be used to secure ferrous to non-ferrous metals.
3. Threaded rods or anchor bolts shall be used to mount sign letters which
are spaced out from background panel. Angle clips attached to letter sides
will not be permitted.
4. Surfaces with color mixes and hues prone to fading (e.g., pastels,
fluorescent, complex mixtures, and intense reds, yellows and purples) shall
be coated with ultraviolet-inhibiting clear coat in a matte, gloss, or
semi-gloss finish.
5. Joining of materials (e.g., seams) shall be finished in such a way as to
be unnoticeable. Visible welds shall be continuous and ground smooth.
Rivets, screws, and other fasteners that extend to visible surfaces shall
be flush, filled, and finished so as to be unnoticeable.
6. Finished surfaces of metal shall be free from canning and warping. All
sign finishes shall be free of dust, San Diego peel, drips, and runs and
shall have a uniform surface conforming to the highest standards of the
industry.
7. Reverse channel letters shall be pinned 2" off building wall. Return
depth shall be 2-1/4", maximum, for letters less than 12" in height, and
such signs shall have a clear acrylic backing. Double tube neon shall be
used where width of letter stroke exceeds 2-1/4".
8. Depth of open channel letters shall not exceed 2". All hardware and neon
tube supports inside open channel letters shall be painted to match interior
letter color. Neon tubing shall be sufficient to make letters read "solid"
and shall be installed so that top surface of neon is flush with front edges
of open channel.
9. Signs illuminated with neon shall use 30 m.a. transformers. The ballast
for fluorescent lighting shall be 430 m.a. Fluorescent lamps shall be single
pin (slimline) with 12" center-to-center lamp separation. All lighting must
match the exact specifications of the approved shop drawings.
10. Surface brightness of all illuminated materials shall be consistent in
all letters and components of the sign. Light leaks will not be permitted.
7
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
11. The back side of all bare neon used for signage shall be painted to
provide an opaque finish. Paint color shall exactly match the
Owner-approved specification.
12. All conduit, raceways, crossovers, wiring, ballast boxes, transformers,
and other equipment necessary for sign connection shall be concealed. All
bolts, fastenings and clips shall consist of enameling iron with porcelain
enamel finish, stainless steel, anodized aluminum, brass or bronze; or
carbon-bearing steel with painted finish. No black iron materials will be
allowed.
13. Underwriter's Laboratory-approved labels shall be affixed to all
electrical fixtures. Fabrication and installation of electrical signs shall
comply with all national and local building and electrical codes.
14. Penetrations into building walls, where required, shall be made
waterproof.
15. Location of all openings for conduit sleeves and support in sign panels
and building walls shall be indicated by the sign contractor on drawings
submitted to the Owner. Sign contractor shall install same in accordance
with the approved drawings.
16. In no case shall any manufacturer's label be visible from normal viewing
angles.
17. Sign permit stickers shall be affixed to the bottom edge of signs, and
only that portion of the permit sticker that is legally required to be
visible shall be exposed.
8
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
DESIGN GUIDELINES
1. DESIGN OBJECTIVE
The primary objective of these guidelines is to generate signage of the
highest quality design, fabrication and installation, consistent with the
project architecture and design theme.
2. ACCEPTABLE SIGN TREATMENTS
The following treatments are considered appropriate:
- painted metal
- etched or polished metal
- dimensional letter forms with seamless edge treatment
- opaque acrylic materials with matte finishes
- internally illuminated channel or reverse channel letters
9
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. LIGHTING
The following treatments are considered appropriate:
- reverse channel neon with silhouette illumination
- open channel neon
- exposed neon
- internal illumination
- front lighting
- area lighting
All front lighting should be baffled and obscured in channels where
possible. Where fixtures, shades, or other elements are exposed, they
should contribute to the design of the tenant's lease space.
All exposed or skeletal neon must be backed with a opaque coating,
unless otherwise specified herein or approved in writing by the Owner. All
housings and posts for exposed neon signs must be painted out to match the
building background immediately behind and adjacent to the sign.
The following shall be prohibited:
- animated lights
- exposed conduits and raceways
- front lighting fixtures that compete with the storefront design
4. COLORS
The following guidelines are to be adhered to in selecting colors for
tenant signage:
- sign colors should be selected to provide sufficient contrast against
building background colors
- colors within each sign should be harmoniously blended
- sign colors should be compatible with building background colors
- color of letter returns should contrast with face colors for good
daytime readability
- interior of open channel letters should be painted dark when against
light backgrounds
- neon colors should complement related signage elements
All sign colors are subject to review and approval by the Owner as part
of the tenant sign submittal.
10
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
5. TYPESTYLES AND LOGOS
Tenants may adapt established typestyles, logos and/or images that are in
use on similar buildings operated by them in California, provided that
said images are architecturally compatible and approved by the Owner. Type
may be arranged in one or more lines of copy and may consist of upper
and/or lower case letters.
6. SIZES AND QUANTITIES
Sizes and quantities for tenant signs shall be as outlined in the
criteria for each sign type. Notwithstanding the maximum square footage
specified for copy area allowances, adequate amounts of visual open space
shall be provided around wall signs so that signs appear balanced and in
scale in relation to their backgrounds.
11
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
SIGN CRITERIA
PROJECT AND TENANT SIGNAGE
Signs shall be designed to be harmonious with the overall project design
theme and architecture, and shall be consistent with the provisions of the
Sign Guidelines and Criteria for the project. Minor tenant or directional
signs not oriented towards the public right-of-way are allowed with Owner's
prior written approval in addition to the signs below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Sign Type Max. Qty. Single-Faced/ Dimensions, Wall/ Max. Copy Copy Location
Double-faced Monument Height Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(B) Building (1) sign per bldg. s.f. 24" max. letter Building address/ Address
Address Wall elevation, not to height street number locations to
Signs exceed four signs satisfy Fire
max. per bldg. Dept.
regulations
- -----------------------------------------------------------------------------------------------------------------------------------
(C) Directional As required for s.f. or d.f. 5' 12 sq. ft. + - Directional As necessary
Signs facilitating project logo per information and
traffic sign face arrows
- Project name
and logo
- -----------------------------------------------------------------------------------------------------------------------------------
(D) Secondary As required/
Site Signs see general
guidelines and
provisions for
secondary site
signage
- -----------------------------------------------------------------------------------------------------------------------------------
(E) Restaurant (1) sign per s.f., d.f. 6' 40 sq. ft. Restaurant name As shown on
Identification restaurant and/or logo sign location
Monument Sign frontage plan
- -----------------------------------------------------------------------------------------------------------------------------------
(E2)Restaurant 2 signs per s.f. 50 sq. ft. Restaurant name On
Identification restaurant each and logo restaurant
Wall Sign building
wall
- -----------------------------------------------------------------------------------------------------------------------------------
(H1)Carmel Center 2 along El s.f. 6 ft max. ht. 60 sq. ft. - Project name, As shown on
Project Camino Real each logo and address site map
Identification
Monument
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Sign Type Max Qty. Single- Dimensions. Max. Copy Location
Faced / Wall / Copy
Double- Monument Area
faced Height
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(H2) Office Project 2 per entry s.f. or 5 ft. max ht. 32 sq. ft. - Project As shown on
Entry d.f. each Identification sign location
Identification logo and address plan
Monument - Tenant
Identification and
/or logo
- -------------------------------------------------------------------------------------------------------------------------------
(H3) Tenant 2 signs s.f. -- 100 sq. Building As shown on
Identification total each ft. identification sign location
Wall Signs building; 1 Max. and/or tenant name plan
max. per each and/or logo
tenant each
building
elevation
- -------------------------------------------------------------------------------------------------------------------------------
(H4) Office Building (1) sign per s.f. or 4' max. ht. 32 sq. ft. Building and/or
Monument building d.f. each tenant
Sign identification
Note: Where signs
orient to the
public right of
way, tenant
listings will not
be allowed.
- -------------------------------------------------------------------------------------------------------------------------------
(H5) Tenant (1) sign per s.f. 4 ft. 12 sq. ft. Tenant name As shown on
Identification tenant with Max. and/or logo sign location
Signs individual each plan. May be
entry wall or ground
sign
- -------------------------------------------------------------------------------------------------------------------------------
(H6) Project 1 on s.f. Project name and On retaining
Identification retaining logo wall south side
Sign (on wall south of project
retaining wall) side of
project
- -------------------------------------------------------------------------------------------------------------------------------
(J5) Retail Pad 2 per pad s.f. 32 sq. ft. Tenant name and/or On exterior
Tenant tenant logo building wall
Identification (a third wall
Wall Sign sign may be
allowed in
lieu of Sign
Type J6
monument
sign)
- -------------------------------------------------------------------------------------------------------------------------------
(J6) Retail Pad 1 per pad s.f., d.f. 5 ft. 25 sq. ft. Tenant name and/or As shown on
Tenant tenant 12" max logo sign location
Identification letter ht. plan.
Monument
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
GAS STATION IDENTIFICATION SIGNS
G1. Gas Station Identification Wall Sign
1 per each street frontage, single or double-faced; 50 sq. ft. each maximum
copy area. Copy limited to name and logo of company and product/service.
Color, letter style and logo may be used with Owner's prior written approval.
Signs for associated uses (e.g. car wash) shall conform to criteria for
Tenant Identification Sign Type H5.
G2. Gas Station Identification Monument Sign
1 per street frontage, single or double-faced; 6 ft max. ht., 60 sq. ft. each
face maximum copy area. Copy limited to name and logo of company, associated
uses and gas pricing information.
14
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
SECONDARY SITE SIGNS
Secondary Site Signs are signs other than the primary project or tenant
identification signs and include:
- address signage
- entrance signs
- directory maps and listings
- directional signs, both pedestrian and automobile-oriented
- unit number signs
- parking and traffic control signs
- informational signs such as identification for public restrooms
- building entrance signs
- restaurant menuboards
- other code required signs
Secondary site signs are not to be visible from the public right-of-way, with
the exception of entrance signs, parking control signs, and address signs
which should be oriented toward the public right-of-way. All secondary site
signs shall be designed as a family of signs. Selected elements such as
typestyle, layout, form, detail, colors and materials, shall remain
consistent within each sign "family".
A strong connection shall be maintained between secondary site signs and the
project architecture and landscaping. Elements of color, material, scale,
form and detail shall be reflected in the signage. Signs shall fit
comfortably, never crowding the architectural and landscape elements in the
immediate vicinity.
Secondary signs may be freestanding or wall-mounted. Freestanding signs
should generally be less than (4) feet in height, with the exception of
tow-away, handicapped, address, clearance and traffic regulatory signs, which
shall conform to the regulations and safety standards established by the City
of San Diego. Traffic regulatory signs may be reduced in scale where viewing
distances are diminished. Maximum copy area for all secondary site signs shall
be 12 square feet.
ANCILLARY SIGNAGE
Ancillary signage are signs other than primary tenant identification signs,
and are not included in maximum tenant signage area. Ancillary signage is
subject to Owner's prior written approval. Typical ancillary signage includes:
- Window Signs
- Suite Identification Signs
- Tenant Door Signs
- Delivery Entrance Identification Signs
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TEMPORARY SIGNAGE:
PROJECT LEASING/CONSTRUCTION/FUTURE FACILITIES
Temporary signs will be required for various activities at Carmel Center
during and after completion of the development phase. Shapes, base colors and
proportions of the signage must be consistent with sign design guidelines
(see Exhibit for specific sign type).
- - may be ground-mounted.
- - may be externally illuminated.
TENANT LEASE SPACE BANNERS
- - temporary signs may be allowed at individual lease spaces displaying
"for lease", "coming soon" and similar messages.
- - tenants will be allowed use of a temporary identification banner for a
period of time not to exceed 60 days with prior written approval of the
Owner:
- one sign per street frontage
- 32 square feet maximum copy area per banner
- placed below roof eave
SEASONAL/SPECIAL EVENT SIGNAGE
Cooperative seasonal or special event signage will be permitted upon review
and approval by the Owner.
- - Typical message:
- "Now Open"
- "Grand Opening"
- Themes related to seasonal, holiday or community events
- Design to be compatible with project design theme
- 50 square feet maximum copy area per banner
- placed below roof eave
- use of special event signage for a period of time not to exceed 45
days per event
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
EXHIBITS
NOTE: All maps and figures indicate typical design concepts and locations.
Exhibits are not intended to suggest final sign designs or exact locations
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
[MAP]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
[MAP]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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<PAGE>
OFFICE LEASE
PEREGRINE SYSTEMS CORPORATE CENTER
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
as Landlord,
and
PEREGRINE SYSTEMS, INC.
a Delaware corporation
as Tenant
BUILDING 5
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER OFFICE LEASE
SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "SUMMARY"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "OFFICE LEASE") which
pertains to the "Project," as that term is defined in the Office Lease, to be
known as "PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 of
the Office Lease). This Summary and the Office Lease are collectively
referred to herein as the "LEASE". Each reference in the Office Lease to any
term of this Summary shall have the meaning set forth in this Summary for
such term. In the event of a conflict between the terms of this Summary and
the Office Lease, the terms of the Office Lease shall prevail. Any
capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Office Lease.
<TABLE>
<CAPTION>
TERMS OF LEASE
(REFERENCES ARE TO THE OFFICE
LEASE) DESCRIPTION
----- -----------
<S><C>
1. Date: June 9, 1999.
2. Landlord: KR-CARMEL PARTNERS, LLC, a Delaware limited liability company.
3. Tenant: PEREGRINE SYSTEMS, INC., a Delaware corporation.
4. Premises (Article 1). The Premises is defined as the entire building to be constructed by Landlord, consisting of
approximately 112,067 rentable square feet as generally depicted on Exhibit "A" to the
Office Lease ("BUILDING"). The parties hereby stipulate that the Building will contain a
usable square footage of 99,863 usable square feet.
5. Lease Term (Article 2). The Lease Term for Tenant's lease of the Building shall be eleven (11) years commencing on
the Lease Commencement Date. The Lease Commencement Date is estimated to be July 1, 2000.
6. Initial Base Rent (Article 3): The initial Base Rent payable with respect to the Building shall be calculated as follows:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Estimated Building Monthly Monthly Rental Rate Per
Rentable Square Installment of Rentable
Footage Base Rent Square Foot*
- ------------------------------------------------------------------------------
<S> <C> <C>
112,067 $255,512.76 $2.28
- ------------------------------------------------------------------------------
</TABLE>
*Plus electricity (as indicated in Section 6.2 of the Office Lease)
<TABLE>
<CAPTION>
<S><C>
7. Additional Rent (Article 4).
7.1 Base Year: The calendar year during which the Lease Commencement Date occurs.
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7.2 Tenant's Share: See Article 4.
8. Security Deposit: See Article 21.
9. Parking Privileges (Article 28): Four and one-half (4 1/2) parking permits for every 1,000 usable square feet of the
Premises as such square footage is specified in Section 4 of the Summary. Each permit
shall entitle Tenant to utilize one (1) parking space on an unreserved basis in the
Project parking facilities.
10. Brokers (Section 29.18): John Burnham & Company (representing Landlord and Tenant) and CB Richard Ellis, Inc.
(representing Tenant only)
11. Address of Tenant 12670 High Bluff Drive
(Section 29.13): San Diego, CA 92130
Attention: Richard T. Nelson, Esq.
with a copy to:
12670 High Bluff Drive
San Diego, CA 92130
Attention: Mr. Robert Urwiler
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE
BUIDLING LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT MATTER PAGE
<S> <C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Premises, Building, Project and Common Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Verification of Rentable and Usable Square Feet of Premises, Building, and Project. . . . . . . . . . 3
ARTICLE 2 LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Initial Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 BASE RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Initial Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Adjustments to Base Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4 ADDITIONAL RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Definitions of Key Terms Relating to Additional Rent. . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Allocation of Direct Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.4 Calculation and Payment of Additional Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible. . . . . . . . . . . . . . . . . . .16
ARTICLE 5 USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.2 Prohibited Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.3 CC&R's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE 6 SERVICES AND UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.1 Standard Tenant Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.2 Utilities Costs; Overstandard Tenant Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6.3 Interruption of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6.4 Additional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
6.5 Utility Deregulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
6.6 Emergency Generator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
6.7 Substitution of Vendors.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
6.8 Abatement Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE 7 REPAIRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
7.1 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
7.2 Tenant's Failure to Comply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
7.3 Landlord's Failure to Comply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE 8 ADDITIONS AND ALTERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
8.1 Landlord's Consent to Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
8.2 Manner of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
8.3 Payment for Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
8.4 Construction Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
8.5 Landlord's Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 9 COVENANT AGAINST LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 10 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
10.1 Indemnification and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
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10.2 Tenant's Compliance with Landlord's Fire and Casualty Insurance . . . . . . . . . . . . . . . . . . .27
10.3 Tenant's Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
10.4 Fire and Casualty Insurance of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
10.5 Form of Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
10.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
10.7 Additional Insurance Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 11 DAMAGE AND DESTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
11.1 Repair of Damage to Premises by Landlord. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
11.2 Landlord's Option to Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
11.3 Landlord's or Tenant's Option to Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
11.4 Waiver of Statutory Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
11.5 Damage Near End of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 12 NONWAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 13 CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
13.1 Permanent Taking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
13.2 Temporary Taking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 14 ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
14.1 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
14.2 Landlord's Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
14.3 Transfer Premium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
14.4 Landlord's Option as to Subject Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
14.5 Effect of Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
14.6 Additional Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
14.7 Affiliated and Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.1 Surrender of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.2 Removal of Tenant Property by Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.3 Removal of Tenant's Property by Landlord. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.4 Landlord's Actions on Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 16 HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 17 ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 18 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 19 DEFAULTS; REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
19.1 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
19.2 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
19.3 Sublessees of Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
19.4 Form of Payment After Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
19.5 Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
19.6 Efforts to Relet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
ARTICLE 20 COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
ARTICLE 21 SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
21.1 Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
21.2 Financial Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
21.3 Conditional Release of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
21.4 Cash Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 22 ROOF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
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ARTICLE 23 SIGNAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
23.1 General...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
23.2 Tenant's Exterior Signage Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
23.3 Tenant's Interior Signage Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE 24 COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE 25 LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
26.1 Landlord's Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
26.2 Tenant's Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
ARTICLE 27 ENTRY BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
ARTICLE 28 TENANT PARKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
ARTICLE 29 MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
29.1 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
29.2 Modification of Lease/Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
29.3 Transfer of Landlord's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.4 Consents by the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.5 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.6 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.7 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.8 No Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.9 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
29.11 Right to Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
29.12 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
29.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
29.14 Joint and Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
29.15 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
29.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
29.17 Submission of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
29.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
29.19 Independent Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
29.20 Project or Building Name and Signage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
29.21 Transportation Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
29.22 No Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
29.23 Hazardous Material. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
29.24 Development of the Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
29.25 Landlord Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
29.26 Waiver of Redemption by Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
29.27 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
29.28 Communications and Computer Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
29.29 No Air Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
29.30 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
29.31 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
29.32 Disclosures and Mutual Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
29.33 Landlord Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
</TABLE>
EXHIBIT "A" SITE PLAN
EXHIBIT "B" TENANT WORK LETTER
EXHIBIT "C" NOTICE OF LEASE TERM DATES
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" FORM OF TENANT'S ESTOPPEL CERTIFICATE
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EXHIBIT "F" CC&R'S
EXHIBIT "G" HVAC AND ELECTRICAL STANDARDS
EXHIBIT "H-1" JANITORIAL SPECIFICATIONS
EXHIBIT "H-2" DAY PORTER SPECIFICATIONS
EXHIBIT "I" SECURITY SYSTEMS AND PERSONNEL
EXHIBIT "J" SIGNAGE CRITERIA
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PEREGRINE SYSTEMS CORPORATE CENTER OFFICE BUILDING LEASE
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Abatement Event..............................................................22
Abatement Notice.............................................................22
Accelerated Force Majeure Period.............................................17
Acceptable Changes...........................................................25
Actual Surrender Date........................................................38
ADA..........................................................................46
Additional Rent...............................................................7
Adjacent Building.............................................................2
Adjacent Building Leases......................................................2
Adjacent Building Working Drawings....................................EXHIBIT B
Adjustment Year..............................................................13
Aggregate Force Majeure Period...............................................17
Alterations..................................................................25
Alternative..................................................................21
Applicable Laws..............................................................25
Approved Working Drawings.............................................EXHIBIT B
Architect.............................................................EXHIBIT B
Association..................................................................18
Base Rent.....................................................................6
Base Year.....................................................................7
Base, Shell and Core..................................................EXHIBIT B
Base, Shell and Core Completion.......................................EXHIBIT B
BOMA..........................................................................3
Brokers......................................................................52
Building......................................................................i
Building 1....................................................................1
Building 1 Lease..............................................................2
Building 2....................................................................1
Building 2 Lease..............................................................2
Building 3....................................................................1
Building 3 Lease..............................................................2
Building 4....................................................................2
Building 4 Lease Option Agreement.............................................2
Building Common Areas.........................................................2
Building Direct Expenses......................................................7
Building Hours...............................................................18
Building Operating Expenses...................................................7
Building Systems and Equipment...............................................20
Building Tax Expenses.........................................................7
Building Top Signs...........................................................45
CAD...........................................................................3
CC&R's.......................................................................17
CD...........................................................................43
Change Orders.........................................................EXHIBIT B
Claims.......................................................................27
Code..............................................................34. EXHIBIT B
Commencement Date.............................................................4
Committee....................................................................18
Common Areas..................................................................2
Communication Equipment......................................................43
ComparableBuildings...........................................................2
Construction Schedule.................................................EXHIBIT B
Contractor............................................................EXHIBIT B
Cost Pools...................................................................14
Cost Proposal.........................................................EXHIBIT B
Cost Proposal Delivery Date...........................................EXHIBIT B
Delivery Period..............................................................17
Designated Subcontractors.............................................EXHIBIT B
Direct Expenses...............................................................7
Director Board...............................................................46
Drawings..............................................................EXHIBIT B
Effective Date........................................................EXHIBIT B
Electric Service Provider....................................................21
Eligibility Period...........................................................23
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Engineers.............................................................EXHIBIT B
Estimate.....................................................................14
Estimate Statement...........................................................14
Estimated Excess.............................................................14
Excess.......................................................................14
Excess Over-Allowance Amount..........................................EXHIBIT B
Excusable Delay.......................................................EXHIBIT B
Expense Year..................................................................7
Extension Notice..............................................................4
Extension Options.............................................................4
Extension Reminder Notice.....................................................4
Extension Term Base Rent......................................................4
Extension Term Commencement Date..............................................4
Extension Term(s).............................................................4
Fair Market Rental Value......................................................5
Final Space Plan......................................................EXHIBIT B
Financial Standards..........................................................43
Force Majeure................................................................51
Force Majeure Effective Date.................................................16
Force Majeure Extension Options..............................................17
Force Majeure Termination Notice.............................................16
Ground Floor Space...........................................................55
Hazardous Material...........................................................53
Holdover Notice..............................................................38
Holdover Notice Date.........................................................38
Holidays.....................................................................18
HVAC.........................................................................18
Interest Rate................................................................47
KRC..........................................................................34
Landlord......................................................................1
Landlord Parties.............................................................27
Landlord Supervision Fee..............................................EXHIBIT B
Landlord Work.........................................................EXHIBIT B
Landlord Work Change Orders...........................................EXHIBIT B
Landlord's Sublease..........................................................55
LC...........................................................................42
Lease.........................................................................1
Lease Commencement Date.......................................................3
Lease Expiration Date.........................................................3
Lease Term....................................................................3
Lease Year....................................................................3
Lines........................................................................54
Major Project Milestones..............................................EXHIBIT B
Material Changes......................................................EXHIBIT B
Notices......................................................................51
Objectionable Name...........................................................45
Office Lease..................................................................i
Operating Expenses............................................................7
Original Tenant...............................................................4
Other Improvements...........................................................53
Outside Date..........................................................EXHIBIT B
Outside Date Extension Notice.........................................EXHIBIT B
Outside Date Termination Notice.......................................EXHIBIT B
Over-Allowance Amount.................................................EXHIBIT B
Package Units................................................................18
Partial Cost Proposal.................................................EXHIBIT B
Peregrine Center..............................................................1
Permits...............................................................EXHIBIT B
Permitted Affiliate..........................................................36
Permitted Signage Entities...................................................45
Permitted Transferee.........................................................37
Pre-Judgment Offset Amount...................................................24
Premises......................................................................1
Premium Base Amount..........................................................34
Premium Guidance.............................................................35
Progress Payment Request..............................................EXHIBIT B
Project.......................................................................1
Project Architect.....................................................EXHIBIT B
Project Architect Agreement...........................................EXHIBIT B
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Project Common Areas..........................................................2
Proposition 13...............................................................12
Qualifying Income............................................................34
Qualifying Period.............................................................5
Qualifying Transferee........................................................44
Readjustment Year............................................................13
Reassessment.................................................................13
Recapture Notice.............................................................35
REIT Requirements............................................................35
Reno..........................................................................4
Rent..........................................................................7
Requirements.................................................................46
Review Period................................................................15
Shell Completion Dates................................................EXHIBIT B
Signage Criteria.............................................................44
Single Appraiser Date.........................................................5
Site Plan.....................................................................1
space comparable to the Building..............................................5
Specifications........................................................EXHIBIT B
Standard Improvement Package..........................................EXHIBIT B
Statement....................................................................14
Subject Space................................................................32
Subleasing Costs.............................................................34
Substantial Completion........................................................3
Summary.......................................................................1
Tax Expenses.................................................................12
Tenant........................................................................1
Tenant Delays.........................................................EXHIBIT B
Tenant Improvement Allowance..........................................EXHIBIT B
Tenant Improvement Allowance Items....................................EXHIBIT B
Tenant Improvements...................................................EXHIBIT B
Tenant Work...................................................................3
Tenant Work Letter............................................................1
Tenant's Share...............................................................13
Tenant's Signs...............................................................45
Third Floor Space............................................................55
Threshold Level..............................................................31
Time Deadlines........................................................EXHIBIT B
Title 24.....................................................................46
Transfer Notice..............................................................32
Transfer Premium.............................................................34
Transferee...................................................................32
Transfers....................................................................32
Withdrawal Date...............................................................4
Work..................................................................EXHIBIT B
Working Drawings......................................................EXHIBIT B
Y2K..........................................................................10
</TABLE>
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PEREGRINE SYSTEMS CORPORATE CENTER
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "SUMMARY") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "LEASE"), dated as of the date set forth in Section 1 of the
Summary is made by and between KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company ("LANDLORD"), and PEREGRINE SYSTEMS, INC., a Delaware
corporation ("TENANT").
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Upon and subject to the terms hereinafter set
forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 4 of the Summary (the
"PREMISES"), consisting of the Building described therein and more particularly
depicted on the Site Plan attached hereto as EXHIBIT "A" (the "SITE PLAN"). The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of the Site Plan is to show the
location of the Building and the Adjacent Buildings only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the Common Areas, as that term is defined in Section 1.1.3 below and the
elements thereof or of the accessways to the Premises or the "Project," as that
term is defined in Section 1.1.2 below. Landlord will not make material changes
to the Site Plan without the prior written approval of Tenant, which consent
shall not be unreasonably withheld or delayed. However, notwithstanding the
foregoing, Landlord may make changes to the Site Plan due to topography,
underground conditions, and governmental requirements in order to resolve issues
which arise during construction of the Project without the prior written
approval of Tenant, provided that (i) any such changes to the Site Plan due to
topography may be made to landscaping only (and not to other Site Plan items)
without the prior written approval of Tenant, and (ii) with respect to changes
that do not require the approval of Tenant pursuant to this sentence, Landlord
shall notify Tenant of any material changes made to the Site Plan. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as EXHIBIT "B" (the "TENANT WORK LETTER"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building, the Adjacent Buildings or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 THE PROJECT. The Premises are located in the City and
County of San Diego, California, and are a part of the project to be known as
"PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 below). The
term "PROJECT," as used in this Lease, shall mean (i) the Building, the
Adjacent Buildings and the "Common Areas", as that term is defined in Section
1.1.3 below, and (ii) the land (which is or will be improved with
landscaping, parking facilities and other improvements) upon which the
Buildings and the Common Areas are to be located. For purposes of this
Lease, the term "BUILDING 1" shall mean that building to be constructed by
Landlord at the location so designated on the Site Plan, "BUILDING 2" shall
mean that building to be constructed by Landlord at the location so
designated on the Site Plan, "BUILDING 3" shall mean that building to be
constructed by Landlord at the location so designated
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on the Site Plan, and "BUILDING 4" shall mean that building to be constructed
by Landlord at the location so designated on the Site Plan. Building 1,
Building 2, Building 3 and Building 4 may be collectively referred to herein
as the "ADJACENT BUILDINGS." Landlord and Tenant hereby acknowledge that,
concurrently with the execution and delivery of this Lease, Landlord and
Tenant are entering into separate leases for Building 1 (the "BUILDING 1
LEASE"), Building 2 (the "BUILDING 2 LEASE"), and Building 3 (the "BUILDING 3
LEASE") and a Lease Option Agreement for Building 4 (the "BUILDING 4 LEASE
OPTION AGREEMENT") whereby Tenant shall lease from Landlord all of Building
1, all of Building 2, and all of Building 3 and shall have an option to lease
all of Building 4. The Building 1 Lease, Building 2 Lease, Building 3 Lease
and Building 4 Lease Option Agreement may be collectively referred to herein
as the "ADJACENT BUILDING LEASES."
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas are collectively referred to herein as the
"COMMON AREAS"). The Common Areas shall consist of the Project Common Areas and
the Building Common Areas. The term "PROJECT COMMON AREAS," as used in this
Lease, shall mean the portion of the Project designated as such in the Site
Plan. The Project Common Areas shall consist of all parking facilities,
entrances and exits, driveways, exterior walkways, first-class landscaped and
hardscaped areas which are generally consistent with the quality of landscaped
and hardscaped areas of Comparable Buildings in existence as of the date of this
Lease, open space areas and plazas on the real property comprising the Project.
The term "BUILDING COMMON AREAS," as used in this Lease, shall mean the portions
of the Common Areas located within any building in the Project not entirely
leased by Tenant, which Building Common Areas shall be reasonably designated as
such by Landlord. Notwithstanding the foregoing and subject to (i) Landlord's
approval, which approval (as indicated in Section 29.4 below) shall not be
unreasonably withheld or delayed, (ii) the CC&R's, and (iii) all terms of this
Lease regarding Hazardous Materials, Tenant may install or locate such items as
benches, patio tables, bike racks, above-ground generators, security cameras and
the like (collectively, "MISCELLANEOUS COMMON AREA ITEMS") at Tenant's sole cost
in the Common Areas or on the exterior of the Building, as applicable, provided
that Tenant removes such items upon the expiration or earlier termination of
this Lease and repairs any damage to the Common Areas or the exterior of the
Building (as applicable) resulting from such removal. If Tenant fails to remove
any Miscellaneous Common Area Item or to repair any damage resulting from such
removal upon the expiration or earlier termination of this Lease, Landlord may
do so and may charge Landlord's actual cost thereof to Tenant. The manner in
which the Common Areas are maintained and operated shall be in accordance with a
standard which is not less than that customarily followed in the operation and
maintenance of first class mid-rise office buildings located within the
University Towne Center (i.e., the area from two (2) blocks to the North of La
Jolla Village Drive to two (2) blocks to the South of La Jolla Village Drive
between the I-5 and I-805 freeways), Del Mar, Carmel Valley and Torrey Hills
geographical areas, provided that Landlord shall manage, maintain and operate
the same in a manner consistent with that of Comparable Buildings, and the use
thereof shall be subject to such rules and regulations as Landlord reasonably
may make from time to time. As used herein, "COMPARABLE BUILDINGS" shall mean
the first class mid-rise office buildings (now existing or subsequently
constructed) within the projects located within the University Towne Center, Del
Mar, Carmel Valley and Torrey Hills geographical areas and having substantially
similar characteristics to the Building pertaining to size, age, accessibility,
design, quality, amenities and tenancies. Landlord reserves the right to make
alterations or additions to, or to change the location of, elements of the
Project and the Common Areas, provided that if any such changes might affect
Tenant's use of the Premises (in other than an immaterial manner), Landlord
obtains Tenant's prior written approval of any such alterations, additions and
changes and such alterations, additions and changes do not unreasonably
interfere with Tenant's access to the Premises. Except when and where Tenant's
right of access is specifically excluded in this Lease, Tenant shall have the
right of access to the Building and the parking facilities twenty-four (24)
hours per day, seven (7) days per week during the Lease Term.
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1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES, BUILDING, AND
PROJECT. The number of rentable square feet in the Premises and the Building
shall be determined pursuant to the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1 - 1996 ("BOMA"). The number of rentable square
feet of the Building shall be initially determined by Landlord from the
"as-built" drawings for the Building utilizing Landlord's computer assisted
design ("CAD") system. Tenant shall have the option, exercisable by written
notice to Landlord within thirty (30) days following Tenant's receipt of such
initial determination by Landlord, to cause the number of rentable square feet
of the Building to be verified by an architect, planner, designer or consultant
specializing in measuring square footage selected by Landlord and reasonably
approved by Tenant and such verification shall be made in accordance with the
provisions of this Article 1. In addition, the number of useable square feet and
rentable square feet of any other buildings within the Project not leased by
Tenant are subject to verification by an architect, planner, designer or
consultant specializing in measuring square footage selected by Landlord and
such verification shall be made in accordance with the provisions of this
Article 1. The cost of any such verification of square footage figures as
specified in this Section 1.2 above shall be borne fifty percent (50%) by
Landlord and fifty percent (50%) by Tenant. In the event that such architect,
planner, designer or consultant determines that the amounts thereof are
different from those set forth in this Lease, all amounts, percentages and
figures appearing or referred to in this Lease based upon such incorrect amount
(including, without limitation, the amount of the Rent and Tenant's Share as
those terms are defined in this Lease) shall be modified in accordance with such
determination. Absent manifest error, such determination shall be final and
conclusive. As such determination is made, it will be confirmed in writing by
Landlord and Tenant, and Landlord and Tenant shall execute an amendment to this
Lease confirming the changed amounts of Rent, Tenant's Share and the Tenant
Improvement Allowance.
ARTICLE 2
LEASE TERM
2.1 INITIAL TERM. The terms, covenants and conditions and provisions
of this Lease shall be effective as of the date of this Lease. The term of this
Lease (the "LEASE TERM") shall be as set forth in Section 5 of the Summary and
shall commence ("LEASE COMMENCEMENT DATE") on the earlier of (i) the date
Tenant's work stations are installed and cabled or (ii) eight (8) business days
after "Substantial Completion" by Landlord of the Tenant Improvements for the
Building, provided Landlord has given to Tenant at least sixty (60) days' prior
written notice of the date Landlord estimates for Substantial Completion for the
Building (if such date is more than thirty (30) days different from the
estimated date specified in the Summary). The Lease Commencement Date shall not
under any circumstances occur earlier than the day which is thirty (30) days
earlier than the Estimated Lease Commencement Date set forth in Section 5 of the
Summary unless Tenant elects to commence business operations within such
Building as of an earlier date. The Lease Term shall terminate (the "LEASE
EXPIRATION DATE") on the last day of the month in which the eleventh (11th)
anniversary of the Lease Commencement Date occurs, unless this Lease is sooner
terminated or extended as hereinafter provided. For purposes of this Lease, the
term "LEASE YEAR" shall mean each consecutive twelve (12) month period during
the Lease Term; provided, however, that the first Lease Year shall commence on
the Lease Commencement Date and the last Lease Year shall end on the Lease
Expiration Date. For purposes of this Lease, "SUBSTANTIAL COMPLETION" shall
occur upon the completion of construction of the Tenant Improvements in the
Building pursuant to the plans and drawings which are prepared pursuant to the
terms of the Tenant Work Letter. The completion of the construction with
respect to any such Tenant Improvements shall not be deemed to have occurred
unless and until (i) Landlord has delivered the portion of the Premises covered
by such Tenant Improvements to Tenant in broom-clean condition subject only to
punch list items and any tenant fixtures, workstations or equipment to be
installed by Tenant in the Premises pursuant to the terms of the Tenant Work
Letter (the "TENANT WORK") (i.e., the completion of punchlist items and Tenant
Work shall not affect Substantial Completion), (ii) a temporary certificate of
occupancy or its equivalent permitting occupancy of such portion of the Premises
improved with such Tenant Improvements has been issued by the City of San Diego
or other applicable governmental agency, (iii) all essential building systems to
be installed by Landlord (including,
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but not limited to, electrical, plumbing, heat, air conditioning systems, and
their distribution into such portions of the Premises) are operational to the
extent reasonably necessary to service the portion of the Premises covered by
such Tenant Improvements, and (iv) Tenant has been provided with the parking to
which it is entitled under this Lease . If a temporary certificate of occupancy
or its equivalent is issued by the City of San Diego, Landlord shall use
commercially reasonable efforts to obtain a permanent certificate of occupancy
within three (3) months after the Lease Commencement Date (except to the extent
the receipt of such permanent certificate is delayed as a result of the Tenant
Work or any actions of Tenant, its agents, employees or contractors). At any
time during the Lease Term, Landlord may deliver to Tenant a notice in the form
as set forth in EXHIBIT "C" attached hereto, which notice (so long as it
contains accurate information) Tenant shall execute and return to Landlord
within ten (10) days of receipt thereof. If Tenant contends that such notice
contains inaccurate information, Tenant shall modify such notice as appropriate
and return such notice to Landlord within said ten (10) day period.
2.2 OPTIONS TO EXTEND. Tenant shall have two (2) option(s) to extend
(the "EXTENSION OPTIONS") the Lease Term for consecutive five (5) year period(s)
(the foregoing option term(s) shall be referred to hereinafter sometimes as the
"EXTENSION TERM(s)"), by delivering a written notice of exercise to Landlord
("EXTENSION NOTICE") with respect to the applicable Extension Term, which
Extension Notice may not be delivered earlier than the date which is eighteen
(18) months prior to the end of the initial Lease Term or first Extension Term
(as applicable) and may not be delivered later than the date which is thirty
(30) days after the Reminder Notice. If Landlord has not received an applicable
Extension Notice by the date which is twelve (12) months prior to the end of the
initial Lease Term or first Extension Term (as applicable), Landlord may provide
written notice ("EXTENSION REMINDER NOTICE") to Tenant that the Extension Option
will expire if Tenant fails to deliver the Extension Notice to Landlord within
thirty (30) days after the date of such notice from Landlord. If Tenant fails
to deliver the Extension Notice within said thirty (30) day period, Tenant shall
be deemed to have waived its right to exercise such Extension Option. The
parties acknowledge that Tenant's Extension Option will not lapse until the date
which is thirty (30) days after Landlord's delivery of the Extension Reminder
Notice pursuant to this Section 2.2. The Extension Option shall apply to all
space (and not a portion of the space) then leased by Tenant in the Building.
Tenant may exercise the Extension Option(s) only if this Lease is in full force
and effect and there is no uncured Event of Default under this Lease, at the
time of exercise of such Extension Option and/or at the time of the commencement
of the Extension Term, but Landlord shall have the right to waive such
conditions herein. Tenant's exercise of the second (2nd) Extension Option shall
be conditioned upon Tenant's exercise of the first Extension Option. The rights
of Tenant contained in this Section 2.2 shall be personal to the original Tenant
named in the Summary ("ORIGINAL TENANT") and any Permitted Affiliate and may
only be exercised by the Original Tenant or such Permitted Affiliate if Tenant,
at the date of Tenant's Extension Notice, meets or exceeds the Financial
Standards set forth in Section 21.2 below. The Base Rent during each Extension
Term ("EXTENSION TERM BASE RENT") shall be an amount equal to ninety-five
percent (95%) of the then "Fair Market Rental Value" of the Building (as such
term is defined in Section 2.2(e) below), as stated on a monthly basis and
determined pursuant to this Section 2.2 as of the first (1st) day of the
applicable Extension Term ("EXTENSION TERM COMMENCEMENT DATE"); provided,
however, in no event shall the Base Rent payable during any Extension Term for
the Building be less than the Base Rent payable during the period immediately
preceding such Extension Term for the Building and provided further that, on the
first anniversary of the Extension Term Commencement Date, and on each
subsequent anniversary thereof during such Extension Term, the then payable
monthly Extension Term Base Rent shall be increased in accordance with market
rate increases, as mutually agreed to by Landlord and Tenant or, if Landlord and
Tenant cannot agree, as determined by the appraisal process described below.
Upon receipt by Landlord of Tenant's Extension Notice under this Section 2.2,
above, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the applicable Extension Term Base Rent which shall become effective as of the
respective Extension Term Commencement Date. If Landlord and Tenant have not
agreed upon the Extension Term Base Rent (including the annual market rate
increases) on or before the "Withdrawal Date" (as that term is defined below),
Tenant may elect to withdraw the Extension Notice thereby canceling Tenant's
exercise of the Extension Option. The term "WITHDRAWAL DATE" shall mean (i) if
Landlord delivers the Reminder Notice
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prior to Tenant's delivery of the Extension Notice, the date which is thirty
(30) days after the date of the Reminder Notice, or (ii) if Landlord has not yet
delivered a Reminder Notice at the time of Tenant's delivery of the Extension
Notice, the date which is the earlier of (1) the date which is eleven (11)
months prior to the end of the initial Lease Term or first Extension Term (as
applicable), or (2) the date which is sixty (60) days after the date of Tenant's
delivery of the Extension Notice. If Tenant fails to deliver written notice to
Landlord so withdrawing the Extension Notice on or before the Withdrawal Date
and if Landlord and Tenant have not agreed upon the Extension Term Base Rent
(including the annual market rate increases) within sixty (60) days after the
delivery of Tenant's Extension Notice, the Extension Term Base Rent shall be
determined as follows:
(a) Landlord and Tenant shall attempt to agree in good faith
upon a single appraiser not later than the date ("SINGLE APPRAISER DATE") which
is forty-five (45) days after delivery of Tenant's Extension Notice. If
Landlord and Tenant are unable to agree upon a single appraiser within such time
period, then Landlord and Tenant shall each appoint one appraiser not later than
five (5) days after the deadline for selecting a single appraiser. Landlord and
Tenant shall each give written notice to the other as to the name of the
appraiser it has selected, within five (5) days after the deadline for selecting
a single appraiser. Within ten (10) days thereafter, the two (2) appointed
appraisers shall appoint a third appraiser. All appraisers shall be independent
from, and disinterested in, both Landlord and Tenant.
(b) The only tasks which the appraiser(s) shall perform shall be
forming and reporting to Landlord and Tenant an opinion of the Fair Market
Rental Value (including annual market rate increases) of the Premises for use in
determining the Extension Term Base Rent.
(c) If either Landlord or Tenant fails to appoint its appraiser
within the prescribed time period, the single appraiser appointed shall
determine the Fair Market Rental Value of the Building. If both parties fail to
appoint appraisers within the prescribed time periods, or if the two (2)
appointed appraisers cannot agree on a third appraiser then either party shall
have the right to apply to the presiding judge of the Superior Court of San
Diego County for the appointment of an appraiser meeting the qualifications
hereof to determine the Fair Market Rental Value of such Building.
(d) Each party shall bear the cost of its own appraiser and the
parties shall share equally the cost of any single or third appraiser, if
applicable. All appraisers so designated herein shall have at least ten (10)
years' experience in the appraisal of commercial properties similar to the
Premises and Comparable Buildings and shall be members of professional
organizations such as MAI or its equivalent.
(e) For the purpose of such appraisal and this subsection (e),
the term "FAIR MARKET RENTAL VALUE" shall mean the price that a ready and
willing, non-equity, non-sublease tenant would pay as annual rent as of the
Extension Term Commencement Date (taking into consideration the annual market
rate increases specified in Section 2.2(b) above) and a ready and willing
landlord would accept on a non-sublease, non-renewal basis, at arm's length,
from creditworthy tenants (provided Tenant is then in compliance with the
Financial Standards specified in Section 21.2) for a five (5) year term for
unencumbered "space comparable to the Building" in Comparable Buildings. Such
"space comparable to the Building" shall mean office space consisting of an
entire building, with tenant improvements of substantially similar quality and
layout as the Premises. Fair Market Rental Value shall include or take into
consideration any lease concessions offered by landlords in lease transactions
from and after the date which is twelve (12) months prior to the Single
Appraiser Date (the "QUALIFYING PERIOD") for space comparable to the Building
within such Comparable Buildings, including, without limitation, free rent,
tenant improvement allowances or any other payments or concessions; however,
Fair Market Rental Value shall also take into consideration (i) the market trend
(i.e., all other factors being equal, comparable transactions entered into
earlier in the Qualifying Period shall be accorded less weight than comparable
transactions entered into later in the Qualifying Period), and (ii) the value in
the market of the existing improvements in the Building, as compared to the
value in the market of the existing improvements in such space comparable to the
Building.
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Further, in calculating the Fair Market Rental Rate, no consideration shall be
given to the fact that Landlord is or is not required to pay a real estate
brokerage commission in connection with the Extension Term or the fact that
comparable deals do or do not involve the payment of real estate brokerage
commissions. If there are less than two (2) lease transactions for "space
comparable to the Building," as defined in this Section 2.2(e), entered into
during the Qualifying Period, then the term "space comparable to the Building"
shall be expanded as necessary to allow appraiser(s) to consider lease
transactions covering multiple floors in a building (but less than an entire
building) with the appraiser(s) making appropriate economic adjustments to
compensate for such lease transactions in which less than the entire building is
leased by the tenant.
(f) If a single appraiser is chosen, then such appraiser shall
determine the Fair Market Rental Value of the Building. Otherwise, the Fair
Market Rental Value of the Building shall be the arithmetic average of the two
(2) appraisals which are closest in amount, and the third appraisal shall be
disregarded.
(g) Landlord and Tenant shall instruct the appraiser(s), in
writing, to complete their written determination of the Fair Market Rental Value
not later than thirty (30) days after their selection. If the Fair Market
Rental Value has not been determined by such date, then the Fair Market Rental
Value shall be determined thereafter, and if it has not been determined by the
Extension Term Commencement Date, then Tenant shall continue to pay Landlord
monthly installments of Base Rent in the amount applicable to the Building
immediately prior to the Extension Term Commencement Date until the Fair Market
Rental Value is determined. When the Fair Market Rental Value of the Building
is determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between the monthly installments of Base Rent actually paid by Tenant
to Landlord subsequent to the Extension Term Commencement Date and the new
monthly installments of Base Rent which are determined to have been actually
owing during such period in accordance with this Section 2.2, plus interest at
the Interest Rate from the date the applicable monthly installments were due
until such difference is actually paid.
ARTICLE 3
BASE RENT
3.1 INITIAL BASE RENT. Tenant shall pay, without notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or at such
other place as Landlord may from time to time designate in writing, in currency
or a check for currency which, at the time of payment, is legal tender for
private or public debts in the United States of America, base rent ("BASE RENT")
as set forth in Section 6 of the Summary, payable in equal monthly installments
as set forth in Section 6 of the Summary in advance on or before the first day
of each and every month during the Lease Term, without any offset or deduction
whatsoever except as otherwise expressly set forth in this Lease. Base Rent
shall commence on the Lease Commencement Date. The Base Rent for the first full
month of the Lease Term shall be paid on or before the date which is ninety (90)
days after Landlord notifies Tenant in writing that it has commenced
construction of the Base Shell and Core with respect to such Building. Landlord
shall invest such payment of the first month's Base Rent in a Certificate of
Deposit with a maturity date approximately that of the Lease Commencement Date
in a financial institution selected by Landlord, and any interest accruing
thereon shall be credited to Tenant's Base Rent obligations for the second (2nd)
full month of the Lease Term. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the Rent.
All other payments or adjustments required to be made under the terms of this
Lease that require proration on a time basis shall be prorated on the same
basis.
3.2 ADJUSTMENTS TO BASE RENT. The Base Rent rate payable (per rentable
square foot) with respect to the Building shall be increased on the second (2nd)
anniversary of the Lease
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Commencement Date and on each subsequent second (2nd) anniversary thereof during
the initial Lease Term to an amount equal to 106.5% of the Base Rent rate
payable (per rentable square foot) during the immediately prior period, subject
to further adjustment during any Extension Term in accordance with Section 2.2
above.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.9 and
4.2.2 of this Lease, respectively, which are in excess of the amount of Building
Direct Expenses applicable to the "Base Year" for such Building, as that term is
defined in Section 4.2.1, below; provided, however, if the Lease Commencement
Date occurs after January 1 of the Base Year, the amount of Building Direct
Expenses applicable to the Base Year shall be increased in order to reflect
Building Direct Expenses for an entire twelve (12) month period. Further, in no
event shall any decrease in Building Direct Expenses for such Building for any
"Expense Year" for the Building as that term is defined in Section 4.2.6 below,
below Building Direct Expenses for the Base Year entitle Tenant to any decrease
in Base Rent for the Building or any credit against sums due under this Lease.
It is the intent of Landlord and Tenant hereunder that Building Direct Expenses
be calculated for the Building separately based on the Building Direct Expenses
allocated to such Building. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are collectively referred to in this Lease as the "ADDITIONAL RENT", and the
Base Rent and the Additional Rent are collectively referred to in this Lease as
"RENT." All amounts due under this Article 4 as Additional Rent shall be
payable for the same periods and in the same manner as the Base Rent. Without
limitation on other obligations of Tenant which survive the expiration of the
Lease Term, the obligations of Tenant to pay the Additional Rent provided for in
this Article 4, and the obligation of Landlord to refund to Tenant any
overpayment of Building Direct Expenses pursuant to Section 4.2 below, shall
survive the expiration of the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 7.1
of the Summary.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses," as those terms are defined in Sections
4.2.3 and 4.2.4 below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses," as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts which Landlord pays or accrues during any Expense Year because of or in
connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof.
Without limiting the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the cost of supplying
all
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utilities to the Project (except that electricity supplied to the Premises shall
be separately paid for by Tenant pursuant to Section 6.2.2 below), the cost of
operating, repairing, maintaining, and renovating the utility, telephone,
mechanical, sanitary, storm drainage, and elevator systems, and the cost of
maintenance and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections (other than those obtained in
connection with the initial construction of the Building and the Tenant
Improvements) and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project as reasonably determined by Landlord; (iv) the cost of landscaping,
relamping, and supplies, tools, equipment and materials used in the operation,
repair and maintenance of the Project, or any portion thereof; (v) the cost of
parking area (including any parking structures) repair, restoration, and
maintenance; (vi) reasonable fees and other costs, including reasonable
management, consulting, legal and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental agreements and the
fair rental value of any on-site or off-site management office space for the
Project (as described in Section 6.1.4 below) not to exceed 2,000 rentable
square feet (which fair rental value for the purpose of determining the Direct
Expenses for the Base Year and any subsequent Expense Years shall be the same
rate per rentable square foot as the monthly rental rate per rentable square
foot paid by Tenant to Landlord from time to time for Building 1 under the
Building 1 Lease); (viii) wages, salaries and other compensation and benefits,
including taxes levied thereon, of all non-executive persons reasonably engaged
in the operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the reasonable sharing of costs by the Project
(including, without limitation, any assessments and association dues under the
CC&R's); (x) operation, repair, maintenance and replacement of all systems and
equipment and components thereof of the Project including, but not limited to
HVAC systems, electrical, plumbing and life-safety systems, elevators, any
Project locker rooms and workout facilities (except that the cost of electricity
used to operate the HVAC system shall be paid by Tenant directly pursuant to
Section 6.2.2 below); (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
common areas, maintenance and replacement of curbs, roadways, driveways, and
walkways, repair to roofs and re-roofing; (xii) amortization (including interest
on the unamortized cost) over the useful life as Landlord shall reasonably
determine, of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, or any portion
thereof; (xiii) the cost of capital improvements or other costs incurred in
connection with the Project (A) which are intended, in good faith, to effect
economies in the operation or maintenance of the Project, or any portion
thereof, and only to the extent such anticipated economies exceed the cost of
such item, (B) that are required to comply with present or anticipated
conservation programs, (C) required by laws, ordinances or regulations enacted
after the date permits for the construction of the Building were obtained, and
(D) includable in Operating Expenses pursuant to consistently applied and sound
accounting and management principles (including, but not limited to, the repair,
resurfacing and replacement of parking lots and Project roadways and driveways);
provided, however, that any capital expenditure shall be amortized (including
interest on the amortized cost at Landlord's actual cost of funds) over its
useful life as Landlord shall reasonably determine; and (xiv) costs, fees,
charges or assessments imposed by, or resulting from any mandate imposed on
Landlord by, any federal, state or local government for fire and police
protection, trash removal, community services, or other services which do not
constitute "Tax Expenses" as that term is defined in Section 4.2.8 below.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:
(a) costs incurred in connection with the original construction
of the Building and costs of repairing, replacing or otherwise correcting
latent defects, the cost of any "tap fees" or one-time lump sum sewer or
water connection fees for the Building payable in connection with the
original construction of the Building, costs incurred (less costs of
recovery) for any item to the extent covered by a manufacturer's,
materialman's, vendor's or contractor's warranty and paid by such
manufacturer, materialman, vendor or contractor (provided, however, the
costs incurred for any normal repair or maintenance
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item (not attributable to the correction of start-up problems, repairs or
replacements) to the extent covered by a manufacturer's, materialman's,
vendor's or contractor's warranty in the Base Year (and not in a subsequent
Expense Year) and paid by such manufacturer, materialman, vendor or
contractor during the Base Year shall be included in Operating Expenses);
non-cash items such as deductions for depreciation and amortization of the
Building and the Building Systems and Equipment;
(b) costs, including marketing costs, legal fees, space
planners' fees, and brokerage fees incurred in connection with the original
construction or development of the Project or the original or future
leasing of the Project, and costs, including permit, license and inspection
costs and allowances and other concessions, incurred with respect to the
installation of tenant improvements made for new tenants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space for tenants or other occupants (or
prospective tenants or occupants) of the Project;
(c) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(d) costs for which Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's
carrier (or if Landlord fails to carry the insurance required to be carried
by Landlord pursuant to Section 10.4 below, costs which would have been
covered by insurance had Landlord obtained the coverage required to be
carried under this Lease) or by the Association under the CC&R's or by
anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;
(e) any bad debt loss, rent loss, or reserves for bad debts or
rent loss;
(f) costs associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated
with the operation of the Project). Costs associated with the operation of
the business of the partnership or entity which constitutes Landlord
including costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of the
Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, and
costs incurred in connection with any disputes between Landlord and its
employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord's general corporate overhead and
general and administrative expenses;
(g) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and
managing the Project vis-a-vis time spent on matters unrelated to operating
and managing the Project; provided, that in no event shall Operating
Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of regional Project manager or
Project engineer;
(h) amount paid as ground rental for the Project by Landlord;
(i) any compensation paid to clerks, attendants or other persons
in commercial concessions operated by Landlord, provided that any
compensation paid to any concierge at the Project and any compensation paid
regarding parking operations shall be includable as an Operating Expense;
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(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Expenses as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an emergency
condition in the Project, or during periods when the systems or equipment
is being repaired;
(k) all items and services for which Tenant or any other tenant
in the Project reimburses Landlord or which Landlord provides selectively
to one or more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;
(n) costs incurred to comply with laws or otherwise relating to
the removal or abatement of hazardous material in the soil and costs
incurred to comply with laws or otherwise relating to the removal or
abatement of hazardous material in the Building or any Common Area
improvements except where such removal or abatement in the Building or
Common Area improvements is required to be performed during the Lease Term
by laws not in effect as of the Lease Commencement Date (in which case an
amount not exceeding twenty-five cents (.25CENTS) per rentable square foot
of the Building for the cost of such removal or abatement may be included
in Operating Expenses and any remaining costs shall be capitalized and
amortized over a useful life determined in accordance with generally
accepted accounting principles (but in no event less than ten (10) years)
but only fifty percent (50%) of such amortized amount may be included in
Operating Expenses in each calendar year during such amortization term);
(o) costs arising from Landlord's charitable or political
contributions;
(p) expenses directly resulting from the active or gross
negligence of Landlord, its agents, servants or employees;
(q) rental for any space in the Building set aside for
conference facilities, storage facilities or exercise facilities;
(r) the amounts of any payments by Landlord or to its affiliates
for goods or services in the Project in excess of a competitive (but not
necessarily the lowest) rate;
(s) costs (not including Tax Expenses), incurred in connection
with the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building, including brokerage commissions, consultant's,
attorneys' and accountant's fees, closing costs, title insurance premiums,
transfer taxes and interest charges;
(t) costs incurred by Landlord to correct any Year 2000 ("Y2K")
problems incurred as a direct result of any Y2K problems (provided that
this exclusion shall not apply to Y2K problems of utility providers to
Landlord);
(u) costs attributable to increases in expenses during the Lease
Term for management fees unless the total management fees for such Expense
Year (including any such increases therein) are not in excess of a
competitive (but not necessarily the lowest) rate for Comparable Buildings;
and
(v) assessments, charges, and dues under the CC&R's which would
result in a duplicative charge to Tenant or a charge which is otherwise
precluded under this Section 4.2.7 or other provisions of this Lease
including without limitation (1) any expense, cost
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or charge which would be duplicative of a charge for which Tenant already
is responsible under this Lease; (2) any expense for property management
which would be duplicative of a charge for which Tenant already is
responsible under this Lease; (3) special assessments levied under the
CC&R's which would be precluded by subsection 4.2.7(c) above; and (4) any
expense precluded by Section 5.3 below.
With respect to Landlord's regional Project manager, such individual's
wages and benefits may be included in Operating Expenses; provided, however,
that (1) the amount so included in Operating Expenses for the Project shall not
increase by more than Two Thousand Dollars ($2,000.00) in the first Expense Year
after the Base Year and (2) the maximum amount includable in Operating Expenses
in each Expense Year thereafter shall be one hundred five percent (105%) of the
maximum amount includable in Operating Expenses for the immediately preceding
Expense Year, except that in no event shall such amount included in Operating
Expenses in any such subsequent Expense Year be more than one hundred ten
percent (110%) of the average amount so included in the immediately preceding
two (2) Expense Years. By way of example only, and not as a limitation upon the
foregoing, if the amount of such wages and benefits included in Operating
Expenses for the Project in the Base Year is Forty Thousand Dollars
($40,000.00), such wages and benefits are Forty-Two Thousand Dollars
($42,000.00) in the first (1st), second (2nd) and third (3rd) Expense Years
after the Base Year, but in the fourth (4th) Expense Year after the Base Year
such wages and benefits are increased to Forty-Eight Thousand Dollars
($48,000.00), the maximum amount includable in Operating Expenses for the fourth
(4th) Expense Year after Base Year shall be Forty-Six Thousand Two Hundred
Dollars ($46,200.00) (i.e., 110% of $42,000.00) and the maximum amount
includable in the Operating Expenses for the fifth (5th) Expense Year after Base
Year shall be Forty-Eight Thousand Five Hundred Ten Dollars ($48,510.00) (i.e.,
110% of the average of $42,000.00 and $46,200.00).
There shall be deducted from Operating Expenses the following items in the
year in which they are applicable: (i) insurance and condemnation proceeds to
the extent that such proceeds relate to costs and expenses previously included
in Operating Expenses, (ii) all other funds recovered from any tenant of the
Building, contractors, or other parties as payment for expenses which were
previously included in Operating Expenses, other than tenants' contributions for
their proportionate share of Operating Expenses, and (iii) all funds available
through the CC&R's which were previously included in Operating Expenses.
Operating Expenses shall reflect reductions for cash discounts and trade
discounts taken by Landlord.
If Landlord does not carry a form of insurance coverage (e.g., earthquake
insurance) for the Building during any part of the Base Year but subsequently
obtains such insurance for the Building during the Lease Term, then from and
after the date upon which Landlord obtains such insurance coverage and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent
calendar year. Conversely, if Landlord carries a form of insurance coverage
(e.g., earthquake insurance) for the Building during any part of the Base Year
but subsequently no longer carries such form of insurance coverage, then from
and after the date upon which Landlord no longer carries such insurance coverage
and continuing throughout the period during which Landlord no longer maintains
such insurance coverage, Operating Expenses for the Base Year shall be deemed to
be decreased by the amount of premium Landlord incurred for such insurance for
the same period of time during the Base Year as such insurance was no longer
maintained by Landlord during such subsequent calendar year.
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, then Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Building is
not at least ninety-five percent (95%) occupied during all or a portion of the
Base Year or any
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Expense Year, Landlord shall make an appropriate adjustment to the components of
Operating Expenses for such year to determine the amount of Operating Expenses
that would have been paid had such Building been ninety-five percent (95%)
occupied; and the amount reasonably so determined shall be deemed to have been
the amount of Operating Expenses for such year. Operating Expenses for the Base
Year shall not include market-wide labor-rate increases due to extraordinary
circumstances, including, but not limited to, boycotts and strikes, or utility
rate increases due to extraordinary circumstances including, but not limited to,
conservation surcharges, boycotts, embargoes or other shortages (unless such
labor rate or utility rate increases remain in effect after the Base Year, in
which event the Operating Expenses for the Base Year shall be adjusted when the
labor rate increases or utility rate increases adjust following the cessation of
the extraordinary circumstances causing such increases in the first place), or
amortized costs relating to capital improvements.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property taxes
imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project, or any portion
thereof. Tax Expenses for the Base Year of the Lease Term for the Building (and
the underlying land for the tax parcel) shall be calculated as if the value of
such Building, the Base, Shell and Core of such Building and the Tenant
Improvements thereto and related improvements to the Common Area as reasonably
allocated to such Building were fully assessed. With respect to Tenant
Improvements in each Building, such Tax Expenses shall be calculated to include
the actual "soft" and "hard" costs of such improvements. If Tenant fails to
utilize the entire Tenant Improvement Allowance for any particular Building for
Tenant Improvements, thereupon Tax Expenses shall be adjusted to the actual
amount so utilized.
4.2.8.2 Tax Expenses shall include, without limitation:
(i) any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax or
business license tax with respect to the receipt of or measured by the amount of
such rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; and (iv) any assessment, tax, fee, levy or
charge, upon this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises.
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4.2.8.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.8.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.8.4 If in any Expense Year subsequent to the Base Year
(the "ADJUSTMENT YEAR"), the amount of Tax Expenses decreases below the amount
of Tax Expenses for the Base Year as a result of a Proposition 8 reduction, then
for purposes of all subsequent Expense Years, including the Expense Year in
which such decrease in Tax Expenses occurs, the Building Direct Expenses for the
Base Year shall be decreased by an amount equal to such decrease in assessed
value or direct assessments, as applicable, in the Adjustment Year. Conversely,
if the Tax Expenses thereafter are decreased by a lesser amount during any
comparison year subsequent to the Adjustment Year (the "READJUSTMENT YEAR") as a
result of Landlord's failure to secure a Proposition 8 reduction which is
greater than or equal to the Proposition 8 reduction secured during the
Adjustment Year, then for purposes of all subsequent comparison years, including
the comparison year in which such lesser decrease in Tax Expenses occurs, the
Building Direct Expenses for the Base Year shall only be decreased by an amount
equal to the decrease in assessed value or direct assessments, as applicable,
during such Readjustment Year which resulted from Landlord's failure to secure a
Proposition 8 reduction greater than or equal to the Proposition 8 reduction
secured during the Adjustment Year; provided that any costs and expenses
incurred by Landlord in securing any Proposition 8 reduction shall not be
included in Building Direct Expenses for purposes of this Lease. Landlord and
Tenant acknowledge that this Section 4.2.8.4 is not intended to in any way
affect (A) the inclusion in Tax Expenses of the statutory two percent (2%)
annual increase in Tax Expenses (as such statutory increase may be modified by
subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13, which shall be governed pursuant to the
terms of Sections 4.2.8.1 through 4.2.8.3, above and Section 4.4.4 below.
Notwithstanding the foregoing, in the event that the Project is reassessed (the
"REASSESSMENT") for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, and such Reassessment results
in a decrease in Tax Expenses, the component of Tax Expenses for the Base Year
which is attributable to the assessed value of the Project under Proposition 13
prior to the Reassessment (without taking into account any Proposition 8
reductions) shall be reduced for the purposes of comparison to all subsequent
Expense Years (commencing with the Expense Year for which the Reassessment is
first attributable) to an amount equal to the real estate taxes based upon such
Reassessment.
4.2.9 "TENANT'S SHARE" with respect to Building Direct Expenses,
shall equal the percentage which the total rentable square footage of the space
leased by Tenant in such Building bears to the total rentable square footage of
the Building. In the event either the rentable square feet of the Premises
and/or the total rentable square feet of the Building is remeasured pursuant to
Section 1.2 above, Tenant's Share shall be appropriately adjusted, and, as to
the Expense Year in which such change occurs, Tenant's Share for such Expense
Year shall be determined on the basis of the number of days during such Expense
Year that each such Tenant's Share was in effect.
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4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the
Building will be a part of a multi-building project and that the costs and
expenses incurred in connection with the Project (I.E. the Direct Expenses)
should be shared among the tenants of the Building and the tenants of the
Adjacent Buildings in the Project. Such allocation shall be made in accordance
with the CC&R's; provided, however, that to the extent such allocation is not
addressed in the CC&R's, Landlord shall, in Landlord's reasonable judgment,
determine which Direct Expenses are properly allocable to an individual building
(because the expense applies to only such building) and which Direct Expenses
shall be allocable to tenants of more than one (1) building (in which case
Building Direct Expenses shall include those expenses so allocated to the
Building based upon the relative square footages of the affected buildings).
4.3.2 COST POOLS. Notwithstanding anything to the contrary
contained herein, Landlord shall have the right, from time to time, to equitably
allocate some or all of the Direct Expenses for the Project among different
portions or occupants of the Project (the "COST POOLS"), in Landlord's
reasonable judgment. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building of the Project or of the Project, and the
retail space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense
Year ending or commencing within the Lease Term, Tenant's Share of Building
Direct Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "EXCESS").
4.4.1 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. By May 1
of each year, Landlord shall give Tenant a yearly expense estimate statement
(the "ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate
(the "ESTIMATE") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "ESTIMATED
EXCESS") as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish
the Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary but Landlord shall not do
so more than twice during any Expense Year. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the next
to last sentence of this Section 4.4.1). Such fraction shall have as its
numerator the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator. Until
a new Estimate Statement is furnished (which Landlord shall have the right to
deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12th) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant. Landlord shall maintain books and records with respect to
Building Direct Expenses in accordance with generally accepted and sound
accounting and management practices, consistently applied.
4.4.2 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. In addition, Landlord shall give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year for the
Building, and which shall indicate the amount of the Excess. Upon receipt of
the Statement for each Expense Year commencing or ending during the Lease Term,
if an Excess is present, Tenant shall pay, with its next installment of Base
Rent due, the full amount of the Excess for such Expense Year, less the amounts,
if any, paid during such Expense Year as Estimated Excess, and if Tenant paid
more as Estimated Excess than the actual Excess, Tenant shall receive a credit
in the amount of Tenant's overpayment against Rent next
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due under this Lease. In addition, Landlord shall, within ten (10) days after
written request from Tenant, distribute (or if Landlord does not control the
Association, request the Association to distribute) to Tenant a copy of (1) the
budget, notice and summary prepared pursuant to Section 3.3 of the CC&R's and
(2) the accounting prepared pursuant to Section 3.6(c) of the CC&R's. The
failure of Landlord to timely furnish the Statement, or any other information
required under this Section 4.4.2, for any Expense Year shall not prejudice
Landlord or Tenant from enforcing its rights under this Article 4. Even though
the Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Share of Building Direct Expenses for the
Expense Year in which this Lease terminates, if an Excess if present, Tenant
shall pay to Landlord such amount within thirty (30) days, and if Tenant paid
more as Estimated Excess than the actual Excess, Landlord shall, within thirty
(30) days, deliver a check payable to Tenant in the amount of the overpayment.
The provisions of this Section 4.4.2 shall survive the expiration or earlier
termination of the Lease Term.
4.4.3 TENANT'S AUDIT RIGHT. Within six (6) months after receipt
of a Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set
forth in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default in the payment of Base Rent
or Building Direct Expenses after expiration of all applicable cure periods and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord's records in strict confidence. Landlord shall cooperate with Tenant
in obtaining all necessary or appropriate information from the Association.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement by written notice to
Landlord within thirty (30) days after the Review Period shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement. If after such
inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing that Tenant still disputes such amounts, a certification as
to the proper amount shall be made by an independent certified public accountant
selected by Landlord and reasonably approved by Tenant who is a member of a
nationally or regionally recognized accounting firm. Landlord shall cooperate
in good faith with Tenant and the accountant to show Tenant and the accountant
the information upon which the certification is to be based. If such
certification by the accountant proves that the Building Direct Expenses set
forth in the Statement were (i) overstated by less than two percent (%), then
the cost of the accountant and the cost of such certification shall be paid for
by Tenant, (ii) overstated by two percent (2%) or more but less than three
percent (3%), then the cost of the accountant and the cost of certification
shall be split evenly between Landlord and Tenant, or (iii) overstated by three
percent (3%) or more, then the cost of the accountant and the cost of such
certification shall be paid for by Landlord. Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification.
4.4.4 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease in the event that at any time
during the first seven (7) years of the Lease Term, any sale, refinancing, or
change in ownership of such Building is consummated, and as a result thereof,
and to the extent that in connection therewith, a Reassessment occurs pursuant
to the terms of Proposition 13, then the terms of this Section 4.4.4 shall apply
to such Reassessment for the Building.
4.4.4.1 THE TAX INCREASE. For purposes of this Article 4,
the term "Tax Increase" shall mean that portion of the Tax Expenses, as
calculated immediately following the Reassessment, which is attributable solely
to the Reassessment. Accordingly, the term Tax Increase shall not include any
portion of the Tax Expenses, as calculated immediately following the
Reassessment, which is attributable to (i) the initial assessment of the value
of the land associated with the Building, the Base, Shell and Core of such
Building, improvements in the
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Project or any "soft" costs, permit costs, site improvement costs or
entrepreneurial profit added by the assessor due to construction of the Project,
(ii) assessments which were pending immediately prior to the Reassessment which
assessments were conducted during, and included in, such Reassessment, or which
assessments were otherwise rendered unnecessary following the Reassessment, or
(iii) the annual inflationary increase of real estate taxes permitted to be
assessed annually under Proposition 13.
4.4.4.2 TAX INCREASE PROTECTION. During the first seven
(7) years of the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase. Notwithstanding the foregoing, Landlord shall be
permitted to pass through to Tenant any Tax Increase resulting from a change in
ownership of the Project arising out of the sale, financing or merger of all or
substantially all of the assets or stock of and/or partnership interests and/or
limited liability company interests owned by Kilroy Realty Corporation and/or
its affiliates.
4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13
PROTECTION AMOUNT ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax
Expenses which Tenant is not obligated to pay or will not be obligated to pay
during the Lease Term in connection with a particular Reassessment pursuant to
the terms of this Section 4.4.4, shall be sometimes referred to hereinafter as
"Proposition 13 Protection Amount." If the occurrence of a Reassessment is
reasonably foreseeable by Landlord and the Proposition 13 Protection Amount
attributable to such Reassessment can be reasonably quantified or estimated for
each Lease Year commencing with the Lease Year in which the Reassessment will
occur, the terms of this Section 4.4.4.3. shall apply to each such Reassessment.
Upon notice to Tenant, Landlord shall have the right to purchase the Proposition
13 Protection Amount relating to the applicable Reassessment (the "Applicable
Reassessment"), at any time during the Lease Term, by paying to Tenant an amount
equal to the "Proposition 13 Purchase Price," as that term is defined below,
provided that the right of any successor of Landlord to exercise its right of
repurchase hereunder shall not apply to any Reassessment which results from the
event pursuant to which such successor of Landlord became the landlord under
this Lease. As used herein, "Proposition 13 Purchase Price" shall mean the
present value of the Proposition 13 Protection Amount remaining during the Lease
Term, as of the date of payment of the Proposition 13 Purchase Price by
Landlord. Such present value shall be calculated (i) by using the portion of
the Proposition 13 Protection Amount attributable to each remaining Lease Year
(assuming for purposes of this computation that the amount of such Proposition
13 Protection Amount benefited Tenant on an equal monthly basis at the end of
each month during each Lease Year), as the amount to be discounted, and (ii) by
using an eight percent (8%) discount rate, compounded annually, for each monthly
amount to be discounted. Upon such payment of the Proposition 13 Purchase
Price, the provisions of Section 4.4.4.2 of this Lease shall not apply to any
Tax Increase attributable to the Applicable Reassessment. Since Landlord is
estimating the Proposition 13 Purchase Price because a Reassessment has not yet
occurred, then when such Reassessment occurs, if Landlord has underestimated the
Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, Tenant's
Rent next due shall be credited with the amount of such under-estimation, and if
Landlord overestimates the Proposition 13 Purchase Price, then upon notice by
Landlord to Tenant, Rent next due shall be increased by the amount of the
overestimation. The amount of any such underestimate or overestimate shall be
calculated by taking the difference between the Proposition 13 Purchase Price
for the Applicable Reassessment actually paid to Tenant and the Proposition 13
Purchase Price for the Applicable Reassessment as it should have been computed
had all relevant facts concerning the Applicable Reassessment been known at the
time such Purchase Price was originally computed, and adding interest thereto at
a rate per annum equal to ten percent (10%), compounded annually, from the date
such Purchase Price was paid to Tenant through the date that the amount of the
underestimate or overestimate is to be credited or debited (as the case may be)
against Rent next due hereunder.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment, furniture, fixtures
and any other personal property located in or about the Premises. If any such
taxes on Tenant's equipment, furniture, fixtures and
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any other personal property are levied against Landlord or Landlord's property
or if the assessed value of Landlord's property is increased by the inclusion
therein of a value placed upon such equipment, furniture, fixtures or any other
personal property and if Landlord pays the taxes based upon such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof but only under proper protest if requested by Tenant, Tenant shall upon
demand repay to Landlord the taxes so levied against Landlord or the proportion
of such taxes resulting from such increase in the assessment, as the case may
be.
4.5.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes at a valuation higher than the Tenant Improvement Allowance
actually used to build-out the Premises then the Tax Expenses levied against
Landlord or the property by reason of such excess assessed valuation shall be
deemed to be taxes levied against personal property of Tenant and shall be
governed by the provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall
pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer
tax or value added tax, or any other applicable tax on the rent or services
herein or otherwise respecting this Lease, (ii) taxes assessed upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facilities; or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises for office, software
development, training, research and development, storage, distribution and other
lawful uses permitted under the CC&R's (as defined below) and the Project's
permitted zoning and for no other purpose or purposes whatsoever without
Landlord's consent, which may be withheld in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in EXHIBIT D, attached hereto, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project.
Tenant shall not do or permit anything to be done in or about the Premises which
will obstruct or interfere with the rights of other tenants or occupants of the
Buildings or Project, or injure them or use or allow the Premises to be used for
any unlawful purpose, nor shall Tenant cause or maintain any nuisance in, on or
about the Premises. Tenant shall not use or knowingly allow another person or
entity to use any part of the Premises for the storage, use, treatment,
manufacture or sale of "Hazardous Material," (as that term is defined in Section
29.23 of this Lease); provided, however, Tenant may use commercially reasonable
amounts of any Hazardous Material as is normal and customary for general office
use so long as Tenant complies, at Tenant's sole cost and expense, with all
Applicable Laws relating thereto.
5.3 CC&R'S. Tenant acknowledges that Landlord intends to record an
Agreement Between Land Owners Including Covenants, Conditions and Restrictions
and Grants of Easements for Carmel Center and Including Termination of Both
Former Declaration and Prior Grants of Easements (the "CC&R'S") over the
Project. Tenant hereby approves the draft of CC&R's attached hereto as Exhibit
"F" and made a part hereof and hereby subordinates this Lease to the CC&R's and
any amendments or modifications thereto; provided, however, that any
modifications to the draft of the CC&R's attached as EXHIBIT "F" which may have
a material effect on Tenant's use or enjoyment of, or access to, the Premises or
Project shall be subject to
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Tenant's prior approval, which approval shall not be unreasonably withheld or
delayed. Tenant shall, within fifteen (15) days after request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination of this Lease to the CC&R's.
As of the date of execution of this Lease, Landlord contemplates that it will be
the declarant under the CC&R's and a California nonprofit mutual benefit
corporation has been, or will be, established (the "ASSOCIATION") and charged
with certain duties under the CC&R's. Certain individuals who are directors,
officers or employees of Landlord, the members of Landlord, or affiliates
thereof, are, or will be, members of the board of directors of the Association.
The board shall have the right to appoint members and alternatives members of
the Architectural and Development Review Committee (the "COMMITTEE")
contemplated by the CC&R's. As an owner of property subject to the CC&R's,
Landlord is a member of the Association for each parcel within the Project which
is subject to assessments under the CC&R's. With respect to Landlord's
respective capacities as declarant, member of the board, and a member of the
Committee under the CC&R's, Landlord covenants not to do any of the following
without Tenant's consent (which shall not be unreasonably withheld) (i) take any
action which in Landlord's reasonable opinion will jeopardize or be detrimental
to Tenant's rights under this Lease and Tenant's use and enjoyment of its
leasehold estate, (ii) take any action which has the effect of materially
increasing assessments or costs incurred by Landlord under the CC&R's, which
will result in an unreasonable increase in Direct Expenses in Expense Years
after the Base Year, (iii) vote in favor of or approve any new improvements,
operation or use on any of the properties covered by the CC&R's without first
consulting with Tenant, and (iv) knowingly allow any use of the parking
facilities within the Project (as defined in this Lease) that is not allowed
pursuant to the reciprocal parking rights described in the CC&R's. Landlord
shall provide (or if Landlord does not control the Association, Landlord will
request the Association to provide) to Tenant the draft budget prepared from
time to time in connection with the CC&R's for Tenant's review and comment, and
Landlord will reasonably consider Tenant's comments in preparing the budget.
Further, Landlord represents and warrants that the signage contemplated by this
Lease is in compliance with the CC&R's and the Sign Plan defined therein.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating, ventilation and
air conditioning ("HVAC") , pursuant to the HVAC service levels set forth in
EXHIBIT "G" attached hereto, from Monday through Friday, during the period from
6:00 A.M. to 7:00 P.M. and on Saturday during the period from 8:00 A.M. to 12:00
P.M. (the "BUILDING HOURS"), except for the dates of observation of New Year's
Day, Presidents Day, Independence Day, Labor Day, Memorial Day, Thanksgiving
Day, and Christmas Day and other nationally recognized holidays that are not
nationally recognized as of the date of this Lease (collectively, the
"HOLIDAYS"). Notwithstanding the foregoing, Landlord shall change the Building
Hours as requested by Tenant from time to time (but not more than two (2) times
per calendar year) so long as (i) the total Building Hours for the weekly period
(i.e., Monday through Sunday) do not exceed sixty-nine (69) hours, (ii) Tenant
leases the entire Building, (iii) any such Building Hours so designated by
Tenant for any day must be consecutive hours, and (iv) Tenant shall be
responsible for any additional reasonable costs incurred by Landlord as a result
of such change in hours requested by Tenant (which costs shall be payable as
Additional Rent within thirty (30) days after Tenant's receipt of invoice
therefor). Tenant shall be entitled to install, as an initial Tenant
Improvement or as an Alteration, dedicated heating, ventilation and air
conditioning units ("PACKAGE UNITS") within or serving the Premises at Tenant's
sole cost and expense (but not window units). The plans and specifications for
any Package Units shall, as indicated in Article 8 below and the Tenant Work
Letter (as applicable), be subject to Landlord's reasonable approval and the
electricity required to power such Package Units shall be included within the
allotment set forth in Section 6.1.2 below and such electricity and any other
utilities used by such Package Units shall be payable by Tenant in accordance
with
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Section 6.2 below. Tenant shall be solely responsible for maintenance and
repair of the Package Units and such units shall be considered to be a fixture
within the Premises and shall remain upon the Premises upon the expiration or
earlier termination of Lease Term unless Landlord requires Tenant to remove such
items upon expiration or earlier termination of this Lease pursuant to the
provisions of Section 8.5 below. Notwithstanding the foregoing, Tenant may
remove any "Libert" or similar type HVAC units from the Premises at any time
prior to expiration or earlier termination of the Lease Term provided that
Tenant removes all associated wiring and cabling, repairs any damage resulting
from such removal and restores the Premises to the condition prior to the
placement of such unit(s), reasonable wear and tear excepted.
6.1.2 Landlord shall provide adequate electrical wiring,
facilities and power sufficient to provide Tenant with four (4) watts per
rentable square foot of connected electrical load for Tenant's equipment and
sufficient to provide an additional one point five (1.5) watts per rentable
square foot of connected electrical load for Tenant's lighting fixtures. Any
such electrical usage shall be subject to applicable laws and regulations.
Tenant shall bear the cost of replacement of any non-Building standard lamps,
starters and ballasts for lighting fixtures within the Premises; replacement of
any such Building standard items (as shown on the Specifications) shall be
included in Operating Expenses.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall manage the Project and employ qualified
property management personnel and maintenance personnel to operate and manage
the Project in accordance with a standard which is not less than customarily
observed in the operation and management of Comparable Buildings. Such
management personnel and maintenance personnel shall, at a minimum, include the
following: upon completion of the Building, on-site management shall include a
full-time property manager, an assistant property manager and an allocation of
time for a regional property manager; engineering staff will include one (1)
senior full-time engineer as of the Lease Commencement Date for Building 1 and
an additional journeyman level engineer to be hired upon the Lease Commencement
Date for the initial Floor Group for Building 3 and stationed at the Project;
and one (1) full-time day porter will be stationed at the Project upon the Lease
Commencement Date for Building 1 whose duties shall be as specified in EXHIBIT
"H-2." The management office for the Project shall be located in the Del Mar
Heights area until such time as the Building has been completed, at which time
the management office for the Project shall be located within the Project for
the remainder of the Lease Term. Landlord shall at all times comply with the
service levels and performance standards specifically described in EXHIBIT "G"
and EXHIBIT "H-1" and EXHIBIT "H-2", attached hereto, which may be modified by
Landlord from time to time so long as an equivalent or better level of service
is provided and such modification is reasonable and customary for Comparable
Buildings; provided, however, that if any such modification is made by Landlord
and results in an increase in Operating Expenses, then from and after the date
upon which such modification is effective and continuing throughout the period
during which such modification is effective, Operating Expenses for the Base
Year shall be increased by the amount Landlord reasonably determines it would
have incurred had the modification been in effect throughout the Base Year.
6.1.5 Landlord shall provide janitorial services five (5) days per
week except the date of observation of the Holidays, in and about the Building
in accordance with the standards described in EXHIBIT "H-1" attached hereto and
window washing services in accordance with a standard which is not less than
that customarily observed in other Comparable Buildings. Notwithstanding the
foregoing, Tenant may elect upon reasonable prior notice to Landlord to require
Landlord to change the provider of such janitorial services in the Building in
accordance with, and subject to, Section 6.7 below.
6.1.6 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours; Landlord shall have one
elevator available at all other times, including Holidays.
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6.1.7 Landlord, at its sole cost but includable as an Operating
Expense, shall provide a security system for the Project, including equipment,
on-site personnel, procedures and systems as provided in Exhibit "I" attached
hereto and made a part hereof. Security procedures shall be implemented to
regulate access to the Project during certain hours provided that, subject to
such restrictions and subject to the other provisions of this Lease, Tenant
shall have access to the Premises seven (7) days a week, twenty-four (24) hours
per day. Subject to Landlord's reasonable approval of Tenant's plans and
specifications and Tenant's compliance with the terms and conditions of Article
8, Tenant shall be entitled to install its own security systems for the
Premises, which shall be located within the Premises and shall not interfere
with the Project systems.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems (collectively, "BUILDING SYSTEMS AND EQUIPMENT") .
6.2 UTILITIES COSTS; OVERSTANDARD TENANT USE.
6.2.1 If Tenant uses heat-generating machines, machines other than
normal office machines, or equipment or lighting other than Building standard
lights in the Building, which adversely and materially affects the temperature
otherwise maintained by the air conditioning system or materially increase the
water normally furnished for such Building by Landlord pursuant to the terms of
Section 6.1 of this Lease, Landlord shall have the right to install
supplementary air conditioning units or other facilities in such Building,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance shall be paid by
Tenant to Landlord within thirty (30) days after billing by Landlord.
6.2.2 The Tenant Improvements to be constructed for the Building
shall include an electrical meter section and switchgear to measure electricity
supplied to the Premises (including, without limitation, electricity required in
order to provide HVAC to the Premises). Tenant shall contract directly with an
electricity service provider for electrical service to the Premises (including,
without limitation, electricity required in order to provide HVAC to the
Premises) and Tenant shall timely pay all charges for such service from such
provider and Landlord shall have no obligation with respect to the provision of
such service. The actual cost of electricity provided to the Premises
(including, without limitation, electricity required in order to provide HVAC to
the Premises) shall, notwithstanding anything to the contrary contained in this
Lease, not be included in Operating Expenses (including, without limitation,
Operating Expenses for the Base Year) for the Building (except for electricity
relating to the Common Areas, which shall be included in Operating Expenses
(including, without limitation, Operating Expenses for the Base Year) and paid
by Tenant as part of Building Direct Expenses).
6.2.3 If Tenant desires to use HVAC during hours other than those
for which Landlord is obligated to supply such HVAC pursuant to the terms of
Section 6.1 of this Lease (i.e., in excess of sixty-nine (69) hours in any
week), Tenant shall not be required to give Landlord prior notice of Tenant's
desired use but rather Tenant may control its after-hours HVAC use from within
the Premises. Landlord shall supply such after-hours HVAC to Tenant subject to
Tenant's payment to Landlord of an amount reasonably determined by Landlord to
be attributable to increased wear and tear on existing Building Systems and
Equipment caused by such after-hours use, any engineer's over-time and a nominal
amount attributable to overhead and accounting costs. Amounts payable by Tenant
to Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be paid within thirty (30) days after Tenant's receipt of
invoice therefor.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent (except for abatement as specifically
provided in Section 6.8 below), or otherwise, for failure to furnish or delay in
furnishing any service (including telephone, electrical and telecommunication
services), or for any diminution in the quality or quantity thereof, when
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such failure or delay or diminution is occasioned, in whole or in part, by
repairs, replacements, or improvements, by any strike, lockout or other labor
trouble, by inability to secure electricity, gas, water, or other fuel at the
Building or the Project after diligent and reasonable efforts to do so, by any
accident or casualty whatsoever, by act or default of Tenant or other parties,
or by any other cause beyond Landlord's reasonable control; and such failures or
delays or diminution shall never be deemed to constitute an eviction or
disturbance of Tenant's use and possession of the Premises or relieve Tenant
from paying Rent (except for abatement as specifically provided in Section 6.8
below), or performing any of its obligations under this Lease. Furthermore,
Landlord shall not be liable under any circumstances for a loss of, or injury
to, property or for injury to, or interference with, Tenant's business,
including, without limitation, loss of profits, however occurring, through or in
connection with or incidental to a failure to furnish any of the services or
utilities as set forth in this Article 6, except in any circumstances where the
failure to furnish any such services or utilities arises out of or is a result
of, Landlord's sole or gross negligence or intentional misconduct (in which case
Landlord shall be responsible to the extent such item is not covered by
insurance required to be carried by Tenant under this Lease or actually carried
by Tenant). Landlord shall be entitled to cooperate in a reasonable manner with
the mandatory requirements of national, state or local governmental agencies or
utilities suppliers in reducing the consumption of energy or other resources
(including temporary stoppages in the supply of any utilities), and Landlord
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the Rent herein reserved be abated (except
as expressly provided in Section 6.8 below) by reason of such cooperation by
Landlord.
6.4 ADDITIONAL SERVICES. Landlord shall also provide any additional
services which may be reasonably requested by Tenant, including, without
limitation, locksmithing, lamp replacement, additional janitorial service, and
additional repairs and maintenance, provided that Tenant shall pay to Landlord
within fifteen (15) days after receipt of written notice from Landlord, the sum
of all costs to Landlord of such additional services plus a reasonable
administration fee. Charges for any service for which Tenant is required to pay
from time to time hereunder shall be deemed Additional Rent hereunder and shall
be billed on a monthly basis. Tenant shall not be required to use Landlord for
such any additional services; provided, however, that Landlord shall have the
right to reasonably approve any other provider of such services should Tenant
elect not to use Landlord for the providing of such services. However, nothing
in this Section 6.4 shall be construed as requiring Landlord to provide any such
service which would, in Landlord's reasonable judgment, result in the receipt by
Landlord of amounts that would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Internal Revenue Code of 1986, as
amended, or any successor section thereto.
6.5 UTILITY DEREGULATION.
6.5.1 SELECTION OF SERVICE PROVIDER. Landlord has advised Tenant
that presently San Diego Gas and Electric ("ELECTRIC SERVICE PROVIDER") is the
utility company selected by Landlord to provide electricity service for the
Project. Notwithstanding the foregoing, if permitted by Applicable Law, upon
mutual agreement of Tenant and Landlord, the contract for service to the Common
Areas will be let to a different company or companies providing electricity
service (each such company shall hereinafter be referred to as an "ALTERNATE
SERVICE PROVIDER"). Any and all rebates or discounts enjoyed or realized as a
result of the selection of an Alternate Service Provider or the continued use of
the Electric Service Provider shall be reflected in the payments to be made by
Tenant pursuant to Article 4 above. However, if, after the Base Year, the
parties agree to utilize an Alternate Service Provider, then from and after the
date upon which the Alternate Service Provider is retained and continuing
throughout the period during which the Alternate Service Provider is retained,
Operating Expenses for the Base Year shall be reduced by the amount Landlord
reasonably estimates it would have saved had the Alternate Service Provider been
retained throughout the Base Year (for service to the Common Areas) based upon
the rates of the Alternate Service Provider prevailing throughout the Base Year.
Landlord and Tenant acknowledge that, with respect to electricity service to be
provided to the Premises, Tenant shall be entitled to retain any provider
(including, without limitation, an Alternate Service Provider) and that Tenant
will be contracting directly with such provider as indicated in Section 6.2.2
above.
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6.5.2 TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate
with Landlord, the Electric Service Provider, and any Alternate Service Provider
at all times and, as reasonably necessary, shall allow Landlord, Electric
Service Provider, and any Alternate Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring and any other machinery
within the Premises, provided Landlord shall take all reasonable measures to
minimize any interference or disruption to Tenant's use of the Premises. In
addition, Landlord shall cooperate with Tenant and Tenant's provider of
electrical service to the Premises at all times and as reasonably necessary to
allow access to the facilities of the Building necessary for the provision of
such service.
6.6 EMERGENCY GENERATOR. Subject to Tenant's compliance with all
Applicable Laws and Landlord's prior approval of all plans and specifications,
which approval shall not be unreasonably withheld, Landlord shall permit Tenant
to install, at Tenant's sole cost and expense, an above-ground emergency
generator (as a Miscellaneous Common Area Item) for Tenant's use in the
Building. Such emergency generator shall be used by Tenant only during (i)
testing and regular maintenance, and (ii) any period of electrical power outage
in the Building. Tenant shall be entitled to operate the emergency generator
for testing and regular maintenance only upon notice to Landlord and at times
reasonably approved by Landlord. Landlord's consent to Tenant's plans for the
emergency generator may be conditioned on Tenant complying with such reasonable
requirements imposed by Landlord, based on the advice of Landlord's engineers,
so that the systems and equipment of the Building are not adversely affected.
Any repairs and maintenance of such generator shall be the sole responsibility
of Tenant. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, remove the emergency generator and all
associated cabling and wiring and repair all damage resulting from such removal.
Landlord makes no representation or warranty with respect to the emergency
generator or its suitability for use by Tenant and Article 10 of the Lease shall
apply with respect to Tenant's use, maintenance, repair and operation of the
emergency generator.
6.7 SUBSTITUTION OF VENDORS. Upon request from Tenant, Landlord shall
review with Tenant the performance and cost of vendors and contract service
providers for the Project and except for the property manager and the property
management staff and engineers, Tenant shall have the right to require Landlord
to substitute other vendors or contract service providers reasonably designated
by Tenant provided that (i) Tenant then leases on a direct basis (i.e., not
including any space leased by Tenant pursuant to a sublease) at least fifty
percent (50%) of the space then constructed for lease at the Project, (ii) such
substitution does not result in any increase in Operating Expenses during the
Base Year, (iii) such substitution does not result in any invalidation or
reduction in coverage of any warranties for the Project (unless Tenant agrees to
be responsible for the costs which would have otherwise been covered by such
warranties), and (iv) Landlord reasonably approves such substitute vendor or
contract service provider. If a vendor or contract service provider is
substituted pursuant to this Section 6.7 above and if the annual cost of such
substitute vendor or contract service provider is less than the amount included
in Operating Expenses during the Base Year for the same service, effective upon
the date of such substitution, Operating Expenses for the Base Year shall be
reduced by the amount of such difference.
6.8 ABATEMENT EVENT. An "ABATEMENT EVENT" shall be defined as an event
that prevents Tenant from using the Premises or any portion thereof, as a result
of any failure to provide services or access to the Premises, where (i) Tenant
does not actually use the Premises or such portion thereof, and (ii) such event
is not caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. In addition, an "Abatement Event" shall not be deemed
to have occurred where such failure is caused by (a) an Alternate Service
Provider for the Premises where such failure would generally not have occurred
had Tenant utilized the Electric Service Provider (or its successor), or (b) an
Alternate Service Provider for service to the Common Areas where Landlord
reasonably conditioned its approval of the use of such Alternate Service
Provider pursuant to Section 6.5.1 upon Tenant assuming the risk that any
failures to provide services or access to the Premises caused by such Alternate
Service Provider would not be deemed to constitute an "Abatement Event" pursuant
to this Section 6.8. Tenant shall give Landlord notice ("ABATEMENT NOTICE") of
any such Abatement Event, and if such Abatement
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Event continues beyond the "Eligibility Period" (as that term is defined below),
then the Base Rent and Tenant's Share of Direct Expenses shall be abated
entirely or reduced, as the case may be, after expiration of the Eligibility
Period for such time that Tenant continues to be so prevented from using, and
does not use, the Premises or a portion thereof, in the proportion that the
rentable area of the portion of the Premises that Tenant is prevented from
using, and does not use, bears to the total rentable area of the Premises leased
by Tenant; provided, however, in the event that Tenant is prevented from using,
and does not use, a portion of the Premises for a period of time in excess of
the Eligibility Period and the remaining portion of the Premises is not
sufficient to allow Tenant to effectively conduct its business therein, and if
Tenant does not conduct its business from such remaining portion, then for such
time after expiration of the Eligibility Period during which Tenant is so
prevented from effectively conducting its business therein, the Base Rent and
Tenant's Share of Direct Expenses for the entire Premises shall be abated
entirely for such time as Tenant continues to be so prevented from using, and
does not use, the Premises for Tenant's business purposes. If, however, Tenant
reoccupies any portion of the Premises during such period, the Base Rent and
Tenant's Share of Direct Expenses allocable to such reoccupied portion, based on
the proportion that the rentable area of such reoccupied portion of the Premises
bears to the total rentable area of the Premises, shall be payable by Tenant
from the date Tenant reoccupies such portion of the Premises. The term
"ELIGIBILITY PERIOD" shall mean a period of five (5) consecutive business days
after Landlord's receipt of any Abatement Notice(s). If the Abatement Event is
caused by the negligence or willful misconduct of Tenant, or by the
circumstances described in the second (2nd) sentence of this Section 6.8 with
respect to an Alternate Service Provider, the Abatement described in this
Section 6.8 shall not apply; however, Tenant may seek recovery from its business
interruption insurance. Except as provided in Article 11 and Article 13, such
right to abate Base Rent and Tenant's Share of Direct Expenses shall be Tenant's
sole and exclusive remedy at law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 OBLIGATIONS. Landlord shall maintain and repair any and all
defects in the Base, Shell and Core of the Building, including, without
limitation, the foundations, floor/ceiling slabs, structural portions of the
roof (including the roof membrane), curtain wall, exterior glass, columns,
beams, shafts, stairs, stairwells, and elevator cabs, and shall also maintain
and repair the basic mechanical, electrical, life safety, plumbing, sprinkler
systems and heating, ventilating and air conditioning systems of the Building
(i.e., all of such systems except for distribution within the Premises, in which
case (i) Landlord shall be responsible for repair of construction defects, (ii)
with respect to design defects, that party that retained the consultant to
design such distribution shall be responsible for repair of the defect and any
additional costs incurred as a result of such defect (to the extent not covered
by warranty or insurance), and (iii) Tenant shall be responsible for all other
repairs and maintenance), the exterior portions of the Building and the Common
Areas of the Project. In addition, Landlord shall make repairs necessitated by
the acts or omissions of Landlord or its respective agents, employees or
contractors. Tenant shall, at Tenant's own expense, keep the Premises and
specifically all tenant improvements, fixtures and furnishings therein, in good
order, repair and condition at all times during the Lease Term, and in this
regard, Tenant shall at Tenant's own expense within a reasonable period of time
but under the supervision and subject to the prior approval of Landlord with
respect to any repairs for which a building permit is required, adequately
repair all such damage thereto. Except with respect to the express maintenance
and repair obligations of Tenant under this Lease, Landlord shall maintain and
repair the Building and the Project (including the Common Areas) and replace or
repair all damaged, broken, or worn fixtures and appurtenances, the cost of
which shall be included in Operating Expenses (subject t the provisions of
Article 4 above). Landlord may enter the Premises at all reasonable times upon
reasonable prior notice to Tenant (except that no notice will be required in
case of emergency) to make such repairs, alterations, improvements or additions
to the Buildings or to the Project or to any equipment located in the Project as
Landlord is obligated under this Lease or Landlord shall deem reasonably
necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree.
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7.2 TENANT'S FAILURE TO COMPLY. If Tenant fails to make any repairs
required of Tenant under this Lease, after written notice to Tenant and the
expiration of a reasonable cure period, Landlord may (but need not) enter the
Premises pursuant to Section 7.1 above to make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage (not to
exceed five percent (5%)) of the cost thereof to compensate Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements within fifteen (15)
days of being billed for same. Except as expressly provided in Section 7.3
below, Tenant hereby waives and releases its right to make repairs at Landlord's
expense under Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
7.3 LANDLORD'S FAILURE TO COMPLY. If Tenant provides notice to
Landlord of an event or circumstance which requires the action of Landlord with
respect to the provision of repairs as set forth in Section 7.1 of this Lease,
and Landlord fails to provide such action as required by the terms of this Lease
within thirty (30) days after the date of such notice from Tenant (or if such
repair is reasonably expected to require longer than thirty (30) days to
complete, if Landlord shall fail to commence such repair within said thirty (30)
day period or to diligently prosecute such repair to completion), then Tenant
may proceed to take the required action upon delivery of an additional ten (10)
business days notice and cure period to Landlord specifying that Tenant is
taking such required action, and if such action was required under the terms of
this Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action including a percentage (not to exceed five percent (5%) of the cost
thereof to compensate Tenant for all overhead, general conditions, fees and
other costs or expenses arising from Tenant's involvement with such repairs and
replacement) in which case the reimbursed amount shall be included in Operating
Expenses to the extent the action, if taken by Landlord, would have been
includable in Operating Expenses pursuant to Section 4.2.7 above. In the event
Tenant takes such action, and such work will affect the Building Systems and
Equipment, structural integrity of the Building or exterior appearance of the
Building, Tenant shall use only those contractors used by Landlord in the
Project for such work unless such contractors are unwilling or unable to perform
such work or their pricing is unreasonable, in which event Tenant may utilize
the services of any other qualified contractor which normally and regularly
performs similar work in comparable first-class, institutional quality, office
buildings in the San Diego, California area whose pricing is reasonable. If
Tenant is entitled to reimbursement by Landlord of Tenant's reasonable costs and
expenses in taking any action pursuant to this Section 7.3, Tenant shall so
notify Landlord in writing (the "REIMBURSEMENT NOTICE"), which Reimbursement
Notice shall specify in detail such costs and expenses. Within thirty (30) days
after Landlord's receipt of a Reimbursement Notice, Landlord shall pay to Tenant
any undisputed portion of such costs and expenses and shall notify Tenant in
writing of those costs and expenses specified by Tenant in the Reimbursement
Notice which Landlord disputes (the "DISPUTED AMOUNTS") and the reasons for such
dispute. Any amounts which are not so identified by Landlord as Disputed
Amounts within said thirty (30) day period shall be considered to be undisputed.
To the extent Landlord fails to reimburse Tenant for the costs and expenses
specified in the Reimbursement Notice within thirty (30) days after demand
therefor, Tenant shall be entitled to offset the sum of (i) the amount of any
undisputed portion of such costs and expenses and (ii) one-half of the amount of
any Disputed Amount (which total sum may be referred to as the "PRE-JUDGMENT
OFFSET AMOUNT") against Base Rent payable by Tenant under this Lease together
with interest at the Interest Rate specified in Article 25 of this Lease from
the date of expiration of said thirty (30) day period until the date of offset
(up to a maximum offset each month of twenty percent (20%) of the Base Rent
payable for the Building) until the full Pre-Judgment Offset Amount (plus such
interest) has been so offset. If Tenant obtains a final judgment against
Landlord for the remaining portion of the Disputed Amount and if Landlord fails
to pay such judgment within thirty (30) days after the date such judgment is
rendered, Tenant shall be entitled to offset such judgment against Base Rent
payable by Tenant under this Lease together with interest at the Interest Rate
specified in Article 25 of this Lease from the date Landlord failed to timely
reimburse Tenant for such costs and expenses until the date of offset (up to a
maximum offset each month of twenty percent (20%) of the Base Rent payable for
the Building) until the full amount of such judgment (plus such interest) has
been so offset. If Landlord obtains a final judgment against Tenant for the
Disputed Amount, Tenant
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shall pay to Landlord such judgment (as it relates to the Disputed Amount plus
interest Tenant has previously offset with respect to the Disputed Amount)
within thirty (30) days after the date such judgment is rendered.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent (as
indicated in Section 29.4 below) shall not be unreasonably withheld by Landlord.
However, Tenant may make (i) cosmetic changes to the finish work in the
Premises, not requiring any structural or other substantial modifications to the
Premises (e.g., voice/data cabling), without Landlord's prior consent, (ii)
cosmetic changes to the interior of any Tenant space within the Building (e.g.,
changes to the carpet, wallcovering and paint) and (iii) nonstructural changes
to the interior of any Tenant space within the Building (such cosmetic and
nonstructural changes to be referred to hereafter collectively as the
"ACCEPTABLE CHANGES") upon at least ten (10) days prior notice to Landlord but
without Landlord's prior consent provided (a) with respect to the changes
described in Subsection 8.1(iii) above only, such changes do not cost in excess
of Two Dollars ($2.00) per usable square foot of the Premises for any one (1)
job, (b) such Acceptable Changes do not affect the exterior appearance of the
Building or Common Areas, the structural aspects of the Building, or any
Building System or Equipment, and (c) Tenant shall perform such Acceptable
Changes in a good and workmanlike manner and in conformance with any and all
applicable federal, state, county or municipal laws, rules or regulations
(collectively, "APPLICABLE LAWS"). At any time Tenant proposes to make
Alterations which require the consent of Landlord pursuant to this Section 8.1,
Tenant's notice regarding the proposed Alterations shall be provided together
with plans and specifications for the Alterations, and Landlord shall approve or
disapprove of the same within fifteen (15) days after Landlord's receipt
thereof. The construction of the initial improvements to the Premises shall be
governed by the terms of the Tenant Work Letter and not the terms of this
Article 8, and therefore, as used herein, the term "Alterations" does not refer
to any tenant improvements installed pursuant to the Tenant Work Letter.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord may reasonably require, including, but
not limited to, the requirement that Tenant shall, at Tenant's expense, remove
such Alterations upon the expiration or any early termination of the Lease Term,
provided Landlord imposed such removal requirement as a condition to consenting
to such Alterations when they are installed, and/or the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials, mechanics
and materialmen approved by Landlord (which approval (as indicated in Section
29.4 below) shall not be unreasonably withheld or delayed). In any event,
Tenant shall utilize subcontractors of Landlord's selection to perform any and
all work that may affect the Building Systems and Equipment, structural aspects
of the Building, the Base Shell or Core or exterior appearance of the Building
or Common Areas provided that (i) if such subcontractors are unwilling or unable
to perform such work, Tenant may utilize the services of any other qualified
subcontractor which normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San Diego,
California area, and (ii) Landlord shall cause such subcontractor selected by
Landlord to charge Tenant for such work in an amount equal to the cost that a
comparable, first-class, reputable and reliable subcontractor would have charged
Tenant if selected pursuant to competitive bidding procedures (and if such
subcontractor refuses to meet such pricing requirements, Landlord shall have the
option to either pay the excess charges of such subcontractor or to permit
Tenant to utilize any other qualified subcontractor which meets the requirements
of subsection 8.2(i) above). Tenant shall construct such Alterations and
perform such repairs in conformance with any and all Applicable Laws and
pursuant to a valid building permit, issued by the City of San Diego, all in
conformance with Landlord's construction rules
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and regulations. All work with respect to any Alterations must be done in a
good and workmanlike manner and diligently prosecuted to completion to the end
that the Premises shall at all times be a complete unit except during the period
of work. In performing the work of any such Alterations, Tenant shall have the
work performed in such manner so as not to obstruct access to the Project or any
portion thereof by any other tenant of the Project, and so as not to obstruct
the business of other tenants in the Project. In addition to Tenant's
obligations under Article 9 of this Lease, upon completion of any Alterations,
Tenant agrees to cause a Notice of Completion to be recorded in the office of
the Recorder of the County of San Diego in accordance with California Civil Code
Section 3093 or any successor statute, and Tenant shall deliver to the Project
management office a reproducible copy of the "as built" drawings of the
Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. The Cost of all Alterations shall be
paid for by Tenant. In the event Tenant orders any Alterations or repair work
directly from Landlord, the charges for such work shall be deemed Additional
Rent under this Lease, payable within fifteen (15) days of billing therefor,
either periodically during construction in reasonable progress payments or upon
the substantial completion of such work, at Landlord's option. Upon completion
of such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for labor, services or
materials. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord a percentage of the cost of such work not to exceed three percent
(3%) of such cost to compensate Landlord for all overhead, general conditions,
fees and other costs and expenses arising from Landlord's involvement with such
work. If Tenant does not order such work directly from Landlord, Tenant shall
pay to Landlord a fee equal to one percent (1%) of the cost of such work and
shall reimburse Landlord for Landlord's reasonable out-of-pocket costs and
expenses actually incurred in connection with review of such work; provided,
however, that this sentence shall not apply to Acceptable Changes.
8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any
Alterations (other than work described in Subsections 8.1(i) and (ii) above),
Tenant agrees to carry "Builder's All Risk" insurance in a reasonable amount
covering the construction of such Alterations, and such other insurance as
Landlord may reasonably require, it being understood and agreed that all of such
Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof. In addition, if Tenant fails to meet the
Financial Standards (described in Section 21.2 below) and the cost of the
Alteration exceeds One Hundred Thousand Dollars ($100,000.00), Landlord may, in
its reasonable discretion, require Tenant to obtain a lien and completion bond
or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures
and/or equipment which may be installed or placed in or about the Premises, and
all signs installed in, on or about the Premises, from time to time, shall be at
the sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any fixtures, equipment and/or other personal property
owned by Tenant (including, without limitation, items purchased by Tenant
pursuant to Section 2.2.10 of the Tenant Work Letter), provided Tenant repairs
any damage to the Premises and Building caused by such removal. Furthermore,
Landlord may require Tenant, at Tenant's expense, to remove any Alterations (or
any Tenant Improvements which do not conform to the Specifications) and to
repair any damage to the Premises and Building caused by such removal provided
Landlord gave to Tenant written notice (prior to the installation of any such
Alterations or Tenant Improvement) that Landlord would require such removal at
the end of the Lease Term or following any earlier termination of this Lease.
If Tenant fails to complete such removal and/or to repair any damage caused by
the removal of such Alterations or Tenant Improvements, Landlord may do so and
may charge the actual cost thereof to Tenant.
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ARTICLE 9
COVENANT AGAINST LIENS
Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from mechanics'
liens. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project, the
Building or the Premises, or any portion thereof, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be promptly
released and removed of record. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed by
bond or otherwise on or before the date occurring thirty (30) days after notice
of such lien is delivered by Landlord to Tenant (which thirty (30) day period
shall be subject to reduction as provided in the next sentence below), Landlord,
at its sole option, may immediately take all action necessary to release and
remove such lien, without any duty to investigate the validity thereof, and all
sums, costs and expenses, including reasonable attorneys' fees and costs,
incurred by Landlord in connection with such lien shall be deemed Additional
Rent under this Lease and shall immediately be due and payable by Tenant.
However, if Landlord's notice of such lien to Tenant indicates that Landlord is
in escrow to sell or finance the Building or has an executed letter of intent to
sell or a commitment letter to finance the Building (or a substantially similar
document), Landlord may indicate in such notice that such thirty (30) day period
shall be reduced to a period designated by Landlord which is not less than ten
(10) business days.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its members, partners, subpartners and affiliates and their respective
officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability,
including without limitation court costs and reasonable attorneys' fees
(collectively, "CLAIMS") incurred in connection with or arising from any cause
in, on or about the Premises during the Lease Term, provided that the terms of
the foregoing indemnity by Tenant shall not apply to the gross negligence or
willful misconduct of Landlord or its agents, contractors, servants, employees
or licensees in connection with Landlord's activities in the Project and
Landlord shall indemnify, defend, protect and hold Tenant, its officers,
directors, agents, servants and employees harmless from any such Claims (except
for damage to the Tenant Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises, to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease). The provisions
of this Section 10.1 shall survive the expiration or sooner termination of this
Lease with respect to any claims or liability occurring prior to such expiration
or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.
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10.3.1 Commercial/Comprehensive General Liability Insurance
covering the insured against claims of bodily injury, personal injury and
property damage arising out of Tenant's operations, assumed liabilities or use
of the Premises, including a Broad Form Commercial/Comprehensive General
Liability endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:
Bodily Injury and
Property Damage Liability $3,000,000 each occurrence
$3,000,000 annual aggregate,
or any
combination of primary
insurance and excess liability
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate,
or any
combination of primary
insurance and excess liability
10.3.2 Property Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant
Improvements, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include sprinkler leakage
coverage and earthquake sprinkler leakage coverage.
10.3.3 Worker's Compensation and Employer's Liability Insurance,
with a waiver of subrogation endorsement, with minimum limits of $1,000,000 per
employee and $1,000,000 per occurrence.
10.3.4 Business Interruption, loss of income and extra expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings for up to one (1) year attributable to the risks outlined in
Section 10.3.2 above; however, Tenant shall be entitled to self-insure the
coverage described in this Section 10.3.4 only, in which case such
self-insurance shall be deemed to contain all of the terms and conditions
applicable to the coverage described in this Section 10.3.4 including, without
limitation, a deemed waiver of subrogation and, consequently, Landlord shall be
treated, for all purposes, as if Tenant had actually purchased such insurance
from a third party.
10.4 FIRE AND CASUALTY INSURANCE OF LANDLORD. Landlord shall maintain
during the Lease Term and as an Operating Expense, a policy or policies of
insurance insuring the Building and Landlord's remaining interest in the Tenant
Improvements and Alterations against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage. Such coverage shall be in the amount of full
replacement cost for the Building (including coverages for enforcement of
Applicable Laws requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Building as the result of a covered loss) and
other improvements and may include, at the option of Landlord, the risks of
earthquakes and/or flood damage and additional hazards, a rental loss
endorsement for a period of one (1) year and one or more loss payee endorsements
in favor of the holders of any mortgages or deeds of trust encumbering the
interest of Landlord in the Building or any ground or underlying lessors of the
Building.
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. All insurance shall be issued on an occurrence basis
and shall be (i) be issued by an insurance company having a rating of not less
than A-X in BEST'S INSURANCE GUIDE or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; and (ii) provide that
said
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insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Landlord and any mortgagee or
ground or underlying lessor of Landlord. In addition, the insurance described
in Section 10.3.1 above shall (a) name Landlord, and any other party reasonably
specified by Landlord, as an additional insured; (b) specifically cover the
liability assumed by Tenant under this Lease including, but not limited to,
Tenant's obligations under Section 10.1 of this Lease; (c) be primary insurance
as to all claims thereunder and provide that any insurance obtained by Landlord
is excess and is non-contributing with any insurance requirement of Tenant; and
(d) contain a cross-liability endorsement or severability of interest clause
acceptable to Landlord. Tenant shall deliver said policy or policies or
certificates thereof to Landlord before the Lease Commencement Date (or Tenant's
entry into the Building pursuant to the Tenant Work Letter, if earlier) and at
least thirty (30) days before the expiration dates thereof. In the event Tenant
shall fail to procure such insurance, or to deliver such certificate, Landlord
may, at its option, procure such policies for the account of Tenant, and the
costs of it shall be paid to Landlord as Additional Rent within fifteen (15)
days after delivery to Tenant of bills therefor. Tenant may satisfy the
insurance coverage described in this Article 10 through one or more blanket
policies so long as such policies otherwise meet the requirements specified
above.
10.6 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage and loss of insurance and extra
expense insurance waive any rights of subrogation that such companies may have
against Landlord or Tenant, as the case may be, so long as the insurance carried
by Landlord and Tenant, respectively, is not invalidated thereby. As long as
such waivers of subrogation are contained in their respective insurance policies
(or are deemed to be contained in any self-insurance maintained by Tenant
pursuant to the provisions of Section 10.3.4 above), Landlord and Tenant hereby
waive any right that either may have against the other on account of any loss or
damage to the extent such loss or damage is insurable under such policies of
insurance.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord. Notwithstanding the foregoing, Landlord's
request shall only be considered reasonable if such increased amounts and any
such other coverages are standard amounts and coverages for Comparable
Buildings, and Landlord shall not increase amounts and require additional
coverages during the first five (5) years of the Lease Term and thereafter not
more often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Building or other portion of the Project
resulting from fire or any other casualty. If such Building or any Common Areas
serving or providing access to such Building shall be damaged by fire or other
casualty, Landlord shall promptly and diligently, subject to reasonable delays
for insurance adjustment or other matters beyond Landlord's reasonable control,
and subject to all other terms of this Article 11, restore the Base, Shell, and
Core of such Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base, Shell, and Core of the Premises
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord and reasonably approved by Tenant, provided that access to
the Building shall not be materially impaired. Upon the occurrence of any
damage to such Building, Tenant shall assign to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under Tenant's
physical damage and property damage insurance required under Section 10.3 of
this Lease (excluding, however, proceeds payable with respect to any damage to
Tenant's furniture, equipment and other personal property on the Premises), and
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Landlord shall repair any injury or damage to the Tenant Improvements installed
in the Premises and shall return such Tenant Improvements and Alterations to
their original condition; provided that if the cost of such repair by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant's
insurance carrier, as assigned by Tenant, plus the amount of insurance proceeds
received by Landlord from Landlord's insurance carrier to the extent allocable
to damage of such Tenant Improvements and Alterations, the cost of such repairs
shall be paid by Tenant to Landlord in reasonable progress payments as Landlord
repairs the damage (provided that if any mortgage holder or deed of trust
beneficiary so requires, Tenant shall deposit such cost of repairs with such
mortgage holder or deed of trust beneficiary prior to the commencement of repair
by Landlord of such injury or damage, in which case Tenant shall be entitled to
interest on such funds to the extent permitted by such lender). In connection
with such repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors (subject to Tenant's approval thereof, not to be unreasonable
withheld or delayed (as indicated in Section 29.4 below)) to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Building or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Base Rent during the time and to the extent the Building is unfit for occpancy
for the purposes permitted under this Lease, and not occupied by Tenant as a
result thereof for the conduct of Tenant's business; provided, however, that if
such damage is the result of the negligence or willful misconduct of Tenant or
Tenant's employees, contractors, licensees or invitees, such abatement of Base
Rent shall apply only to the extent Landlord is reimbursed from the proceeds of
rental interruption insurance purchased by Landlord as a part of Operating
Expenses.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Building; and instead terminate this Lease by notifying Tenant in writing of
such termination within ninety (90) days after the date Landlord learns of the
necessity for repairs as the result of damage, such notice to include a
termination date giving Tenant ninety (90) days to vacate the Building, but
Landlord may so elect only if (i) the Building shall be damaged by fire or other
casualty or cause, and the damage is not fully covered, except for deductible
amounts, by insurance policies required to be carried by Landlord under this
Lease and (ii) Tenant is not willing to fund the amount of the shortfall in
excess of deductible amounts.
11.3 LANDLORD'S OR TENANT'S OPTION TO REPAIR. Notwithstanding the terms
of Section 11.1 of this Lease, either Landlord or Tenant may elect to terminate
this Lease by notifying the other in writing of such termination with ninety
(90) days after the date Landlord learns of the necessity for repairs as a
result of such damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Building, but Landlord or Tenant, whichever is
the case, may so elect only if the Building shall be damaged by fire or other
casualty or cause and one or more of the following conditions is present: (i)
the repair or restoration is reasonably estimated to cost more than sixty
percent (60%) of the replacement cost of such Building, or (ii) repairs cannot
reasonably be substantially completed within three hundred sixty (360) days
after the date Landlord learns of the necessity for repairs as the result of
damage (when such repairs are made without the payment of overtime or other
premiums). Notwithstanding the foregoing, if this Lease is terminated by
Landlord and Landlord thereafter elects to commence the rebuilding of the
Building prior to the sooner to occur of the third (3rd) anniversary of the
termination date or the expiration of this Lease, Tenant shall have the right to
reinstate this Lease by written notice to Landlord within forty-five (45) days
after Tenant's receipt of notice from Landlord that Landlord so elects to
rebuild. Tenant's failure to so notify Landlord within said forty-five (45) day
period shall be deemed to constitute Tenant's waiver of the right to so
reinstate this Lease. Tenant hereby specifically acknowledges that its right to
reinstatement contained in this Section 11.3 shall not be applicable to any
assignee or transferee of Landlord to whom the Premises is transferred after
this Lease is terminated pursuant to this Section 11.3 as a result of a
foreclosure, trustee's sale or bona-fide deed in lieu of foreclosure.
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11.4 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, California Civil Code
Sections 1932(2) and 1933(4), with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Buildings or the Project.
11.5 DAMAGE NEAR END OF TERM. In the event that the Building is
destroyed or damaged during the last twelve (12) months of the Lease Term or any
Extension Term and the repair or restoration is reasonably estimated to cost
more than the "Threshold Level" (as that term is defined below), then
notwithstanding anything contained in this Article 11, Landlord shall have the
option to terminate this Lease by giving written termination notice to Tenant of
the exercise of such option within thirty (30) days after Landlord learns of the
necessity for repairs as the result of such damage or destruction, and, to the
extent such damage or destruction was not caused as a result of the negligence
or willful misconduct of Tenant or any of Tenant's employees, agents,
contractors, licensees or invitees and the repair of same is reasonably expected
by Landlord to require more than three (3) months to complete, Tenant shall have
the option to terminate this Lease by giving written termination notice to
Landlord of the exercise of such option within thirty (30) days after Landlord
learns of the necessity for repairs as the result of such damage or destruction.
The term "THRESHOLD LEVEL" shall mean twenty percent (20%) of the replacement
cost of the Building where the damage occurs during the period from the first
day of the ninth (9th) month prior to the scheduled date of expiration of the
Lease Term or any Extension Term to the last day of the twelfth (12th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term, fifteen percent (15%) of the replacement cost of the Building where the
damage occurs during the period from the first day of the fifth (5th) month
prior to the scheduled date of expiration of the Lease Term or any Extension
Term until the last day of the eighth (8th) month prior to the scheduled date of
expiration of the Lease Term or any Extension Term, and ten percent (10%) of the
replacement cost of the Building where the damage occurs during the last four
(4) months of the Lease Term or any Extension Term. If either Landlord or
Tenant exercises such option to terminate this Lease as provided above (i) this
Lease shall cease and terminate as of the earlier of (1) the date ninety (90)
days after the date of such notice, or (2) the expiration date of this Lease,
(ii) Tenant shall pay the Base Rent and Additional Rent, properly apportioned up
to such date of termination, and (iii) both parties hereto shall thereafter be
freed and discharged of all further obligations hereunder, except as provided
for in provisions of this Lease which by their terms survive the expiration or
earlier termination of the Lease Term. Notwithstanding the foregoing, if Tenant
exercises an upcoming option to extend the term of this Lease, neither Landlord
nor Tenant shall not have any right to terminate this Lease under this Section
11.5.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
either party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently.
Any waiver by either party of any provision of this Lease may only be in
writing. Additionally, no express waiver shall affect any provision other than
the one specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
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ARTICLE 13
CONDEMNATION
13.1 PERMANENT TAKING. If more than twenty-five percent (25%) of the
rentable square feet of the Building shall be taken by power of eminent domain
or condemned by any competent authority for any public or quasi-public use or
purpose, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease upon ninety (90) days' notice, provided such notice is
given no later than one hundred twenty (120) days after the date of such taking,
condemnation, reconfiguration, vacation, deed or other instrument. If more than
twenty-five percent (25%) of the rentable square feet of the Building is taken,
Tenant shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred twenty (120)
days after the date of such taking. Landlord shall be entitled to the entire
award or payment in connection therewith, except that Tenant shall have the
right to file any separate claim available to Tenant for any taking of Tenant's
personal property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to such Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination, or the date of such taking,
whichever shall first occur. If any part of the Premises shall be taken, and
this Lease is not terminated pursuant to this Section 13.1, the Rent shall be
abated proportionately based on the percentage of the rentable square feet of
the Building which is taken. Tenant hereby waives any and all rights it might
otherwise have pursuant to California Code of Civil Procedure Section 1265.130.
13.2 TEMPORARY TAKING. Notwithstanding anything to the contrary
contained in this Article 13, in the event of a temporary taking of all or any
portion of the Premises for a period of one (1) year or less, then this Lease
shall not terminate but the Base Rent shall be abated for the period of such
taking for the number of rentable square feet of the Premises so taken.
Landlord shall be entitled to receive the entire award made in connection with
any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, except as otherwise expressly provided herein, assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise
transfer, this Lease or any interest hereunder, permit any assignment, or other
transfer of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as "TRANSFERS" and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"TRANSFEREE"). Where Landlord's consent to a proposed Transfer is required
under this Article 14, if Tenant desires Landlord's consent to any Transfer,
Tenant shall notify Landlord in writing, which notice (the "TRANSFER NOTICE")
shall include (i) the proposed effective date of the Transfer, which shall not
be less than fifteen (15) business days nor more than one hundred eighty (180)
days after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii) all
of the material terms of the proposed Transfer and the consideration therefor
(including calculation of the "Transfer Premium," as that term is defined in
Section 14.3 below, in connection with such Transfer), the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) current financial statements of
the proposed Transferee certified by an officer, partner or owner thereof, and
any other information reasonably required by Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space, and such
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other information as Landlord may reasonably require. Landlord shall approve or
disapprove of the proposed Transfer within fifteen (15) business days after
Landlord's receipt of the applicable Transfer Notice including all items
required pursuant to the immediately preceding sentence. Where Landlord's
consent to a proposed Transfer is required under this Article 14, any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under Section 19.1.2 of this Lease. Where Landlord's consent
to a proposed Transfer is required under this Article 14, whether or not
Landlord consents to such proposed Transfer, for each proposed Transfer Tenant
shall pay to Landlord a review and processing fee in an amount equal to $500.00
and any reasonable legal fees incurred by Landlord (which legal fees shall not
exceed $1,000 per proposed Transfer during the initial Lease Term), upon request
by Landlord.
14.2 LANDLORD'S CONSENT. Where Landlord's consent to a proposed
Transfer is required under this Article 14, Landlord shall not unreasonably
withhold its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Without limitation as
to other reasonable grounds for withholding consent, the parties hereby agree
that it shall be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply:
14.2.1 The Transferee is of a character or reputation or engaged in
a business which Landlord reasonably determines is not consistent with the
quality of the Project as a first-class, institutional quality office project;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof which Landlord reasonably determines is not consistent
with the quality of the Project as a first-class, institutional quality office
project;
14.2.3 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;
14.2.4 The Transfer will result in more than a reasonable and safe
number of occupants per floor within the Subject Space;
14.2.5 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Transfer on the date consent is requested (provided, however, that this Section
14.2.5 shall only apply if the Transfer is for a full floor or more of the
Building); or
14.2.6 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease or bring an action against Landlord, provided that (i) the
foregoing provisions of this Section 14.2.6 shall only apply (a) to restrictions
in other leases in the Project to the extent Tenant has received written notice
of such restrictions prior to the proposed Transfer, and (b) if (at the time
Tenant gives Landlord any Transfer Notice) Tenant is leasing less than eighty
percent (80%) of the rentable square feet of the Project; and (ii) this Section
14.2.6 shall not apply to any proposed food service use by the proposed
Transferee (i.e., Landlord may not grant an exclusive within the Project for a
food service use that would restrict Tenant's ability to enter into a Transfer).
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to Tenant than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's
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right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding
any contrary provisions of this Lease, if Tenant claims that Landlord has
unreasonably withheld or delayed its consent to a proposed Transfer or otherwise
has breached its obligations under this Article, Tenant's only remedies shall be
to seek a declaratory judgment and/or injunctive relief and/or monetary damages,
and Tenant waives the right to terminate this Lease as to all or any portion of
the Premises.
14.3 TRANSFER PREMIUM.
14.3.1 DEFINITION OF TRANSFER PREMIUM. If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall, except as otherwise provided in this Article 14, pay to Landlord
fifty percent (50%) of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee (the amount which may be
so payable to Landlord may be referred to herein as the "PREMIUM BASE AMOUNT").
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Landlord or Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any brokerage commissions,
reasonable attorneys' and architectural fees and reasonable advertising costs
incurred in connection with the Transfer, (iii) any Rent and Additional Rent
paid by Tenant for the portion of the Premises transferred while such space is
being actively marketed for sublease or assignment to the extent Tenant is not
occupying such space, and (iv) any other out-of-pocket costs reasonably incurred
by Tenant in connection with such Transfer (collectively, the "SUBLEASING
COSTS"). "Transfer Premium" shall also include, but not be limited to, key
money and bonus money paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
14.3.2 PAYMENT OF TRANSFER PREMIUMS. The determination of the
amount of the Transfer Premium shall be made on an annual basis in accordance
with the terms of this Section 14.3.2, but an estimate of the amount of the
Transfer Premium shall be made each month and one-twelfth (1/12th) of such
estimated amount shall be paid to Landlord promptly, but in no event later than
the next date for payment of Base Rent hereunder, subject to an annual
reconciliation on each anniversary date of the Transfer. If the payments to
Landlord under this Section 14.3.2 during the twelve (12) months preceding each
annual reconciliation exceed the amount of Transfer Premium determined on an
annual basis and actually received by Tenant, then Landlord shall promptly
refund the excess to Tenant. If Tenant has underpaid the Transfer Premium, as
determined by such annual reconciliation, Tenant shall pay the amount of such
deficiency to Landlord promptly, but in no event later than the next date for
payment of Basic Rent hereunder. For purposes of calculating the Transfer
Premium on an annual basis, Tenant's Subleasing Costs shall be amortized on a
straight-line basis over the term of the Transfer.
14.3.3 LIMITATION ON AMOUNT AND TIMING. Notwithstanding the
foregoing provisions of this Section 14, Tenant shall have no obligation to pay,
and shall not pay, any percentage of the foregoing Transfer Premium under this
or any other section of this Lease in any calendar year, to the extent Tenant is
advised by Landlord that such payment would exceed the sum of: (A) the maximum
amount (if any) that can be paid to Landlord without causing Kilroy Realty
Corporation, a Maryland corporation ("KRC") to fail to meet the requirements of
sections 856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"CODE") for such year determined as if (i) the payment of such amount did not
constitute income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of
the Code ("QUALIFYING INCOME"), (ii) the payment of such amount resulted in all
other amounts received by Landlord from Tenant pursuant to this Lease during
such year failing to constitute Qualifying Income, and (iii) KRC had $1,000,000
of income from unknown sources during such year which was not Qualifying Income
(in addition to any known or anticipated income of KRC which was not Qualifying
Income), in each case as determined by KRC's independent accountants, and (B)
the Premium Base Amount less the
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amounts paid under clause (A) in the event KRC receives and provides Tenant with
a copy of a reasoned opinion from outside counsel or a ruling from the Internal
Revenue Service (the "PREMIUM GUIDANCE") indicating that Landlord's receipt of
the Premium Base Amount would constitute Qualifying Income and would not cause
other amounts paid by Tenant to Landlord to fail to constitute Qualifying Income
(the "REIT REQUIREMENTS"). In the event that Landlord is not able to receive
the full Premium Base Amount due to the above limitation, Tenant shall not pay
any amounts in excess of such limit unless and until KRC receives (and delivers
to Tenant) any one or combination of the following, once or more often: (i) a
letter from KRC's independent accountants indicating the maximum amount that can
be paid by Tenant to Landlord at that time without causing KRC to fail to meet
the REIT Requirements (calculated as described above) or (ii) the Premium
Guidance; in which event Tenant shall pay to Landlord the lesser of the unpaid
Transfer Premium or the maximum amount stated in the letter referred to in (i)
above. Tenant's obligation to pay any unpaid portion of the Transfer Premium
shall terminate on the December 31 following the date which is three (3) years
after the date such payment would (without regard to the limitations in this
subparagraph) have initially been due. Any amounts paid shall first be applied
to the Transfer Premium which is the oldest. Tenant shall cooperate with
Landlord and KRC and provide them with any information or documents that are
necessary or helpful to Landlord or KRC in obtaining any Premium Guidance or in
calculating the amount of any payment due hereunder.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Should Tenant's financial
performance at the time of any proposed Transfer have fallen below the minimum
Financial Standards set forth in Section 21.2 below, Landlord shall have the
option, by giving written notice ("RECAPTURE NOTICE") to Tenant within fifteen
(15) days after receipt of any Transfer Notice, to recapture the Subject Space.
Such recapture shall cancel and terminate this Lease, with respect to the
Subject Space as of the date stated in the Transfer Notice as the effective date
of the proposed Transfer until the last day of the term of the Transfer as set
forth in the Transfer Notice. However, if Landlord delivers a Recapture Notice
to Tenant, Tenant may, within ten (10) days after Tenant's receipt of the
Recapture Notice, deliver written notice to Landlord indicating that Tenant is
rescinding its request for consent to the proposed Transfer, in which case such
Transfer shall not be consummated and this Lease shall remain in full force and
effect as to the portion of the Premises that was the subject of the Transfer.
Tenant's failure to so notify Landlord in writing within said ten (10) day
period shall be deemed to constitute Tenant's election to allow the Recapture
Notice to be effective. In the event of a recapture by Landlord, if this Lease
shall be canceled with respect to less than all of the rentable square feet
within the Building, the Rent reserved herein shall be prorated on the basis of
the number of rentable square feet retained by Tenant in proportion to the
number of rentable square feet contained in the Building, and this Lease as so
amended shall continue thereafter in full force and effect, and upon request of
either party, the parties shall execute written confirmation of the same. If
Landlord declines, or fails to timely elect to recapture the Subject Space under
this Section 14.4, then, provided Landlord has consented to the proposed
Transfer with respect to any Transfer which such consent is required, Tenant
shall be entitled to transfer the Subject Space to the proposed Transferee,
subject to the provisions of this Article 14. If, as a result of Landlord's
exercise of its recapture rights, the Building is converted to a multi-tenant
building, Landlord and Tenant will amend this Lease in order to reflect
appropriate modifications necessary for a multi-tenant building.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant from liability
under this Lease. Landlord or its authorized representatives shall have the
right at all reasonable times (but no more than one (1) timer per calendar year)
to audit the books, records and papers of Tenant relating to any Transfer,
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and shall have the right to make copies thereof. If the Transfer Premium
respecting any Transfer shall be found understated, Tenant shall, within thirty
(30) days after demand, pay the deficiency and, in addition, if understated by
more than (a) two percent (2%), Tenant shall pay Landlord's cost of such audit
within thirty (30) days after demand, and (b) ten percent (10%), Landlord shall
be entitled to interest on the understated amount at the rate of ten percent
(10%) per annum from the date upon which the understated amount would have been
paid if the Transfer Premium had been accurately determined in the first place
to the date Tenant pays to Landlord in full such understated amounts; Landlord's
rights pursuant to the immediately preceding sentence shall constitute
Landlord's sole remedy for any understatement of the Transfer Premium (in the
absence of fraud by Tenant).
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership or limited
liability company, the withdrawal or change, voluntary, involuntary or by
operation of law, of fifty percent (50%) or more of the partners or members, or
transfer of fifty percent (50%) or more of partnership or membership interests,
within a twelve (12)-month period, or the dissolution of the partnership or
company without immediate reconstitution thereof, and (ii) except as otherwise
provided in Section 14.7 below, if Tenant is a closely held corporation (I.E.,
whose stock is not publicly held and not traded through an exchange or over the
counter), (A) the dissolution, merger, consolidation or other reorganization of
Tenant or, (B) the sale or other transfer of more than an aggregate of fifty
percent (50%) of the voting shares of Tenant (other than to immediate family
members by reason of gift or death) within a twelve (12)-month period, or (C)
the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty
percent (50%) of the value of the unencumbered assets of Tenant within a twelve
(12)-month period.
14.7 AFFILIATED AND PERMITTED TRANSFERS.
14.7.1 PERMITTED AFFILIATES. Notwithstanding anything contained in
this Lease to the contrary, an assignment, subletting or permitting the use of
all or any portion of the Premises to or by a Permitted Affiliate (as defined
below) of Tenant shall not be deemed a Transfer under this Article 14 and thus
shall not be subject to (i) any requirement of obtaining Landlord's consent
thereto under this Article 14, (ii) Landlord's right to receive fifty percent
(50%) of any Transfer Premium in connection therewith under Section 14.3 or
(iii) Landlord's right to recapture the Premises under Section 14.4, provided
that (a) Tenant notifies Landlord of such assignment or sublease and the
identity of the Permitted Affiliate prior to the effective date thereof and
promptly after request from Landlord supplies Landlord with any documents or
information reasonably requested by Landlord regarding such assignment or
sublease and/or such Permitted Affiliate; and (b) such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14. As used in this Section
14.7, "PERMITTED AFFILIATE" shall mean (1) any person, corporation or other
entity which is controlled by, controls, or in common control with Tenant, or
(2) any entity which merges with Tenant or acquires substantially all of
Tenant's stock or assets, and in either case of (1) or (2) above, such person,
corporation or other entity has a net worth as of the effective date of the
assignment or sublease at least equal to the net worth of Tenant as of the date
of execution of this Lease. "Control," as used in this Section 14.7, shall mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise.
14.7.2 PERMITTED TRANSFERS. Notwithstanding anything contained in
this Lease to the contrary, any sublease for a term less than the remaining
initial Lease Term (or, if during any Extension Term, for a term less than the
remaining Extension Term), shall not require Landlord's consent and shall not be
subject to Landlord's recapture right under Section 14.4 (unless Tenant's
financial performance at the time of such proposed Transfer has fallen below the
minimum Financial Standards set forth in Section 21.2 below), but shall be
subject to (a) the condition that the sublease does not provide for the
subtenant to receive parking in a ratio per rentable square foot in excess of
that to which Tenant is entitled under this Lease, and (b) Landlord's receipt of
the amount described in Section 14.3. In the event of any such sublease, Tenant
shall notify
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Landlord at least thirty (30) days prior to the effective date of such
sublease, of such proposed sublease and the identity of the proposed subtenant
and supply Landlord with any documents or information reasonably requested by
Landlord in connection therewith. Any subtenant under any sublease occurring
under this Section 14.7.2 may be referred to herein as a "PERMITTED TRANSFEREE."
ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in a writing signed by Landlord. The
delivery of keys to any portion of the Premises to Landlord or any agent or
employee of Landlord shall not constitute a surrender of the Premises or any
portion thereof or effect a termination or partial termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been properly
terminated. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, Alterations and Tenant
Improvements which do not conform to the Specifications (provided Landlord
conditioned its approval of their installation under Section 8.5 above upon
Tenant's removal of such Alterations or non-standard Tenant Improvements (as
applicable) upon the expiration or earlier termination of this Lease),
free-standing cabinet work, and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may, in
its sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Building resulting from such removal. Tenant also
shall comply with the provisions of Section 8.5 of this Lease. Notwithstanding
the foregoing, with respect to Tenant's cabling, Landlord shall have the option,
exercisable by written notice to Tenant on or before the day which is thirty
(30) days prior to the expiration or earlier termination of this Lease, to
require Tenant to remove any or all of its cabling from the Premises and to
repair any damage to the Premises resulting from such removal; provided,
however, that if Landlord so requires Tenant to remove such cabling and if,
within six (6) months after the date of expiration or earlier termination of
this Lease, leasehold improvements within the Premises are demolished in a
manner such that the amount expended to remove such cabling as a part of such
demolition would have been less than the amount previously incurred by Tenant to
remove such cabling, Landlord shall promptly rebate to Tenant the difference
between the amount expended by Tenant to remove such cabling and the amount
which would have been incurred by Landlord to remove such cabling as a part of
the demolition process described herein.
15.3 REMOVAL OF TENANT'S PROPERTY BY LANDLORD. Whenever Landlord shall
re-enter the Building as provided in this Lease, any personal property of Tenant
not removed by Tenant upon the expiration of the Lease Term, or within five (5)
days after a termination by reason of Tenant's default as provided in this
Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord in
accordance with California Civil Code Sections 1980 through 1991 and
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California Code of Civil Procedure Section 1174, or in accordance with any laws
or judicial decisions which may supplement or supplant those provisions from
time to time.
15.4 LANDLORD'S ACTIONS ON PREMISES. Excepting any claims for damages
or other liability arising out of Landlord's or its agents' or its
representatives' gross negligence or willful misconduct, Tenant hereby waives,
and releases Landlord from, all claims for damages or other liability in
connection with Landlord's or its agents' or representatives' reentering and
taking possession of the Premises or removing, retaining, storing or selling the
property of Tenant as herein provided, and Tenant hereby indemnifies and holds
Landlord harmless from any such damages or other liability, and no such re-entry
shall be considered or construed to be a forcible entry.
ARTICLE 16
HOLDING OVER
If Tenant provides Landlord with written notice ("HOLDOVER NOTICE") at
least thirty (30) days prior to expiration of the Lease Term (or any applicable
Extension Term) that Tenant will be holding over in the Premises, Tenant shall
have the right (and, subject to the grace periods described below, the
obligation) to hold over after the expiration of the Lease Term until the date
("HOLDOVER NOTICE DATE") specified in such Holdover Notice (but not in excess of
one hundred twenty (120) days after the expiration of the Lease Term or
applicable Extension Term). Any holdover tenancy (including without limitation,
any holdover tenancy pursuant to a Holdover Notice) shall be subject to every
applicable term, covenant and agreement contained herein, except that the Base
Rent payable by Tenant for the Premises (irrespective of the amount of space
Tenant continues to occupy in the Building) shall be escalated to equal one
hundred ten percent (110%) of the then current Base Rent and Direct Expenses
payments for the entire Premises for the first ninety (90) days of such holdover
occupancy and one hundred twenty-five percent (125%) of such amount during the
next succeeding ninety (90) days and from and after such one hundred eighty
(180) day period, Rent shall equal one hundred fifty percent (150%) of such
amount thereafter; provided, however, subject to the next sentence of this
Article 16, such holdover Rent and Additional Rent shall be prorated on a per
diem basis through and including the date ("ACTUAL SURRENDER DATE") Tenant
actually vacates and surrenders the Premises to Landlord in the condition
required under this Lease. If Tenant properly delivers the Holdover Notice and
the Actual Surrender Date (a) is earlier than the Holdover Notice Date by
forty-five (45) days or less, Tenant's obligation to pay such holdover Rent and
Additional Rent shall terminate on a per diem basis as of the Actual Surrender
Date, however if the Actual Surrender Date is earlier than forty-five (45) days
prior to the Holdover Notice Date, Tenant's holdover Rent and Additional Rent
shall cease as of the date which is forty-five (45) days prior to the Holdover
Notice Date, or (b) is later than the Holdover Notice Date, Tenant's obligation
to pay holdover Rent and Additional Rent shall cease as of the Actual Surrender
Date, provided that Tenant shall have no right to holdover beyond the earlier to
occur of fifteen (15) days after the Holdover Notice Date or the expiration of
the one hundred twenty (120) period specified in the first sentence of this
Article 16 above. By way of example only, and not as a limitation upon the
foregoing, if the Holdover Notice indicates that the Holdover Notice Date is
ninety (90) days after the expiration of the Lease Term or applicable Extension
Term, Tenant shall be permitted to holdover until the date which is one hundred
five (105) days after the expiration of the Lease Term or applicable Extension
Term and Tenant's obligation to pay holdover Rent and Additional Rent shall be
prorated on a per diem basis until the later of the forty-fifth (45th) day after
the expiration of the Lease Term or applicable Extension Term or the Actual
Surrender Date. Nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant (except as expressly provided
in this Article 16 above), and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration of the Lease Term (or the period specified in clause
16(b) above, as applicable). The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
within the period specified in this Article 16 above, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
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indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys' fees) and liability resulting from such failure, including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender (including such tenant's lost
profits) and any lost profits to Landlord resulting therefrom, provided Landlord
promptly notified Tenant in writing of any lease or signed letter of intent for
all or any portion of the Premises.
ARTICLE 3
ESTOPPEL CERTIFICATES
Within fifteen (15) days following a request in writing by either party to
the other, but in no event more frequently than three (3) times in any twelve
(12) month period, the recipient party shall execute and deliver to the
requesting party an estoppel certificate, which shall be substantially in the
form of EXHIBIT "E", attached hereto (or such other form as may be reasonably
required by any prospective mortgagee or purchaser of the Building or other
portion of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of either
party to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises (if addressed to
Tenant) and an acknowledgment by such party that the statements included in the
estoppel certificate in good faith are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord agrees
to provide Tenant, within sixty (60) days after written request by Tenant, with
commercially reasonable nondisturbance agreements(s) in favor of Tenant from any
ground lessors, mortgage holders or deed of trust beneficiaries under any ground
lease, mortgage or deed of trust affecting the Project or any portion thereof
leased by Tenant (whether now existing or coming into existence at any time
after the date of execution of this Lease but prior to the expiration of the
Lease Term) and in consideration of, and as a condition precedent to, Tenant's
agreement to be bound by the terms of this Article 18. Tenant covenants and
agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof, to attorn, without any deductions or set-offs
whatsoever, to the purchaser or any successors thereto upon any such foreclosure
sale or deed in lieu thereof if so requested to do so by such purchaser, and to
recognize such purchaser as the lessor under this Lease. Tenant shall, within
fifteen (15) days of request by Landlord, execute such further instruments or
assurances as Landlord or any mortgage holder or deed of trust beneficiary may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases or other typical provisions contained in Subordination,
Non-Disturbance and Attornment Agreements. Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event of any foreclosure proceeding
or sale.
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ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall constitute
a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due, where such
failure continues for five (5) days after written notice thereof from Landlord
to Tenant; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, if the nature of such a
default is such that the same cannot be reasonably be cured within a thirty (30)
day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as is reasonably possible under the
circumstances; or
19.1.3 To the extent permitted by law, a general assignment by
Tenant or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.4 The hypothecation or assignment of this Lease or subletting
of the Premises in violation of Article 14 hereof; or
19.1.5 Any default by Tenant (after expiration of any applicable
cure period) under any of the Adjacent Building Leases; provided, however, that
any such default by Tenant under any of the Adjacent Building Leases shall be
treated as a default by Tenant under this Lease only if (i) Landlord and all of
the other landlords under the Adjacent Building Leases all elect to declare a
default, and (ii) all lenders of this Building and the applicable Adjacent
Building consent. However, the restrictions upon Landlord in declaring a
default by Tenant pursuant this Section 19.1.5 are not intended to, and shall
not, restrict Landlord from declaring a default of this Lease by Tenant under
the circumstances described in Sections 19.1.1 through and including 19.1.4
above.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
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(ii) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time of
award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not limited
to, brokerage commissions and advertising expenses incurred, and an
amortized portion (over the balance of the Lease Term compared to the term
of any new lease) of any expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be
and to mean all sums of every nature required to be paid by Tenant pursuant to
the terms of this Lease, whether to Landlord or to others. As used in Sections
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Section 19.2.1(iii) above, the "worth at the time of award" shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of more
than two (2) monetary events of default by Tenant in any twelve (12) month
period during the Lease Term, Landlord shall have the right to require that any
or all subsequent amounts paid by Tenant to Landlord hereunder, whether in the
cure of the default in question or otherwise, be paid in the form of cash, money
order, cashier's or certified check drawn on an institution acceptable to
Landlord, or by other means approved by Landlord, notwithstanding any prior
practice of accepting payments in any different form.
19.5 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any
violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other or
later violation or breach of the same or any other of the terms, provisions, and
covenants herein contained. Forbearance by Landlord in enforcement of one or
more of the remedies herein provided upon an event of default shall not be
deemed or construed
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to constitute a waiver of such default. The acceptance of any Rent hereunder by
Landlord following the occurrence of any default, whether or not known to
Landlord, shall not be deemed a waiver of any such default, except only a
default in the payment of the Rent so accepted.
19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Premises, by its acts of maintenance or preservation with
respect to the Premises, or by appointment of a receiver to protect Landlord's
interests hereunder. The foregoing enumeration is not exhaustive, but merely
illustrative of acts which may be performed by Landlord without terminating
Tenant's right to possession.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
21.1 LETTER OF CREDIT. In addition to its primary obligations under
this Lease, Tenant shall, commencing March 31, 2000, and continuing throughout
the Lease Term (including any Extension Terms), at any time that Tenant fails to
meet or equal the "Financial Standards" set forth below, provide security
against a default by Tenant under this Lease in the form of an unconditional,
irrevocable, standby letter of credit ("LC"), naming Landlord as the payee
thereunder, with terms as described in more detail below. The LC shall be in an
amount equal to six (6) months' then current Base Rent and shall be increased by
the amount of and upon any increase in monthly Base Rent payable under this
Lease. The LC shall be issued by a money center bank (a bank which accepts
deposits, maintains accounts, has a local San Diego office which will negotiate
a letter of credit, and whose deposits are insured by the FDIC) reasonably
acceptable to Landlord, and shall be in a form and content reasonably acceptable
to Landlord and in the form required hereunder. The LC shall be drawable by
Landlord upon presentation of a sight draft or demand to the LC issuer.
Landlord may present such a sight draft or demand if (i) the LC has not been
renewed and replaced by Tenant at least thirty (30) days prior to the expiration
date of the then effective LC, or (ii) Tenant commits a default under this
Lease; provided, however, proceeds of the drawn LC shall be applied to Rent,
damages or charges to which Landlord is entitled under the Lease as a result of
Tenant's default. If Landlord makes a draw upon the LC pursuant to this Section
21.1 and Tenant fails to replenish the LC (or, if applicable, the CD described
in Section 21.4 below) within ten (10) days thereafter to an amount equal to six
(6) months' then current Base Rent, then Tenant shall be in default under this
Lease. The LC is not intended to represent liquidated damages for Tenant's
default, but only a mechanism for paying the Rent, damages or charges to which
Landlord may be entitled. If allowed by the issuing bank, Landlord shall be
entitled to grant a security interest in, or make a collateral assignment of,
Landlord's rights under the LC in connection with mortgage indebtedness incurred
by Landlord to a bona fide third-party institutional lender in an arm's-length
transaction. The LC shall indicate that it is transferable in it entirety by
Landlord as beneficiary and that upon receiving written notice of the transfer
and upon presentation to the issuer of the LC the issuer will reissue the LC
naming such transferee as beneficiary. Tenant shall pay all expenses, points,
and/or fees incurred in obtaining the LC.
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21.2 FINANCIAL STANDARDS. Such LC shall be required in the event
Tenant, at the end of any calendar quarter (commencing with the calendar quarter
ending March 31, 2000), fails to meet all of the following financial
requirements ("FINANCIAL STANDARDS"): (i) Tenant shall have annual gross
revenues of not less than $150,000,000, (ii) Tenant shall have cash on hand of
not less than $15,000,000 and (iii) Tenant's equity-to-debt (which for purposes
of this test shall exclude deferred revenue) ratio shall not be less than 1:1.
21.3 CONDITIONAL RELEASE OF SECURITY. Any LC previously delivered by
Tenant shall be returned to Tenant at such time as Tenant has not been in
default (after expiration of any applicable notice and cure period) under this
Lease and has met or exceeded all of the Financial Standards, for four (4)
consecutive quarters. Notwithstanding the foregoing, in the event the LC has
been returned to Tenant, but Tenant thereafter fails, at the end of any quarter,
to meet all of the Financial Standards then, in such event, Landlord shall be
entitled to require that the LC be reestablished on the terms and provisions set
forth in this Article 21.
21.4 CASH EQUIVALENT. At Tenant's option, but subject to the terms and
conditions hereof and the condition that Landlord determine that Landlord's
ability to draw upon such security in the event of Tenant's bankruptcy is not
impaired, Tenant may , in lieu of the delivery of an LC, pledge a Certificate of
Deposit ("CD") which shall be administered, as practicable, in accordance with
the procedures set forth in this Article 21 with respect to the LC; provided,
however, in the event of such CD any interest accruing on the CD shall be for
the benefit of Tenant. The pledge of any such CD shall be on terms and
conditions approved by Landlord, and the CD shall be issued by a financial
institution reasonably acceptable to Landlord.
ARTICLE 22
ROOF RIGHTS
Subject to all governmental laws, rules and regulations and compliance with
the CC&R's, Tenant and Tenant's contractors (which shall first be approved by
Landlord but which approval shall not be unreasonably withheld or delayed (as
specified in Section 29.4 below)) shall have the nonexclusive right and access,
without further payment of Rent to Landlord, to install, repair, replace,
remove, operate and maintain satellite dishes and/or microwave dishes, and other
radio transmitting and receiving antennae, together with all necessary cable,
wiring, conduits and related equipment (collectively, "COMMUNICATION
EQUIPMENT"), for the purpose of receiving and sending telephone and other
communication signals, at a location on the roof of the Building as reasonably
requested by Tenant and reasonably approved by Landlord in writing. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) Tenant's right to install, replace, repair, remove, operate
and maintain the Communication Equipment shall be subject to all governmental
laws, rules and regulations and Landlord makes no representations that such
laws, rules and regulations permit such installation and operation. Any such
installation shall be under the supervision of Landlord, by a contractor
approved by Landlord and shall be installed in a lien-free manner in accordance
with the provisions of this Lease.
(ii) The exact size, quality, materials and aesthetics of, and
any required screening for, the Communication Equipment shall be subject to
Landlord's prior written consent which shall not be unreasonably withheld or
delayed. In addition, the installation, protection for roof membrane,
specifications for roof penetration and flashing shall be subject to Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
(iii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and of connections to the
Building's electrical system) shall be borne by Tenant. All such Communication
Equipment shall be screened to commercially reasonable standards and to prevent
visual impairment. Tenant shall be responsible for the replacement, repair and
maintenance, at Tenant's sole cost and expense, of those areas on the roof of
the
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Building surrounding Tenant's Communication Equipment to the extent any such
replacement, repair or maintenance is required by virtue of Tenant's
installation, operation or maintenance of Tenant's Communication Equipment,
notwithstanding anything to the contrary contained in this Lease.
(iv) Tenant shall endeavor to use the Communication Equipment so
as not to cause any interference (i) with any other communications from or to
the Project or (ii) to other existing tenants or occupants in the Project who
may use the communication facilities located at the Project and/or related
facilities.
(v) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
(vi) Tenant's rights with respect to such Communication Equipment
shall be personal to the Original Tenant executing this Lease and may not be
assigned or transferred to, or utilized by, any other person or entity with the
exception of any Permitted Transferee under Article 14 which occupies a minimum
of 10,000 rentable square feet of the Building or (ii) any Permitted Affiliate
(collectively, "QUALIFYING TRANSFEREE"); provided, however, such Qualifying
Transferee's rights with respect to Communication Equipment shall be subject to
all the terms and conditions of this Article 22. Other than Qualifying
Transferees, Tenant shall not be permitted to allow any third party to use any
portion of the roof for Communication Equipment or otherwise without Landlord's
consent, which shall not be unreasonably withheld.
(vii) Tenant shall (i) be solely responsible for any damage caused
as a result of the Communication Equipment, (ii) promptly pay any tax, license
or permit fees charged pursuant to any laws or regulations in connection with
the installation, maintenance or use of the Communication Equipment and comply
with all precautions and safeguards recommended by all governmental authorities,
and (iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment and all roof repairs required by the installation and
maintenance of the Communication Equipment.
(viii) The Communication Equipment shall remain the sole property
of Tenant. Tenant shall remove the Communication Equipment and related
equipment at Tenant's sole expense upon the expiration or sooner termination of
this Lease or upon the imposition of any governmental law or regulation which
may require removal, and shall repair the Building upon such removal to the
extent required by such work of removal. If Tenant fails to remove the
Communication Equipment and repair the Building within thirty (30) days after
the expiration or earlier termination of this Lease with respect to such
Building, Landlord may do so at Tenant's expense.
Landlord reserves the right to use a portion of the roof space on the Building
or lease roof space on the Building to other parties; provided, however, any
party to which Landlord leases such roof space shall be subject to similar
restrictions as set forth in this Article 22.
ARTICLE 23
SIGNAGE
23.1 GENERAL. Other than as contemplated by Section 23.2 below, Tenant
shall have no right to install or maintain any Tenant identification signs (or
any other signs, banners or other such displays) in any location on the Building
or in the Project which may be visible from the exterior of the Building, except
as may be approved by Landlord in writing prior to installation (which approval
shall not be unreasonably withheld, and are consistent and compatible with (a)
the restrictions contained in this Article 23, (b) all governmental regulations
and requirements, (c) the Project's signage criteria, a copy of which is
attached hereto as EXHIBIT "J" ("SIGNAGE CRITERIA"), and (d) the CC&R's.
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23.2 TENANT'S EXTERIOR SIGNAGE RIGHTS.
23.2.1 Tenant shall have the right, at Tenant's sole cost and
expense (but chargeable against the Tenant Improvement Allowance described in
the Tenant Work Letter), to install during the Lease Term (i) an identity sign
on the exterior of the Building (the "BUILDING TOP SIGNS") and (ii) certain
eyebrow, directional and monument signage in accordance with the Signage
Criteria. As used herein, "TENANT'S SIGNS" shall mean all Building Signs and
any eyebrow, directional, monument or other signage rights granted to Tenant
pursuant to this Article 23 or EXHIBIT "J". Tenant's Signs shall identify the
name of Tenant and shall not refer to the name of the Project except that
monument signage may refer to the name of the Project.
23.2.2 Tenant's right to Tenant's Signs which are visible from the
exterior of the Building shall be personal to the Original Tenant, any Permitted
Affiliate and any other assignee of Tenant's entire interest in this Lease
(collectively, "PERMITTED SIGNAGE ENTITIES") and may not be transferred to any
other person or entity, except that Tenant may assign Tenant's rights to any of
Tenant's Signs to any other Transferee occupying at least a full floor in the
Building where Landlord reasonably determines that the name of the Transferee is
not an "Objectionable Name," as that term is defined below. The term
"OBJECTIONABLE NAME" shall mean any name that (i) relates to an entity that is
of a character or reputation, or is associated with a political orientation or
faction, that is inconsistent with the quality of the Project as a first-class,
institutional quality office project, or which a landlord of a first-class,
institutional quality office project would reasonably find to be offensive,
taking into consideration the level and visibility of the applicable Tenant's
Signs, or (ii) conflicts with any exclusive use covenants in other leases of
space in the Project.
23.2.3 Tenant's signage rights shall include exclusive illuminated
and nonilluminated signage for the Building (except Landlord's signage on the
Building as provided in Section 29.33 below), and Tenant shall have the right to
have its professional name and logo prominently displayed on any monument
signage for the Building.
23.2.4 Intentionally Omitted.
23.2.5 Any utility costs for illuminated signs shall be charged to
Tenant pursuant to Article 6.
23.2.6 Notwithstanding the foregoing, Landlord hereby reserves and
retains the right to identify Landlord (or its successor) as owner and/or
manager of the Project on monument signage and at the entry to the Building.
Any specifications for such signage not shown on EXHIBIT "J" shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
Tenant's name on the monument signage shall be prominent and at the top of such
signage. The monument signage shall be limited to tenants of the Project except
as described in this Section 23.2.6.
23.2.7 Tenant's Building Top Sign may (but shall not be required
to) face SR56 and shall be located on the skin of the Building in the location
shown on the Signage Criteria. The specifications, plans and elevations for
Tenant's Signs (including the graphics, materials, color, design, lettering,
height, lighting, size and quality) shall be subject to Landlord's approval,
which shall not be unreasonably withheld or delayed and shall be consistent with
the Signage Criteria for the Project. Tenant's Signs shall be installed under
the supervision of Landlord by a contractor reasonably approved by Landlord and
shall be installed in a lien-free manner in accordance with the provisions of
this Lease. Tenant's signs shall be maintained, at the sole cost and expense of
Tenant, pursuant to a maintenance program approved by Landlord.
23.2.8 Tenant shall, at Tenant's sole cost and expense (subject to
Landlord's supervision, but without charge to Tenant for such supervision),
cause Tenant's Signs to be removed and the Building and the Project to be
restored to the condition existing prior to the placement of such Tenant's Signs
(reasonable wear and tear excepted) at the expiration or earlier termination of
this Lease (or such earlier time as Tenant elects or is required to remove any
such Tenant Signs). If Tenant fails to remove Tenant's Signs and restore the
Building and Project as
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provided above within thirty (30) days following Landlord's demand therefor,
then Landlord may perform such work and all costs and expenses incurred by
Landlord in so performing such work shall be reimbursed by Tenant to Landlord
within fifteen (15) days following Landlord's delivery to Tenant of an invoice
therefor.
23.3 TENANT'S INTERIOR SIGNAGE RIGHTS. Tenant shall have the right to
locate in the Building lobby a Building directory board ("DIRECTORY BOARD") the
size, location, design, materials, color and quality of which shall be subject
to Tenant's reasonable discretion, except that if, at any time, the Building is
not one hundred percent (100%) leased by Tenant, the size, location, design,
material, color and quality of the Directory Board shall be subject to
Landlord's reasonable approval. The cost of the Directory Board shall be
included in the Base, Shell and Core for the Building and the cost of Tenant's
listings shall be borne by Tenant. Tenant shall have exclusive use of any such
Directory Board so long as Tenant's lease covers one hundred percent (100%) of
the rentable square footage in the Building; provided, however, Landlord shall
have the right to identify Landlord (or its successor) as owner and/or manager
of the Project on any such Directory Board. In the event Tenant no longer
leases and occupies one hundred percent (100%) of the rentable square footage of
the Building, Tenant and its Permitted Transferees shall be entitled to its
Building pro rata share of the space on such Directory Board. Tenant shall also
have the right to install other signage identifying Tenant within the Building,
which interior signage shall be in compliance with the Signage Criteria.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
(i) structural changes to the Building or (ii) changes to the Building's life
safety system, or (iii) any capital improvements to the Project the requirement
of which is not related to Tenant's particular use of the Premises or
Alterations made by Tenant. Compliance with the items described in subsections
(i), (ii) and (iii) above shall be Landlord's responsibility and shall, subject
to the terms of Article 4 above, be included in Operating Expenses. Should any
standard or regulation now or hereafter be imposed on Landlord or Tenant by a
state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, at its sole cost
and expense, to comply promptly with such standards or regulations. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any judicial action, regardless of whether Landlord is a party thereto, that
Tenant has violated any of said governmental measures, shall be conclusive of
that fact as between Landlord and Tenant. Notwithstanding the foregoing or
anything to the contrary contained in this Lease, Landlord hereby warrants to
Tenant that the Building shall be in compliance with the requirements of the
Americans With Disabilities Act ("ADA") and California Administrative Code Title
24 ("TITLE 24") in effect at the time Landlord obtains the certificate of
occupancy (or its equivalent) for the Base, Shell and Core; provided, however,
that if the requirements of ADA and/or Title 24 change after the date upon which
Landlord obtains the permit for the initial construction of the Building and
Landlord is not required by law to comply with such change, Landlord shall not
be in violation of this provision so long as Landlord not making such change
does not increase the cost of construction of the Tenant Improvements or delay
the construction of the Tenant Improvements. Landlord will be fully responsible
for making all alterations and repairs to the Building, at Landlord's cost
(which shall not be included in Operating Expenses) resulting from or
necessitated by the failure of Landlord or Landlord's contractors to comply with
the foregoing ADA and Title 24 warranty. The obtaining of a Certificate of
Occupancy by either Landlord or Tenant permitting Tenant occupy the Building
shall be prima facia evidence that Landlord has complied with the foregoing
requirements of this Article 24 ("REQUIREMENTS") as of the date of such
Certificate of Occupancy, unless refuted or reversed by any applicable
governmental authorities. However, notwithstanding anything to the contrary
contained in this Article 24,
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Tenant, at Tenant's sole cost and expense, shall promptly make all repairs,
replacements, alterations or improvements needed to comply with the Requirements
to the extent that the Requirements relate to or are triggered by (a) Tenant's
particular use of the Building for other than general office use, or (b) any
Alterations made to the Building by Tenant.
ARTICLE 25
LATE PAYMENTS
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to two
percent (2%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum ("INTEREST RATE") equal to
the lesser of (i) two percent (2%) over the rate publicly announced by Wells
Fargo Bank as its prime or reference rate (or the largest state chartered bank
operating in California in the event that Wells Fargo Bank ceases to exist or to
announce a prime or reference rate) or (ii) the highest rate permitted by
applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent. If Tenant shall fail
to perform any of its obligations under this Lease, within a reasonable time
after such performance is required by the terms of this Lease, Landlord may, but
shall not be obligated to, after reasonable prior notice to Tenant (except in
the case of an emergency), make any such payment or perform any such act on
Tenant's part without waiving its rights based upon any default of Tenant and
without releasing Tenant from any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15)
days after delivery by Landlord to Tenant of statements therefor: (i) sums
equal to expenditures reasonably made and obligations incurred by Landlord in
connection with the remedying by Landlord of Tenant's defaults pursuant to the
provisions of Section 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in Article 10 of this Lease; and (iii) sums
equal to all expenditures reasonably made and obligations incurred by Landlord
in collecting or attempting to collect the Rent or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, all legal fees and other amounts so expended. Tenant's
obligations under this Section 26.2 shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants (but as to prospective tenants, only during the last twelve (12)
months of the initial Lease Term or of any Extension Term), or to the ground or
underlying lessors; (iii) post notices of nonresponsibility; or (iv) alter,
improve or repair the Premises or the Building if necessary to comply with
current building codes or other
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applicable laws, or for structural alterations, repairs or improvements to the
Building. Tenant shall be offered an opportunity to accompany Landlord in
connection with any such entry and Landlord shall use reasonable efforts to
comply with Tenant's security procedures in connection with such entry (except
that these restrictions shall not apply in the case of an emergency where Tenant
is not available to accompany Landlord). Notwithstanding anything to the
contrary contained in this Article 27, Landlord may enter the Premises at any
time to (A) perform services required of Landlord; (B) take possession due to
any breach of this Lease in the manner provided herein; and (C) perform any
covenants of Tenant which Tenant fails to perform. Landlord may make any such
entries without the abatement of Rent so long as Tenant can continue to occupy
and use any affected portion of the Premises for the same business purposes as
Tenant had been using such affected portion prior to Landlord's entry, and
Landlord may take such reasonable steps as required to accomplish the stated
purposes, provided, however, that any such entry shall be accomplished as
expeditiously as reasonably possible and in a manner so as to not materially and
adversely interfere with Tenant's normal business functions. Tenant hereby
waives any claims for damages or for any injuries or inconvenience to or
interference with Tenant's business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby except
any claims arising out of Landlord's gross negligence or willful misconduct.
For each of the above purposes, Landlord shall at all times have a key with
which to unlock all the doors in the Premises, excluding Tenant's vaults, safes
and special security areas designated from time to time in advance by Tenant.
In an emergency, Landlord shall have the right to use any means that Landlord
may deem proper to open the doors in and to the Premises. Any entry into the
Premises by Landlord in the manner hereinbefore described shall not be deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
actual or constructive eviction of Tenant from any portion of the Premises.
ARTICLE 28
TENANT PARKING
Commencing on the Lease Commencement Date, Tenant shall have the right, at
no cost to Tenant during the initial Lease Term (with the parking charge, if
any, during Extension Terms to be determined as a component of Fair Market
Rental Value), to the use of the number of parking permits set forth in Section
9 of the Summary, which parking permits shall pertain to the Project parking
facilities. Such parking permits shall permit Tenant and its employees and
invitees to use, on a nonexclusive basis, together with other tenants and their
respective employees and invitees, any undesignated, unreserved spaces available
in such parking facility for the Building. Tenant shall abide by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the Project parking facility, provided that Landlord shall not prescribe
any rules and regulations which unreasonably and adversely affect Tenant's use
of the Project parking facility. Such rules and regulations shall provide that
Tenant shall pay Landlord's then current nominal charge for any replacement of
any Tenant parking pass card, if any, which is lost, stolen, damaged or
destroyed. Tenant understands and agrees that, pursuant to the CC&R's, other
owners of adjacent property to the Project have been or will be granted
reciprocal rights of access and parking over certain portions of the Project as
more particularly set forth in the CC&R's; provided, however, the use of the
parking structure will be limited to tenants of the Project. Landlord shall
not, without Tenant's prior written approval (which approval shall not be
unreasonably withheld), change the size, configuration, design, layout and all
other aspects of the Project parking facilities at any time, and if Tenant
approves any such changes, Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, temporarily restrict access to the Project
parking facility for purposes of permitting any such construction, alteration or
improvements so long as Landlord takes all reasonable measures to minimize any
disruption to Tenant's use or access of the Project parking facilities for the
duration of any such construction, alteration or improvements. Notwithstanding
the foregoing, Landord may, without Tenant's prior written approval, make such
changes to the Project parking facilities to the extent such changes are
mandated by any applicable governmental law, rule or regulation or any changes
to any governmental law, rule or regulation. If Landlord is forced to relocate
Tenant's parking off site of the Project parking facility, any such relocation
shall be temporary and
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Landlord shall use commercially reasonable efforts to cause such relocation to
be within a reasonable walking or shuttle distance of the Project. Further,
Landlord shall not knowingly allow any non-tenants of the Project to use the
Project parking facilities in violation of the CC&R's without Tenant's prior
written approval. Landlord agrees that the average number of parking permits
granted by Landlord to any other tenants of the Project shall not exceed four
and one-half (4.5) parking permits per 1,000 usable square feet of space so
leased. Landlord may delegate its responsibilities hereunder to a parking
operator in which case such parking operator shall have all the rights of
control attributed hereby to the Landlord. Tenant's parking permits under this
Article 28 are provided to Tenant solely for use by Tenant's own personnel and
such privileges may not be transferred, assigned, subleased or otherwise
alienated by Tenant without Landlord's prior approval other than on a pro rata
basis to Permitted Affiliates and Permitted Transferees. Tenant's invitees and
guests may use parking spaces in such parking facility which are not allocated
or reserved for Tenant or other occupants or visitors of the Building or Project
on a first-come, first-serve basis. Notwithstanding the foregoing,
approximately ten percent (10%) of Tenant's parking permits for the Building
shall be reserved spaces for Tenant's visitors and employees of the Building, as
will be shown on a Project parking plan prepared by Landlord and acceptable to
Tenant. Landlord shall have the right to relocate such reserved spaces from time
to time so long as Landlord provides Tenant with reserved spaces within the same
general proximity of the Building. The parking permits allocated to Tenant are
not for long term (i.e., more than ninety-six (96) hours) storage of
automobiles, and are not for short or long term storage of boats, trailers,
recreational vehicles, motorcycles or other vehicles or equipment. Tenant shall
have the option to require Landlord to add, at Tenant's sole cost and expense
(other than the cost of card keys for tenant(s) of Building 4, unless Tenant
exercises its option to lease Building 4), a card key entry system to the
parking structure (as selected by Tenant and reasonably approved by Landlord)
for the Project and/or security cameras (including a security desk and console
with monitors for each security camera at the location specified in EXHIBIT "I")
within the parking structure for the Project; if Tenant exercises such option,
Tenant shall pay such cost to Landlord, as Additional Rent, within thirty (30)
days after Tenant's receipt of reasonably detailed invoice(s).
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Subject to all other provisions of this Lease,
each of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Landlord and of Tenant, but
also of their respective successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of this
Lease.
29.2 MODIFICATION OF LEASE/MEMORANDUM OF LEASE. Should any current or
prospective mortgagee or ground lessor for the Building or Project require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way change
the rights and obligations of Tenant hereunder (as reasonably determined by
Tenant), then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. Landlord agrees to pay to Tenant, within thirty (30) days
after invoice, any reasonable attorneys' fees incurred by Tenant in connection
with any modification to this Lease executed by Tenant pursuant to the
immediately preceding sentence. Should Landlord or any such prospective
mortgagee or ground lessor, or should Tenant, request execution of a short form
Memorandum of Lease for recording, containing, among other customary provisions,
the names of the parties, a description of the Premises and the Lease Term, each
party agrees to execute and deliver such short form Memorandum of Lease to the
other within twenty (20) days following the request therefor. Either party may
record any such Memorandum of Lease at such party's sole cost and expense;
however, if Tenant records a Memorandum of Lease, Tenant agrees to execute,
acknowledge and deliver to Landlord, within ten (10) days after Landlord's
request (which request may be made by Landlord at any time after the date of
expiration or earlier termination of this Lease), a quitclaim
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deed prepared by Landlord and in commercially reasonable form acknowledging the
expiration or earlier termination of this Lease. The immediately preceding
sentence shall survive the expiration or earlier termination of this Lease.
29.3 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project and
in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease for
obligations accruing after the date of transfer and Tenant agrees to look solely
to such transferee for the performance of Landlord's obligations to be performed
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that an assignment shall not release
Landlord from its obligations hereunder and Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.4 CONSENTS BY THE PARTIES. The parties intend that whenever
Landlord's or Tenant's consent or approval is expressly or impliedly required by
any provision of this Lease, the consent or approval may not be unreasonably or
arbitrarily withheld, conditioned or delayed; and on the contrary, shall be
approved or disapproved by a party acting in a commercially reasonable manner.
Notwithstanding anything to the contrary contained in this Lease, except as
expressly provided in Section 14.2 above, an action for declaratory judgment or
specific performance shall be Tenant's or Landlord's sole right and remedy in
any dispute as to whether Tenant or Landlord has breached this Section 29.4
concerning a consent or approval.
29.5 CAPTIONS. The captions of articles and sections are for
convenience only and shall not be deemed to limit, construe, affect or alter the
meaning of such articles and sections.
29.6 TIME OF ESSENCE. Time is of the essence of this Lease and each of
its provisions.
29.7 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.9 CONSTRUCTION. Should any provision of this Lease require
interpretation by a court of law, it is agreed that the court interpreting or
construing this Lease shall not apply a presumption that the terms shall be more
strictly construed against one party who by itself or through its agents
prepared this document.
29.10 ENTIRE AGREEMENT. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises and shall be
considered to be the only agreements between the parties hereto and their
representatives and agents. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.
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29.11 RIGHT TO LEASE. Subject to Tenant's rights hereunder, Landlord
reserves the absolute right to effect such other tenancies in the Project as
Landlord in the exercise of its sole business judgment shall determine to best
promote the interests of the Building or Project, provided that Landlord shall
lease space in the Project only to tenants who are consistent with the quality
of the Project as a first-class, institutional quality office project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the Lease Term, occupy any space in
the Building or Project.
29.12 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
29.13 NOTICES. All notices, demands, statements, designations, approvals
or other communications (collectively, "NOTICES") given or required to be given
by either party to the other hereunder shall be in writing, shall be sent by (i)
United States certified or registered mail, postage prepaid, return receipt
requested, (ii) nationally recognized and reputable overnight courier (e.g.,
Federal Express and Network Courier), or (iii) delivered personally. Notice
shall be sent (a) to Tenant at the appropriate address set forth in Section 11
of the Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord; or (b) to Landlord at the following addresses, or to
such other firm or to such other place as Landlord may from time to time
designate in a Notice to Tenant:
Kilroy Realty, L.P.
2250 East Imperial Highway, Suite 1200
El Segundo, California 92045
Attention: Legal Department
Facsimile: (310) 322-8790
with a copy to:
Kilroy Realty, L.P.
4370 Executive Drive, Suite 400
San Diego, California 92121
Attention: Asset Manager
Facsimile: (619) 547-4767
Any Notice will be deemed given on the date which is three (3) business days
after the date it is mailed as provided in this Section 29.13, the next business
day if sent by overnight courier, or upon the date personal delivery is made.
If Tenant is notified of the identity and address of the holder of any deed of
trust or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given the same opportunity to cure such
default as is available to Landlord, prior to Tenant's exercising any remedy
available to Tenant.
29.14 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.15 AUTHORITY. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
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to execute and deliver this Lease and that each person signing on behalf of
Tenant is authorized to do so. If only one (1) officer executes this Lease for
Tenant, Tenant agrees to provide to Landlord evidence reasonably satisfactory to
Landlord confirming the authority of the signing officer of Tenant to bind
Tenant to this Lease.
29.16 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING
ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF
ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW. EACH PARTY HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION (FOR UNLAWFUL DETAINER OR OTHERWISE) BY LANDLORD
TO RECOVER POSSESSION OF THE PREMISES.
29.17 SUBMISSION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
29.18 BROKERS. 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 Lease, excepting only the real estate brokers or
agents specified in Section 10 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. 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, judgments, 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
any dealings with any real estate broker or agent, other than the Brokers (whose
commissions shall be paid by Landlord pursuant to a separate agreement),
occurring by, through, or under the indemnifying party.
29.19 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord except as expressly set forth in this Lease;
provided, however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of
the provisions hereof so long as notice is first given to Landlord.
29.20 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord and Tenant agree
that if Tenant leases on a direct basis (i.e., not including any space leased by
Tenant pursuant to a sublease) at least two-thirds (2/3) of any space then
constructed for lease at the Project, the name of the Project shall be
"Peregrine Systems Corporate Center." However, if at any time (after the Lease
Commencement Date for Building 1) Tenant fails to lease on a direct basis at
least two-thirds (2/3) of such space, Landlord shall have the right, at
Landlord's sole cost and expense, to change the name of the Project to "Carmel
Center", whether or not Tenant subsequently meets the leasing requirement
specified above. Except as provided in this Section 29.20 above, Landlord shall
not have the right at any time to change the name of the Project or Building
without first obtaining Tenant's written consent. Except for signs identifying
the Project or the owner or manager of the Project, Landlord shall not install,
affix and maintain any signs on the exterior or on the interior of the Building,
except as expressly contemplated by this Lease and/or may be required by law.
29.21 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future mandatory programs imposed by statute or ordinance intended to
manage parking, transportation or traffic in and around the Project or Building,
and in connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at
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the Premises by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities. If any of the foregoing are not imposed by statute or ordinance,
Tenant may participate, in its discretion, on a voluntary basis. Such programs
may include, without limitation: (i) restrictions on the number of peak-hour
vehicle trips generated by Tenant; (ii) increased vehicle occupancy; (iii)
implementation of an in-house ridesharing program and an employee transportation
coordinator; (iv) working with employees and any Project, Buildings or area-wide
ridesharing program manager; (v) instituting employer-sponsored incentives
(financial or in-kind) to encourage employees to rideshare; and (vi) utilizing
flexible work shifts for employees. Tenant shall be entitled to the benefit of
any governmental incentives (financial or in-kind) available or otherwise
offered to induce compliance with such programs to the extent such incentives
are applicable to Tenant's implementation of any such programs.
29.22 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
29.23 HAZARDOUS MATERIAL. As used herein, the term "HAZARDOUS MATERIAL"
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Tenant acknowledges that
Landlord may incur costs (A) for complying with laws, codes, regulations or
ordinances relating to Hazardous Material, or (B) otherwise in connection with
Hazardous Material including, without limitation, the following: (i) Hazardous
Material present in soil or ground water; (ii) Hazardous Material that migrates,
flows, percolates, diffuses or in any way moves onto or under the Project; (iii)
Hazardous Material present on or under the Project as a result of any discharge,
dumping or spilling (whether accidental or otherwise) on the Project by other
tenants of the Project or their agents, employees, contractors or invitees, or
by others; and (iv) material which becomes Hazardous Material due to a change in
laws, codes, regulations or ordinances which relate to hazardous or toxic
material, substances or waste. Tenant agrees that the costs incurred by
Landlord with respect to, or in connection with, the Project for complying with
laws, codes, regulations or ordinances relating to the investigation,
remediation or removal of Hazardous Material shall not be an Operating Expense,
except as indicated in Section 4.2.7(n) above. However, if the cost of such
compliance, as between Landlord and Tenant, is the responsibility of Tenant
under this Lease, Tenant shall bear the cost of such compliance.
29.24 DEVELOPMENT OF THE PROJECT.
29.24.1 SUBDIVISION. Tenant acknowledges that the Project has
been, or is in the process of being, subdivided. Landlord reserves the right to
further subdivide all or a portion of the buildings and Common Areas in the
Project. Tenant agrees to execute and deliver, within ten (10) days after
demand by Landlord and in the form reasonably requested by Landlord, any
additional documents needed to conform this Lease to the circumstances resulting
from a subdivision and any all maps in connection therewith provided Tenant
shall not be required to incur any cost, undue burden or diminution of Tenant's
rights hereunder in connection therewith. Notwithstanding anything to the
contrary set forth in this Lease, the separate ownership of any buildings and/or
Common Areas of the Project by an entity other than Landlord shall not affect
the calculation of Direct Expenses or Tenant's payment of Tenant's Share of
Direct Expenses.
29.24.2 THE OTHER IMPROVEMENTS. If portions of the Project or
property adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any
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of the Other Improvements to provide (i) for reciprocal rights of access, use
and/or enjoyment of the Project and the Other Improvements, (ii) for the common
management, operation, maintenance, improvement and/or repair of all or any
portion of the Project and all or any portion of the Other Improvements, (iii)
for the allocation of a portion of the Project Expenses to the Other
Improvements and the allocation of a portion of the operating expenses and taxes
for the Other Improvements to the Project, (iv) for the use or improvement of
the Other Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project,
and (v) for any other matter which Landlord deems necessary. Nothing contained
herein shall be deemed or construed to limit or otherwise affect Landlord's
right to sell all or any portion of the Project or any other of Landlord's
rights described in this Lease.
29.24.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction, provided that Landlord shall
take all reasonable measures to minimize any interference or disruption to
Tenant's use of the Premises.
29.25 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord hereunder) and any recourse by Tenant against Landlord
from and after Landlord's Substantial Completion of the Building and delivery of
the same to Tenant in accordance with Landlord's obligations under this Lease,
shall be limited solely and exclusively to the lesser of (a) the equity interest
of Landlord in the Buildings then leased by Tenant as of the date upon which any
claim(s) arises or accrues in favor of Tenant or (b) the equity interest
Landlord would have in such Buildings if such Buildings were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Buildings, except to the extent any such claims and liability are covered by
insurance carried by Landlord. None of Landlord's constituent members, owners,
partners or subpartners, shall have any liability for the obligations of
Landlord under this Lease, and Tenant, on behalf of itself and all persons
claiming by, through or under Tenant, hereby expressly waives and releases such
members, owners, partners and subpartners from any and all liability.
29.26 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant, all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
29.27 ATTORNEYS' FEES. If either party commences litigation against the
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
29.28 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at underground locations in the Project in or
serving the Premises, provided that (i) Tenant shall use an experienced and
qualified contractor approved in writing by Landlord (which approval shall not
be unreasonably withheld or delayed), and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of
conduits for additional Lines shall be maintained for existing and future
occupants of the Project, as determined in Landlord's reasonable opinion, (iii)
conduits for the Lines therefor (including riser cables unless originally
installed by Landlord) shall be appropriately insulated to prevent excessive
electromagnetic fields or radiation, and shall be surrounded by a protective
conduit reasonably acceptable to Landlord, (iv) any new or existing Lines
servicing the Premises shall comply with all applicable governmental laws and
regulations, and (v) Tenant shall pay all costs in connection therewith
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(except that Tenant shall have no obligation to remove any Lines between the
Buildings upon the expiration or earlier termination of this Lease). However,
Landlord reserves the right to require that Tenant remove any Lines located in
or serving the Premises which are installed in violation of these provisions, or
which are at any time in violation of any laws or represent a dangerous or
potentially dangerous condition.
29.29 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenant's obligations under this Lease.
29.30 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.31 CONFIDENTIALITY. Landlord and Tenant acknowledge that the content
of this Lease and any related documents are confidential information. Landlord
and Tenant shall keep such confidential information strictly confidential and
shall not disclose such confidential information to any person or entity other
than (i) their financial, legal, and space planning consultants, (ii) as may be
required by any public reporting requirements, and (iii) as may be required by
any applicable governmental law, rule or regulation.
29.32 DISCLOSURES AND MUTUAL RELEASE. Tenant acknowledges that Landlord
has advised Tenant (i) that an earthquake fault may be located under a portion
of the Project, and (ii) of the proximity of the Project to the Miramar military
air base's vectored departure corridors and the potential overflights and
associated noise generated by various military aircraft in the area. Landlord
and Tenant hereby mutually release, acquit and discharge each other from any and
all Claims which either party may have against the other party arising out of or
in connection with (a) any earthquake affecting all or any portion of the
Project (subject to Landlord's and Tenant's rights and obligations under Article
11 above), and (b) any such overflights and associated noise.
29.33. LANDLORD SUBLEASE. Tenant hereby agrees and grants to Landlord the
right to sublease ("LANDLORD'S SUBLEASE"), for a term of five and one-half
(51/2) years, up to 8,000 rentable square feet of contiguous space on the third
(3rd) floor of the Building in a location in the southwesterly quadrant of such
Building ("THIRD FLOOR SPACE") and up to 2,000 rentable square feet on the
ground floor of the Building ("GROUND FLOOR SPACE"), with the exact location and
configuration of such spaces to be mutually and reasonably agreed to by Landlord
and Tenant. This right shall be personal to Landlord, except that it may be
assigned by Landlord to its affiliate Kilroy Realty Corporation or any other
affiliate of Landlord. Until the expiration or earlier termination of this
Lease (including any applicable Extension Terms), Landlord shall have
consecutive one (1) year options to extend the term of Landlord's Sublease upon
at least ninety (90) days prior written notice to Tenant; provided, however,
that any such extensions for the Third Floor Space (but not the Ground Floor
Space) shall be subject to Tenant's need to utilize such space for Tenant's own
occupancy needs. For purposes of the immediately preceding sentence, however,
Tenant shall only be considered to require the Third Floor Space for Tenant's
own occupancy needs if no other equivalent space is then available in the
Building. Space shall be deemed to be "equivalent space" if the number of
rentable square feet of such space is at least seventy-five percent (75%) but
not in excess of one hundred twenty-five percent (125%) of the number of
rentable square feet of the Third Floor Space. The subtenant shall pay as rent
and additional rent for the subleased premises under the Landlord's Sublease the
same rent as is payable by Tenant for such space in the Building, and such rent
shall be adjusted in the same manner as the Rent is adjusted under this Lease.
Tenant shall not be obligated to pay any brokerage commission or finder's fee in
connection with the Landlord's Sublease. The Landlord's Sublease shall
generally be on the other terms and conditions as are applicable to Tenant's
lease of the Premises. Tenant acknowledges that if Landlord exercises its right
to a Landlord's Sublease, and if Tenant grants any exterior signage rights to
any other subtenant
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subleasing a full floor or less in the Building, Landlord shall be entitled to
erect signage on the exterior of the Building identifying Landlord or its
affiliate of a size, and in a location, which is comparable to such other
subtenant's sign (subject to compliance with all applicable governmental laws,
rules and regulations and compliance with the CC&R's). However, in any event,
Landlord shall be entitled, at Landlord's sole cost and expense, to signage
identifying Landlord or its affiliate on the monument sign for the Building.
Landlord must exercise its right to the Landlord's Sublease, if at all, by
written notice to Tenant on or before December 31, 1999. If Landlord exercises
its right to Landlord's Sublease pursuant to this Section 29.33, Landlord and
Tenant shall promptly execute a sublease document in commercially reasonable
form on the terms and conditions specified herein.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD": KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By:/s/ Steven L. Black
-------------------------
Name: Steven L. Black
-----------------------
Its: EVP - CDO
-------------------
By:/s/ Jeffrey C. Hawken
-------------------------
Name: Jeffrey C. Hawken
-----------------------
Its: EVP - CDO
-------------------
"TENANT": PEREGRINE SYSTEMS, INC., a Delaware corporation
By: [ILLEGIBLE]
-----------------------------------
Sr. V.P., Finance & Administration
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
By:
-----------------------------------
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
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EXHIBIT A
PEREGRINE SYSTEMS CORPORATE CENTER
SITE PLAN
[MAP]
EXHIBIT A
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT B
PEREGRINE SYSTEMS CORPORATE CENTER
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Base, Shell and Core and tenant improvements for the
Building. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Building, in sequence, as such
issues will arise during the actual construction of the Building. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Lease. All references in this Tenant Work Letter to articles or
sections of "this Lease" shall mean the relevant portion of Articles 1 through
29 of this Office Lease to which this Tenant Work Letter is attached as EXHIBIT
B and of which this Tenant Work Letter forms a part, and all references in this
Tenant Work Letter to sections of "this Tenant Work Letter" shall mean the
relevant portion of Sections 1 through 7 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION OF BASE, SHELL, AND CORE
The base, shell and core for the Building (collectively, the "BASE, SHELL
AND CORE") shall be constructed by Landlord, at its sole cost and expense
(except as expressly provided herein), in accordance with this Section 1.
1.1 LANDLORD'S RESPONSIBILITIES. The Base, Shell and Core for the
Building shall consist of only those items reflected on the final working
drawings to be prepared for the Building as a logical evolution of those certain
drawings prepared by the Project Architect for Building 1 and Building 2 as
summarized on Schedule 3 to this Tenant Work Letter, (as such drawings may be
revised pursuant to the Tenant Work Letter for the Building 1 Lease for reasons
other than a Landlord Work Change Order) (as so-revised, the "ADJACENT BUILDING
WORKING DRAWINGS") and the existing schematic design drawings for the Building
and shall be consistent with the design of, and quality of materials specified
in, the Adjacent Building Working Drawings. Notwithstanding the foregoing, the
Base, Shell and Core for the Building shall (without limitation to the items
reflected in the Adjacent Building Working Drawings) consist of (i) core walls
and elevator lobby areas drywalled and taped ready for Building-standard surface
treatments; (ii) balance of core: exposed structure, level concrete floors
(broom clean) suitable for the installation of general office improvements and
ready to receive floor covering, Building-standard finish for painted door
frames, and Building-standard hardware; (iii) primary electrical system ready
for Tenant's switchgear in main electrical room which will service the floor of
the Building on which the Premises are located sufficient to provide Tenant with
4 watts per rentable square foot and sufficient capacity in such distribution to
provide an additional 1.5 watts per rentable square foot; (iv) Building
telephone room to have floor sleeves to allow utility company to distribute
service lines onto each floor (Tenant to locate phone system equipment in the
Premises and to provide voice/data cabling from equipment to termination in
telephone room); (v) men's and ladies' restroom facilities with
Building-standard finishes located on each floor; (vi) sprinkler risers capped
at the core walls; (vii) primary heating, ventilating and air conditioning
system, including main water distribution loop (however, any VAV boxes and
ducting including main ducting loop, shall be a Tenant Improvement); (viii)
drinking fountain at core on ground floor; (ix) electrical and janitorial
closets; (x) code required exit stairways; (xi) mechanical shafts; (xii)
life-safety systems as required by applicable building codes on an unoccupied
basis and ground floor lobby improvements including the improvements described
in the Building Working Drawings, and (xiii) card access system for Building
entrances and elevators. Landlord shall use commercially reasonable efforts to
cause the Base, Shell and Core of the Building to be completed by the date
specified in Section 1.5.2(v) below (the "SHELL COMPLETION DATES") in order to
allow a sufficient period of time for the construction of the Tenant
Improvements prior to the Estimated Lease Commencement Date.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
1.1.1 BOOKS AND RECORDS. Landlord shall be responsible for
performing all accounting functions associated with the performance of the
construction of the improvements to the Common Areas and the Base, Shell and
Core and Tenant Improvements (collectively, the "WORK") and shall prepare and
maintain or cause to be prepared and maintained detailed and accurate operating
and financial records for the Work. Tenant shall have the right to inspect such
records at the offices of Landlord in Southern California during normal business
hours and to make copies thereof at its expense. Landlord shall preserve, or
cause its agents to preserve, copies of all books and records relating to the
Work for a period of three (3) years after the completion of the Base, Shell and
Core.
1.1.2 GOVERNMENTAL APPROVALS. Landlord shall be responsible for
obtaining all necessary agreements with governmental agencies and utility
companies relating to access, traffic control, utility services and other
similar entitlements affecting the construction of the Work.
1.1.3 BIDDING OF CONTRACTS. Landlord shall be responsible for the
bidding (or at Landlord's election the negotiation of fees) of the contract with
the general contractor and all subcontracts to be awarded in connection with the
initial Common Area improvements and the Base, Shell and Core (collectively, the
"LANDLORD WORK") in accordance with Section 1.4 below. Landlord shall be
responsible for negotiating the terms of the agreements with the contractor and
Project Architect with respect to the Landlord Work, both of which shall be
consistent with the terms and provisions of this Section 1. Except as expressly
provided in the Lease or this Tenant Work Letter, Landlord shall be solely
responsible for the payment of the costs of designing and constructing the
Landlord Work.
1.1.4 PERMITS. In addition to Landlord's obligations under
Section 1.1.2 above, Landlord shall be responsible for obtaining, or causing its
contractor to obtain, all building permits and other governmental approvals,
permits and land use entitlements required to complete the Landlord Work.
Landlord shall be responsible for compliance with all laws, rules, regulations
and policies of the City of San Diego, State of California and United States of
America governing completion of the Landlord Work, including without limitation,
the requirements of the ADA and Title 24 in effect as of the Lease Commencement
Date, and shall correct any such violations at no cost to Tenant; however, if
the requirements of any laws change after the date upon which Landlord obtains
the permit for construction of the Base, Shell and Core and Landlord is not
required by law to comply with such change with respect to the Landlord Work,
Landlord shall not be in violation of this Section 1.1.4 so long as Landlord by
electing not to make such change does not increase the cost of construction of
the Tenant Improvements or delay the construction of the Tenant Improvements.
1.1.5 PROJECT ADMINISTRATION. Landlord shall be responsible for
supervising the progress of the Work and for reviewing and approving progress
payment applications before they are processed for payment.
1.1.6 POST-COMPLETION MATTERS. Following the completion of the
Landlord Work, Landlord shall assemble and maintain at the property management
office for the Project copies of (i) all warranties, operating manuals,
specifications and similar items with respect to the Building, and (ii) as-built
architectural and engineering drawings (including the master background) and any
other plans for the Landlord Work. Following the completion of the Work, upon
the request of Tenant and at Landlord's expense, Landlord also shall assemble
and deliver to Tenant copies of reproducible as-built plans and specifications
for the Building (in an auto-cad format, if available).
1.1.7 STATUS REPORTS. Landlord shall inform Tenant of any
problems or developments that may have an adverse impact on the completion of
the Landlord Work in a timely manner promptly after Landlord becomes aware of
such problems or developments.
1.1.8 PERIODIC INSPECTIONS. Landlord shall conduct ongoing
inspections (at least weekly) of the Landlord Work for compliance with plans and
specifications and review of progress of construction, and shall conduct
periodic site meetings with the construction trades.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Landlord shall keep Tenant reasonably informed of such meetings and proposed
meetings and provided that Tenant's participation does not extend the
Construction Schedule, Tenant shall have the right to participate in such
meetings if it so desires.
1.1.9 PARKING STRUCTURE. Landlord shall construct the parking
structure for the Project as part of the Landlord Work. The parking structure
shall be at least two (2) levels and shall contain at least one thousand six
hundred ninety (1,690) parking spaces. Substantial Completion shall not be
deemed to have occurred until the parking structure is substantially complete
(i.e., complete other than punchlist items which shall then be completed as soon
as reasonably possible).
1.2 DESIGN OF THE LANDLORD WORK. Landlord has entered into an
agreement with Carrier Johnson for the design of the Landlord Work including
preparation of design, development and construction documents. Landlord has
entered into or may enter into other agreements with other consultants for
design of other aspects of the Landlord Work (if applicable). Carrier Johnson
and such other design consultants (if applicable) retained by Landlord shall be
collectively referred to as the "PROJECT ARCHITECT." Landlord's agreement(s)
with the Project Architect shall be collectively referred to herein as the
"PROJECT ARCHITECT AGREEMENT." The specific terms of the Project Architect
Agreement shall be such that it will enable Landlord to perform Landlord's
obligations hereunder.
Landlord shall cause the Project Architect to prepare the Building Working
Drawings in accordance with the requirements of Section 1.1 above. Upon
preparation of the Building Working Drawings, Landlord shall identify in writing
to Tenant any "Material Changes," as defined in this Section 1.2, reflected in
the Building Working Drawing from the Adjacent Building Working Drawings.
"MATERIAL CHANGES" shall mean any changes or deviations which will or may cause
(i) interference with or delay of the Tenant Improvements proposed by Tenant for
the Building, (ii) a material change to the exterior of the Building, (iii) a
material change to any of the finish materials, including without limitation, to
the lobby, bathrooms, and elevator cabs of the Building, or (iv) any adverse
effect (as reasonably determined by Landlord) on the quality of the Landlord
Work. Tenant shall give written notice to Landlord of Tenant's approval or
disapproval of any Material Changes (or any revisions to the Building Working
Drawings arising out of Material Changes or out of Tenant's disapproval of any
proposed Material Changes) within five (5) days following Tenant's receipt of
Landlord's notice of any such Material Changes (or revisions, as applicable);
any such notice of disapproval shall be accompanied by detailed reasons for such
disapproval. Failure of Tenant to approve or disapprove by written notice to
Landlord within such time frame shall constitute Tenant's approval of same. In
a time and manner consistent with the Construction Schedule, Landlord shall
request the Project Architect to obtain approval of the Building Working
Drawings from all appropriate governmental agencies, including all departments
of the City of San Diego having jurisdiction to review the Building Working
Drawings. Landlord shall be solely responsible for any additional costs
incurred as a result of a Material Change unless mutually agreed upon by
Landlord and Tenant; however, Tenant shall be responsible for additional costs
resulting from Landlord Work Change Orders pursuant to Section 1.3 below.
Nothing contained in this Section 1.2 is intended to, nor shall, provide Tenant
with the right to require changes to the Base, Shell and Core Working Drawings
without Landlord's approval.
1.3 CHANGE ORDERS REQUESTED BY TENANT TO THE LANDLORD WORK. Tenant may
request that additions to or deletions from the Landlord Work be made ("LANDLORD
WORK CHANGE ORDERS"). If Tenant desires a Landlord Work Change Order to be
made, Tenant shall so notify Landlord in writing and, within ten (10) days after
such notification, Landlord shall deliver to Tenant (i) written notice that
Landlord has determined, in Landlord's reasonable discretion, to disapprove the
proposed Landlord Work Change Order, or (ii) if Landlord approves the proposed
Landlord Work Change Order, a written estimate of any extension to the
Construction Schedule and any additional costs resulting from such proposed
Landlord Work Change Order. Without limitation on other reasons for Landlord's
disapproval, Landlord may disapprove any such proposed Landlord Work Change
Order if it will cause (a) a material change to the exterior of the Building,
(b) a material change to any of the finish materials, including without
limitation, to the
EXHIBIT B
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[Peregrine Systems]
<PAGE>
lobby, bathrooms or elevator cabs of the Building, or (c) any material adverse
effect (as reasonably determined by Landlord) on the quality or adequate
functionality of the Landlord Work. If Landlord approves the proposed Landlord
Work Change Order, Tenant shall, within five (5) days following receipt of such
notification from Landlord, then notify Landlord in writing whether or not
Tenant elects to proceed with the Landlord Work Change Order. If Tenant elects
to cause any Landlord Work Change Order to be made, the Shell Completion Date
and other Major Project Milestones shall be appropriately adjusted as a result
of any delays due to such Landlord Work Change Order. If Landlord does not
approve a proposed Landlord Work Change Order, the Landlord Work Change Order
shall not be implemented. Any increased cost resulting from a Landlord Work
Change Order shall be charged to the Tenant Improvement Allowance and any delay
resulting from a Landlord Work Change Order shall, subject to Section 5 below,
be deemed to constitute a Tenant Delay and an Excusable Delay. Tenant
acknowledges, however, that the contractor for the Landlord Work shall not be
instructed to stop work during the time taken by Tenant in considering whether
to proceed with any proposed Landlord Work Change Orders and that the cost
charged to the Tenant Improvement Allowance and any potential Tenant Delay and
Excusable Delay resulting from a Landlord Work Change Order shall include any
work necessary to reverse the work performed by the contractor during the
pendency of Tenant's decision whether to proceed with a Landlord Work Change
Order.
1.4 CONTRACTING. Landlord may, at its option, retain Reno Contracting,
Inc., a California corporation ("RENO") or separately bid and award separate
contracts for the construction of the Base, Shell and Core of the Buildings.
1.5 CONSTRUCTION SCHEDULE.
1.5.1 COMPLETION. The construction of the Base, Shell and Core of
the Building shall be deemed to be completed (the "BASE, SHELL AND CORE
COMPLETION") when (i) the Project Architect determines that the Base, Shell and
Core for such Building has been completed in accordance with the Building
Working Drawings (subject to customary "punch list" items) by issuing a
certificate of substantial completion, and (ii) a certificate of occupancy or an
approval to occupy (or their equivalent) with respect to the Base, Shell and
Core has been issued by the City of San Diego. "Punch list" items, as referred
to in this Section 1.5.1, are items that will require correction but that will
not materially interfere with, or cause a delay to, the construction of the
Tenant Improvements. Landlord agrees to correct all such Base, Shell and Core
punch list items prior to the Lease Commencement Date.
1.5.2 MAJOR PROJECT MILESTONES. Landlord agrees that it shall use
commercially reasonable efforts to complete its duties and tasks specified in
this Tenant Work Letter in accordance with the schedule attached to this Tenant
Work Letter as Schedule 1 and made a part hereof ("CONSTRUCTION SCHEDULE") and
to endeavor to accomplish all "Major Project Milestones" within the time set
forth in the Construction Schedule. As used herein, the term "MAJOR PROJECT
MILESTONES" means:
(i) Completion of Base, Shell and Core Working Drawings and
submittal of same to City of San Diego for permits by:
Done
(ii) Obtaining all building and other permits for the
construction of the Base, Shell and Core by:
July 25, 1999
(iii) Commencement of construction of the Base, Shell
and Core by:
July 25, 1999
(iv) Completion of vertical construction of the Base, Shell
and Core by:
February 11, 2000
(v) Base, Shell and Core Completion by the applicable Shell
Completion Date:
July 1, 2000
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Landlord shall use its reasonable, good-faith efforts to meet all
milestones by the date set forth for the accomplishment of such milestones in
the Construction Schedule. If Landlord fails to accomplish any milestone by the
date set forth in the Construction Schedule (as may be extended pursuant to the
next sentence below), then Landlord shall authorize and direct its employees,
the Project Architect, the general contractor for the Landlord Work and any
relevant subcontractor to work at an accelerated pace utilizing such "overtime"
hours as may be necessary to bring the Landlord Work back on schedule. The
dates set forth in the Construction Schedule (including, without limitation, any
milestones and any Major Project Milestones) shall be extended by any delay
(collectively, "EXCUSABLE DELAY") attributable to Tenant's failure to comply
with its obligations under Section 1 of this Tenant Work Letter, any Tenant
Delay, any Landlord Work Change Order, and any Force Majeure. However, any
delay necessitated by changes in the Building Working Drawings because the same
do not comply with Code or other applicable laws shall not constitute an
Excusable Delay except to the extent the portion of the Building Working
Drawings which is found to not comply is attributable to Landlord Work Change
Orders made by Tenant.
SECTION 2
TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a tenant
improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount of
Three Million Seven Hundred Twenty-Three Thousand One Hundred Thirty-Nine
Dollars ($3,723,139.00) for the costs relating to the design and construction of
Tenant's improvements (the "TENANT IMPROVEMENTS"). Tenant shall have the right
to defer the construction of Tenant Improvements for space in the Building which
Tenant elects not to initially build-out until no later than three (3) years
after the Lease Commencement Date; however, (i) if Tenant elects to commence
construction of Tenant Improvements for any space in the Building, such
construction may not thereafter be deferred, and (ii) any such deferral shall be
deemed a Tenant Delay so that the Lease Commencement Date shall not be delayed.
In no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Tenant Improvement
Allowance (except as expressly contemplated by this Tenant Work Letter). Any
portion of the Tenant Improvement Allowance remaining after construction of the
Tenant Improvements for the Building may be used by Tenant for Tenant
Improvements for such Building before the second (2nd) anniversary of the Lease
Commencement Date for such Building; provided, however, Tenant shall have the
right to transfer portions of the Tenant Improvement Allowance among the
Building and Buildings 1 and 2 for Tenant Improvements and space planning costs
only. Further, Tenant shall allocate and use a minimum Tenant Improvement
Allowance for "hard costs" (i.e., costs incurred under the general contract with
Contractor) of Tenant Improvements in an amount not less than Two Million Four
Hundred Thirty-Two Thousand Seven Hundred Thirty-Three Dollars ($2,432,733.00).
All Tenant Improvements for which the Tenant Improvement Allowance has been made
available shall be deemed Landlord's property except as described under the
terms of Section 8.5 of this Lease.
2.2 DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE. Except as
otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance
shall be disbursed by Landlord (each of which disbursements shall be made
pursuant to the disbursement process described in Section 4.3.1 below) only for
the following items and costs (collectively, the "TENANT IMPROVEMENT ALLOWANCE
ITEMS"):
2.2.1 Payment of the fees of all design consultants, project
managers, the "Space Planner," "Architect" and the "Engineers," as those terms
are defined in Section 3.1 of this Tenant Work Letter, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Tenant
Work Letter;
EXHIBIT B
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[Peregrine Systems]
<PAGE>
2.2.2 The payment of all governmental and utility service or
connection fees, including, but not limited to, plan check, permit and license
fees relating to construction of the Tenant Improvements; provided, however, the
Tenant Improvement Allowance Items shall not include any costs for utilities or
use of elevators during the construction of the Tenant Improvements;
2.2.3 The cost of construction of the Tenant Improvements within
such Building, including, without limitation, all labor, materials, testing and
inspection costs, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.4 The cost of any changes in the Base, Shell and Core work
when such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural, engineering and/or other
consultant fees and expenses incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings or
Tenant Improvements required by applicable governing codes ("CODE") unless such
changes are required to cause the Base, Shell and Core to comply with applicable
building Code (however, changes to the Base, Shell and Core required due to the
unique nature of the Tenant Improvements requested by Tenant shall be charged to
the Tenant Improvement Allowance);
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 "Landlord's Supervision Fee", as that term is defined in
Section 4.3.2 of this Tenant Work Letter;
2.2.8 All other costs to be expended by Landlord and reasonably
approved by Tenant in connection with the construction of the Tenant
Improvements; and
2.2.9 Costs incurred for Tenant's voice/data cabling, network
racks and hardware, furniture, telecom system, keys, locks, security costs,
relocation and interior and exterior signage (including Tenant's Signs);
provided, however, in no event shall the aggregate costs of the items forth in
this Section 2.2.9 exceed Seven Hundred Forty Thousand Three Hundred
Ninety-Seven Dollars ($740,397.00). Landlord and Tenant acknowledge that the
Base Rent for the Premises includes an amortization (with interest at twelve
percent (12%) per annum) of the amount payable by Landlord pursuant to this
Section 2.2.9.
2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord and Tenant have
established specifications (the "SPECIFICATIONS") for some of the Building
standard components which Tenant may elect to construct in the Building
(collectively, the "STANDARD IMPROVEMENT PACKAGE"). The Standard Improvement
Package is attached as Schedule 2 to this Tenant Work Letter. Landlord may only
make changes to the Specifications and the Standard Improvement Package from
time to time with Tenant's prior written approval thereof. Tenant may deviate
from the Specifications with Landlord's approval (as part of the approval of
Construction Drawings).
SECTION 3
CONSTRUCTION DRAWINGS
3.1 SELECTION OF ARCHITECT. Tenant shall retain Carrier Johnson as
architect (the "ARCHITECT") to prepare the architectural plans and drawings for
the Tenant Improvements in the Building in accordance with the Construction
Schedule. Tenant shall have the right to replace Architect with another
architect(s) from time to time at Tenant's discretion and subject to Landlord's
reasonable approval. Tenant shall also retain engineering consultants (the
"ENGINEERS") selected by Tenant and subject to Landlord's reasonable approval to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work of the
Tenant Improvements. The parties acknowledge that Tenant's retention of the
Engineers may be done in connection with a
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[Peregrine Systems]
<PAGE>
design/build format. The plans and drawings to be prepared by Architect and the
Engineers hereunder shall be known collectively as the "CONSTRUCTION DRAWINGS."
All Construction Drawings shall comply with the drawing format and
specifications as reasonably determined by Landlord, and shall be subject to
Landlord's approval which shall not be unreasonably withheld or delayed. Tenant
shall be deemed to have approved any Construction Drawings submitted to Landlord
for Landlord's approval. Tenant and Architect shall verify, in the field, the
dimensions and conditions as shown in the relevant portions of Construction
Drawings for the Base, Shell and Core. Landlord shall cause the Contractor to
assist Tenant's Architect in identifying any coordination or other construction
issues relating to the Construction Drawings for the Base, Shell and Core.
Landlord's review of the Construction Drawings, as set forth in this Section 3,
shall not imply Landlord's review of the same for quality, design, Code
compliance or other like matters, but Landlord shall nevertheless inform Tenant
of any deficiencies discovered. Accordingly, notwithstanding any Construction
Drawings reviewed by Landlord or its consultants, and notwithstanding any advice
or assistance which may be rendered to Tenant by Landlord or Landlord's
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings unless any omissions or errors are a result of omissions
or errors in the Construction Drawings for the Base, Shell and Core, and
Tenant's waiver and indemnity set forth in Section 10.1 of the Lease shall
specifically apply to the Construction Drawings.
3.2 FINAL SPACE PLAN. On or before the applicable date set forth in
the Construction Schedule, Tenant shall cause the Architect to prepare the final
space plan for Tenant Improvements in the Building (collectively, the "FINAL
SPACE PLAN"), which Final Space Plan shall include a layout and a designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval. Subject to the restrictions specified in Section 2.1
above, Tenant may exclude from the Final Space Plan a layout for any space in
the Building which Tenant elects not to initially build out. Landlord shall
notify Tenant of its approval (which approval shall not be unreasonably
withheld) or disapproval (with reasons for disapproval specified) of the Final
Space Plan for the Premises within ten (10) business days after receipt thereof;
any failure by Landlord to notify Tenant of its approval or disapproval within
such ten (10) business day period shall be deemed to be Landlord's disapproval
thereof. If Landlord disapproves the Final Space Plan, Landlord and Tenant
shall, within two (2) business days thereafter, meet (or telephonically confer)
in an attempt to resolve such disapproval as soon as reasonably possible. If,
in connection with such meeting, Landlord and Tenant conceptually agree upon
revisions to be made to the Final Space Plan, then within ten (10) business days
after such meeting, Tenant shall cause the Final Space Plan to be revised in
accordance with the parties' conceptual agreement and shall resubmit the Final
Space Plan for Landlord's approval. This process shall continue until the Final
Space Plan is approved by Landlord. If Landlord and Tenant are, despite such
meeting, unable to resolve the items disapproved by Landlord in the Final Space
Plan, the parties shall mutually select an architect from Carrier Johnson to
resolve such disagreement (or if Carrier Johnson is unwilling to make a
determination to resolve such dispute or either party objects to Carrier Johnson
playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.3 WORKING DRAWINGS. On or before the applicable date set forth in
the Construction Schedule, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
construction documents in a form which is complete to allow contractors and
subcontractors to bid on the work, to obtain all applicable permits, and to
subsequently construct the work (collectively, the "WORKING DRAWINGS"). Subject
to the restrictions specified in Section 2.1 above, Tenant may exclude from the
Working Drawings any space which Tenant elects not to initially build-out.
Landlord shall notify Tenant of its approval (which approval shall not be
unreasonably withheld) or disapproval (with reasons for such disapproval
specified) of the Working Drawings within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. However,
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Landlord may not disapprove any details of the Working Drawings which have
already been approved by Landlord in the Final Space Plan. If Landlord
disapproves the Working Drawings, Landlord and Tenant shall, within two (2)
business days thereafter, meet in an attempt to resolve such disapproval as soon
as reasonably possible. If, in connection with such meeting, Landlord and
Tenant conceptually agree upon revisions to be made to the Working Drawings,
then within ten (10) business days after such meeting, Tenant shall cause the
Working Drawings to be revised in accordance with the parties' conceptual
agreement and shall resubmit the Working Drawings for Landlord's approval. This
process shall continue until the Working Drawings are approved by Landlord. If
Landlord and Tenant are, despite such meeting, unable to resolve the items
disapproved by Landlord in the Working Drawings, the parties shall mutually
select an architect from Carrier Johnson to resolve such disagreement (or if
Carrier Johnson is unwilling to make a determination to resolve such dispute or
either party objects to Carrier Johnson playing such role, then the parties
shall mutually agree upon some other reasonably qualified architect to resolve
such issues). Any such resolution by such architect (whether from Carrier
Johnson or some other firm) shall be made within ten (10) business days after
the meeting between Landlord and Tenant.
3.4 PERMITS. The Working Drawings shall be approved by Landlord (the
"APPROVED WORKING DRAWINGS") prior to the commencement of construction of the
Tenant Improvements. Landlord shall, in accordance with the Construction
Schedule, submit or cause the Approved Working Drawings to be submitted to the
appropriate municipal authorities for all applicable building permits necessary
to allow the Contractor selected pursuant to Section 4.1 below to commence and
fully complete the construction of the Tenant Improvements (the "PERMITS"), and
in connection therewith, Landlord and Tenant shall coordinate with Contractor to
allow Landlord and Tenant to take part in all phases of the permitting process.
Landlord shall require Contractor to supply Landlord and Tenant, as soon as
possible, with all plan check numbers and dates of submittal with respect to the
Building. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord and Tenant,
which shall not be unreasonably withheld or delayed, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would delay the Substantial Completion of such
Tenant Improvements or the Building unless Tenant agrees in writing to be
responsible for any such delay as in a Tenant Delay and for the costs of any
delay resulting therefrom.
3.5 TIME DEADLINES. Landlord and Tenant shall use good faith,
reasonable efforts and all due diligence to cooperate with each other and the
Architect and the Engineers to complete all phases of the Working Drawings and
the permitting process, and with Contractor for approval of the Cost Proposal
(as defined below), as is necessary to keep such Tenant Improvements on
schedule. The applicable dates for approval of items, plans and drawings as
described in this Tenant Work Letter are set forth and further elaborated upon
in the Construction Schedule (the "TIME DEADLINES"), attached hereto. Landlord
and Tenant agree to use good faith, reasonable efforts to comply with the Time
Deadlines.
3.6 DESIGN-BUILD. Landlord and Tenant acknowledge that Tenant may
elect to design and construct the Tenant Improvements using a fast-track
design/build format. If Tenant so elects, Tenant may forward to Landlord, for
Landlord's approval, Construction Drawings for portions of the Tenant
Improvement project rather than Construction Drawings for the entire Premises.
Landlord agrees to advise Tenant within ten (10) business days after Landlord's
receipt of any such drawings if the same are unsatisfactory or incomplete in any
respect. Upon Landlord's approval of any such drawings, the Contractor may be
instructed to submit the same to the applicable governmental authorities for
receipt of Permits. This process may be repeated by Tenant, as necessary, for
all portions of the Tenant Improvement project.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 CONTRACTOR. A general contractor retained by Landlord (the
"CONTRACTOR"), shall construct the Tenant Improvements. The Contractor shall be
selected pursuant to a competitive bidding procedure reasonably determined by
Landlord and Tenant. At least three (3) general contractors approved by
Landlord and Tenant (which list shall, if Landlord so desires, include Reno)
shall competitively bid the Tenant Improvements using the Approved Working
Drawings for such Tenant Improvements. At Tenant's option, Landlord shall
require prospective general contractors reasonably approved by Landlord to
competitively bid the general conditions and fees before competitively bidding
the Tenant Improvements as a procedure for selecting the Contractor; any such
bidding of general conditions and fees shall be completed on or before the date
which is ten (10) days after the date that the Working Drawings are approved.
Landlord shall require Contractor to review the Approved Working Drawings in
order to identify any deficiencies and to promptly notify Landlord and Tenant of
any deficiencies discovered. Landlord shall allow Tenant to assist in
negotiating subcontractor fees and bid costs for labor and materials so long as
Tenant's participation in such negotiation does not extend the Construction
Schedule. Each such prospective general contractor shall be notified in the
bidding package of the time schedule for the construction of the applicable
Tenant Improvements and that such contractor shall be required to competitively
bid (in accordance with industry standard bidding procedures) to at least three
(3) subcontractors for each trade (which list of subcontractors shall, if Tenant
so desires, include one (1) subcontractor designated by Tenant for each trade),
subject to Landlord's option to designate certain building subcontractors as
described in this Section 4.1. Each bid shall include a schedule of values
including an itemized bid with unit prices, quantities and labor charges.
Promptly after request from Tenant, Landlord shall provide Tenant with any
back-up information in Landlord's possession regarding such bids. Landlord
shall cooperate with Tenant in evaluating the bid information received from the
respective general contractors. The general contractor bids shall be submitted
to Landlord and Tenant and a reconciliation shall be performed by Landlord's
representative to adjust inconsistent or incorrect assumptions so that a "like
kind" comparison can be made and the lowest qualified bidder determined. The
lowest qualified bidder that commits to the Construction Schedule shall be
selected as the Contractor for the Tenant Improvements. Whenever the lowest
subcontractor bidder is not selected, Contractor shall justify such selection
(to Landlord's and Tenant's satisfaction) by explaining in writing why the
lowest bidder was not selected. At Landlord's option, such Contractor shall use
the building subcontractors as designated by Landlord (the "DESIGNATED
SUBCONTRACTORS"), after having competitively bid the same to at least three (3)
qualified and comparable first-class, reputable and reliable subcontractors
selected by Landlord and reasonably approved by Tenant (which approval shall be
granted or denied within three (3) business days), for any work affecting the
Building structure and/or Building Systems and Equipment; provided, however,
that Landlord shall cause such Designated Contractors to charge for such work
(including any work arising out of Change Orders) an amount equal to the cost
that comparable first class, reputable and reliable subcontractors would have
charged if selected pursuant to competitive bidding procedures. If Reno is
selected as the Contractor, Reno has agreed to a four percent (4%) contracting
fee and a three percent (3%) general conditions fee, both of which fees shall be
based upon the direct costs of the subcontractors.
4.1.1 CONTRACT WITH CONTRACTOR. The contract with the Contractor
shall be consistent with this Tenant Work Letter and shall provide that Tenant
shall have the full benefit of all warranties provided by Contractor and that
such warranties shall be assignable to Tenant. Landlord shall provide Tenant
with an opportunity to review the construction contract with the Contractor to
confirm that such contract is not in conflict with this Tenant Work Letter. In
addition, upon request from Tenant, Landlord shall provide Tenant with a copy of
all Contractor's contracts with the major trade subcontractors in Landlord's
possession at the time of such request.
4.1.2 GENERAL CONDITIONS FEE. The general conditions fee charged
by Contractor shall cover all of the following: project executive, general
superintendent, home
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[Peregrine Systems]
<PAGE>
office expenses, general overhead, office supplies, accounting services,
computer charges, telephone expenses, fax office/job site, data processing,
secretarial services, mail, express mail, insurance, city licenses, project
manager, estimator, project engineer, scheduling, superintendent, daily clean up
and final clean up, protection of work, petty cash, safety enforcement and
safety signage, small tools, first aid facilities, general field coordination,
project field office, tenant vendor coordination and job trailer, but shall
exclude reconstruction services, general labor, blue printing and temporary
structures. Except as provided herein, Landlord or Contractor shall not receive
any other fee or payment from Tenant in connection with Contractor's services.
4.1.3 CONTRACT OF WORK. Landlord shall cause its contract with
Contractor to include the provisions set forth in this Section 4.1.3.
Contractor shall take appropriate field measurements and verify field conditions
before commencing construction of Tenant Improvements. Contractor shall review,
approve and submit to the Architect shop drawings, product data, samples and
submittals required by the contract documents with promptness and in sequence as
to cause no delay in the Construction Schedule. During the course of
construction, Contractor shall take all reasonable precautions to maintain
industry safety standards and protect against damage, injury or loss to any
persons or property. Contractor shall supervise and direct the construction of
the Tenant Improvements using Contractor's best skills and attention and shall
be fully responsible for and have control over construction means, methods,
techniques, sequences and procedures for coordinating all portions of the work
under the contract.
4.2 COST PROPOSAL. After the Approved Working Drawings are approved by
Landlord and Tenant, and the Contractor and subcontractors have been selected
pursuant to Section 4.1 above, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings setting forth the
reconciled bids and copies of all sub-bids, which cost proposal shall include,
as nearly as possible, the cost of all Tenant Improvement Allowance Items to be
incurred in connection with the construction of the Tenant Improvements (the
"COST PROPOSAL"). The Cost Proposal shall reflect bids that will be priced by
Contractor on an individual item-by-item or trade-by-trade basis. Landlord and
Tenant shall work together in good faith in an attempt to agree upon a mutually
acceptable Cost Proposal as soon as reasonably possible. Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the "PARTIAL COST PROPOSAL") for purposes of
facilitating the early purchase of items and construction of the same. Tenant
shall approve and deliver the Cost Proposal to Landlord within seven (7)
business days of the receipt of the same, or, as to a Partial Cost Proposal
within five (5) business days of receipt of the same, and upon receipt of the
same by Landlord, Landlord shall be released by Tenant to purchase the items set
forth in the Cost Proposal or Partial Cost Proposal, as the case may be, and to
commence the construction relating to such items. If Tenant disapproves the
Cost Proposal or Partial Cost Proposal, Tenant shall provide Landlord with a
reasonably sufficient explanation, and in such event, Landlord and Tenant shall
use good faith, diligent efforts to work with each other and Contractor to
address Tenant's reasons for disapproving the Cost Proposal or Partial Cost
Proposal, whichever is the case and a new Cost Proposal (or Partial Cost
Proposal, as applicable) shall be prepared and the process described in this
Section 4.2 shall be repeated. The date by which Tenant must approve and
deliver the Cost Proposal or the last Partial Cost Proposal to Landlord, as the
case may be, shall be known hereafter as the "COST PROPOSAL DELIVERY DATE". The
total of all Partial Cost Proposals, if any, shall be known as the Cost
Proposal.
4.3 CONSTRUCTION OF TENANT IMPROVEMENTS BY LANDLORD'S CONTRACTOR UNDER
THE SUPERVISION OF LANDLORD.
4.3.1 OVER-ALLOWANCE AMOUNT. In connection with Tenant's approval
of the Cost Proposal, Tenant shall be responsible for the amount equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (as adjusted for any transfer to or from
Adjacent Buildings as provided in, and subject to, Section 2.1 of this Tenant
Work Letter above and less any portion thereof already disbursed by Landlord, or
in the process of being disbursed by Landlord, on or before the Cost Proposal
Delivery Date)
EXHIBIT B
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[Peregrine Systems]
<PAGE>
(which difference is referred to herein as the "OVER-ALLOWANCE AMOUNT"). All
costs for Tenant Improvements shall be fully documented and may be verified by
Tenant. In the event that, after the Cost Proposal Delivery Date, Tenant shall
request any revisions, changes, or substitutions to the Construction Drawings or
the Tenant Improvements, any additional costs which arise in connection with
such revisions, changes or substitutions or any other additional costs (in
excess of the Tenant Improvement Allowance) shall be considered to be an
addition to the Over-Allowance Amount (which shall result in a recalculation of
the amounts to be paid by Tenant pursuant to Sections 4.3.1.1. and 4.3.1.2
below).
4.3.1.1 PAYMENT OF INITIAL PORTION OF OVER-ALLOWANCE
AMOUNT. Except as provided in Section 4.3.1.2 below, the procedure described in
this Section 4.3.1.1 shall apply to Tenant's payment of the Over-Allowance
Amount. Tenant shall pay ninety percent (90%) of the Over-Allowance Amount and
Landlord shall pay ninety percent (90%) of the Tenant Improvement Allowance, in
monthly progress payments corresponding to the progress of the Tenant
Improvement Work and Tenant and Landlord shall each retain ten percent (10%)
thereof to be paid as part of the final retention, in accordance with the
construction contract, upon completion of such work. During the course of
construction of the Tenant Improvements, Contractor shall deliver to Landlord
and Tenant not more than once for each calendar month a written request for
payment ("PROGRESS PAYMENT REQUEST") which shall be accompanied by (i)
Contractor's certification of the payment amount requested and the percentage of
completion of each item of work for which payment is sought and (ii) copies of
conditional lien releases (for upcoming payments) and unconditional lien
releases (for the previous month's payments) from all subcontractors and
vendors. Through this monthly process, Tenant shall pay to Landlord ninety
percent (90%) of the completed percentage of the Over-Allowance Amount, if any,
and Landlord shall pay to Contractor ninety percent (90%) of the Tenant
Improvement Allowance due pursuant to the Progress Payment Request, each month
within thirty (30) days after Tenant's and Landlord's receipt of the above items
and approval of the same (which approval shall not be unreasonably withheld,
conditioned or delayed and shall be granted or denied (with detailed reasons for
such denial) within five (5) days after Tenant's receipt of a Progress Payment
Request). Failure to grant or deny any such approval within said five (5) day
period shall be deemed to constitute Tenant's approval thereof. The
Over-Allowance Amount shall be proportionately paid by Landlord prorata with the
Tenant Improvement Allowance, and such disbursement by Landlord of the Over-
Allowance Amount shall be pursuant to the same procedure as Landlord's
disbursement of the Tenant Improvement Allowance.
4.3.1.2 PAYMENT OF ANY EXCESS PORTION OF OVER-ALLOWANCE
AMOUNT. To the extent that the Over-Allowance Amount is One Million Fifty-Seven
Thousand Seven Hundred Ten Dollars ($1,057,710.00) or more (such excess to be
referred to as the "EXCESS OVER-ALLOWANCE AMOUNT") and/or if as of the Cost
Proposal Delivery Date, Tenant fails to meet all of the Financial Standards, and
if in either such case, Landlord's lender (who is unaffiliated with Landlord) so
requires, Tenant shall pay the Excess Over-Allowance Amount (or if the Financial
Standards are not met, then all of the Over-Allowance Amount) in accordance with
the procedure specified in this Section 4.3.1.2 below. Tenant shall deposit
fifty percent (50%) of the Excess Over-Allowance Amount (or if the Financial
Standards are not met, then all of the Over-Allowance Amount) within ten (10)
days after the Cost Proposal Delivery Date and shall deposit the remaining fifty
percent (50%) of the Over-Allowance Amount within ten (10) days after notice
from Landlord that the Contractor has determined that the Tenant Improvement
Work has been fifty percent (50%) completed. Such deposits from Tenant shall be
with Landlord (or with the lender if so required by such lender) and maintained
in a segregated account at a financial institution reasonably selected by
Landlord (if not with the lender). To the extent permitted by the lender, any
amounts so deposited by Tenant shall earn interest which shall accrue to Tenant
at the actual rate earned from the date of such deposit until the date that such
funds are disbursed.
4.3.2 LANDLORD'S RETENTION OF CONTRACTOR. Landlord shall
independently retain Contractor to construct the Tenant Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Tenant
shall pay (as part of the Tenant Improvement Allowance) a construction
supervision fee (the "LANDLORD SUPERVISION FEE") to Landlord in an amount equal
to one percent (1%) of all "hard" Tenant Improvement Allowance Items.
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
4.3.3 CONTRACTOR'S WARRANTIES AND GUARANTIES. Landlord hereby
assigns to Tenant all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements
(except for any portion of the Tenant Improvements which consist of components
of the Building Systems and Equipment for which Landlord maintains
responsibility for repair pursuant to Section 7.1 of the Lease). Such
warranties and guaranties of Contractor shall guarantee that the Tenant
Improvements shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof, and
Contractor shall be responsible for the replacement or repair, without
additional charge, of the Tenant Improvements that shall become defective within
one (1) year after Substantial Completion of such Tenant Improvements. The
correction of such work shall include, without additional charge, all additional
expenses and damages in connection with such removal or replacement of all or
any part of the Tenant Improvements.
4.3.4 TENANT'S COVENANTS. Tenant hereby indemnifies Landlord for
any loss, claims, damages or delays arising from the actions of the Architect
retained by Tenant pursuant to Section 3.1 of this Tenant Work Letter on the
Premises or in the Building to design or construct the Tenant Improvements.
Tenant, immediately after the Substantial Completion of the Building, shall have
prepared and delivered to Landlord a copy of the "as built" plans and
specifications (including all working drawings) for the Tenant Improvements.
4.4 CHANGE ORDERS. Subject to Landlord's reasonable approval, Tenant
shall have the right to order changes in the Tenant Improvements ("CHANGE
ORDERS"). Landlord's contract with Contractor shall provide that, upon request
and prior to Tenant's submitting any binding Change Order, Contractor shall
promptly provide Tenant with a written itemized breakdown of labor and materials
for the estimated cost to implement, the estimated time delay and any other
estimated increased construction costs associated with the proposed Change
Order. Costs related to changes shall include, without limitation, any
architectural or design fees, and Contractor's fee (not to exceed the percentage
rate for Contractor's fee and general conditions fee as previously set forth
herein) for effecting the change. In addition, any Change Order shall be
subject to Landlord's approval, not to be unreasonably withheld, conditioned or
delayed. If ordered by Tenant and so approved by Landlord, Contractor shall
implement such Change Order and the cost of construction of the Tenant
Improvements shall be increased or decreased in accordance with the cost
proposal previously approved by Tenant for any such Change Order, subject to
reconciliation for actual costs.
Except as provided in this Section 5, the Lease Commencement Date for the
Premises shall occur as set forth in Article 2 of this Lease. Any delay or
delays in the Substantial Completion of the Premises as set forth in Article 2
of this Lease, as a result of any of the following shall be considered "TENANT
DELAYS":
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCMENT DATE
5.1 Tenant's failure to comply with the Time Deadlines which are
Tenant's responsibility to meet in accordance with this Tenant Work Letter;
5.2 Tenant's failure to timely approve any matter requiring Tenant's
approval;
5.3 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
5.4 Changes in any of the Construction Drawings because the same do not
comply with Code or other applicable laws;
5.5 Tenant's request for changes in the Working Drawings or the
Approved Working Drawings including any delay resulting from Tenant's request
for information from the
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Contractor, the time taken by Tenant in considering any such information prior
to agreeing to proceed (or not to proceed) with such change and/or the actual
Change Order;
5.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the
Lease, or which are different from, or not included in, the Standard Improvement
Package, provided Landlord informed Tenant in writing that any such requirement
would not be available in accordance with the Construction Schedule and would
likely cause a delay in the anticipated date of Substantial Completion of the
Premises;
5.7 Changes to the Base, Shell and Core work required by the Approved
Working Drawings; or
5.8 Any other acts or omissions of Tenant, or its agents, or employees.
Notwithstanding the foregoing, no delay under Sections 5.2, 5.3, 5.5, 5.6,
5.7 or 5.8 above shall be considered a Tenant Delay unless and until Tenant is
(i) provided prior written notice that it is about to suffer a Tenant Delay and
is afforded a one (1) business day opportunity to cure the same, and (ii)
offered the opportunity to incur premium costs (as an Over-Allowance Amount if
the Tenant Improvement Allowance has been exceeded) to prevent or minimize such
delay if it is possible to do so. Landlord shall not assess any day towards a
Tenant Delay for delays caused by Contractor, Landlord or any third parties or
due to Force Majeure. For purposes of determining whether a delay by Tenant or
Architect constitutes a Tenant Delay, reference shall be made to the critical
path schedule for the construction of Tenant Improvements set forth in the
Construction Schedule. Landlord and Contractor shall take commercially
reasonable actions, remedial or otherwise, to maintain the Construction Schedule
notwithstanding any Tenant Delay, provided that this requirement shall not
require Landlord or Contractor to incur any additional costs or expenses (e.g.,
contractor overtime or costs resulting from accelerated delivery) unless Tenant
agrees to pay for such additional costs or expenses.
Notwithstanding anything to the contrary set forth in this Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date for the Premises shall
be deemed to be the date the Lease Commencement Date would have occurred if no
Tenant Delays, as set forth above, had occurred; provided, however, if the
actual date of Substantial Completion of the Tenant Improvements occurs on or
before the estimated Lease Commencement Date specified in Section 5 of the
Summary, no Tenant Delays shall be deemed to have occurred.
SECTION 6
ACCEPTANCE OF TENANT IMPROVEMENTS
Tenant's taking possession of the Premises shall be an acceptance of the
Tenant Improvements except for (i) any "punch list" type items of which Tenant
has given Landlord written notice, (ii) any latent defects in the construction
of the Tenant Improvements, (iii) Landlord's obligation to correct construction
defects, (iv) any warranties made by Landlord and Contractor, and (v) any
noncompliance of the Premises with all laws and codes in effect as of the Lease
Commencement Date. Tenant shall provide Landlord with Tenant's written list of
"punch list" items within ten (10) business days after the Lease Commencement
Date. Landlord shall cause Contractor to correct within thirty (30) days of
Landlord's receipt of notice thereof any construction deficiencies or other
"punch list" items of which Tenant notifies Landlord and Contractor; except that
for minor items (such as minor items on backorder) that cannot reasonably be
corrected in thirty (30) days, Landlord shall cause correction to occur as soon
as reasonably practicable. Any such corrective work shall be performed so as to
reasonably minimize any interference or disruption to Tenant and its activities
on the Premises.
EXHIBIT B
-13-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SECTION 7
MISCELLANEOUS
7.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Project and the Building, Contractor shall allow Tenant (and its vendors,
consultants, contractors, and agents) access to the Building during the forty
five (45) day period prior to the estimated Substantial Completion date of the
Tenant Improvements (but if such access is to be prior to the issuance of the
Temporary Certificate of Occupancy for the Building, then such access shall be
only as allowed by the City of San Diego) for the purpose of Tenant installing
equipment, furniture or fixtures (including Tenant's data and telephone
equipment) in the Premises. Tenant's access shall include reasonable use
(subject to scheduling) of any exterior loading and staging areas and the use of
stairs, elevators and hoists, roofs and conduits. Tenant's entry into the
Premises prior to Substantial Completion pursuant to this Section 7.1 shall be
at no cost or charge from Landlord to Tenant including, without limitation, any
charge for utilities. Prior to Tenant's entry into the Premises as permitted by
the terms of this Section 7.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval, which schedule shall detail the timing and
purpose of Tenant's entry. Tenant shall hold Landlord, the Contractor and
subcontractors harmless from and indemnify, protect and defend Landlord against
any loss or damage to the Project or Premises and against injury to any persons
caused by Tenant's actions pursuant to this Section 7.1.
7.2 TENANT'S REPRESENTATIVE. Tenant has designated Robert Urwiler as
its sole representative with respect to the matters relating to cost and
schedule set forth in this Tenant Work Letter, who, until further notice to
Landlord, shall have full authority and responsibility to act on behalf of
Tenant in such matters as required in this Tenant Work Letter. Tenant has
designated Michele Voth as its local representative with respect to daily
decisions required under this Tenant Work Letter that do not relate to cost or
schedule, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of Tenant in such matters as required in this
Tenant Work Letter.
7.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Randy Jackson
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
7.4 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Landlord or Tenant is required to approve
or deliver an item, time is of the essence.
7.5 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the is
Lease, if an event of default as described in Section 19.1 of this Lease has
occurred at any time on or before the Substantial Completion of the Tenant
Improvements, then (i) in addition to all other rights and remedies granted
to Landlord pursuant to the Lease, Landlord may cause Contractor to cease the
construction of the Premises (in which case, Tenant shall be responsible for
any delay in the Substantial Completion of the Premises caused by such work
stoppage as set forth in Section 5.3 of this Tenant Work Letter), and (ii)
all other obligations of Landlord under the terms of this Tenant Work Letter
shall be forgiven until such time as such default is cured pursuant to the
terms of the Lease.
SECTION 8
TENANT REMEDIES FOR DELAY
8.1 LIQUIDATED DAMAGES FOR DELAY IN SUBSTANTIAL COMPLETION. If the
Substantial Completion of the Tenant Improvements has not occurred (or been
deemed to have occurred) by the Estimated Lease Commencement Date for such
Tenant Improvements as set forth in Section 5 of the Summary (as such date may
be adjusted for Excusable Delays, then Landlord shall pay Tenant liquidated
damages of One Thousand Five Hundred Dollars ($1,500.00) per day
EXHIBIT B
-14-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
for each day of delay beyond the Estimated Lease Commencement Date (as may be so
adjusted) until the date of Substantial Completion or the date this Lease is
terminated pursuant to Section 8.2 below. Such liquidated damages shall be paid
within thirty (30) days after the end of each month of delay beyond the
applicable Estimated Lease Commencement Date (as may be so adjusted). If
Landlord fails to pay timely to Tenant the amount representing the liquidated
damages owing and if Tenant obtains a final judgment against Landlord for such
liquidated damages, and if Landlord fails to pay such judgment within thirty
(30) days after the date such judgment is rendered, Tenant shall be entitled to
offset such judgment against Base Rent payable by Tenant together with interest
at the Interest Rate specified in Article 25 of the Lease from the date of
expiration of said thirty (30) day period until the date of offset (up to a
maximum offset each month of twenty percent (20%) of the Base Rent payable for
such Building) until the full amount of such judgment (plus such interest) has
been so offset.
LANDLORD AND TENANT AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF
A DELAY IN THE SUBSTANTIAL COMPLETION DATE BEYOND THE ESTIMATED LEASE
COMMENCEMENT DATE (AS MAY BE ADJUSTED), WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICABLE TO DETERMINE AND THAT THE AMOUNTS DESIGNATED ABOVE AS
LIQUIDATED DAMAGES PAYABLE BY LANDLORD TO TENANT IN SUCH EVENTS ARE
EACH REASONABLE AMOUNTS TO BE SET AS DAMAGES FOR SUCH EVENTS UNDER THE
CIRCUMSTANCES EXISTING AT THE TIME THIS LEASE HAS BEEN ENTERED INTO.
IN CONSIDERATION OF THE PAYMENT OF LIQUIDATED DAMAGES, EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 8.2 BELOW, TENANT SHALL BE DEEMED TO
HAVE WAIVED ALL OTHER CLAIMS FOR DAMAGES OR RELIEF AT LAW OR IN EQUITY
DUE TO SUCH DELAY INCLUDING ANY RIGHTS TO SPECIFIC PERFORMANCE TENANT
MAY OTHERWISE HAVE.
Tenant: [ILLEGIBLE] Landlord: /s/ Steven L. Black
----------- ------------------
8.2 TERMINATION RIGHTS.
8.2.1 DEFINITION OF OUTSIDE DATE. The term "OUTSIDE DATE" shall
mean the date which is five (5) months after the date for any Major Project
Milestone specified in the Construction Schedule, as such five (5) month period
may be extended by any Excusable Delay (subject to Section 8.2.4 below).
8.2.2 OUTSIDE DATE TERMINATION. In the event that any Major
Project Milestone has not occurred by the Outside Date for such Major Project
Milestone, then the sole remedy of Tenant (in addition to the remedy specified
in Section 8.1 above) shall be the right to deliver a notice to Landlord (the
"OUTSIDE DATE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Outside Date Termination Notice by Landlord (the "EFFECTIVE
DATE"). However, until the Lease Commencement Date for Building 2 occurs,
Tenant may elect to terminate the leases of any or all of the Adjacent Buildings
effective as of the Effective Date by giving to Landlord notice thereof in the
Outside Date Termination Notice (except that the Effective Date for the
termination of the Building 1 Lease shall be the date so specified in the
Outside Date Termination Notice, which date shall be at least twelve (12) months
and not more than twenty-four (24) months after the date of such notice).
Landlord and Tenant acknowledge that Tenant's right to terminate any of the
Adjacent Building Leases pursuant to this Section 8.2 shall cease as of the
Lease Commencement Date for Building 2. The Outside Date Termination Notice
must be delivered by Tenant to Landlord, if at all, not earlier than the
applicable Outside Date and not later than ten (10) business days after the
applicable Outside Date. If Tenant timely delivers the Outside Date Termination
Notice to Landlord, then Landlord shall have the right to suspend the Effective
Date for a period ending thirty (30) days after the original Effective Date.
EXHIBIT B
-15-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
In order to suspend the Effective Date, Landlord must deliver to Tenant, within
ten (10) business days after Landlord's receipt of the Outside Date Termination
Notice, a written statement from the general contractor certifying that it is
such contractor's best, good faith judgment that the applicable Major Project
Milestone will occur within thirty (30) days after the original Effective Date.
If the applicable Major Project Milestone occurs within said thirty (30) day
suspension period, then the Outside Date Termination Notice shall be of no
further force or effect; if, however, the applicable Major Project Milestone
does not occur within said thirty (30) day suspension period, then this Lease
(and the other leases so specified in the Outside Date Termination Notice) shall
terminate as of the date of expiration of such thirty (30) day period (or, for
Building 1, as of the date so specified in the Outside Date Termination Notice).
8.2.3 PROSPECTIVE EXTENSION OF OUTSIDE DATE. If, prior to any
applicable Outside Date, Landlord determines that any particular Major Project
Milestone will not occur by the applicable Outside Date, Landlord shall have the
right to deliver a written notice ("OUTSIDE DATE EXTENSION NOTICE") to Tenant
stating Landlord's opinion as to the date by which the Major Project Milestone
will occur and Tenant shall be required, within ten (10) business days after
receipt of such Outside Date Extension Notice, to either deliver the Outside
Date Termination Notice (in which case this Lease (and the other Adjacent
Building Leases so specified in the Outside Date Termination Notice subject to
the restrictions specified in Section 8.2.2 above) shall terminate) or to agree
to extend the applicable Outside Date (and any subsequent Outside Dates for the
Building) to that date which is set by Landlord in the Outside Date Extension
Notice. Failure of Tenant to so respond in writing within said five (5)
business day period shall be deemed to constitute Tenant's agreement to extend
the applicable Outside Date (and any subsequent Outside Dates for the Building)
to that date which is set by Landlord in the Outside Date Extension Notice. If
such Outside Date is so extended, Landlord's right to request Tenant to elect to
either terminate or further extend such Outside Date shall remain and shall
continue to remain, with each of the notice and response periods set forth
above, until the applicable Major Project Milestone occurs or until this Lease
is terminated.
8.2.4 LIMITATION ON FORCE MAJEURE EXTENSIONS. Notwithstanding
anything to the contrary contained in this Section 8.2 above, the date for any
Major Project Milestone specified in the Construction Schedule may only be
extended for Force Majeure (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for up
to a maximum of one (1) year. If Force Majeure extends any Major Project
Milestone for one (1) year, without limitation on Tenant's rights under Section
8.2.2 above, Tenant shall have the right to deliver a notice to Landlord (the
"FORCE MAJEURE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Force Majeure Termination Notice by Landlord (the "FORCE
MAJEURE EFFECTIVE DATE"). However, until the Lease Commencement Date for
Building 2 occurs, Tenant may elect to terminate the leases of any or all of the
Adjacent Buildings effective as of the Force Majeure Effective Date by giving to
Landlord notice thereof in the Force Majeure Termination Notice (except that the
Force Majeure Effective Date for the termination of the Building 1 Lease shall
be the date so specified in the Force Majeure Termination Notice, which date
shall be at least twelve (12) months and not more than twenty-four (24) months
after the date of such notice). Landlord and Tenant acknowledge that Tenant's
right to terminate any Adjacent Building Leases pursuant to this Section 8.2.4
shall cease as of the Lease Commencement Date for Building 2. The Force Majeure
Termination Notice must be delivered by Tenant to Landlord, if at all, within
thirty (30) calendar days after the date upon which Tenant's right to deliver
the Force Majeure Termination Notice to Landlord is triggered. However, if
Force Majeure extends for greater than one (1) year, thereby triggering Tenant's
right to deliver the Force Majeure Termination Notice to Landlord, and if Tenant
elects not to deliver such Force Majeure Termination Notice to Landlord, and if
Force Majeure continues for an additional year, then Tenant shall have an
additional right to deliver the Force Majeure Termination Notice to Landlord
within thirty (30) days after the expiration of such two (2) year period based
upon the date for any Major Project Milestone being extended by Force Majeure
for two (2) years. However, if Tenant does not elect to deliver the Force
Majeure Termination Notice to Landlord based upon the two (2) year extension for
Force Majeure, Tenant shall not thereafter have the right to deliver the Force
Majeure Termination Notice to Landlord whether or not Force Majeure continues
beyond such two (2) year period.
EXHIBIT B
-16-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8.2.5 ACCELERATION OF TERMINATION RIGHT FOR LACK OF REASONABLE
ASSURANCES. If one (1) or more Force Majeure events extends the date for any
Major Project Milestone (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for a
period in excess of the "Accelerated Force Majeure Period" (as that term is
defined below) and if Landlord does not deliver to Tenant within fifteen (15)
days thereafter a statement providing reasonable assurances to Tenant that the
Force Majeure delay will last for a total period of less than one (1) year,
Tenant shall be entitled to deliver the Force Majeure Termination Notice to
Landlord within ten (10) days after the expiration of such fifteen (15) day
period (rather than waiting until the expiration of the one (1) year period
specified in Section 8.2.4 above). The one (1) year period described in this
Section 8.2.5 above may be referred to as the "AGGREGATE FORCE MAJEURE PERIOD"
and the fifteen (15) day period described in this Section 8.2.5 above may be
referred to as the "DELIVERY PERIOD." The term "ACCELERATED FORCE MAJEURE
PERIOD" shall mean a total of one hundred eighty (180) days of delay for events
of Force Majeure which may affect office construction projects in San Diego
County generally (e.g., labor strikes, material shortages and permit
moratoriums) or a period of one hundred twenty (120) total days of Force Majeure
delay for Force Majeure events which are particular to the Project and do not
apply to office construction in general. Notwithstanding the foregoing,
Landlord shall have five (5) separate options to extend the Accelerated Force
Majeure Period and the Aggregate Force Majeure Period for thirty (30) days each
("FORCE MAJEURE EXTENSION OPTIONS"). In order to exercise a Force Majeure
Extension Option, Landlord must so notify Tenant in writing within the Delivery
Period (as to the first (1st) Force Majeure Extension Option) or prior to the
expiration of the previous thirty (30) day period for extension of the
Accelerated Force Majeure Period (with respect to each of the four (4)
subsequent Force Majeure Extension Options). In addition, in order to properly
exercise any such Force Majeure Extension Option, Landlord must pay to Tenant
Forty-Five Thousand Dollars ($45,000.00) within thirty (30) days after
Landlord's notice to Tenant of the exercise of such option, for each option so
exercised. If Landlord properly exercises any such Force Majeure Extension
Option, the Accelerated Force Majeure Period and the Aggregate Force Majeure
Period shall each be extended for thirty (30) days for each such option so
exercised.
SECTION 9
CONTINUITY OF LANDLORD
Landlord acknowledges and agrees that Tenant has entered into this Lease in
reliance upon Landlord's reputation and ability to do all things necessary for
the proper construction and lien free completion of all Project improvements.
Accordingly, Landlord agrees not to sell its interest in any uncompleted
building in the Project (or otherwise assign its interest and duties hereunder
as to any uncompleted building in the Project) until after the Lease
Commencement Date has occurred for the initial Floor Group in Building 3 (or if
the Lease for Building 3 is terminated, until the termination date for such
Lease) except for (i) transfers between or among entities affiliated with Kilroy
Realty Corporation (i.e., entities controlled, controlled by or under common
control with Kilroy Realty Corporation); (ii) a merger or sale of all or
substantially all of the assets, stock, partnership interests and/or limited
liability company interests of, or owned by, Kilroy Realty Corporation and/or
its affiliates; (iii) a sale, contribution or distribution to a partnership,
corporation, joint venture, limited liability company or other ownership
structure, where Kilroy Realty Corporation or its affiliate(s) retains
responsibility for managing the development of the Project; or (iv) any transfer
resulting from foreclosure, trustee's sale or deed in lieu of foreclosure. Upon
the Lease Commencement Date for the initial Floor Group in Building 3, the
restrictions specified in this Section 9 shall terminate..
EXHIBIT B
-17-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 1
CONSTRUCTION SCHEDULE
MILESTONE DATES - BUILDING 5
BASE, SHELL AND CORE
<TABLE>
<CAPTION>
Event Date
----- ----
<S> <C>
1 Completion of Schematic Design Done
2 Completion of Base, Shell and Core Working Done
Drawings
*3 Submittal to City of San Diego for Permits Done
*4 Obtaining all Building and other Permits for
Construction of Base, Shell and Core July 25, 1999
*5 Commencement of Construction July 25, 1999
6 Completion of Slab-on-Grade September 24, 1999
*7 Completion of Vertical Construction February 11, 2000
8 Completion of Roof Framing February 25, 2000
*9 Completion of Construction of Base, Shell and
Core/ Certificate of Occupancy/Shell Completion July 1, 2000
Date
<CAPTION>
Notes: Items marked with an "*" are Major Project Milestones
TENANT IMPROVEMENTS
-------------------
<S> <C>
1. Delivery by Tenant of Final Space Plan for
Landlord Approval October 1, 1999
2. Delivery by Tenant of Working Drawings for
Landlord Approval January 1, 2000
</TABLE>
SCHEDULE 1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 2
STANDARD IMPROVEMENT PACKAGE
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.0 PARTITIONS
- --------------------------------------------------------------------------------
1.1 1 HOUR PARTITION: (One-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 20-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.2 2 HOUR PARTITION: (Two-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, two layers each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association. Second layer of gypsum board shall be
installed at right angles over the first layer with joints
staggered.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 90-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
SCHEDULE 2
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.3 STANDARD INTERIOR OFFICE PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend to underside of suspended
acoustical ceiling grid (+10'-0" AFF, nominal); or shall extend 6"
above ceiling grid plane. Refer to wall types and referenced
details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Diagonal bracing shall be installed per details illustrated on
the drawings.
f. Install metal casing beads at all exposed corners and edges, as
applicable.
g. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.4 STANDARD INTERIOR OFFICE ACOUSTICAL PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend from floor slab to underside of
metal or roof deck above (+13'-6" AFF, nominal). Refer to wall
types and referenced details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Provide continuous bead of acoustical sealant between bottom edge
of gypsum board panels and floor slab. Cut gypsum board panels at
top of wall to fit undulations of metal deck structures and seal
all gaps with drywall taping compound.
f. Install R-8 unfaced fiberglass sound batts in cavity between
studs, full height of partition.
SCHEDULE 2
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
2.0 COLUMN COVERS, CORE WALLS, PERIMETER SOFFITS
- --------------------------------------------------------------------------------
a. Provide either 1-1/2" or 2-1/2"-25 gage metal studs at 16" O.C.
(or as otherwise noted or configured) per details illustrated on
drawings.
b. Furnish and install 5/8" standard gypsumboard, one layer around
interior and perimeter columns, attached to studs with screws as
required by code and as recommended by the Gypsum Association.
c. Provide and install R-8 unfaced sound batt insulation at all
furred columns where plumbing lines occur, typical.
d. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
3.0 DOORS, FRAMES, HARDWARE
- --------------------------------------------------------------------------------
3.1 ONE-HOUR CORRIDOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 20 minute rated, 3'-0" x 8'-10" x
1-3/4" (U.N.O.). Doors shall conform to A.W.I. standards and carry
a lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness, minimum 20
minute rated with applicable listing labels provided and securely
fastened to frame. Color: Black Anodized.
c. Hardware:
i. Single
4 each Butts
1 each Lockset
1 each Closer
1 each Stop
1 each Smokeseal
SCHEDULE 2
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
ii. Pair
8 each Butts
2 each Closer
1 each Lockset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
2 each Smokeseal
1 each Dustproof
Strike
2 each Electro Magnetic
Hold Open
3.2 INTERIOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 3'-0" x 8'-10" x 1-3/4"
(U.N.O.). Doors shall conform to A.W.I. standards and carry a
lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness. Color:
Black Anodized.
c. Hardware.
i. Single
4 each Butts
1 each Latchset
1 each Stop
ii. Single Locking
a. All the above. In place of latchset, provide lockset.
iii. Single with Closer
a. All the above, plus closer.
SCHEDULE 2
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
iv. Pair
8 each Butts
2 each Closer
1 each Latchset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
1 each Dustproof
Strike
4.0 SUSPENDED GRID CEILINGS
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4.1 GENERAL INSTALLATION REQUIREMENTS:
a. Install ceiling under the supervision of an experienced
superintendent. Consult with and coordinate installation with other
trades. Install ceiling using laser level within a tolerance of
1/8" in 12 feet in any direction.
b. Pattern: Unless otherwise indicated or specified, install
ceilings in a regular pattern without border, joint lines parallel
to walls. Install acoustical units symmetrically about centerlines
of each room or space (unless specifically noted otherwise on
drawings), avoiding narrow units at walls.
c. Framing for Lighting and Mechanical Fixtures: Obtain necessary
data from other trades and provide additional hanger wire and
framing in suspended grids as required to support lighting and
mechanical fixtures.
d. Lateral Bracing: Lateral bracing for suspended ceiling must be
provided (UBC Table 23-j). Where ceiling loads are less than 5PSF
and not supporting interior partitions, ceiling bracing shall be
provided by four (4) No. 12 gauge wires secured to the main runner
within 2 inches from the cross runner intersection and splayed 90
degrees from each other at an angle not exceeding 45 degrees from
the plane of the ceiling. These horizontal restraint points shall
be placed 12 feet o.c. in both directions with the first point
within 4 feet from each wall. Attachment of the restraint wires to
the structure above shall be adequate for the load imposed.
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
e. Hanger Wires: Space wires at maximum 48" centers along main tees
and connect to structure above. Provide: 2 safety wires per
mechanical diffuser, 2 per light fixture and 4 at main runner
within 3" of fixture.
f. Ceiling Offsets: Provide trim pieces and/or accessories where
illustrated on drawings or as necessary to properly finish or
transition offsets or ceiling breaks.
g. Seismic Bracing: Provide splayed bracing wires as shown and
required by the Uniform Building Code. Provide compression struts
at 12'-0" o.c., both directions fastened to the main runner and a
structural member above. Repair, Cleaning and Completion: Remove
and replace all discolored, broken or damaged materials. Completed
ceilings shall present a smooth level surface free of edge or corner
offsets, cupping, scratches, gouges or other defects. Clean exposed
surfaces and remove foreign matter.
4.2 2 x 2 ACOUSTICAL CEILING:
a. Suspension Grid: ARMSTRONG, "Suprafine" XL 9/16" Exposed Tee.
b. Ceiling Tile: ARMSTRONG, "Hi-LR Ultima" RH90 2 x 2 #1792 beveled
tegular lay in.
c. Ceiling heights vary and are as noted on plans.
4.3 DRYWALL CEILING:
a. Carrying channel at 24" on center.
b. 1-1/2" cold-rolled carrying channel at 48" on center with hanger
wire spaced a maximum of 48" on center along carrying channel.
c. 5/8" gypsum wallboard.
d. Seismic bracing as required per the Uniform Building Code and as
noted on drawings.
e. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint. (Note: no texture; all painted surfaces
shall be 'smooth').
f. Locate all mechanical and electrical equipment requiring access
in 2' x 2' lay-in ceiling to avoid access doors in gypsum board
ceilings, where possible.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
5.0 FINISHES
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NOTE: PROVIDE CUTTINGS, BRUSH-OUTS, SAMPLES, ETC. OF ACTUAL DYE LOTS,
OR PRODUCTION RUNS FOR ARCHITECT'S AND INTERIOR DESIGNER'S APPROVAL.
5.1 PAINT:
a. Provide paint color as specified on finish plans - one (1) coat
primer base, two (2) coats flat water base latex acrylic.
5.2 CARPET:
a. Standard multicolored loop tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
b. Standard cut pile tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
5.3 VINYL COMPOSITION TILE:
a. Vinyl composition tile (VCT) shall be: ARMSTRONG, "Imperial
Texture". Colors as selected from standard range.
5.4 RESILIENT SHEET FLOORING:
a. Resilient sheet flooring shall be: ARMSTRONG, "Standard
Excelon". Colors as selected from standard range.
5.5 RUBBER BASE:
a. Rubber base shall be: ROPPE, 4" topset; straight base at carpeted
areas and coved at all hard surface areas. Colors as selected from
standard range.
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
6.0 MILLWORK
11.0 GENERAL:
a. See millwork plans, details and notes for configuration and
fabrication specifications.
b. Millwork shops drawings shall be WIC approved.
c. All fabrications shall conform to WIC standards for "Premium
Grade" U.N.O. and be certified as such.
d. Submit shop drawings, samples, finishes for Architect's and
Interior Designer's approval prior to fabrication and
installation.
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15300 - FIRE PROTECTION SYSTEMS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall include all work necessary for a
complete automatic fire sprinkler system for the tenant
improvement of the shell building.
b. The shell building includes necessary standpipes, tamper
switches, flow and alarm switches and alarm bell.
B. SYSTEM REQUIREMENTS
1. The entire tenant improvement of the building shall be provided
with a hydraulically calculated automatic fire sprinkler system for
each occupancy classification.
2. Minimum densities for areas of coverage shall be determined by
the City of San Diego Fire Department. Hydraulically calculate water
protection systems. Form sheets, summary sheets, detailed work
sheets and graphs shall be in strict accordance with the required
and advisory provisions of NFPA 13; 7-3.
3. Tenant spaces shall be sized for Ordinary Hazard Group 1.
4. The system shall be designed for earthquakes and shall include
all materials necessary to provide the system complete and ready
for use. Design and install the system to give full consideration
to blind spaces, piping, electrical equipment, ductwork and other
construction and equipment in accordance with detailed drawings to
be submitted for approval.
5. Devices and equipment for fire protection service shall be UL
listed and FM approved for the specific purpose for which the item
is used in sprinkler systems.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
C. MATERIALS
1. Buried pipe and fittings: N/A
2. Above ground pipe and fittings:
a. 2-inch and smaller: ASTM A53 or ASTM A135 Schedule 40 black
steel pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow or equal.
b. 2 1/2-inch and larger: ASTM A135 Schedule 40 black steel
pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow pipe, or rolled groove pipe with mechanical
joint grooved coupling fittings; or ASTM A135 Schedule 10
welded steel pipe with rolled groove ends and mechanical
joint grooved coupling fittings. Cut grooving of pipe will not
be permitted.
c. Flanged fittings: ANSI B16.1 Class 125 cast iron.
d. Flanges: ANSI B16.1 Class 125 cast iron.
3. Gate Valves:
a. 4-inch and larger: UL listed and labeled, FM approved, 175 psi
OS&Y type, iron body, bronze mounted.
b. 3-inch and smaller: UL listed and labeled, FM approved, 175
psi OS&Y type, bronze body gate with solid wedge.
4. Check Valves: UL listed and labeled, FM approved, 175 psi iron
body, bronze mounted, horizontal swing check valve with bolted
bonnet and flanged end connections. Check valves shall be designed
for replacement of internal parts without removal of valve body
from piping with the exception that water check valves may be used
with freestanding Fire Department Connections.
5. Butterfly Valves: UL listed and labeled. FM approved, 175 psi
bronze body, threaded ends, stainless steel disc and stem, two
inch maximum pipe size with integral tamper switch, and geared
slow-close mechanism.
6. Drain Valve: UL listed and labeled, FM approved, 175 psi bronze
body gate valve, OS&Y type, solid wedge bronze disc; or class 150,
400 lb. WWP, conventional port, bronze, two-piece construction ball
valve.
7. Sprinkler Heads:
a. Spacing and number of heads shall comply with recommendations
of NFPA 13 for type of occupancy involved.
b. Sprinkler Heads: UL listed and labeled and FM approved for
installation in the hazard classification as indicated and by
the agencies listed above; 165 degree F rated fusible link,
1/2 inch orifice, standard response.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
.1 Finished ceiling Areas: Recessed, chrome-plated brass
pendant heads, matching chrome plated adjustable metal
escutcheon.
.2 Exposed Piping: Upright or pendant type; natural brass
finish.
D. EQUIPMENT
1. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15400 - PLUMBING SYSTEMS DESCRIPTIONS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall cover all plumbing systems for the tenant
improvement design. Utilities shall be connected to and
extended from points-of-connection from the original building
shell.
b. Piped utilities required by the installation of HVAC
equipment/systems for the tenant improvements to the building.
2. Work Excluded:
a. Plumbing sanitary and vent mains, potable water mains,
condensate drains for building shell rooftop units, roof and
storm water mains, shell toilet rooms and janitors closets.
B. SYSTEM REQUIREMENTS
1. Principal systems to be included in the tenant design:
a. Convenience sinks required by tenant for lunch/coffee rooms.
With local instahot water heater.
b. Potable cold water for drinking fountain system throughout the
building.
c. All drain piping from any HVAC equipment installed as part
of the tenant improvement that would generate condensate.
d. An hydraulically calculated automatic fire sprinkler system,
extended from the building shell to be installed in the tenant
improvement ceilings.
2. Materials:
a. Soil, Waste and Vent Above Ground: Service-weight, no-hub
cast-iron pipe and fittings.
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
b. Soil, Waste and Vent Below Ground and to 5'-0" Outside of
Building: Service-weight, cast-iron hub & spigot pipe and
fittings.
c. Water and Condensate Drain Piping Above Ground: Type "M"
hard-drawn copper type, ASTM B88, and wrought copper fittings,
ANSI B1 6.22. All hot water supply piping shall be insulated
with 1 inch thick fiberglass insulation for sizes up to 2-1/2
inch size, 1-1/2 inch thick above 2-inch size piping.
Condensate drain piping above ceilings shall be insulated.
d. Water Piping Below Ground 4-inches and Smaller: Type "K"
hard-drawn copper tubing, ASTM B88, and wrought copper fittings
ANSI B 16.22, silver brazed joints.
e. Natural Gas Piping: Buried piping shall be Polyethylene
(P.E.) per ASTM D2513. Above grade shall be Schedule 40 black
steel pipe per ASTM D2513.
f. Indirect Drains: Type "M" copper fittings, ANSI B16.22,
solder joint type. Insulate with Manville Micro-Lok 650AP.
3. Equipment:
a. N/A
4. Plumbing Fixtures:
a. Sinks as required and described in architectural floor
plans. If no description is provided, install 20 gage
stainless steel sink with standard single lever faucet.
b. Electric Water Cooler: Barrier-free, wall hung water cooler
with push bar control and equipped for handicap usage.
5. Drains:
a. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15800 - HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS DESCRIPTIONS
A. CODES AND REGULATIONS
All work shall be in strict conformance with, but not limited to:
Uniform Mechanical Code - UMC 1997
Uniform Building Code - UBC 1997
CEC Title 24 Energy Standards
Fire Department Regulation
City of San Diego Requirements
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Tenant Improvement (TI) Work:
a. All main air moving equipment including all air handling
units, exhaust fans, hot water boilers and pumps, variable air
volume with hot water reheat terminals for the building core
and all associated vertical ductwork and heating hot water
piping, and DDC control backbone will be installed as part of
the shell work. Five rooftop VAV units, one per floor are
provided with cooling only, and are based on a nominal 350
sf/ton.
b. Tenant shall provide all extensions of duct, piping,
electronic VAV boxes, DDC thermostats, control power and
wiring, smoke/fire dampers, diffusers and grilles for all
tenant improvements. Any specialty tenant requirement, such as
Kitchen exhaust will be designed and installed during the TI
work.
c. Any controls associated with the operation of the VAV boxes,
reheat coils and equipment added as TI work including
sub-control panels and thermostats required for the
environmental controls will be done as part of the TI work.
C. ENVIRONMENTAL DESIGN CONDITIONS
The following criteria will be used for sizing the heating and
cooling plants:
1. Outdoor Ambient Design Conditions:
Summer (mean 0.5%): 83DEG F dB 69DEG F wB
13DEG F dB outdoor daily range
Winter (0.2%): 42DEG F dB
Note: 88DEG F dB, 70DEG F wB is the 0.1% mean temperature: we
assume the less conservative 0.5% temperature is acceptable
for this project.
2. Indoor Conditions for Air Conditioned Area:
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
All floors 70DEG F dB +/- 2DEG F dB (winter)
72F dB +/- 2F dB (Summer)
60% RH (no low end humidity
control)
Electrical, Telecommunication No Temperature Control -
Rooms: Ventilation only - if Tenant
Equipment mounted within a
room requires a controlled
environment, it shall be
provided as part of the TI
D. VENTILATION AIR REQUIREMENTS
Outdoor air for ventilation will be based on the American Society of
Heating Ventilation and Air Conditioning Engineers (ASHRAE) Standard
62-1989, Ventilation for Acceptable Indoor Air Quality.
E. ENERGY USE AND CONSERVATION
The Energy Efficiency Standard, Title 24, will be used as the basis of
the design.
F. HEATING HOT WATER SYSTEM
1. The heating for the building will be by hot water, generated on
site by a rooftop boiler plant. The boilers, pumps and controls
will be installed as part of the building shell, along with valved
riser system to each floor.
2. Tenant improvement shall extend the heating hot water system to
heating coils at each VAV terminal with automatic flow control
valves, two way solenoids and a three way valve at four of the most
remote VAV boxes on each floor.
3. Heating hot water piping shall be type M copper with wrought
fittings, insulated.
G. MISCELLANEOUS VENTILATION/EXHAUST SYSTEMS
The following exhaust system will be installed within the scope of the
shell building design, it is assumed that ambient outside air (1) and
building air (2) (3) shall provide makeup air to the exhausted area:
(1) Elevator Machinery Room on roof.
(2) Electrical/telecom Rooms
(3) Janitors closets.
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
H. TI CONTROLS
1. An electronic direct digital control (DDC) system shall
incorporate stand alone, remote control units at each of the new
air handling units. Electronic digital control will be provided at
the zone level.
2. The controls will automatically operate the HVAC system and provide
the necessary change-over commands for the occupied and non-occupied
temperature and ventilation schedules. The system shall provide the
necessary monitoring, alarm, and by-pass for efficient energy
management.
I. Specification Sections
The following specification sections will be provided:
1. Division 15
a. Section 15010 Mechanical General Requirements
b. Section 15060 Hangers and Supports
c. Section 15090 Mechanical Identification
d. Section 15240 Vibration and Seismic Isolation
e. Section 15250 Mechanical Insulation
f. Section 15500 HVAC Pumps, Piping, Valves, and Accessories
g. Section 15850 Ductwork and Accessories
h. Section 15900 HVAC Controls
i. Section 15990 Testing, Adjusting and Balancing
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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Section 16050 BASIC ELECTRICAL REQUIREMENTS
PART 1 GENERAL REQUIREMENTS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions and Division 1 are part of this section
and the contract for this work and apply to this section as fully
as if repeated herein. This section, 16050, applies to all
Division 16 categories.
1.1.2 Reference to other sections: The applicable requirements from
other Division 16 sections shall form a part of the electrical
work and each section shall be referenced to the other sections.
1.2 EXPLANATION OF DRAWINGS
1.2.1 These construction documents are intended to be diagrammatic
and reflect the scope, quality, and character of the work to be
performed; all miscellaneous materials and work, though not
specifically mentioned, shall be furnished and installed by the
Contractor.
1.2.2 The Contractor shall confirm sizes, dimensions, weights and
locations of all equipment prior to installation. Dimensioned
architectural drawings shall take precedence over diagrammatic
layouts shown on these contract documents.
1.2.3 The specifications and the drawings are an integral document and
shall be considered complementary to each other. In the case of a
conflict between the specifications and the drawings, the more
constricting condition shall be enforced.
1.2.4 The Contractor shall be responsible for reporting any
discrepancies, errors, or omissions noted prior to bid.
1.2.5 It is the intent of the drawings to indicate schematic routing
and placement of devices, fixtures, equipment and conduit. Exact
locations shall be dimensioned on these documents or in other
trade documents (architectural, mechanical, etc.). Offsets,
elbows, or extensions shall be furnished and installed by the
Contractor as necessary to avoid structure, piping, clearances
and to provide a complete and workmanlike installation.
1.3 QUALITY ASSURANCE
1.3.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.3.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
Section 16050 Basic Electrical Requirements
Master Specs 16050-1
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.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriters' Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.3.3 All items shall be listed by Underwriter's Laboratories and
shall bear the U.L. label.
1.3.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.3.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the Contractor.
1.4 SUBMITTALS
1.4.1 Shop drawings for materials, equipment, devices, fixtures, and
systems shall be submitted by the Contractor for review within 30
days after award of the contract. In addition to the requirements
for submittals stated herein, the Contractor shall be responsible
for compliance with the requirements of Division 1.
1.4.2 The Contractor shall bear the responsibility for any materials
installed which were not submitted for review or not installed in
compliance with the review comments and the contract documents.
1.4.3 Verbal authorization of submittal documents or changes to the
requirements of the contract documents shall not be acceptable.
All submittal material must be documented in a written format.
1.4.4 All submittal packages must be submitted at one time and in
accordance with the specification section appropriate for the
material. All packages must be identical and clearly labeled
indicating the specification section, project name, submittal
date, Contractor's name, Engineer's name, preparer's name and
submission version (first submission, resubmittal #1, etc.).
1.4.5 Product catalog cutsheets and descriptive literature shall be
cross-referenced to the specification section by paragraph.
1.4.6 All submittal packages shall be permanently bound in brochure
or booklet format. A minimum quantity of six submittal booklets
shall be provided by the Contractor; additional copies may be
required if so noted.
Section 16050 Basic Electrical Requirements
Master Specs 16050-2
SCHEDULE 2
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1.4.7 Materials which bear a certification or approval of a testing
agency, performance criteria, society, agency, or other
organization shall be submitted with all labels identified.
1.4.8 The submittal shall be complete and with catalog data and
information properly marked to show, among other things,
materials, capacity and performance data to meet the specified
requirements.
1.4.9 Incomplete submittals will be rejected at the discretion of the
reviewing Engineer.
1.4.10 Review of the submittal is only for general conformance with
the contract documents. The Contractor is responsible for
confirmation and coordination of dimensions, quantities, sizes,
fabrication, installation methods, and for coordination of work
of other trades with electrical work.
1.4.11 Detailed working drawings shall be prepared and submitted showing
items which are to be fabricated including transformer mounting
racks, unistrut mounting frames, equipment room layouts, pull
boxes, splice boxes, gutters, etc.
1.4.12 Minimum scale for submitted drawings shall be 1/8". Details shall
be drawn to 1/4" scale. All drawings shall be 8.5"x11" or larger.
1.4.13 Submittal brochures shall be complete and descriptive of the
type, make, manufacturer, application, quantity, performance,
capacity, ratings, options, dimensions, clearances, weights,
nameplate data, special installation requirements, mounting
method, NEMA type, NEMA class, environmental restrictions, layout
requirements or other information as may be necessary for review
of the material.
1.4.14 Submittal brochures for switchgear shall include, as a minimum,
the following: singleline diagrams; fault current ratings of
buses and devices; device identification, ratings, layout and
characteristics; dimensions; circuit identification;
identification label type and method of affixing; mounting;
conduit entry point and quantities; NEMA enclosure type; and
additional data as required for a complete review.
1.4.15 Submittal brochures for lighting systems shall include, as a
minimum, the following: manufacturer; detailed drawing or
photograph; dimensions; lamp data; ballast data; certified
photometric data from a third-party testing agency; U.L. label
listing; fixture number or identification from the drawings;
finish color and material; mounting equipment; socket type and
rating; environmental ratings (damp location, watertight,
explosionproof, etc.); voltage; input wattage; and additional
information as necessary for a complete review.
1.4.16 The Contractor shall be responsible for all aspects of
substitutions of material including any additional cost or delay
incurred as a result of the substitution. The Contractor shall
coordinate all substitutions with other trades, verify code
compliance, verify clearances, photometric performance,
appearance, suitability, constructability, and availability of the
material prior to submitting the substitution for review. The
Contractor shall bear the responsibility of any increased costs
to other trades with are directly related to the substitution.
1.5 MATERIAL HANDLING
Section 16050 Basic Electrical Requirements
Master Specs 16050-3
SCHEDULE 2
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1.5.1 The Contractor shall deliver all equipment and material to the site
in the manufacturer's original packaging without seals broken.
1.5.2 The Contractor shall handle, store, and protect all equipment and
materials in accordance with the manufacturer's recommendations.
1.5.3 The Contractor shall immediately replace damaged or defective
equipment or materials with identical new equipment or material at
no cost, inconvenience, or delay to the Owner.
1.6 EXISTING CONDITIONS
1.6.1 The Contractor shall verify all existing conditions prior to bid and
include all costs in bid.
1.6.2 The Contractor shall match the finish and appearance of all existing
conditions where constructing new work adjacent to existing surfaces
or equipment.
1.6.3 Coordinate with the Owner's Representative for all ongoing projects
or the work of other trades which may affect the Contractor's work.
Verify Owner schedule requirements for special or standard events
which may impact the Contractor's work.
1.6.4 Coordinate work to be performed in occupied areas and comply with
the Owner's requirements such that the Owner's work is not disrupted
by the Contractor. Verify the need for work to be performed during
premium hours, evenings, weekends, or holidays prior to bid and
include all costs in bid. Bring to the Owner's attention the need
for all disruptive work prior to commencement of work.
1.7 UTILITY COMPANY REQUIREMENTS
1.7.1 The contractor shall contact the serving utility company for all
utility system requirements prior to commencement of work. Utility
work shall include electric power, telephone, data, fiber optic
cable, cable television or other utilities as may require connections
as a part of this contract. Coordinate and comply with all serving
utility company requirements.
1.7.2 The utility information depicted on the contract documents is for
bidding purposes only and shall not be used for construction
purposes. All construction shall be performed according to
engineered documents from the serving utility company. The
Contractor shall obtain and coordinate with utility company
requirements as a part of this contract and furnish and install all
work as a part of this contract.
1.7.3 Verify all connection points, routing, and requirements with the
serving utility company prior to commencement of work and coordinate
final requirements with other trades.
1.7.4 The Contractor shall be responsible for all costs associated with
his failure to contact or coordinate with utility company
requirements.
1.8 CONSTRUCTION UTILITY REQUIREMENTS
1.8.1 Power, telephone or other temporary construction utility services
required by the Contractor shall be the responsibility of the
Contractor.
Section 16050 Basic Electrical Requirements
Master Specs 16050-4
SCHEDULE 2
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1.8.2 Arrangements for construction utility services shall be made by the
Contractor in coordination with the Owner's Representative and the
serving utility company.
1.9 CONTINUITY OF SERVICE
1.9.1 The Contractor shall coordinate all shutdowns with the Owner's
Representative. Electrical shutdowns shall be kept to the minimum
number necessary to complete the work.
1.9.2 The Contractor shall coordinate all work done on overtime or premium
time with Owner's Representative prior to commencement of work.
1.9.3 All work performed in or through occupied spaces, or other work
disruptive to existing occupants shall be considered as performed
during premium time or as overtime for the purposes of the
bid; include all costs in bid.
1.9.4 The Contractor shall notify Owner's Representative of all shutdowns
or disruptive work minimum of 72 hours prior to commencement of
work. The Contractor shall obtain approval from the Owner's
Representative prior to commencement of work.
1.9.5 The Contractor shall provide all necessary temporary power, including
temporary power generation, to accommodate shutdowns and minimize
disruption of work.
1.9.6 The Owner reserves the right to provide emergency repairs or
temporary power to maintain service continuity at the Contractor's
cost in the event Contractor fails to provide adequate service
continuity.
1.10 RECORD DOCUMENTS
1.10.1 The Contractor shall prepare as-built documents depicting all
revisions to branch circuits, conduit routing, equipment, or
materials. Drawings shall be legible, reproducible, and properly
identified such they may be used as a reference for maintenance or
construction.
1.10.2 The Contractor shall provide a minimum of three copies of the
operation and maintenance manuals to the Owner's Representative at
the completion of the project. Each copy shall be bound in a
three-ring binder and labeled indicating: the project name; system
name; Contractor's name, telephone number, and contact person; and
Owner's name. The Contractor shall provide the following information
within each manual:
.1 List of the Subcontractors performing work on the system
including contact names and telephone numbers.
.2 Routine and emergency service contacts and telephone numbers
for each system.
.3 Description of system operation.
.4 Single line diagrams and control wiring diagrams.
.5 Detailed product literature with technical information.
Section 16050 Basic Electrical Requirements
Master Specs 16050-5
SCHEDULE 2
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.6 Sequence of starting, shutdown and operation.
.7 Installation instructions and safety requirements.
.8 Maintenance schedule, testing instructions and performance
parameters.
.9 Parts list including recommended spare parts.
1.11 GUARANTEE
All electrical work, materials and equipment provided under this
contract shall be guaranteed for a period of one year from the date
of acceptance of the work by the Owner. Any failures, problems, or
deficiencies experienced during this period due to defective
materials or faulty workmanship shall be immediately corrected by
the Contractor without cost to the Owner. The Contractor shall be
responsible for all damages to the Owner's facility due to
deficiencies in the electrical system. Equipment guarantees in
excess of one year shall not be superseded by this guarantee.
PART 2 PRODUCTS
2.1 MATERIALS
2.1.1 All materials shall be new, of prime quality, listed as suitable for
the application, and bear factory-applied U.L. labels.
2.1.2 Materials shall be currently in production and shall be supported by
spare parts, repair service, maintenance, and factory technical
support.
2.1.3 Materials of one assembly (switchboards, substations, motor control
centers, etc.) shall be of one manufacturer unless specifically stated
otherwise in the contract documents.
PART 3 EXECUTION
3.1 INSTALLATION REQUIREMENTS
3.1.1 All work shall conform to National Electrical Contractors
Association standards of installation and the requirements of the
manufacturer, Division 1, Division 16, and the Owner's Representative.
3.1.2 The Contractor shall field-verify all dimensions and coordinate
dimensions with equipment sizes and locations.
3.1.3 The Contractor shall coordinate and install all penetrations, openings,
slots, chases, or sleeves as necessary for the routing and installation
of raceways, conductors, or equipment. The Contractor shall provide
approved fire sealant to maintain fire ratings at all penetrations.
3.1.4 The Contractor shall coordinate the placement and sequence of
installation of all mounting bolts, conduits, sleeves, etc. which are
to be set in poured-in-place concrete slabs per the structural
drawings.
3.1.5 The Contractor shall install access panels in walls or ceilings in
coordination with the Architect for all junction boxes or electrical
equipment which requires access.
Section 16050 Basic Electrical Requirements
Master Specs 16050-6
SCHEDULE 2
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3.1.6 All equipment shall be installed plumb, parallel, or orthogonal to
structure and in a neat orderly fashion. All material shall be
accessible for maintenance, inspection, servicing or replacement.
3.1.7 Verify final locations for devices during the rough-in phase with
dimensioned architectural drawings, fabrication drawings, or other
space planning requirements included in the contract documents.
3.1.8 The Contractor shall coordinate and arrange for the proper sequence
of construction including scheduling of long-lead items, shutdowns,
work of other trades, and Owner-scheduled events.
3.1.9 The Contractor shall provide adequate and qualified supervision for
the work performed: no work shall be performed without the
supervision of a representative of the Contractor.
3.1.10 The Contractor shall coordinate and cooperate with all other trades
for a successful completion of the project.
3.2 SEISMIC BRACING
The Contractor shall seismically brace all equipment in accordance
with Title 24 requirements for Seismic Zone 4 and provide
certification of seismic compliance upon request.
3.3 CUTTING AND PATCHING
3.3.1 The Contractor shall provide cutting and patching as required to
install the electrical system in this contract.
3.3.2 Coordinate the schedule of all cutting such that the work may be
performed in an expeditious manner with minimum inconvenience to
the Owner.
3.3.3 Remove or cut structures or materials as necessary for demolition
prior to the installation of new electrical work.
3.3.4 The Contractor shall protect all surfaces, structure, furnishings,
and finishes not directly affected by cutting or patching.
3.3.5 Provide dust and moisture barriers as required during cutting and
prior to patching openings.
3.3.6 All penetrations through roofs shall be performed per architectural
requirements.
3.3.7 Patching shall be performed with materials which exactly match the
adjacent surfaces in color, texture, character, and appearance.
3.3.8 All patches must maintain the fire ratings of the original surface
and shall be sealed with a U.L. listed and Fire Marshal approved
sealant.
3.4 COMMISSIONING
Section 16050 Basic Electrical Requirements
Master Specs 16050-7
SCHEDULE 2
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3.4.1 The Contractor shall initiate start up of all electrical equipment
including operation of all devices, switches, generators, transfer
switches, overcurrent protection, disconnect switches, etc. to verify
normal operation of all moving parts and electrical performance.
3.4.2 The Contractor shall test, adjust, aim, align, label, clean and
complete all systems prior to acceptance by the Owner's
Representative.
3.4.3 The Contractor shall demonstrate that all systems operate within the
manufacturer's recommended performance characteristics, the
electrical construction documents, system requirements, and Owner
requirements.
3.4.4 The Contractor shall test each system per the manufacturer's
requirements and shall perform the following system tests:
.1 Inspect cables for physical damage and proper connection.
.2 Torque test cable connection and tighten in accordance with
industry standards.
.3 Infrared scan all connections under loaded conditions.
.4 Insulation resistance test of each cable.
.5 Inspect ground system connections.
.6 Voltage drop tests on the main grounding electrode of system.
.7 Determine the ground resistance between the main grounding
system and all major electrical equipment frames, system neutral
points.
.8 Check rated voltage and phase balance at all equipment, motors
and selected devices at full load conditions. Measure no load
voltage conditions at each location.
.9 Furnish all material, equipment, instruments and labor as
required to complete testing.
3.5 TRAINING
3.5.1 Furnish at least one copy operating instructions from the
manufacturer for all electrical equipment to the Owner's
Representative. Instructions shall be clean, legible, and properly
bound.
3.5.2 The Contractor shall provide training for the Owner's staff as
directed by the Owner's Representative for a minimum of one
man-day (eight hours).
3.5.3 Provide classroom training by a qualified instructor for the
operation, installation, and maintenance of designated equipment or
systems including, but not limited to, generation systems, transfer
switches, uninterruptible power supplies, energy management
systems, lighting control systems, power distributions systems, and
other systems which may require instruction.
3.6 CLEANING
Section 16050 Basic Electrical Requirements
Master Specs 16050-8
SCHEDULE 2
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<PAGE>
Contractor shall clean all equipment, panelboard interiors, conduit
interiors, fixtures, devices, etc. of all extraneous paint, drywall
mud, overspray, dust, dirt, debris, trash, grease or markings. All
cleaning shall be performed by the Contractor in accordance with the
appropriate manufacturer's recommendations.
END OF SECTION
Section 16050 Basic Electrical Requirements
Master Specs 16050-9
SCHEDULE 2
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<PAGE>
Section 16110 RACEWAYS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Basic Electrical Requirements
(Section 16050) are part of this section and the contract for this
work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16110 Raceways
Master Specs 16110-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Raceway materials
.2 Fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Rigid Galvanized Steel (RGS) Conduit
2.1.1 Continuous hot-dipped galvanized manufactured per UL and ANSI
requirement.
2.1.2 Rigid aluminum conduit is not acceptable.
2.1.3 Fittings for use with steel conduit, rigid or flexible, shall be
manufactured per UL requirements and shall be cast metal with
gasketed closures.
2.1.4 Fittings for RGS conduit shall be malleable iron or forged steel
with cadmium or zinc coating.
2.1.5 Union couplings for joining rigid conduit at intermediate runs shall
be of the same material as the conduit. Couplings shall be threaded
concrete-tight to permit completing conduit runs when neither
conduit can be turned and to permit breaking the conduit run at the
union.
2.1.6 Set screw connectors or threadless type are not acceptable.
2.1.7 Minimum raceway size shall not be less than 3/4".
2.2 Electrical Metallic Tubing (EMT)
2.2.1 Conduit shall be cold rolled zinc coated steel and manufactured per
UL and ANSI requirements.
2.2.2 Fittings for EMT shall be watertight steel or malleable gripping ring
compression type.
2.2.3 Pressure cast material for nuts of compression ring type fittings
and set screw connections are not acceptable.
2.2.4 Minimum raceway size shall be 1/2".
2.3 Flexible Metallic Conduit
2.3.1 Flexible conduit shall bear the UL label and be zinc coated steel.
2.3.2 Fittings for flexible metallic conduit shall be steel or malleable
iron. Fittings shall clamp to conduit securely.
2.3.3 Screw in type, sheet metal or set screw type fittings are not
acceptable.
Section 16110 Raceways
Master Specs 16110-2
SCHEDULE 2
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2.3.4 Minimum raceway size shall not be less than 3/4".
2.4 Liquid Tight Flexible Conduit
2.4.1 Conduit shall be manufactured in accordance with UL and ANSI
requirements. Conduit shall be approved for grounding and compatible
with approved fittings. Flexible steel conduit shall be hot dipped
galvanized with extruded PVC covering manufactured per UL
requirements.
2.4.2 Fittings shall be liquid tight type with body and gland nut of steel
or malleable iron with provisions for grounding flexible conduit to
fittings.
2.4.3 Minimum raceway size shall be 3/4".
2.5 Polyvinyl Chloride (PVC) Conduit
2.5.1 PVC shall be constructed of a virgin homopolymer PVC compound and be
manufactured according to NEMA and UL specifications. PVC conduit shall
be Schedule 40 or 80.
2.5.2 Minimum raceway size shall be 3/4".
PART 3 EXECUTION
3.1 Rigid Galvanized Steel (RGS) Conduit
3.1.1 RGS shall be used where exposed to weather or where subject to
physical damage in exposed areas below 8'0" above finished floor.
3.1.2 RGS shall be used in NEC classified hazardous locations with seal
connections per NEC requirements.
3.2 Electrical Metallic Tubbing (EMT)
3.2.1 EMT shall be run indoors concealed in drywall type
construction, above suspended ceilings, and exposed indoors not less
than 8'0" above finished floor in unfinished areas.
3.2.2 EMT shall not be installed underground or embedded in concrete.
3.3 Flexible Metallic Conduit
3.3.1 Flexible conduit shall be used for indoor lighting connections in
suspended ceiling areas and shall not exceed 6'0" in length.
3.3.2 Flexible conduit shall be used for final connection to control
equipment and not to exceed 2'0" in length.
3.3.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL approved.
3.4 Liquid Tight Flexible Conduit
Section 16110 Raceways
Master Specs 16110-3
SCHEDULE 2
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3.4.1 Flexible conduit shall be used for final connection to
machines, motors, transformers and equipment that requires vibration
isolation.
3.4.2 Flexible conduit shall be used for final connection to equipment in
wet or damp locations or where exposed to grease, water, dust, or dirt.
3.4.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL requirements.
3.5 Polyvinyl Chloride (PVC) Conduit
3.5.1 All sweeps, bends, and risers shall be concrete encased Schedule 80.
3.5.2 All underground high voltage conduit, telephone conduit, service
entrance conduit and feeders 100A and over shall have 3" of red
mixed concrete cover.
3.5.3 All PVC conduit feeders shall contain a copper green grounding
conductor sized per NEC requirements and continuity shall be
maintained throughout conduit runs and pullboxes.
3.6 All conduit installation methods shall comply with the latest
enforced edition of the National ELectrical Code and the authority
having jurisdiction.
3.7 All conduit installations shall comply with the manufacturer's
installation requirements.
3.8 All spare conduit shall be provided with a pullwire.
END OF SECTION
Section 16110 Raceways
Master Specs 16110-4
SCHEDULE 2
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(Peregrine Systems)
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Section 16120
WIRE AND CABLE
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
Section 16120 Wire and Cable
Master Specs 16120-1
SCHEDULE 2
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<PAGE>
.1 Conductor materials
.2 Connector and fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Conductors shall be copper; conductors size #10AWG and smaller shall
be solid, conductors size #8AWG and larger shall be stranded.
Conductors shall be minimum size #12AWG for power and lighting
circuits; control circuits shall use a minimum conductor size of
#14AWG.
2.2 Insulation shall be type THW or THHN/THWN for all branch circuits up
to and including size #2AWG. Insulation for conductors over size
#2AWG shall be XHHN.
2.3 Jackets shall be nylon of PVC material.
2.4 All cables shall be UL listed for the application.
2.5 All conductors shall be installed in conduit in the field, unless
specifically noted otherwise in these documents. Type AC and type NM
cable is not acceptable; type MC cable may be used where
specifically noted for purposes of flexibility, maintenance, or ease
of installation but shall not be used without permission.
2.6 Multi-conductor flexible cords shall be types SO, SJO, STO, or SJTO.
2.7 Connectors shall be UL listed and suitable for the conductor
material being connected and rated appropriately. Connectors shall
be solderless metal pressure type for conductors #10AWG and smaller.
Connectors shall be compression type for conductors #8AWG and larger.
PART 3 EXECUTION
3.1 All wiring methods shall comply with the latest enforced edition of
the National Electrical Code and the authority having jurisdiction.
3.2 Conductors shall be installed in clean raceways using nylon
cord, polypropylene cord, hemp rope, or other material which will not
damage the conductors or conduit. Do not use metal fish tape. Use
lubricant when necessary for pulling.
3.3 Conductors shall be pulled into conduit simultaneously so as to not
damage conductors during pulling.
3.4 Conductors installed at outlets and switches shall have a minimum of
6" pigtail left in the box for future connections. All conductors
not connected to devices shall be terminated with splice caps or
tape.
3.5 Conductors shall be terminated such that no copper material is
exposed. Conductors shall be trained and labeled at terminations in
a neat and workmanlike manner.
3.6 All terminations shall comply with the manufacturer's installation
and torquing requirements.
3.7 Splices on conductors #10AWG and smaller shall be made with splice
caps twisted
Section 16120 Wire and Cable
Master Specs 16120-2
SCHEDULE 2
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<PAGE>
onto the conductors. Tape all splices.
3.8 Splices on conductors #8AWG and larger shall be made with pressure
connectors and terminal lugs. Where exposed to water, damp air, or
moisture splices shall be watertight.
3.9 Splices shall be not be made in feeders; splices to branch circuits
shall not be made within panelboards or similar enclosures.
3.10 When combining homeruns, the Contractor shall derate all conductors
per code requirements including reducing the capacity, using high
temperature insulation where necessary. Conduit sizes shall be
adjusted by the Contractor as suitable for the conductor revisions.
3.11 The Contractor shall provide a code-sized insulated ground
conductor, in addition to the feeder conductors indicated on the
drawings, where non-metallic conduit is used.
3.12 Conductors shall be color-coded as follows:
208Y/120V Phase 480Y/277V
Black A Brown
Red B Orange
Blue C Yellow
White Neutral Gray
Green Ground Green
3.13 Where tape or labels are used for color-coding, apply material at each
end of the conductor, splices, boxes, and all terminations.
END OF SECTION
Section 16120 Wire and Cable
Master Specs 16120-3
SCHEDULE 2
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(Peregrine Systems)
<PAGE>
Section 16130 BOXES
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3. All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16130 Boxes
Master Specs 16130-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Box materials
.2 Accessory materials
PART 2 PRODUCTS
2.1 Boxes shall be flat rolled steel sized as required by code and as
suitable for the application. Boxes shall have mounting holes and
knock-outs in sides and back. Grounding shall be accommodated by
means of threaded holes.
2.2 Provide accessories, extension rings, gaskets, supports, trim
rings, hangers, straps, and other material as necessary for a
complete code complying installation.
2.3 Boxes installed outdoors shall be weathertight, dusttight, and
corrosion resistant. Provide gaskets and conduit hubs.
2.4 Provide Type FS boxes for surface mounted applications.
2.5 Provide additional support for boxes as necessary when mounting
fixtures or devices from boxes.
2.6 Provide ganged boxes for multiple switches and devices; provide
barriers for boxes served by separate voltages.
2.7 Acceptable manufacturers shall be Appleton, Crouse Hinds, Steel
City, or Raco.
PART 3 EXECUTION
3.1 All box installation method shall comply with the latest enforced
edition of the National Electrical Code and the authority having
jurisdiction.
3.2 Install all boxes plumb, square, and securely fastened to
structure.
3.3 Boxes shall be placed such that they are readily accessible.
3.4 Cover or plug all unused openings in boxes where knockout blanks
have been removed.
3.5 Install boxes such that they are flush with the finished surface
of the wall or surface within which they are mounted.
3.6 Install all boxes at mounting heights per architectural,
electrical code, and ADA requirements.
3.7 Boxes shall not be mounted back to back in walls.
3.8 Boxes in sealed environments shall be sealed with an approved
sealant suitable for the application.
3.9 Boxes penetrating fire rated walls or surfaces shall be sealed
with a Fire Marshall approved fire sealant to maintain the fire
rating of the wall or surface.
Section 16130 Boxes
Master Specs 16130-2
SCHEDULE 2
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<PAGE>
3.10 Boxes located above inaccessible ceilings shall be made accessible
by means of access doors or hatches in the ceiling.
3.11 Install all boxes per manufacturer's recommendations and
requirements.
3.12 Provide for ground continuity at all boxes.
END OF SECTION
Section 16130 Boxes
Master Specs 16130-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
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<PAGE>
Section 16140 WIRING DEVICES AND CONNECTORS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and
the contract for this work and apply to this section as fully
as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-1
SCHEDULE 2
-36-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Receptacles
.2 Switches
.3 Wiring devices
.4 Accessories
PART 2 PRODUCTS
2.1 RECEPTACLES
2.1.1 Wiring devices shall be UL listed and suitable for the application.
2.1.2 Devices shall be color coded per the system to which they are
connected: normal power shall be white; emergency power shall
be red; dedicated outlets shall be grey; unless otherwise noted
on the construction documents.
2.1.3 Receptacles shall be heavy duty with the screw type, side wired,
120V, 20A, duplex type, unless noted otherwise on the contraction
documents. Verify NEMA configuration with construction documents.
2.1.4 Weathertight receptacles shall be gasketed in cast metal boxes
with cast metal coverplates with spring-loaded hinged covers over
each opening.
2.1.5 Ground fault interrupting receptacles shall be duplex type and
capable of detecting a leaking current of 5mA.
2.2 TOGGLE SWITCHES
2.2.1 Toggle wall switches shall be quiet AC type, rated 120/277V, 20A
and UL listed for the application.
2.2.2 Switches shall be single pole, double throw with white finish
unless noted otherwise.
2.3 COVERPLATES
2.3.1 Single, combination coverplates shall be used at all ganged device
locations.
2.3.2 Provide white plastic coverplates with white screws in all office
areas. Provide stainless steel coverplates with matching screws in
laboratory, process, manufacturing, and clean room areas or as
noted on the construction documents.
2.3.3 Provide labeled plates as noted on the construction documents.
2.3.4 Provide labeled plates at all receptacles with circuit and panel
designation. Labeling method shall utilize clear adhesive printed
labels with black bold letters.
2.4 ACCEPTABLE MANUFACTURERS
2.4.1 Acceptable manufacturers shall be Arrow Hart, Hubbell, Leviton, or
Pass and Seymour.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-2
SCHEDULE 2
-37-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of wiring devices shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all devices in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate device mounting height, location and type with
architectural and interior drawings. Coordinate with other
trades to identify conflicts with device locations and notify
the Engineer of any conflicts.
3.4 Install devices only in clean boxes.
3.5 Install all trim rings and coverplates in coordination with other
trades and their installation schedules.
3.6 Tighten and inspect all connections prior to covering devices and
reconnect or repair wiring as necessary.
3.7 Test all devices for voltage level, continuity, ground fault, and
short circuits.
3.8 Install all devices plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to covering device.
3.10 Demonstrate the proper operation of all ground fault interrupting
devices.
END OF SECTION
Section 16140 Wiring Devices and Connectors
Master Specs 16140-3
SCHEDULE 2
-38-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16170 CIRCUIT AND MOTOR DISCONNECTS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-1
SCHEDULE 2
-39-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage and current ratings
.2 NEMA enclosure type
.3 Horsepower rand fault current rating
.4 Dimensions
.5 Fuse type and class
PART 2 PRODUCTS
2.1 Disconnects shall NEMA 1, indoor type, or rated for the location
in which they are installed as noted on the construction documents.
2.2 Disconnects shall be UL listed and suitable for the application.
2.3 Exterior disconnects shall be raintight, dusttight, have raintight
hubs, and be rated NEMA 3R.
2.4 Disconnects shall be heavy duty type, rated 600V with current
capacity as noted on the construction documents. Verify NEMA
configuration with construction documents.
2.5 Disconnects shall have hinged, lockable, dead-front doors wit
permanently marked ON/OFF indicators. Enclosures shall be baked
enamel factory painted steel with conduit knockouts.
2.6 Disconnects shall be operated by a handle accessible from the
exterior of the enclosure. Handles shall have provision to be
padlocked in the OFF position.
2.7 All current carrying parts shall be high conductivity copper
designed to carry rated load without damage from heat and plated
to resist corrosion.
2.8 Switch mechanism shall be a quick-make, quick-break type such that
the operation of the contact is restrained by the handle during the
closing or opening operation.
2.9 Switches shall have a minimum fault current rating of 200,000A RMS.
All switches shall be fused unless specifically noted otherwise.
2.10 The disconnect door cover shall have an interlocking mechanism to
prevent opening the cover when the switch is in the ON position.
2.11 Fuses serving motor loads shall be Class L and Class RK1, 250V and
600V, time delay, dual element unless noted otherwise on the
construction documents.
2.12 Fuses serving non-motor loads shall be Class L and Class RK1, 250V
and 600V, fast acting, dual element unless noted otherwise on the
construction documents.
2.13 Provide built-in fuse pullers.
2.14 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. and Westinghouse. Fuses shall be Gould-Shawmut
or Bussman.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-2
SCHEDULE 2
-40-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of disconnects shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all disconnects in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate disconnect mounting height, location and type with
architectural and interior drawings. Coordinate with other trades
to identify conflicts with device locations and notify the
Engineer of any conflicts. Mount switches 42" above finished
floor unless noted otherwise.
3.4 Provide suitable galvanized metal strut framework where no wall or
structure is available for the mounting of vibrating equipment.
3.5 Provide flexible conduit connections for disconnects mounted to
strut framework, motors, or vibrating equipment.
3.6 Tighten and inspect all connections and reconnect or repair wiring
as necessary.
3.7 Test all disconnects for voltage level, continuity, ground fault,
and short circuits. Check switch mechanism operation under no load
conditions prior to operating under load.
3.8 Install all disconnects plumb and square to structure and adjacent
surfaces.
3.9 Provide and install all fuses sized per the equipment
manufacturer's recommendation.
END OF SECTION
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-3
SCHEDULE 2
-41-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16420 SWITCHBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearance prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16420 Switchboards
Master Specs 16420-1
SCHEDULE 2
-42-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Switchboards
.2 Overcurrent protection
.3 Instrumentation
.4 Dimensions, weights, ratings, and layouts
.5 Device settings and trip ratings
PART 2 PRODUCTS
2.1 Switchboards shall be factory assembled, dead-front, metal
enclosed, self-supporting floor standing sections as noted in the
construction documents.
2.2 Vertical sections shall contain overcurrent protective devices
including circuit breakers and fuses and shall be nominally
90" in height.
2.3 Switchboard finish shall be baked enamel factory paint of
manufacturer's standard color.
2.4 Provide front accessibility for wireways on each side of
overcurrent protective devices for entire height of section.
Provide welded steel framework with screw covers removable from
the front; covers may be hinged.
2.5 All bussing shall be silver-coated copper with ratings as
indicated in the construction documents.
2.6 Switchboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Switchboards shall be equipped with lifting eyes.
2.8 Switchboards shall be suitable for the environment in which they
are located and shall be NEMA 1, indoor, unless noted otherwise on
the construction documents.
2.9 Main circuit breakers shall be provided and shall be solid state
trip with ratings as noted. Distribution circuit breakers shall be
molded case type. All circuit breakers shall be bolt-on type.
2.10 Cross bussing shall be fully rated for the length of the
switchboard.
2.11 Instrumentation shall be provided where noted. Utility company
metering shall be provided in accordance with the serving utility
company requirements.
2.12 The switchgear manufacturer shall submit a coordination and short
circuit study for the entire system provided including long time,
short time, instantaneous, and ground fault.
2.13 Provide permanently adhered bakelite labels indicating the
identification of each device on the switchboard adjacent to the
device and visible on the enclosure exterior.
2.14 Provide a ground bus in each switchboard section with connecting
ground bonds between sections.
Section 16420 Switchboards
Master Specs 16420-2
SCHEDULE 2
-43-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square
D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of switchboards shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all switchboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate switchboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with switchboard locations and notify the Engineer of any conflicts.
3.4 Coordinate switchboard size with concrete housekeeping pads.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Ground fault protective devices shall be testing by an approved
third party testing agency and a written report submitted with the
operation manual for review.
3.7 Test all switchboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all switchboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing switchboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all switchboard interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation. Set ground fault
protective device as per the written report recommendations.
END OF SECTION
Section 16420 Switchboards
Master Specs 16420-3
SCHEDULE 2
-44-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16460 TRANSFORMERS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and contract for
this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electric Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with the applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16460 Transformers
Master Specs 16460-1
SCHEDULE 2
-45-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage, KVA, impedance, frequency, taps, and efficiency
.2 Temperature rating above ambient
.3 Regulation and sound levels
.4 Mounting details and vibration isolation
.5 Nameplate data
PART 2 PRODUCTS
2.1 Transformers shall be general purpose, ventilated dry type, factory
assembled, dead-front, metal enclosed, self-supporting floor standing
as noted in the construction documents.
2.2 Transformers shall be 480V-208Y/120V 3 amps 4W(primary-secondary)
voltage rated, unless noted otherwise.
2.3 Transformers shall be rated for 80DEG. C rise above an ambient
temperature of 40DEG C.
2.4 Coils shall be continuously wound non-hygroscopic type with
thermosetting varnish. Windings shall be aluminum or copper.
2.5 Taps shall be provided at primary windings with (6)2 1/2 % taps,
three above and three below.
2.6 Intergral vibration isolators shall be provided between the core and
coil assembly and the transformer enclosure in addition to the
vibration isolation located between the enclosure and the floor.
2.7 Grounding shall be provided by means of a flexible grounding strap.
2.8 Transformers shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Transformers shall have lifting lugs and be enclosed in a heavy
gauge, sheet steel housing with baked enamel finish. The enclosure
shall be ventilated.
2.10 Transformers located in exterior areas shall be NEMA 3R, with drip
shield and corrosion resistant finish.
2.11 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of transformers shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all transformers in accordance with the manufacturer's
recommendations and requirements.
Section 16460 Transformers
Master Specs 16460-2
SCHEDULE 2
-46-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.3 Coordinate transformer location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with transformer locations and notify the Engineer of any conflicts.
3.4 Coordinate transformer size with concrete housekeeping pads,
structural frames, and mounting hardware.
3.5 Brace transformers per California Code of Regulations, Title 24,
Seismic Zone 4 requirements.
3.6 Provide rubber vibration isolation between transformer and floor,
structure, or any fixed surface (including wireways).
3.7 Test all transformers for voltage level at primary and secondary
windings.
3.8 Install all transformers plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing transformer.
3.10 Install all conduit connections to transformer with liquid tight
flexible conduit.
3.11 Clean all transformer interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Tighten and test all connections prior to energizing the transformer.
END OF SECTION
Section 16460 Transformers
Master Specs 16460-3
SCHEDULE 2
-47-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16470 PANELBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the contract
for this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16470 Panelboards
Master Specs 16470-1
SCHEDULE 2
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Panelboards
.2 Overcurrent protection, bus capacity, main ratings, AIC rating
.3 Mounting, enclosure, dimensions
.4 Dimensions, voltage, ratings and phases
.5 Device settings, trip ratings, and layout
PART 2 PRODUCTS
2.1 Panelboards shall be factory assembled, dead-front, metal enclosed,
wall mounted type as noted in the construction documents.
2.2 Panelboards shall be rated 600VAC and shall not exceed 1200A current
capacity.
2.3 Panelboard finish shall be baked enamel factory paint of manufacturer's
standard color.
2.4 Provide front accessibility for wireways on each side of overcurrent
protective devices for entire height of panelboard.
2.5 All bussing shall be silver-plated copper with ratings as indicated in
the construction documents.
2.6 Panelboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Enclosures shall be galvanized sheet steel cabinet type with hinged
and lockable doors, dead front, and permanently adhered identification
labels on the front.
2.8 Switchboards shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Circuit breakers shall be molded case type; all circuit breakers shall
be bolt-on type.
2.10 Main lugs shall be anti-turn solderless pressure type for use with
copper conductors.
2.11 Instrumentation shall be provided where noted.
2.12 Enclosures, panel interiors, and devices shall be of one manufacture.
2.13 Provide a typewritten panel schedule located in a sleeve on the
interior of the panelboard door indicating loads and areas connected
to each circuit.
2.14 Provide a ground bus in each panelboard.
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square D,
Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of panelboards shall comply with the latest
enforced edition of the
Section 16470 Panelboards
Master Specs 16470-2
SCHEDULE 2
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
National Electrical Code and the authority having jurisdiction.
3.2 Install all panelboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate panelboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with panelboard locations and notify the Engineer of any conflicts.
3.4 Fasten panelboards securely to structural wall or surface to Seismic
Zone 4 requirements. Panelboards shall be mounted no higher than 6'0"
to the highest device from finished floor and no lower than 24" above
finished floor. Provide panel skirts where noted.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Complete the panel schedule card and place in the sleeve on the
interior of the panelboard door.
3.7 Test all panelboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all panelboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing panelboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all panelboard interiors and exteriors prior to handing over to
Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation.
END OF SECTION
Section 16470 Panelboards
Master Specs 16470-3
SCHEDULE 2
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
SCHEDULE 3
SUMMARY OF BUILDING WORKING DRAWINGS
BLDG. ONE - PROJECT NO. 4085.10
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
GRADING PERMIT (WO# 980807)
CIVIL
1D GENERAL NOTES, LEGEND, KEY MAP
2D GRADING/UTILITY PLAN
LANDSCAPE
3D IRRIGATION PLAN
4D PLANTING PLAN
5D ENTRY ROAD IRRIGATION PLAN
6D ENTRY ROAD PLANTING PLAN SEPARATE
7D IRRIGATION DETAILS SITE
8D IRRIGATION DETAILS PACKAGE
9D PLANTING DETAILS
10D LANDSCAPE SPECIFICATIONS
11D LANDSCAPE SPECIFICATIONS
12D LANDSCAPE SPECIFICATIONS
13D LANDSCAPE SPECIFICATIONS
14D LANDSCAPE SPECIFICATIONS
15D RIGHT OF WAY IRRIGATION PLAN
16D RIGHT OF WAY PLANTING PLAN
- -------------------------------------------------------
SHELL ONLY BUILDING PERMIT
(PLAN FILE #A108210-98)
TS-1 TITLE SHEET 12-18-98
TS-2 ACCESSIBILITY NOTES 12-18-98
ARCHITECTURAL-ALL "A" DRAWINGS DATED 12-18-98
A1.1 SITE PLAN
A1.2 SITE DETAILS
A2.1 FIRST FLOOR PLAN
A2.2 SECOND FLOOR PLAN
A2.3 THIRD FLOOR PLAN
A2.4 ROOF PLAN
A3.1 EXTERIOR ELEVATIONS
A3.2 EXTERIOR ELEVATIONS
A3.3 BUILDING SECTIONS
A3.4 BUILDING SECTIONS
A3.5 WALL SECTIONS
A3.6 WALL SECTIONS
A3.7 WALL SECTIONS
A4.1 STAIR PLANS AND SECTIONS
A4.2 ENLARGED PLANS, INTERIOR ELEVATIONS
A4.3 ENLARGED DECK PLAN, REFLECTED SOFFIT PLANS
A4.4 SCHEDULES
A5.1 DETAILS
A5.2 DETAILS
A5.3 DETAILS
A5.4 DETAILS
- -------------------------------------------------------
FOUNDATION/FRAMING PERMIT
(PLAN FILE #A107551-98)
STRUCTURAL--ALL "S" DRAWINGS DATED 11-10-98
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S1.2 TYPICAL DETAILS
S1.4 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 SECOND FLOOR FRAMING PLAN
S2.3 THIRD FLOOR FRAMING PLAN
S2.4 ROOF FRAMING PLAN
S3.1 FRAME ELEVATIONS AND STAIR DETAILS
S4.1 SECTIONS AND DETAILS
S4.2 SECTIONS AND DETAILS
S5.2 PANEL ELEVATIONS
S5.3 PANEL DETAILS
- -------------------------------------------------------
MECHANICAL--ALL "M" DRAWINGS DATED 12-18-98
M1 MECHANICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
M2 TITLE 24
M3 MECHANICAL FIRST FLOOR PLAN
M4 MECHANICAL SECOND FLOOR PLAN
M5 MECHANICAL THIRD FLOOR PLAN
M6 MECHANICAL ROOF PLAN
M7 MECHANICAL DETAILS
M8 MECHANICAL DETAILS
M9 MECHANICAL DETAILS
PLUMBING--ALL "P" DRAWINGS DATED 12-18-98
P1 PLUMBING SYMBOLS, ABBREVIATIONS, SCHEDULES
P2 PLUMBING SITE PLAN
P3 PLUMBING FIRST FLOOR PLAN
P4 PLUMBING SECOND FLOOR PLAN
P5 PLUMBING THIRD FLOOR PLAN
P6 PLUMBING ROOF PLAN
P7 PLUMBING DIAGRAMS
P8 PLUMBING DETAILS
ELECTRICAL--ALL "E" DRAWINGS DATED 12-18-98
E1 ELECTRICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
E2 SINGLE LINE DIAGRAM
E3 ELECTRICAL SITE PLAN
E4 ELECTRICAL FIRST FLOOR PLAN
E5 ELECTRICAL SECOND FLOOR PLAN
E6 ELECTRICAL THIRD FLOOR PLAN
E7 ELECTRICAL ROOF PLAN
E8 ELECTRICAL PANEL SCHEDULES
E9 ELECTRICAL PARTIAL PLAN AND DETAILS
E10 TITLE 24 AND ELECTRICAL DETAILS
- -------------------------------------------------------
SCHEDULE 3
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
BLDG. TWO - PROJECT NO. 4085.20
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
[ILLEGIBLE]
SCHEDULE 3
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT C
PEREGRINE SYSTEMS CORPORATE CENTER
NOTICE OF LEASE TERM DATES
To: ______________________
______________________
______________________
Re: Office Lease dated _________________, ______ between KR-CARMEL
PARTNERS, LLC, a Delaware limited liability company ("LANDLORD"), and
PEREGRINE SYSTEMS, INC., a Delaware corporation ("TENANT") concerning
that certain office building located at ______ Valley Center Drive,
San Diego, California 92130.
Ladies and Gentlemen:
In accordance with the referenced Office Lease (the "LEASE"), we wish to
advise you and/or confirm as follows:
1. The Substantial Completion of the Premises has occurred, and the
Lease Term shall commence on or has commenced on _________________ for a term
of ______________________ ending on __________________.
2. Rent commenced to accrue on ____________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to _________________ at
______________________________________________________.
5. The exact number of rentable and usable square feet within the
Premises are _________ and ___________ square feet, respectively.
6. Base Rent, as adjusted based upon the exact number of rentable
square feet within the Premises, is as follows: ______________________________
_____________________.
7. Tenant's Share, as adjusted based upon the exact number of rentable
square feet within the Building(s), is _________%.
EXHIBIT C
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The street address(es) of the Building is _________________ Valley
Center Drive, San Diego, California 92130.
"LANDLORD":
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: _________________________
Name: _______________________
Its: ___________________
By: _________________________
Name: _______________________
Its: ___________________
Agreed to and Accepted as
of _______________, _____.
"TENANT":
_________________________________,
a _______________________________
By: ____________________________
Its: _______________________
By: ____________________________
Its: _______________________
EXHIBIT C
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT D
PEREGRINE SYSTEMS CORPORATE CENTER
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors, windows or mailboxes of the Premises without
giving to Landlord prior written notice. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to install its own
security system within the Premises in accordance with the provisions of the
Lease.
2. All doors opening to public corridors (other than Building lobbies
(which shall be kept closed if required by law)) shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Any tenant, its employees, agents or any other persons entering or
leaving any Building at any time when it is considered to be after normal
business hours for such Building will be required to sign the Building
register. Access to the Building may be refused unless the person seeking
access has proper identification or has a previously arranged pass for access
to the Building. Landlord and its agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from any
Building of any person. In case of invasion, mob, riot, public excitement,
or other commotion, Landlord reserves the right to prevent access to the
Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.
Notwithstanding the foregoing, Tenant may adopt its own rules and regulations
with respect to access to any building for which Tenant leases the entire
building.
4. All moving activity into or out of the Building shall be done in
such manner as Landlord reasonably designates; Landlord shall at all times
reasonably cooperate with Tenant with respect to such activities. Service
deliveries (other than messenger services) shall be allowed only during hours
reasonably approved by Landlord. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building. Safes and other heavy objects shall stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property in
any case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be
the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be reasonably
designated by Landlord. Landlord shall at all times reasonably cooperate
with Tenant with respect to such activities.
6. Any requests of Tenant shall be directed to the management office
for the Project or at such office location designated by Landlord.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Landlord and its agents to prevent such
activities.
EXHIBIT D
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the tenant who, or whose employees or agents,
shall have caused it.
9. Tenant shall not overload the floor of the Premises, Tenant shall
not mark, drive nails or screws, or drill into the partitions, woodwork or
plaster or deface the Premises without Landlord's prior consent other than in
connection with any Alterations for which Landlord's consent is not required.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. Notwithstanding the foregoing, the
foregoing limitation shall not apply to Tenant's cafeteria, workout facility,
showers and lockers which are contemplated to be a part of Tenant's
improvements.
11. Tenant shall not use or keep in or on the Premises, the Building,
or the Project any kerosene, gasoline or other inflammable or combustible
fluid or material other than as expressly permitted in Section 5.2 of the
Lease.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by
Landlord other than supplemental heating and air conditioning approved by
Landlord, which approval shall not be unreasonably withheld.
13. Tenant shall not use, keep or permit to be used or kept, any foul
or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having
business therein.
14. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals or birds. Bicycles are permitted in
designated areas, and Tenant may install bike racks at appropriate locations
designated by Landlord in the Common Areas to accommodate bicycles.
15. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used
in the Premises for heating food and brewing coffee, tea, hot chocolate and
similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations. The foregoing rule and restriction shall
not apply to any cafeteria facility of Tenant.
16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. Boring or cutting for wires shall be
allowed only at locations reasonably designated by Landlord. The location of
telephone, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
17. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
18. Tenant, its employees, contractors and agents (i) shall not loiter
in the entrances or corridors, nor in any way obstruct the sidewalks, lobby,
halls, stairways or elevators, and shall use them only as a means of ingress
and egress for the Premises, and (ii) shall only be permitted to smoke in the
areas of the Project designated for smoking.
EXHIBIT D
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage
in the "Carmel Valley" area of San Diego, California without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse
disposal shall be made only through entry-ways and elevators provided for
such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises if visible from the
exterior of the Building without the prior written consent of Landlord. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent and/or of a quality, type, design and bulb
color approved by Landlord provided Tenant shall have the right to install
specialty lighting in the Premises not visible from the exterior of the
Building. Tenant shall abide by Landlord's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
25. Any access by Tenant or its agents, employees or contractors to the
roof of any Building shall be subject to coordination with Landlord and
Landlord's reasonable rules and regulations.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein; provided, however, Landlord shall not change
or make any Rules and Regulations which materially adversely affects Tenant's
rights under this Lease, including without limitation Tenant's use and
enjoyment of the Premises. Landlord shall cooperate with Tenant in connection
with changing or making any Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as
a condition of its occupancy of the Premises. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of
such Rules and Regulations in favor of any other tenant, nor prevent Landlord
from thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project.
EXHIBIT D
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT E
PEREGRINE SYSTEMS CORPORATE CENTER
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "LEASE")
made and entered into as of _____________, _____ by and between as Landlord,
and the undersigned as Tenant, for Premises on the ____ floor(s) of the
office building located at ______ Valley Center Drive, San Diego, California
92130, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained
in EXHIBIT A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on __________________, and the Lease Term
expires on __________________.
4. Base Rent became payable on ________________________.
5. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
6. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows: __________________________________________________
______________________________.
7. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of the holder of the first deed of trust on
the Premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$________.
9. All conditions of the Lease to be performed by Landlord necessary
to the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the Security Deposit held by Landlord is
$_________.
11. No rental has been paid more than thirty (30) days in advance and
no security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Landlord nor have any events occurred that
with the passage of time or the giving of notice, or both, would constitute a
default on the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making of such loan or
acquisition of such property.
14. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
EXHIBIT E
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
Executed at ____________________ on the ____ day of _____________, 19__.
"TENANT": ____________________________________,
a __________________________________
By: _______________________________
Name:__________________________
Title:_________________________
By: _______________________________
Name:__________________________
Title:_________________________
EXHIBIT E
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT F
PEREGRINE SYSTEMS CORPORATE CENTER
CC&R'S
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
KR-CARMEL PARTNERS, LLC
4365 Executive Drive, Suite 850
San Diego, California 92121
Attention: Mr. Steven L. Black
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Space Above For Recorder's Use)
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
EXHIBIT F
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS...........................................................3
ARTICLE 2 MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION...........................6
2.1 Membership.....................................................6
2.2 Voting Rights..................................................6
ARTICLE 3 COVENANT FOR PAYMENT OF ASSESSMENTS TO
ASSOCIATION...........................................................7
3.1 Creation of Lien and Personal Obligation for Assessments.......7
3.2 Purpose of Assessments.........................................7
3.3 Budgets........................................................7
3.4 Parcel Area....................................................8
3.5 Parcels Subject to Assessment; Allocation of Assessments ......8
3.6 Regular Assessments............................................8
3.7 Special Assessments............................................9
3.8 Reimbursement Assessments.....................................10
3.9 Effect of Non-Payment of Assessments; Remedies of
Association...................................................10
3.10 Right of Owner to Audit Books and Records of Association......11
3.11 Subordination of the Lien to First Mortgages..................11
3.12 Estoppel Certificate..........................................11
3.13 Personal Liability of Owner...................................11
ARTICLE 4 ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE ......................11
4.1 Committee Composition.........................................12
4.2 Alternate Members.............................................12
4.3 Appointment...................................................12
4.4 Removal.......................................................12
4.5 Terms of Office...............................................12
4.6 Resignations; Vacancies.......................................12
4.7 Duties and Appeals............................................12
4.8 Meetings......................................................12
4.9 Design Guidelines.............................................12
ARTICLE 5 LAND USE.............................................................13
5.1 Permitted Uses................................................13
5.2 Use Restrictions .............................................13
5.3 Prohibited Operations and Uses ...............................14
-i-
EXHIBIT F
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
5.4 Other Operations and Uses.....................................15
5.5 Laws..........................................................15
ARTICLE 6 REGULATION OF IMPROVEMENTS...........................................16
6.1 Approval of Application Required..............................16
6.2 Filing Fee....................................................16
6.3 Basis for Approval............................................17
6.4 Result of Inaction............................................17
6.5 Proceeding With Work..........................................18
6.6 Completion of Work............................................18
6.7 Estoppel Certificate..........................................18
6.8 Indemnity and Limitation of Liability.........................19
6.9 Limitations on Improvements...................................19
6.10 Certain Improvements Exempt from Application..................21
6.11 Disclosure and Waiver of Conflict of Interest.................21
ARTICLE 7 OPERATIONS GENERALLY.................................................22
7.1 Slope and Drainage Easements..................................22
7.2 Shared Parking; Common Parking Areas..........................22
7.3 Storage and Loading Areas.....................................23
7.4 Inspection....................................................23
7.5 Division of Land..............................................23
7.6 Hazardous Materials...........................................23
7.7 Payment of Taxes, Liens.......................................24
ARTICLE 8 COMMON AREA..........................................................25
8.1 Use...........................................................25
8.2 Modification of Common Area...................................26
8.3 Parking Regulations...........................................26
8.4 Construction and Repair.......................................26
8.5 Interim Improvements and Maintenance of Parcels...............27
8.6 Lighting the Common Area......................................28
ARTICLE 9 EMINENT DOMAIN.......................................................28
ARTICLE 10 MUTUAL RELEASE.......................................................29
ARTICLE 11 EASEMENTS............................................................29
11.1 Grants of Reciprocal Easements over Common Areas..............29
11.2 Utility Easements.............................................30
11.3 Construction and Repair.......................................31
11.4 Obstructions Within Common Area...............................31
11.5 Right of Entry by Declarant, Association, Board...............31
-ii-
EXHIBIT F
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
11.6 Entry by Owners...............................................32
11.7 Reservation by Declarant......................................32
11.8 Termination of Former Declaration and Confirmation of
Termination of 1990 Grant of Easements........................32
ARTICLE 12 BUILDING MAINTENANCE.................................................33
12.1 Owner's Maintenance Obligations...............................33
12.2 Closure.......................................................33
12.3 Repair or Replacement of Damaged Building.....................34
ARTICLE 13 COMMON AREA MAINTENANCE..............................................34
13.1 Association Maintenance.......................................34
13.2 Common Area Insurance.........................................35
13.3 Association's Right to Repair Neglected Parcels...............36
13.4 Property Management Company...................................36
ARTICLE 14 THE ASSOCIATION......................................................36
14.1 Organization..................................................36
14.2 Duties........................................................36
14.3 Powers........................................................37
14.4 Election of New Board of Directors............................38
14.5 Subsequent Board of Directors.................................38
14.6 Personal Liability............................................38
14.7 Annual Membership Meetings....................................38
ARTICLE 15 APPROVAL OF OWNERS AND NOTICES.......................................38
ARTICLE 16 MODIFICATION PROVISION...............................................40
ARTICLE 17 NOT A PUBLIC DEDICATION..............................................40
ARTICLE 18 INJUNCTIVE RELIEF....................................................40
ARTICLE 19 BREACH SHALL NOT PERMIT TERMINATION..................................40
ARTICLE 20 INDEMNITY BY OWNERS..................................................41
20.1 Indemnity.....................................................41
20.2 Building Area Liability Insurance.............................41
ARTICLE 21 SEVERABILITY.........................................................41
ARTICLE 22 ENFORCEMENT AND REMEDIES.............................................41
22.1 Right to Enforce..............................................41
-iii-
EXHIBIT F
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
22.2 Owner's Remedies..............................................42
22.3 Waiver........................................................42
ARTICLE 23 LITIGATION EXPENSES..................................................42
ARTICLE 24 NO ASSIGNMENT OR TRANSFER............................................42
ARTICLE 25 SALE BY OWNER........................................................42
25.1 Notice........................................................42
25.2 Constructive Notice and Acceptance............................43
25.3 Release of Owner..............................................43
25.4 Liability of Transferee.......................................43
ARTICLE 26 TERM OF DECLARATION..................................................43
ARTICLE 27 MISCELLANEOUS........................................................43
27.1 Captions......................................................43
27.2 Gender........................................................44
27.3 Declarant's Reserved Rights...................................44
27.4 Exhibits......................................................44
27.5 Governing Law.................................................44
27.6 Mortgage Protection...........................................44
27.7 Mutuality, Reciprocity; Runs With Land........................44
</TABLE>
EXHIBITS
Exhibit "A" Site Plan of the Center
Exhibit "B" Legal Descriptions of Parcels Comprising the Center
Exhibit "C" Table of Parcel Areas
-iv-
EXHIBIT F
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
This AGREEMENT BETWEEN LANDOWNERS INCLUDING COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANTS OF EASEMENTS FOR CARMEL CENTER AND INCLUDING
TERMINATION OF BOTH FORMER DECLARATION AND PRIOR GRANTS OF EASEMENTS is made as
of _________, 1999, with reference to the following:
RECITALS:
A. Declarant (defined in Article 1) owns those certain Parcels (defined in
Article 1) of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels B and E
through K, inclusive (and sometimes referred to herein as the "Carmel Center
Office Campus"). The legal descriptions of such Parcels are also set forth on
EXHIBIT "B".
B. Piazza Partners, L.P., a California limited partnership, owns that
certain Parcel of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcel A. The
legal description of such Parcel is also set forth on EXHIBIT "B".
C. Carmel Valley, LLC, a California limited liability company, owns those
certain Parcels of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels D and M.
The legal descriptions of such Parcels are also set forth on EXHIBIT "B".
D. Acacia Gasoline and Car Wash of Carmel Valley, LLC, a California limited
liability company, owns that certain Parcel of real property located in the City
of San Diego, County of San Diego, California, identified on EXHIBIT "B"
attached hereto as Parcel L. The legal description of such Parcel is also set
forth on EXHIBIT "B".
E. RFS Financing Partnership, L.P., a Tennessee limited partnership, owns
that certain Parcel of real property located in the City of San Diego, County of
San Diego, California, identified on EXHIBIT "B" attached hereto as Parcel C.
The legal description of such Parcel is also set forth on EXHIBIT "B". A hotel
is currently open for business on Parcel C.
EXHIBIT F
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
F. Previous owners of the properties comprising the Center (defined in
Article 1) intended to develop a retail shopping center and an adjacent
commercial complex, and in furtherance of that objective recorded that certain
Agreement Between Landowners Including Easements With Covenants and Restrictions
Affecting Land for Carmel Valley Commercial, recorded in the Office of the
County Recorder of San Diego County, California, on September 29, 1994, as
Document No. 19940579026 ("FORMER DECLARATION"). Except for the hotel on Parcel
C, in most respects the properties comprising the Center have not been
developed as contemplated under the Former Declaration. The Former Declaration
is not consistent with the manner in which the current Owners intend to develop
the property comprising the undeveloped portions of the Center. Therefore, the
Owners intend to terminate the Former Declaration and to replace the Former
Declaration in its entirety with this Declaration.
G. The Owners intend to develop and operate the Center as a commercial
common interest development described in Section 1351(k) of the California
CIVIL CODE as a "Planned Development". The Center will include certain Common
Area which is shown on the Site Plan attached hereto as Exhibit "A". Portions
of the Common Area are or may be designated as Exclusive Use Areas for the
exclusive use of one or more Occupants. "Common Area" and "Exclusive Use
Area" are defined in Article 1.
H. The Association was formed by certain previous owners of portions of the
property comprising the Center. Substantially concurrently with the recordation
of this Declaration, the membership of the Association will be changed so that
the current Owners of the Parcels become the current members of the Association.
Among other things, the Association will maintain, repair and replace the
portions of the Parcels designated as Common Area, except any Exclusive Use
Areas, and except as otherwise provided in this Declaration. Each Owner or
Occupant will maintain, repair and replace the building(s) and any Exclusive Use
Area(s) on the Owner's or Occupant's Parcel(s).
I. The Owners wish to subject the Center, in accordance with a common plan,
to certain covenants, conditions and restrictions for the benefit of the Owners
and any and all future owners of the Center or of a Parcel in the Center. The
purposes of this Declaration are to ensure proper development and use of the
Center, to protect the Owner of each Parcel against any improper development or
use of surrounding Parcels which might depreciate the value of the Parcel, to
prevent the erection on the Center of structures built of improper design or
materials, to encourage the erection of attractive Improvements, to prevent
haphazard and inharmonious Improvements, to secure and maintain proper setbacks
from streets and adequate free spaces between structures, to provide for
reciprocal parking and reciprocal pedestrian and vehicular access, ingress and
egress upon certain portions of the Center for the benefit of certain of the
Parcels, to enhance and protect the value, desirability and attractiveness of
the entire Center, and in general to provide adequately for a high type and
quality of improvement of the Center in accordance with a uniform plan of
development.
J. The Center is presently comprised of thirteen (13) legal parcels as of
the date of this Declaration, which in this Declaration will be designated and
referred to as Parcel A through Parcel M, inclusive. The Owners intend that the
provisions of this Declaration be restrictive
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
covenants made pursuant to Section 1468 of the California CIVIL CODE, and that
this Declaration will bind and inure to the benefit of the Parcels and the
respective Owners of the Parcels during their respective periods of ownership.
Declarant is processing with the City a new Parcel Map (the "New Parcel Map")
which, upon recordation, shall effect a reparcelization and lot line adjustment
of that portion of the Center owned by Declarant and presently described as Lots
1 through 6 and 9 of Piazza Carmel II, Unit No. 1, of Map No. 13138 into seven
(7) newly configured parcels which will be more particularly described as
Parcels 1 through 7 of the New Parcel Map. Exhibit "B" attached hereto sets
forth the tentative description of these Parcels contained within the New Parcel
Map, and upon recordation of the New Parcel Map, the legal description of the
Parcels contained therein shall supersede those descriptions of their
predecessor Parcels.
NOW, THEREFORE, the Owners hereby certify, declare and establish the
following general plan for the protection and benefit of the Center, and hereby
fix the following protective covenants, conditions and restrictions upon each
and every ownership interest in the Center. Each ownership interest in the
Center shall be hereafter held, used, occupied, leased, sold, encumbered,
conveyed and transferred under and pursuant to such covenants, conditions and
restrictions. Each and all of the covenants, conditions and restrictions set
forth herein are for the purpose of protecting the value and desirability of the
Center and shall bind and inure to the benefit of the Parcels and the respective
Owners of the Parcels during their respective periods of ownership.
ARTICLE 1
DEFINITIONS
In addition to any other terms defined in this Declaration, the following
definitions shall apply unless otherwise indicated:
"APPLICATION" - Any plans, specifications and other documentation required
to be submitted to the Committee pursuant to the provisions of Article 6.
"APPROVED DECLARANT IMPROVEMENTS" - Those Improvements more particularly
described and defined in Section 4.9.
"ARCHITECT" - A Person holding a certificate to practice architecture in
the State of California under authority of Division 3, Chapter 3 of the
BUSINESS & PROFESSIONS CODE of the State of California or any successor
legislation thereto.
"ARTICLES" - The Articles of Incorporation of the Association filed with
the California Secretary of State on September 20, 1994, amended in their
entirety by those Restated Articles of Incorporation of Carmel Center
Association filed with the Secretary of State on ___________, 1999, and as
may be further amended from time to time.
"ASSOCIATION" - Carmel Center Association, a California Nonprofit Mutual
Benefit Corporation.
"BOARD" - The Board of Directors of the Association.
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[Peregrine Systems]
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"BYLAWS" - The Restated Bylaws of the Association dated _____, 1999, as
may be further amended from time to time.
"CARMEL CENTER OFFICE CAMPUS" - Parcels B and E through K, inclusive, which
Declarant intends to improve with multi-story buildings primarily for office use
and the Parking Structure.
"CENTER" - All of the Parcels of real property shown on the Site Plan and
described on EXHIBIT "B".
"CITY" - The City of San Diego, California, a municipal corporation.
"COMMITTEE" - The Architectural and Development Review Committee created
pursuant to Article 4.
"COMMON AREA" - Those portions of the Center shown on Exhibit "A" attached
hereto intended for the common use of Owners and Occupants, and comprised of
parking areas, vehicular and pedestrian access areas and driveways, sidewalks,
Common Landscaping, curbs, loading areas and lighting facilities; EXCEPTING
THEREFROM, HOWEVER, portions of the Common Area which are, or from time to
time may be, designated for the exclusive use of one or more Occupants, and as
such are "Exclusive Use Areas" as defined in this Article 1. The Common Area and
Exclusive Use Areas may be modified from time to time to change the location or
configuration thereof or to reflect the requirements of the City or other
governmental authorities by recordation of a supplement to this Declaration by
Declarant or the Association.
"COMMON EXPENSES" - The actual and estimated expenses of maintaining and
operating the Association, including property management fees, maintaining and
operating the Common Areas and the Improvements located thereon (excluding
Exclusive Use Areas), the cost of utility services for the Common Areas
(excluding Exclusive Use Areas), the cost of insurance maintained by the Board
as described herein or in the Bylaws, exercising the powers and performing the
duties of the Association and the Board under this Declaration, the Articles,
the Bylaws and any rules or regulations adopted by the Association, and
maintaining any reasonable reserves for such purposes as determined by the
Board.
"COMMON LANDSCAPING" - The landscaping and related irrigation system
improvements to be maintained by the Association, the approximate location of
which is shown on Exhibit "A" attached hereto.
"DECLARANT" - KR-CARMEL PARTNERS, LLC, a Delaware limited liability company
("KRCP") and its successor-in-interest (defined below). As used in this
definition, a "SUCCESSOR-IN-INTEREST" of KRCP shall mean a Person which, through
a purchase or acquisition of stock or partnership interest(s), amalgamation,
consolidation, reorganization, dissolution, merger or similar transaction (as
opposed to a purchase, transfer or conveyance of one or more Parcels), becomes
vested with the rights and assumes the obligations of KRCP, as "Declarant",
pursuant to this Declaration. "DECLARANT" shall also mean the transferee from
KRCP or its successor-in-interest of three (3) or more Parcels comprising the
Center, provided KRCP or its
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[Peregrine Systems]
<PAGE>
successor-in-interest assigns to such transferee the rights of "Declarant", and
such transferee assumes the obligations of "Declarant", under this Declaration;
any such assignment and assumption of the rights and obligations of "Declarant"
shall be in writing and signed by both KRCP or its successor-in-interest and by
the transferee in recordable form and shall be recorded by the transferee in the
Office of the County Recorder of San Diego County, California.
"DECLARATION" - This Agreement Between Landowners Including Covenants,
Conditions and Restrictions and Grants of Easements for Carmel Center and
Including Termination of Both Former Declaration and Prior Grants of Easements,
as it may be amended from time to time.
"DESIGN GUIDELINES" - Guidelines, rules and regulations which may be
prepared and issued from time to time (and which may be amended from time to
time) by the Committee, and approved and adopted by the Board for the purpose of
assisting Owners in preparing plans and specifications for Improvements and in
preparing other plans, specifications and other materials (including designs for
signs and the like) which are subject to review by the Committee pursuant to
this Declaration.
"ELIGIBLE OCCUPANT" - An Occupant of an Owner's entire Parcel (or of all of
the usable area within the building(s) on the Parcel): (a) pursuant to a lease
or sublease which, as of the date of the Owner's designation of the Occupant as
an Eligible Occupant, has a remaining term which exceeds five (5) years, not
including periods for which the term thereof may be extended by unexercised
options to extend; and (b) designated as such by the Owner of the Parcel
pursuant to Section 2.1.
"EXCLUSIVE USE AREAS" - Those portions of the Common Area within a Parcel
for the exclusive use of one or more Occupants and either (i) designated as
Exclusive Use Areas on the Site Plan, or (ii) subject to the provisions of
Section 8.2, subsequently designated as Exclusive Use Areas from time to time by
the Board or the Committee in writing.
"IMPROVEMENTS" - Buildings, outbuildings, underground installations, slope
and grade alterations, roads, curbs, gutters, storm drains, utilities,
driveways, parking areas, fences, screening walls and barriers, retaining walls,
stairs, decks, windbreaks, plantings, planted trees and shrubs, sidewalks,
poles, signs, loading areas, docks and all other structures, land development or
landscaping improvements of every type and kind.
"MEMBER" - An Owner entitled to membership in the Association as provided
in this Declaration.
"MORTGAGE" - A deed of trust as well as a mortgage encumbering a Parcel.
"MORTGAGEE" - The beneficiary of a deed of trust as well as the mortgagee
of a mortgage encumbering a Parcel.
"OCCUPANT" - Any Person from time to time entitled by right of ownership or
under any lease, sublease or license to use and occupy any portion of the
building Improvements on any Parcel within the Center.
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[Peregrine Systems]
<PAGE>
"OWNER" - Any Person (including Declarant) who from time to time holds fee
title to any Parcel within the Center.
"PARCEL" - Any separate legal lot or parcel which is a portion of the
Center. Any lot or parcel of real property created after this Declaration is
recorded, whether created by a legal split, subdivision or parcelization of a
Parcel, lot line adjustment, or by combination or merger of one or more Parcels,
shall be included in the definition of Parcel for purposes of this Declaration.
"PARCEL AREA" - The total gross square footage of a Parcel as shown on
EXHIBIT "C".
"PARKING STRUCTURE" - The multi-level parking garage to be constructed by
Declarant, at Declarant's cost and expense, on Parcels E, F and G (Parcels 1, 6,
and 7 of the New Parcel Map). The Parking Structure and the parking spaces
within the Parking Structure are not Common Area and are for the exclusive use
and benefit of the Owners and Occupants of the Carmel Center Office Campus and
their customers, guests and invitees.
"PERSON" - An individual, partnership, association, corporation, limited
liability company, trust, governmental agency, administrative tribunal or any
other form of business or legal entity.
"PROJECT DOCUMENTS" - This Declaration, the exhibits attached hereto, the
Articles and Bylaws, the Sign Plan, and any Design Guidelines and rules and
regulations as may be adopted from time to time by the Board or the Association,
all as amended or supplemented from time to time.
"SIGN PLAN" - The Carmel Center Sign Guidelines and Criteria, dated
February 24, 1999, on file with the Association, as may be amended and
supplemented from time to time.
"SITE PLAN" - The Site Plan attached to this Declaration as EXHIBIT "A".
ARTICLE 2
MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION
2.1 MEMBERSHIP. Every Owner of a Parcel which is subject to assessment by
the Association shall be a Member of the Association. Membership shall be
appurtenant to ownership of any Parcel subject to assessment, and membership
shall not be separated from such ownership or transferred, pledged or alienated
in any way, except that an Owner, upon giving written notice to the Association,
may, at its option, grant to an Eligible Occupant a power coupled with an
interest to act as the Owner's agent in all matters relating to the Association;
any such power shall automatically terminate upon expiration of the Eligible
Occupant's lease or the earlier termination of the Eligible Occupant's tenancy
for any reason. Any attempt to transfer a membership in violation of this
Section shall be void and shall not be reflected in the books and records of the
Association.
2.2 VOTING RIGHTS. The Association shall have one (1) class of voting
membership.
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[Peregrine Systems]
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Each Owner shall be entitled to one (1) vote for each four hundred (400)
square feet of Parcel Area owned which is subject to assessment, rounded down to
the next lowest whole four hundred (400) square feet of Parcel Area subject to
assessment; PROVIDED, HOWEVER, any Owner of a Parcel comprised of less than four
hundred (400) square feet of Parcel Area subject to assessment shall be entitled
to one (1) vote for such Parcel. (For example and illustration only, the Owner
of a Parcel comprised of 16,000 square feet of Parcel Area subject to assessment
would be entitled to 40 votes, and the Owner of a Parcel comprised of 15,950
square feet of Parcel Area subject to assessment would be entitled to 39 votes.)
When more than one (1) Person holds an ownership interest in any Parcel subject
to assessment, all such Persons shall be Members, the vote(s) for such Parcel
shall be exercised as they among themselves determine, and the authorized voter
shall be designated in a writing delivered to the Association signed by a
majority of the co-Owners.
ARTICLE 3
COVENANT FOR PAYMENT OF ASSESSMENTS TO ASSOCIATION
3.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Each Owner,
for each Parcel owned which is subject to assessment hereunder, hereby covenants
and agrees to pay to the Association: (a) annual Regular Assessments described
in Section 3.6 for the periodic maintenance, repair and replacement of the
Common Area (except any Exclusive Use Areas); (b) Special Assessments described
in Section 3.7; (c) Reimbursement Assessments described in Section 3.8; and (d)
such other assessments which the Board is authorized to levy pursuant to this
Declaration or the Bylaws, such assessments to be established and collected as
provided in this Declaration. Assessments, together with interest pursuant to
Section 3.9, reasonable collection costs and attorney's fees, shall (except as
otherwise provided in Section 3.8) be a charge on the Parcel and shall be a
continuing lien upon the Parcel against which each such assessment is made, the
lien to be effective upon recordation of a notice of delinquent assessment. Each
such assessment, together with interest pursuant to Section 3.9, reasonable
collection costs and attorney's fees, shall also be the personal obligation of
the Person who was the Owner of such Parcel at the time the assessment fell due.
If more than one Person is the Owner of a Parcel subject to assessment, the
personal obligation to pay such assessment shall be joint and several. The
personal obligation for delinquent assessments shall not pass to an Owner's
successors in title, however, unless expressly assumed by them, but any lien
established hereunder shall remain a charge against the Parcel except to
bonafide purchasers or encumbrancers for value without notice and further except
as set forth in Section 3.11.
3.2 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall
be used exclusively to pay the Common Expenses (as defined in Article 1),
reimburse the Association for the costs incurred in bringing an Owner into
compliance with the Project Documents and only such other purposes expressly set
forth in this Declaration.
3.3 BUDGETS. At least thirty (30) days prior to the date for commencement
of Regular Assessments pursuant to Section 3.6, and at least thirty (30) days
prior to each calendar year thereafter, the Board shall prepare or cause to be
prepared and distribute to all Members of the
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[Peregrine Systems]
<PAGE>
Association a pro forma operating budget ("Budget") for such first or successive
calendar year setting forth the estimated revenue and expenses on an accrual
basis. The Budget shall include a reasonable allowance for contingencies,
replacements and reserves. The Association shall deliver, together with the
Budget: (a) notice of the Members' right to obtain copies of minutes of Board
meetings, to the extent required under California Civil Code Section 1363; and
(b) the summary of the provisions of California Civil Code Section 1354, as
required by such Section.
3.4 PARCEL AREA. The Parcel Area of each Parcel subject to assessment as of
the date of recordation of this Declaration is indicated on EXHIBIT C. The
Parcel Area of one or more Parcels shall be redetermined and shall be subject to
the approval of Declarant and the Board in the event of: (a) resubdivision of
any Parcel or a merger affecting two or more Parcels, in which event the Parcel
Area shall be redetermined for each resulting Parcel; (b) a lot line or boundary
adjustment affecting two or more Parcels; or (c) any other change in the gross
square footage of any Parcel. The Board shall maintain a current schedule of the
Parcel Area of the Parcels, which shall be available for inspection by any Owner
upon request. From time to time, as deemed appropriate by the Board, Declarant
or the Board shall have the right to execute and record a supplement to this
Declaration, which includes the modified Parcel Areas in an updated EXHIBIT C.
Such supplement need only be executed by the Board and the EXHIBIT C
incorporated in such supplement shall replace the EXHIBIT C hereto or in any
previously recorded supplement.
3.5 PARCELS SUBJECT TO ASSESSMENT; ALLOCATION OF ASSESSMENTS. Except as
provided below, all Parcels within the Center are subject to Regular Assessments
and to Special Assessments. All assessments (except for Reimbursement
Assessments described in Section 3.8) shall be allocated among the Owners in the
proportion the Parcel Area of each Owner's Parcel or Parcels subject to
assessment bears to the total Parcel Area of all Parcels then subject to
assessment under this Declaration. The Parking Structure Parcels shall not be
subject to any assessments levied by the Association or otherwise under this
Declaration. Parcels L and M shall not be assessed for any expenses of
maintenance and repair of the Common Parking Area.
3.6 REGULAR ASSESSMENTS.
(a) PURPOSE. Regular Assessments shall be used to defray the
Common Expenses.
(b) DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES. The
Regular Assessments shall commence for Parcel C upon recordation of this
Declaration. The Regular Assessments shall commence for each Parcel other than
Parcel C on the date on which construction of any building Improvements on the
Parcel have been substantially completed, and the Regular Assessments for all
Parcels then subject to assessment shall be recalculated, on a going forward
basis, as Parcels are added to the assessment roll. The first Regular Assessment
for a Parcel shall be adjusted according to the number of months and any
partial month (prorated on the basis of a 30-day month) remaining in the
calendar year. The Board shall fix the amount of the Regular Assessment against
each Parcel at least thirty (30) days in advance of each Regular Assessment
period. Written notice of the Regular Assessment shall be sent to every Owner of
a Parcel subject thereto.
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[Peregrine Systems]
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(c) REVISED REGULAR ASSESSMENT. If the Board reasonably
determines that the Regular Assessment established for any year is, or will
become, insufficient to meet all Common Expenses, it may determine the
approximate amount of such deficiency and revise the amount of the Regular
Assessments for each Owner for the balance of such year to reduce or avoid the
deficiency. After the end of each calendar year, the Board shall cause an
accounting to be made of all Common Expenses for such year and the amount of
Regular Assessments paid for such year. If the Regular Assessments collected
exceed the Common Expenses, the Board may refund the excess to Owners, or apply
such excess toward Regular Assessments next becoming due from Owners, in either
event in the same proportion as the Regular Assessments were paid.
(d) PAYMENT OF ASSESSMENTS. Regular Assessments shall be due and
payable by the Owners to the Association in advance in four (4) equal quarterly
installments, on or before the first (1st) day of January, April, July and
October of each calendar year, or in such other manner as the Board shall
designate.
3.7 SPECIAL ASSESSMENTS.
(a) PURPOSE. Special Assessments may be levied by the Board:
(i) If the Board determines that the Regular Assessments
are or will be insufficient to defray actual Common Expenses of the
Association for a given year due to unanticipated delinquencies or cost
increases or unexpected repairs, replacements or reconstruction of any
Improvements in those Common Areas maintained by the Association;
(ii) If funds are otherwise required for any authorized
activity of the Association; or
(iii) For the purpose of defraying, in whole or in part, the
cost of construction of any capital improvements within the Common Area
(excluding Exclusive Use Areas) deemed reasonably necessary by the Board
for the benefit of the Center, provided that any such capital improvement
assessment in excess of five percent (5%) of all Regular Assessments
budgeted for that calendar year shall require approval by the vote or
written consent of Members holding a majority of the voting power of the
Association Members, and the Declarant for so long as Declarant owns any
portion of the Center.
(b) ESTABLISHMENT. The Board shall determine the approximate
amount necessary to defray the expenses set forth in Section 3.7(a), and, if the
amount is approved by the Board, it shall become a Special Assessment; provided,
however, that the Board may, in its discretion, prorate such Special Assessment
over the remaining months of the calendar year or levy the full assessment
immediately against each Parcel subject to assessment. Any Special Assessment in
excess of ten percent (10%) of the budgeted Common Expenses of the Association
for the calendar year in which a Special Assessment is levied shall require
approval by Members holding a majority of the voting power of the Association
Members, and the Declarant for so long as Declarant owns any portion of the
Center.
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[Peregrine Systems]
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(c) PAYMENT OF ASSESSMENTS. Special Assessments shall be due and
payable within thirty (30) days after a Member receives written notice from the
Board specifying the amount of the Special Assessment, unless the Board
specifies in such notice a later date for payment.
3.8 REIMBURSEMENT ASSESSMENTS. The Association may also impose a
Reimbursement Assessment against any Owner to reimburse the Association for
costs incurred in bringing the Owner and the Owner's Parcel into compliance with
the provisions of this Declaration, the Articles, the Bylaws and the rules and
regulations of the Association, which assessment may be imposed upon the vote of
the Board after notice and an opportunity for a hearing which satisfy the
requirements of Section 7341 of the California CORPORATIONS CODE, as set forth
in the Bylaws; PROVIDED, HOWEVER, except to the extent such Reimbursement
Assessment is to reimburse the Association for the cost of (i) repairing damage
to Common Areas for which the Owner or its Occupants, guests or invitees are
responsible, or (ii) collecting assessments, any Reimbursement Assessment shall
not constitute a lien on the Owner's Parcel.
3.9 EFFECT OF NON-PAYMENT OF ASSESSMENTS; REMEDIES OF ASSOCIATION. Any
assessment made in accordance with this Declaration shall be a debt of the Owner
of a Parcel from the time the assessment is due. Any assessment not paid within
thirty (30) days after the due date shall bear interest from thirty (30) days
following the due date at the rate of the greater of (a) twelve percent (12%)
per annum, or (b) two percent (2%) per annum over the Prime Rate published in
the California Edition of the Wall Street Journal most recently before the due
date. The Association may bring an action at law against the Owner personally
obligated to pay the assessment, and in addition thereto, or in lieu thereof,
may foreclose the lien against the Parcel. Any assessment not paid within
fifteen (15) days after the due date shall be delinquent. Except as otherwise
provided in Section 3.8, the amount of any such delinquent assessment plus costs
of collection, late charges, penalties, interest and attorneys' fees, shall be
and become a lien upon the Parcel when the Association causes to be recorded in
the Office of the County Recorder of San Diego County, California, a Notice of
Delinquent Assessment, which shall state the amount of such delinquent
assessment and such other charges thereon as may be authorized by this
Declaration, a description of the Parcel against which the same has been
assessed, the name of the record owner of the Parcel and, in order for the lien
to be foreclosed by non-judicial foreclosure, the name and address of the
trustee authorized by the Association to enforce the lien by sale. The Notice of
Delinquent Assessment shall be signed by the person designated by the
Association for that purpose or, if no one is designated, by the President of
the Association. Upon payment of the delinquent assessment and charges in
connection with which the Notice of Delinquent Assessment has been recorded, or
other satisfaction thereof, the Association shall cause to be recorded a further
notice stating the satisfaction and the release of the lien thereof. Such lien
may be enforced by sale by the Association after failure of the Owner to pay
such assessment in accordance with its terms, such sale to be conducted in
accordance with the provisions of Section 2924, Section 2924b and Section 2924c
of the California CIVIL CODE applicable to the exercise of powers of sale in
mortgages or in any other manner permitted by law. The Association shall have
the power to purchase the Parcel at the foreclosure sale and to hold, lease,
mortgage and convey the same. Suit to recover a money judgment for unpaid
assessments, interest and attorney's fees may be commenced and maintained
without foreclosing or waiving the lien
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[Peregrine Systems]
<PAGE>
securing the same. Any sale or transfer of any Parcel pursuant to this Section
3.9 shall not disturb the possession, or otherwise diminish the rights or
enlarge the obligations, of any Occupant under any then-existing lease.
3.10 RIGHT OF OWNER TO AUDIT BOOKS AND RECORDS OF ASSOCIATION. Each year,
each Owner shall have the right, exercisable by delivering ten (10) days advance
written notice to the Chief Financial Officer of the Association, to have
conducted, at such Owner's cost and expense, one (1) audit of the books and
records of the Association. Any such audit may encompass any or all of the three
(3) previous years of the operation of the Association; provided, however, any
Owner shall be entitled to audit any given year only once. If any such audit
discloses any error in the determination of the proportionate share of Regular
Assessments of any Owner or in the composition of any cost comprising the
Regular Assessments: (a) an appropriate adjustment shall be made promptly
between the Owner(s) and the Association to correct the error; and (b) if the
error is greater than ten percent (10%) of the auditing Owner's actual
proportionate share of the Regular Assessments, then the Association shall
reimburse the auditing Owner for the reasonable auditor's fees and costs
incurred by the auditing Owner in having the audit performed.
3.11 SUBORDINATION OF THE LIEN TO FIRST MORTGAGES. The lien of any
assessment levied upon a Parcel pursuant to this Declaration shall be
subordinate to the lien of any first Mortgage upon such Parcel, and the sale or
transfer of such Parcel pursuant to judicial or nonjudicial foreclosure of a
first Mortgage shall extinguish the lien of such assessments as to payments
which became due prior to such sale or transfer. No sale or transfer shall
relieve such Parcel from lien rights for any assessments thereafter becoming
due. Where the Mortgagee of a first Mortgage or other purchaser of a Parcel
obtains title to the same as a result of foreclosure, such acquirer of title,
its successors and assigns, shall not be liable for the share of assessments
chargeable to such Parcel which became due prior to the acquisition of title to
such Parcel by such acquirer.
3.12 ESTOPPEL CERTIFICATE. The Association shall furnish or cause an
appropriate officer to furnish, within ten (10) days of a written demand by any
person, a certificate signed by an officer of the Association setting forth
whether the assessments on a specified Parcel have been paid. A properly signed
certificate of the Association with respect to the status of assessments on a
Parcel is binding upon the Association as of the date of its issuance.
3.13 PERSONAL LIABILITY OF OWNER. No Owner may exempt itself from personal
liability for assessments, nor any part thereof, levied by the Association, nor
release the Parcel it owns from the liens and charges of assessments pursuant to
this Declaration, by waiving the use and enjoyment of the Common Area and
facilities thereof, or by abandonment of its Parcel(s).
ARTICLE 4
ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE
Declarant hereby creates an architectural and development review Committee,
which shall be organized as follows:
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[Peregrine Systems]
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4.1 COMMITTEE COMPOSITION. The Committee shall consist of three (3)
individuals, at least one (1) of which shall not be an employee, contractor or
other affiliate of Declarant.
4.2 ALTERNATE MEMBERS. There shall also be two (2) alternate members,
either of whom may be designated by the Committee to act as a substitute for any
member of the Committee in the event of the member's unavailability or
disability.
4.3 APPOINTMENT. The Board shall have the right to appoint all members and
alternate members of the Committee.
4.4 REMOVAL. The right to remove any member or alternate member of the
Committee shall be and is hereby vested solely in the Board.
4.5 TERMS OF OFFICE. The term of all Committee members appointed shall be
one (1) year. Any new member appointed to replace a member who has resigned or
has been removed shall serve such member's unexpired term. Members whose terms
have expired may be reappointed.
4.6 RESIGNATIONS; VACANCIES. Any member of the Committee may, at any time,
resign from the Committee upon written notice to the Board.
4.7 DUTIES AND APPEALS. It shall be the duty of the Committee to perform
the functions required of it pursuant to this Declaration; to consider and
act upon each Application which is submitted to it pursuant to the terms of
this Declaration; to enforce the Design Guidelines if any are adopted; and to
perform all other duties delegated to it by the Board or imposed upon it by
this Declaration. Any Owner may appeal any decision of the Committee to the
Board.
4.8 MEETINGS. The Committee shall meet as often as it, in its sole,
absolute and unfettered discretion, considers necessary or proper to perform
properly its duties and obligations pursuant to this Declaration. The vote,
written consent or written approval of any two (2) members shall constitute an
act by the Committee, unless the unanimous decision of its members is otherwise
required pursuant to this Declaration. The Committee shall keep written records
of all actions the Committee takes.
4.9 DESIGN GUIDELINES. The Committee may, from time to time, and in its
sole, absolute and unfettered discretion, adopt Design Guidelines and amend
the Sign Plan and any Design Guidelines adopted by the Committee, provided,
however, that no such amendment shall apply to any previously approved (or
deemed approved) Improvement within the Center. The Design Guidelines may
include (a) standards and procedures for Committee review; and (b) guidelines
for Improvements, which may include, but not necessarily be limited to,
guidelines for the architectural design of Improvements, site plans, floor
plans and exterior elevations, the size and location of buildings (including
setback requirements), the height of buildings (including architectural
features), the location and pitch of slopes, requirements for grading,
excavation and drainage, the location and capacity of facilities for
utilities, parking areas, loading areas and docks, trash areas (including
compactor pads), Exclusive Use Areas, landscaping designs and
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irrigation plans, color schemes, signs, exterior lighting, and finishes and
materials for use in the Center. Notwithstanding the foregoing, and
notwithstanding anything in the Design Guidelines to the contrary (or which may
be interpreted as being to the contrary), the following are exempt from the
Design Guidelines: (i) Improvements existing or under construction on the date
of this Declaration; and (ii) Improvements for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration including, without limitation, the five office buildings and the
Parking Structure comprising the Carmel Center Office Campus and related
Improvements (herein the "Approved Declarant Improvements") approved by the City
for construction upon Parcel B and Parcels E, F, G, H, I, J and K pursuant to
Carmel Valley Planned District and Coastal Development Permit No. 98-0227
(Amendment to Carmel Valley Planned District, Coastal Development and
Conditional Use Permit No. 93-0451) for Kilroy Carmel Center (the "KILROY CARMEL
CENTER PERMIT").
4.10 EXERCISE OF RIGHTS. Exercise of the Board's right of appointment and
removal, as set forth in this Declaration, shall be evidenced by the Board's
recording among the Committee's regular records a declaration identifying each
new Committee member appointed and each member replaced or removed from the
Committee.
ARTICLE 5
LAND USE
5.1 PERMITTED USES. The following Parcels and the Improvements constructed
or to be constructed thereon may be used for those purposes set forth below
provided such uses comply with all Laws as defined in Section 5.5 in effect as
of the date of this Declaration and the provisions of this Declaration and the
other Project Documents:
(a) With respect to Parcels B and Parcels E through K, inclusive,
those uses set forth in the Kilroy Carmel Center Permit.
(b) With respect to Parcel C, hotel and other related uses as set
forth in North City West Planned District Development Plan Permit No. 88-0941
("PERMIT NO. 88-0941").
(c) With respect to Parcel A, restaurant use pursuant to Permit No.
88-0941.
(d) With respect to Parcel L, those uses set forth in that certain
Carmel Valley Planned District Development/Conditional Use/Coastal Development
Permit Amendment No. 96-7784 issued to Acacia Gasoline and Car Wash of Carmel
Valley, LLC (the "PARCEL L PERMIT")
5.2 USE RESTRICTIONS. Except as otherwise consented to in writing by the
Declarant (or the Board, after there is no longer a Declarant), which may be
withheld in its sole, absolute and unfettered discretion:
(a) There shall be no children's play areas or day care facilities in
the Center, except that (i) a play area may be located and operated on
Parcel M in connection with any fast-food restaurant located and operated
thereon; (ii) the hotel on Parcel C may
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contain related recreational facilities; and (iii) a day care center and
related play areas may be located within the Carmel Center Office Campus.
(b) There shall be no tavern, night club or bar in the Center, except
that a bar may be located in a restaurant or a hotel.
(c) Neither Parcels B nor D may be used for a fast food or
drive-through restaurant.
(d) No portion of the Center or any Improvements constructed thereon
may be put to any use which is not allowed pursuant to the Laws applicable
to the Center and in effect as of the date of this Declaration.
To be effective, any written consent of Declarant for the purpose of this
Section 5.2 must be (i) signed by Declarant in recordable form; and (ii)
recorded in the Office of the County Recorder of San Diego County. After there
is no longer a Declarant, to be effective, any written consent of the Board for
the purpose of this Section must be (A) evidenced by a duly adopted resolution
of the Board, certified as such in writing by the Secretary or an Assistant
Secretary of the Association in recordable form; and (B) recorded in the Office
of the County Recorder of San Diego County.
5.3 PROHIBITED OPERATIONS AND USES. No use or operation will be made,
conducted or permitted on or with respect to all or any part of any Parcel or
Improvement which is obnoxious to, or out of harmony with the development or
operation of the business conducted on any other Parcel or on other sites in the
general vicinity of the Center. Included among the uses or operations which are
prohibited because of their obvious detrimental effect on the general appearance
of the Parcels and their conflict with the reasonable standards of appearance
and maintenance required by Declarant and the Board, are uses or operations
which produce, or are accompanied by, the following characteristics:
(a) Any public or private nuisance;
(b) Any use which, in the Board's sole and absolute discretion, is
considered to be objectionable as an intrusion into the environment of
sound, odor, visual effect or physical impact or that will disturb or tend
to disturb the other Owners or Occupants or their customers or invitees in
the Center;
(c) Any use that produces intense glare or heat, unless such use is
performed only within an enclosed or screened area in a manner such that
the glare or heat emitted will not be discernible from any property line of
the Parcel;
(d) Any use or operation that results in a discharge or release of
Hazardous Materials (defined in Section 7.7) on or under the surface of a
Parcel or into the surface or ground water of the Center, unless such
discharge or release is in compliance with all applicable Laws relating to
Hazardous Materials;
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(e) Any use or operation that results in air omissions of pollutants
or contaminants unless such emissions are in compliance with all applicable
laws relating to Hazardous Materials;
(f) Any emission of odorous, noxious, caustic or corrosive matter or
gas, whether toxic or non-toxic;
(g) Any unusual litter, dust, dirt or debris, except as generated
during construction of Improvements;
(h) Any unusual firing, explosion or other damaging or dangerous
hazard, including, but not limited to, storage, display or sale of
explosives or fireworks;
(i) Any mobile home or trailer court, labor camp, junk yard, stock
yard, distillation of bones, or raising, storing, slaughtering or disposing
of animals of any kind;
(j) Any drilling for, excavation, refining and/or removal of earth
materials, oil, gas, hydrocarbon substance, water, geothermal steam or any
other subsurface substance of any nature whatsoever, except as part of
normal grading operations in connection with construction of
approved Improvements;
(k) Any dumping, disposal, incineration or reduction of garbage or
reuse of the same, other than handling or reducing such garbage in a
reasonably clean and sanitary manner;
(l) Any auction, public sale (except as may be conducted inside the
hotel Improvements located on Parcel C by clients or patrons of the hotel)
or other auction house operation;
(m) Any display or sale of merchandise or any storage or placement of
merchandise, portable signs or other objects belonging to an Owner or
Occupant of the Center outside the defined exterior walls, roof and
permanent doorways of any building.
(n) Any commercial excavation of building or construction materials;
and
(o) Any smelting of iron, tin, zinc or other metals or ores.
5.4 OTHER OPERATIONS AND USES. Operations and uses which are neither
specifically prohibited nor specifically authorized by this Declaration may
be permitted in a specific case if an Application containing operational
plans and specifications are submitted to and approved in writing by the
Committee. Approval or disapproval of and compatibility with such operational
plans and specifications shall be based upon the effect of such proposal
operations or uses on the balance of the Center and the Owners and Occupants
thereof, but shall be in the sole discretion of the Committee.
5.5 LAWS. As used herein, "Laws" means, collectively, all laws, statutes,
ordinances, rules, regulations, requirements, permits, approvals, or
certificates of occupancy promulgated by
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any federal, state or local governmental entity with jurisdiction over the
Center or any business, use or operation thereon. No Owner or Occupant shall
permit any activity, use or operation on any portion of the Center in violation
of any Law. Each Owner and Occupant shall, upon written notice from Declarant,
or the Board, discontinue any use which is finally determined by any
governmental entity having such jurisdiction to be a violation of any Law. Each
Owner and Occupant shall, immediately upon receipt from any governmental entity
of an alleged violation of any Law, provide a copy of such allegation to the
Board, notwithstanding such party's belief that meritorious defenses to such
allegations exist.
ARTICLE 6
REGULATION OF IMPROVEMENTS
6.1 APPROVAL OF APPLICATION REQUIRED. Subject to Section 6.10, no
Improvement shall be constructed, reconstructed, rebuilt, erected, placed,
altered, used, maintained or permitted to remain in the Center (i) unless the
Improvement and intended use thereof conforms with all applicable Laws; and (ii)
until plans, specifications and other documentation required by the Committee
(or as otherwise specified in any Design Guidelines adopted by the Committee)
for the Improvement and the intended use thereof ("APPLICATION") have been
submitted to and approved in writing by the Committee. Each Application,
including all exhibits and supporting materials and documentation, must be
submitted in duplicate. Such Applications shall be in such form and shall
contain such information as may be required by the Committee, but shall in any
event include the following:
(a) A site development plan of the Parcel showing the nature, grading
scheme, kind, shape, composition, and location of all structures with respect to
the particular Parcel (including proposed front, rear and side setback lines),
and with respect to structures on adjoining Parcels, and the number and location
of all parking spaces and driveways on the Parcel;
(b) A landscaping plan for the particular Parcel;
(c) A plan for the location of signs and lighting; and
(d) A building elevation plan showing dimensions, materials and
exterior color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit.
Material changes to previously approved plans must be similarly
submitted to and approved by the Committee.
6.2 FILING FEE. As a means of defraying its costs and expenses, the
Committee may institute and require that a reasonable filing and review fee
("REVIEW FEE") accompany an Application. The initial schedule of Review Fees is
set forth in the following schedule:
(a) If an Application is prepared by an Architect, the Review Fee
shall be Two Hundred Fifty Dollars ($250) per building per Parcel.
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(b) In all other cases, the Review Fee shall be Five Hundred Dollars
($500) per building per Parcel.
(c) If an Application is resubmitted, the Committee may require an
additional Review Fee in an amount not to exceed One Hundred Dollars ($100)
for each resubmission.
(d) The schedule of Review Fees may be modified from time to time by
the Committee to reflect increased costs and expenses or changed
circumstances, such as, but not limited to, inflation.
6.3 BASIS FOR APPROVAL. The Committee shall have the right to disapprove an
Application submitted to it in the event any part of the Application: (a) is not
in accordance with this Declaration, the Sign Plan and any Design Guidelines or
other requirements adopted by the Committee; or (b) is incomplete; or (c) is not
in compliance with the applicable governmental approvals and regulations for the
Center; or (d) is deemed by the Committee to be contrary to the best interests
of the Center or the Owners; or (e) any combination of the foregoing. The
Committee shall not unreasonably withhold its approval of an Application
submitted to it, but may condition its approval on the satisfaction of one or
more conditions set forth in writing. In this regard, the Committee may base its
approval or disapproval on criteria which may include, but are not limited to,
the following: (i) the adequacy of the building locations and dimensions on the
Parcel; (ii) the adequacy of the parking to be provided; (iii) conformity and
harmony of external design with neighboring structures; (iv) effect of location
and proposed use of proposed Improvements on neighboring Parcels and the types
of operations and uses thereof; (v) relation of topography, grade and finish
ground elevation of the Parcel being improved to that of neighboring Parcels;
(vi) proper facing of main elevation with respect to nearby streets and other
buildings; (vii) adequacy of screening trash facilities and mechanical, air
conditioning or other rooftop installations; (viii) adequacy of landscaping; and
(ix) conformity of the Application to the purpose and general plan and intent of
this Declaration. No Application shall be approved which does not provide for
the underground installation of all utility services. The Committee may
condition its approval of an Application on such changes therein as it deems
appropriate such as, and without limitation, the approval of such Improvements
by a holder of an easement which may be impaired thereby or upon approval of any
such Improvements by the appropriate governmental entity. Any Committee approval
conditioned upon the approval by a governmental entity shall not imply the
Association is enforcing any government codes or regulations, nor shall the
failure to make such conditional approval imply that any such governmental
entity approval is not required.
6.4 RESULT OF INACTION. The Committee shall approve or disapprove an
Application within thirty (30) days after receipt of a complete Application
and the Review Fee. If the Committee fails either to approve or disapprove an
Application within such thirty-day (30-day) period, then it shall be
conclusively presumed that the Committee has disapproved the Application,
unless the applicant has delivered to the Committee, within fifteen (15) days
after the expiration of the thirty-day (30-day) period, a notice in writing
setting forth a date of initial submittal of the complete Application to the
Committee and the fact that no approval or
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disapproval has been given as of the date of such notice. If the Committee
thereafter fails to either approve or disapprove the Application on or before
the fifteenth (15th) day after the Committee's receipt of such notice, the
provisions of this Declaration requiring approval of such Application shall be
deemed to have been waived by the Committee with respect to such Improvements;
provided, however, that such waiver shall not be deemed to be a waiver of any
other covenant, condition or restriction provided herein. One (1) set of the
Application shall, with the approval or disapproval of the Committee endorsed
thereon, be returned to the Owner submitting it, and the other set shall be
retained by the Committee for its permanent files. In the case of a conditional
approval of an Application, the written conditions shall accompany the
Committee's written conditional approval.
6.5 PROCEEDING WITH WORK. Upon the Committee's approval of an Application
pursuant to this Article 6, the Owner to whom the approval is granted and
delivered, shall, as soon as practicable, satisfy all conditions thereof (if
any) and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations, excavations and landscaping so that no
Improvement remains in a partly-finished condition any longer than reasonably
necessary for completion thereof. In addition, each Owner shall cause all work
to be as nondisruptive as practicable to the Center and the guests, invitees,
tenants, employees and Owners who use the Center. Each Owner shall disrupt
traffic flow and parking as little as possible during construction and shall
clean up daily any construction debris to the extent reasonably practicable. In
all cases, work shall be commenced within one (1) year following the date of
such approval. If work is not commenced within one (1) year following the date
of such approval, then the approval given pursuant to this Article 6 shall be
deemed revoked; PROVIDED, HOWEVER, upon written request made prior to the
expiration of said one (1) year period, the Committee may, in its sole, absolute
and unfettered discretion, extend the time for commencing work.
6.6 COMPLETION OF WORK. Construction, refinishing, alteration or excavation
of any Improvements previously approved under this Article 6 shall be completed
within two (2) years following the commencement thereof, except for so long as
such completion is rendered impossible or would result in hardship due to action
of the elements, fire or other casualty, war, riot, labor dispute, inability to
procure or general shortage of labor or material in the normal channels of
trade, delay in transportation, delay in inspections, governmental action or
inaction or moratorium or any other cause beyond the reasonable control of the
Owner so obligated, whether similar or dissimilar to the foregoing, financial
inability excepted. Failure to comply with this Section 6.6 shall constitute a
breach of this Declaration and subject the defaulting Owner or Owners to all
enforcement procedures set forth in this Declaration or any other remedies
provided by law or in equity. Upon completion of construction of any
Improvement, one complete set of as-built plans shall be submitted to and
maintained by the Committee.
6.7 ESTOPPEL CERTIFICATE. The Committee shall deliver to any Owner an
estoppel certificate within thirty (30) days following receipt of a written
request therefor. If the Committee does not have an as-built survey of the
Owner's Parcel in its files, then any such request shall be accompanied by an
ALTA map of survey or a certified as-built survey of the Owner's Parcel. The
estoppel certificate shall certify that as of the date of the certificate either
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(a) all Improvements made or work done on or within the Owner's Parcel
comply with this Declaration; or (b) such Improvements or work do not
so comply, in which event the certificate shall identify the
non-complying Improvements and shall set forth the cause or causes for
such noncompliance. Any existing or prospective Owner, Occupant or
Mortgagee in good faith for value shall be entitled to rely on the
certificate with respect to the matters set forth therein, such matters
being conclusive as between the Committee and all such subsequent
parties in interest.
6.8 INDEMNITY AND LIMITATION OF LIABILITY. Neither Declarant, the
Association, the Board nor the Committee, nor any member of the Board or the
Committee, nor any agents, employees or contractors of Declarant, the
Association, the Members, Occupants, the Board or the Committee (individually or
collectively, "INDEMNITEE") shall be liable for any liability, damage, loss,
cost, expense or prejudice suffered, incurred or claimed by any Owner, Occupant
or other person (an "Applicant") who submits an Application, or by any other
Person (including any other Owner or Occupant); and each Applicant who submits
an Application shall forever hold each and every Indemnitee harmless from and
against any liability, damage, loss, cost, expense or prejudice suffered,
incurred or claimed by such Applicant, and shall forever indemnify, defend,
protect and hold each Indemnitee harmless for any liability, damage, loss, cost,
expense or prejudice suffered, incurred or claimed by any other Person
(including any other Owner or Occupant), arising from, our of or in connection
with (a) any defects in any plans, drawings, specifications or other
documentation submitted in any Application, revised or approved in accordance
with this Declaration, or for any structural or other defects in any work done
according to such plans, drawings, specifications or other documentation; (b)
the approval or disapproval of any Application, whether or not defective; (c)
the construction or performance of any work, whether or not constructed or
performed pursuant to an approved Application; (d) the development of any Parcel
within the Center; (e) the execution and filing of an estoppel certificate
pursuant to Section 6.7, whether or not the facts therein are correct, provided
that the Committee has acted in good faith in issuing such estoppel certificate
on the basis of such information as may be possessed by it; or (f) any
combination of the foregoing.
6.9 LIMITATIONS ON IMPROVEMENTS. All limitations contained in this
Declaration supplement the controls established by applicable zoning, land
use-related entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules and
regulations; and of the foregoing, the more restrictive shall apply. Each Owner
and Occupant is responsible for identifying and conforming with all Laws.
(a) SETBACK LINES. Buildings, structures of any kind (or any part
thereof), Exclusive Use Areas and parking areas shall be subject to the
minimum setback requirements of applicable zoning, land use-related
entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules
and regulations.
(b) LANDSCAPING. Every Parcel on which a building is constructed in
the Center shall be landscaped by the Owner in accordance with the
Application approved by the Committee pursuant to this Article 6; and, if
not previously installed, the Owner shall
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also install the Common Landscaping upon the Parcel in accordance with the
plans and specifications adopted by the Declarant, or as otherwise approved
by the Committee. Landscaping for each Parcel, as approved by the
Committee, shall be installed before the earlier of (a) the date on which
the first Occupant occupies the building (or any portion thereof) on the
Parcel; or (b) the date of substantial completion of the building;
PROVIDED, HOWEVER, the Committee may, in its sole, absolute and unfettered
discretion, approve in writing another final date of landscape
installation. As used in this Section, "SUBSTANTIAL COMPLETION" means the
date on which final City inspection is obtained for the building shell.
Once installed, landscaping in the Center shall be maintained, repaired and
replaced as provided in Section 12.1 and Section 13.1 of this Declaration.
(c) EXCLUSIVE USE AREAS. Any Exclusive Use Areas within a Parcel shall
be as designated on the Site Plan, or as otherwise approved by the Board or
by the Committee in its written approval of an Application pursuant to this
Article 6. Exclusive Use Areas shall be maintained, repaired and replaced
in accordance with Article 12.
(d) SIGNS. Except for street and traffic control signs and such other
signs as may be required by applicable law, no sign, billboard or other
advertising shall be erected, placed or maintained within the Center
without written approval by the Committee, which, unless such signage is
consistent with the Sign Plan, may be withheld in its sole, absolute and
unfettered discretion. Nothing contained herein shall preclude Declarant or
any subsequent Owner of the Carmel Center Office Campus from renaming it
after such Owner, an Eligible Occupant, or a major tenant that leases in
excess of twenty-five percent (25%) of the space within the buildings
comprising the Carmel Center Office Campus, and installing signage
consistent with the Sign Plan to reflect such name change.
(e) PARKING AREAS. The Committee shall have the authority to
disapprove any Application for the construction of any building on a Parcel
in the Center if the Application does not provide for parking substantially
in accordance with the Site Plan and in compliance with applicable
ordinances, rules and regulations of the City. The purpose and intent of
this requirement is to ensure that all development and parking arrangements
comply with the Site Plan and that this Declaration satisfies any
City-imposed requirements for shared parking existing on the date of this
Declaration.
(f) EXTERIOR LIGHTING. Exterior lighting shall conform to the Design
Guidelines and shall not be of such intensity, size, color or location as
to be a nuisance to Owners or the public.
(g) UTILITY LINES AND ANTENNAS. No sewer, drainage or utility
lines, cables or wires or other devices for the communication or
transmission of electric current, power or signals (including, but not
limited to, telephone, television, microwave or radio signals) shall be
constructed, placed or maintained anywhere in or upon any Parcel other than
within buildings or structures unless contained in underground conduits;
PROVIDED, HOWEVER, transformers and terminal equipment related thereto may
be installed above
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ground if screened from view of adjacent streets and Parcels in a manner
satisfactory to the Committee. No antenna, satellite dish or disc for
transmitting or receiving telephone, television, microwave or radio signals
shall be placed on any Parcel unless (i) such antenna, dish or disc,
whether on the ground or on a building, is screened from view of adjacent
streets and Parcels in a manner satisfactory to the Committee; and (ii) the
prior written consent of the Committee is obtained. Nothing contained in
this Section shall prohibit (x) the erection or use of temporary power or
telephone facilities incidental to the construction or repair of
Improvements on any Parcel, or (y) the installation and maintenance of
security and surveillance devices upon the exterior of buildings, within
Common Areas adjacent to such buildings or elsewhere upon an Owner's Parcel
and Exclusive Use Areas. No Owner shall enter into any contract or
agreement with the City, the County of San Diego or any other governmental
agency or entity or public utility with respect to sewer lines or
connections, water lines or connections, or street improvements (including,
but not limited to, curbs, gutters, parkways, street lighting or other
utility connections, lines or easements) relating to the Center or any
Parcel without the prior written consent of the Committee (including the
Committee's approval of the contract or agreement proposed to be entered
into), which may be withheld if the Committee determines such contract or
agreement, or the improvements to be constructed pursuant thereto, are not
consistent with the Declaration or any of the other Project Documents.
(h) EXCAVATION AND UNDERGROUND UTILITIES. No excavation shall be made
except in connection with construction of an Improvement, and upon
completion thereof, exposed openings shall be back filled and disturbed
ground shall be graded, leveled and restored to its original or approved
similar condition.
6.10 CERTAIN IMPROVEMENTS EXEMPT FROM APPLICATION. Notwithstanding
anything in this Declaration to the contrary (or which may be interpreted as
being to the contrary), the following Improvements shall be exempt from the
provisions of this Article 6 and are not required to be the subject of an
Application pursuant to this Article 6: (i) Improvements existing or under
construction on the date of this Declaration; (ii) Improvements which are
substantially consistent with the Site Plan and for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration which include, without limitation, the Approved Declarant
Improvements; and (iii) Improvements within the interior of a building such as
tenant improvements, lobbies and other interior space.
6.11 DISCLOSURE AND WAIVER OF CONFLICT OF INTEREST. Committee members may
be appointed by, affiliated with or employed by Declarant. If Declarant submits
an Application to the Committee for approval, Committee members appointed by
Declarant may have a conflict of interest in rendering their decisions. Neither
Declarant nor any Committee member shall have any liability to any Owner,
Occupant or other Person as a result of decisions which may benefit Declarant
rendered in good faith by the Committee or any Committee member, and each Owner
hereby waives any claim of liability against Declarant, the Committee or any
Committee member, based upon such conflict of interest. Nothing in this Section
6.11 is intended to limit the application or meaning of Section 14.6.
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ARTICLE 7
OPERATIONS GENERALLY
7.1 SLOPE AND DRAINAGE EASEMENTS. The Owner of each Parcel will permit free
access by Owners of adjacent or adjoining Parcels and by Declarant to slopes or
drainageways located on the Owner's Parcel which affect such adjacent or
adjoining Parcels when such access is required for the maintenance of permanent
stabilization on said slopes, or maintenance of the drainage facilities for the
protection and use of property other than the Parcel on which the slope or
drainageway is located. No Owner shall in any way interfere with the established
drainage pattern over the Owner's Parcel from adjoining or other Parcels, and
each Owner shall make adequate provisions for proper drainage in the event it is
necessary to change the established drainage over the Owner's Parcel. For the
purpose of this paragraph, "ESTABLISHED" drainage is defined as the drainage
patterns at the time the overall grading of each Parcel is completed in
accordance with the City-approved grading plans therefor. Upon completion of
final grading of a Parcel, no surface drainage shall be directed across any
portion of an adjoining Building Area, all surface drainage shall be directed to
a public street or into the underground drainage system.
7.2 SHARED PARKING; COMMON PARKING AREAS.
(a) The Owners intend that this Declaration satisfies any City-imposed
requirements for shared parking existing on the date of this Declaration.
(b) Those portions of the Common Area improved, or to be improved,
with parking spaces as generally shown on the Site Plan and not designated
or subsequently designated as Exclusive Use or Exclusive Parking Area or,
with respect to Parcel D, improved with a building (herein "Common Parking
Area") shall be reciprocal parking area for the common use and enjoyment of
all Parcels (excluding Parcels L and M) and their respective Owners,
Occupants, customers, guests and invitees. The Owners of Parcels L and M
shall have no rights to use any of the Common Parking Area.
(c) The Parking Structure, the parking spaces included therein and
those additional surface parking areas within the Carmel Center Office
Campus and shown on the Site Plan as Exclusive Parking Area shall be for
the exclusive use and enjoyment of the Carmel Center Office Campus and
their respective Owners, Occupants, customers, guests and invitees (herein
"Exclusive Parking Area").
(d) In addition to the Exclusive Parking Areas described in subsection
(c) above, Declarant (and the Board when there no longer is a Declarant)
may designate other portions of a Parcel improved as parking as Exclusive
Parking Area, subject to the provisions of Section 8.2.
(e) No commercial truck is permitted to be parked on any Parcel unless
hidden from view from other Parcels within the Center and from public
streets by attractive visual barriers. Notwithstanding the immediately
preceding sentence, commercial trucks may park for the purpose of loading
and unloading on all Parcels; PROVIDED HOWEVER, reasonable restrictions
concerning permitted times for parking,
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loading and unloading commercial trucks, which may be applicable to one or
more Parcels, may be adopted by the Board.
(f) No charge of any kind shall ever be made for ingress to, egress
from or parking in the Center, unless ordered or permitted by governmental
authority. The Owner of the Carmel Center Office Campus may install a card
access system in the Parking Structure and receive reimbursement from the
Occupants of the Carmel Center Office Campus for the cost of installing
such system and the cost of access cards and replacement cards.
7.3 STORAGE AND LOADING AREAS. Subject to Committee approval, which may be
withheld in its sole, absolute and unfettered discretion:
(a) No materials, supplies or equipment, including any trucks, shall
be stored in any area on a Parcel, except inside a closed building or on a
temporary basis behind a Committee approved visual barrier which screens
such areas from the view of adjoining Parcels and public streets.
(b) Loading areas and docks shall be set back and screened to
minimize the visual and noise effects from the street. All loading areas
shall be hidden from view from public streets by visual barriers approved
by the Committee. Notwithstanding the foregoing, it may not be practical or
feasible for all loading areas and docks to comply with this restriction,
in which event, as to those loading areas and docks, the Committee shall
have the right to designate hours for loading and unloading and the rules
reasonably necessary to minimize the visual and noise effects thereof.
7.4 INSPECTION. Declarant, members of the Board, members of the Committee
and their authorized representatives may from time to time, at any reasonable
hours, enter upon and inspect any Parcel, or any portion thereof, or
Improvements thereon, to ascertain compliance with this Declaration and other
Project Documents, but without obligation to do so or liability therefor
provided, however, no such entry shall be permitted to inspect the interior or
exterior of any building improvements without at least five (5) business days'
prior written notice and a statement for the reasons such entry is permitted or
required under the Project Documents.
7.5 DIVISION OF LAND. No Parcel shall be subdivided or resubdivided without
the prior written approval of Declarant (or the Board, if there is no
Declarant), which may be withheld in its sole, absolute and unfettered
discretion. The creation of a "condominium project" on any Parcel or Parcels
pursuant to Section 1351, ET SEQ. of the California CIVIL CODE shall not
constitute a subdivision or resubdivision of a Parcel which is prohibited by the
provisions of this Section.
7.6 HAZARDOUS MATERIALS. Each Owner with respect to the Parcel(s) owned by
such Owner covenants to do as follows:
(a) At all times and in all respects to comply, and cause all of its
Occupants to comply, with all federal, state and local laws, ordinances and
regulations, including, but
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not limited to, the Federal Water Pollution Control Act (33 U.S.C. Section
1251, ET SEQ.), Resource Conservation & Recovery Act (42 U.S.C. Section
6901, ET SEQ.), Safe Drinking Water Act (42 U.S.C. Section 3000f, ET SEQ.),
Toxic Substances Control Act (15 U.S.C. Section 2601, ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401, ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, ET
SEQ.), California Health & Safety Code (Section 25100, ET SEQ.; Section
39000, ET SEQ.), California Safe Drinking Water & Toxic Enforcement Act of
1986 (California Health & Safety Code Section 25249.5, ET SEQ.), California
Water Code (Section 13000, ET SEQ.), and other comparable state and federal
laws, currently in force or enacted in the future ("HAZARDOUS MATERIALS
LAWS"), relating to industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"HAZARDOUS MATERIALS").
(b) Each Owner, Occupant and all other users of a Parcel shall, at its
own expense, procure, maintain in effect and comply with all conditions of
any and all permits, licenses, and other governmental and regulatory
approvals required for its or its use of the Center, including, without
limitation, discharge of (appropriately treated) materials or wastes into
or through any sanitary sewer serving the Center. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, no Person shall cause any and all Hazardous
Materials removed from the Center to be removed and transported except
solely by duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Each Owner, Occupant and user shall
in all respects handle, treat, deal with and manage any and all Hazardous
Materials in, on, under or about the Center in total conformity with all
applicable Hazardous Materials Laws and prudent industry practices
regarding management of such Hazardous Materials.
7.7 PAYMENT OF TAXES, LIENS. Each Owner shall pay or cause to be paid prior
to delinquency the real estate taxes, assessments, special district charges and
all other public, governmental, quasi-public or quasi-governmental charges which
are or may become a lien upon the Owner's Parcel or Parcels ("Impositions"), and
all other liens or charges which may be or become superior to this Declaration
or any amendments thereto. If any Owner fails to pay any Imposition or other
lien or charge as provided herein, the Association shall have the right, but no
obligation, to cure such default. All costs and expenses, including attorneys'
fees and costs, incurred by the Association in connection with any such cure may
be recovered by the Association as a Reimbursement Assessment against said Owner
and its Parcel or Parcels. An Owner shall have the right, at its own cost and
expense, and in its own name, to contest or protest or seek to have reviewed,
reduced, equalized or abated any Imposition levied upon its Parcel(s) by first
paying such Imposition and thereafter filing a claim for refund or pursuing
such other remedy as may then be available under and in accordance with
California law. Upon final determination of any such proceeding, the protesting
Owner shall pay the Impositions for which
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it is responsible pursuant to this Section as they are finally determined and
all penalties, interest, costs and expense which may thereupon be due or have
resulted therefrom. An Owner shall notify the Association in writing of any
contest or protest so filed by an Owner, and shall provide the Association,
upon request, with any and all documents pertaining thereto.
ARTICLE 8
COMMON AREA
8.1 USE. Subject to the provisions of this Article 8 and such other
provisions of the Declaration regarding restrictions upon use, the Common Area
of each Parcel shall be used solely for the purposes specified in Sections
7.2(b) and 11.1. In addition, no Owner or Occupant shall use or permit to be
used the Common Area for any use other than the following:
(a) Parking motor vehicles, and pedestrian and vehicular ingress and
egress by Occupants, their agents, employees, customers and other invitees,
to and from buildings, the Common Area and adjacent public streets;
(b) Parking stalls, sidewalks, walls, ramps, driveways, lanes, curbs,
gutters, seating areas, flagpoles, bike racks, kiosks, automatic teller
machines, bus stops and similar facilities for accommodating public
transportation, traffic control areas, signals, traffic islands, landscaped
areas, traffic and parking lighting facilities and monument signs with
appropriate underground electrical connections, and all things incidental
thereto, all as approved by the Committee and only in locations approved by
the Committee;
(c) Public utility installations serving buildings or the Common Area;
(d) Ingress and egress of delivery and service vehicles to and from
the Center or any portion thereof and adjacent public streets, and parking
thereof only in unloading and truck loading and unloading areas;
(e) Delivery of goods, wares, merchandise and providing services to
Occupants of the Center;
(f) Perimeter walls and fences shown on the Site Plan;
(g) If required by law, recycling facilities or pickup points, the
location of which are approved by the Committee; and
(h) Lighting standards, Common Landscaping, and any other landscaping
or Common Area Improvements as may be required under applicable controls
and regulations of the City. The Owners and/or Eligible Occupants of
Parcels may also install and maintain security and surveillance devices
upon the Common Areas within their respective Parcels.
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The Common Area shall be used reasonably for the foregoing purposes so as not to
interfere with parking.
8.2 MODIFICATION OF COMMON AREA. The initial design of the Common Parking
Areas and pattern of traffic flow over the Common Area within the Center shall
be as shown on the Site Plan, and there shall be no material change thereto
unless:
(a) In the case of any material change to the Common Area located on
Parcels A, B, C, D, E and H, the prior written consent of Declarant and the
Owners of all such Parcels, which shall not be unreasonably withheld, has
been obtained;
(b) With respect to any material change to the Common Area (excluding
Common Parking Area) within Parcels G, K, L or M, the prior written consent
of Declarant and the Owners of all such Parcels, which shall not be
unreasonably withheld, has been obtained;
(c) With respect to any material change to the Common Parking Area
within Parcels E through K, the prior written consent of the Declarant and
the Owners of all such Parcels, which shall not be unreasonably withheld by
any of them, has been obtained;
(d) In all other cases, the prior written consent of Declarant (or the
Board, after there is no longer a Declarant), which may be withheld in its
sole, absolute and unfettered discretion, has been obtained; and
(e) In all cases, the resulting Common Parking Area layout and pattern
of traffic flow over the Common Area comply with all applicable Laws.
8.3 PARKING REGULATIONS. Occupants within the Center will have widely
varying parking requirements. To ensure Common Parking Areas are used in the
most efficient manner and in the best interest of all Occupants entitled to the
use thereof, the Board may adopt reasonable rules and regulations governing
the use of the Common Parking Areas; PROVIDED, HOWEVER, that no such rule or
regulation shall diminish the parking rights of any Occupant under any lease
existing at the time such rule or regulation is adopted; and PROVIDED FURTHER,
any and all such rules or regulations shall be subject to Section 8.2.
8.4 CONSTRUCTION AND REPAIR. All construction, alteration or repair work
requiring workers to perform activity or to use or locate materials, tools or
equipment (such as, but not limited to, compressors, sawhorses, tool boxes,
scaffolds, ladders and barricades) in the Common Area (other than Exclusive Use
Areas) during the course of performing such work, whether such work is
undertaken with respect to building Improvements located on a Parcel or in the
Common Area, shall be subject to the prior written approval of the Board (or any
committee of the Board established in accordance with the Bylaws for the purpose
of administering this Section) and shall be accomplished in the most expeditious
and speedy manner consistent with ongoing business operations within the Center.
The Owner or Occupant undertaking such work shall take all measures necessary to
minimize any disruption or inconvenience caused by such work. Such work shall be
accomplished by the Owner or Occupant undertaking it in a reasonable manner so
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that any damage or adverse effect which might be caused by such work to any
other Owner or Occupant or to any Parcel (including the Parcel on which the work
is being accomplished) is minimized. The Owner or Occupant undertaking such work
shall repair at its own cost any and all damage caused by such work and shall
restore the affected portion of any Parcel (including the Parcel upon which such
work is performed) to a condition which is equal to or better than the condition
which existed prior to the beginning of such work. In addition, the Owner or
Occupant undertaking such work shall pay all costs and expenses associated
therewith and shall indemnify, protect, defend and hold the Association and all
other Owners and Occupants harmless from all liabilities, damages, losses,
costs, expenses or claims arising out of, in connection with or attributable to
the performance of such work. Except in cases of emergency, all such work
shall be undertaken only after giving the Board ten (10) days prior written
notice of the work to be undertaken, the scope and nature of the work, the
duration of the work and the area in which the work is to be performed.
Notwithstanding the foregoing, construction, alteration or repair work to be
accomplished outside the Common Area may be made without the consent of or
prior written notice to the Board (or committee thereof) required under this
Section.
8.5 INTERIM IMPROVEMENTS AND MAINTENANCE OF PARCELS.
(a) Commencing as required in paragraph (b) of this Section and
continuing until such time as the commencement of construction of a building
or buildings upon a Parcel in the Center, the Owner of such Parcel shall, at its
sole cost, and subject to the discretion and approval of the Committee, pave
with asphalt for parking or landscape with ground cover (or both) and take such
other measures as are reasonably necessary to control weeds, blowing dirt and
sand, accumulation of refuse and other matters with respect to the undeveloped
portions of such Parcel. The cost of design and construction of such interim
parking or landscaping improvements (or, if applicable, both) shall be borne
solely by the Owners of the respective Parcels upon which such improvements are
constructed. Once constructed, the Association shall maintain any such interim
improvements within the Common Area and the cost and expense thereof shall be
Common Expenses; and the Owner shall maintain such other interim improvements.
Each Owner's paving plans or landscaping plans (or, if applicable, both) for the
Parcel shall be subject to the Committee's written approval to ensure
consistency and harmony with (a) the landscaping plan and theme of the Center;
and (b) the parking configuration and pattern of traffic flow in the Center. The
Committee's approval shall not be unreasonably withheld or delayed, and neither
paving nor landscaping the Parcel shall commence unless and until the
Committee's written approval has been obtained. After the Committee's written
approval has been obtained, the Parcel shall be paved and landscaped pursuant to
and in accordance with the plans approved by the Committee. Nothing contained in
this Section 8.5 regarding interim improvements of Parcels shall restrict or
impair the Owners' rights to fully develop and improve their respective Parcels
with buildings and other Improvements consistent with the Project Documents.
(b) The Owners of all Parcels shall pave with asphalt or landscape
with ground cover, or a combination of both as provided in subsection (a)
above, the otherwise unimproved portions of their respective Parcels within
six (6) months after the first Occupant of any building constructed within
the Carmel Center Office Campus opens for business in its
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premises; PROVIDED, HOWEVER, the Owner of any Parcel on which construction of a
building and related improvements has commenced before or during such six (6)
month period shall not be bound by this subparagraph (b) as to such Parcel.
(c) At least ten (10) days before commencing construction of any
Improvements upon a Parcel, the Owner of the Parcel must deliver written notice
to the Board of its intent to commence construction, and the Association shall
have the right to remove any Association property from the Parcel.
8.6 LIGHTING THE COMMON AREA. The provisions of this Section shall be
subject to any resolution or resolutions to the contrary which may be adopted by
the Board from time to time. Lighting for the Common Area (other than lighting
necessary for security of the Center or portions thereof) shall be turned on at
least thirty (30) minutes before sunset (but not more than one (1) hour before
sunset) and shall remain on each day until at least 11:00 p.m., unless to do so
is contrary to any law, rule, statute or ordinance then in effect, in which
event, the standard so prescribed shall be adhered to while in effect. Lighting
representing not less than twenty-five percent (25%) of full intensity of the
Common Area lighting system, uniformly distributed throughout the Common Area,
shall remain on each day after 11:00 p.m. until dawn for security purposes,
unless all of the Owners consent to a lesser amount of lighting in writing, or
unless to do so is contrary to any law, rule, statute or ordinance then in
effect, in which event, the standard so prescribed shall be adhered to while in
effect. If "special" lighting (other than lighting necessary for security of the
Center) is required or if regular lighting is required for a time later than the
foregoing by any Owner or Occupant of the Center, then the electricity to
service such lighting requirements shall, if reasonably feasible, be separately
metered and all expenses thereof shall be paid by the Owner(s) or Occupant(s)
who requires the special service. If such separate metering is not reasonably
feasible, then the cost of such special lighting shall be determined and
equitably prorated based on the amount of time required by each such Owner or
Occupant and the Parcel Area of each Owner or Occupant in relation to the Parcel
Area of all of the Owners or Occupants requiring the special service; all such
prorated expenses shall be paid by the Owners or Occupants which require the
special service.
ARTICLE 9
EMINENT DOMAIN
In the event the whole or any part of the Center is taken by right of
eminent domain or any similar authority of law, the entire award for the value
of the land and improvements so taken shall belong to the Owner(s) of the
property so taken or to their Occupants, as their interest may appear, and no
other Owner of land in the Center shall claim any portion of such award by
virtue of any interest, easement or other right created by this Declaration;
PROVIDED, HOWEVER, any such other Owner may file a collateral claim with the
condemning authority over and above the value of the land and improvements being
so taken to the extent of any damage suffered by such Owner resulting from the
severance of the area so taken, provided such collateral claim does not diminish
the amount recoverable by the Owner(s) of the property so taken. In the event of
a partial taking, the Owner(s) of the portion of the Center so condemned shall
restore the remaining portion of the Center owned by such Owner(s), including
improvements in the
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Common Area, as nearly as possible to the condition existing just prior to such
condemnation, without contribution from the Owners of the area not so taken and
any condemnation award necessary therefore shall be held in trust and applied
for such purpose; PROVIDED, HOWEVER, that if any Mortgagee of any property in
the Center makes the requirement pursuant to a provision in a Mortgage that the
portion of the award representing compensation for severance damage to property
not taken be paid to the Mortgagee, then the party required to make such payment
to such Mortgagee shall not be obligated to restore the remaining portion of its
Parcel(s) so taken, except to the extent necessary to clear and pave for parking
and/or landscape in accordance with plans approved by the Committee.
ARTICLE 10
MUTUAL RELEASE
Each Owner, for itself and, to the extent it is legally possible for it to
do so, on behalf of its insurer, hereby releases the other Owners from any
liability for (a) any loss or damage to the property of each Owner located upon
or in the Center, including buildings or other improvements in the Center or the
contents thereof caused by fire or other risks of the type generally covered by
a standard policy insuring against "all risk" perils (also known as "special
causes of loss"); and (b) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is of the type generally covered by a
standard policy insuring against "all risk" perils (also known as "special
causes of loss").
ARTICLE 11
EASEMENTS
11.1 GRANTS OF RECIPROCAL EASEMENTS OVER COMMON AREAS. Each Owner, as
grantor, grants to and reserves from all other Owners, for the benefit of the
Association and each other Owner and their respective successors, assigns,
Occupants, customers and invitees, and for the benefit of the respective
Parcel(s) belonging to said other Owners, as grantees, the following
non-exclusive easements upon, over, under, across and through that portion of
the Common Area lying within the grantor's Parcel(s):
(a) For ingress and egress by vehicular and pedestrian traffic and
vehicle parking upon, over and through the Common Area and the entryways,
driveways, roads, pedestrian pathways and parking areas as may be
constructed thereon for those purposes, provided, that, Parcels L and M and
their Owners, Occupants, guests, customers and invitees shall have no
rights hereunder to use the Common Parking Areas;
(b) For grading and installation of utilities, landscaping, irrigation
and drainage facilities, and other Improvements, as necessary or
appropriate to complete the improvement of such Common Areas within the
Center pursuant to City approvals and other applicable Laws;
(c) To the Declarant and Association, and their agents and
representatives, an easement over all Common Areas for the purpose of
operation, maintenance, repair,
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reconstruction, restoration and landscaping, and, as necessary, to exercise
the rights and to perform the duties set forth in this Declaration.
(d) For the installation, maintenance, repair and replacement from
time to time of any monument or other freestanding sign permitted under
this Declaration and in accordance with the Sign Plan, including any
permitted Occupant identification signs which have been placed thereon or
made a part thereof;
(e) For construction staging, storage of construction materials and
equipment, temporary construction trailers, erection of ladders,
scaffolding and barricades upon Common Areas owned by the Owner during
construction, remodeling or repair of buildings and building appurtenances
upon such Owner's Parcel or Parcels; and
(f) For the purpose of entering onto the grantor's Parcel(s) to cure
any default or breach under this Declaration.
11.2 UTILITY EASEMENTS. There is hereby reserved for the use and benefit of
the Association and all Owners, non-exclusive easements within the Common Areas
for the location, installation and maintenance of utilities and drainage
facilities of convenience or necessity as may be requested or required by the
Association or any Owner provided that the grant thereof does not unreasonably
interfere with the normal operation, improvement, and use of the Common Area and
the buildings constructed within the Center, and no affirmative monetary
obligation is imposed upon the Owners (other than the Owner benefiting from such
easement). The Declarant (and the Board where there no longer is a Declarant)
shall have the authority to grant easements or rights-of-way for utilities over
the Common Areas as necessary to serve the Common Areas and/or the Parcels. The
Owner of any Parcel and any of his Occupants or licensees shall have the right
at all reasonable times to enter upon the land subject to said easements and to
install, maintain, operate, repair and service utilities and drainage facilities
thereon for the use and benefit of his Parcel; provided, however, any such
Person shall restore said land, at his own expense, as nearly as practicable, to
the same condition as existed prior to such entry and shall comply with the
provisions of Section 11.6. The Owner of any Parcel shall have the right to
assign the benefit and use of any such easement to any public or private utility
company, agency or district for the purpose of installing, operating, repairing,
servicing and maintaining utilities or drainage facilities and enforcing the
easement rights. For purposes hereof, "utilities" shall include electricity, gas
mains and lines, water distribution lines, storm water sewers, sanitary sewers,
telephone, fiberoptic, cable TV, and telegraph cables and lines, and other
similar or related facilities commonly regarded as utilities.
All storm drains, utility lines, transformers and meters shall be
maintained under the terms of this Declaration in a safe and good working
condition by the party responsible therefor. No grantee of a utility easement
shall in the use, construction, reconstruction, operation, maintenance or repair
of any storm drains, utility lines, transformers and meters in any way
interfere, obstruct or delay the business of the grantor of said easement or any
other Owner or Occupant, or the public access to and from said business or
interfere, obstruct or delay in any way the receiving of merchandise by said
grantor or any Owner or Occupant.
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11.3 CONSTRUCTION AND REPAIR. In addition to the foregoing and in
connection with any work performed upon a Parcel, incidental encroachments into
or upon the Common Area within that Parcel shall be permitted in connection with
the use of ladders, scaffolding, storefront barricades and similar facilities
resulting in temporary obstruction of portions of the Common Area, all of which
are permitted under this Section so long as their use is kept within reasonable
requirements of construction work expeditiously pursued. The Common Area may be
used for ingress and egress of vehicles transporting construction materials,
equipment and Persons employed in connection with any work provided for in this
Declaration and that Common Area within the Parcel upon which the construction
is taking place may also be used for temporary storage of material and vehicles
being used in connection with such construction, subject to all of the other
terms of this Declaration. Reasonable precautions and measures shall be taken so
that any disturbance to the use of the Common Area generated by such
encroachments will be minimized.
11.4 OBSTRUCTIONS WITHIN COMMON AREA. Except as otherwise expressly
provided in Sections 8.1, 8.4, 11.1 and 11.3, no walls, fences, barriers or
obstructions of any sort or kind shall be constructed or maintained in the
Center, or any portion thereof, by any Owner, its agent or Occupant, which
prevent or impair the use or exercise of any of the easements granted in this
Article 11, including, but not limited to, the ingress and egress of vehicular
and pedestrian traffic and parking within the Common Area and the Common Parking
Area; PROVIDED, HOWEVER, reasonable traffic controls (including speed bumps) as
may be necessary to guide and control the orderly flow of traffic may be
installed so long as access driveways to the Common Parking Area are not closed
or blocked and the traffic circulation pattern of the Common Area, as shown on
the Site Plan, is not changed or affected in a substantial way; AND PROVIDED
FURTHER, temporary fences made of security chain link may be erected to cordon
off areas of construction activity (including staging areas for equipment and
materials). The Owners and Occupants of the Parking Structure and the Exclusive
Parking Areas may also establish and install control devices and measures such
as a card entry system to the Parking Structure, restricted parking signs,
security gates, or other mechanisms to secure the Parking Structure and
Exclusive Parking Areas from unauthorized use and traffic.
11.5 RIGHT OF ENTRY BY DECLARANT, ASSOCIATION, BOARD. Declarant, the
Association, the Board, and their employees, agents, and contractors are hereby
granted the right to enter upon the Common Areas and upon any other portion of
the Center, to the extent reasonably necessary, to repair, improve, maintain and
operate the Common Areas and to exercise the rights and to perform the duties
imposed by this Declaration on the Board or the Association. Such right of entry
upon portions of the Center other than the Common Areas shall be exercised so as
to interfere as little as reasonably possible with the possession, use and
enjoyment of the Owner or Occupants of such portion and shall be subject to the
provisions of Section 7.4. The Association shall indemnify, protect, hold
harmless and defend the Owner and Occupants of each Parcel over which the
foregoing easements are reserved from and against all liabilities, losses,
liens, damages, claims, costs and expenses and arising from or caused by the use
of such Common Areas by the Declarant, Association, and Board.
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11.6 ENTRY BY OWNERS. In connection with any entry by an Owner onto any
Common Areas for purposes of exercising such Owner's rights pursuant to utility
or drainage easements pursuant to Section 11.2, or performing any other work on
the Common Areas (not including Exclusive Use Areas within such Owner's Parcel)
permitted under this Declaration or otherwise approved by the Board, such Owner
shall, at its expense:
(a) Maintain, at all times during such period of entry, commercial
general liability insurance with a combined single limit per occurrence of
at least $1,000,000, naming the Association (and the Owner and Occupants
of such Common Areas if not owned by the entering Owner) as additional
insureds, and providing that such coverage shall not be terminated or
modified without at least thirty (30) days' prior written notice to the
Board;
(b) Deliver to the Board a certificate evidencing that such insurance
is in full force and effect prior to entry onto such Common Areas;
(c) Perform all work in a safe manner, insure that no hazardous
condition remains on such Common Areas, and repair any damage thereto;
(d) Keep such Common Areas free and clear of all mechanics' or
materialmen's liens arising out of such Owner's activities;
(e) Comply with all applicable Laws in connection with such work;
and
(f) Indemnify, protect, hold harmless and defend the Association, the
Board and the Owner and Occupants of such Common Areas from and against all
liabilities, losses, liens, claims, damages, costs and expenses (including
attorneys' fees and court costs) for labor or services performed
or materials furnished to or for such Owner, or for personal injury, death
or property damage, arising out of or related to such Owner's entry or
breach of the provisions of this Section 11.6.
11.7 RESERVATION BY DECLARANT. The Declarant hereby reserves the right to
subsequently grant and create additional easements over one or more of the
Parcels owned by Declarant, including the Common Areas contained therein, for
the benefit of one or more other Parcels owned by Declarant provided, and upon
condition that, the grant of any such additional easements shall not materially
interfere or impede with the grant and use of the other easements established
hereunder.
11.8 TERMINATION OF FORMER DECLARATION AND CONFIRMATION OF TERMINATION OF
1990 GRANT OF EASEMENTS. The Former Declaration (defined in Recital F) is hereby
terminated in its entirety and is declared to be of no further force or effect;
PROVIDED, HOWEVER, the termination of the 1990 Grant of Easements (as defined in
Section X(e) of the Former Declaration), which is set forth in Section X(e) of
the Former Declaration, shall remain in effect (I.E., the 1990 Grant of
Easements are hereby confirmed previously terminated and of no further force or
effect). The easements granted in this Article 11 replace and supersede the
easements
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granted in that Grant of Easement dated February 12, 1990 and recorded in the
Office of the County Recorder at San Diego County on February 13, 1990 as
Document No. 1990-080110, and that Grant of Easement and the easements granted
thereunder are hereby terminated and declared to be of no further force or
effect.
ARTICLE 12
BUILDING MAINTENANCE
12.1 OWNER'S MAINTENANCE OBLIGATIONS. Subject to Section 12.3, each Owner
shall maintain, repair and replace (or cause to be maintained, repaired and
replaced) the following:
(a) All exterior surfaces and roofs of buildings and other structures
located on the Owner's Parcel(s), so that the exterior walls, exterior
signs, roofing materials and painted surfaces, are at all times maintained
in a first-class condition. All painted portions of building exteriors
shall be repainted no less frequently than once each five (5) years with
the same colors as such portions were originally painted or stained, unless
the Committee approves a change in color, which approval may be withheld in
the Committee's sole, absolute and unfettered discretion.
(b) All other portions of the Owner's Parcel, other than Common Area,
in a neat, clean, sightly and well-kept condition, free and clear of
weeds, debris and rubbish. All landscaping, other than Common Landscaping,
shall be maintained in a first-class condition and, as and when necessary,
replaced.
(c) Any and all monument signs on which the name of an Occupant of the
Owner's Parcel appears, even if the monument sign is located on another
Owner's Parcel.
(d) Those portions of facilities for water, sewer, gas, telephone,
electricity and other utilities serving such Owners' buildings so as to not
interfere, interrupt or otherwise impair delivery of utilities required for
maintenance of the Common Areas and by other buildings within the Center.
(e) Each Owner and or its Occupants shall also contract for the
removal of trash from its buildings.
Each Owner shall also adopt and maintain such standards of property maintenance,
appearance and housekeeping as are necessary or appropriate to keep and maintain
the foregoing in first-class condition, repair and appearance.
12.2 CLOSURE. The Owner of a Parcel shall, following the permanent closure
or cessation of any business operation which is expected to continue for any
extended period of time take such measures as may be reasonably required under
the circumstances to prevent vandalism, including preventing graffiti and
preventing windows from being broken, and to keep the vacant building or
premises in a reasonably attractive manner.
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12.3 REPAIR OR REPLACEMENT OF DAMAGED BUILDING. In the event of any damage
to or destruction of any building within the Center, the Owner of the Parcel
upon which such building is located shall, subject to the requirements and
limitations stated in this Declaration and any Mortgage encumbering such Parcel,
(a) repair, restore and rebuild such building as quickly as reasonably
practicable subject to the requirements and limitations stated in this
Declaration; (b) tear down and remove all parts of said damaged or destroyed
building then remaining and the debris resulting therefrom and otherwise clean
and restore the Building Area affected by such casualty to a level and clean
condition; or (c) any combination of the above in a manner satisfactory to the
Committee. The Owner of any Parcel on which damaged building improvements are
located shall be obligated to proceed with all due diligence hereunder, and such
Owner shall cause cleanup and/or reconstruction to commence within three (3)
months after the damage occurs and to be completed within twelve (12) months
thereafter, unless prevented by causes beyond such Owner's reasonable control.
ARTICLE 13
COMMON AREA MAINTENANCE
13.1 ASSOCIATION MAINTENANCE. Upon completion of construction of the
Improvements on a Parcel (which as of the date of this Declaration includes only
Parcel C), the Association shall manage, maintain, repair and replace (or cause
to be managed, maintained, repaired and replaced) the Common Area on such Parcel
(except any portion thereof which is an Exclusive Use Area) and all Improvements
within the Common Area on such Parcel (except in any portion of the Common Area
which is an Exclusive Use Area) in good repair and appearance, including, but
not limited to, contracting for and paying costs of or related to (i) utility
services provided to such Common Area including, but not limited to, water,
electricity and natural gas (if applicable); (ii) sweeping and cleaning
(including steam cleaning) the parking areas, sidewalks and other hardscape, as
necessary; (iii) repairing and replacing asphalt paving using materials equal to
or better than those originally installed; (iv) bumpers; (v) parking lot
striping and directional signs; (vi) light bulbs and light standards; (vii)
perimeter walls; (viii) electrical lines, gas lines (if applicable), storm
drains, water lines and sanitary sewers which serve such Common Area or which
are within such Common Area; (ix) planters, landscaping and sprinkler systems
comprising the Common Landscaping; (x) hiring and supervising private security,
if any; (xi) the insurance for which Section 13.2 provides; and (xii) all other
items of maintenance, repair or replacement that may be needed from time to time
to maintain such Common Area properly and in a first-class condition.
The foregoing notwithstanding, the following exceptions shall apply:
(a) During the period of construction or repair of any building on any
Parcel, the Owner of such Parcel shall maintain (or cause to be maintained)
those portions of the Common Area within its Parcel, if any, which are
affected by such building construction or repair and shall be responsible
for controlling blowing dust and debris resulting from such construction or
repair activity.
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(b) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving more than one
building with different Owners and lying beneath the Common Area (e.g., an
electric trunk line from which individual lateral lines are routed to serve
different individual buildings), the Association will perform any required
maintenance, repair or replacement (or cause the same to be performed), and
will bill each Owner's share of the cost of the work to the Owners of the
Parcels whose buildings are served by the facilities. Each Owner's share of
the total bill shall be determined by multiplying the total bill by a
fraction, the numerator of which is the Parcel Area of the Owner's Parcel
or Parcels served by the facility, and the denominator of which is the
Parcel Area of all Parcels served by the facility. Each Owner shall be
responsible for maintenance and repair of the lateral lines serving his
Parcel or Parcels.
(c) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving one or more
buildings owned by the same Owner and lying beneath the Common Area, the
Association will perform any required maintenance, repair or replacement
(or cause the same to be performed), and will bill the Owner of the
Parcel(s) whose building(s) is served by the facilities. With the consent
of the Association, the Owner of the affected building or buildings may
contract directly for any such required maintenance, repair or replacement
work to be performed at the sole cost and expense of such Owner.
13.2 COMMON AREA INSURANCE.
(a) As part of its obligation to maintain the Common Area within
the Center except those portions designated Exclusive Use Areas, the
Association shall at all times maintain in force and effect commercial or
comprehensive general liability insurance insuring the Association and, as
additional insureds, all Owners and Eligible Occupants who now or hereafter
own or hold any Parcel or any qualifying leasehold estate (I.E., qualifying the
lessee thereunder to be an Eligible Occupant) or other interest therein as
their respective interests may appear (provided that the Association is given
prior written notice of such interest), against claims for bodily injury,
personal injury, death or property damage occurring in, upon or about the
Common Area. Such insurance shall be written with an insurer licensed to do
business in the State of California. All such insurance shall be primary
coverage, endorsed to name as additional insureds all Owners and Eligible
Occupants under leases of which the Association has been notified in writing,
and shall not require that any other insurance be called upon to contribute
to a loss under such coverage, and shall have liability limits of not less
than Three Million Dollars ($3,000,000) combined single limit coverage for
bodily injury, personal injury, death and/or property damage arising out of
any single occurrence, which amount shall be reviewed annually and changed to
reflect the current practice in mixed use commercial centers in San Diego
County, California which are of a similar size and which have a similar mix
of Occupants. The Association shall cause certificates of insurance to be
issued by the insurer to each of the Owners and Eligible Occupants of whom
the Association has been notified in writing, certifying that such insurance
is in full force and effect and shall not be canceled or materially amended
without thirty (30) days prior written notice thereof to each of such Owners
and Eligible Occupants.
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(b) Association shall obtain and maintain in force property damage
insurance under a standard form policy or policies of all-risk insurance
then in use in California, covering retaining walls and other walls,
lighting facilities and lighting standards, landscaping (in the reasonable
business judgment of the Association), and other improvements in the Common
Area (excluding Exclusive Use Areas);
(c) Worker's compensation insurance, as required by law;
(d) Association Directors' and Officers' errors and omissions
insurance, in form and amount determined by the Board; and
(e) Insurance against any other risk which the Board considers
appropriate.
13.3 ASSOCIATION'S RIGHT TO REPAIR NEGLECTED PARCELS. In addition to
maintaining the Common Area, if an Owner fails to maintain the Improvements, and
other portions of Owner's Parcel so as to violate Section 12.1, then the
Association, after approval of the Board, shall have the right, through its
agents, contractors and employees, to enter onto the Owner's Parcel to repair,
maintain and restore the Parcel, any Exclusive Use Areas, and the exteriors of
any building and other Improvements erected thereon. However, entry into a
Building Area or Exclusive Use Area may be made only after not less than five
(5) business days notice has been given to the Owner and any Eligible Occupant.
Entry shall be made with as little inconvenience to the Owner and Occupants as
possible and any damage caused thereby shall be repaired by the Association at
its cost and expense. The cost of such exterior maintenance shall be levied as a
Reimbursement Assessment against such Parcel pursuant to Section 3.8.
13.4 PROPERTY MANAGEMENT COMPANY. Nothing in this Article 13 or in this
Declaration shall preclude or be interpreted as precluding the Association from
retaining a "managing agent" within the meaning of Section 1363.1 of the
California CIVIL CODE, as it may be amended or replaced from time to time. In
the event the Association so retains such a "managing agent", then the "managing
agent" and the Association shall make all arrangements necessary or proper to
ensure that funds accepted or received by the "managing agent" and belonging to
the Association are deposited and handled in compliance with Section 1363.2 of
the California CIVIL CODE, as it may be amended or replaced from time to time.
The Association may retain the Declarant or an affiliate of the Declarant as
managing agent.
ARTICLE 14
THE ASSOCIATION
14.1 ORGANIZATION. The Association is a California nonprofit mutual benefit
corporation.
14.2 DUTIES. The Association shall be charged with the duties set forth in
the Articles, the Bylaws and this Declaration, including, but not limited to,
the following:
(a) ASSESSMENTS. The Association shall fix, levy, collect and
enforce Assessments as further described in Article 3.
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(b) COMMON AREAS. The Association shall maintain, repair,
replace, restore, operate, control and manage the Common Areas (excluding
Exclusive Use Areas) and all facilities, Improvements and equipment located
thereon, as further described in Article 13, except to the extent such
maintenance has been assumed by a governmental agency or public or private
utility, and except as otherwise set forth herein.
(c) PAYMENT OF EXPENSES. The Association shall pay all expenses
and obligations incurred by the Association in the conduct of its business,
including, without limitation, all licenses, taxes or governmental charges
levied or imposed against the property of the Association.
14.3 POWERS. The Association shall have the following powers, rights and
duties, in addition to those provided elsewhere in this Declaration, the
Articles and the Bylaws and those powers granted to a nonprofit mutual benefit
corporation pursuant to the California Corporations Code:
(a) ACQUISITION OF PROPERTY. The Association shall have the power
to acquire (by gift, purchase or otherwise), own, hold, improve, operate,
maintain, convey, sell, lease, transfer, dedicate for public use or otherwise
dispose of real or personal property in connection with the affairs of the
Association.
(b) ASSESSMENTS, LIENS. The Association shall have the power to
levy and collect assessments pursuant to Article 3 and to perfect and enforce
liens in accordance with the provisions of Article 3.
(c) BORROWING. The Association shall have the power to borrow
funds to pay costs of operation, secured by assessment revenues due for
succeeding years or by assignment or pledge of rights against delinquent Owners;
provided, however, that the affirmative vote or written consent of Declarant and
other Owners holding a majority of the total voting power of the Class A Members
shall be required to borrow, during any calendar year, in excess of an amount
equal to Ten Thousand Dollars ($10,000) multiplied by the number of Parcels
within the Center subject to assessment. Such borrowing may be from Declarant if
Declarant agrees to advance funds; and, in such event, Declarant shall receive,
as interest, no more than the published Wall Street Journal Prime Rate, as
modified from time to time, plus two percent (2%).
(d) CONTRACTS. The Association shall have the power to contract
for goods and/or services for the Common Areas or for the performance of any
power or duty of the Association, subject to limitations set forth elsewhere in
this Declaration, the Articles or the Bylaws. The Association's power to
contract shall include, but is not limited to, the right to enter into
agreements with one or more other owners' associations for the purposes
described in this Section.
(e) DELEGATION. The Association shall have the power to delegate
its authority and powers to committees, officers or employees of the
Association.
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(f) ENFORCEMENT. The Association shall have the power to enforce
this Declaration pursuant to the provisions hereof.
(g) SECURITY SERVICES. The Association shall have the power to
provide, or to contract for the provision of, security patrols or other security
measures, or both, as the Board deems necessary.
(h) VARIANCES. The Board, acting for the Association, shall have
the power to grant reasonable variances from the provisions of this Declaration
from time to time, as the Board may deem, in its sole discretion, to be in the
best interests of the Center, in order to overcome practical difficulties and to
prevent unnecessary hardship in the application of the provisions contained
herein; provided, however, that: (a) a variance shall not materially injure any
of the Parcels or Improvements in the Center; and (b) the Owner seeking the
variance shall otherwise be subject to and conform with all applicable
governmental laws, ordinances, regulations and requirements. No variance granted
pursuant to the authority granted herein shall constitute a waiver of any
provision of this Declaration as applied to any person or real property.
14.4 ELECTION OF NEW BOARD OF DIRECTORS. Concurrently with the recordation
of this Declaration, the Members shall elect a new Board of Directors of the
Association consisting of three (3) directors who shall hold office until the
next annual meeting of Members pursuant to Section 14.7.
14.5 SUBSEQUENT BOARD OF DIRECTORS. At each annual meeting of Members, a
new Board consisting of three (3) directors shall be elected, and such Board
shall serve until the next annual meeting. The Bylaws may provide for staggered
terms and lengths of terms for directors different from those initially set
forth in this Declaration and may provide for a greater or lesser number of
directors than set forth herein; provided, however, in no event shall there be
more than seven (7) directors or less than three (3) directors. The Board shall
undertake all duties and responsibilities of the Association and the management
and conduct of the affairs thereof, except as expressly reserved herein to a
vote of the Members.
14.6 PERSONAL LIABILITY. No member of the Board, or of any committee of the
Association, or any officer or manager of the Association shall be personally
liable to any Owner, or to any other party, including the Association, for any
damage, loss or prejudice suffered or claimed on account of any act, omission,
error or negligence of any such Person.
14.7 ANNUAL MEMBERSHIP MEETINGS. The Association shall hold annual meetings
of the Members in accordance with the Bylaws of the Association.
ARTICLE 15
APPROVAL OF OWNERS AND NOTICES
All notices, demands or requests for consent or approval of any kind which
the Association or any Owner or Occupant is required or desires to give or make
upon the
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Association or any other Owner or Occupant shall (a) be in writing; (b) specify
the Section of this Declaration which requires or authorizes that such notice be
given or requires that such consent or approval be obtained; and (c) be given or
made (subject to the right of the Association or any Owner or Occupant to
designate a different address by giving notice of such change in the manner
provided in this Section) by personal delivery, private express courier, or by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed, in the case of Declarant and the consenting parties, as
follows:
DECLARANT: KR-Carmel Partners, LLC
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
PIAZZA PARTNERS, L.P.: Piazza Partners, L.P.
c/o The Allen Group
401 "B" Street, Suite 2150
San Diego, CA 9101
Attention: Mr. David L. Dick
CARMEL VALLEY, LLC: Carmel Valley, LLC
___________________________________
___________________________________
Attention:_________________________
ACACIA GASOLINE AND CAR WASH Acacia Gasoline and Car Wash of
OF CARMEL VALLEY, LLC Carmel Valley, LLC
___________________________________
___________________________________
___________________________________
Attention:_________________________
RFS FINANCING PARTNERSHIP, L.P.: RFS Financing Partnership, L.P.
___________________________________
___________________________________
Attention:_________________________
ASSOCIATION: Carmel Center Association
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
When given in the manner prescribed in this Section, all notices, demands
or requests for consent or approval shall be deemed given, received, made or
communicated on the date
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personal delivery is effected or, if mailed, on the delivery date or the date on
which delivery is refused by the addressee.
ARTICLE 16
MODIFICATION PROVISION
This Declaration may not be modified in any respect whatsoever, or
rescinded, in whole or in part, except by written instrument duly recorded in
the Office of the County Recorder of San Diego County, after first being duly
signed and acknowledged by Declarant for so long as there is a Declarant, and by
those Owners (which may include Declarant) holding at least seventy-five percent
(75%) of the Members' voting power. Notwithstanding the foregoing, any
modification or rescission of any of the provisions of Section 8.2 regarding the
Common Area and the provisions of Article 11 regarding the grant of easements
with respect to the Common Area shall require the written consent of those
Owners as set forth in Section 8.2.
ARTICLE 17
NOT A PUBLIC DEDICATION
Nothing contained in this Declaration shall be deemed to be a gift or
dedication of any portion of the Center to the general public or for the benefit
of the general public or for any public purposes whatsoever, it being the intent
of Declarant that this Declaration shall be strictly limited to and for the
purposes expressed in this Declaration. The right of the public or any Person to
make any use whatsoever of the Center or any portion thereof (other than any use
expressly allowed by a written or recorded map, agreement, deed or dedication)
is by permission and subject to control of the Owners.
ARTICLE 18
INJUNCTIVE RELIEF
In the event of any violation or threatened violation by any Owner or
Occupant of any portion of the Center of any of the terms, covenants, conditions
and obligations of this Declaration, in addition to the other remedies for which
this Declaration provides, any or all of the Owners shall have the right to
enjoin such violation or threatened violation in a court of competent
jurisdiction.
ARTICLE 19
BREACH SHALL NOT PERMIT TERMINATION
No breach of this Declaration shall entitle any Owner to cancel, rescind or
otherwise terminate this Declaration, but such limitation shall not affect in
any manner any other rights or remedies which such Owner may have under this
Declaration by reason of any breach of this Declaration. Any breach of any of
the covenants, conditions or restrictions set forth in this Declaration,
however, shall not defeat or render invalid the lien of any Mortgage made in
good faith and for value, but such covenants, conditions or restrictions shall
be binding upon and be effective against such Owner of any of said property or
any portion thereof whose title thereto is acquired by foreclosure, trustee's
sale or otherwise.
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ARTICLE 20
INDEMNITY BY OWNERS
20.1 INDEMNITY. Each Owner shall indemnify, protect, defend and hold the
Association and the other Owners harmless from and against all claims, expenses,
liabilities, loss, damage and costs, including any actions or proceedings in
connection therewith and including reasonable attorneys' fees and costs,
incurred in connection with, arising from, due to or as a result of the death of
or any accident, injury, loss or damage, howsoever caused, to any Person or loss
or damage to the property of any Person as shall occur on the indemnifying
Owner's Parcel (excluding Common Areas), except claims resulting from the
negligence or willful act or omission of (a) the Association or the indemnified
Owner, whichever is applicable; (b) any Occupant of the indemnified Owner's
Parcel (including such Occupant's agents, servants and employees); or (c) the
agent, servants or employees of such indemnified Owner, wherever such negligence
or willful act or omission may occur.
20.2 BUILDING AREA LIABILITY INSURANCE. Each Owner shall at all times
during the term of this Declaration maintain or cause to be maintained
commercial or comprehensive general liability insurance covering the Owner's
Parcel (excluding Common Area) insuring against the risks of bodily injury,
property damage and personal injury liability, with a limit of not less than
Three Million Dollars ($3,000,000) per occurrence, which amount shall be
reviewed and adjusted by the Board every three (3) years for increases
recommended by insurance industry-recommended standards for mixed use commercial
centers in San Diego County, California.
ARTICLE 21
SEVERABILITY
If any provision of this Declaration is held by a court of competent
jurisdiction to be invalid, the invalidity of such provision shall not affect
the validity of the remaining provisions of this Declaration, and all remaining
provisions shall continue unimpaired, in full force and effect.
ARTICLE 22
ENFORCEMENT AND REMEDIES
22.1 RIGHT TO ENFORCE. The Declarant or the Association shall have the
right to enforce, by all appropriate legal and equitable proceedings, all
conditions, covenants, restrictions, reservations, liens, and charges now or
hereafter imposed by the provisions of this Declaration. It is hereby agreed
that money damages are an inadequate remedy for breach of any of the conditions,
covenants and restrictions contained herein, other than a default in the payment
of any assessment when due. Every Owner and Occupant of a Parcel subject to
these restrictions expressly waives the benefit of California Code of Civil
Procedure Section 731 (a) and any other comparable statute or rule, and agrees
that such violation or breach may be enjoined whether or not monetary damages
may be provided or provable. Prior to commencing litigation, the requirements of
California Civil Code Section 1354 relating to alternative dispute resolution
shall be satisfied.
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22.2 OWNER'S REMEDIES. After written request to the Association to prevent
any violation of this Declaration, and failure to act by Declarant or the
Association within fifteen (15) days after receipt of such request, any Owner
shall additionally have all enforcement rights provided for in this Declaration.
In addition, any other party to whose benefit this Declaration inures shall have
the right, in the event of violation or breach of this Declaration, to prosecute
a proceeding at law or in equity against the Person or Persons who have violated
or are attempting to violate this Declaration, to enjoin or prevent them from
doing so, to cause said violation to be remedied and to recover damages for said
violation.
22.3 WAIVER. The failure of any Owner, Declarant or the Association to
enforce any provision of this Declaration shall in no event be deemed a waiver
of the right to do so thereafter, and neither any Owner, Declarant nor the
Association shall have any liability for such failure of such Owner, Declarant
or the Association to enforce any provision of this Declaration.
ARTICLE 23
LITIGATION EXPENSES
If any Owner or the Association brings an action against any other Owner or
Occupant by reason of a breach or alleged violation of any covenant, term or
obligation of this Declaration, or for the enforcement of any provision of this
Declaration or otherwise arising out of this Declaration, the prevailing party
in such action shall be entitled to its cost of suit and reasonable attorneys'
fees, which shall be made part of any judgment rendered in such action.
ARTICLE 24
NO ASSIGNMENT OR TRANSFER
The rights, powers, duties and obligations conferred upon the Owners
pursuant to this Declaration shall not at any time be transferred or assigned by
any Owner, except (a) in the case of the rights, powers, duties and obligations
of Declarant, by Declarant pursuant to the definition of "Declarant" set forth
in Article 1; or (b) in the case of any Owner, (i) through a transfer of the
Owner's interest in its Parcel in the manner provided in Article 25, or (ii) to
an Eligible Occupant pursuant to Section 2.1.
ARTICLE 25
SALE BY OWNER
Upon the sale, transfer, conveyance or assignment by any Owner of its
right, title and interest in its Parcel, the following shall apply:
25.1 NOTICE. The transferring Owner shall give prompt written notice of the
sale, transfer, conveyance or assignment to the Association, Declarant and each
other Owner. Such notice shall set forth the name of the transferee and the
transferor, the description of the affected Parcel, the nature of the interest
transferred, the transferee's mailing address and the date of transfer. Prior to
receipt of such notification, any and all communications required or permitted
to be given under the Project Documents shall be deemed to be duly given to the
transferee if duly and timely given to said transferee's transferor.
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25.2 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Each Owner and Occupant, and every
other person who now or hereafter owns or acquires any right, title, estate or
interest in or to any portion of the Center, by acceptance of a deed, lease or
other interest therein, shall be conclusively deemed to have consented and
agreed to hold such title, leasehold or interest subject to and to comply with
every covenant, condition and restriction contained herein and to the rights of
Declarant and the Association hereunder, whether or not any reference to this
Declaration is contained in the deed, lease or other instrument by which such
person acquired said interest in the Center. Every provision of this
Declaration, regardless of its characterization herein, shall be deemed a
covenant, condition, restriction, reservation, easement or servitude, as the
circumstances may require, to permit the enforcement thereof and to carry out
the intent of this Declaration.
25.3 RELEASE OF OWNER. A transferring Owner shall be released from all
obligations of this Declaration as of the effective date of the transfer;
provided that with respect to the period before the effective date of the
transfer, such Owner is not in default in the performance of any duties or
obligations arising under this Declaration or in the payment of any amounts due
and payable under this Declaration.
25.4 LIABILITY OF TRANSFEREE. In no event shall any transferee of any Owner
be liable for any default of the transferring Owner under this Declaration which
occurred prior to the effective date of the transfer; PROVIDED, HOWEVER, nothing
contained in this Section shall affect the existence, priority, validity or
enforceability of any lien placed upon the transferred Parcel or portion thereof
pursuant to Section 3.9.
ARTICLE 26
TERM OF DECLARATION
This Declaration shall continue for a period of fifty (50) years and
thereafter year to year, unless, before the expiration of the term (as it may be
so extended), this Declaration is terminated or modified by written instrument
duly signed and acknowledged by the Declarant, if the Declarant still owns a
Parcel within the Center, and Owners (which may include Declarant) holding at
least seventy-five percent (75%) of the Members voting power, and such
instrument is recorded in the Office of the County Recorder of San Diego County,
California. This Declaration shall terminate upon the expiration of the term
following such recordation. Notwithstanding any such termination, the provisions
of Section 8.2 regarding the Common Area and the provisions of Article 11
regarding the grant of easements with respect to the Common Area shall survive
and remain in full force and effect unless terminated or otherwise modified by
the requisite written consent of the Owners as set forth in Section 8.2.
ARTICLE 27
MISCELLANEOUS
27.1 CAPTIONS. Captions and Section headings, where used in this
Declaration, are for convenience of reference only, are not intended to be a
part of this Declaration and in no way
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EXHIBIT F
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
define, limit, amplify, change, alter or describe the scope or intent of the
particular paragraphs to which they refer.
27.2 GENDER. For the purpose of this Declaration, the neuter gender
includes the feminine or masculine and the singular number includes the plural.
27.3 DECLARANT'S RESERVED RIGHTS. Wherever it appears in this Declaration
that the Declarant has the right to waive compliance with certain provisions,
the right to approve or deny certain matters or the right to exercise its
discretion in various areas, these rights of the Declarant are expressly
reserved or retained by the Declarant, and all of the provisions of this
Declaration are subject to such retained and reserved rights.
27.4 EXHIBITS. All exhibits referred to herein are attached hereto and
incorporated by reference.
27.5 GOVERNING LAW. This Declaration shall be governed, construed and
enforced in accordance with the laws of the State of California.
27.6 MORTGAGE PROTECTION. No breach of this Declaration shall affect,
impair, defeat or render invalid the lien of any Mortgage now or hereafter
executed in good faith and for value upon any part of the Center. However, if
any portion of the Center is sold under a foreclosure of any Mortgage or is
conveyed to the party so secured in lieu of foreclosure, any purchaser at such
sale, and his successors and assigns, shall hold any and all property so
acquired subject to all of the restrictions and other provisions of this
Declaration. Such a purchaser shall not be obligated to cure any preexisting
breach of this Declaration which is non-curable by payment of money (subject to
the provisions of Section 3.11 subordinating the lien of delinquent assessments
to the lien of a first priority Mortgage) or of a type which is not practical or
feasible to cure. Any loan to facilitate the resale of any portion of the
Property after a foreclosure sale or deed in lieu of foreclosure is a loan made
in good faith and for value. If a Mortgagee delivers written notice of its
Mortgage to the Board together with a request for notices of default with
respect to the Parcel or Parcels encumbered by the Mortgage, the Association
shall deliver copies of all such notices of default to such Mortgagee (a
"Requesting Mortgagee") concurrently with delivery to the Owner or Owners. A
Requesting Mortgagee shall also be entitled to timely written notice of any
destruction, taking or threatened taking that affects a material portion of the
Common Area (including without limitation any Common Parking Area) benefiting a
Parcel securing the Mortgage, and any lapse, cancellation or material
modification of any insurance policy maintained by the Association. Mortgagees
are hereby authorized to furnish information to the Board concerning the status
of any Mortgage. Nothing contained in this Declaration or the other Project
Documents shall give the Association, any Owner, or any other party priority
over the rights of a first Mortgagee with respect to distributions of insurance
proceeds or condemnation awards for losses to or a taking of a Parcel, or any
portion thereof, encumbered by a Mortgage held by such Mortgagee.
27.7 MUTUALITY, RECIPROCITY; RUNS WITH LAND. This Declaration is made for
the direct, mutual and reciprocal benefit of each and every Parcel; shall create
mutual, equitable servitudes upon each Parcel in favor of every other Parcel;
shall create reciprocal rights and
-44-
EXHIBIT F
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
obligations between and among the respective Owners during their respective
periods of ownership and privity of contract and estate between and among all
grantees of each Parcel, their respective heirs, successors and assigns; and
shall, with respect to the Owner of each Parcel, its heirs, successors and
assigns during their respective periods of ownership, operate as covenants
running with the land, for the benefit of all other Parcels.
IN WITNESS WHEREOF, the Owners have signed and made this Declaration as of
the date first above written.
-45-
EXHIBIT F
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DECLARANT KR-CARMEL PARTNERS, LLC, a Delaware
limited liability company
By: Kilroy Realty, L.P., a Delaware limited
partnership, Managing Member
By: Kilroy Realty Corporation, a
Maryland corporation, its
General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIAZZA PARTNERS, L.P. PIAZZA PARTNERS, L.P.,
a California
limited partnership
By: Allen Development, Inc., a California
corporation, Its General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-46-
EXHIBIT F
-51-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ACACIA GASOLINE AND CAR WASH ACACIA GASOLINE AND CAR WASH OF
OF CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RFS FINANCING PARTNERSHIP, L.P. RFS FINANCING PARTNERSHIP, L.P., a
Tennessee limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSENT OF ASSOCIATION
The Association hereby manifests its assent to the foregoing Declaration as
of the date of its recordation in the Office of the County Recorder of San Diego
County, California.
CARMEL CENTER ASSOCIATION, a California
nonprofit mutual benefit corporation
-47-
EXHIBIT F
-52-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-48-
EXHIBIT F
-53-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-49-
EXHIBIT F
-54-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ____________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-50-
EXHIBIT F
-55-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-51-
EXHIBIT F
-56-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-52-
EXHIBIT F
-57-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-53-
EXHIBIT F
-58-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-54-
EXHIBIT F
-59-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SUBORDINATION AGREEMENT
_______________________________________________________, being the
beneficiary under that certain deed of trust dated _____________________, 199__
and recorded in the Office of the County Recorder of San Diego County,
California on ____________, 1999__ as Document No. ________________, hereby
declares that the lien and charge of said deed of trust are and shall be
subordinate and inferior to the Agreement Between Landowners Including
Covenants, Conditions and Restrictions and Grants of Easements for Carmel Center
and Including Termination of Both Former Declaration and Prior Grants of
Easements to which this Subordination Agreement is attached.
[NAME OF LENDER]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
EXHIBIT F
-60-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "A"
SITE PLAN OF THE CENTER
[MAP]
EXHIBIT F
-61-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTIONS OF PARCELS COMPRISING THE CENTER
PARCEL A: Parcel 2 of Parcel Map 15957 (NW corner site)
PARCEL B: Parcel 1 of Parcel Map 17382 (office building - west of parking
garage)
PARCEL C: Parcel 1 of Parcel Map 18098 (hotel)
PARCEL D: Parcel 2 of Parcel Map 18098 (Frank's pad immediately east of
hotel)
PARCEL E: Parcel 1 of New Parcel Map (parking garage)*
PARCEL F: Parcel 6 of New Parcel Map (parking garage)*
PARCEL G: Parcel 7 of New Parcel Map (parking garage)*
PARCEL H: Parcel 2 of New Parcel Map (office building - most westerly)*
PARCEL I: Parcel 3 of New Parcel Map (office building)*
PARCEL J: Parcel 4 of New Parcel Map (office building)*
PARCEL K: Parcel 5 of New Parcel Map (office building - most easterly)*
PARCEL L: Lot 7 of Parcel Map 13138 (gas station - car wash)
PARCEL M: Lot 8 of Parcel Map 13138 (Frank's pad at far east end of site)
EXHIBIT "B"
EXHIBIT F
-62-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
* - These Parcels are presently described as Lots 1 through 6 and 9 of
Piazza Carmel II, Unit No. 1, in the City of San Diego, County of San Diego,
State of California, according to map thereof No. 13138, filed in the Office of
the County Recorder of San Diego County, September 13, 1994.
EXHIBIT F
-63-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "C"
TABLE OF PARCEL AREAS (PRELIMINARY)
PARCEL A: 47,568 square feet of Parcel Area
PARCEL B: 104,326 square feet of Parcel Area
PARCEL C: 168,839 square feet of Parcel Area
PARCEL D: 18,861 square feet of Parcel Area
PARCEL E: N/A (Parking Garage) square feet of Parcel Area
PARCEL F: N/A (Parking Garage) square feet of Parcel Area
PARCEL G: N/A (Parking Garage) square feet of Parcel Area
PARCEL H: 756,677 (total for Parcels H-K) square feet of Parcel Area
PARCEL I: _________________ square feet of Parcel Area
PARCEL J: _________________ square feet of Parcel Area
PARCEL K: _________________ square feet of Parcel Area
PARCEL L: 76,404 square feet of Parcel Area
PARCEL M: 58,501 square feet of Parcel Area
----------------------------
Total Parcel Area 1,229,176 square feet
Subject to Assessment
EXHIBIT F
-64-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
HVAC AND ELECTRICAL STANDARDS
HEATING, VENTILATING & AIR CONDITIONING
Description of System: The system design
shall include roof-top mounted variable air
column (VAV) cooling units with associated
valves, pipes and fittings. Capacity and
number of units as indicated on the plans.
Ductwork stubbed to each floor. Medium
pressure duct loop provided as a Tenant
Improvement.
A. Five (5) VAV rooftop package units
variable frequency drive motors per
Building.
B. Controls: The controls will be an
electronic type and give individual zone
control.
C. Exhaust System: Provide all toilet rooms
with acceptable exhaust systems with
quiet operation. Exhaust to roof.
Exhausting to meet code requirements.
Provide exhaust in stair enclosures as
required by code.
ELECTRICAL
Main Service Main service to each building to be 277/480
volt, 3 phase 4 wire, 4000 amp located
within an electric room with distribution
and subpanel for core functions only to
each floor as a part of the Base, Shell and
Core improvements.
Building Power and Lighting Electrical work shall include metering
facilities, conduit, conductors, main
switch board, subpanels, branch circuits,
J-boxes, lighting fixtures, wall light
switches, power receptacles, etc. for the
site common areas, Base, Shell and Core
improvements and parking structure.
Switchgear and conductors, for conduits,
subpanels, etc. for Tenant access in Tenant
Improvements.
Power & Utility Core Electrical for the Base, Shell and Core
improvements and parking structure work
shall include a service and distribution
including conduit, conductors, switch
board, subpanels, branch circuits, J-boxes,
lighting fixtures, wall light switches,
power receptacles, etc.
Power for Equipment Power wiring and connection to air
condition equipment as well as control
wiring and control devices to be included
in Tenant Improvements.
Telephone & Data Communication Telephone and data communication cabling
provided by Tenant. Provide (4) 4" conduit
between Buildings.
Installation All electrical work to be in accordance
with applicable codes. All necessary
outlets, conduit, wiring, trenching and
concrete encasing shall be provided as
required.
Interior Lighting Fluorescent lighting (exit corridors,
janitor closet): Provide 2' x 4' recessed
fixtures with parabolic lens and electronic
ballast in suspended ceilings. Provide
recessed down lighting in lobbies. Provide
1' x 4' recess mounted fixtures at toilet
rooms, electrical and telephone rooms. All
lighting in lobby and exit enclosures to be
controlled by wall mounted motion sensors
with override switch as required by Title
24.
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-1
PEREGRINE SYSTEMS CORPORATE CENTER
JANITORIAL SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 6
--------------
SPECIFICATIONS
ENTRANCE LOBBIES/BUILDING CORRIDORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum carpets completely.
3. Empty all waste containers and spot-clean.
4. Spot clean carpeted floor surface.
5. Dust ledges within reach.
6. Damp mop spillage as needed.
7. Empty cigarette receptacles.
8. Spot clean walls and doors.
9. Clean entrance mats as necessary.
10. Clean all metal door frames and thresholds.
11. Clean building directory board glass.
12. Vacuum entrance mats as necessary.
13. Only designated lights will be left on.
Weekly Services:
1. Spot clean walls, woodwork, and doors.
2. Perform high dusting.
3. Edge all carpets.
4. Polish entrance metals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 6
--------------
SPECIFICATIONS - CONTINUED
5. Dust all baseboards.
6. Dust all horizontal surfaces.
Monthly Services:
1. Dust and vacuum air supply and exhaust diffusers.
2. Vacuum all furniture in lobby area.
ELEVATORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum and spot clean carpets.
3. Clean and polish doors.
4. Clean and polish interior of cab.
5. Vacuum tracks thoroughly.
6. Clean all bright work.
Weekly Services:
1. Polish all bright work.
2. Clean tracks thoroughly.
Monthly Services:
1. Vacuum ceiling grate.
STAIRWAYS AND LANDINGS
Daily Services: Five (5) Days Per Week
1. Police area to remove refuse.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 3 OF 6
--------------
SPECIFICATIONS - CONTINUED
2. Damp mop to remove spillage as needed.
3. Spot sweep stairs as needed.
Weekly Services:
1. Sweep stairways and landings.
2. Dust all handrails.
3. Wet mop as needed.
OFFICE/TENANT AREAS
Daily services: Five (5) Days Per Week
1. Sweep with chemically treated dust-mop or vacuum all high traffic
areas.
2. Spot clean composition floors.
3. Dust desks, chairs, and all other office furniture.
4. Clean all ash trays and sand urns.
5. Empty all waste baskets and carry trash to pick up area.
6. Spot clean partition door glass.
7. Clean and polish drinking fountains.
8. Install plastic waste basket liners furnished by customer, replace as
necessary.
Weekly Services:
1. Dust ledges and window sills.
2. Perform High Dusting.
3. Dust picture frames and book shelves.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 4 OF 6
--------------
SPECIFICATIONS - CONTINUED
4. Remove fingerprints from woodwork, walls and partitions.
5. Dust vertical surfaces of office furniture.
6. Dust chair rungs and furniture legs.
7. All in suite carpet to be vacuumed completely.
8. Spot clean around wall switches.
9. Spot clean doors, door frames, and counters.
10. Dust all horizontal surfaces.
11. Spot clean all glass partitions.
Monthly Services:
1. Perform high dusting, i.e. door sashes and tops of partitions.
2. Wipe down plastic and leather furniture.
3. Dust venetian blinds.
4. Dust and vacuum ceiling and wall vents.
RESTROOM AND LOUNGES
Daily Services: Five (5) Days Per Week
1. Empty and wipe out all waste paper containers.
2. Empty sanitary napkin containers and replace insert.
3. Polish all metal and mirrors.
4. Clean all dispensers.
5. Clean and disinfect wash basins, toilets and urinals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 5 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Disinfect undersides and tops of toilet seats.
7. Clean floors with germicidal solution.
8. Vacuum carpets.
9. Refill soap, towel, and tissue dispensers.
10. Report to Building Manager any fixture not working.
Weekly Services:
1. Perform high dusting.
2. Dust all air supply and exhaust diffusers.
3. Polish all dispensers.
4. Spot clean tile walls and toilet partitions.
5. Spot clean walls around wash basins.
Monthly Services:
1. Wash down toilet compartment partitions.
KITCHEN, VENDING OR LUNCHROOM
Daily Services: Five (5) Days Per Week
1. Clean sink if empty.
2. Clean counter top.
3. Empty trash.
4. Damp mop floor.
5. Wipe off tables and chairs and arrange.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 6 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Wipe off fronts of vending machines.
7. Vacuum carpeting.
8. Wipe down microwaves.
FLOOR CARE
ENTRANCE LOBBIES AND BUILDING CORRIDORS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
OFFICE/TENANT AREAS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
RESTROOMS
1. Scrub and seal floors monthly.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-2
PEREGRINE SYSTEMS CORPORATE CENTER
DAY PORTER SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 2
--------------
SPECIFICATIONS
DAY PORTER JOB DESCRIPTION
A. ENTRANCE LOBBY AND BUILDING CORRIDORS
1. Spot clean entrance door glass and lobby glass.
2. Wipe down all interior and exterior window sills at lobby level.
3. Dust lobby, including guard station and vacuum as needed. Empty trash
at guard station and clean counters.
4. Remove trash from receptacles in elevator lobbies on each floor.
5. Clean lobby directory as necessary throughout the day.
6. Empty and clean sand urns and replace sand as needed.
7. Polish and clean all metal and brightwork as necessary.
8. Spot clean carpets for spills.
9. Spot vacuum carpets as necessary.
10. Clean drinking fountains.
B. BUILDING EXTERIOR
1. Police for trash, sidewalks, curbs, around trees, planters and pots
around entire building.
2. Damp mop walkway for spills and stains.
3. Clean hose bib cover plates, as needed.
4. Sweep entrance sidewalks as needed.
5. Police balconies daily for leaves and debris.
6. Sweep balconies as needed.
7. Wipe down handrails on balconies.
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<PAGE>
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SPECIFICATIONS
PAGE 2 OF 2
--------------
SPECIFICATIONS - CONTINUED
C. PARKING GARAGE AND TRASH ENCLOSURES
1. Police and clean around trash bins.
2. Empty and break down all boxes before disposing in dumpsters.
3. Clean pay phones in garage and keep area around them clean.
4. Spot clean garage lobby door and glass.
5. Dust exterior of lobby doors and wall in garage.
6. Check mail room daily, and wipe down counters and mail boxes.
Vacuum as needed.
D. STAIRWELLS, LANDINGS AND ELEVATORS
1. Police stairwells daily for trash and debris.
2. Damp mop for spills and stains.
3. Thoroughly sweep two flights of stairs per day.
4. Check stairwells for cobwebs, dustballs and burned out lights.
5. Dust and wipe handrails after sweeping.
6. Check elevator cabs several times daily.
7. Spot vacuum elevator cabs as necessary.
8. Spot clean elevator doors and walls.
9. Keep elevator cab emergency phones clean and sanitary at all times.
E. RESTROOMS
1. Empty trash containers if necessary.
2. Clean and restock restroom supplies after the noon hour.
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EXHIBIT H-2
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
SECURITY SYSTEMS AND PERSONNEL
A card key access system will be included in the Base, Shell and Core. One
(1) security guard will be on duty at the Project on a twenty-four (24) hour
per day, seven (7) days per week basis commencing upon the Lease Commencement
Date for Building 1. Security rounds will be made at applicable shift
changes. If Tenant constructs a security desk and security console (as a
Tenant Improvement or as an Alteration), Tenant shall have the option to
cause such security guard to be stationed at such desk and console; however,
if Tenant elects to construct such desk and console on a permanent basis at
Building 1, and if Tenant's occupancy in the Project falls below 182,000
rentable square feet, Landlord shall have the option, at Landlord's sole cost
and expense, to relocate such security desk and console to a location in
Building 2 reasonably designated by Landlord. An additional security guard
will be hired to patrol the Project during the hours of 6:00 a.m. to 10:00
p.m. Monday through Friday and 8:00 a.m. to 12:00 noon on Saturday (except
Holidays) commencing upon the Lease Commencement Date for Building 2; the
cost of such additional security guard will be included in Operating Expenses
and Operating Expenses for the Base Year shall be grossed up to include such
guard's services as if provided throughout the Base Year.
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT J
PEREGRINE SYSTEMS CORPORATE CENTER
SIGNAGE CRITERIA
CARMEL CENTER
SIGN GUIDELINES AND CRITERIA
February 24, 1999
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SUBMITTALS AND APPROVALS.....................................................1
RESTRICTIONS.................................................................2
NONCONFORMING SIGNS.......................................................4
ILLEGAL SIGNS.............................................................4
ABANDONED SIGNS...........................................................4
GENERAL PROVISIONS...........................................................5
CONSTRUCTION REQUIREMENTS....................................................7
DESIGN GUIDELINES............................................................9
SIGN CRITERIA...............................................................12
PROJECT AND TENANT SIGNAGE...............................................12
GAS STATION IDENTIFICATION SIGNS.........................................14
SECONDARY SITE SIGNS.....................................................15
ANCILLARY SIGNAGE........................................................15
TEMPORARY SIGNAGE: .........................................................16
PROJECT LEASING / CONSTRUCTION / FUTURE FACILITIES.......................16
TENANT LEASE SPACE BANNERS...............................................16
SEASONAL / SPECIAL EVENT SIGNAGE.........................................16
EXHIBITS....................................................................17
</TABLE>
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
OBJECTIVE
The objective of The Carmel Center Sign Guidelines and Criteria is to provide
design standards and specifications that assure consistency in quality,
color, size, placement, and configuration for signage throughout the project,
and to provide signage that will be an integral part of the overall
architectural character and design theme suitable for the prestigious
corporate image of the Carmel Center project.
SUBMITTALS AND APPROVALS
1. There is a formal process for the creation, review and approval of
signage throughout The Carmel Center project. Prior to sign fabrication,
plans for all proposed signage shall be submitted to the Owner who will
review plans for conformance with the Sign Guidelines and Criteria. All plans
submitted for approval must conform to requirements of the criteria contained
in The Carmel Center Sign Guidelines and Criteria. Only those sign types
specifically approved in writing by the Owner will be allowed. The Owner
shall have the discretionary authority to deny approval for any submittal
which does not comply with the intent or purpose of the sign criteria.
The Tenant shall submit all sign designs to Owner and obtain his written
approval prior to sign fabrication. Approval or disapproval shall remain the
sole right and discretion of the Owner. The Tenant must continue to revise
and resubmit rejected designs until approval is obtained.
Prior to sign fabrication, the Tenant or his sign contractor shall submit for
Owner approval three (3) sets of complete and fully-dimensioned shop drawings
reflecting the sign design approved by the Owner. The shop drawings submittal
shall include:
a. Name, address and phone number of tenant / user
b. Name, address and phone number of Sign Contractor, Designer.
c. Elevation of structure showing all proposed signs indicating sign
type, design, location, size and layout of sign drawn to scale and
indicating dimensions, attachment devices and construction details,
colors, materials and lighting details.
d. Section detail of letters and/or sign element showing the
dimensioned projection of the face of letters, method and intensity
of illumination.
e. Color board with actual sample colors (8-1/2" x 11" format).
f. Site plan showing property lines, buildings, location and
dimensions from public right of way.
1
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3. Requests to establish signs that vary from the provisions of this sign
program shall be submitted to the Owner for approval in writing prior to
being submitted to the City of San Diego.
4. Following approval of proposed signage by the Owner, applications for all
permits for fabrication and installation by Sign Contractor may be submitted
to the City of San Diego for approval, along with applicable sign permit
applications.
5. Fabrication and installation of all signs shall be performed in accordance
with the standards and specifications outlined in these guidelines and in the
final approved plans and working drawings.
RESTRICTIONS
Only those sign types provided for herein and specifically approved in writing
by the Owner will be allowed. The following signs are prohibited:
1. PROHIBITED SIGNS
a. Exposed junction boxes, transformers, lamps, tubing, conduits,
raceways or neon crossovers of any type.
b. Signs using "Trim Cap" retainers that do not match the color of the
letter returns and logo returns.
c. Rooftop signs.
d. Rotating, revolving, flashing or moving signs, except as provided in
this text.
e. Advertising or promotional signs on parked vehicles.
f. Advertising signs on bus benches, within or outside of the public
right-of-way.
g. Off-premise signs (other than directional signs) installed for the
purpose of advertising a project, event, person or subject not related
to the premises upon which said sign is located.
h. No signs, decals or advertising may be placed on windows except as
provided for in the Sign Guidelines and Criteria and specifically
approved in writing by the Owner.
i. No temporary promotional signs, appliances, or advertising shall be
permitted such as banners, pennants, streamers, temporary wall signs,
portable signs, including
2
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
signs on vehicles, sandwich boards, inflatable displays or any other
attention getting devices except as provided for herein.
3
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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2. NONCONFORMING SIGNS
The Owner may, at its sole discretion, correct, replace or remove any
sign that is installed without written approval and/or that is deemed not to
be in conformance with the plans as submitted and with the Carmel Center
Signage Plan.
3. ILLEGAL SIGNS
Any sign that is deemed not to be in conformance with the approved
guidelines or erected without government approval or permits is considered
an illegal sign. The Owner may, at its sole discretion, correct, replace or
remove any illegal sign.
4. ABANDONED SIGNS
An abandoned sign is one whose use is discontinued because the premises
upon which it is located becomes vacated and unoccupied for a period of more
than 90 days. The Owner may, at its sole discretion, replace or remove any
abandoned sign.
4
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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GENERAL PROVISIONS
1. Signs shall be designed in a manner that is compatible with and
complementary to the overall project and adjacent facades.
2. Only those sign types provided for in the Sign Guidelines and Criteria
and/or specifically approved in writing by the Owner will be allowed.
3. Signage that incorporates logos, business identity, and/or images
denoting the type of business shall be encouraged. Logo design and colors
to be approved by the Owner.
4. Logo, letter heights and sign square footages, where specified, shall be
determined by measuring the normal capital letter of type exclusive of
typographic swashes, ascenders, descenders or exaggerated initial capitals.
Maximum copy areas shall be calculated exclusive of display surfaces,
backings, architectural elements, and mounting devices.
Logos and/or images that are in use on similar buildings operated by the
tenant in California may be used, provided that said images are
architecturally compatible and approved by the Owner and shall be counted in
overall allowable square footage for tenant signs.
5. Notwithstanding the maximum square footages specified for copy area
allowances, signs and typography in all cases shall appear balanced and in
scale within the context of the sign spaces - monuments and building walls -
as a whole. Thickness, height, and color of sign lettering shall be visually
balanced and in proportion to other signs on the building.
6. Wall signs shall be affixed without visible means of attachment, unless
attachments make an intentional statement. Wall signs need not be attached
directly to the lease space to which they refer.
5
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7. Ground signs or monument signs may be located within landscaped zones
between property lines and building setback lines, allowing for adequate
site-lines for approaching vehicular traffic at street intersections and
project entries, but may not be located in the public right-of-way. Ground
signs identifying any tenant or use within the project area may be located
on any lot within the project area.
8. All sign fabrication work shall be of excellent quality. All logo images
and typestyles shall be accurately reproduced. Lettering that approximates
typestyles shall not be acceptable. The Owner reserves the right to reject
any fabrication work deemed to be below standard.
6
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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CONSTRUCTION REQUIREMENTS
1. All formed metal, such as letter forms, shall be fabricated using
full-weld construction.
2. All ferrous and non-ferrous metals shall be separated with non-conductive
gaskets to prevent electrolysis. In addition to gaskets, stainless steel
fasteners shall be used to secure ferrous to non-ferrous metals.
3. Threaded rods or anchor bolts shall be used to mount sign letters which
are spaced out from background panel. Angle clips attached to letter sides
will not be permitted.
4. Surfaces with color mixes and hues prone to fading (e.g., pastels,
fluorescent, complex mixtures, and intense reds, yellows and purples) shall
be coated with ultraviolet-inhibiting clear coat in a matte, gloss, or
semi-gloss finish.
5. Joining of materials (e.g., seams) shall be finished in such a way as to
be unnoticeable. Visible welds shall be continuous and ground smooth.
Rivets, screws, and other fasteners that extend to visible surfaces shall
be flush, filled, and finished so as to be unnoticeable.
6. Finished surfaces of metal shall be free from canning and warping. All
sign finishes shall be free of dust, San Diego peel, drips, and runs and
shall have a uniform surface conforming to the highest standards of the
industry.
7. Reverse channel letters shall be pinned 2" off building wall. Return
depth shall be 2-1/4", maximum, for letters less than 12" in height, and
such signs shall have a clear acrylic backing. Double tube neon shall be
used where width of letter stroke exceeds 2-1/4".
8. Depth of open channel letters shall not exceed 2". All hardware and neon
tube supports inside open channel letters shall be painted to match interior
letter color. Neon tubing shall be sufficient to make letters read "solid"
and shall be installed so that top surface of neon is flush with front edges
of open channel.
9. Signs illuminated with neon shall use 30 m.a. transformers. The ballast
for fluorescent lighting shall be 430 m.a. Fluorescent lamps shall be single
pin (slimline) with 12" center-to-center lamp separation. All lighting must
match the exact specifications of the approved shop drawings.
10. Surface brightness of all illuminated materials shall be consistent in
all letters and components of the sign. Light leaks will not be permitted.
7
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11. The back side of all bare neon used for signage shall be painted to
provide an opaque finish. Paint color shall exactly match the
Owner-approved specification.
12. All conduit, raceways, crossovers, wiring, ballast boxes, transformers,
and other equipment necessary for sign connection shall be concealed. All
bolts, fastenings and clips shall consist of enameling iron with porcelain
enamel finish, stainless steel, anodized aluminum, brass or bronze; or
carbon-bearing steel with painted finish. No black iron materials will be
allowed.
13. Underwriter's Laboratory-approved labels shall be affixed to all
electrical fixtures. Fabrication and installation of electrical signs shall
comply with all national and local building and electrical codes.
14. Penetrations into building walls, where required, shall be made
waterproof.
15. Location of all openings for conduit sleeves and support in sign panels
and building walls shall be indicated by the sign contractor on drawings
submitted to the Owner. Sign contractor shall install same in accordance
with the approved drawings.
16. In no case shall any manufacturer's label be visible from normal viewing
angles.
17. Sign permit stickers shall be affixed to the bottom edge of signs, and
only that portion of the permit sticker that is legally required to be
visible shall be exposed.
8
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
DESIGN GUIDELINES
1. DESIGN OBJECTIVE
The primary objective of these guidelines is to generate signage of the
highest quality design, fabrication and installation, consistent with the
project architecture and design theme.
2. ACCEPTABLE SIGN TREATMENTS
The following treatments are considered appropriate:
- painted metal
- etched or polished metal
- dimensional letter forms with seamless edge treatment
- opaque acrylic materials with matte finishes
- internally illuminated channel or reverse channel letters
9
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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3. LIGHTING
The following treatments are considered appropriate:
- reverse channel neon with silhouette illumination
- open channel neon
- exposed neon
- internal illumination
- front lighting
- area lighting
All front lighting should be baffled and obscured in channels where
possible. Where fixtures, shades, or other elements are exposed, they
should contribute to the design of the tenant's lease space.
All exposed or skeletal neon must be backed with a opaque coating,
unless otherwise specified herein or approved in writing by the Owner. All
housings and posts for exposed neon signs must be painted out to match the
building background immediately behind and adjacent to the sign.
The following shall be prohibited:
- animated lights
- exposed conduits and raceways
- front lighting fixtures that compete with the storefront design
4. COLORS
The following guidelines are to be adhered to in selecting colors for
tenant signage:
- sign colors should be selected to provide sufficient contrast against
building background colors
- colors within each sign should be harmoniously blended
- sign colors should be compatible with building background colors
- color of letter returns should contrast with face colors for good
daytime readability
- interior of open channel letters should be painted dark when against
light backgrounds
- neon colors should complement related signage elements
All sign colors are subject to review and approval by the Owner as part
of the tenant sign submittal.
10
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5. TYPESTYLES AND LOGOS
Tenants may adapt established typestyles, logos and/or images that are in
use on similar buildings operated by them in California, provided that
said images are architecturally compatible and approved by the Owner. Type
may be arranged in one or more lines of copy and may consist of upper
and/or lower case letters.
6. SIZES AND QUANTITIES
Sizes and quantities for tenant signs shall be as outlined in the
criteria for each sign type. Notwithstanding the maximum square footage
specified for copy area allowances, adequate amounts of visual open space
shall be provided around wall signs so that signs appear balanced and in
scale in relation to their backgrounds.
11
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[Peregrine Systems]
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SIGN CRITERIA
PROJECT AND TENANT SIGNAGE
Signs shall be designed to be harmonious with the overall project design
theme and architecture, and shall be consistent with the provisions of the
Sign Guidelines and Criteria for the project. Minor tenant or directional
signs not oriented towards the public right-of-way are allowed with Owner's
prior written approval in addition to the signs below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Sign Type Max. Qty. Single-Faced/ Dimensions, Wall/ Max. Copy Copy Location
Double-faced Monument Height Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(B) Building (1) sign per bldg. s.f. 24" max. letter Building address/ Address
Address Wall elevation, not to height street number locations to
Signs exceed four signs satisfy Fire
max. per bldg. Dept.
regulations
- -----------------------------------------------------------------------------------------------------------------------------------
(C) Directional As required for s.f. or d.f. 5' 12 sq. ft. + - Directional As necessary
Signs facilitating project logo per information and
traffic sign face arrows
- Project name
and logo
- -----------------------------------------------------------------------------------------------------------------------------------
(D) Secondary As required/
Site Signs see general
guidelines and
provisions for
secondary site
signage
- -----------------------------------------------------------------------------------------------------------------------------------
(E) Restaurant (1) sign per s.f., d.f. 6' 40 sq. ft. Restaurant name As shown on
Identification restaurant and/or logo sign location
Monument Sign frontage plan
- -----------------------------------------------------------------------------------------------------------------------------------
(E2)Restaurant 2 signs per s.f. 50 sq. ft. Restaurant name On
Identification restaurant each and logo restaurant
Wall Sign building
wall
- -----------------------------------------------------------------------------------------------------------------------------------
(H1)Carmel Center 2 along El s.f. 6 ft max. ht. 60 sq. ft. - Project name, As shown on
Project Camino Real each logo and address site map
Identification
Monument
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Sign Type Max Qty. Single- Dimensions. Max. Copy Location
Faced / Wall / Copy
Double- Monument Area
faced Height
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(H2) Office Project 2 per entry s.f. or 5 ft. max ht. 32 sq. ft. - Project As shown on
Entry d.f. each Identification sign location
Identification logo and address plan
Monument - Tenant
Identification and
/or logo
- -------------------------------------------------------------------------------------------------------------------------------
(H3) Tenant 2 signs s.f. -- 100 sq. Building As shown on
Identification total each ft. identification sign location
Wall Signs building; 1 Max. and/or tenant name plan
max. per each and/or logo
tenant each
building
elevation
- -------------------------------------------------------------------------------------------------------------------------------
(H4) Office Building (1) sign per s.f. or 4' max. ht. 32 sq. ft. Building and/or
Monument building d.f. each tenant
Sign identification
Note: Where signs
orient to the
public right of
way, tenant
listings will not
be allowed.
- -------------------------------------------------------------------------------------------------------------------------------
(H5) Tenant (1) sign per s.f. 4 ft. 12 sq. ft. Tenant name As shown on
Identification tenant with Max. and/or logo sign location
Signs individual each plan. May be
entry wall or ground
sign
- -------------------------------------------------------------------------------------------------------------------------------
(H6) Project 1 on s.f. Project name and On retaining
Identification retaining logo wall south side
Sign (on wall south of project
retaining wall) side of
project
- -------------------------------------------------------------------------------------------------------------------------------
(J5) Retail Pad 2 per pad s.f. 32 sq. ft. Tenant name and/or On exterior
Tenant tenant logo building wall
Identification (a third wall
Wall Sign sign may be
allowed in
lieu of Sign
Type J6
monument
sign)
- -------------------------------------------------------------------------------------------------------------------------------
(J6) Retail Pad 1 per pad s.f., d.f. 5 ft. 25 sq. ft. Tenant name and/or As shown on
Tenant tenant 12" max logo sign location
Identification letter ht. plan.
Monument
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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GAS STATION IDENTIFICATION SIGNS
G1. Gas Station Identification Wall Sign
1 per each street frontage, single or double-faced; 50 sq. ft. each maximum
copy area. Copy limited to name and logo of company and product/service.
Color, letter style and logo may be used with Owner's prior written approval.
Signs for associated uses (e.g. car wash) shall conform to criteria for
Tenant Identification Sign Type H5.
G2. Gas Station Identification Monument Sign
1 per street frontage, single or double-faced; 6 ft max. ht., 60 sq. ft. each
face maximum copy area. Copy limited to name and logo of company, associated
uses and gas pricing information.
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SECONDARY SITE SIGNS
Secondary Site Signs are signs other than the primary project or tenant
identification signs and include:
- address signage
- entrance signs
- directory maps and listings
- directional signs, both pedestrian and automobile-oriented
- unit number signs
- parking and traffic control signs
- informational signs such as identification for public restrooms
- building entrance signs
- restaurant menuboards
- other code required signs
Secondary site signs are not to be visible from the public right-of-way, with
the exception of entrance signs, parking control signs, and address signs
which should be oriented toward the public right-of-way. All secondary site
signs shall be designed as a family of signs. Selected elements such as
typestyle, layout, form, detail, colors and materials, shall remain
consistent within each sign "family".
A strong connection shall be maintained between secondary site signs and the
project architecture and landscaping. Elements of color, material, scale,
form and detail shall be reflected in the signage. Signs shall fit
comfortably, never crowding the architectural and landscape elements in the
immediate vicinity.
Secondary signs may be freestanding or wall-mounted. Freestanding signs
should generally be less than (4) feet in height, with the exception of
tow-away, handicapped, address, clearance and traffic regulatory signs, which
shall conform to the regulations and safety standards established by the City
of San Diego. Traffic regulatory signs may be reduced in scale where viewing
distances are diminished. Maximum copy area for all secondary site signs shall
be 12 square feet.
ANCILLARY SIGNAGE
Ancillary signage are signs other than primary tenant identification signs,
and are not included in maximum tenant signage area. Ancillary signage is
subject to Owner's prior written approval. Typical ancillary signage includes:
- Window Signs
- Suite Identification Signs
- Tenant Door Signs
- Delivery Entrance Identification Signs
15
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TEMPORARY SIGNAGE:
PROJECT LEASING/CONSTRUCTION/FUTURE FACILITIES
Temporary signs will be required for various activities at Carmel Center
during and after completion of the development phase. Shapes, base colors and
proportions of the signage must be consistent with sign design guidelines
(see Exhibit for specific sign type).
- - may be ground-mounted.
- - may be externally illuminated.
TENANT LEASE SPACE BANNERS
- - temporary signs may be allowed at individual lease spaces displaying
"for lease", "coming soon" and similar messages.
- - tenants will be allowed use of a temporary identification banner for a
period of time not to exceed 60 days with prior written approval of the
Owner:
- one sign per street frontage
- 32 square feet maximum copy area per banner
- placed below roof eave
SEASONAL/SPECIAL EVENT SIGNAGE
Cooperative seasonal or special event signage will be permitted upon review
and approval by the Owner.
- - Typical message:
- "Now Open"
- "Grand Opening"
- Themes related to seasonal, holiday or community events
- Design to be compatible with project design theme
- 50 square feet maximum copy area per banner
- placed below roof eave
- use of special event signage for a period of time not to exceed 45
days per event
16
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- -------------------------------------------------------------------------------
EXHIBITS
NOTE: All maps and figures indicate typical design concepts and locations.
Exhibits are not intended to suggest final sign designs or exact locations
17
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- -------------------------------------------------------------------------------
18
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- -------------------------------------------------------------------------------
[MAP]
19
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
[MAP]
20
EXHIBIT J
-22-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ------------------------------------------------------------------------------ B
[DIAGRAM]
21
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ------------------------------------------------------------------------------ C
[DIAGRAM]
22
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ------------------------------------------------------------------------------ D
[DIAGRAM]
23
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- E1
[DIAGRAM]
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- F2
[DIAGRAM]
25
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ------------------------------------------------------------------------------ G
[DIAGRAM]
26
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H1
[DIAGRAM]
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H2
[DIAGRAM]
28
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H3
[DIAGRAM]
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EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H4
[DIAGRAM]
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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[DIAGRAM]
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
LEASE OPTION AGREEMENT
PEREGRINE SYSTEMS CORPORATE CENTER
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
as Landlord,
and
PEREGRINE SYSTEMS, INC.
a Delaware corporation
as Tenant
BUILDING 4
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER LEASE OPTION AGREEMENT
SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "SUMMARY"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "OFFICE LEASE") which
pertains to the "Project," as that term is defined in the Office Lease, to be
known as "PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 of the
Office Lease). This Summary and the Office Lease are collectively referred to
herein as the "LEASE". Each reference in the Office Lease to any term of this
Summary shall have the meaning set forth in this Summary for such term. In the
event of a conflict between the terms of this Summary and the Office Lease, the
terms of the Office Lease shall prevail. Any capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the Office
Lease.
<TABLE>
<CAPTION>
TERMS OF LEASE
(REFERENCES ARE TO THE OFFICE LEASE) DESCRIPTION
<S> <C>
1. Date: June 9, 1999.
2. Landlord: KR-CARMEL PARTNERS, LLC, a Delaware limited liability company.
3. Tenant: PEREGRINE SYSTEMS, INC., a Delaware corporation.
4. Premises (Article 1). The Premises is defined as the entire building to be constructed by Landlord,
consisting of approximately 118,061 rentable square (105,775 usable square
feet (as calculated on a multi-tenant usable basis for purposes of
determining Tenant's parking pursuant to Section 9 of the Summary below))
feet as generally depicted on Exhibit "A" to the Office Lease ("BUILDING").
5. Lease Term (Article 2). The Lease Term for Tenant's lease of the Building shall be twelve (12) years
commencing on the Lease Commencement Date for the initial Floor Group. The
Lease Commencement Date is estimated to be January 1, 2003 for Floors 3, 4,
and 5 and July 1, 2003 for Floors 1 and 2.
6. Initial Base Rent (Article 3): The initial Base Rent payable with respect to the Building shall be
calculated as follows:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Estimated Building Monthly Monthly Rental Rate Per
Rentable Square Installment of Rentable
Footage Base Rent Square Foot*
- ------------------------------------------------------------------------------
<S> <C> <C>
118,061 $297,513.72 $2.52
- ------------------------------------------------------------------------------
</TABLE>
*Plus electricity (as indicated in Section 6.2 of the Office Lease)
<TABLE>
<CAPTION>
<S> <C>
7. Additional Rent (Article 4).
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7.1 Base Year: The calendar year during which the Lease Commencement Date for the initial Floor Group
occurs.
7.2 Tenant's Share: See Article 4.
8. Security Deposit: See Article 21.
9. Parking Privileges (Article Four and one-half (4 1/2) parking permits for every 1,000 usable square feet of the Premises
28): as such square footage is determined as specified in Section 4 of the Summary. Each permit
shall entitle Tenant to utilize one (1) parking space on an unreserved basis in the Project
parking facilities.
10. Brokers (Section 29.18): John Burnham & Company (representing Landlord and Tenant) and CB Richard Ellis, Inc.
(representing Tenant only)
11. Address of Tenant 12670 High Bluff Drive
(Section 29.13): San Diego, CA 92130
Attention: Richard T. Nelson, Esq.
with a copy to:
12670 High Bluff Drive
San Diego, CA 92130
Attention: Mr. Robert Urwiler
</TABLE>
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<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER LEASE OPTION AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SUBJECT MATTER PAGE
- ------- --------------
<S> <C>
ARTICLE 1 LEASE OPTION, PREMISES, BUILDING, PROJECT, AND COMMON AREAS..........................................1
1.1 Premises, Building, Project and Common Areas....................................2
1.2 Verification of Rentable and Usable Square Feet of Premises, Building, and
Project.........................................................................3
ARTICLE 2 LEASE TERM...........................................................................................4
2.1 Initial Term....................................................................4
2.2 Options to Extend...............................................................5
ARTICLE 3 BASE RENT............................................................................................7
3.1 Initial Base Rent...............................................................7
3.2 Adjustments to Base Rent........................................................8
ARTICLE 4 ADDITIONAL RENT......................................................................................8
4.1 General Terms...................................................................8
4.2 Definitions of Key Terms Relating to Additional Rent............................8
4.3 Allocation of Direct Expenses..................................................15
4.4 Calculation and Payment of Additional Rent.....................................15
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible...............18
ARTICLE 5 USE OF PREMISES.....................................................................................18
5.1 Permitted Use..................................................................18
5.2 Prohibited Uses................................................................18
5.3 CC&R's.........................................................................19
ARTICLE 6 SERVICES AND UTILITIES..............................................................................19
6.1 Standard Tenant Services.......................................................19
6.2 Utilities Costs; Overstandard Tenant Use.......................................21
6.3 Interruption of Use............................................................22
6.4 Additional Services............................................................22
6.5 Utility Deregulation...........................................................22
6.6 Emergency Generator............................................................23
6.7 Substitution of Vendors........................................................23
6.8 Abatement Event................................................................24
ARTICLE 7 REPAIRS.............................................................................................24
7.1 Obligations....................................................................24
7.2 Tenant's Failure to Comply.....................................................25
7.3 Landlord's Failure to Comply...................................................25
ARTICLE 8 ADDITIONS AND ALTERATIONS...........................................................................26
8.1 Landlord's Consent to Alterations..............................................26
8.2 Manner of Construction.........................................................26
8.3 Payment for Improvements.......................................................27
8.4 Construction Insurance.........................................................27
8.5 Landlord's Property............................................................28
ARTICLE 9 COVENANT AGAINST LIENS..............................................................................28
ARTICLE 10 INSURANCE..........................................................................................28
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10.1 Indemnification and Waiver.....................................................28
10.2 Tenant's Compliance with Landlord's Fire and Casualty Insurance................29
10.3 Tenant's Insurance.............................................................29
10.4 Fire and Casualty Insurance of Landlord........................................29
10.5 Form of Policies...............................................................30
10.6 Subrogation....................................................................30
10.7 Additional Insurance Obligations...............................................30
ARTICLE 11 DAMAGE AND DESTRUCTION.............................................................................30
11.1 Repair of Damage to Premises by Landlord.......................................30
11.2 Landlord's Option to Repair....................................................31
11.3 Landlord's or Tenant's Option to Repair........................................31
11.4 Waiver of Statutory Provisions.................................................32
11.5 Damage Near End of Term........................................................32
ARTICLE 12 NONWAIVER..........................................................................................33
ARTICLE 13 CONDEMNATION.......................................................................................33
13.1 Permanent Taking...............................................................33
13.2 Temporary Taking...............................................................33
ARTICLE 14 ASSIGNMENT AND SUBLETTING..........................................................................33
14.1 Transfers......................................................................33
14.2 Landlord's Consent.............................................................34
14.3 Transfer Premium...............................................................35
14.4 Landlord's Option as to Subject Space..........................................36
14.5 Effect of Transfer.............................................................37
14.6 Additional Transfers...........................................................37
14.7 Affiliated and Permitted Transfers.............................................37
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES...................................................38
15.1 Surrender of Premises..........................................................38
15.2 Removal of Tenant Property by Tenant...........................................38
15.3 Removal of Tenant's Property by Landlord.......................................39
15.4 Landlord's Actions on Premises.................................................39
ARTICLE 16 HOLDING OVER.......................................................................................39
ARTICLE 17 ESTOPPEL CERTIFICATES..............................................................................40
ARTICLE 18 SUBORDINATION......................................................................................40
ARTICLE 19 DEFAULTS; REMEDIES.................................................................................41
19.1 Defaults.......................................................................41
19.2 Remedies Upon Default..........................................................42
19.3 Sublessees of Tenant...........................................................42
19.4 Form of Payment After Default..................................................43
19.5 Waiver of Default..............................................................43
19.6 Efforts to Relet...............................................................43
ARTICLE 20 COVENANT OF QUIET ENJOYMENT........................................................................43
ARTICLE 21 SECURITY DEPOSIT...................................................................................43
21.1 Letter of Credit...............................................................43
21.2 Financial Standards............................................................44
21.3 Conditional Release of Security................................................44
21.4 Cash Equivalent................................................................44
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ARTICLE 22 ROOF RIGHTS........................................................................................44
ARTICLE 23 SIGNAGE............................................................................................46
23.1 General........................................................................46
23.2 Tenant's Exterior Signage Rights...............................................46
23.3 Tenant's Interior Signage Rights...............................................47
ARTICLE 24 COMPLIANCE WITH LAW................................................................................47
ARTICLE 25 LATE PAYMENTS......................................................................................48
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT...............................................48
26.1 Landlord's Cure................................................................48
26.2 Tenant's Reimbursement.........................................................49
ARTICLE 27 ENTRY BY LANDLORD..................................................................................49
ARTICLE 28 TENANT PARKING.....................................................................................49
ARTICLE 29 MISCELLANEOUS PROVISIONS...........................................................................50
29.1 Binding Effect.................................................................50
29.2 Modification of Lease/Memorandum of Lease......................................51
29.3 Transfer of Landlord's Interest................................................51
29.4 Consents by the Parties........................................................51
29.5 Captions.......................................................................51
29.6 Time of Essence................................................................51
29.7 Partial Invalidity.............................................................51
29.8 No Warranty....................................................................51
29.9 Construction...................................................................52
29.10 Entire Agreement...............................................................52
29.11 Right to Lease.................................................................52
29.12 Force Majeure..................................................................52
29.13 Notices........................................................................52
29.14 Joint and Several..............................................................53
29.15 Authority......................................................................53
29.16 Governing Law..................................................................53
29.17 Submission of Lease............................................................53
29.18 Brokers........................................................................53
29.19 Independent Covenants..........................................................54
29.20 Project or Building Name and Signage...........................................54
29.21 Transportation Management......................................................54
29.22 No Discrimination..............................................................54
29.23 Hazardous Material.............................................................54
29.24 Development of the Project.....................................................55
29.25 Landlord Exculpation...........................................................55
29.26 Waiver of Redemption by Tenant.................................................56
29.27 Attorneys' Fees................................................................56
29.28 Communications and Computer Lines..............................................56
29.29 No Air Rights..................................................................56
29.30 Counterparts...................................................................56
29.31 Confidentiality................................................................56
29.32 Disclosures and Mutual Release.................................................56
EXHIBIT "A" SITE PLAN
EXHIBIT "B" TENANT WORK LETTER
EXHIBIT "C" NOTICE OF LEASE TERM DATES
EXHIBIT "D" RULES AND REGULATIONS
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EXHIBIT "E" FORM OF TENANT'S ESTOPPEL CERTIFICATE
EXHIBIT "F" CC&R'S
EXHIBIT "G" HVAC AND ELECTRICAL STANDARDS
EXHIBIT "H-1" JANITORIAL SPECIFICATIONS
EXHIBIT "H-2" DAY PORTER SPECIFICATIONS
EXHIBIT "I" SECURITY SYSTEMS AND PERSONNEL
EXHIBIT "J" SIGNAGE CRITERIA
</TABLE>
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<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER LEASE OPTION AGREEMENT
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Abatement Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Abatement Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Accelerated Force Majeure Period . . . . . . . . . . . . . . . . . . . . . . 17
Acceptable Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Actual Surrender Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Adjacent Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjacent Building Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjacent Building Working Drawings . . . . . . . . . . . . . . . . . EXHIBIT B
Adjustment Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Aggregate Force Majeure Period . . . . . . . . . . . . . . . . . . . . . . . 17
Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Approved Working Drawings . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Base Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Base, Shell and Core . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Base, Shell and Core Completion . . . . . . . . . . . . . . . . . . . EXHIBIT B
BOMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Building 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 1 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 2 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 3 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building 5 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Building Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Building Direct Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Building Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Building Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 8
Building Systems and Equipment . . . . . . . . . . . . . . . . . . . . . . . 21
Building Tax Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Building Top Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CAD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CC&R's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Change Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36. EXHIBIT B
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Communication Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Comparable Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Construction Schedule . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Cost Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cost Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Cost Proposal Delivery Date . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Delivery Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Designated Subcontractors . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Direct Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Director Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Electric Service Provider . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Eligibility Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Estimate Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Estimated Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess Over-Allowance Amount . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Excusable Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Exercise Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expansion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expansion Reminder Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expense Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Extension Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Extension Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Extension Reminder Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Extension Term Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Extension Term Commencement Date . . . . . . . . . . . . . . . . . . . . . . 5
Extension Term(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Fair Market Rental Value . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Final Space Plan . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Financial Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Floor Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Force Majeure Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 16
Force Majeure Extension Options . . . . . . . . . . . . . . . . . . . . . . . 17
Force Majeure Termination Notice . . . . . . . . . . . . . . . . . . . . . . 16
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Holdover Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Holdover Notice Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
HVAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
KRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Landlord Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Landlord Supervision Fee . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Landlord Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Landlord Work Change Orders . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lease Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Lease Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Lease Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Major Project Milestones . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Objectionable Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Original Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Other Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Outside Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Outside Date Extension Notice . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Outside Date Termination Notice . . . . . . . . . . . . . . . . . . . EXHIBIT B
Over-Allowance Amount . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Package Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Partial Cost Proposal . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Peregrine Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Permitted Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Permitted Signage Entities . . . . . . . . . . . . . . . . . . . . . . . . . 46
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Pre-Judgment Offset Amount . . . . . . . . . . . . . . . . . . . . . . . . . 26
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Premium Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Premium Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Progress Payment Request . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
viii
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Project Architect . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project Architect Agreement . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Project Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Proposition 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Qualifying Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Qualifying Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Qualifying Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Readjustment Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Reassessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Recapture Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Reno . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Review Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Shell Completion Dates . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Signage Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Single Appraiser Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Site Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
space comparable to the Building . . . . . . . . . . . . . . . . . . . . . . 6
Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Standard Improvement Package . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Subject Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Subleasing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Substantial Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Tax Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Tenant Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Tenant Improvement Allowance . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Tenant Improvement Allowance Items . . . . . . . . . . . . . . . . . EXHIBIT B
Tenant Improvements . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Tenant Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Tenant Work Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tenant's Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Tenant's Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Threshold Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Time Deadlines . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Title 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Transfer Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transfer Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Withdrawal Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Working Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B
Y2K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<PAGE>
PEREGRINE SYSTEMS CORPORATE CENTER
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "SUMMARY") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "LEASE"), dated as of the date set forth in Section 1 of the
Summary is made by and between KR-CARMEL PARTNERS, LLC, a Delaware limited
liability company ("LANDLORD"), and PEREGRINE SYSTEMS, INC., a Delaware
corporation ("TENANT").
ARTICLE 1
LEASE OPTION, PREMISES, BUILDING, PROJECT, AND COMMON AREAS
Landlord hereby grants to Tenant the option (the "EXPANSION OPTION") to
lease Building 4 on the terms and conditions set forth in this Lease. The
Expansion Option may be exercised by Tenant's delivery to Landlord of a written
and irrevocable notice of exercise ("EXERCISE NOTICE") at any time on or before
July 1, 2001 (which date is eighteen (18) months prior to the Estimated Lease
Commencement Date set forth in Section 5 of the Summary), but in no event shall
such Exercise Notice be delivered after July 1, 2001, provided Landlord has
given to Tenant the notice described in the following sentence. If Landlord has
not received the Exercise Notice by June 1, 2001, Landlord may give written
notice ("EXPANSION REMINDER NOTICE") to Tenant that the Expansion Option for the
Building will expire if Tenant fails to deliver to Landlord on or before the
date which is thirty (30) days after the date of such Expansion Reminder Notice
from Landlord, the Exercise Notice. If Tenant still fails to deliver the
Exercise Notice within thirty (30) days after the date of such Expansion
Reminder Notice from Landlord, Tenant shall be deemed to have elected not to
exercise its Expansion Option. The parties acknowledge that Tenant's Expansion
Option will not lapse until the date which is thirty (30) days after Landlord's
delivery of the Expansion Reminder Notice pursuant to this Article 1. If Tenant
properly exercises the Expansion Option, Landlord shall use commercially
reasonable efforts to deliver the initial Floor Group in the Building for
Tenant's occupancy on the date which is eighteen (18) months after Tenant's
delivery to Landlord of the Exercise Notice (and the Estimated Lease
Commencement Date for the initial Floor Group in the Building shall be so
adjusted). Tenant may exercise the Expansion Option only if this Lease is in
full force and effect and there is no uncured Event of Default at the time of
exercise of the Expansion Option (with respect to this Lease and/or any Adjacent
Building Leases), but Landlord shall have the right at its sole discretion to
waive such conditions herein. Notwithstanding anything to the contrary
contained in this Section 1.3, the rights of Tenant to lease the Building shall
be personal to the original tenant named in the Summary ("ORIGINAL TENANT") and
to any Permitted Affiliate (as defined in Section 14.7 below) and may be
exercised by such Original Tenant or any such Permitted Affiliate only if
Tenant, at the time of Tenant's Exercise Notice meets or exceeds the "Financial
Standards" set forth in Section 21.2 below. Approximately nine (9) months
before the scheduled date of completion of the Base Shell and Core for the
Building, Landlord and Tenant shall meet and begin the development of plans and
specifications for the construction of Tenant Improvements in the Building in
accordance with the Tenant Work Letter. Tenant and Landlord shall promptly
execute such supplementary documents or amendments to this Lease as Landlord or
Tenant shall deem reasonably necessary to document Tenant's exercise of the
Expansion Option. Until such time as Landlord commences construction of the
Building Landlord shall install landscaping on the building pad for the Building
pursuant to a landscape plan approved by the City of San Diego. Tenant shall
have the right to review and reasonably approve (taking into consideration that
such landscaping is intended to be temporary pending construction of the
Building) such landscape plan prior to Landlord's submittal to the City of San
Diego. If Landlord delivers written notice to Tenant in accordance with the
notice provisions of this Lease that Tenant's failure to disapprove such
landscape plan may be deemed to constitute Tenant's approval thereof, Tenant's
failure to notify Landlord in writing of its reasonable disapproval of such
landscape plan within ten (10) business days after Tenant's receipt thereof
shall be deemed
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to constitute Tenant's approval. The cost of maintaining such temporary
landscaping shall be excluded from Operating Expenses.
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Upon and subject to the terms hereinafter set
forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 4 of the Summary (the
"PREMISES"), consisting of the Building described therein and more particularly
depicted on the Site Plan attached hereto as EXHIBIT "A" (the "SITE PLAN"). The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of the Site Plan is to show the
location of the Building and the Adjacent Buildings only, and such Exhibit is
not meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the Common Areas, as that term is defined in Section 1.1.3 below and the
elements thereof or of the accessways to the Premises or the "Project," as that
term is defined in Section 1.1.2 below. Landlord will not make material changes
to the Site Plan without the prior written approval of Tenant, which consent
shall not be unreasonably withheld or delayed. However, notwithstanding the
foregoing, Landlord may make changes to the Site Plan due to topography,
underground conditions, and governmental requirements in order to resolve issues
which arise during construction of the Project without the prior written
approval of Tenant, provided that (i) any such changes to the Site Plan due to
topography may be made to landscaping only (and not to other Site Plan items)
without the prior written approval of Tenant, and (ii) with respect to changes
that do not require the approval of Tenant pursuant to this sentence, Landlord
shall notify Tenant of any material changes made to the Site Plan. Except as
specifically set forth in this Lease and in the Tenant Work Letter attached
hereto as EXHIBIT "B" (the "TENANT WORK LETTER"), Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises. Tenant also acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
condition of the Premises, the Building, the Adjacent Buildings or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 THE PROJECT. The Premises are located in the City and County
of San Diego, California, and are a part of the project to be known as
"PEREGRINE SYSTEMS CORPORATE CENTER" (subject to Section 29.20 below). The term
"PROJECT," as used in this Lease, shall mean (i) the Building, the Adjacent
Buildings and the "Common Areas", as that term is defined in Section 1.1.3
below, and (ii) the land (which is or will be improved with landscaping, parking
facilities and other improvements) upon which the Buildings and the Common Areas
are to be located. For purposes of this Lease, the term "BUILDING 1" shall mean
that building to be constructed by Landlord at the location so designated on the
Site Plan, "BUILDING 2" shall mean that building to be constructed by Landlord
at the location so designated on the Site Plan, "BUILDING 3" shall mean that
building to be constructed by Landlord at the location so designated on the Site
Plan, and "BUILDING 5" shall mean that building to be constructed by Landlord at
the location so designated on the Site Plan. Building 1, Building 2, Building 3
and Building 5 may be collectively referred to herein as the "ADJACENT
BUILDINGS." Landlord and Tenant hereby acknowledge that, concurrently with the
execution and delivery of this Lease, Landlord and Tenant are entering into
separate leases for Building 1 (the "BUILDING 1 LEASE"), Building 2 (the
"BUILDING 2 LEASE"), Building 3 (the "BUILDING 3 LEASE") and Building 5 (the
"BUILDING 5 LEASE") whereby Tenant shall lease from Landlord all of Building 1,
all of Building 2, all of Building 3 and all of Building 5. The Building 1
Lease, Building 2 Lease, Building 3 Lease and Building 5 Lease may be
collectively referred to herein as the "ADJACENT BUILDING LEASES."
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in
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Article 5 of this Lease, those portions of the Project which are provided,
from time to time, for use in common by Landlord, Tenant and any other
tenants of the Project, whether or not those areas are open to the general
public (such areas are collectively referred to herein as the "COMMON
AREAS"). The Common Areas shall consist of the Project Common Areas and the
Building Common Areas. The term "PROJECT COMMON AREAS," as used in this
Lease, shall mean the portion of the Project designated as such in the Site
Plan. The Project Common Areas shall consist of all parking facilities,
entrances and exits, driveways, exterior walkways, first-class landscaped and
hardscaped areas which are generally consistent with the quality of
landscaped and hardscaped areas of Comparable Buildings in existence as of
the date of this Lease, open space areas and plazas on the real property
comprising the Project. The term "BUILDING COMMON AREAS," as used in this
Lease, shall mean the portions of the Common Areas located within any
building in the Project not entirely leased by Tenant, which Building Common
Areas shall be reasonably designated as such by Landlord. Notwithstanding the
foregoing and subject to (i) Landlord's approval, which approval (as
indicated in Section 29.4 below) shall not be unreasonably withheld or
delayed, (ii) the CC&R's, and (iii) all terms of this Lease regarding
Hazardous Materials, Tenant may install or locate such items as benches,
patio tables, bike racks, above-ground generators, security cameras and the
like (collectively, "MISCELLANEOUS COMMON AREA ITEMS") at Tenant's sole cost
in the Common Areas or on the exterior of the Building, as applicable,
provided that Tenant removes such items upon the expiration or earlier
termination of this Lease and repairs any damage to the Common Areas or the
exterior of the Building (as applicable) resulting from such removal. If
Tenant fails to remove any Miscellaneous Common Area Item or to repair any
damage resulting from such removal upon the expiration or earlier termination
of this Lease, Landlord may do so and may charge Landlord's actual cost
thereof to Tenant. The manner in which the Common Areas are maintained and
operated shall be in accordance with a standard which is not less than that
customarily followed in the operation and maintenance of first class mid-rise
office buildings located within the University Towne Center (i.e., the area
from two (2) blocks to the North of La Jolla Village Drive to two (2) blocks
to the South of La Jolla Village Drive between the I-5 and I-805 freeways),
Del Mar, Carmel Valley and Torrey Hills geographical areas, provided that
Landlord shall manage, maintain and operate the same in a manner consistent
with that of Comparable Buildings, and the use thereof shall be subject to
such rules and regulations as Landlord reasonably may make from time to time.
As used herein, "COMPARABLE BUILDINGS" shall mean the first class mid-rise
office buildings (now existing or subsequently constructed) within the
projects located within the University Towne Center, Del Mar, Carmel Valley
and Torrey Hills geographical areas and having substantially similar
characteristics to the Building pertaining to size, age, accessibility,
design, quality, amenities and tenancies. Landlord reserves the right to
make alterations or additions to, or to change the location of, elements of
the Project and the Common Areas, provided that if any such changes might
affect Tenant's use of the Premises (in other than an immaterial manner),
Landlord obtains Tenant's prior written approval of any such alterations,
additions and changes and such alterations, additions and changes do not
unreasonably interfere with Tenant's access to the Premises. Except when and
where Tenant's right of access is specifically excluded in this Lease, Tenant
shall have the right of access to the Building and the parking facilities
twenty-four (24) hours per day, seven (7) days per week during the Lease Term.
1.2 VERIFICATION OF RENTABLE AND USABLE SQUARE FEET OF PREMISES,
BUILDING, AND PROJECT. The number of rentable and usable square feet in the
Premises and the Building shall be determined pursuant to the Standard Method
for Measuring Floor Area in Office Buildings, ANSI Z65.1 - 1996 ("BOMA").
The parties acknowledge that the number of Tenant's parking permits (as
specified in Section 9 of the Summary) shall be determined on a multi-tenant
usable basis and that the amount of the Tenant Improvement Allowance (and all
other amounts in EXHIBIT "B" which vary based on usable square footage) shall
be determined on a single-tenant usable basis. The number of rentable and
usable square feet of the Building shall be initially determined by Landlord
from the "as-built" drawings for the Building utilizing Landlord's computer
assisted design ("CAD") system. Tenant shall have the option, exercisable by
written notice to Landlord within thirty (30) days following Tenant's receipt
of such initial determination by Landlord, to cause the number of rentable
and usable square feet of the Building to be verified by an architect,
planner, designer or consultant specializing in measuring square footage
selected
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by Landlord and reasonably approved by Tenant and such verification shall be
made in accordance with the provisions of this Article 1. In addition, the
number of rentable square feet of any other buildings within the Project not
leased by Tenant are subject to verification by an architect, planner, designer
or consultant specializing in measuring square footage selected by Landlord and
such verification shall be made in accordance with the provisions of this
Article 1. The cost of any such verification of square footage figures as
specified in this Section 1.2 above shall be borne fifty percent (50%) by
Landlord and fifty percent (50%) by Tenant. In the event that such architect,
planner, designer or consultant determines that the amounts thereof are
different from those set forth in this Lease, all amounts, percentages and
figures appearing or referred to in this Lease based upon such incorrect amount
(including, without limitation, the amount of the Rent, Tenant's Share and
Tenant Improvement Allowance, as those terms are defined in this Lease) shall be
modified in accordance with such determination. Absent manifest error, such
determination shall be final and conclusive. As such determination is made, it
will be confirmed in writing by Landlord and Tenant, and Landlord and Tenant
shall execute an amendment to this Lease confirming the changed amounts of Rent,
Tenant's Share and the Tenant Improvement Allowance.
ARTICLE 2
LEASE TERM
2.1 INITIAL TERM. The terms, covenants and conditions and provisions of
this Lease shall be effective as of the date of this Lease. The term of this
Lease (the "LEASE TERM") shall be as set forth in Section 5 of the Summary and
shall commence ("LEASE COMMENCEMENT DATE") on the earlier of (i) the date
Tenant's work stations are installed and cabled with respect to the initial
Floor Group (i.e., Floors 3, 4 and 5) or (ii) eight (8) business days after
"Substantial Completion" by Landlord of the Tenant Improvements for such initial
Floor Group in the Building, provided Landlord has given to Tenant at least
sixty (60) days' prior written notice of the date Landlord estimates for
Substantial Completion for such initial Floor Group in the Building (if such
date is more than thirty (30) days different from the estimated date specified
in the Summary). The Lease Commencement Date for each Floor Group shall not
under any circumstances occur earlier than the day which is thirty (30) days
earlier than the Estimated Lease Commencement Date set forth in Section 5 of the
Summary unless Tenant elects to commence business operations within such
Building as of an earlier date; however, if Tenant delivers its Exercise Notice
prior to July 1, 2001, the Estimated Lease Commencement Date for the initial
Floor Group set forth in Section 5 of the Summary shall be deemed to be
accelerated for each day prior to July 1, 2001, that such notice is delivered.
The Lease Term shall terminate (the "LEASE EXPIRATION DATE") on the last day of
the month in which the twelfth (12th) anniversary of the Lease Commencement Date
occurs, unless this Lease is sooner terminated or extended as hereinafter
provided. For purposes of this Lease, the term "LEASE YEAR" shall mean each
consecutive twelve (12) month period during the Lease Term; provided, however,
that the first Lease Year shall commence on the Lease Commencement Date and the
last Lease Year shall end on the Lease Expiration Date. For purposes of this
Lease, "SUBSTANTIAL COMPLETION" shall occur upon the completion of construction
of the Tenant Improvements in the Building pursuant to the plans and drawings
which are prepared pursuant to the terms of the Tenant Work Letter (provided,
however, Substantial Completion shall occur with respect to the Tenant
Improvements for each phased Floor Group as more particularly set forth in
Section 5 of the Summary). The completion of the construction with respect to
any such Tenant Improvements shall not be deemed to have occurred unless and
until (i) Landlord has delivered the portion of the Premises covered by such
Tenant Improvements to Tenant in broom-clean condition subject only to punch
list items and any tenant fixtures, workstations or equipment to be installed by
Tenant in the Premises pursuant to the terms of the Tenant Work Letter (the
"TENANT WORK") (i.e., the completion of punchlist items and Tenant Work shall
not affect Substantial Completion), (ii) a temporary certificate of occupancy or
its equivalent permitting occupancy of such portion of the Premises improved
with such Tenant Improvements has been issued by the City of San Diego or other
applicable governmental agency, (iii) all essential building systems to be
installed by Landlord (including, but not limited to, electrical, plumbing,
heat, air conditioning systems, and their distribution into such portions of the
Premises) are operational to the extent reasonably
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necessary to service the portion of the Premises covered by such Tenant
Improvements, and (iv) Tenant has been provided with the parking to which it is
entitled under this Lease . If a temporary certificate of occupancy or its
equivalent is issued by the City of San Diego, Landlord shall use commercially
reasonable efforts to obtain a permanent certificate of occupancy within three
(3) months after the Lease Commencement Date (except to the extent the receipt
of such permanent certificate is delayed as a result of the Tenant Work or any
actions of Tenant, its agents, employees or contractors). At any time during
the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth
in EXHIBIT "C" attached hereto, which notice (so long as it contains accurate
information) Tenant shall execute and return to Landlord within ten (10) days of
receipt thereof. If Tenant contends that such notice contains inaccurate
information, Tenant shall modify such notice as appropriate and return such
notice to Landlord within said ten (10) day period.
2.2 OPTIONS TO EXTEND. Tenant shall have two (2) option(s) to extend (the
"EXTENSION OPTIONS") the Lease Term for consecutive five (5) year period(s) (the
foregoing option term(s) shall be referred to hereinafter sometimes as the
"EXTENSION TERM(S)"), by delivering a written notice of exercise to Landlord
("EXTENSION NOTICE") with respect to the applicable Extension Term, which
Extension Notice may not be delivered earlier than the date which is eighteen
(18) months prior to the end of the initial Lease Term or first Extension Term
(as applicable) and may not be delivered later than the date which is thirty
(30) days after the Reminder Notice. If Landlord has not received an applicable
Extension Notice by the date which is twelve (12) months prior to the end of the
initial Lease Term or first Extension Term (as applicable), Landlord may provide
written notice ("EXTENSION REMINDER NOTICE") to Tenant that the Extension Option
will expire if Tenant fails to deliver the Extension Notice to Landlord within
thirty (30) days after the date of such notice from Landlord. If Tenant fails
to deliver the Extension Notice within said thirty (30) day period, Tenant shall
be deemed to have waived its right to exercise such Extension Option. The
parties acknowledge that Tenant's Extension Option will not lapse until the date
which is thirty (30) days after Landlord's delivery of the Extension Reminder
Notice pursuant to this Section 2.2. The Extension Option shall apply to all
space (and not a portion of the space) then leased by Tenant in the Building.
Tenant may exercise the Extension Option(s) only if this Lease is in full force
and effect and there is no uncured Event of Default under this Lease, at the
time of exercise of such Extension Option and/or at the time of the commencement
of the Extension Term, but Landlord shall have the right to waive such
conditions herein. Tenant's exercise of the second (2nd) Extension Option shall
be conditioned upon Tenant's exercise of the first Extension Option. The rights
of Tenant contained in this Section 2.2 shall be personal to the Original Tenant
and any Permitted Affiliate and may only be exercised by the Original Tenant or
such Permitted Affiliate if Tenant, at the date of Tenant's Extension Notice,
meets or exceeds the Financial Standards set forth in Section 21.2 below. The
Base Rent during each Extension Term ("EXTENSION TERM BASE RENT") shall be an
amount equal to ninety-five percent (95%) of the then "Fair Market Rental Value"
of the Building (as such term is defined in Section 2.2(e) below), as stated on
a monthly basis and determined pursuant to this Section 2.2 as of the first
(1st) day of the applicable Extension Term ("EXTENSION TERM COMMENCEMENT DATE");
provided, however, in no event shall the Base Rent payable during any Extension
Term for the Building be less than the Base Rent payable during the period
immediately preceding such Extension Term for the Building and provided further
that, on the first anniversary of the Extension Term Commencement Date, and on
each subsequent anniversary thereof during such Extension Term, the then payable
monthly Extension Term Base Rent shall be increased in accordance with market
rate increases, as mutually agreed to by Landlord and Tenant or, if Landlord and
Tenant cannot agree, as determined by the appraisal process described below.
Upon receipt by Landlord of Tenant's Extension Notice under this Section 2.2,
above, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the applicable Extension Term Base Rent which shall become effective as of the
respective Extension Term Commencement Date. If Landlord and Tenant have not
agreed upon the Extension Term Base Rent (including the annual market rate
increases) on or before the "Withdrawal Date" (as that term is defined below),
Tenant may elect to withdraw the Extension Notice thereby canceling Tenant's
exercise of the Extension Option. The term "WITHDRAWAL DATE" shall mean (i) if
Landlord delivers the Reminder Notice prior to Tenant's delivery of the
Extension Notice, the date which is thirty (30) days after the date of the
Reminder Notice, or (ii)
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if Landlord has not yet delivered a Reminder Notice at the time of Tenant's
delivery of the Extension Notice, the date which is the earlier of (1) the date
which is eleven (11) months prior to the end of the initial Lease Term or first
Extension Term (as applicable), or (2) the date which is sixty (60) days after
the date of Tenant's delivery of the Extension Notice. If Tenant fails to
deliver written notice to Landlord so withdrawing the Extension Notice on or
before the Withdrawal Date and if Landlord and Tenant have not agreed upon the
Extension Term Base Rent (including the annual market rate increases) within
sixty (60) days after the delivery of Tenant's Extension Notice, the Extension
Term Base Rent shall be determined as follows:
(a) Landlord and Tenant shall attempt to agree in good faith upon
a single appraiser not later than the date ("SINGLE APPRAISER DATE") which is
forty-five (45) days after delivery of Tenant's Extension Notice. If Landlord
and Tenant are unable to agree upon a single appraiser within such time period,
then Landlord and Tenant shall each appoint one appraiser not later than five
(5) days after the deadline for selecting a single appraiser. Landlord and
Tenant shall each give written notice to the other as to the name of the
appraiser it has selected, within five (5) days after the deadline for selecting
a single appraiser. Within ten (10) days thereafter, the two (2) appointed
appraisers shall appoint a third appraiser. All appraisers shall be independent
from, and disinterested in, both Landlord and Tenant.
(b) The only tasks which the appraiser(s) shall perform shall be
forming and reporting to Landlord and Tenant an opinion of the Fair Market
Rental Value (including annual market rate increases) of the Premises for use in
determining the Extension Term Base Rent.
(c) If either Landlord or Tenant fails to appoint its appraiser
within the prescribed time period, the single appraiser appointed shall
determine the Fair Market Rental Value of the Building. If both parties fail to
appoint appraisers within the prescribed time periods, or if the two (2)
appointed appraisers cannot agree on a third appraiser then either party shall
have the right to apply to the presiding judge of the Superior Court of San
Diego County for the appointment of an appraiser meeting the qualifications
hereof to determine the Fair Market Rental Value of such Building.
(d) Each party shall bear the cost of its own appraiser and the
parties shall share equally the cost of any single or third appraiser, if
applicable. All appraisers so designated herein shall have at least ten (10)
years' experience in the appraisal of commercial properties similar to the
Premises and Comparable Buildings and shall be members of professional
organizations such as MAI or its equivalent.
(e) For the purpose of such appraisal and this subsection (e), the
term "FAIR MARKET RENTAL VALUE" shall mean the price that a ready and willing,
non-equity, non-sublease tenant would pay as annual rent as of the Extension
Term Commencement Date (taking into consideration the annual market rate
increases specified in Section 2.2(b) above) and a ready and willing landlord
would accept on a non-sublease, non-renewal basis, at arm's length, from
creditworthy tenants (provided Tenant is then in compliance with the Financial
Standards specified in Section 21.2) for a five (5) year term for unencumbered
"space comparable to the Building" in Comparable Buildings. Such "space
comparable to the Building" shall mean office space consisting of an entire
building, with tenant improvements of substantially similar quality and layout
as the Premises. Fair Market Rental Value shall include or take into
consideration any lease concessions offered by landlords in lease transactions
from and after the date which is twelve (12) months prior to the Single
Appraiser Date (the "QUALIFYING PERIOD") for space comparable to the Building
within such Comparable Buildings, including, without limitation, free rent,
tenant improvement allowances or any other payments or concessions; however,
Fair Market Rental Value shall also take into consideration (i) the market trend
(i.e., all other factors being equal, comparable transactions entered into
earlier in the Qualifying Period shall be accorded less weight than comparable
transactions entered into later in the Qualifying Period), and (ii) the value in
the market of the existing improvements in the Building, as compared to the
value in the market of the existing improvements in such space comparable to the
Building. Further, in calculating the Fair Market Rental Rate, no consideration
shall be given to the fact that Landlord is or is not required to pay a real
estate brokerage commission in connection with
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the Extension Term or the fact that comparable deals do or do not involve the
payment of real estate brokerage commissions. If there are less than two (2)
lease transactions for "space comparable to the Building," as defined in this
Section 2.2(e), entered into during the Qualifying Period, then the term "space
comparable to the Building" shall be expanded as necessary to allow appraiser(s)
to consider lease transactions covering multiple floors in a building (but less
than an entire building) with the appraiser(s) making appropriate economic
adjustments to compensate for such lease transactions in which less than the
entire building is leased by the tenant.
(f) If a single appraiser is chosen, then such appraiser shall
determine the Fair Market Rental Value of the Building. Otherwise, the Fair
Market Rental Value of the Building shall be the arithmetic average of the two
(2) appraisals which are closest in amount, and the third appraisal shall be
disregarded.
(g) Landlord and Tenant shall instruct the appraiser(s), in
writing, to complete their written determination of the Fair Market Rental Value
not later than thirty (30) days after their selection. If the Fair Market
Rental Value has not been determined by such date, then the Fair Market Rental
Value shall be determined thereafter, and if it has not been determined by the
Extension Term Commencement Date, then Tenant shall continue to pay Landlord
monthly installments of Base Rent in the amount applicable to the Building
immediately prior to the Extension Term Commencement Date until the Fair Market
Rental Value is determined. When the Fair Market Rental Value of the Building
is determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between the monthly installments of Base Rent actually paid by Tenant
to Landlord subsequent to the Extension Term Commencement Date and the new
monthly installments of Base Rent which are determined to have been actually
owing during such period in accordance with this Section 2.2, plus interest at
the Interest Rate from the date the applicable monthly installments were due
until such difference is actually paid.
ARTICLE 3
BASE RENT
3.1 INITIAL BASE RENT. Tenant shall pay, without notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or at such
other place as Landlord may from time to time designate in writing, in currency
or a check for currency which, at the time of payment, is legal tender for
private or public debts in the United States of America, base rent ("BASE RENT")
as set forth in Section 6 of the Summary, payable in equal monthly installments
as set forth in Section 6 of the Summary in advance on or before the first day
of each and every month during the Lease Term, without any offset or deduction
whatsoever except as otherwise expressly set forth in this Lease. Base Rent
shall commence on the Lease Commencement Date; provided, however, it is
anticipated that the Tenant Improvements will be built-out in phases consisting
of groups of floors ("FLOOR GROUP") as more particularly set forth in Section 5
of the Summary. Accordingly, and notwithstanding anything to the contrary
contained in this Lease, Tenant's obligation to commence payment of Base Rent
(and Additional Rent) with respect to the Building shall commence on the Lease
Commencement Date for each Floor Group, as specified in Section 5 of the
Summary. Tenant may decide the exact phasing of the Floor Groups within the
Building, as Tenant prepares the Final Space Plan for such Building pursuant to
the Tenant Work Letter (e.g., Tenant may elect to have the Estimated Lease
Commencement Date for floors 2, 3 and 4 be January 1, 2003 and the Estimated
Lease Commencement Date for floors 1 and 5 be July 1, 2003); provided, however,
such phasing shall have no impact on the Lease Commencement Date for the number
of floors in each Floor Group and each Floor Group shall have the same number of
floors as specified in Section 5 of the Summary. As more particularly set forth
in Section 2.1, the Lease Commencement Date for the Building shall occur upon
the Lease Commencement Date for the initial first Floor Group within the
Building, it being the intent of Landlord and Tenant that the Lease Term shall
expire on the last day of the month in which the twelfth (12th) anniversary of
Tenant's lease of the initial Floor Group within the Building occurs. The Base
Rent for the first full month of the Lease Term shall be paid on or before the
date which is ninety (90) days after Landlord notifies Tenant in writing that it
has
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commenced construction of the Base Shell and Core with respect to such Building.
Landlord shall invest such payment of the first month's Base Rent in a
Certificate of Deposit with a maturity date approximately that of the Lease
Commencement Date in a financial institution selected by Landlord, and any
interest accruing thereon shall be credited to Tenant's Base Rent obligations
for the second (2nd) full month of the Lease Term. If any Rent payment date
(including the Lease Commencement Date) falls on a day of the month other than
the first day of such month or if any payment of Rent is for a period which is
shorter than one month, the Rent for any fractional month shall accrue on a
daily basis for the period from the date such payment is due to the end of such
calendar month or to the end of the Lease Term at a rate per day which is equal
to 1/365 of the Rent. All other payments or adjustments required to be made
under the terms of this Lease that require proration on a time basis shall be
prorated on the same basis.
3.2 ADJUSTMENTS TO BASE RENT. The Base Rent rate payable (per rentable
square foot) with respect to each Floor Group shall be increased on the second
(2nd) anniversary of the Lease Commencement Date for the initial Floor Group and
on each subsequent second (2nd) anniversary thereof during the initial Lease
Term to an amount equal to 106.5% of the Base Rent rate payable (per rentable
square foot) during the immediately prior period, subject to further adjustment
during any Extension Term in accordance with Section 2.2 above.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.9 and
4.2.2 of this Lease, respectively, which are in excess of the amount of Building
Direct Expenses applicable to the "Base Year" for such Building, as that term is
defined in Section 4.2.1, below; provided, however, if the Lease Commencement
Date for the initial Floor Group occurs after January 1 of the Base Year, the
amount of Building Direct Expenses applicable to the Base Year shall be
increased in order to reflect Building Direct Expenses for an entire twelve (12)
month period. Further, in no event shall any decrease in Building Direct
Expenses for such Building for any "Expense Year" for the Building as that term
is defined in Section 4.2.6 below, below Building Direct Expenses for the Base
Year entitle Tenant to any decrease in Base Rent for the Building or any credit
against sums due under this Lease. It is the intent of Landlord and Tenant
hereunder that Building Direct Expenses be calculated for the Building
separately based on the Building Direct Expenses allocated to such Building.
Such payments by Tenant, together with any and all other amounts payable by
Tenant to Landlord pursuant to the terms of this Lease, are collectively
referred to in this Lease as the "ADDITIONAL RENT", and the Base Rent and the
Additional Rent are collectively referred to in this Lease as "RENT." All
amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner as the Base Rent. Without limitation on
other obligations of Tenant which survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4,
and the obligation of Landlord to refund to Tenant any overpayment of Building
Direct Expenses pursuant to Section 4.2 below, shall survive the expiration of
the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 7.1 of
the Summary.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses," as those terms are defined in Sections
4.2.3 and 4.2.4 below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3.1 below.
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4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses," as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3.1 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts which Landlord pays or accrues during any Expense Year because of or
in connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof.
Without limiting the generality of the foregoing, Operating Expenses shall
specifically include any and all of the following: (i) the cost of supplying
all utilities to the Project (except that electricity supplied to the
Premises shall be separately paid for by Tenant pursuant to Section 6.2.2
below), the cost of operating, repairing, maintaining, and renovating the
utility, telephone, mechanical, sanitary, storm drainage, and elevator
systems, and the cost of maintenance and service contracts in connection
therewith; (ii) the cost of licenses, certificates, permits and inspections
(other than those obtained in connection with the initial construction of the
Building and the Tenant Improvements) and the cost of contesting any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with a governmentally mandated transportation system
management program or similar program; (iii) the cost of all insurance
carried by Landlord in connection with the Project as reasonably determined
by Landlord; (iv) the cost of landscaping, relamping, and supplies, tools,
equipment and materials used in the operation, repair and maintenance of the
Project, or any portion thereof; (v) the cost of parking area (including any
parking structures) repair, restoration, and maintenance; (vi) reasonable
fees and other costs, including reasonable management, consulting, legal and
accounting fees, of all contractors and consultants in connection with the
management, operation, maintenance and repair of the Project; (vii) payments
under any equipment rental agreements and the fair rental value of any
on-site or off-site management office space for the Project (as described in
Section 6.1.4 below) not to exceed 2,000 rentable square feet (which fair
rental value for the purpose of determining the Direct Expenses for the Base
Year and any subsequent Expense Years shall be the same rate per rentable
square foot as the monthly rental rate per rentable square foot paid by
Tenant to Landlord from time to time for Building 1 under the Building 1
Lease); (viii) wages, salaries and other compensation and benefits, including
taxes levied thereon, of all non-executive persons reasonably engaged in the
operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the reasonable sharing of costs by the Project
(including, without limitation, any assessments and association dues under
the CC&R's); (x) operation, repair, maintenance and replacement of all
systems and equipment and components thereof of the Project including, but
not limited to HVAC systems, electrical, plumbing and life-safety systems,
elevators, any Project locker rooms and workout facilities (except that the
cost of electricity used to operate the HVAC system shall be paid by Tenant
directly pursuant to Section 6.2.2 below); (xi) the cost of janitorial,
alarm, security and other services, replacement of wall and floor coverings,
ceiling tiles and fixtures in common areas, maintenance and replacement of
curbs, roadways, driveways, and walkways, repair to roofs and re-roofing;
(xii) amortization (including interest on the unamortized cost) over the
useful life as Landlord shall reasonably determine, of the cost of acquiring
or the rental expense of personal property used in the maintenance, operation
and repair of the Project, or any portion thereof; (xiii) the cost of capital
improvements or other costs incurred in connection with the Project (A) which
are intended, in good faith, to effect economies in the operation or
maintenance of the Project, or any portion thereof, and only to the extent
such anticipated economies exceed the cost of such item, (B) that are
required to comply with present or anticipated conservation programs, (C)
required by laws, ordinances or regulations enacted after the date permits
for the construction of the Building were obtained, and (D) includable in
Operating Expenses pursuant to consistently applied and sound accounting and
management principles (including, but not limited to, the repair, resurfacing
and replacement of parking lots and Project roadways and driveways);
provided, however, that any capital expenditure shall be amortized (including
interest on the amortized cost at Landlord's actual cost
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of funds) over its useful life as Landlord shall reasonably determine; and (xiv)
costs, fees, charges or assessments imposed by, or resulting from any mandate
imposed on Landlord by, any federal, state or local government for fire and
police protection, trash removal, community services, or other services which do
not constitute "Tax Expenses" as that term is defined in Section 4.2.8 below.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:
(a) costs incurred in connection with the original construction of
the Building and costs of repairing, replacing or otherwise correcting
latent defects, the cost of any "tap fees" or one-time lump sum sewer or
water connection fees for the Building payable in connection with the
original construction of the Building, costs incurred (less costs of
recovery) for any item to the extent covered by a manufacturer's,
materialman's, vendor's or contractor's warranty and paid by such
manufacturer, materialman, vendor or contractor (provided, however, the
costs incurred for any normal repair or maintenance item (not attributable
to the correction of start-up problems, repairs or replacements) to the
extent covered by a manufacturer's, materialman's, vendor's or contractor's
warranty in the Base Year (and not in a subsequent Expense Year) and paid
by such manufacturer, materialman, vendor or contractor during the Base
Year shall be included in Operating Expenses); non-cash items such as
deductions for depreciation and amortization of the Building and the
Building Systems and Equipment;
(b) costs, including marketing costs, legal fees, space planners'
fees, and brokerage fees incurred in connection with the original
construction or development of the Project or the original or future
leasing of the Project, and costs, including permit, license and inspection
costs and allowances and other concessions, incurred with respect to the
installation of tenant improvements made for new tenants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space for tenants or other occupants (or
prospective tenants or occupants) of the Project;
(c) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(d) costs for which Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's
carrier (or if Landlord fails to carry the insurance required to be carried
by Landlord pursuant to Section 10.4 below, costs which would have been
covered by insurance had Landlord obtained the coverage required to be
carried under this Lease) or by the Association under the CC&R's or by
anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;
(e) any bad debt loss, rent loss, or reserves for bad debts or
rent loss;
(f) costs associated with the operation of the business of the
partnership or entity which constitutes Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated
with the operation of the Project). Costs associated with the operation of
the business of the partnership or entity which constitutes Landlord
including costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of the
Tenant may be in issue), costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interest in the Project, and
costs incurred in connection with any disputes between Landlord and its
employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord's general corporate overhead and
general and administrative expenses;
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(g) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and
managing the Project vis-a-vis time spent on matters unrelated to operating
and managing the Project; provided, that in no event shall Operating
Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of regional Project manager or
Project engineer;
(h) amount paid as ground rental for the Project by Landlord;
(i) any compensation paid to clerks, attendants or other persons
in commercial concessions operated by Landlord, provided that any
compensation paid to any concierge at the Project and any compensation paid
regarding parking operations shall be includable as an Operating Expense;
(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Expenses as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an emergency
condition in the Project, or during periods when the systems or equipment
is being repaired;
(k) all items and services for which Tenant or any other tenant in
the Project reimburses Landlord or which Landlord provides selectively to
one or more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses elsewhere
in this Lease;
(n) costs incurred to comply with laws or otherwise relating to
the removal or abatement of hazardous material in the soil and costs
incurred to comply with laws or otherwise relating to the removal or
abatement of hazardous material in the Building or any Common Area
improvements except where such removal or abatement in the Building or
Common Area improvements is required to be performed during the Lease Term
by laws not in effect as of the Lease Commencement Date (in which case an
amount not exceeding twenty-five cents (.25 CENTS) per rentable square
foot of the Building for the cost of such removal or abatement may be
included in Operating Expenses and any remaining costs shall be
capitalized and amortized over a useful life determined in accordance
with generally accepted accounting principles (but in no event less
than ten (10) years) but only fifty percent (50%) of such amortized
amount may be included in Operating Expenses in each calendar year
during such amortization term);
(o) costs arising from Landlord's charitable or political
contributions;
(p) expenses directly resulting from the active or gross
negligence of Landlord, its agents, servants or employees;
(q) rental for any space in the Building set aside for conference
facilities, storage facilities or exercise facilities;
(r) the amounts of any payments by Landlord or to its affiliates
for goods or services in the Project in excess of a competitive (but not
necessarily the lowest) rate;
(s) costs (not including Tax Expenses), incurred in connection
with the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building,
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including brokerage commissions, consultant's, attorneys' and accountant's
fees, closing costs, title insurance premiums, transfer taxes and interest
charges;
(t) costs incurred by Landlord to correct any Year 2000 ("Y2K")
problems incurred as a direct result of any Y2K problems (provided that
this exclusion shall not apply to Y2K problems of utility providers to
Landlord);
(u) costs attributable to increases in expenses during the Lease
Term for management fees unless the total management fees for such Expense
Year (including any such increases therein) are not in excess of a
competitive (but not necessarily the lowest) rate for Comparable Buildings;
and
(v) assessments, charges, and dues under the CC&R's which would
result in a duplicative charge to Tenant or a charge which is otherwise
precluded under this Section 4.2.7 or other provisions of this Lease
including without limitation (1) any expense, cost or charge which would be
duplicative of a charge for which Tenant already is responsible under this
Lease; (2) any expense for property management which would be duplicative
of a charge for which Tenant already is responsible under this Lease; (3)
special assessments levied under the CC&R's which would be precluded by
subsection 4.2.7(c) above; and (4) any expense precluded by Section 5.3
below.
With respect to Landlord's regional Project manager, such individual's
wages and benefits may be included in Operating Expenses; provided, however,
that (1) the amount so included in Operating Expenses for the Project shall not
increase by more than Two Thousand Dollars ($2,000.00) in the first Expense Year
after the Base Year and (2) the maximum amount includable in Operating Expenses
in each Expense Year thereafter shall be one hundred five percent (105%) of the
maximum amount includable in Operating Expenses for the immediately preceding
Expense Year, except that in no event shall such amount included in Operating
Expenses in any such subsequent Expense Year be more than one hundred ten
percent (110%) of the average amount so included in the immediately preceding
two (2) Expense Years. By way of example only, and not as a limitation upon the
foregoing, if the amount of such wages and benefits included in Operating
Expenses for the Project in the Base Year is Forty Thousand Dollars
($40,000.00), such wages and benefits are Forty-Two Thousand Dollars
($42,000.00) in the first (1st), second (2nd) and third (3rd) Expense Years
after the Base Year, but in the fourth (4th) Expense Year after the Base Year
such wages and benefits are increased to Forty-Eight Thousand Dollars
($48,000.00), the maximum amount includable in Operating Expenses for the fourth
(4th) Expense Year after Base Year shall be Forty-Six Thousand Two Hundred
Dollars ($46,200.00) (i.e., 110% of $42,000.00) and the maximum amount
includable in the Operating Expenses for the fifth (5th) Expense Year after Base
Year shall be Forty-Eight Thousand Five Hundred Ten Dollars ($48,510.00)
(i.e., 110% of the average of $42,000.00 and $46,200.00).
There shall be deducted from Operating Expenses the following items in the
year in which they are applicable: (i) insurance and condemnation proceeds to
the extent that such proceeds relate to costs and expenses previously included
in Operating Expenses, (ii) all other funds recovered from any tenant of the
Building, contractors, or other parties as payment for expenses which were
previously included in Operating Expenses, other than tenants' contributions for
their proportionate share of Operating Expenses, and (iii) all funds available
through the CC&R's which were previously included in Operating Expenses.
Operating Expenses shall reflect reductions for cash discounts and trade
discounts taken by Landlord.
If Landlord does not carry a form of insurance coverage (e.g., earthquake
insurance) for the Building during any part of the Base Year but subsequently
obtains such insurance for the Building during the Lease Term, then from and
after the date upon which Landlord obtains such insurance coverage and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent
calendar year. Conversely, if Landlord carries a
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form of insurance coverage (e.g., earthquake insurance) for the Building during
any part of the Base Year but subsequently no longer carries such form of
insurance coverage, then from and after the date upon which Landlord no longer
carries such insurance coverage and continuing throughout the period during
which Landlord no longer maintains such insurance coverage, Operating Expenses
for the Base Year shall be deemed to be decreased by the amount of premium
Landlord incurred for such insurance for the same period of time during the Base
Year as such insurance was no longer maintained by Landlord during such
subsequent calendar year.
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, then Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Building is
not at least ninety-five percent (95%) occupied during all or a portion of the
Base Year or any Expense Year, Landlord shall make an appropriate adjustment to
the components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been paid had such Building been ninety-five
percent (95%) occupied; and the amount reasonably so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, or utility rate increases due to extraordinary circumstances including,
but not limited to, conservation surcharges, boycotts, embargoes or other
shortages (unless such labor rate or utility rate increases remain in effect
after the Base Year, in which event the Operating Expenses for the Base Year
shall be adjusted when the labor rate increases or utility rate increases adjust
following the cessation of the extraordinary circumstances causing such
increases in the first place), or amortized costs relating to capital
improvements.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state, county,
or local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof. Tax Expenses for the Base
Year of the Lease Term for the Building (and the underlying land for the tax
parcel) shall be calculated as if the value of such Building, the Base, Shell
and Core of such Building and the Tenant Improvements thereto and related
improvements to the Common Area as reasonably allocated to such Building were
fully assessed. With respect to Tenant Improvements in each Building, such Tax
Expenses shall be calculated to include the actual "soft" and "hard" costs of
such improvements (commencing as of the Lease Commencement Date for the
applicable Floor Group, any Floor Groups not improved in the Base Year of the
Lease Term for such Building shall be fully assessed based on the Tenant
Improvement Allowance available therefor). If Tenant fails to utilize the
entire Tenant Improvement Allowance for any particular Building for Tenant
Improvements, thereupon Tax Expenses shall be adjusted to the actual amount so
utilized.
4.2.8.2 Tax Expenses shall include, without limitation: (i)
any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof; (ii) any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of real property tax, it being
acknowledged by
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Tenant and Landlord that Proposition 13 was adopted by the voters of the State
of California in the June 1978 election ("PROPOSITION 13") and that assessments,
taxes, fees, levies and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly provided without charge to
property owners or occupants, and, in further recognition of the decrease in the
level and quality of governmental services and amenities as a result of
Proposition 13, Tax Expenses shall also include any governmental or private
assessments or the Project's contribution towards a governmental or private
cost-sharing agreement for the purpose of augmenting or improving the quality of
services and amenities normally provided by governmental agencies; (iii) any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the Rent payable hereunder, including, without limitation, any
business or gross income tax or excise tax or business license tax with respect
to the receipt of or measured by the amount of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any portion
thereof; and (iv) any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or transferring
an interest or an estate in the Premises.
4.2.8.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Tax refunds shall be credited against Tax Expenses
and refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.8 (except as set forth in Section 4.2.8.1, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.8.4 If in any Expense Year subsequent to the Base Year
(the "ADJUSTMENT YEAR"), the amount of Tax Expenses decreases below the amount
of Tax Expenses for the Base Year as a result of a Proposition 8 reduction, then
for purposes of all subsequent Expense Years, including the Expense Year in
which such decrease in Tax Expenses occurs, the Building Direct Expenses for the
Base Year shall be decreased by an amount equal to such decrease in assessed
value or direct assessments, as applicable, in the Adjustment Year. Conversely,
if the Tax Expenses thereafter are decreased by a lesser amount during any
comparison year subsequent to the Adjustment Year (the "READJUSTMENT YEAR") as a
result of Landlord's failure to secure a Proposition 8 reduction which is
greater than or equal to the Proposition 8 reduction secured during the
Adjustment Year, then for purposes of all subsequent comparison years, including
the comparison year in which such lesser decrease in Tax Expenses occurs, the
Building Direct Expenses for the Base Year shall only be decreased by an amount
equal to the decrease in assessed value or direct assessments, as applicable,
during such Readjustment Year which resulted from Landlord's failure to secure a
Proposition 8 reduction greater than or equal to the Proposition 8 reduction
secured during the Adjustment Year; provided that any costs and expenses
incurred by Landlord in securing any Proposition 8 reduction shall not be
included in Building Direct Expenses for purposes of this Lease. Landlord and
Tenant acknowledge that this Section 4.2.8.4 is not intended to in any way
affect (A) the inclusion in Tax Expenses of the statutory two percent (2%)
annual increase in Tax Expenses (as such statutory increase may be modified by
subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13, which shall be governed pursuant to the
terms of Sections 4.2.8.1 through 4.2.8.3, above and Section 4.4.4 below.
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Notwithstanding the foregoing, in the event that the Project is reassessed (the
"REASSESSMENT") for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, and such Reassessment results
in a decrease in Tax Expenses, the component of Tax Expenses for the Base Year
which is attributable to the assessed value of the Project under Proposition 13
prior to the Reassessment (without taking into account any Proposition 8
reductions) shall be reduced for the purposes of comparison to all subsequent
Expense Years (commencing with the Expense Year for which the Reassessment is
first attributable) to an amount equal to the real estate taxes based upon such
Reassessment.
4.2.9 "TENANT'S SHARE" with respect to Building Direct Expenses,
shall equal the percentage which the total rentable square footage of the space
leased by Tenant in such Building bears to the total rentable square footage of
the Building. In the event either the rentable square feet of the Premises
and/or the total rentable square feet of the Building is remeasured pursuant to
Section 1.2 above, Tenant's Share shall be appropriately adjusted, and, as to
the Expense Year in which such change occurs, Tenant's Share for such Expense
Year shall be determined on the basis of the number of days during such Expense
Year that each such Tenant's Share was in effect.
4.3 ALLOCATION OF DIRECT EXPENSES.
4.3.1 METHOD OF ALLOCATION. The parties acknowledge that the
Building will be a part of a multi-building project and that the costs and
expenses incurred in connection with the Project (I.E. the Direct Expenses)
should be shared among the tenants of the Building and the tenants of the
Adjacent Buildings in the Project. Such allocation shall be made in accordance
with the CC&R's; provided, however, that to the extent such allocation is not
addressed in the CC&R's, Landlord shall, in Landlord's reasonable judgment,
determine which Direct Expenses are properly allocable to an individual building
(because the expense applies to only such building) and which Direct Expenses
shall be allocable to tenants of more than one (1) building (in which case
Building Direct Expenses shall include those expenses so allocated to the
Building based upon the relative square footages of the affected buildings).
4.3.2 COST POOLS. Notwithstanding anything to the contrary
contained herein, Landlord shall have the right, from time to time, to equitably
allocate some or all of the Direct Expenses for the Project among different
portions or occupants of the Project (the "COST POOLS"), in Landlord's
reasonable judgment. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building of the Project or of the Project, and the
retail space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Building Direct
Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "EXCESS").
4.4.1 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. By May 1 of
each year, Landlord shall give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "ESTIMATED
EXCESS") as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish
the Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary but Landlord shall not do
so more than twice during any Expense Year. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to the next
to last sentence of this Section 4.4.1).
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Such fraction shall have as its numerator the number of months which have
elapsed in such current Expense Year, including the month of such payment, and
twelve (12) as its denominator. Until a new Estimate Statement is furnished
(which Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12th) of the total Estimated Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant. Landlord shall maintain
books and records with respect to Building Direct Expenses in accordance with
generally accepted and sound accounting and management practices, consistently
applied.
4.4.2 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. In addition, Landlord shall give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year for the
Building, and which shall indicate the amount of the Excess. Upon receipt of
the Statement for each Expense Year commencing or ending during the Lease Term,
if an Excess is present, Tenant shall pay, with its next installment of Base
Rent due, the full amount of the Excess for such Expense Year, less the amounts,
if any, paid during such Expense Year as Estimated Excess, and if Tenant paid
more as Estimated Excess than the actual Excess, Tenant shall receive a credit
in the amount of Tenant's overpayment against Rent next due under this Lease.
In addition, Landlord shall, within ten (10) days after written request from
Tenant, distribute (or if Landlord does not control the Association, request the
Association to distribute) to Tenant a copy of (1) the budget, notice and
summary prepared pursuant to Section 3.3 of the CC&R's and (2) the accounting
prepared pursuant to Section 3.6(c) of the CC&R's. The failure of Landlord to
timely furnish the Statement, or any other information required under this
Section 4.4.2, for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4. Even though the Lease Term has
expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Share of Building Direct Expenses for the Expense Year in which
this Lease terminates, if an Excess if present, Tenant shall pay to Landlord
such amount within thirty (30) days, and if Tenant paid more as Estimated Excess
than the actual Excess, Landlord shall, within thirty (30) days, deliver a check
payable to Tenant in the amount of the overpayment. The provisions of this
Section 4.4.2 shall survive the expiration or earlier termination of the Lease
Term.
4.4.3 TENANT'S AUDIT RIGHT. Within six (6) months after receipt of
a Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set forth
in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default in the payment of Base Rent
or Building Direct Expenses after expiration of all applicable cure periods and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord's records in strict confidence. Landlord shall cooperate with Tenant
in obtaining all necessary or appropriate information from the Association.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement by written notice to
Landlord within thirty (30) days after the Review Period shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement. If after such
inspection, but within thirty (30) days after the Review Period, Tenant notifies
Landlord in writing that Tenant still disputes such amounts, a certification as
to the proper amount shall be made by an independent certified public accountant
selected by Landlord and reasonably approved by Tenant who is a member of a
nationally or regionally recognized accounting firm. Landlord shall cooperate
in good faith with Tenant and the accountant to show Tenant and the accountant
the information upon which the certification is to be based. If such
certification by the accountant proves that the Building Direct Expenses set
forth in the Statement were (i) overstated by less than two percent (%), then
the cost of the accountant and the cost of such certification shall be paid for
by Tenant, (ii) overstated by two percent (2%) or more but less than three
percent (3%), then the cost of the accountant and the cost of certification
shall be split evenly between Landlord and Tenant, or (iii) overstated by
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three percent (3%) or more, then the cost of the accountant and the cost of such
certification shall be paid for by Landlord. Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification.
4.4.4 TENANT'S PAYMENT OF CERTAIN TAX EXPENSES. Notwithstanding
anything to the contrary contained in this Lease in the event that at any time
during the first seven (7) years of the Lease Term, any sale, refinancing, or
change in ownership of such Building is consummated, and as a result thereof,
and to the extent that in connection therewith, a Reassessment occurs pursuant
to the terms of Proposition 13, then the terms of this Section 4.4.4 shall apply
to such Reassessment for the Building.
4.4.4.1 THE TAX INCREASE. For purposes of this Article 4,
the term "Tax Increase" shall mean that portion of the Tax Expenses, as
calculated immediately following the Reassessment, which is attributable solely
to the Reassessment. Accordingly, the term Tax Increase shall not include any
portion of the Tax Expenses, as calculated immediately following the
Reassessment, which is attributable to (i) the initial assessment of the value
of the land associated with the Building, the Base, Shell and Core of such
Building, improvements in the Project or any "soft" costs, permit costs, site
improvement costs or entrepreneurial profit added by the assessor due to
construction of the Project, (ii) assessments which were pending immediately
prior to the Reassessment which assessments were conducted during, and included
in, such Reassessment, or which assessments were otherwise rendered unnecessary
following the Reassessment, or (iii) the annual inflationary increase of real
estate taxes permitted to be assessed annually under Proposition 13.
4.4.4.2 TAX INCREASE PROTECTION. During the first seven
(7) years of the initial Lease Term, Tenant shall not be obligated to pay any
portion of the Tax Increase. Notwithstanding the foregoing, Landlord shall be
permitted to pass through to Tenant any Tax Increase resulting from a change in
ownership of the Project arising out of the sale, financing or merger of all or
substantially all of the assets or stock of and/or partnership interests and/or
limited liability company interests owned by Kilroy Realty Corporation and/or
its affiliates.
4.4.4.3 LANDLORD'S RIGHT TO PURCHASE THE PROPOSITION 13
PROTECTION AMOUNT ATTRIBUTABLE TO A PARTICULAR REASSESSMENT. The amount of Tax
Expenses which Tenant is not obligated to pay or will not be obligated to pay
during the Lease Term in connection with a particular Reassessment pursuant to
the terms of this Section 4.4.4, shall be sometimes referred to hereinafter as
"Proposition 13 Protection Amount." If the occurrence of a Reassessment is
reasonably foreseeable by Landlord and the Proposition 13 Protection Amount
attributable to such Reassessment can be reasonably quantified or estimated for
each Lease Year commencing with the Lease Year in which the Reassessment will
occur, the terms of this Section 4.4.4.3. shall apply to each such Reassessment.
Upon notice to Tenant, Landlord shall have the right to purchase the Proposition
13 Protection Amount relating to the applicable Reassessment (the "Applicable
Reassessment"), at any time during the Lease Term, by paying to Tenant an amount
equal to the "Proposition 13 Purchase Price," as that term is defined below,
provided that the right of any successor of Landlord to exercise its right of
repurchase hereunder shall not apply to any Reassessment which results from the
event pursuant to which such successor of Landlord became the landlord under
this Lease. As used herein, "Proposition 13 Purchase Price" shall mean the
present value of the Proposition 13 Protection Amount remaining during the Lease
Term, as of the date of payment of the Proposition 13 Purchase Price by
Landlord. Such present value shall be calculated (i) by using the portion of
the Proposition 13 Protection Amount attributable to each remaining Lease Year
(assuming for purposes of this computation that the amount of such Proposition
13 Protection Amount benefited Tenant on an equal monthly basis at the end of
each month during each Lease Year), as the amount to be discounted, and (ii) by
using an eight percent (8%) discount rate, compounded annually, for each monthly
amount to be discounted. Upon such payment of the Proposition 13 Purchase
Price, the provisions of Section 4.4.4.2 of this Lease shall not apply to any
Tax Increase attributable to the Applicable Reassessment. Since Landlord is
estimating the Proposition 13 Purchase Price because a Reassessment has not yet
occurred, then when such Reassessment occurs, if Landlord has
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underestimated the Proposition 13 Purchase Price, then upon notice by Landlord
to Tenant, Tenant's Rent next due shall be credited with the amount of such
under-estimation, and if Landlord overestimates the Proposition 13 Purchase
Price, then upon notice by Landlord to Tenant, Rent next due shall be increased
by the amount of the overestimation. The amount of any such underestimate or
overestimate shall be calculated by taking the difference between the
Proposition 13 Purchase Price for the Applicable Reassessment actually paid to
Tenant and the Proposition 13 Purchase Price for the Applicable Reassessment as
it should have been computed had all relevant facts concerning the Applicable
Reassessment been known at the time such Purchase Price was originally computed,
and adding interest thereto at a rate per annum equal to ten percent (10%),
compounded annually, from the date such Purchase Price was paid to Tenant
through the date that the amount of the underestimate or overestimate is to be
credited or debited (as the case may be) against Rent next due hereunder.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the Tenant Improvement Allowance actually
used to build-out the Premises then the Tax Expenses levied against Landlord or
the property by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facilities; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises for office, software
development, training, research and development, storage, distribution and other
lawful uses permitted under the CC&R's (as defined below) and the Project's
permitted zoning and for no other purpose or purposes whatsoever without
Landlord's consent, which may be withheld in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in EXHIBIT D, attached hereto, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project.
Tenant shall not do or permit anything to be done in or about the Premises which
will obstruct or interfere with the rights of other tenants
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or occupants of the Buildings or Project, or injure them or use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant cause or maintain
any nuisance in, on or about the Premises. Tenant shall not use or knowingly
allow another person or entity to use any part of the Premises for the storage,
use, treatment, manufacture or sale of "Hazardous Material," (as that term is
defined in Section 29.23 of this Lease); provided, however, Tenant may use
commercially reasonable amounts of any Hazardous Material as is normal and
customary for general office use so long as Tenant complies, at Tenant's sole
cost and expense, with all Applicable Laws relating thereto.
5.3 CC&R'S. Tenant acknowledges that Landlord intends to record an
Agreement Between Land Owners Including Covenants, Conditions and Restrictions
and Grants of Easements for Carmel Center and Including Termination of Both
Former Declaration and Prior Grants of Easements (the "CC&R'S") over the
Project. Tenant hereby approves the draft of CC&R's attached hereto as Exhibit
"F" and made a part hereof and hereby subordinates this Lease to the CC&R's and
any amendments or modifications thereto; provided, however, that any
modifications to the draft of the CC&R's attached as EXHIBIT "F" which may have
a material effect on Tenant's use or enjoyment of, or access to, the Premises or
Project shall be subject to Tenant's prior approval, which approval shall not be
unreasonably withheld or delayed. Tenant shall, within fifteen (15) days after
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination of this
Lease to the CC&R's. As of the date of execution of this Lease, Landlord
contemplates that it will be the declarant under the CC&R's and a California
nonprofit mutual benefit corporation has been, or will be, established (the
"ASSOCIATION") and charged with certain duties under the CC&R's. Certain
individuals who are directors, officers or employees of Landlord, the members of
Landlord, or affiliates thereof, are, or will be, members of the board of
directors of the Association. The board shall have the right to appoint members
and alternatives members of the Architectural and Development Review Committee
(the "COMMITTEE") contemplated by the CC&R's. As an owner of property subject
to the CC&R's, Landlord is a member of the Association for each parcel within
the Project which is subject to assessments under the CC&R's. With respect to
Landlord's respective capacities as declarant, member of the board, and a member
of the Committee under the CC&R's, Landlord covenants not to do any of the
following without Tenant's consent (which shall not be unreasonably withheld)
(i) take any action which in Landlord's reasonable opinion will jeopardize or be
detrimental to Tenant's rights under this Lease and Tenant's use and enjoyment
of its leasehold estate, (ii) take any action which has the effect of materially
increasing assessments or costs incurred by Landlord under the CC&R's, which
will result in an unreasonable increase in Direct Expenses in Expense Years
after the Base Year, (iii) vote in favor of or approve any new improvements,
operation or use on any of the properties covered by the CC&R's without first
consulting with Tenant, and (iv) knowingly allow any use of the parking
facilities within the Project (as defined in this Lease) that is not allowed
pursuant to the reciprocal parking rights described in the CC&R's. Landlord
shall provide (or if Landlord does not control the Association, Landlord will
request the Association to provide) to Tenant the draft budget prepared from
time to time in connection with the CC&R's for Tenant's review and comment, and
Landlord will reasonably consider Tenant's comments in preparing the budget.
Further, Landlord represents and warrants that the signage contemplated by this
Lease is in compliance with the CC&R's and the Sign Plan defined therein.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and guidelines
applicable thereto, Landlord shall provide heating, ventilation and air
conditioning ("HVAC") , pursuant to the HVAC service levels set forth in
EXHIBIT "G" attached hereto, from Monday through Friday, during the period from
6:00 A.M. to 7:00 P.M. and on Saturday during the period from 8:00 A.M. to
12:00 P.M. (the "BUILDING HOURS"), except for the dates of observation of New
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Year's Day, Presidents Day, Independence Day, Labor Day, Memorial Day,
Thanksgiving Day, and Christmas Day and other nationally recognized holidays
that are not nationally recognized as of the date of this Lease (collectively,
the "HOLIDAYS"). Notwithstanding the foregoing, Landlord shall change the
Building Hours as requested by Tenant from time to time (but not more than two
(2) times per calendar year) so long as (i) the total Building Hours for the
weekly period (i.e., Monday through Sunday) do not exceed sixty-nine (69) hours,
(ii) Tenant leases the entire Building, (iii) any such Building Hours so
designated by Tenant for any day must be consecutive hours, and (iv) Tenant
shall be responsible for any additional reasonable costs incurred by Landlord as
a result of such change in hours requested by Tenant (which costs shall be
payable as Additional Rent within thirty (30) days after Tenant's receipt of
invoice therefor). Tenant shall be entitled to install, as an initial Tenant
Improvement or as an Alteration, dedicated heating, ventilation and air
conditioning units ("PACKAGE UNITS") within or serving the Premises at Tenant's
sole cost and expense (but not window units). The plans and specifications for
any Package Units shall, as indicated in Article 8 below and the Tenant Work
Letter (as applicable), be subject to Landlord's reasonable approval and the
electricity required to power such Package Units shall be included within the
allotment set forth in Section 6.1.2 below and such electricity and any other
utilities used by such Package Units shall be payable by Tenant in accordance
with Section 6.2 below. Tenant shall be solely responsible for maintenance and
repair of the Package Units and such units shall be considered to be a fixture
within the Premises and shall remain upon the Premises upon the expiration or
earlier termination of Lease Term unless Landlord requires Tenant to remove such
items upon expiration or earlier termination of this Lease pursuant to the
provisions of Section 8.5 below. Notwithstanding the foregoing, Tenant may
remove any "Libert" or similar type HVAC units from the Premises at any time
prior to expiration or earlier termination of the Lease Term provided that
Tenant removes all associated wiring and cabling, repairs any damage resulting
from such removal and restores the Premises to the condition prior to the
placement of such unit(s), reasonable wear and tear excepted.
6.1.2 Landlord shall provide adequate electrical wiring, facilities
and power sufficient to provide Tenant with four (4) watts per rentable square
foot of connected electrical load for Tenant's equipment and sufficient to
provide an additional one point five (1.5) watts per rentable square foot of
connected electrical load for Tenant's lighting fixtures. Any such electrical
usage shall be subject to applicable laws and regulations. Tenant shall bear
the cost of replacement of any non-Building standard lamps, starters and
ballasts for lighting fixtures within the Premises; replacement of any such
Building standard items (as shown on the Specifications) shall be included in
Operating Expenses.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall manage the Project and employ qualified
property management personnel and maintenance personnel to operate and manage
the Project in accordance with a standard which is not less than customarily
observed in the operation and management of Comparable Buildings. Such
management personnel and maintenance personnel shall, at a minimum, include the
following: upon completion of Building 5, on-site management shall include a
full-time property manager, an assistant property manager and an allocation of
time for a regional property manager; engineering staff will include one (1)
senior full-time engineer as of the Lease Commencement Date for Building 1 and
an additional journeyman level engineer to be hired upon the Lease Commencement
Date for the initial Floor Group for Building 3 and stationed at the Project;
and one (1) full-time day porter will be stationed at the Project upon the Lease
Commencement Date for Building 1 whose duties shall be as specified in EXHIBIT
"H-2." The management office for the Project shall be located in the Del Mar
Heights area until such time as Building 5 has been completed, at which time the
management office for the Project shall be located within the Project for the
remainder of the Lease Term. Landlord shall at all times comply with the
service levels and performance standards specifically described in EXHIBIT "G"
and EXHIBIT "H-1" and EXHIBIT "H-2", attached hereto, which may be modified by
Landlord from time to time so long as an equivalent or better level of service
is provided and such modification is reasonable and customary for Comparable
Buildings; provided, however, that if any such modification is made by Landlord
and results in an increase in Operating
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Expenses, then from and after the date upon which such modification is effective
and continuing throughout the period during which such modification is
effective, Operating Expenses for the Base Year shall be increased by the amount
Landlord reasonably determines it would have incurred had the modification been
in effect throughout the Base Year.
6.1.5 Landlord shall provide janitorial services five (5) days per
week except the date of observation of the Holidays, in and about the Building
in accordance with the standards described in EXHIBIT "H-1" attached hereto and
window washing services in accordance with a standard which is not less than
that customarily observed in other Comparable Buildings. Notwithstanding the
foregoing, Tenant may elect upon reasonable prior notice to Landlord to require
Landlord to change the provider of such janitorial services in the Building in
accordance with, and subject to, Section 6.7 below.
6.1.6 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours; Landlord shall have one
elevator available at all other times, including Holidays.
6.1.7 Landlord, at its sole cost but includable as an Operating
Expense, shall provide a security system for the Project, including equipment,
on-site personnel, procedures and systems as provided in Exhibit "I" attached
hereto and made a part hereof. Security procedures shall be implemented to
regulate access to the Project during certain hours provided that, subject to
such restrictions and subject to the other provisions of this Lease, Tenant
shall have access to the Premises seven (7) days a week, twenty-four (24) hours
per day. Subject to Landlord's reasonable approval of Tenant's plans and
specifications and Tenant's compliance with the terms and conditions of Article
8, Tenant shall be entitled to install its own security systems for the
Premises, which shall be located within the Premises and shall not interfere
with the Project systems.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems (collectively, "BUILDING SYSTEMS AND EQUIPMENT") .
6.2 UTILITIES COSTS; OVERSTANDARD TENANT USE.
6.2.1 If Tenant uses heat-generating machines, machines other than
normal office machines, or equipment or lighting other than Building standard
lights in the Building, which adversely and materially affects the temperature
otherwise maintained by the air conditioning system or materially increase the
water normally furnished for such Building by Landlord pursuant to the terms of
Section 6.1 of this Lease, Landlord shall have the right to install
supplementary air conditioning units or other facilities in such Building,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance shall be paid by
Tenant to Landlord within thirty (30) days after billing by Landlord.
6.2.2 The Tenant Improvements to be constructed for the Building
shall include an electrical meter section and switchgear to measure electricity
supplied to the Premises (including, without limitation, electricity required in
order to provide HVAC to the Premises). Tenant shall contract directly with an
electricity service provider for electrical service to the Premises (including,
without limitation, electricity required in order to provide HVAC to the
Premises) and Tenant shall timely pay all charges for such service from such
provider and Landlord shall have no obligation with respect to the provision of
such service. The actual cost of electricity provided to the Premises
(including, without limitation, electricity required in order to provide HVAC to
the Premises) shall, notwithstanding anything to the contrary contained in this
Lease, not be included in Operating Expenses (including, without limitation,
Operating Expenses for the Base Year) for the Building (except for electricity
relating to the Common Areas, which shall be included in Operating Expenses
(including, without limitation, Operating Expenses for the Base Year) and paid
by Tenant as part of Building Direct Expenses).
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6.2.3 If Tenant desires to use HVAC during hours other than those
for which Landlord is obligated to supply such HVAC pursuant to the terms of
Section 6.1 of this Lease (i.e., in excess of sixty-nine (69) hours in any
week), Tenant shall not be required to give Landlord prior notice of Tenant's
desired use but rather Tenant may control its after-hours HVAC use from within
the Premises. Landlord shall supply such after-hours HVAC to Tenant subject to
Tenant's payment to Landlord of an amount reasonably determined by Landlord to
be attributable to increased wear and tear on existing Building Systems and
Equipment caused by such after-hours use, any engineer's over-time and a nominal
amount attributable to overhead and accounting costs. Amounts payable by Tenant
to Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be paid within thirty (30) days after Tenant's receipt of
invoice therefor.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent (except for abatement as specifically provided
in Section 6.8 below), or otherwise, for failure to furnish or delay in
furnishing any service (including telephone, electrical and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
the Project after diligent and reasonable efforts to do so, by any accident or
casualty whatsoever, by act or default of Tenant or other parties, or by any
other cause beyond Landlord's reasonable control; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
(except for abatement as specifically provided in Section 6.8 below), or
performing any of its obligations under this Lease. Furthermore, Landlord shall
not be liable under any circumstances for a loss of, or injury to, property or
for injury to, or interference with, Tenant's business, including, without
limitation, loss of profits, however occurring, through or in connection with or
incidental to a failure to furnish any of the services or utilities as set forth
in this Article 6, except in any circumstances where the failure to furnish any
such services or utilities arises out of or is a result of, Landlord's sole or
gross negligence or intentional misconduct (in which case Landlord shall be
responsible to the extent such item is not covered by insurance required to be
carried by Tenant under this Lease or actually carried by Tenant). Landlord
shall be entitled to cooperate in a reasonable manner with the mandatory
requirements of national, state or local governmental agencies or utilities
suppliers in reducing the consumption of energy or other resources (including
temporary stoppages in the supply of any utilities), and Landlord shall not be
in default hereunder or be liable for any damages directly or indirectly
resulting from, nor shall the Rent herein reserved be abated (except as
expressly provided in Section 6.8 below) by reason of such cooperation by
Landlord.
6.4 ADDITIONAL SERVICES. Landlord shall also provide any additional
services which may be reasonably requested by Tenant, including, without
limitation, locksmithing, lamp replacement, additional janitorial service, and
additional repairs and maintenance, provided that Tenant shall pay to Landlord
within fifteen (15) days after receipt of written notice from Landlord, the sum
of all costs to Landlord of such additional services plus a reasonable
administration fee. Charges for any service for which Tenant is required to pay
from time to time hereunder shall be deemed Additional Rent hereunder and shall
be billed on a monthly basis. Tenant shall not be required to use Landlord for
such any additional services; provided, however, that Landlord shall have the
right to reasonably approve any other provider of such services should Tenant
elect not to use Landlord for the providing of such services. However, nothing
in this Section 6.4 shall be construed as requiring Landlord to provide any such
service which would, in Landlord's reasonable judgment, result in the receipt by
Landlord of amounts that would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Internal Revenue Code of 1986, as
amended, or any successor section thereto.
6.5 UTILITY DEREGULATION.
6.5.1 SELECTION OF SERVICE PROVIDER. Landlord has advised Tenant
that presently San Diego Gas and Electric ("ELECTRIC SERVICE PROVIDER") is the
utility company selected by Landlord to provide electricity service for the
Project. Notwithstanding the foregoing, if
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permitted by Applicable Law, upon mutual agreement of Tenant and Landlord, the
contract for service to the Common Areas will be let to a different company or
companies providing electricity service (each such company shall hereinafter be
referred to as an "ALTERNATE SERVICE PROVIDER"). Any and all rebates or
discounts enjoyed or realized as a result of the selection of an Alternate
Service Provider or the continued use of the Electric Service Provider shall be
reflected in the payments to be made by Tenant pursuant to Article 4 above.
However, if, after the Base Year, the parties agree to utilize an Alternate
Service Provider, then from and after the date upon which the Alternate Service
Provider is retained and continuing throughout the period during which the
Alternate Service Provider is retained, Operating Expenses for the Base Year
shall be reduced by the amount Landlord reasonably estimates it would have saved
had the Alternate Service Provider been retained throughout the Base Year (for
service to the Common Areas) based upon the rates of the Alternate Service
Provider prevailing throughout the Base Year. Landlord and Tenant acknowledge
that, with respect to electricity service to be provided to the Premises, Tenant
shall be entitled to retain any provider (including, without limitation, an
Alternate Service Provider) and that Tenant will be contracting directly with
such provider as indicated in Section 6.2.2 above.
6.5.2 TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate
with Landlord, the Electric Service Provider, and any Alternate Service Provider
at all times and, as reasonably necessary, shall allow Landlord, Electric
Service Provider, and any Alternate Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring and any other machinery
within the Premises, provided Landlord shall take all reasonable measures to
minimize any interference or disruption to Tenant's use of the Premises. In
addition, Landlord shall cooperate with Tenant and Tenant's provider of
electrical service to the Premises at all times and as reasonably necessary to
allow access to the facilities of the Building necessary for the provision of
such service.
6.6 EMERGENCY GENERATOR. Subject to Tenant's compliance with all
Applicable Laws and Landlord's prior approval of all plans and specifications,
which approval shall not be unreasonably withheld, Landlord shall permit Tenant
to install, at Tenant's sole cost and expense, an above-ground emergency
generator (as a Miscellaneous Common Area Item) for Tenant's use in the
Building. Such emergency generator shall be used by Tenant only during (i)
testing and regular maintenance, and (ii) any period of electrical power outage
in the Building. Tenant shall be entitled to operate the emergency generator
for testing and regular maintenance only upon notice to Landlord and at times
reasonably approved by Landlord. Landlord's consent to Tenant's plans for the
emergency generator may be conditioned on Tenant complying with such reasonable
requirements imposed by Landlord, based on the advice of Landlord's engineers,
so that the systems and equipment of the Building are not adversely affected.
Any repairs and maintenance of such generator shall be the sole responsibility
of Tenant. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, remove the emergency generator and all
associated cabling and wiring and repair all damage resulting from such removal.
Landlord makes no representation or warranty with respect to the emergency
generator or its suitability for use by Tenant and Article 10 of the Lease shall
apply with respect to Tenant's use, maintenance, repair and operation of the
emergency generator.
6.7 SUBSTITUTION OF VENDORS. Upon request from Tenant, Landlord shall
review with Tenant the performance and cost of vendors and contract service
providers for the Project and except for the property manager and the property
management staff and engineers, Tenant shall have the right to require Landlord
to substitute other vendors or contract service providers reasonably designated
by Tenant provided that (i) Tenant then leases on a direct basis (i.e., not
including any space leased by Tenant pursuant to a sublease) at least fifty
percent (50%) of the space then constructed for lease at the Project, (ii) such
substitution does not result in any increase in Operating Expenses during the
Base Year, (iii) such substitution does not result in any invalidation or
reduction in coverage of any warranties for the Project (unless Tenant agrees to
be responsible for the costs which would have otherwise been covered by such
warranties), and (iv) Landlord reasonably approves such substitute vendor or
contract service provider. If a vendor or contract service provider is
substituted pursuant to this Section 6.7 above and if the annual cost of such
substitute vendor or contract service provider is less than the amount
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included in Operating Expenses during the Base Year for the same service,
effective upon the date of such substitution, Operating Expenses for the Base
Year shall be reduced by the amount of such difference.
6.8 ABATEMENT EVENT. An "ABATEMENT EVENT" shall be defined as an event
that prevents Tenant from using the Premises or any portion thereof, as a result
of any failure to provide services or access to the Premises, where (i) Tenant
does not actually use the Premises or such portion thereof, and (ii) such event
is not caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. In addition, an "Abatement Event" shall not be deemed
to have occurred where such failure is caused by (a) an Alternate Service
Provider for the Premises where such failure would generally not have occurred
had Tenant utilized the Electric Service Provider (or its successor), or (b) an
Alternate Service Provider for service to the Common Areas where Landlord
reasonably conditioned its approval of the use of such Alternate Service
Provider pursuant to Section 6.5.1 upon Tenant assuming the risk that any
failures to provide services or access to the Premises caused by such Alternate
Service Provider would not be deemed to constitute an "Abatement Event" pursuant
to this Section 6.8. Tenant shall give Landlord notice ("ABATEMENT NOTICE") of
any such Abatement Event, and if such Abatement Event continues beyond the
"Eligibility Period" (as that term is defined below), then the Base Rent and
Tenant's Share of Direct Expenses shall be abated entirely or reduced, as the
case may be, after expiration of the Eligibility Period for such time that
Tenant continues to be so prevented from using, and does not use, the Premises
or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises leased by Tenant; provided, however, in the
event that Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period and the
remaining portion of the Premises is not sufficient to allow Tenant to
effectively conduct its business therein, and if Tenant does not conduct its
business from such remaining portion, then for such time after expiration of the
Eligibility Period during which Tenant is so prevented from effectively
conducting its business therein, the Base Rent and Tenant's Share of Direct
Expenses for the entire Premises shall be abated entirely for such time as
Tenant continues to be so prevented from using, and does not use, the Premises
for Tenant's business purposes. If, however, Tenant reoccupies any portion of
the Premises during such period, the Base Rent and Tenant's Share of Direct
Expenses allocable to such reoccupied portion, based on the proportion that the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date Tenant
reoccupies such portion of the Premises. The term "ELIGIBILITY PERIOD" shall
mean a period of five (5) consecutive business days after Landlord's receipt of
any Abatement Notice(s). If the Abatement Event is caused by the negligence or
willful misconduct of Tenant, or by the circumstances described in the second
(2nd) sentence of this Section 6.8 with respect to an Alternate Service
Provider, the Abatement described in this Section 6.8 shall not apply; however,
Tenant may seek recovery from its business interruption insurance. Except as
provided in Article 11 and Article 13, such right to abate Base Rent and
Tenant's Share of Direct Expenses shall be Tenant's sole and exclusive remedy at
law or in equity for an Abatement Event.
ARTICLE 7
REPAIRS
7.1 OBLIGATIONS. Landlord shall maintain and repair any and all defects
in the Base, Shell and Core of the Building, including, without limitation, the
foundations, floor/ceiling slabs, structural portions of the roof (including the
roof membrane), curtain wall, exterior glass, columns, beams, shafts, stairs,
stairwells, and elevator cabs, and shall also maintain and repair the basic
mechanical, electrical, life safety, plumbing, sprinkler systems and heating,
ventilating and air conditioning systems of the Building (i.e., all of such
systems except for distribution within the Premises, in which case (i) Landlord
shall be responsible for repair of construction defects, (ii) with respect to
design defects, that party that retained the consultant to design such
distribution shall be responsible for repair of the defect and any additional
costs incurred as a result of such defect (to the extent not covered by warranty
or insurance), and (iii) Tenant shall
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be responsible for all other repairs and maintenance), the exterior portions of
the Building and the Common Areas of the Project. In addition, Landlord shall
make repairs necessitated by the acts or omissions of Landlord or its respective
agents, employees or contractors. Tenant shall, at Tenant's own expense, keep
the Premises and specifically all tenant improvements, fixtures and furnishings
therein, in good order, repair and condition at all times during the Lease Term,
and in this regard, Tenant shall at Tenant's own expense within a reasonable
period of time but under the supervision and subject to the prior approval of
Landlord with respect to any repairs for which a building permit is required,
adequately repair all such damage thereto. Except with respect to the express
maintenance and repair obligations of Tenant under this Lease, Landlord shall
maintain and repair the Building and the Project (including the Common Areas)
and replace or repair all damaged, broken, or worn fixtures and appurtenances,
the cost of which shall be included in Operating Expenses (subject t the
provisions of Article 4 above). Landlord may enter the Premises at all
reasonable times upon reasonable prior notice to Tenant (except that no notice
will be required in case of emergency) to make such repairs, alterations,
improvements or additions to the Buildings or to the Project or to any equipment
located in the Project as Landlord is obligated under this Lease or Landlord
shall deem reasonably necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree.
7.2 TENANT'S FAILURE TO COMPLY. If Tenant fails to make any repairs
required of Tenant under this Lease, after written notice to Tenant and the
expiration of a reasonable cure period, Landlord may (but need not) enter the
Premises pursuant to Section 7.1 above to make such repairs and replacements,
and Tenant shall pay Landlord the cost thereof, including a percentage (not to
exceed five percent (5%)) of the cost thereof to compensate Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's involvement with such repairs and replacements within fifteen (15)
days of being billed for same. Except as expressly provided in Section 7.3
below, Tenant hereby waives and releases its right to make repairs at Landlord's
expense under Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
7.3 LANDLORD'S FAILURE TO COMPLY. If Tenant provides notice to Landlord
of an event or circumstance which requires the action of Landlord with respect
to the provision of repairs as set forth in Section 7.1 of this Lease, and
Landlord fails to provide such action as required by the terms of this Lease
within thirty (30) days after the date of such notice from Tenant (or if such
repair is reasonably expected to require longer than thirty (30) days to
complete, if Landlord shall fail to commence such repair within said thirty (30)
day period or to diligently prosecute such repair to completion), then Tenant
may proceed to take the required action upon delivery of an additional ten (10)
business days notice and cure period to Landlord specifying that Tenant is
taking such required action, and if such action was required under the terms of
this Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action including a percentage (not to exceed five percent (5%) of the cost
thereof to compensate Tenant for all overhead, general conditions, fees and
other costs or expenses arising from Tenant's involvement with such repairs and
replacement) in which case the reimbursed amount shall be included in Operating
Expenses to the extent the action, if taken by Landlord, would have been
includable in Operating Expenses pursuant to Section 4.2.7 above. In the event
Tenant takes such action, and such work will affect the Building Systems and
Equipment, structural integrity of the Building or exterior appearance of the
Building, Tenant shall use only those contractors used by Landlord in the
Project for such work unless such contractors are unwilling or unable to perform
such work or their pricing is unreasonable, in which event Tenant may utilize
the services of any other qualified contractor which normally and regularly
performs similar work in comparable first-class, institutional quality, office
buildings in the San Diego, California area whose pricing is reasonable. If
Tenant is entitled to reimbursement by Landlord of Tenant's reasonable costs and
expenses in taking any action pursuant to this Section 7.3, Tenant shall so
notify Landlord in writing (the "REIMBURSEMENT NOTICE"), which Reimbursement
Notice shall specify in detail such costs and expenses. Within thirty (30) days
after Landlord's receipt of a Reimbursement Notice, Landlord shall pay to Tenant
any undisputed portion of such costs and expenses and shall notify Tenant in
writing of those costs and expenses specified by Tenant in the Reimbursement
Notice which Landlord disputes (the "DISPUTED AMOUNTS") and the reasons for such
dispute. Any amounts
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which are not so identified by Landlord as Disputed Amounts within said thirty
(30) day period shall be considered to be undisputed. To the extent Landlord
fails to reimburse Tenant for the costs and expenses specified in the
Reimbursement Notice within thirty (30) days after demand therefor, Tenant shall
be entitled to offset the sum of (i) the amount of any undisputed portion of
such costs and expenses and (ii) one-half of the amount of any Disputed Amount
(which total sum may be referred to as the "PRE-JUDGMENT OFFSET AMOUNT") against
Base Rent payable by Tenant under this Lease together with interest at the
Interest Rate specified in Article 25 of this Lease from the date of expiration
of said thirty (30) day period until the date of offset (up to a maximum offset
each month of twenty percent (20%) of the Base Rent payable for the Building)
until the full Pre-Judgment Offset Amount (plus such interest) has been so
offset. If Tenant obtains a final judgment against Landlord for the remaining
portion of the Disputed Amount and if Landlord fails to pay such judgment within
thirty (30) days after the date such judgment is rendered, Tenant shall be
entitled to offset such judgment against Base Rent payable by Tenant under this
Lease together with interest at the Interest Rate specified in Article 25 of
this Lease from the date Landlord failed to timely reimburse Tenant for such
costs and expenses until the date of offset (up to a maximum offset each month
of twenty percent (20%) of the Base Rent payable for the Building) until the
full amount of such judgment (plus such interest) has been so offset. If
Landlord obtains a final judgment against Tenant for the Disputed Amount, Tenant
shall pay to Landlord such judgment (as it relates to the Disputed Amount plus
interest Tenant has previously offset with respect to the Disputed Amount)
within thirty (30) days after the date such judgment is rendered.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent (as
indicated in Section 29.4 below) shall not be unreasonably withheld by Landlord.
However, Tenant may make (i) cosmetic changes to the finish work in the
Premises, not requiring any structural or other substantial modifications to the
Premises (e.g., voice/data cabling), without Landlord's prior consent, (ii)
cosmetic changes to the interior of any Tenant space within the Building (e.g.,
changes to the carpet, wallcovering and paint) and (iii) nonstructural changes
to the interior of any Tenant space within the Building (such cosmetic and
nonstructural changes to be referred to hereafter collectively as the
"ACCEPTABLE CHANGES") upon at least ten (10) days prior notice to Landlord but
without Landlord's prior consent provided (a) with respect to the changes
described in Subsection 8.1(iii) above only, such changes do not cost in excess
of Two Dollars ($2.00) per usable square foot of the Premises for any one (1)
job, (b) such Acceptable Changes do not affect the exterior appearance of the
Building or Common Areas, the structural aspects of the Building, or any
Building System or Equipment, and (c) Tenant shall perform such Acceptable
Changes in a good and workmanlike manner and in conformance with any and all
applicable federal, state, county or municipal laws, rules or regulations
(collectively, "APPLICABLE LAWS"). At any time Tenant proposes to make
Alterations which require the consent of Landlord pursuant to this Section 8.1,
Tenant's notice regarding the proposed Alterations shall be provided together
with plans and specifications for the Alterations, and Landlord shall approve or
disapprove of the same within fifteen (15) days after Landlord's receipt
thereof. The construction of the initial improvements to the Premises shall be
governed by the terms of the Tenant Work Letter and not the terms of this
Article 8, and therefore, as used herein, the term "Alterations" does not refer
to any tenant improvements installed pursuant to the Tenant Work Letter.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord may reasonably require, including, but
not limited to, the requirement that Tenant shall, at Tenant's expense, remove
such Alterations upon the expiration or any early termination of the Lease Term,
provided Landlord imposed such removal requirement as a condition to consenting
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to such Alterations when they are installed, and/or the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials, mechanics
and materialmen approved by Landlord (which approval (as indicated in Section
29.4 below) shall not be unreasonably withheld or delayed). In any event,
Tenant shall utilize subcontractors of Landlord's selection to perform any and
all work that may affect the Building Systems and Equipment, structural aspects
of the Building, the Base Shell or Core or exterior appearance of the Building
or Common Areas provided that (i) if such subcontractors are unwilling or unable
to perform such work, Tenant may utilize the services of any other qualified
subcontractor which normally and regularly performs similar work in comparable
first-class, institutional quality, office buildings in the San Diego,
California area, and (ii) Landlord shall cause such subcontractor selected by
Landlord to charge Tenant for such work in an amount equal to the cost that a
comparable, first-class, reputable and reliable subcontractor would have charged
Tenant if selected pursuant to competitive bidding procedures (and if such
subcontractor refuses to meet such pricing requirements, Landlord shall have the
option to either pay the excess charges of such subcontractor or to permit
Tenant to utilize any other qualified subcontractor which meets the requirements
of subsection 8.2(i) above). Tenant shall construct such Alterations and
perform such repairs in conformance with any and all Applicable Laws and
pursuant to a valid building permit, issued by the City of San Diego, all in
conformance with Landlord's construction rules and regulations. All work with
respect to any Alterations must be done in a good and workmanlike manner and
diligently prosecuted to completion to the end that the Premises shall at all
times be a complete unit except during the period of work. In performing the
work of any such Alterations, Tenant shall have the work performed in such
manner so as not to obstruct access to the Project or any portion thereof by any
other tenant of the Project, and so as not to obstruct the business of other
tenants in the Project. In addition to Tenant's obligations under Article 9 of
this Lease, upon completion of any Alterations, Tenant agrees to cause a Notice
of Completion to be recorded in the office of the Recorder of the County of San
Diego in accordance with California Civil Code Section 3093 or any successor
statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. The Cost of all Alterations shall be paid
for by Tenant. In the event Tenant orders any Alterations or repair work
directly from Landlord, the charges for such work shall be deemed Additional
Rent under this Lease, payable within fifteen (15) days of billing therefor,
either periodically during construction in reasonable progress payments or upon
the substantial completion of such work, at Landlord's option. Upon completion
of such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits and full and final waivers of all liens for labor, services or
materials. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord a percentage of the cost of such work not to exceed three percent
(3%) of such cost to compensate Landlord for all overhead, general conditions,
fees and other costs and expenses arising from Landlord's involvement with such
work. If Tenant does not order such work directly from Landlord, Tenant shall
pay to Landlord a fee equal to one percent (1%) of the cost of such work and
shall reimburse Landlord for Landlord's reasonable out-of-pocket costs and
expenses actually incurred in connection with review of such work; provided,
however, that this sentence shall not apply to Acceptable Changes.
8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any
Alterations (other than work described in Subsections 8.1(i) and (ii) above),
Tenant agrees to carry "Builder's All Risk" insurance in a reasonable amount
covering the construction of such Alterations, and such other insurance as
Landlord may reasonably require, it being understood and agreed that all of such
Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof. In addition, if Tenant fails to meet the
Financial Standards (described in Section 21.2 below) and the cost of the
Alteration exceeds One Hundred Thousand Dollars ($100,000.00), Landlord may, in
its reasonable discretion, require Tenant to obtain a lien and completion bond
or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.
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8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any fixtures, equipment and/or other personal property
owned by Tenant (including, without limitation, items purchased by Tenant
pursuant to Section 2.2.10 of the Tenant Work Letter), provided Tenant repairs
any damage to the Premises and Building caused by such removal. Furthermore,
Landlord may require Tenant, at Tenant's expense, to remove any Alterations (or
any Tenant Improvements which do not conform to the Specifications) and to
repair any damage to the Premises and Building caused by such removal provided
Landlord gave to Tenant written notice (prior to the installation of any such
Alterations or Tenant Improvement) that Landlord would require such removal at
the end of the Lease Term or following any earlier termination of this Lease.
If Tenant fails to complete such removal and/or to repair any damage caused by
the removal of such Alterations or Tenant Improvements, Landlord may do so and
may charge the actual cost thereof to Tenant.
ARTICLE 9
COVENANT AGAINST LIENS
Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from mechanics'
liens. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project, the
Building or the Premises, or any portion thereof, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be promptly
released and removed of record. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed by
bond or otherwise on or before the date occurring thirty (30) days after notice
of such lien is delivered by Landlord to Tenant (which thirty (30) day period
shall be subject to reduction as provided in the next sentence below), Landlord,
at its sole option, may immediately take all action necessary to release and
remove such lien, without any duty to investigate the validity thereof, and all
sums, costs and expenses, including reasonable attorneys' fees and costs,
incurred by Landlord in connection with such lien shall be deemed Additional
Rent under this Lease and shall immediately be due and payable by Tenant.
However, if Landlord's notice of such lien to Tenant indicates that Landlord is
in escrow to sell or finance the Building or has an executed letter of intent to
sell or a commitment letter to finance the Building (or a substantially similar
document), Landlord may indicate in such notice that such thirty (30) day period
shall be reduced to a period designated by Landlord which is not less than ten
(10) business days.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its members, partners, subpartners and affiliates and their respective
officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, any damage either to
person or property or resulting from the loss of use thereof, which damage is
sustained by Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability,
including without limitation court costs and reasonable attorneys' fees
(collectively, "CLAIMS") incurred in connection with or arising from any cause
in, on or about the Premises during the Lease Term, provided that the terms of
the foregoing indemnity by Tenant shall not apply to the gross negligence or
willful misconduct of Landlord or its agents, contractors, servants, employees
or licensees in connection with Landlord's activities in the Project and
Landlord shall indemnify, defend, protect and hold Tenant, its officers,
directors, agents, servants and employees harmless from any such Claims (except
for damage to the Tenant Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises, to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease). The provisions
of this
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Section 10.1 shall survive the expiration or sooner termination of this Lease
with respect to any claims or liability occurring prior to such expiration or
termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages in
the following amounts.
10.3.1 Commercial/Comprehensive General Liability Insurance covering
the insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Broad Form Commercial/Comprehensive General Liability endorsement
covering the insuring provisions of this Lease and the performance by Tenant of
the indemnity agreements set forth in Section 10.1 of this Lease, for limits of
liability not less than:
Bodily Injury and
Property Damage Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate, or any
combination of primary insurance
and excess liability
10.3.2 Property Insurance covering (i) all office furniture, trade
fixtures, office equipment, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant
Improvements, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include sprinkler leakage
coverage and earthquake sprinkler leakage coverage.
10.3.3 Worker's Compensation and Employer's Liability Insurance, with
a waiver of subrogation endorsement, with minimum limits of $1,000,000 per
employee and $1,000,000 per occurrence.
10.3.4 Business Interruption, loss of income and extra expense
insurance in such amounts as will reimburse Tenant for actual direct or indirect
loss of earnings for up to one (1) year attributable to the risks outlined in
Section 10.3.2 above; however, Tenant shall be entitled to self-insure the
coverage described in this Section 10.3.4 only, in which case such
self-insurance shall be deemed to contain all of the terms and conditions
applicable to the coverage described in this Section 10.3.4 including, without
limitation, a deemed waiver of subrogation and, consequently, Landlord shall be
treated, for all purposes, as if Tenant had actually purchased such insurance
from a third party.
10.4 FIRE AND CASUALTY INSURANCE OF LANDLORD. Landlord shall maintain
during the Lease Term and as an Operating Expense, a policy or policies of
insurance insuring the Building and Landlord's remaining interest in the Tenant
Improvements and Alterations against loss or damage due to fire and other
casualties covered within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage and
special extended coverage. Such coverage shall be in the amount of full
replacement cost for the
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Building (including coverages for enforcement of Applicable Laws requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Building as the result of a covered loss) and other improvements and may
include, at the option of Landlord, the risks of earthquakes and/or flood damage
and additional hazards, a rental loss endorsement for a period of one (1) year
and one or more loss payee endorsements in favor of the holders of any mortgages
or deeds of trust encumbering the interest of Landlord in the Building or any
ground or underlying lessors of the Building.
10.5 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. All insurance shall be issued on an occurrence basis
and shall be (i) be issued by an insurance company having a rating of not less
than A-X in BEST'S INSURANCE GUIDE or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; and (ii) provide that
said insurance shall not be canceled or coverage changed unless thirty (30)
days' prior written notice shall have been given to Landlord and any mortgagee
or ground or underlying lessor of Landlord. In addition, the insurance
described in Section 10.3.1 above shall (a) name Landlord, and any other party
reasonably specified by Landlord, as an additional insured; (b) specifically
cover the liability assumed by Tenant under this Lease including, but not
limited to, Tenant's obligations under Section 10.1 of this Lease; (c) be
primary insurance as to all claims thereunder and provide that any insurance
obtained by Landlord is excess and is non-contributing with any insurance
requirement of Tenant; and (d) contain a cross-liability endorsement or
severability of interest clause acceptable to Landlord. Tenant shall deliver
said policy or policies or certificates thereof to Landlord before the Lease
Commencement Date (or Tenant's entry into the Building pursuant to the Tenant
Work Letter, if earlier) and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such certificate, Landlord may, at its option, procure such policies for
the account of Tenant, and the costs of it shall be paid to Landlord as
Additional Rent within fifteen (15) days after delivery to Tenant of bills
therefor. Tenant may satisfy the insurance coverage described in this Article
10 through one or more blanket policies so long as such policies otherwise meet
the requirements specified above.
10.6 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage and loss of insurance and extra
expense insurance waive any rights of subrogation that such companies may have
against Landlord or Tenant, as the case may be, so long as the insurance carried
by Landlord and Tenant, respectively, is not invalidated thereby. As long as
such waivers of subrogation are contained in their respective insurance policies
(or are deemed to be contained in any self-insurance maintained by Tenant
pursuant to the provisions of Section 10.3.4 above), Landlord and Tenant hereby
waive any right that either may have against the other on account of any loss or
damage to the extent such loss or damage is insurable under such policies of
insurance.
10.7 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord. Notwithstanding the foregoing, Landlord's
request shall only be considered reasonable if such increased amounts and any
such other coverages are standard amounts and coverages for Comparable
Buildings, and Landlord shall not increase amounts and require additional
coverages during the first five (5) years of the Lease Term and thereafter not
more often than one time in any five (5) year period.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Building or other portion of the Project
resulting from fire or any other casualty. If such Building or any Common Areas
serving or providing access to such
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Building shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base, Shell, and Core of such Building and such
Common Areas. Such restoration shall be to substantially the same condition of
the Base, Shell, and Core of the Premises and the Common Areas prior to the
casualty, except for modifications required by zoning and building codes and
other laws or by the holder of a mortgage on the Building or Project or any
other modifications to the Common Areas deemed desirable by Landlord and
reasonably approved by Tenant, provided that access to the Building shall not be
materially impaired. Upon the occurrence of any damage to such Building, Tenant
shall assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant's physical damage and property damage
insurance required under Section 10.3 of this Lease (excluding, however,
proceeds payable with respect to any damage to Tenant's furniture, equipment and
other personal property on the Premises), and Landlord shall repair any injury
or damage to the Tenant Improvements installed in the Premises and shall return
such Tenant Improvements and Alterations to their original condition; provided
that if the cost of such repair by Landlord exceeds the amount of insurance
proceeds received by Landlord from Tenant's insurance carrier, as assigned by
Tenant, plus the amount of insurance proceeds received by Landlord from
Landlord's insurance carrier to the extent allocable to damage of such Tenant
Improvements and Alterations, the cost of such repairs shall be paid by Tenant
to Landlord in reasonable progress payments as Landlord repairs the damage
(provided that if any mortgage holder or deed of trust beneficiary so requires,
Tenant shall deposit such cost of repairs with such mortgage holder or deed of
trust beneficiary prior to the commencement of repair by Landlord of such injury
or damage, in which case Tenant shall be entitled to interest on such funds to
the extent permitted by such lender). In connection with such repairs and
replacements, Tenant shall, prior to the commencement of construction, submit to
Landlord, for Landlord's review and approval, all plans, specifications and
working drawings relating thereto, and Landlord shall select the contractors
(subject to Tenant's approval thereof, not to be unreasonable withheld or
delayed (as indicated in Section 29.4 below)) to perform such improvement work.
Landlord shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Building or Common Areas necessary to Tenant's occupancy,
Landlord shall allow Tenant a proportionate abatement of Base Rent during the
time and to the extent the Building is unfit for occpancy for the purposes
permitted under this Lease, and not occupied by Tenant as a result thereof for
the conduct of Tenant's business; provided, however, that if such damage is the
result of the negligence or willful misconduct of Tenant or Tenant's employees,
contractors, licensees or invitees, such abatement of Base Rent shall apply only
to the extent Landlord is reimbursed from the proceeds of rental interruption
insurance purchased by Landlord as a part of Operating Expenses.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Building; and instead terminate this Lease by notifying Tenant in writing of
such termination within ninety (90) days after the date Landlord learns of the
necessity for repairs as the result of damage, such notice to include a
termination date giving Tenant ninety (90) days to vacate the Building, but
Landlord may so elect only if (i) the Building shall be damaged by fire or other
casualty or cause, and the damage is not fully covered, except for deductible
amounts, by insurance policies required to be carried by Landlord under this
Lease and (ii) Tenant is not willing to fund the amount of the shortfall in
excess of deductible amounts.
11.3 LANDLORD'S OR TENANT'S OPTION TO REPAIR. Notwithstanding the terms of
Section 11.1 of this Lease, either Landlord or Tenant may elect to terminate
this Lease by notifying the other in writing of such termination with ninety
(90) days after the date Landlord learns of the necessity for repairs as a
result of such damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Building, but Landlord or Tenant, whichever is
the case, may so elect only if the Building shall be damaged by fire or other
casualty or cause and one or more of the following conditions is present: (i)
the repair or restoration is reasonably estimated to cost more than sixty
percent (60%) of the replacement cost of such Building, or
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(ii) repairs cannot reasonably be substantially completed within three hundred
sixty (360) days after the date Landlord learns of the necessity for repairs as
the result of damage (when such repairs are made without the payment of overtime
or other premiums). Notwithstanding the foregoing, if this Lease is terminated
by Landlord and Landlord thereafter elects to commence the rebuilding of the
Building prior to the sooner to occur of the third (3rd) anniversary of the
termination date or the expiration of this Lease, Tenant shall have the right to
reinstate this Lease by written notice to Landlord within forty-five (45) days
after Tenant's receipt of notice from Landlord that Landlord so elects to
rebuild. Tenant's failure to so notify Landlord within said forty-five (45) day
period shall be deemed to constitute Tenant's waiver of the right to so
reinstate this Lease. Tenant hereby specifically acknowledges that its right to
reinstatement contained in this Section 11.3 shall not be applicable to any
assignee or transferee of Landlord to whom the Premises is transferred after
this Lease is terminated pursuant to this Section 11.3 as a result of a
foreclosure, trustee's sale or bona-fide deed in lieu of foreclosure.
11.4 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, California Civil Code
Sections 1932(2) and 1933(4), with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Buildings or the Project.
11.5 DAMAGE NEAR END OF TERM. In the event that the Building is destroyed
or damaged during the last twelve (12) months of the Lease Term or any Extension
Term and the repair or restoration is reasonably estimated to cost more than the
"Threshold Level" (as that term is defined below), then notwithstanding anything
contained in this Article 11, Landlord shall have the option to terminate this
Lease by giving written termination notice to Tenant of the exercise of such
option within thirty (30) days after Landlord learns of the necessity for
repairs as the result of such damage or destruction, and, to the extent such
damage or destruction was not caused as a result of the negligence or willful
misconduct of Tenant or any of Tenant's employees, agents, contractors,
licensees or invitees and the repair of same is reasonably expected by Landlord
to require more than three (3) months to complete, Tenant shall have the option
to terminate this Lease by giving written termination notice to Landlord of the
exercise of such option within thirty (30) days after Landlord learns of the
necessity for repairs as the result of such damage or destruction. The term
"THRESHOLD LEVEL" shall mean twenty percent (20%) of the replacement cost of the
Building where the damage occurs during the period from the first day of the
ninth (9th) month prior to the scheduled date of expiration of the Lease Term or
any Extension Term to the last day of the twelfth (12th) month prior to the
scheduled date of expiration of the Lease Term or any Extension Term, fifteen
percent (15%) of the replacement cost of the Building where the damage occurs
during the period from the first day of the fifth (5th) month prior to the
scheduled date of expiration of the Lease Term or any Extension Term until the
last day of the eighth (8th) month prior to the scheduled date of expiration of
the Lease Term or any Extension Term, and ten percent (10%) of the replacement
cost of the Building where the damage occurs during the last four (4) months of
the Lease Term or any Extension Term. If either Landlord or Tenant exercises
such option to terminate this Lease as provided above (i) this Lease shall
cease and terminate as of the earlier of (1) the date ninety (90) days after the
date of such notice, or (2) the expiration date of this Lease, (ii) Tenant shall
pay the Base Rent and Additional Rent, properly apportioned up to such date of
termination, and (iii) both parties hereto shall thereafter be freed and
discharged of all further obligations hereunder, except as provided for in
provisions of this Lease which by their terms survive the expiration or earlier
termination of the Lease Term. Notwithstanding the foregoing, if Tenant
exercises an upcoming option to extend the term of this Lease, neither Landlord
nor Tenant shall not have any right to terminate this Lease under this
Section 11.5.
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ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
either party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently.
Any waiver by either party of any provision of this Lease may only be in
writing. Additionally, no express waiver shall affect any provision other than
the one specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
13.1 PERMANENT TAKING. If more than twenty-five percent (25%) of the
rentable square feet of the Building shall be taken by power of eminent domain
or condemned by any competent authority for any public or quasi-public use or
purpose, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease upon ninety (90) days' notice, provided such notice is
given no later than one hundred twenty (120) days after the date of such taking,
condemnation, reconfiguration, vacation, deed or other instrument. If more than
twenty-five percent (25%) of the rentable square feet of the Building is taken,
Tenant shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred twenty (120)
days after the date of such taking. Landlord shall be entitled to the entire
award or payment in connection therewith, except that Tenant shall have the
right to file any separate claim available to Tenant for any taking of Tenant's
personal property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to such Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination, or the date of such taking,
whichever shall first occur. If any part of the Premises shall be taken, and
this Lease is not terminated pursuant to this Section 13.1, the Rent shall be
abated proportionately based on the percentage of the rentable square feet of
the Building which is taken. Tenant hereby waives any and all rights it might
otherwise have pursuant to California Code of Civil Procedure Section 1265.130.
13.2 TEMPORARY TAKING. Notwithstanding anything to the contrary contained
in this Article 13, in the event of a temporary taking of all or any portion of
the Premises for a period of one (1) year or less, then this Lease shall not
terminate but the Base Rent shall be abated for the period of such taking for
the number of rentable square feet of the Premises so taken. Landlord shall be
entitled to receive the entire award made in connection with any such temporary
taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, except as otherwise expressly provided herein, assign, mortgage,
pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise
transfer, this Lease or any interest hereunder, permit any assignment, or other
transfer of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than
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Tenant and its employees (all of the foregoing are hereinafter sometimes
referred to collectively as "TRANSFERS" and any person to whom any Transfer is
made or sought to be made is hereinafter sometimes referred to as a
"TRANSFEREE"). Where Landlord's consent to a proposed Transfer is required
under this Article 14, if Tenant desires Landlord's consent to any Transfer,
Tenant shall notify Landlord in writing, which notice (the "TRANSFER NOTICE")
shall include (i) the proposed effective date of the Transfer, which shall not
be less than fifteen (15) business days nor more than one hundred eighty (180)
days after the date of delivery of the Transfer Notice, (ii) a description of
the portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii) all
of the material terms of the proposed Transfer and the consideration therefor
(including calculation of the "Transfer Premium," as that term is defined in
Section 14.3 below, in connection with such Transfer), the name and address of
the proposed Transferee, and a copy of all existing executed and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) current financial statements of
the proposed Transferee certified by an officer, partner or owner thereof, and
any other information reasonably required by Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee's business and proposed use of the Subject Space, and such other
information as Landlord may reasonably require. Landlord shall approve or
disapprove of the proposed Transfer within fifteen (15) business days after
Landlord's receipt of the applicable Transfer Notice including all items
required pursuant to the immediately preceding sentence. Where Landlord's
consent to a proposed Transfer is required under this Article 14, any Transfer
made without Landlord's prior written consent shall, at Landlord's option, be
null, void and of no effect, and shall, at Landlord's option, constitute a
default by Tenant under Section 19.1.2 of this Lease. Where Landlord's consent
to a proposed Transfer is required under this Article 14, whether or not
Landlord consents to such proposed Transfer, for each proposed Transfer Tenant
shall pay to Landlord a review and processing fee in an amount equal to $500.00
and any reasonable legal fees incurred by Landlord (which legal fees shall not
exceed $1,000 per proposed Transfer during the initial Lease Term), upon request
by Landlord.
14.2 LANDLORD'S CONSENT. Where Landlord's consent to a proposed Transfer
is required under this Article 14, Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in a
business which Landlord reasonably determines is not consistent with the quality
of the Project as a first-class, institutional quality office project;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof which Landlord reasonably determines is not consistent
with the quality of the Project as a first-class, institutional quality office
project;
14.2.3 The Transferee intends to use the Subject Space for purposes
which are not permitted under this Lease;
14.2.4 The Transfer will result in more than a reasonable and safe
number of occupants per floor within the Subject Space;
14.2.5 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Transfer on the date consent is requested (provided, however, that this Section
14.2.5 shall only apply if the Transfer is for a full floor or more of the
Building); or
14.2.6 The proposed Transfer would cause a violation of another lease
for space in the Project, or would give an occupant of the Project a right to
cancel its lease or bring an action against Landlord, provided that (i) the
foregoing provisions of this Section 14.2.6 shall only apply (a) to restrictions
in other leases in the Project to the extent Tenant has received
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written notice of such restrictions prior to the proposed Transfer, and (b) if
(at the time Tenant gives Landlord any Transfer Notice) Tenant is leasing less
than eighty percent (80%) of the rentable square feet of the Project; and (ii)
this Section 14.2.6 shall not apply to any proposed food service use by the
proposed Transferee (i.e., Landlord may not grant an exclusive within the
Project for a food service use that would restrict Tenant's ability to enter
into a Transfer).
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to Tenant than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). Notwithstanding any contrary provisions of this Lease, if Tenant claims
that Landlord has unreasonably withheld or delayed its consent to a proposed
Transfer or otherwise has breached its obligations under this Article, Tenant's
only remedies shall be to seek a declaratory judgment and/or injunctive relief
and/or monetary damages, and Tenant waives the right to terminate this Lease as
to all or any portion of the Premises.
14.3 TRANSFER PREMIUM.
14.3.1 DEFINITION OF TRANSFER PREMIUM. If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall, except as otherwise provided in this Article 14, pay to Landlord
fifty percent (50%) of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee (the amount which may be
so payable to Landlord may be referred to herein as the "PREMIUM BASE AMOUNT").
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in excess of the Rent and Additional Rent payable by
Tenant under this Lease on a per rentable square foot basis if less than all of
the Premises is transferred, after deducting the reasonable expenses incurred by
Landlord or Tenant for (i) any changes, alterations and improvements to the
Premises in connection with the Transfer, (ii) any brokerage commissions,
reasonable attorneys' and architectural fees and reasonable advertising costs
incurred in connection with the Transfer, (iii) any Rent and Additional Rent
paid by Tenant for the portion of the Premises transferred while such space is
being actively marketed for sublease or assignment to the extent Tenant is not
occupying such space, and (iv) any other out-of-pocket costs reasonably incurred
by Tenant in connection with such Transfer (collectively, the "SUBLEASING
COSTS"). "Transfer Premium" shall also include, but not be limited to, key
money and bonus money paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
14.3.2 PAYMENT OF TRANSFER PREMIUMS. The determination of the amount
of the Transfer Premium shall be made on an annual basis in accordance with the
terms of this Section 14.3.2, but an estimate of the amount of the Transfer
Premium shall be made each month and one-twelfth (1/12th) of such estimated
amount shall be paid to Landlord promptly, but in no event later than the next
date for payment of Base Rent hereunder, subject to an annual reconciliation on
each anniversary date of the Transfer. If the payments to Landlord under this
Section 14.3.2 during the twelve (12) months preceding each annual
reconciliation exceed the amount of Transfer Premium determined on an annual
basis and actually received by Tenant, then Landlord shall promptly refund the
excess to Tenant. If Tenant has underpaid the Transfer Premium, as determined
by such annual reconciliation, Tenant shall pay the amount of such deficiency to
Landlord promptly, but in no event later than the next date for payment of Basic
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Rent hereunder. For purposes of calculating the Transfer Premium on an annual
basis, Tenant's Subleasing Costs shall be amortized on a straight-line basis
over the term of the Transfer.
14.3.3 LIMITATION ON AMOUNT AND TIMING. Notwithstanding the
foregoing provisions of this Section 14, Tenant shall have no obligation to pay,
and shall not pay, any percentage of the foregoing Transfer Premium under this
or any other section of this Lease in any calendar year, to the extent Tenant is
advised by Landlord that such payment would exceed the sum of: (A) the maximum
amount (if any) that can be paid to Landlord without causing Kilroy Realty
Corporation, a Maryland corporation ("KRC") to fail to meet the requirements of
sections 856(c)(2) and (3) of the Internal Revenue Code of 1986, as amended (the
"CODE") for such year determined as if (i) the payment of such amount did not
constitute income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of
the Code ("QUALIFYING INCOME"), (ii) the payment of such amount resulted in all
other amounts received by Landlord from Tenant pursuant to this Lease during
such year failing to constitute Qualifying Income, and (iii) KRC had $1,000,000
of income from unknown sources during such year which was not Qualifying Income
(in addition to any known or anticipated income of KRC which was not Qualifying
Income), in each case as determined by KRC's independent accountants, and (B)
the Premium Base Amount less the amounts paid under clause (A) in the event KRC
receives and provides Tenant with a copy of a reasoned opinion from outside
counsel or a ruling from the Internal Revenue Service (the "PREMIUM GUIDANCE")
indicating that Landlord's receipt of the Premium Base Amount would constitute
Qualifying Income and would not cause other amounts paid by Tenant to Landlord
to fail to constitute Qualifying Income (the "REIT REQUIREMENTS"). In the event
that Landlord is not able to receive the full Premium Base Amount due to the
above limitation, Tenant shall not pay any amounts in excess of such limit
unless and until KRC receives (and delivers to Tenant) any one or combination of
the following, once or more often: (i) a letter from KRC's independent
accountants indicating the maximum amount that can be paid by Tenant to Landlord
at that time without causing KRC to fail to meet the REIT Requirements
(calculated as described above) or (ii) the Premium Guidance; in which event
Tenant shall pay to Landlord the lesser of the unpaid Transfer Premium or the
maximum amount stated in the letter referred to in (i) above. Tenant's
obligation to pay any unpaid portion of the Transfer Premium shall terminate on
the December 31 following the date which is three (3) years after the date such
payment would (without regard to the limitations in this subparagraph) have
initially been due. Any amounts paid shall first be applied to the Transfer
Premium which is the oldest. Tenant shall cooperate with Landlord and KRC and
provide them with any information or documents that are necessary or helpful to
Landlord or KRC in obtaining any Premium Guidance or in calculating the amount
of any payment due hereunder.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. In the event that, following
any proposed Transfer, Tenant and its Permitted Affiliates do not or will not
occupy at least fifty percent (50%) of the rentable square footage of the
Building or should Tenant's financial performance at the time of such proposed
Transfer have fallen below the minimum Financial Standards set forth in
Section 21.2 below, Landlord shall have the option, by giving written notice
("RECAPTURE NOTICE") to Tenant within fifteen (15) days after receipt of any
Transfer Notice, to recapture the Subject Space. Such recapture shall cancel
and terminate this Lease, with respect to the Subject Space as of the date
stated in the Transfer Notice as the effective date of the proposed Transfer
until the last day of the term of the Transfer as set forth in the Transfer
Notice. However, if Landlord delivers a Recapture Notice to Tenant, Tenant may,
within ten (10) days after Tenant's receipt of the Recapture Notice, deliver
written notice to Landlord indicating that Tenant is rescinding its request for
consent to the proposed Transfer, in which case such Transfer shall not be
consummated and this Lease shall remain in full force and effect as to the
portion of the Premises that was the subject of the Transfer. Tenant's failure
to so notify Landlord in writing within said ten (10) day period shall be deemed
to constitute Tenant's election to allow the Recapture Notice to be effective.
In the event of a recapture by Landlord, if this Lease shall be canceled with
respect to less than all of the rentable square feet within the Building, the
Rent reserved herein shall be prorated on the basis of the number of rentable
square feet retained by Tenant in proportion to the number of rentable square
feet contained in the Building, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. If Landlord declines,
or fails to
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timely elect to recapture the Subject Space under this Section 14.4, then,
provided Landlord has consented to the proposed Transfer with respect to any
Transfer which such consent is required, Tenant shall be entitled to transfer
the Subject Space to the proposed Transferee, subject to the provisions of this
Article 14. If, as a result of Landlord's exercise of its recapture rights, the
Building is converted to a multi-tenant building, Landlord and Tenant will amend
this Lease in order to reflect appropriate modifications necessary for a
multi-tenant building.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord,
(iv) Tenant shall furnish upon Landlord's request a complete statement,
certified by an independent certified public accountant, or Tenant's chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant from liability
under this Lease. Landlord or its authorized representatives shall have the
right at all reasonable times (but no more than one (1) timer per calendar year)
to audit the books, records and papers of Tenant relating to any Transfer, and
shall have the right to make copies thereof. If the Transfer Premium respecting
any Transfer shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency and, in addition, if understated by more than
(a) two percent (2%), Tenant shall pay Landlord's cost of such audit within
thirty (30) days after demand, and (b) ten percent (10%), Landlord shall be
entitled to interest on the understated amount at the rate of ten percent (10%)
per annum from the date upon which the understated amount would have been paid
if the Transfer Premium had been accurately determined in the first place to the
date Tenant pays to Landlord in full such understated amounts; Landlord's rights
pursuant to the immediately preceding sentence shall constitute Landlord's sole
remedy for any understatement of the Transfer Premium (in the absence of fraud
by Tenant).
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "Transfer"
shall also include (i) if Tenant is a partnership or limited liability company,
the withdrawal or change, voluntary, involuntary or by operation of law, of
fifty percent (50%) or more of the partners or members, or transfer of fifty
percent (50%) or more of partnership or membership interests, within a twelve
(12)-month period, or the dissolution of the partnership or company without
immediate reconstitution thereof, and (ii) except as otherwise provided in
Section 14.7 below, if Tenant is a closely held corporation (I.E., whose stock
is not publicly held and not traded through an exchange or over the counter),
(A) the dissolution, merger, consolidation or other reorganization of Tenant or,
(B) the sale or other transfer of more than an aggregate of fifty percent (50%)
of the voting shares of Tenant (other than to immediate family members by reason
of gift or death) within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 AFFILIATED AND PERMITTED TRANSFERS.
14.7.1 PERMITTED AFFILIATES. Notwithstanding anything contained in
this Lease to the contrary, an assignment, subletting or permitting the use of
all or any portion of the Premises to or by a Permitted Affiliate (as defined
below) of Tenant shall not be deemed a Transfer under this Article 14 and thus
shall not be subject to (i) any requirement of obtaining Landlord's consent
thereto under this Article 14, (ii) Landlord's right to receive fifty percent
(50%) of any Transfer Premium in connection therewith under Section 14.3 or
(iii) Landlord's right to recapture the Premises under Section 14.4, provided
that (a) Tenant notifies Landlord of such assignment or sublease and the
identity of the Permitted Affiliate prior to the effective date thereof and
promptly after request from Landlord supplies Landlord with any documents or
information reasonably requested by Landlord regarding such assignment or
sublease and/or such Permitted Affiliate; and (b) such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14.
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As used in this Section 14.7, "PERMITTED AFFILIATE" shall mean (1) any person,
corporation or other entity which is controlled by, controls, or in common
control with Tenant, or (2) any entity which merges with Tenant or acquires
substantially all of Tenant's stock or assets, and in either case of (1) or (2)
above, such person, corporation or other entity has a net worth as of the
effective date of the assignment or sublease at least equal to the net worth of
Tenant as of the date of execution of this Lease. "Control," as used in this
Section 14.7, shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person or
entity, whether through the ownership of voting securities, by contract or
otherwise.
14.7.2 PERMITTED TRANSFERS. Notwithstanding anything contained in
this Lease to the contrary, any subletting of less than fifty percent (50%) of
the rentable square footage, in the aggregate, of the Building by Tenant for a
term less than the remaining initial Lease Term (or, if during any Extension
Term, for a term less than the remaining Extension Term), shall not require
Landlord's consent and shall not be subject to Landlord's recapture right under
Section 14.4 (unless Tenant's financial performance at the time of such proposed
Transfer has fallen below the minimum Financial Standards set forth in Section
21.2 below), but shall be subject to (a) the condition that the sublease does
not provide for the subtenant to receive parking in a ratio per rentable square
foot in excess of that to which Tenant is entitled under this Lease, and
(b) Landlord's receipt of the amount described in Section 14.3. In the event of
any such sublease, Tenant shall notify Landlord at least thirty (30) days prior
to the effective date of such sublease, of such proposed sublease and the
identity of the proposed subtenant and supply Landlord with any documents or
information reasonably requested by Landlord in connection therewith. Any
subtenant under any sublease occurring under this Section 14.7.2 may be referred
to herein as a "PERMITTED TRANSFEREE."
ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to any portion of the Premises to Landlord or any agent or employee of Landlord
shall not constitute a surrender of the Premises or any portion thereof or
effect a termination or partial termination of this Lease, whether or not the
keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, Alterations and Tenant
Improvements which do not conform to the Specifications (provided Landlord
conditioned its approval of their installation under Section 8.5 above upon
Tenant's removal of such Alterations or non-standard Tenant Improvements (as
applicable) upon the expiration or earlier termination of this Lease),
free-standing cabinet work, and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may, in
its sole discretion, require to be removed, and Tenant shall repair at its own
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expense all damage to the Building resulting from such removal. Tenant also
shall comply with the provisions of Section 8.5 of this Lease. Notwithstanding
the foregoing, with respect to Tenant's cabling, Landlord shall have the option,
exercisable by written notice to Tenant on or before the day which is thirty
(30) days prior to the expiration or earlier termination of this Lease, to
require Tenant to remove any or all of its cabling from the Premises and to
repair any damage to the Premises resulting from such removal; provided,
however, that if Landlord so requires Tenant to remove such cabling and if,
within six (6) months after the date of expiration or earlier termination of
this Lease, leasehold improvements within the Premises are demolished in a
manner such that the amount expended to remove such cabling as a part of such
demolition would have been less than the amount previously incurred by Tenant to
remove such cabling, Landlord shall promptly rebate to Tenant the difference
between the amount expended by Tenant to remove such cabling and the amount
which would have been incurred by Landlord to remove such cabling as a part of
the demolition process described herein.
15.3 REMOVAL OF TENANT'S PROPERTY BY LANDLORD. Whenever Landlord shall
re-enter the Building as provided in this Lease, any personal property of Tenant
not removed by Tenant upon the expiration of the Lease Term, or within five (5)
days after a termination by reason of Tenant's default as provided in this
Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord in
accordance with California Civil Code Sections 1980 through 1991 and California
Code of Civil Procedure Section 1174, or in accordance with any laws or judicial
decisions which may supplement or supplant those provisions from time to time.
15.4 LANDLORD'S ACTIONS ON PREMISES. Excepting any claims for damages or
other liability arising out of Landlord's or its agents' or its representatives'
gross negligence or willful misconduct, Tenant hereby waives, and releases
Landlord from, all claims for damages or other liability in connection with
Landlord's or its agents' or representatives' reentering and taking possession
of the Premises or removing, retaining, storing or selling the property of
Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord
harmless from any such damages or other liability, and no such re-entry shall be
considered or construed to be a forcible entry.
ARTICLE 16
HOLDING OVER
If Tenant provides Landlord with written notice ("HOLDOVER NOTICE") at
least thirty (30) days prior to expiration of the Lease Term (or any applicable
Extension Term) that Tenant will be holding over in the Premises, Tenant shall
have the right (and, subject to the grace periods described below, the
obligation) to hold over after the expiration of the Lease Term until the date
("HOLDOVER NOTICE DATE") specified in such Holdover Notice (but not in excess of
one hundred twenty (120) days after the expiration of the Lease Term or
applicable Extension Term). Any holdover tenancy (including without limitation,
any holdover tenancy pursuant to a Holdover Notice) shall be subject to every
applicable term, covenant and agreement contained herein, except that the Base
Rent payable by Tenant for the Premises (irrespective of the amount of space
Tenant continues to occupy in the Building) shall be escalated to equal one
hundred ten percent (110%) of the then current Base Rent and Direct Expenses
payments for the entire Premises for the first ninety (90) days of such holdover
occupancy and one hundred twenty-five percent (125%) of such amount during the
next succeeding ninety (90) days and from and after such one hundred eighty
(180) day period, Rent shall equal one hundred fifty percent (150%) of such
amount thereafter; provided, however, subject to the next sentence of this
Article 16, such holdover Rent and Additional Rent shall be prorated on a per
diem basis through and including the date ("ACTUAL SURRENDER DATE") Tenant
actually vacates and surrenders the Premises to Landlord in the condition
required under this Lease. If Tenant properly delivers the Holdover Notice and
the Actual Surrender Date (a) is earlier than the Holdover Notice Date by
forty-five (45) days or less, Tenant's obligation to pay such holdover Rent and
Additional Rent shall terminate on a per diem basis as of the Actual Surrender
Date, however if the Actual Surrender Date is earlier than forty-five (45) days
prior to the Holdover Notice Date, Tenant's holdover Rent and Additional Rent
shall cease as of the date which is forty-five (45) days prior to the
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Holdover Notice Date, or (b) is later than the Holdover Notice Date, Tenant's
obligation to pay holdover Rent and Additional Rent shall cease as of the Actual
Surrender Date, provided that Tenant shall have no right to holdover beyond the
earlier to occur of fifteen (15) days after the Holdover Notice Date or the
expiration of the one hundred twenty (120) period specified in the first
sentence of this Article 16 above. By way of example only, and not as a
limitation upon the foregoing, if the Holdover Notice indicates that the
Holdover Notice Date is ninety (90) days after the expiration of the Lease Term
or applicable Extension Term, Tenant shall be permitted to holdover until the
date which is one hundred five (105) days after the expiration of the Lease Term
or applicable Extension Term and Tenant's obligation to pay holdover Rent and
Additional Rent shall be prorated on a per diem basis until the later of the
forty-fifth (45th) day after the expiration of the Lease Term or applicable
Extension Term or the Actual Surrender Date. Nothing contained in this
Article 16 shall be construed as consent by Landlord to any holding over by
Tenant (except as expressly provided in this Article 16 above), and Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises to Landlord as provided in this Lease upon the expiration of the Lease
Term (or the period specified in clause 16(b) above, as applicable). The
provisions of this Article 16 shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein or at law.
If Tenant fails to surrender the Premises within the period specified in this
Article 16 above, in addition to any other liabilities to Landlord accruing
therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless
from all loss, costs (including reasonable attorneys' fees) and liability
resulting from such failure, including, without limiting the generality of the
foregoing, any claims made by any succeeding tenant founded upon such failure to
surrender (including such tenant's lost profits) and any lost profits to
Landlord resulting therefrom, provided Landlord promptly notified Tenant in
writing of any lease or signed letter of intent for all or any portion of the
Premises.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within fifteen (15) days following a request in writing by either party to
the other, but in no event more frequently than three (3) times in any twelve
(12) month period, the recipient party shall execute and deliver to the
requesting party an estoppel certificate, which shall be substantially in the
form of EXHIBIT "E," attached hereto (or such other form as may be reasonably
required by any prospective mortgagee or purchaser of the Building or other
portion of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of either
party to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises (if addressed to
Tenant) and an acknowledgment by such party that the statements included in the
estoppel certificate in good faith are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord agrees
to provide Tenant, within sixty (60) days after written request by Tenant, with
commercially reasonable nondisturbance agreements(s) in favor of Tenant from any
ground lessors, mortgage holders or deed of trust beneficiaries under any ground
lease, mortgage or deed of trust affecting the Project or any portion thereof
leased by
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Tenant (whether now existing or coming into existence at any time after the date
of execution of this Lease but prior to the expiration of the Lease Term) and in
consideration of, and as a condition precedent to, Tenant's agreement to be
bound by the terms of this Article 18. Tenant covenants and agrees in the event
any proceedings are brought for the foreclosure of any such mortgage or deed in
lieu thereof, to attorn, without any deductions or set-offs whatsoever, to the
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof if so requested to do so by such purchaser, and to recognize such
purchaser as the lessor under this Lease. Tenant shall, within fifteen (15)
days of request by Landlord, execute such further instruments or assurances as
Landlord or any mortgage holder or deed of trust beneficiary may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases or other
typical provisions contained in Subordination, Non-Disturbance and Attornment
Agreements. Tenant waives the provisions of any current or future statute, rule
or law which may give or purport to give Tenant any right or election to
terminate or otherwise adversely affect this Lease and the obligations of Tenant
hereunder in the event of any foreclosure proceeding or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due, where such
failure continues for five (5) days after written notice thereof from Landlord
to Tenant; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, if the nature of such a
default is such that the same cannot be reasonably be cured within a thirty (30)
day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as is reasonably possible under the
circumstances; or
19.1.3 To the extent permitted by law, a general assignment by Tenant
or any guarantor of the Lease for the benefit of creditors, or the filing by or
against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.4 The hypothecation or assignment of this Lease or subletting of
the Premises in violation of Article 14 hereof; or
19.1.5 Any default by Tenant (after expiration of any applicable cure
period) under any of the Adjacent Building Leases; provided, however, that any
such default by Tenant under any of the Adjacent Building Leases shall be
treated as a default by Tenant under this Lease only if (i) Landlord and all of
the other landlords under the Adjacent Building Leases all elect to declare a
default, and (ii) all lenders of this Building and the applicable Adjacent
Building consent. However, the restrictions upon Landlord in declaring a
default by Tenant pursuant this Section 19.1.5 are not intended to, and shall
not, restrict Landlord from declaring a default of this Lease by Tenant under
the circumstances described in Sections 19.1.1 through and including 19.1.4
above.
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19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not limited
to, brokerage commissions and advertising expenses incurred, and an
amortized portion (over the balance of the Lease Term compared to the term
of any new lease) of any expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any
special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in
Sections 19.2.1(i) and (ii), above, the "worth at the time of award" shall be
computed by allowing interest at the rate set forth in Article 25 of this Lease,
but in no case greater than the maximum amount of such interest permitted by
law. As used in Section 19.2.1(iii) above, the "worth at the time of award"
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 SUBLESSEES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses,
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concessions or arrangements, Tenant shall, as of the date of notice by Landlord
of such election, have no further right to or interest in the rent or other
consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of more than
two (2) monetary events of default by Tenant in any twelve (12) month period
during the Lease Term, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.
19.5 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any violation
or breach of any of the terms, provisions and covenants herein contained shall
be deemed or construed to constitute a waiver of any other or later violation or
breach of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the
remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. The acceptance of any Rent
hereunder by Landlord following the occurrence of any default, whether or not
known to Landlord, shall not be deemed a waiver of any such default, except only
a default in the payment of the Rent so accepted.
19.6 EFFORTS TO RELET. For the purposes of this Article 19, Tenant's right
to possession shall not be deemed to have been terminated by efforts of Landlord
to relet the Premises, by its acts of maintenance or preservation with respect
to the Premises, or by appointment of a receiver to protect Landlord's interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant's right to
possession.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT
21.1 LETTER OF CREDIT. In addition to its primary obligations under this
Lease, Tenant shall, commencing March 31, 2000, and continuing throughout the
Lease Term (including any Extension Terms), at any time that Tenant fails to
meet or equal the "Financial Standards" set forth below, provide security
against a default by Tenant under this Lease in the form of an unconditional,
irrevocable, standby letter of credit ("LC"), naming Landlord as the payee
thereunder, with terms as described in more detail below. The LC shall be in an
amount equal to six (6) months' then current Base Rent and shall be increased by
the amount of and upon any increase in monthly Base Rent payable under this
Lease. The LC shall be issued by a money center bank (a bank which accepts
deposits, maintains accounts, has a local San Diego office which will negotiate
a letter of credit, and whose deposits are insured by the FDIC) reasonably
acceptable to Landlord, and shall be in a form and content reasonably acceptable
to Landlord and in the form required hereunder. The LC shall be drawable by
Landlord upon presentation of a sight draft or demand to the LC issuer.
Landlord may present such a sight draft or demand if (i) the LC has not been
renewed and replaced by Tenant at least thirty (30) days prior to the expiration
date of the then effective LC, or (ii) Tenant commits a default under this
Lease; provided, however, proceeds of the drawn LC shall be applied to Rent,
damages or charges to
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which Landlord is entitled under the Lease as a result of Tenant's default. If
Landlord makes a draw upon the LC pursuant to this Section 21.1 and Tenant fails
to replenish the LC (or, if applicable, the CD described in Section 21.4 below)
within ten (10) days thereafter to an amount equal to six (6) months' then
current Base Rent, then Tenant shall be in default under this Lease. The LC is
not intended to represent liquidated damages for Tenant's default, but only a
mechanism for paying the Rent, damages or charges to which Landlord may be
entitled. If allowed by the issuing bank, Landlord shall be entitled to grant a
security interest in, or make a collateral assignment of, Landlord's rights
under the LC in connection with mortgage indebtedness incurred by Landlord to a
bona fide third-party institutional lender in an arm's-length transaction. The
LC shall indicate that it is transferable in it entirety by Landlord as
beneficiary and that upon receiving written notice of the transfer and upon
presentation to the issuer of the LC the issuer will reissue the LC naming such
transferee as beneficiary. Tenant shall pay all expenses, points, and/or fees
incurred in obtaining the LC.
21.2 FINANCIAL STANDARDS. Such LC shall be required in the event Tenant,
at the end of any calendar quarter (commencing with the calendar quarter ending
March 31, 2000), fails to meet all of the following financial requirements
("FINANCIAL STANDARDS"): (i) Tenant shall have annual gross revenues of not less
than $150,000,000, (ii) Tenant shall have cash on hand of not less than
$15,000,000 and (iii) Tenant's equity-to-debt (which for purposes of this test
shall exclude deferred revenue) ratio shall not be less than 1:1.
21.3 CONDITIONAL RELEASE OF SECURITY. Any LC previously delivered by
Tenant shall be returned to Tenant at such time as Tenant has not been in
default (after expiration of any applicable notice and cure period) under this
Lease and has met or exceeded all of the Financial Standards, for four (4)
consecutive quarters. Notwithstanding the foregoing, in the event the LC has
been returned to Tenant, but Tenant thereafter fails, at the end of any quarter,
to meet all of the Financial Standards then, in such event, Landlord shall be
entitled to require that the LC be reestablished on the terms and provisions set
forth in this Article 21.
21.4 CASH EQUIVALENT. At Tenant's option, but subject to the terms and
conditions hereof and the condition that Landlord determine that Landlord's
ability to draw upon such security in the event of Tenant's bankruptcy is not
impaired, Tenant may , in lieu of the delivery of an LC, pledge a Certificate of
Deposit ("CD") which shall be administered, as practicable, in accordance with
the procedures set forth in this Article 21 with respect to the LC; provided,
however, in the event of such CD any interest accruing on the CD shall be for
the benefit of Tenant. The pledge of any such CD shall be on terms and
conditions approved by Landlord, and the CD shall be issued by a financial
institution reasonably acceptable to Landlord.
ARTICLE 22
ROOF RIGHTS
Subject to all governmental laws, rules and regulations and compliance with
the CC&R's, Tenant and Tenant's contractors (which shall first be approved by
Landlord but which approval shall not be unreasonably withheld or delayed (as
specified in Section 29.4 below)) shall have the nonexclusive right and access,
without further payment of Rent to Landlord, to install, repair, replace,
remove, operate and maintain satellite dishes and/or microwave dishes, and other
radio transmitting and receiving antennae, together with all necessary cable,
wiring, conduits and related equipment (collectively, "COMMUNICATION
EQUIPMENT"), for the purpose of receiving and sending telephone and other
communication signals, at a location on the roof of the Building as reasonably
requested by Tenant and reasonably approved by Landlord in writing. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) Tenant's right to install, replace, repair, remove, operate
and maintain the Communication Equipment shall be subject to all governmental
laws, rules and regulations and Landlord makes no representations that such
laws, rules and regulations permit such installation and operation. Any such
installation shall be under the supervision of Landlord, by a contractor
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approved by Landlord and shall be installed in a lien-free manner in accordance
with the provisions of this Lease.
(ii) The exact size, quality, materials and aesthetics of, and any
required screening for, the Communication Equipment shall be subject to
Landlord's prior written consent which shall not be unreasonably withheld or
delayed. In addition, the installation, protection for roof membrane,
specifications for roof penetration and flashing shall be subject to Landlord's
prior written consent, which shall not be unreasonably withheld or delayed.
(iii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and of connections to the
Building's electrical system) shall be borne by Tenant. All such Communication
Equipment shall be screened to commercially reasonable standards and to prevent
visual impairment. Tenant shall be responsible for the replacement, repair and
maintenance, at Tenant's sole cost and expense, of those areas on the roof of
the Building surrounding Tenant's Communication Equipment to the extent any such
replacement, repair or maintenance is required by virtue of Tenant's
installation, operation or maintenance of Tenant's Communication Equipment,
notwithstanding anything to the contrary contained in this Lease.
(iv) Tenant shall endeavor to use the Communication Equipment so as
not to cause any interference (i) with any other communications from or to the
Project or (ii) to other existing tenants or occupants in the Project who may
use the communication facilities located at the Project and/or related
facilities.
(v) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance and Tenant agrees that Landlord
shall not be liable to Tenant therefor.
(vi) Tenant's rights with respect to such Communication Equipment
shall be personal to the Original Tenant executing this Lease and may not be
assigned or transferred to, or utilized by, any other person or entity with the
exception of any Permitted Transferee under Article 14 which occupies a minimum
of 10,000 rentable square feet of the Building or (ii) any Permitted Affiliate
(collectively, "QUALIFYING TRANSFEREE"); provided, however, such Qualifying
Transferee's rights with respect to Communication Equipment shall be subject to
all the terms and conditions of this Article 22. Other than Qualifying
Transferees, Tenant shall not be permitted to allow any third party to use any
portion of the roof for Communication Equipment or otherwise without Landlord's
consent, which shall not be unreasonably withheld.
(vii) Tenant shall (i) be solely responsible for any damage caused
as a result of the Communication Equipment, (ii) promptly pay any tax, license
or permit fees charged pursuant to any laws or regulations in connection with
the installation, maintenance or use of the Communication Equipment and comply
with all precautions and safeguards recommended by all governmental authorities,
and (iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment and all roof repairs required by the installation and
maintenance of the Communication Equipment.
(viii) The Communication Equipment shall remain the sole property of
Tenant. Tenant shall remove the Communication Equipment and related equipment
at Tenant's sole expense upon the expiration or sooner termination of this Lease
or upon the imposition of any governmental law or regulation which may require
removal, and shall repair the Building upon such removal to the extent required
by such work of removal. If Tenant fails to remove the Communication Equipment
and repair the Building within thirty (30) days after the expiration or earlier
termination of this Lease with respect to such Building, Landlord may do so at
Tenant's expense.
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Landlord reserves the right to use a portion of the roof space on the Building
or lease roof space on the Building to other parties; provided, however, any
party to which Landlord leases such roof space shall be subject to similar
restrictions as set forth in this Article 22.
ARTICLE 23
SIGNAGE
23.1 GENERAL. Other than as contemplated by Section 23.2 below, Tenant
shall have no right to install or maintain any Tenant identification signs (or
any other signs, banners or other such displays) in any location on the Building
or in the Project which may be visible from the exterior of the Building, except
as may be approved by Landlord in writing prior to installation (which approval
shall not be unreasonably withheld, and are consistent and compatible with (a)
the restrictions contained in this Article 23, (b) all governmental regulations
and requirements, (c) the Project's signage criteria, a copy of which is
attached hereto as EXHIBIT "J" ("SIGNAGE CRITERIA"), and (d) the CC&R's.
23.2 TENANT'S EXTERIOR SIGNAGE RIGHTS.
23.2.1 Tenant shall have the right, at Tenant's sole cost and expense
(but chargeable against the Tenant Improvement Allowance described in the Tenant
Work Letter), to install during the Lease Term (i) an identity sign on the
exterior of the Building (the "BUILDING TOP SIGNS") and (ii) certain eyebrow,
directional and monument signage in accordance with the Signage Criteria. As
used herein, "TENANT'S SIGNS" shall mean all Building Signs and any eyebrow,
directional, monument or other signage rights granted to Tenant pursuant to this
Article 23 or EXHIBIT "J". Tenant's Signs shall identify the name of Tenant and
shall not refer to the name of the Project except that monument signage may
refer to the name of the Project.
23.2.2 Tenant's right to Tenant's Signs which are visible from the
exterior of the Building shall be personal to the Original Tenant, any Permitted
Affiliate and any other assignee of Tenant's entire interest in this Lease
(collectively, "PERMITTED SIGNAGE ENTITIES") and may not be transferred to any
other person or entity, except that, subject to the occupancy requirements of
Section 23.2.4 below, Tenant may assign Tenant's rights to any of Tenant's Signs
to any other Transferee occupying at least a full floor in the Building where
Landlord reasonably determines that the name of the Transferee is not an
"Objectionable Name," as that term is defined below. The term "OBJECTIONABLE
NAME" shall mean any name that (i) relates to an entity that is of a character
or reputation, or is associated with a political orientation or faction, that is
inconsistent with the quality of the Project as a first-class, institutional
quality office project, or which a landlord of a first-class, institutional
quality office project would reasonably find to be offensive, taking into
consideration the level and visibility of the applicable Tenant's Signs, or (ii)
conflicts with any exclusive use covenants in other leases of space in the
Project.
23.2.3 Tenant's signage rights shall include exclusive illuminated
and nonilluminated signage for the Building so long as Tenant occupies at least
fifty percent (50%) of the rentable square footage thereof, and Tenant shall
have the right to have its professional name and logo prominently displayed on
any monument signage for the Building so long as Tenant occupies at least fifty
percent (50%) of the rentable square footage thereof.
23.2.4 If Tenant's (or any other Permitted Signage Entity's)
occupancy of the Building falls below fifty percent (50%) of the rentable square
footage thereof, upon notice to Tenant, Tenant's right to Building Top Signs for
such Building shall terminate and Tenant shall remove such signs in accordance
with Section 23.2.8 below.
23.2.5 Any utility costs for illuminated signs shall be charged to
Tenant pursuant to Article 6.
23.2.6 Notwithstanding the foregoing, Landlord hereby reserves and
retains the right to identify Landlord (or its successor) as owner and/or
manager of the Project on monument signage and at the entry to the Building.
Any specifications for such signage not shown on
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EXHIBIT "J" shall be subject to Tenant's approval, which approval shall not be
unreasonably withheld or delayed. Tenant's name on the monument signage shall
be prominent and at the top of such signage. The monument signage shall be
limited to tenants of the Project except as described in this Section 23.2.6.
23.2.7 Tenant's Building Top Sign may (but shall not be required to)
face SR56 and shall be located on the skin of the Building in the location shown
on the Signage Criteria. The specifications, plans and elevations for Tenant's
Signs (including the graphics, materials, color, design, lettering, height,
lighting, size and quality) shall be subject to Landlord's approval, which shall
not be unreasonably withheld or delayed and shall be consistent with the Signage
Criteria for the Project. Tenant's Signs shall be installed under the
supervision of Landlord by a contractor reasonably approved by Landlord and
shall be installed in a lien-free manner in accordance with the provisions of
this Lease. Tenant's signs shall be maintained, at the sole cost and expense of
Tenant, pursuant to a maintenance program approved by Landlord.
23.2.8 Tenant shall, at Tenant's sole cost and expense (subject to
Landlord's supervision, but without charge to Tenant for such supervision),
cause Tenant's Signs to be removed and the Building and the Project to be
restored to the condition existing prior to the placement of such Tenant's Signs
(reasonable wear and tear excepted) at the expiration or earlier termination of
this Lease (or such earlier time as Tenant elects or is required to remove any
such Tenant Signs). If Tenant fails to remove Tenant's Signs and restore the
Building and Project as provided above within thirty (30) days following
Landlord's demand therefor, then Landlord may perform such work and all costs
and expenses incurred by Landlord in so performing such work shall be reimbursed
by Tenant to Landlord within fifteen (15) days following Landlord's delivery to
Tenant of an invoice therefor.
23.3 TENANT'S INTERIOR SIGNAGE RIGHTS. Tenant shall have the right to
locate in the Building lobby a Building directory board ("DIRECTORY BOARD") the
size, location, design, materials, color and quality of which shall be subject
to Tenant's reasonable discretion, except that if, at any time, the Building is
not one hundred percent (100%) leased by Tenant, the size, location, design,
material, color and quality of the Directory Board shall be subject to
Landlord's reasonable approval. The cost of the Directory Board shall be
included in the Base, Shell and Core for the Building and the cost of Tenant's
listings shall be borne by Tenant. Tenant shall have exclusive use of any such
Directory Board so long as Tenant's lease covers one hundred percent (100%) of
the rentable square footage in the Building; provided, however, Landlord shall
have the right to identify Landlord (or its successor) as owner and/or manager
of the Project on any such Directory Board. In the event Tenant no longer
leases and occupies one hundred percent (100%) of the rentable square footage of
the Building, Tenant and its Permitted Transferees shall be entitled to its
Building pro rata share of the space on such Directory Board. Tenant shall also
have the right to install other signage identifying Tenant within the Building,
which interior signage shall be in compliance with the Signage Criteria.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
(i) structural changes to the Building or (ii) changes to the Building's life
safety system, or (iii) any capital improvements to the Project the requirement
of which is not related to Tenant's particular use of the Premises or
Alterations made by Tenant. Compliance with the items described in
subsections (i), (ii) and (iii) above shall be Landlord's responsibility and
shall, subject to the terms of Article 4 above, be included in Operating
Expenses. Should any standard or regulation now or hereafter be imposed on
Landlord or Tenant by a state, federal or local governmental body charged with
the establishment, regulation and enforcement of occupational, health or safety
standards for employers, employees, landlords or tenants, then Tenant agrees, at
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its sole cost and expense, to comply promptly with such standards or
regulations. The judgment of any court of competent jurisdiction or the
admission of Tenant in any judicial action, regardless of whether Landlord is a
party thereto, that Tenant has violated any of said governmental measures, shall
be conclusive of that fact as between Landlord and Tenant. Notwithstanding the
foregoing or anything to the contrary contained in this Lease, Landlord hereby
warrants to Tenant that the Building shall be in compliance with the
requirements of the Americans With Disabilities Act ("ADA") and California
Administrative Code Title 24 ("TITLE 24") in effect at the time Landlord obtains
the certificate of occupancy (or its equivalent) for the Base, Shell and Core;
provided, however, that if the requirements of ADA and/or Title 24 change after
the date upon which Landlord obtains the permit for the initial construction of
the Building and Landlord is not required by law to comply with such change,
Landlord shall not be in violation of this provision so long as Landlord not
making such change does not increase the cost of construction of the Tenant
Improvements or delay the construction of the Tenant Improvements. Landlord
will be fully responsible for making all alterations and repairs to the
Building, at Landlord's cost (which shall not be included in Operating Expenses)
resulting from or necessitated by the failure of Landlord or Landlord's
contractors to comply with the foregoing ADA and Title 24 warranty. The
obtaining of a Certificate of Occupancy by either Landlord or Tenant permitting
Tenant occupy the Building shall be prima facia evidence that Landlord has
complied with the foregoing requirements of this Article 24 ("REQUIREMENTS") as
of the date of such Certificate of Occupancy, unless refuted or reversed by any
applicable governmental authorities. However, notwithstanding anything to the
contrary contained in this Article 24, Tenant, at Tenant's sole cost and
expense, shall promptly make all repairs, replacements, alterations or
improvements needed to comply with the Requirements to the extent that the
Requirements relate to or are triggered by (a) Tenant's particular use of the
Building for other than general office use, or (b) any Alterations made to the
Building by Tenant.
ARTICLE 25
LATE PAYMENTS
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to two
percent (2%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum ("INTEREST RATE") equal to
the lesser of (i) two percent (2%) over the rate publicly announced by Wells
Fargo Bank as its prime or reference rate (or the largest state chartered bank
operating in California in the event that Wells Fargo Bank ceases to exist or to
announce a prime or reference rate) or (ii) the highest rate permitted by
applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall fail to perform
any of its obligations under this Lease, within a reasonable time after such
performance is required by the terms of this Lease, Landlord may, but shall not
be obligated to, after reasonable prior notice to Tenant (except in the case of
an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.
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26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15) days
after delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures reasonably made and obligations incurred by Landlord in collecting
or attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Section 26.2 shall survive the expiration or sooner termination of
the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants (but as to prospective tenants, only during the last twelve (12)
months of the initial Lease Term or of any Extension Term), or to the ground or
underlying lessors; (iii) post notices of nonresponsibility; or (iv) alter,
improve or repair the Premises or the Building if necessary to comply with
current building codes or other applicable laws, or for structural alterations,
repairs or improvements to the Building. Tenant shall be offered an opportunity
to accompany Landlord in connection with any such entry and Landlord shall use
reasonable efforts to comply with Tenant's security procedures in connection
with such entry (except that these restrictions shall not apply in the case of
an emergency where Tenant is not available to accompany Landlord).
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord;
(B) take possession due to any breach of this Lease in the manner provided
herein; and (C) perform any covenants of Tenant which Tenant fails to perform.
Landlord may make any such entries without the abatement of Rent so long as
Tenant can continue to occupy and use any affected portion of the Premises for
the same business purposes as Tenant had been using such affected portion prior
to Landlord's entry, and Landlord may take such reasonable steps as required to
accomplish the stated purposes, provided, however, that any such entry shall be
accomplished as expeditiously as reasonably possible and in a manner so as to
not materially and adversely interfere with Tenant's normal business functions.
Tenant hereby waives any claims for damages or for any injuries or inconvenience
to or interference with Tenant's business, lost profits, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby except
any claims arising out of Landlord's gross negligence or willful misconduct.
For each of the above purposes, Landlord shall at all times have a key with
which to unlock all the doors in the Premises, excluding Tenant's vaults, safes
and special security areas designated from time to time in advance by Tenant.
In an emergency, Landlord shall have the right to use any means that Landlord
may deem proper to open the doors in and to the Premises. Any entry into the
Premises by Landlord in the manner hereinbefore described shall not be deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
actual or constructive eviction of Tenant from any portion of the Premises.
ARTICLE 28
TENANT PARKING
Commencing on the Lease Commencement Date, Tenant shall have the right, at
no cost to Tenant during the initial Lease Term (with the parking charge, if
any, during Extension Terms to be determined as a component of Fair Market
Rental Value), to the use of the number of parking permits set forth in
Section 9 of the Summary, which parking permits shall pertain to the Project
parking facilities. Such parking permits shall permit Tenant and its employees
and invitees to use, on a nonexclusive basis, together with other tenants and
their respective employees and invitees, any undesignated, unreserved spaces
available in such parking facility
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for the Building. Tenant shall abide by all rules and regulations which are
prescribed from time to time for the orderly operation and use of the Project
parking facility, provided that Landlord shall not prescribe any rules and
regulations which unreasonably and adversely affect Tenant's use of the Project
parking facility. Such rules and regulations shall provide that Tenant shall
pay Landlord's then current nominal charge for any replacement of any Tenant
parking pass card, if any, which is lost, stolen, damaged or destroyed. Tenant
understands and agrees that, pursuant to the CC&R's, other owners of adjacent
property to the Project have been or will be granted reciprocal rights of access
and parking over certain portions of the Project as more particularly set forth
in the CC&R's; provided, however, the use of the parking structure will be
limited to tenants of the Project. Landlord shall not, without Tenant's prior
written approval (which approval shall not be unreasonably withheld), change
the size, configuration, design, layout and all other aspects of the Project
parking facilities at any time, and if Tenant approves any such changes, Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of Rent under this Lease, from time to time,
temporarily restrict access to the Project parking facility for purposes of
permitting any such construction, alteration or improvements so long as Landlord
takes all reasonable measures to minimize any disruption to Tenant's use or
access of the Project parking facilities for the duration of any such
construction, alteration or improvements. Notwithstanding the foregoing,
Landord may, without Tenant's prior written approval, make such changes to the
Project parking facilities to the extent such changes are mandated by any
applicable governmental law, rule or regulation or any changes to any
governmental law, rule or regulation. If Landlord is forced to relocate
Tenant's parking off site of the Project parking facility, any such relocation
shall be temporary and Landlord shall use commercially reasonable efforts to
cause such relocation to be within a reasonable walking or shuttle distance of
the Project. Further, Landlord shall not knowingly allow any non-tenants of the
Project to use the Project parking facilities in violation of the CC&R's without
Tenant's prior written approval. Landlord agrees that the average number of
parking permits granted by Landlord to any other tenants of the Project shall
not exceed four and one-half (4.5) parking permits per 1,000 usable square feet
of space so leased. Landlord may delegate its responsibilities hereunder to a
parking operator in which case such parking operator shall have all the rights
of control attributed hereby to the Landlord. Tenant's parking permits under
this Article 28 are provided to Tenant solely for use by Tenant's own personnel
and such privileges may not be transferred, assigned, subleased or otherwise
alienated by Tenant without Landlord's prior approval other than on a pro rata
basis to Permitted Affiliates and Permitted Transferees. Tenant's invitees and
guests may use parking spaces in such parking facility which are not allocated
or reserved for Tenant or other occupants or visitors of the Building or Project
on a first-come, first-serve basis. Notwithstanding the foregoing,
approximately ten percent (10%) of Tenant's parking permits for the Building
shall be reserved spaces for Tenant's visitors and employees of the Building, as
will be shown on a Project parking plan prepared by Landlord and acceptable to
Tenant. Landlord shall have the right to relocate such reserved spaces from time
to time so long as Landlord provides Tenant with reserved spaces within the same
general proximity of the Building. The parking permits allocated to Tenant are
not for long term (i.e., more than ninety-six (96) hours) storage of
automobiles, and are not for short or long term storage of boats, trailers,
recreational vehicles, motorcycles or other vehicles or equipment. Tenant shall
have the option to require Landlord to add, at Tenant's sole cost and expense, a
card key entry system to the parking structure (as selected by Tenant and
reasonably approved by Landlord) for the Project and/or security cameras
(including a security desk and console with monitors for each security camera at
the location specified in EXHIBIT "I") within the parking structure for the
Project; if Tenant exercises such option, Tenant shall pay such cost to
Landlord, as Additional Rent, within thirty (30) days after Tenant's receipt of
reasonably detailed invoice(s).
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Subject to all other provisions of this Lease, each
of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Landlord and of Tenant, but
also of their respective successors or assigns,
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provided this clause shall not permit any assignment by Tenant contrary to the
provisions of Article 14 of this Lease.
29.2 MODIFICATION OF LEASE/MEMORANDUM OF LEASE. Should any current or
prospective mortgagee or ground lessor for the Building or Project require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way change
the rights and obligations of Tenant hereunder (as reasonably determined by
Tenant), then and in such event, Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. Landlord agrees to pay to Tenant, within thirty (30) days
after invoice, any reasonable attorneys' fees incurred by Tenant in connection
with any modification to this Lease executed by Tenant pursuant to the
immediately preceding sentence. Should Landlord or any such prospective
mortgagee or ground lessor, or should Tenant, request execution of a short form
Memorandum of Lease for recording, containing, among other customary provisions,
the names of the parties, a description of the Premises and the Lease Term, each
party agrees to execute and deliver such short form Memorandum of Lease to the
other within twenty (20) days following the request therefor. Either party may
record any such Memorandum of Lease at such party's sole cost and expense;
however, if Tenant records a Memorandum of Lease, Tenant agrees to execute,
acknowledge and deliver to Landlord, within ten (10) days after Landlord's
request (which request may be made by Landlord at any time after the date of
expiration or earlier termination of this Lease), a quitclaim deed prepared by
Landlord and in commercially reasonable form acknowledging the expiration or
earlier termination of this Lease. The immediately preceding sentence shall
survive the expiration or earlier termination of this Lease.
29.3 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project and
in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease for
obligations accruing after the date of transfer and Tenant agrees to look solely
to such transferee for the performance of Landlord's obligations to be performed
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to the holder of any mortgage or deed of
trust as additional security, but agrees that an assignment shall not release
Landlord from its obligations hereunder and Tenant shall continue to look to
Landlord for the performance of its obligations hereunder.
29.4 CONSENTS BY THE PARTIES. The parties intend that whenever Landlord's
or Tenant's consent or approval is expressly or impliedly required by any
provision of this Lease, the consent or approval may not be unreasonably or
arbitrarily withheld, conditioned or delayed; and on the contrary, shall be
approved or disapproved by a party acting in a commercially reasonable manner.
Notwithstanding anything to the contrary contained in this Lease, except as
expressly provided in Section 14.2 above, an action for declaratory judgment or
specific performance shall be Tenant's or Landlord's sole right and remedy in
any dispute as to whether Tenant or Landlord has breached this Section 29.4
concerning a consent or approval.
29.5 CAPTIONS. The captions of articles and sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such articles and sections.
29.6 TIME OF ESSENCE. Time is of the essence of this Lease and each of its
provisions.
29.7 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 NO WARRANTY. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that
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Landlord is furnishing the same services to other tenants, at all, on the same
level or on the same basis, or any warranty or any statement of Landlord which
is not set forth herein or in one or more of the exhibits attached hereto.
29.9 CONSTRUCTION. Should any provision of this Lease require
interpretation by a court of law, it is agreed that the court interpreting or
construing this Lease shall not apply a presumption that the terms shall be more
strictly construed against one party who by itself or through its agents
prepared this document.
29.10 ENTIRE AGREEMENT. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises and shall be
considered to be the only agreements between the parties hereto and their
representatives and agents. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.
29.11 RIGHT TO LEASE. Subject to Tenant's rights hereunder, Landlord
reserves the absolute right to effect such other tenancies in the Project as
Landlord in the exercise of its sole business judgment shall determine to best
promote the interests of the Building or Project, provided that Landlord shall
lease space in the Project only to tenants who are consistent with the quality
of the Project as a first-class, institutional quality office project. Tenant
does not rely on the fact, nor does Landlord represent, that any specific tenant
or type or number of tenants shall, during the Lease Term, occupy any space in
the Building or Project.
29.12 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "FORCE MAJEURE"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.
29.13 NOTICES. All notices, demands, statements, designations, approvals
or other communications (collectively, "NOTICES") given or required to be given
by either party to the other hereunder shall be in writing, shall be sent by (i)
United States certified or registered mail, postage prepaid, return receipt
requested, (ii) nationally recognized and reputable overnight courier (e.g.,
Federal Express and Network Courier), or (iii) delivered personally. Notice
shall be sent (a) to Tenant at the appropriate address set forth in Section 11
of the Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord; or (b) to Landlord at the following addresses, or to
such other firm or to such other place as Landlord may from time to time
designate in a Notice to Tenant:
Kilroy Realty, L.P.
2250 East Imperial Highway, Suite 1200
El Segundo, California 92045
Attention: Legal Department
Facsimile: (310) 322-8790
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with a copy to:
Kilroy Realty, L.P.
4370 Executive Drive, Suite 400
San Diego, California 92121
Attention: Asset Manager
Facsimile: (619) 547-4767
Any Notice will be deemed given on the date which is three (3) business days
after the date it is mailed as provided in this Section 29.13, the next business
day if sent by overnight courier, or upon the date personal delivery is made.
If Tenant is notified of the identity and address of the holder of any deed of
trust or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given the same opportunity to cure such
default as is available to Landlord, prior to Tenant's exercising any remedy
available to Tenant.
29.14 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.15 AUTHORITY. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. If only one (1) officer executes this Lease for Tenant,
Tenant agrees to provide to Landlord evidence reasonably satisfactory to
Landlord confirming the authority of the signing officer of Tenant to bind
Tenant to this Lease.
29.16 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING
ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF
ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW. EACH PARTY HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION (FOR UNLAWFUL DETAINER OR OTHERWISE) BY LANDLORD
TO RECOVER POSSESSION OF THE PREMISES.
29.17 SUBMISSION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
29.18 BROKERS. 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 Lease, excepting only the real estate brokers or
agents specified in Section 10 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. 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, judgments, 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
any dealings with any real estate broker or agent, other than the Brokers (whose
commissions shall be paid by Landlord pursuant to a separate agreement),
occurring by, through, or under the indemnifying party.
29.19 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to
the contrary and agrees that if Landlord fails to perform its obligations set
forth herein, repairs or perform any acts hereunder at Landlord's expense or
to any setoff of the Rent or other amounts owing hereunder against Landlord
except as expressly set forth in this Lease; provided, however,
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that the foregoing shall in no way impair the right of Tenant to commence a
separate action against Landlord for any violation by Landlord of the provisions
hereof so long as notice is first given to Landlord.
29.20 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord and Tenant agree
that if Tenant leases on a direct basis (i.e., not including any space leased by
Tenant pursuant to a sublease) at least two-thirds (2/3) of any space then
constructed for lease at the Project, the name of the Project shall be
"Peregrine Systems Corporate Center." However, if at any time (after the Lease
Commencement Date for Building 1) Tenant fails to lease on a direct basis at
least two-thirds (2/3) of such space, Landlord shall have the right, at
Landlord's sole cost and expense, to change the name of the Project to "Carmel
Center", whether or not Tenant subsequently meets the leasing requirement
specified above. Except as provided in this Section 29.20 above, Landlord shall
not have the right at any time to change the name of the Project or Building
without first obtaining Tenant's written consent. Except for signs identifying
the Project or the owner or manager of the Project, Landlord shall not install,
affix and maintain any signs on the exterior or on the interior of the Building,
except as expressly contemplated by this Lease and/or may be required by law.
29.21 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future mandatory programs imposed by statute or ordinance intended to
manage parking, transportation or traffic in and around the Project or Building,
and in connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any governmental transportation management
organization or any other transportation-related committees or entities. If any
of the foregoing are not imposed by statute or ordinance, Tenant may
participate, in its discretion, on a voluntary basis. Such programs may
include, without limitation: (i) restrictions on the number of peak-hour vehicle
trips generated by Tenant; (ii) increased vehicle occupancy;
(iii) implementation of an in-house ridesharing program and an employee
transportation coordinator; (iv) working with employees and any Project,
Buildings or area-wide ridesharing program manager; (v) instituting
employer-sponsored incentives (financial or in-kind) to encourage employees to
rideshare; and (vi) utilizing flexible work shifts for employees. Tenant shall
be entitled to the benefit of any governmental incentives (financial or in-kind)
available or otherwise offered to induce compliance with such programs to the
extent such incentives are applicable to Tenant's implementation of any such
programs.
29.22 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
29.23 HAZARDOUS MATERIAL. As used herein, the term "HAZARDOUS MATERIAL"
means any hazardous or toxic substance, material or waste which is or becomes
regulated by, or is dealt with in, any local governmental authority, the State
of California or the United States Government. Tenant acknowledges that
Landlord may incur costs (A) for complying with laws, codes, regulations or
ordinances relating to Hazardous Material, or (B) otherwise in connection with
Hazardous Material including, without limitation, the following: (i) Hazardous
Material present in soil or ground water; (ii) Hazardous Material that migrates,
flows, percolates, diffuses or in any way moves onto or under the Project;
(iii) Hazardous Material present on or under the Project as a result of any
discharge, dumping or spilling (whether accidental or otherwise) on the Project
by other tenants of the Project or their agents, employees, contractors or
invitees, or by others; and (iv) material which becomes Hazardous Material due
to a change in laws, codes, regulations or ordinances which relate to hazardous
or toxic material, substances or waste. Tenant agrees that the costs incurred
by Landlord with respect to, or in connection with, the
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Project for complying with laws, codes, regulations or ordinances relating to
the investigation, remediation or removal of Hazardous Material shall not be an
Operating Expense, except as indicated in Section 4.2.7(n) above. However, if
the cost of such compliance, as between Landlord and Tenant, is the
responsibility of Tenant under this Lease, Tenant shall bear the cost of such
compliance.
29.24 DEVELOPMENT OF THE PROJECT.
29.24.1 SUBDIVISION. Tenant acknowledges that the Project has
been, or is in the process of being, subdivided. Landlord reserves the right to
further subdivide all or a portion of the buildings and Common Areas in the
Project. Tenant agrees to execute and deliver, within ten (10) days after
demand by Landlord and in the form reasonably requested by Landlord, any
additional documents needed to conform this Lease to the circumstances resulting
from a subdivision and any all maps in connection therewith provided Tenant
shall not be required to incur any cost, undue burden or diminution of Tenant's
rights hereunder in connection therewith. Notwithstanding anything to the
contrary set forth in this Lease, the separate ownership of any buildings and/or
Common Areas of the Project by an entity other than Landlord shall not affect
the calculation of Direct Expenses or Tenant's payment of Tenant's Share of
Direct Expenses.
29.24.2 THE OTHER IMPROVEMENTS. If portions of the Project or
property adjacent to the Project (collectively, the "OTHER IMPROVEMENTS") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any of the Other Improvements to
provide (i) for reciprocal rights of access, use and/or enjoyment of the Project
and the Other Improvements, (ii) for the common management, operation,
maintenance, improvement and/or repair of all or any portion of the Project and
all or any portion of the Other Improvements, (iii) for the allocation of a
portion of the Project Expenses to the Other Improvements and the allocation of
a portion of the operating expenses and taxes for the Other Improvements to the
Project, (iv) for the use or improvement of the Other Improvements and/or the
Project in connection with the improvement, construction, and/or excavation of
the Other Improvements and/or the Project, and (v) for any other matter which
Landlord deems necessary. Nothing contained herein shall be deemed or construed
to limit or otherwise affect Landlord's right to sell all or any portion of the
Project or any other of Landlord's rights described in this Lease.
29.24.3 CONSTRUCTION OF PROJECT AND OTHER IMPROVEMENTS. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction, provided that Landlord shall
take all reasonable measures to minimize any interference or disruption to
Tenant's use of the Premises.
29.25 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord hereunder (including
any successor landlord hereunder) and any recourse by Tenant against Landlord
from and after Landlord's Substantial Completion of the Building and delivery of
the same to Tenant in accordance with Landlord's obligations under this Lease,
shall be limited solely and exclusively to the lesser of (a) the equity interest
of Landlord in the Buildings then leased by Tenant as of the date upon which any
claim(s) arises or accrues in favor of Tenant or (b) the equity interest
Landlord would have in such Buildings if such Buildings were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Buildings, except to the extent any such claims and liability are covered by
insurance carried by Landlord. None of Landlord's constituent members, owners,
partners or subpartners, shall have any liability for the obligations of
andlord under this Lease, and Tenant, on behalf of itself and all persons
claiming by, through or under Tenant, hereby expressly waives and releases such
members, owners, partners and subpartners from any and all liability.
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29.26 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives for Tenant
and for all those claiming under Tenant, all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant's right of occupancy of the Premises after any termination of this Lease.
29.27 ATTORNEYS' FEES. If either party commences litigation against the
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
29.28 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at underground locations in the Project in or
serving the Premises, provided that (i) Tenant shall use an experienced and
qualified contractor approved in writing by Landlord (which approval shall not
be unreasonably withheld or delayed), and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of
conduits for additional Lines shall be maintained for existing and future
occupants of the Project, as determined in Landlord's reasonable opinion, (iii)
conduits for the Lines therefor (including riser cables unless originally
installed by Landlord) shall be appropriately insulated to prevent excessive
electromagnetic fields or radiation, and shall be surrounded by a protective
conduit reasonably acceptable to Landlord, (iv) any new or existing Lines
servicing the Premises shall comply with all applicable governmental laws and
regulations, and (v) Tenant shall pay all costs in connection therewith (except
that Tenant shall have no obligation to remove any Lines between the Buildings
upon the expiration or earlier termination of this Lease). However, Landlord
reserves the right to require that Tenant remove any Lines located in or serving
the Premises which are installed in violation of these provisions, or which are
at any time in violation of any laws or represent a dangerous or potentially
dangerous condition.
29.29 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are
temporarily darkened or the light or view therefrom is obstructed by reason of
any repairs, improvements, maintenance or cleaning in or about the Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenant's obligations under this Lease.
29.30 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.31 CONFIDENTIALITY. Landlord and Tenant acknowledge that the content
of this Lease and any related documents are confidential information. Landlord
and Tenant shall keep such confidential information strictly confidential and
shall not disclose such confidential information to any person or entity other
than (i) their financial, legal, and space planning consultants, (ii) as may be
required by any public reporting requirements, and (iii) as may be required by
any applicable governmental law, rule or regulation.
29.32 DISCLOSURES AND MUTUAL RELEASE. Tenant acknowledges that Landlord
has advised Tenant (i) that an earthquake fault may be located under a portion
of the Project, and (ii) of the proximity of the Project to the Miramar military
air base's vectored departure corridors and the potential overflights and
associated noise generated by various military aircraft in the area. Landlord
and Tenant hereby mutually release, acquit and discharge each other from any and
all Claims which either party may have against the other party arising out of or
in connection with (a) any earthquake affecting all or any portion of the
Project (subject to Landlord's and Tenant's rights and obligations under
Article 11 above), and (b) any such overflights and associated noise.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD": KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By:/s/ Steven L. Black
-------------------------
Name: Steven L. Black
-----------------------
Its: EVP - CDO
-------------------
By:/s/ Jeffrey C. Hawken
-------------------------
Name: Jeffrey C. Hawken
-----------------------
Its: EVP - CDO
-------------------
"TENANT": PEREGRINE SYSTEMS, INC., a Delaware corporation
By: [ILLEGIBLE]
-----------------------------------
Sr. V.P., Finance & Administration
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
By:
-----------------------------------
-----------------------------------
[PRINT NAME AND OFFICE OF PERSON SIGNING]
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EXHIBIT A
PEREGRINE SYSTEMS CORPORATE CENTER
SITE PLAN
[MAP]
EXHIBIT A
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT B
PEREGRINE SYSTEMS CORPORATE CENTER
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Base, Shell and Core and tenant improvements for the
Building. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Building, in sequence, as such
issues will arise during the actual construction of the Building. All
capitalized terms used but not defined herein shall have the meanings given such
terms in the Lease. All references in this Tenant Work Letter to articles or
sections of "this Lease" shall mean the relevant portion of Articles 1 through
29 of this Office Lease to which this Tenant Work Letter is attached as EXHIBIT
B and of which this Tenant Work Letter forms a part, and all references in this
Tenant Work Letter to sections of "this Tenant Work Letter" shall mean the
relevant portion of Sections 1 through 7 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION OF BASE, SHELL AND CORE
The base, shell and core for the Building (collectively, the "BASE, SHELL
AND CORE") shall be constructed by Landlord, at its sole cost and expense
(except as expressly provided herein), in accordance with this Section 1.
1.1 LANDLORD'S RESPONSIBILITIES. The Base, Shell and Core for the
Building shall consist of only those items reflected on the final working
drawings to be prepared for the Building as a logical evolution of those certain
drawings prepared by the Project Architect for Building 1 and Building 2 as
summarized on Schedule 3 to this Tenant Work Letter (as such drawings may be
revised pursuant to the Tenant Work Letter for the Building 1 Lease for reasons
other than a Landlord Work Change Order) (as so-revised, the "ADJACENT BUILDING
WORKING DRAWINGS") and the existing schematic design drawings for the Building
and shall be consistent with the design of, and quality of materials specified
in, the Adjacent Building Working Drawings. Notwithstanding the foregoing, the
Base, Shell and Core for the Building shall (without limitation to the items
reflected in the Adjacent Building Working Drawings) consist of (i) core walls
and elevator lobby areas drywalled and taped ready for Building-standard surface
treatments; (ii) balance of core: exposed structure, level concrete floors
(broom clean) suitable for the installation of general office improvements and
ready to receive floor covering, Building-standard finish for painted door
frames, and Building-standard hardware; (iii) primary electrical system ready
for Tenant's switchgear in main electrical room which will service the floor of
the Building on which the Premises are located sufficient to provide Tenant with
4 watts per rentable square foot and sufficient capacity in such distribution to
provide an additional 1.5 watts per rentable square foot; (iv) Building
telephone room to have floor sleeves to allow utility company to distribute
service lines onto each floor (Tenant to locate phone system equipment in the
Premises and to provide voice/data cabling from equipment to termination in
telephone room); (v) men's and ladies' restroom facilities with
Building-standard finishes located on each floor; (vi) sprinkler risers capped
at the core walls; (vii) primary heating, ventilating and air conditioning
system, including main water distribution loop (however, any VAV boxes and
ducting including main ducting loop, shall be a Tenant Improvement); (viii)
drinking fountain at core on ground floor; (ix) electrical and janitorial
closets; (x) code required exit stairways; (xi) mechanical shafts; (xii)
life-safety systems as required by applicable building codes on an unoccupied
basis and ground floor lobby improvements including the improvements described
in the Building Working Drawings, and (xiii) card access system for Building
entrances and elevators. Landlord shall use commercially reasonable efforts to
cause the Base, Shell and Core of the Building to be completed by the date
specified in Section 1.5.2(v) below (the "SHELL COMPLETION DATES") in order to
allow a sufficient period of time for the construction of the Tenant
Improvements prior to the Estimated Lease Commencement Date.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
1.1.1 BOOKS AND RECORDS. Landlord shall be responsible for
performing all accounting functions associated with the performance of the
construction of the improvements to the Common Areas and the Base, Shell and
Core and Tenant Improvements (collectively, the "WORK") and shall prepare and
maintain or cause to be prepared and maintained detailed and accurate operating
and financial records for the Work. Tenant shall have the right to inspect such
records at the offices of Landlord in Southern California during normal business
hours and to make copies thereof at its expense. Landlord shall preserve, or
cause its agents to preserve, copies of all books and records relating to the
Work for a period of three (3) years after the completion of the Base, Shell and
Core.
1.1.2 GOVERNMENTAL APPROVALS. Landlord shall be responsible for
obtaining all necessary agreements with governmental agencies and utility
companies relating to access, traffic control, utility services and other
similar entitlements affecting the construction of the Work.
1.1.3 BIDDING OF CONTRACTS. Landlord shall be responsible for the
bidding (or at Landlord's election the negotiation of fees) of the contract with
the general contractor and all subcontracts to be awarded in connection with the
initial Common Area improvements and the Base, Shell and Core (collectively, the
"LANDLORD WORK") in accordance with Section 1.4 below. Landlord shall be
responsible for negotiating the terms of the agreements with the contractor and
Project Architect with respect to the Landlord Work, both of which shall be
consistent with the terms and provisions of this Section 1. Except as expressly
provided in the Lease or this Tenant Work Letter, Landlord shall be solely
responsible for the payment of the costs of designing and constructing the
Landlord Work.
1.1.4 PERMITS. In addition to Landlord's obligations under
Section 1.1.2 above, Landlord shall be responsible for obtaining, or causing its
contractor to obtain, all building permits and other governmental approvals,
permits and land use entitlements required to complete the Landlord Work.
Landlord shall be responsible for compliance with all laws, rules, regulations
and policies of the City of San Diego, State of California and United States of
America governing completion of the Landlord Work, including without limitation,
the requirements of the ADA and Title 24 in effect as of the Lease Commencement
Date, and shall correct any such violations at no cost to Tenant; however, if
the requirements of any laws change after the date upon which Landlord obtains
the permit for construction of the Base, Shell and Core and Landlord is not
required by law to comply with such change with respect to the Landlord Work,
Landlord shall not be in violation of this Section 1.1.4 so long as Landlord by
electing not to make such change does not increase the cost of construction of
the Tenant Improvements or delay the construction of the Tenant Improvements.
1.1.5 PROJECT ADMINISTRATION. Landlord shall be responsible for
supervising the progress of the Work and for reviewing and approving progress
payment applications before they are processed for payment.
1.1.6 POST-COMPLETION MATTERS. Following the completion of the
Landlord Work, Landlord shall assemble and maintain at the property management
office for the Project copies of (i) all warranties, operating manuals,
specifications and similar items with respect to the Building, and (ii) as-built
architectural and engineering drawings (including the master background) and any
other plans for the Landlord Work. Following the completion of the Work, upon
the request of Tenant and at Landlord's expense, Landlord also shall assemble
and deliver to Tenant copies of reproducible as-built plans and specifications
for the Building (in an auto-cad format, if available).
1.1.7 STATUS REPORTS. Landlord shall inform Tenant of any
problems or developments that may have an adverse impact on the completion of
the Landlord Work in a timely manner promptly after Landlord becomes aware of
such problems or developments.
1.1.8 PERIODIC INSPECTIONS. Landlord shall conduct ongoing
inspections (at least weekly) of the Landlord Work for compliance with plans and
specifications and review of progress of construction, and shall conduct
periodic site meetings with the construction trades.
EXHIBIT B
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[Peregrine Systems]
<PAGE>
Landlord shall keep Tenant reasonably informed of such meetings and proposed
meetings and provided that Tenant's participation does not extend the
Construction Schedule, Tenant shall have the right to participate in such
meetings if it so desires.
1.2 DESIGN OF THE LANDLORD WORK. Landlord has entered into an
agreement with Carrier Johnson for the design of the Landlord Work including
preparation of design, development and construction documents. Landlord has
entered into or may enter into other agreements with other consultants for
design of other aspects of the Landlord Work (if applicable). Carrier Johnson
and such other design consultants (if applicable) retained by Landlord shall be
collectively referred to as the "PROJECT ARCHITECT." Landlord's agreement(s)
with the Project Architect shall be collectively referred to herein as the
"PROJECT ARCHITECT AGREEMENT." The specific terms of the Project Architect
Agreement shall be such that it will enable Landlord to perform Landlord's
obligations hereunder.
Landlord shall cause the Project Architect to prepare the Building Working
Drawings in accordance with the requirements of Section 1.1 above. Upon
preparation of the Building Working Drawings, Landlord shall identify in writing
to Tenant any "Material Changes," as defined in this Section 1.2, reflected in
the Building Working Drawing from the Adjacent Building Working Drawings.
"MATERIAL CHANGES" shall mean any changes or deviations which will or may cause
(i) interference with or delay of the Tenant Improvements proposed by Tenant for
the Building, (ii) a material change to the exterior of the Building, (iii) a
material change to any of the finish materials, including without limitation, to
the lobby, bathrooms, and elevator cabs of the Building, or (iv) any adverse
effect (as reasonably determined by Landlord) on the quality of the Landlord
Work. Tenant shall give written notice to Landlord of Tenant's approval or
disapproval of any Material Changes (or any revisions to the Building Working
Drawings arising out of Material Changes or out of Tenant's disapproval of any
proposed Material Changes) within five (5) days following Tenant's receipt of
Landlord's notice of any such Material Changes (or revisions, as applicable);
any such notice of disapproval shall be accompanied by detailed reasons for such
disapproval. Failure of Tenant to approve or disapprove by written notice to
Landlord within such time frame shall constitute Tenant's approval of same. In
a time and manner consistent with the Construction Schedule, Landlord shall
request the Project Architect to obtain approval of the Building Working
Drawings from all appropriate governmental agencies, including all departments
of the City of San Diego having jurisdiction to review the Building Working
Drawings. Landlord shall be solely responsible for any additional costs
incurred as a result of a Material Change unless mutually agreed upon by
Landlord and Tenant; however, Tenant shall be responsible for additional costs
resulting from Landlord Work Change Orders pursuant to Section 1.3 below.
Nothing contained in this Section 1.2 is intended to, nor shall, provide Tenant
with the right to require changes to the Base, Shell and Core Working Drawings
without Landlord's approval.
1.3 CHANGE ORDERS REQUESTED BY TENANT TO THE LANDLORD WORK. Tenant may
request that additions to or deletions from the Landlord Work be made ("LANDLORD
WORK CHANGE ORDERS"). If Tenant desires a Landlord Work Change Order to be
made, Tenant shall so notify Landlord in writing and, within ten (10) days after
such notification, Landlord shall deliver to Tenant (i) written notice that
Landlord has determined, in Landlord's reasonable discretion, to disapprove the
proposed Landlord Work Change Order, or (ii) if Landlord approves the proposed
Landlord Work Change Order, a written estimate of any extension to the
Construction Schedule and any additional costs resulting from such proposed
Landlord Work Change Order. Without limitation on other reasons for Landlord's
disapproval, Landlord may disapprove any such proposed Landlord Work Change
Order if it will cause (a) a material change to the exterior of the Building,
(b) a material change to any of the finish materials, including without
limitation, to the lobby, bathrooms or elevator cabs of the Building, or (c) any
material adverse effect (as reasonably determined by Landlord) on the quality or
adequate functionality of the Landlord Work. If Landlord approves the proposed
Landlord Work Change Order, Tenant shall, within five (5) days following receipt
of such notification from Landlord, then notify Landlord in writing whether or
not Tenant elects to proceed with the Landlord Work Change Order. If Tenant
elects to cause any Landlord Work Change Order to be made, the Shell Completion
Date and other Major Project Milestones shall be appropriately adjusted as a
result of any delays due
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to such Landlord Work Change Order. If Landlord does not approve a proposed
Landlord Work Change Order, the Landlord Work Change Order shall not be
implemented. Any increased cost resulting from a Landlord Work Change Order
shall be charged to the Tenant Improvement Allowance and any delay resulting
from a Landlord Work Change Order shall, subject to Section 5 below, be deemed
to constitute a Tenant Delay and an Excusable Delay. Tenant acknowledges,
however, that the contractor for the Landlord Work shall not be instructed to
stop work during the time taken by Tenant in considering whether to proceed with
any proposed Landlord Work Change Orders and that the cost charged to the Tenant
Improvement Allowance and any potential Tenant Delay and Excusable Delay
resulting from a Landlord Work Change Order shall include any work necessary to
reverse the work performed by the contractor during the pendency of Tenant's
decision whether to proceed with a Landlord Work Change Order.
1.4 CONTRACTING. Landlord may, at its option, retain Reno Contracting,
Inc., a California corporation ("RENO") or separately bid and award separate
contracts for the construction of the Base, Shell and Core of the Buildings.
1.5 CONSTRUCTION SCHEDULE.
1.5.1 COMPLETION. The construction of the Base, Shell and Core of
the Building shall be deemed to be completed (the "BASE, SHELL AND CORE
COMPLETION") when (i) the Project Architect determines that the Base, Shell and
Core for such Building has been completed in accordance with the Building
Working Drawings (subject to customary "punch list" items) by issuing a
certificate of substantial completion, and (ii) a certificate of occupancy or an
approval to occupy (or their equivalent) with respect to the Base, Shell and
Core has been issued by the City of San Diego. "Punch list" items, as referred
to in this Section 1.5.1, are items that will require correction but that will
not materially interfere with, or cause a delay to, the construction of the
Tenant Improvements. Landlord agrees to correct all such Base, Shell and Core
punch list items prior to the Lease Commencement Date.
1.5.2 MAJOR PROJECT MILESTONES. Landlord agrees that it shall use
commercially reasonable efforts to complete its duties and tasks specified in
this Tenant Work Letter in accordance with the schedule attached to this Tenant
Work Letter as Schedule 1 and made a part hereof ("CONSTRUCTION SCHEDULE") and
to endeavor to accomplish all "Major Project Milestones" within the time set
forth in the Construction Schedule. As used herein, the term "MAJOR PROJECT
MILESTONES" means:
(i) Completion of Base, Shell and Core Working Drawings and
submittal of same to City of San Diego for permits by:
October 1, 2001
(ii) Obtaining all building and other permits for the
construction of the Base, Shell and Core by:
January 1, 2002
(iii) Commencement of construction of the Base, Shell and
Core by:
January 1, 2002
(iv) Completion of vertical construction of the Base, Shell
and Core by:
September 1, 2002
(v) Base, Shell and Core Completion by the applicable Shell
Completion Date:
January 1, 2003
Landlord shall use its reasonable, good-faith efforts to meet all
milestones by the date set forth for the accomplishment of such milestones in
the Construction Schedule. If Landlord fails to accomplish any milestone by the
date set forth in the Construction Schedule (as may be extended pursuant to the
next sentence below), then Landlord shall authorize and direct its employees,
the Project Architect, the general contractor for the Landlord Work and any
relevant
EXHIBIT B
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[Peregrine Systems]
<PAGE>
subcontractor to work at an accelerated pace utilizing such "overtime" hours as
may be necessary to bring the Landlord Work back on schedule. The dates set
forth in the Construction Schedule (including, without limitation, any
milestones and any Major Project Milestones) shall be extended by any delay
(collectively, "EXCUSABLE DELAY") attributable to Tenant's failure to comply
with its obligations under Section 1 of this Tenant Work Letter, any Tenant
Delay, any Landlord Work Change Order, and any Force Majeure. However, any
delay necessitated by changes in the Building Working Drawings because the same
do not comply with Code or other applicable laws shall not constitute an
Excusable Delay except to the extent the portion of the Building Working
Drawings which is found to not comply is attributable to Landlord Work Change
Orders made by Tenant.
SECTION 2
TENANT IMPROVEMENTS
2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a tenant
improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount of
Thirty-Five and 20/100 Dollars ($35.20) per usable square foot of the Premises
(calculated on a single-tenant basis) for the costs relating to the design and
construction of Tenant's improvements (the "TENANT IMPROVEMENTS"). Tenant shall
have the right to defer the construction of Tenant Improvements for space in the
Building which Tenant elects not to initially build-out until no later than
three (3) years after the Lease Commencement Date for the applicable Floor
Group; however, (i) if Tenant elects to commence construction of Tenant
Improvements for any space in the Building, such construction may not thereafter
be deferred, and (ii) any such deferral shall be deemed a Tenant Delay so that
the Lease Commencement Date shall not be delayed. In no event shall Landlord be
obligated to make disbursements pursuant to this Tenant Work Letter in a total
amount which exceeds the Tenant Improvement Allowance (except as expressly
contemplated by this Tenant Work Letter). Any portion of the Tenant Improvement
Allowance remaining after construction of the Tenant Improvements for each Floor
Group may be used by Tenant for Tenant Improvements for such Floor Group before
the second (2nd) anniversary of the Lease Commencement Date for such Floor
Group). Further, Tenant shall allocate and use a minimum Tenant Improvement
Allowance for "hard costs" (i.e., costs incurred under the general contract with
Contractor) of Tenant Improvements in an amount not less than Twenty Three
Dollars ($23.00) per usable square foot (calculated on a single-tenant basis) of
each Floor Group. All Tenant Improvements for which the Tenant Improvement
Allowance has been made available shall be deemed Landlord's property except as
described under the terms of Section 8.5 of this Lease.
2.2 DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE. Except as
otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance
shall be disbursed by Landlord (each of which disbursements shall be made
pursuant to the disbursement process described in Section 4.3.1 below) only for
the following items and costs (collectively, the "TENANT IMPROVEMENT ALLOWANCE
ITEMS"):
2.2.1 Payment of the fees of all design consultants, project
managers, the "Space Planner," "Architect" and the "Engineers," as those terms
are defined in Section 3.1 of this Tenant Work Letter, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Tenant
Work Letter;
2.2.2 The payment of all governmental and utility service or
connection fees, including, but not limited to, plan check, permit and license
fees relating to construction of the Tenant Improvements; provided, however, the
Tenant Improvement Allowance Items shall not include any costs for utilities or
use of elevators during the construction of the Tenant Improvements;
EXHIBIT B
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[Peregrine Systems]
<PAGE>
2.2.3 The cost of construction of the Tenant Improvements within
such Building, including, without limitation, all labor, materials, testing and
inspection costs, hoisting and trash removal costs, and contractors' fees and
general conditions;
2.2.4 The cost of any changes in the Base, Shell and Core work
when such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural, engineering and/or other
consultant fees and expenses incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings or
Tenant Improvements required by applicable governing codes ("CODE") unless such
changes are required to cause the Base, Shell and Core to comply with applicable
building Code (however, changes to the Base, Shell and Core required due to the
unique nature of the Tenant Improvements requested by Tenant shall be charged to
the Tenant Improvement Allowance);
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 "Landlord's Supervision Fee", as that term is defined in
Section 4.3.2 of this Tenant Work Letter;
2.2.8 All other costs to be expended by Landlord and reasonably
approved by Tenant in connection with the construction of the Tenant
Improvements; and
2.2.9 Costs incurred for Tenant's voice/data cabling, network
racks and hardware, furniture, telecom system, keys, locks, security costs,
relocation and interior and exterior signage (including Tenant's Signs);
provided, however, in no event shall the aggregate costs of the items forth in
this Section 2.2.9 exceed Seven Dollars ($7.00) per usable square foot
(calculated on a single-tenant basis) of the Building. Landlord and Tenant
acknowledge that the Base Rent for the Premises includes an amortization (with
interest at twelve percent (12%) per annum) of the amount payable by Landlord
pursuant to this Section 2.2.9.
2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord and Tenant have
established specifications (the "SPECIFICATIONS") for some of the Building
standard components which Tenant may elect to construct in the Building
(collectively, the "STANDARD IMPROVEMENT PACKAGE"). The Standard Improvement
Package is attached as Schedule 2 to this Tenant Work Letter. Landlord may only
make changes to the Specifications and the Standard Improvement Package from
time to time with Tenant's prior written approval thereof. Tenant may deviate
from the Specifications with Landlord's approval (as part of the approval of
Construction Drawings).
SECTION 3
CONSTRUCTION DRAWINGS
3.1 SELECTION OF ARCHITECT. Tenant shall retain Carrier Johnson as
architect (the "ARCHITECT") to prepare the architectural plans and drawings for
the Tenant Improvements in the Building in accordance with the Construction
Schedule. Tenant shall have the right to replace Architect with another
architect(s) from time to time at Tenant's discretion and subject to Landlord's
reasonable approval. Tenant shall also retain engineering consultants (the
"ENGINEERS") selected by Tenant and subject to Landlord's reasonable approval to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work of the
Tenant Improvements. The parties acknowledge that Tenant's retention of the
Engineers may be done in connection with a design/build format. The plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the "CONSTRUCTION DRAWINGS." All Construction Drawings shall
comply with the drawing format and specifications as reasonably determined by
Landlord, and shall be subject to Landlord's approval which shall not be
unreasonably withheld or delayed. Tenant shall be deemed to have approved any
Construction Drawings submitted to Landlord for Landlord's approval. Tenant and
Architect shall verify, in the field, the dimensions
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and conditions as shown in the relevant portions of Construction Drawings for
the Base, Shell and Core. Landlord shall cause the Contractor to assist
Tenant's Architect in identifying any coordination or other construction issues
relating to the Construction Drawings for the Base, Shell and Core. Landlord's
review of the Construction Drawings, as set forth in this Section 3, shall not
imply Landlord's review of the same for quality, design, Code compliance or
other like matters, but Landlord shall nevertheless inform Tenant of any
deficiencies discovered. Accordingly, notwithstanding any Construction Drawings
reviewed by Landlord or its consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord's
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings unless any omissions or errors are a result of omissions
or errors in the Construction Drawings for the Base, Shell and Core, and
Tenant's waiver and indemnity set forth in Section 10.1 of the Lease shall
specifically apply to the Construction Drawings.
3.2 FINAL SPACE PLAN. On or before the applicable date set forth in
the Construction Schedule, Tenant shall cause the Architect to prepare the final
space plan for Tenant Improvements in the Building (collectively, the "FINAL
SPACE PLAN"), which Final Space Plan shall include a layout and a designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval. Subject to the restrictions specified in Section 2.1
above, Tenant may exclude from the Final Space Plan a layout for any space in
the Building which Tenant elects not to initially build out. Landlord shall
notify Tenant of its approval (which approval shall not be unreasonably
withheld) or disapproval (with reasons for disapproval specified) of the Final
Space Plan for each Floor Group within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. If Landlord disapproves the Final Space Plan, Landlord and
Tenant shall, within two (2) business days thereafter, meet (or telephonically
confer) in an attempt to resolve such disapproval as soon as reasonably
possible. If, in connection with such meeting, Landlord and Tenant conceptually
agree upon revisions to be made to the Final Space Plan, then within ten (10)
business days after such meeting, Tenant shall cause the Final Space Plan to be
revised in accordance with the parties' conceptual agreement and shall resubmit
the Final Space Plan for Landlord's approval. This process shall continue until
the Final Space Plan is approved by Landlord. If Landlord and Tenant are,
despite such meeting, unable to resolve the items disapproved by Landlord in the
Final Space Plan, the parties shall mutually select an architect from Carrier
Johnson to resolve such disagreement (or if Carrier Johnson is unwilling to make
a determination to resolve such dispute or either party objects to Carrier
Johnson playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.3 WORKING DRAWINGS. On or before the applicable date set forth in
the Construction Schedule, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
construction documents in a form which is complete to allow contractors and
subcontractors to bid on the work, to obtain all applicable permits, and to
subsequently construct the work (collectively, the "WORKING DRAWINGS"). Subject
to the restrictions specified in Section 2.1 above, Tenant may exclude from the
Working Drawings any space which Tenant elects not to initially build-out.
Landlord shall notify Tenant of its approval (which approval shall not be
unreasonably withheld) or disapproval (with reasons for such disapproval
specified) of the Working Drawings within ten (10) business days after receipt
thereof; any failure by Landlord to notify Tenant of its approval or disapproval
within such ten (10) business day period shall be deemed to be Landlord's
disapproval thereof. However, Landlord may not disapprove any details of the
Working Drawings which have already been approved by Landlord in the Final Space
Plan. If Landlord disapproves the Working Drawings, Landlord and Tenant shall,
within two (2) business days thereafter, meet in an attempt to resolve such
disapproval as soon as reasonably possible. If, in connection with such
meeting, Landlord and Tenant conceptually agree upon revisions to be made to the
Working Drawings, then within ten (10) business days after such meeting, Tenant
shall cause the Working Drawings to be
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revised in accordance with the parties' conceptual agreement and shall resubmit
the Working Drawings for Landlord's approval. This process shall continue until
the Working Drawings are approved by Landlord. If Landlord and Tenant are,
despite such meeting, unable to resolve the items disapproved by Landlord in the
Working Drawings, the parties shall mutually select an architect from Carrier
Johnson to resolve such disagreement (or if Carrier Johnson is unwilling to make
a determination to resolve such dispute or either party objects to Carrier
Johnson playing such role, then the parties shall mutually agree upon some other
reasonably qualified architect to resolve such issues). Any such resolution by
such architect (whether from Carrier Johnson or some other firm) shall be made
within ten (10) business days after the meeting between Landlord and Tenant.
3.4 PERMITS. The Working Drawings shall be approved by Landlord (the
"APPROVED WORKING DRAWINGS") prior to the commencement of construction of the
Tenant Improvements. Landlord shall, in accordance with the Construction
Schedule, submit or cause the Approved Working Drawings to be submitted to the
appropriate municipal authorities for all applicable building permits necessary
to allow the Contractor selected pursuant to Section 4.1 below to commence and
fully complete the construction of the Tenant Improvements (the "PERMITS"), and
in connection therewith, Landlord and Tenant shall coordinate with Contractor to
allow Landlord and Tenant to take part in all phases of the permitting process.
Landlord shall require Contractor to supply Landlord and Tenant, as soon as
possible, with all plan check numbers and dates of submittal with respect to the
Building. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord and Tenant,
which shall not be unreasonably withheld or delayed, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would delay the Substantial Completion of such
Tenant Improvements or the Building unless Tenant agrees in writing to be
responsible for any such delay as in a Tenant Delay and for the costs of any
delay resulting therefrom.
3.5 TIME DEADLINES. Landlord and Tenant shall use good faith,
reasonable efforts and all due diligence to cooperate with each other and the
Architect and the Engineers to complete all phases of the Working Drawings and
the permitting process, and with Contractor for approval of the Cost Proposal
(as defined below), as is necessary to keep such Tenant Improvements on
schedule. The applicable dates for approval of items, plans and drawings as
described in this Tenant Work Letter are set forth and further elaborated upon
in the Construction Schedule (the "TIME DEADLINES"), attached hereto. Landlord
and Tenant agree to use good faith, reasonable efforts to comply with the Time
Deadlines.
3.6 DESIGN-BUILD. Landlord and Tenant acknowledge that Tenant may
elect to design and construct the Tenant Improvements using a fast-track
design/build format. If Tenant so elects, Tenant may forward to Landlord, for
Landlord's approval, Construction Drawings for portions of the Tenant
Improvement project rather than Construction Drawings for the entire Premises.
Landlord agrees to advise Tenant within ten (10) business days after Landlord's
receipt of any such drawings if the same are unsatisfactory or incomplete in any
respect. Upon Landlord's approval of any such drawings, the Contractor may be
instructed to submit the same to the applicable governmental authorities for
receipt of Permits. This process may be repeated by Tenant, as necessary, for
all portions of the Tenant Improvement project.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 CONTRACTOR. A general contractor retained by Landlord (the
"CONTRACTOR"), shall construct the Tenant Improvements. The Contractor shall be
selected pursuant to a competitive bidding procedure reasonably determined by
Landlord and Tenant. At least three (3) general contractors approved by
Landlord and Tenant (which list shall, if Landlord so desires, include Reno)
shall competitively bid the Tenant Improvements using the Approved Working
Drawings for such Tenant Improvements. At Tenant's option, Landlord shall
require prospective general contractors reasonably approved by Landlord to
competitively bid the general conditions and
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fees before competitively bidding the Tenant Improvements as a procedure for
selecting the Contractor; any such bidding of general conditions and fees
shall be completed on or before the date which is ten (10) days after the
date that the Working Drawings are approved. Landlord shall require
Contractor to review the Approved Working Drawings in order to identify any
deficiencies and to promptly notify Landlord and Tenant of any deficiencies
discovered. Landlord shall allow Tenant to assist in negotiating
subcontractor fees and bid costs for labor and materials so long as Tenant's
participation in such negotiation does not extend the Construction Schedule.
Each such prospective general contractor shall be notified in the bidding
package of the time schedule for the construction of the applicable Tenant
Improvements and that such contractor shall be required to competitively bid
(in accordance with industry standard bidding procedures) to at least three
(3) subcontractors for each trade (which list of subcontractors shall, if
Tenant so desires, include one (1) subcontractor designated by Tenant for
each trade), subject to Landlord's option to designate certain building
subcontractors as described in this Section 4.1. Each bid shall include a
schedule of values including an itemized bid with unit prices, quantities and
labor charges. Promptly after request from Tenant, Landlord shall provide
Tenant with any back-up information in Landlord's possession regarding such
bids. Landlord shall cooperate with Tenant in evaluating the bid information
received from the respective general contractors. The general contractor bids
shall be submitted to Landlord and Tenant and a reconciliation shall be
performed by Landlord's representative to adjust inconsistent or incorrect
assumptions so that a "like kind" comparison can be made and the lowest
qualified bidder determined. The lowest qualified bidder that commits to the
Construction Schedule shall be selected as the Contractor for the Tenant
Improvements. Whenever the lowest subcontractor bidder is not selected,
Contractor shall justify such selection (to Landlord's and Tenant's
satisfaction) by explaining in writing why the lowest bidder was not
selected. At Landlord's option, such Contractor shall use the building
subcontractors as designated by Landlord (the "DESIGNATED SUBCONTRACTORS"),
after having competitively bid the same to at least three (3) qualified and
comparable first-class, reputable and reliable subcontractors selected by
Landlord and reasonably approved by Tenant (which approval shall be granted
or denied within three (3) business days), for any work affecting the
Building structure and/or Building Systems and Equipment; provided, however,
that Landlord shall cause such Designated Contractors to charge for such work
(including any work arising out of Change Orders) an amount equal to the cost
that comparable first class, reputable and reliable subcontractors would have
charged if selected pursuant to competitive bidding procedures. If Reno is
selected as the Contractor, Reno has agreed to a four percent (4%)
contracting fee and a three percent (3%) general conditions fee, both of
which fees shall be based upon the direct costs of the subcontractors.
4.1.1 CONTRACT WITH CONTRACTOR. The contract with the Contractor
shall be consistent with this Tenant Work Letter and shall provide that Tenant
shall have the full benefit of all warranties provided by Contractor and that
such warranties shall be assignable to Tenant. Landlord shall provide Tenant
with an opportunity to review the construction contract with the Contractor to
confirm that such contract is not in conflict with this Tenant Work Letter. In
addition, upon request from Tenant, Landlord shall provide Tenant with a copy of
all Contractor's contracts with the major trade subcontractors in Landlord's
possession at the time of such request.
4.1.2 GENERAL CONDITIONS FEE. The general conditions fee charged
by Contractor shall cover all of the following: project executive, general
superintendent, home office expenses, general overhead, office supplies,
accounting services, computer charges, telephone expenses, fax office/job site,
data processing, secretarial services, mail, express mail, insurance, city
licenses, project manager, estimator, project engineer, scheduling,
superintendent, daily clean up and final clean up, protection of work, petty
cash, safety enforcement and safety signage, small tools, first aid facilities,
general field coordination, project field office, tenant vendor coordination and
job trailer, but shall exclude reconstruction services, general labor, blue
printing and temporary structures. Except as provided herein, Landlord or
Contractor shall not receive any other fee or payment from Tenant in connection
with Contractor's services.
4.1.3 CONTRACT OF WORK. Landlord shall cause its contract with
Contractor to include the provisions set forth in this Section 4.1.3.
Contractor shall take appropriate field
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measurements and verify field conditions before commencing construction of
Tenant Improvements. Contractor shall review, approve and submit to the
Architect shop drawings, product data, samples and submittals required by the
contract documents with promptness and in sequence as to cause no delay in the
Construction Schedule. During the course of construction, Contractor shall take
all reasonable precautions to maintain industry safety standards and protect
against damage, injury or loss to any persons or property. Contractor shall
supervise and direct the construction of the Tenant Improvements using
Contractor's best skills and attention and shall be fully responsible for and
have control over construction means, methods, techniques, sequences and
procedures for coordinating all portions of the work under the contract.
4.2 COST PROPOSAL. After the Approved Working Drawings are approved by
Landlord and Tenant, and the Contractor and subcontractors have been selected
pursuant to Section 4.1 above, Landlord shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings setting forth the
reconciled bids and copies of all sub-bids, which cost proposal shall include,
as nearly as possible, the cost of all Tenant Improvement Allowance Items to be
incurred in connection with the construction of the Tenant Improvements (the
"COST PROPOSAL"). The Cost Proposal shall reflect bids that will be priced by
Contractor on an individual item-by-item or trade-by-trade basis. Landlord and
Tenant shall work together in good faith in an attempt to agree upon a mutually
acceptable Cost Proposal as soon as reasonably possible. Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the "PARTIAL COST PROPOSAL") for purposes of
facilitating the early purchase of items and construction of the same. Tenant
shall approve and deliver the Cost Proposal to Landlord within seven (7)
business days of the receipt of the same, or, as to a Partial Cost Proposal
within five (5) business days of receipt of the same, and upon receipt of the
same by Landlord, Landlord shall be released by Tenant to purchase the items set
forth in the Cost Proposal or Partial Cost Proposal, as the case may be, and to
commence the construction relating to such items. If Tenant disapproves the
Cost Proposal or Partial Cost Proposal, Tenant shall provide Landlord with a
reasonably sufficient explanation, and in such event, Landlord and Tenant shall
use good faith, diligent efforts to work with each other and Contractor to
address Tenant's reasons for disapproving the Cost Proposal or Partial Cost
Proposal, whichever is the case and a new Cost Proposal (or Partial Cost
Proposal, as applicable) shall be prepared and the process described in this
Section 4.2 shall be repeated. The date by which Tenant must approve and
deliver the Cost Proposal or the last Partial Cost Proposal to Landlord, as the
case may be, shall be known hereafter as the "COST PROPOSAL DELIVERY DATE". The
total of all Partial Cost Proposals, if any, shall be known as the Cost
Proposal.
4.3 CONSTRUCTION OF TENANT IMPROVEMENTS BY LANDLORD'S CONTRACTOR UNDER
THE SUPERVISION OF LANDLORD.
4.3.1 OVER-ALLOWANCE AMOUNT. In connection with Tenant's approval
of the Cost Proposal, Tenant shall be responsible for the amount equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (less any portion thereof already disbursed by
Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date) (which difference is referred to herein as the
"OVER-ALLOWANCE AMOUNT"). All costs for Tenant Improvements shall be fully
documented and may be verified by Tenant. In the event that, after the Cost
Proposal Delivery Date, Tenant shall request any revisions, changes, or
substitutions to the Construction Drawings or the Tenant Improvements, any
additional costs which arise in connection with such revisions, changes or
substitutions or any other additional costs (in excess of the Tenant Improvement
Allowance) shall be considered to be an addition to the Over-Allowance Amount
(which shall result in a recalculation of the amounts to be paid by Tenant
pursuant to Sections 4.3.1.1. and 4.3.1.2 below).
4.3.1.1 PAYMENT OF INITIAL PORTION OF OVER-ALLOWANCE
AMOUNT. Except as provided in Section 4.3.1.2 below, the procedure described in
this Section 4.3.1.1 shall apply to Tenant's payment of the Over-Allowance
Amount. Tenant shall pay ninety percent (90%) of the
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Over-Allowance Amount and Landlord shall pay ninety percent (90%) of the Tenant
Improvement Allowance, in monthly progress payments corresponding to the
progress of the Tenant Improvement Work and Tenant and Landlord shall each
retain ten percent (10%) thereof to be paid as part of the final retention, in
accordance with the construction contract, upon completion of such work. During
the course of construction of the Tenant Improvements, Contractor shall deliver
to Landlord and Tenant not more than once for each calendar month a written
request for payment ("PROGRESS PAYMENT REQUEST") which shall be accompanied by
(i) Contractor's certification of the payment amount requested and the
percentage of completion of each item of work for which payment is sought and
(ii) copies of conditional lien releases (for upcoming payments) and
unconditional lien releases (for the previous month's payments) from all
subcontractors and vendors. Through this monthly process, Tenant shall pay to
Landlord ninety percent (90%) of the completed percentage of the Over-Allowance
Amount, if any, and Landlord shall pay to Contractor ninety percent (90%) of the
Tenant Improvement Allowance due pursuant to the Progress Payment Request, each
month within thirty (30) days after Tenant's and Landlord's receipt of the above
items and approval of the same (which approval shall not be unreasonably
withheld, conditioned or delayed and shall be granted or denied (with detailed
reasons for such denial) within five (5) days after Tenant's receipt of a
Progress Payment Request). Failure to grant or deny any such approval within
said five (5) day period shall be deemed to constitute Tenant's approval
thereof. The Over-Allowance Amount shall be proportionately paid by Landlord
prorata with the Tenant Improvement Allowance, and such disbursement by Landlord
of the Over- Allowance Amount shall be pursuant to the same procedure as
Landlord's disbursement of the Tenant Improvement Allowance.
4.3.1.2 PAYMENT OF ANY EXCESS PORTION OF OVER-ALLOWANCE
AMOUNT. To the extent that the Over-Allowance Amount is Ten Dollars ($10.00)
per usable square foot (calculated on a single-tenant basis) of the Building or
more (such excess to be referred to as the "EXCESS OVER-ALLOWANCE AMOUNT")
and/or if as of the Cost Proposal Delivery Date, Tenant fails to meet all of the
Financial Standards, and if in either such case, Landlord's lender (who is
unaffiliated with Landlord) so requires, Tenant shall pay the Excess
Over-Allowance Amount (or if the Financial Standards are not met, then all of
the Over-Allowance Amount) in accordance with the procedure specified in this
Section 4.3.1.2 below. Tenant shall deposit fifty percent (50%) of the Excess
Over-Allowance Amount (or if the Financial Standards are not met, then all of
the Over-Allowance Amount) within ten (10) days after the Cost Proposal Delivery
Date and shall deposit the remaining fifty percent (50%) of the Over-Allowance
Amount within ten (10) days after notice from Landlord that the Contractor has
determined that the Tenant Improvement Work has been fifty percent (50%)
completed. Such deposits from Tenant shall be with Landlord (or with the lender
if so required by such lender) and maintained in a segregated account at a
financial institution reasonably selected by Landlord (if not with the lender).
To the extent permitted by the lender, any amounts so deposited by Tenant shall
earn interest which shall accrue to Tenant at the actual rate earned from the
date of such deposit until the date that such funds are disbursed.
4.3.2 LANDLORD'S RETENTION OF CONTRACTOR. Landlord shall
independently retain Contractor to construct the Tenant Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Tenant
shall pay (as part of the Tenant Improvement Allowance) a construction
supervision fee (the "LANDLORD SUPERVISION FEE") to Landlord in an amount equal
to one percent (1%) of all "hard" Tenant Improvement Allowance Items.
4.3.3 CONTRACTOR'S WARRANTIES AND GUARANTIES. Landlord hereby
assigns to Tenant all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements
(except for any portion of the Tenant Improvements which consist of components
of the Building Systems and Equipment for which Landlord maintains
responsibility for repair pursuant to Section 7.1 of the Lease). Such
warranties and guaranties of Contractor shall guarantee that the Tenant
Improvements shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof, and
Contractor shall be responsible for the replacement or repair, without
additional charge, of the Tenant Improvements that shall become defective within
one (1) year after
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Substantial Completion of such Tenant Improvements. The correction of such work
shall include, without additional charge, all additional expenses and damages in
connection with such removal or replacement of all or any part of the Tenant
Improvements.
4.3.4 TENANT'S COVENANTS. Tenant hereby indemnifies Landlord for
any loss, claims, damages or delays arising from the actions of the Architect
retained by Tenant pursuant to Section 3.1 of this Tenant Work Letter on the
Premises or in the Building to design or construct the Tenant Improvements.
Tenant, immediately after the Substantial Completion of the Building, shall have
prepared and delivered to Landlord a copy of the "as built" plans and
specifications (including all working drawings) for the Tenant Improvements.
4.4 CHANGE ORDERS. Subject to Landlord's reasonable approval, Tenant
shall have the right to order changes in the Tenant Improvements ("CHANGE
ORDERS"). Landlord's contract with Contractor shall provide that, upon request
and prior to Tenant's submitting any binding Change Order, Contractor shall
promptly provide Tenant with a written itemized breakdown of labor and materials
for the estimated cost to implement, the estimated time delay and any other
estimated increased construction costs associated with the proposed Change
Order. Costs related to changes shall include, without limitation, any
architectural or design fees, and Contractor's fee (not to exceed the percentage
rate for Contractor's fee and general conditions fee as previously set forth
herein) for effecting the change. In addition, any Change Order shall be
subject to Landlord's approval, not to be unreasonably withheld, conditioned or
delayed. If ordered by Tenant and so approved by Landlord, Contractor shall
implement such Change Order and the cost of construction of the Tenant
Improvements shall be increased or decreased in accordance with the cost
proposal previously approved by Tenant for any such Change Order, subject to
reconciliation for actual costs.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
Except as provided in this Section 5, the Lease Commencement Date for each
Floor Group of the Premises shall occur as set forth in Article 2 of this Lease.
Any delay or delays in the Substantial Completion of a Floor Group of the
Premises as set forth in Article 2 of this Lease, as a result of any of the
following shall be considered "TENANT DELAYS":
5.1 Tenant's failure to comply with the Time Deadlines which are
Tenant's responsibility to meet in accordance with this Tenant Work Letter;
5.2 Tenant's failure to timely approve any matter requiring Tenant's
approval;
5.3 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
5.4 Changes in any of the Construction Drawings because the same do not
comply with Code or other applicable laws;
5.5 Tenant's request for changes in the Working Drawings or the
Approved Working Drawings including any delay resulting from Tenant's request
for information from the Contractor, the time taken by Tenant in considering any
such information prior to agreeing to proceed (or not to proceed) with such
change and/or the actual Change Order;
5.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the applicable Floor Group, as set
forth in the Lease, or which are different from, or not included in, the
Standard Improvement Package, provided Landlord informed Tenant in writing that
any such requirement would not be available in accordance with the Construction
Schedule and would likely cause a delay in the anticipated date of Substantial
Completion of the applicable Floor Group;
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5.7 Changes to the Base, Shell and Core work required by the Approved
Working Drawings; or
5.8 Any other acts or omissions of Tenant, or its agents, or employees.
Notwithstanding the foregoing, no delay under Sections 5.2, 5.3, 5.5, 5.6,
5.7 or 5.8 above shall be considered a Tenant Delay unless and until Tenant is
(i) provided prior written notice that it is about to suffer a Tenant Delay and
is afforded a one (1) business day opportunity to cure the same, and (ii)
offered the opportunity to incur premium costs (as an Over-Allowance Amount if
the Tenant Improvement Allowance has been exceeded) to prevent or minimize such
delay if it is possible to do so. Landlord shall not assess any day towards a
Tenant Delay for delays caused by Contractor, Landlord or any third parties or
due to Force Majeure. For purposes of determining whether a delay by Tenant or
Architect constitutes a Tenant Delay, reference shall be made to the critical
path schedule for the construction of Tenant Improvements set forth in the
Construction Schedule. Landlord and Contractor shall take commercially
reasonable actions, remedial or otherwise, to maintain the Construction Schedule
notwithstanding any Tenant Delay, provided that this requirement shall not
require Landlord or Contractor to incur any additional costs or expenses (e.g.,
contractor overtime or costs resulting from accelerated delivery) unless Tenant
agrees to pay for such additional costs or expenses.
Notwithstanding anything to the contrary set forth in this Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the applicable Floor Group the Lease Commencement Date for the
applicable Floor Group shall be deemed to be the date the Lease Commencement
Date would have occurred if no Tenant Delays, as set forth above, had occurred;
provided, however, if the actual date of Substantial Completion of the Tenant
Improvements occurs on or before the estimated Lease Commencement Date specified
in Section 5 of the Summary, no Tenant Delays shall be deemed to have occurred.
SECTION 6
ACCEPTANCE OF TENANT IMPROVEMENTS
Tenant's taking possession of the applicable Floor Group shall be an
acceptance of the Tenant Improvements except for (i) any "punch list" type items
of which Tenant has given Landlord written notice, (ii) any latent defects in
the construction of the Tenant Improvements, (iii) Landlord's obligation to
correct construction defects, (iv) any warranties made by Landlord and
Contractor, and (v) any noncompliance of the Premises with all laws and codes in
effect as of the Lease Commencement Date. Tenant shall provide Landlord with
Tenant's written list of "punch list" items within ten (10) business days after
the Lease Commencement Date. Landlord shall cause Contractor to correct within
thirty (30) days of Landlord's receipt of notice thereof any construction
deficiencies or other "punch list" items of which Tenant notifies Landlord and
Contractor; except that for minor items (such as minor items on backorder) that
cannot reasonably be corrected in thirty (30) days, Landlord shall cause
correction to occur as soon as reasonably practicable. Any such corrective work
shall be performed so as to reasonably minimize any interference or disruption
to Tenant and its activities on the Premises.
SECTION 7
MISCELLANEOUS
7.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Project and the Building, Contractor shall allow Tenant (and its vendors,
consultants, contractors, and agents) access to the Building during the forty
five (45) day period prior to the estimated Substantial Completion date of the
Tenant Improvements (but if such access is to be prior to the issuance of the
Temporary Certificate of Occupancy for the Building, then such access shall be
only as allowed by the City of San Diego) for the purpose of Tenant installing
equipment, furniture or fixtures (including Tenant's data and telephone
equipment) in the Premises. Tenant's access shall include reasonable use
(subject to scheduling) of any exterior loading and staging areas and the use of
stairs,
EXHIBIT B
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[Peregrine Systems]
<PAGE>
elevators and hoists, roofs and conduits. Tenant's entry into the Premises
prior to Substantial Completion pursuant to this Section 7.1 shall be at no cost
or charge from Landlord to Tenant including, without limitation, any charge for
utilities. Prior to Tenant's entry into the Premises as permitted by the terms
of this Section 7.1, Tenant shall submit a schedule to Landlord and Contractor,
for their approval, which schedule shall detail the timing and purpose of
Tenant's entry. Tenant shall hold Landlord, the Contractor and subcontractors
harmless from and indemnify, protect and defend Landlord against any loss or
damage to the Project or Premises and against injury to any persons caused by
Tenant's actions pursuant to this Section 7.1.
7.2 TENANT'S REPRESENTATIVE. Tenant has designated Robert Urwiler as
its sole representative with respect to the matters relating to cost and
schedule set forth in this Tenant Work Letter, who, until further notice to
Landlord, shall have full authority and responsibility to act on behalf of
Tenant in such matters as required in this Tenant Work Letter. Tenant has
designated Michele Voth as its local representative with respect to daily
decisions required under this Tenant Work Letter that do not relate to cost or
schedule, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of Tenant in such matters as required in this
Tenant Work Letter.
7.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Randy Jackson
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
7.4 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Landlord or Tenant is required to approve
or deliver an item, time is of the essence.
7.5 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in
Section 19.1 of this Lease has occurred at any time on or before the Substantial
Completion of the Tenant Improvements, then (i) in addition to all other rights
and remedies granted to Landlord pursuant to the Lease, Landlord may cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the Premises
caused by such work stoppage as set forth in Section 5.3 of this Tenant Work
Letter), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of the Lease.
SECTION 8
TENANT REMEDIES FOR DELAY
8.1 LIQUIDATED DAMAGES FOR DELAY IN SUBSTANTIAL COMPLETION. If the
Substantial Completion of the Tenant Improvements has not occurred (or been
deemed to have occurred) by the Estimated Lease Commencement Date for such
Tenant Improvements as set forth in Section 5 of the Summary (as such date may
be adjusted for Excusable Delays and/or as provided in Section 2.1 of the
Lease), then Landlord shall pay Tenant liquidated damages of One Thousand Five
Hundred Dollars ($1,500.00) per day for each day of delay beyond the Estimated
Lease Commencement Date (as may be so adjusted) until the date of Substantial
Completion or the date this Lease is terminated pursuant to Section 8.2 below.
Such liquidated damages shall be paid within thirty (30) days after the end of
each month of delay beyond the applicable Estimated Lease Commencement Date (as
may be so adjusted). If Landlord fails to pay timely to Tenant the amount
representing the liquidated damages owing and if Tenant obtains a final judgment
against Landlord for such liquidated damages, and if Landlord fails to pay such
judgment within thirty (30) days after the date such judgment is rendered,
Tenant shall be entitled to offset such judgment against Base Rent payable by
Tenant together with interest at the Interest Rate specified in Article 25 of
the Lease from the date of expiration of said thirty (30) day period until the
date of offset (up to a maximum offset each month of twenty percent (20%)
EXHIBIT B
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[Peregrine Systems]
<PAGE>
of the Base Rent payable for such Building) until the full amount of such
judgment (plus such interest) has been so offset.
LANDLORD AND TENANT AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF
A DELAY IN THE SUBSTANTIAL COMPLETION DATE BEYOND THE ESTIMATED LEASE
COMMENCEMENT DATE (AS MAY BE ADJUSTED), WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICABLE TO DETERMINE AND THAT THE AMOUNTS DESIGNATED ABOVE AS
LIQUIDATED DAMAGES PAYABLE BY LANDLORD TO TENANT IN SUCH EVENTS ARE
EACH REASONABLE AMOUNTS TO BE SET AS DAMAGES FOR SUCH EVENTS UNDER THE
CIRCUMSTANCES EXISTING AT THE TIME THIS LEASE HAS BEEN ENTERED INTO.
IN CONSIDERATION OF THE PAYMENT OF LIQUIDATED DAMAGES, EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 8.2 BELOW, TENANT SHALL BE DEEMED TO
HAVE WAIVED ALL OTHER CLAIMS FOR DAMAGES OR RELIEF AT LAW OR IN EQUITY
DUE TO SUCH DELAY INCLUDING ANY RIGHTS TO SPECIFIC PERFORMANCE TENANT
MAY OTHERWISE HAVE.
Tenant: [ILLEGIBLE] Landlord: /s/ Steven L. Black
----------- -------------------
8.2 TERMINATION RIGHTS.
8.2.1 DEFINITION OF OUTSIDE DATE. The term "OUTSIDE DATE" shall
mean the date which is five (5) months after the date for any Major Project
Milestone specified in the Construction Schedule, as such five (5) month period
may be extended by any Excusable Delay (subject to Section 8.2.4 below).
8.2.2 OUTSIDE DATE TERMINATION. In the event that any Major
Project Milestone has not occurred by the Outside Date for such Major Project
Milestone, then the sole remedy of Tenant (in addition to the remedy specified
in Section 8.1 above) shall be the right to deliver a notice to Landlord (the
"OUTSIDE DATE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Outside Date Termination Notice by Landlord (the "EFFECTIVE
DATE"). However, until the Lease Commencement Date for Building 2 occurs,
Tenant may elect to terminate the leases of any or all of the Adjacent Buildings
effective as of the Effective Date by giving to Landlord notice thereof in the
Outside Date Termination Notice (except that the Effective Date for the
termination of the Building 1 Lease shall be the date so specified in the
Outside Date Termination Notice, which date shall be at least twelve (12) months
and not more than twenty-four (24) months after the date of such notice).
Landlord and Tenant acknowledge that Tenant's right to terminate any of the
Adjacent Building Leases pursuant to this Section 8.2 shall cease as of the
Lease Commencement Date for Building 2. The Outside Date Termination Notice
must be delivered by Tenant to Landlord, if at all, not earlier than the
applicable Outside Date and not later than ten (10) business days after the
applicable Outside Date. If Tenant timely delivers the Outside Date Termination
Notice to Landlord, then Landlord shall have the right to suspend the Effective
Date for a period ending thirty (30) days after the original Effective Date. In
order to suspend the Effective Date, Landlord must deliver to Tenant, within ten
(10) business days after Landlord's receipt of the Outside Date Termination
Notice, a written statement from the general contractor certifying that it is
such contractor's best, good faith judgment that the applicable Major Project
Milestone will occur within thirty (30) days after the original Effective Date.
If the applicable Major Project Milestone occurs within said thirty (30) day
suspension period, then the Outside Date Termination Notice shall be of no
further force or effect; if, however, the applicable Major Project Milestone
does not occur within said thirty (30) day suspension period, then this Lease
(and the other leases so specified in the Outside Date Termination Notice) shall
terminate as of the date of expiration of such thirty (30) day period (or, for
Building 1, as of the date so specified in the Outside Date Termination Notice).
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8.2.3 PROSPECTIVE EXTENSION OF OUTSIDE DATE. If, prior to any
applicable Outside Date, Landlord determines that any particular Major Project
Milestone will not occur by the applicable Outside Date, Landlord shall have the
right to deliver a written notice ("OUTSIDE DATE EXTENSION NOTICE") to Tenant
stating Landlord's opinion as to the date by which the Major Project Milestone
will occur and Tenant shall be required, within ten (10) business days after
receipt of such Outside Date Extension Notice, to either deliver the Outside
Date Termination Notice (in which case this Lease (and the other Adjacent
Building Leases so specified in the Outside Date Termination Notice subject to
the restrictions specified in Section 8.2.2 above) shall terminate) or to agree
to extend the applicable Outside Date (and any subsequent Outside Dates for the
Building) to that date which is set by Landlord in the Outside Date Extension
Notice. Failure of Tenant to so respond in writing within said five (5)
business day period shall be deemed to constitute Tenant's agreement to extend
the applicable Outside Date (and any subsequent Outside Dates for the Building)
to that date which is set by Landlord in the Outside Date Extension Notice. If
such Outside Date is so extended, Landlord's right to request Tenant to elect to
either terminate or further extend such Outside Date shall remain and shall
continue to remain, with each of the notice and response periods set forth
above, until the applicable Major Project Milestone occurs or until this Lease
is terminated.
8.2.4 LIMITATION ON FORCE MAJEURE EXTENSIONS. Notwithstanding
anything to the contrary contained in this Section 8.2 above, the date for any
Major Project Milestone specified in the Construction Schedule may only be
extended for Force Majeure (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for up
to a maximum of one (1) year. If Force Majeure extends any Major Project
Milestone for one (1) year, without limitation on Tenant's rights under Section
8.2.2 above, Tenant shall have the right to deliver a notice to Landlord (the
"FORCE MAJEURE TERMINATION NOTICE") electing to terminate this Lease effective
upon receipt of the Force Majeure Termination Notice by Landlord (the "FORCE
MAJEURE EFFECTIVE DATE"). However, until the Lease Commencement Date for
Building 2 occurs, Tenant may elect to terminate the leases of any or all of the
Adjacent Buildings effective as of the Force Majeure Effective Date by giving to
Landlord notice thereof in the Force Majeure Termination Notice (except that the
Force Majeure Effective Date for the termination of the Building 1 Lease shall
be the date so specified in the Force Majeure Termination Notice, which date
shall be at least twelve (12) months and not more than twenty-four (24) months
after the date of such notice). Landlord and Tenant acknowledge that Tenant's
right to terminate any Adjacent Building Leases pursuant to this Section 8.2.4
shall cease as of the Lease Commencement Date for Building 2. The Force Majeure
Termination Notice must be delivered by Tenant to Landlord, if at all, within
thirty (30) calendar days after the date upon which Tenant's right to deliver
the Force Majeure Termination Notice to Landlord is triggered. However, if
Force Majeure extends for greater than one (1) year, thereby triggering Tenant's
right to deliver the Force Majeure Termination Notice to Landlord, and if Tenant
elects not to deliver such Force Majeure Termination Notice to Landlord, and if
Force Majeure continues for an additional year, then Tenant shall have an
additional right to deliver the Force Majeure Termination Notice to Landlord
within thirty (30) days after the expiration of such two (2) year period based
upon the date for any Major Project Milestone being extended by Force Majeure
for two (2) years. However, if Tenant does not elect to deliver the Force
Majeure Termination Notice to Landlord based upon the two (2) year extension for
Force Majeure, Tenant shall not thereafter have the right to deliver the Force
Majeure Termination Notice to Landlord whether or not Force Majeure continues
beyond such two (2) year period.
8.2.5 ACCELERATION OF TERMINATION RIGHT FOR LACK OF REASONABLE
ASSURANCES. If one (1) or more Force Majeure events extends the date for any
Major Project Milestone (whether or not such Major Project Milestone is also
extended pursuant to Section 8.2.1 for reasons other than Force Majeure) for a
period in excess of the "Accelerated Force Majeure Period" (as that term is
defined below) and if Landlord does not deliver to Tenant within fifteen (15)
days thereafter a statement providing reasonable assurances to Tenant that the
Force Majeure delay will last for a total period of less than one (1) year,
Tenant shall be entitled to deliver the Force Majeure Termination Notice to
Landlord within ten (10) days after the expiration of such fifteen (15) day
period (rather than waiting until the expiration of the one (1) year period
specified in Section 8.2.4 above). The one (1) year period described in this
Section 8.2.5 above may be
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
referred to as the "AGGREGATE FORCE MAJEURE PERIOD" and the fifteen (15) day
period described in this Section 8.2.5 above may be referred to as the "DELIVERY
PERIOD." The term "ACCELERATED FORCE MAJEURE PERIOD" shall mean a total of one
hundred eighty (180) days of delay for events of Force Majeure which may affect
office construction projects in San Diego County generally (e.g., labor strikes,
material shortages and permit moratoriums) or a period of one hundred twenty
(120) total days of Force Majeure delay for Force Majeure events which are
particular to the Project and do not apply to office construction in general.
Notwithstanding the foregoing, Landlord shall have five (5) separate options to
extend the Accelerated Force Majeure Period and the Aggregate Force Majeure
Period for thirty (30) days each ("FORCE MAJEURE EXTENSION OPTIONS"). In order
to exercise a Force Majeure Extension Option, Landlord must so notify Tenant in
writing within the Delivery Period (as to the first (1st) Force Majeure
Extension Option) or prior to the expiration of the previous thirty (30) day
period for extension of the Accelerated Force Majeure Period (with respect to
each of the four (4) subsequent Force Majeure Extension Options). In addition,
in order to properly exercise any such Force Majeure Extension Option, Landlord
must pay to Tenant Forty-Five Thousand Dollars ($45,000.00) within thirty (30)
days after Landlord's notice to Tenant of the exercise of such option, for each
option so exercised. If Landlord properly exercises any such Force Majeure
Extension Option, the Accelerated Force Majeure Period and the Aggregate Force
Majeure Period shall each be extended for thirty (30) days for each such option
so exercised.
SECTION 9
CONTINUITY OF LANDLORD
Landlord acknowledges and agrees that Tenant has entered into this Lease in
reliance upon Landlord's reputation and ability to do all things necessary for
the proper construction and lien free completion of all Project improvements.
Accordingly, Landlord agrees not to sell its interest in any uncompleted
building in the Project (or otherwise assign its interest and duties hereunder
as to any uncompleted building in the Project) until after the Lease
Commencement Date has occurred for the initial Floor Group in Building 3 (or if
the Lease for Building 3 is terminated, until the termination date for such
Lease) except for (i) transfers between or among entities affiliated with Kilroy
Realty Corporation (i.e., entities controlled, controlled by or under common
control with Kilroy Realty Corporation); (ii) a merger or sale of all or
substantially all of the assets, stock, partnership interests and/or limited
liability company interests of, or owned by, Kilroy Realty Corporation and/or
its affiliates; (iii) a sale, contribution or distribution to a partnership,
corporation, joint venture, limited liability company or other ownership
structure, where Kilroy Realty Corporation or its affiliate(s) retains
responsibility for managing the development of the Project; or (iv) any transfer
resulting from foreclosure, trustee's sale or deed in lieu of foreclosure. Upon
the Lease Commencement Date for the initial Floor Group in Building 3, the
restrictions specified in this Section 9 shall terminate..
EXHIBIT B
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SCHEDULE 1
CONSTRUCTION SCHEDULE
MILESTONE DATES - BUILDING 4
<TABLE>
<CAPTION>
BASE, SHELL AND CORE
Event Date
----- ----
<S> <C>
1 Completion of Schematic Design May 1, 2001
2 Completion of Base, Shell and Core Working
Drawings September 15, 2001
*3 Submittal to City of San Diego for Permits October 1, 2001
*4 Obtaining all Building and other Permits for
Construction of Base, Shell and Core January 1, 2002
*5 Commencement of Construction January 1, 2002
6 Completion of Slab-on-Grade March 15, 2002
*7 Completion of Vertical Construction September 1, 2002
8 Completion of Roof Framing September 15, 2002
*9 Completion of Construction of Base, Shell and
Core/Certificate of Occupancy/Shell Completion
Date January 1, 2003
<CAPTION>
Notes: Items marked with an "*" are Major Project Milestones
<S> <C>
TENANT IMPROVEMENTS
1. Delivery by Tenant of Final Space Plan for
Landlord Approval
- Initial Floor Group April 1, 2002
- Second Floor Group October 1, 2002
2. Delivery by Tenant of Working Drawings for
Landlord Approval
- Initial Floor Group July 1, 2002
- Second Floor Group January 1, 2003
</TABLE>
SCHEDULE 1
-1-
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[Peregrine Systems]
<PAGE>
SCHEDULE 2
STANDARD IMPROVEMENT PACKAGE
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.0 PARTITIONS
- --------------------------------------------------------------------------------
1.1 1 HOUR PARTITION: (One-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 20-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.2 2 HOUR PARTITION: (Two-Hour Rated Assembly)
a. Provide metal studs at walls & sub-ceiling (where indicated as a
'tunnel' assembly); size, gauge and spacing per details
illustrated on drawings.
b. 5/8" Type "X" gypsum board, two layers each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association. Second layer of gypsum board shall be
installed at right angles over the first layer with joints
staggered.
c. Continuous fire tape at all joints to maintain fire rated
assembly.
d. All physical penetrations through fire rated assembly shall be
sealed with UL Listed and approved sealant compounds.
e. All mechanical duct penetrations through one-hour assemblies shall
be fitted with 90-minute rated combination smoke/fire dampers. Such
assemblies shall be tied to the central fire alarm system as
required by code.
f. Diagonal bracing shall be installed per details illustrated on
drawings.
g. Install metal casing beads at all exposed corners and edges, as
applicable.
h. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
1.3 STANDARD INTERIOR OFFICE PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend to underside of suspended
acoustical ceiling grid (+10'-0" AFF, nominal); or shall extend 6"
above ceiling grid plane. Refer to wall types and referenced
details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Diagonal bracing shall be installed per details illustrated on
the drawings.
f. Install metal casing beads at all exposed corners and edges, as
applicable.
g. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
1.4 STANDARD INTERIOR OFFICE ACOUSTICAL PARTITION:
a. Provide 2-1/2"-25 gage metal studs at 16" O.C. at walls (or as
otherwise noted) per details illustrated on drawings.
b. 5/8" standard gypsum board, one layer each side, attached to
studs with screws as required by code and as recommended by the
Gypsum Association.
c. Partition height shall extend from floor slab to underside of
metal or roof deck above (+13'-6" AFF, nominal). Refer to wall
types and referenced details illustrated on drawings.
d. Partitions terminating at curtainwall and/or storefront framing
systems shall receive a continuous neoprene sound gasket between
the mullion and the metal wall trim cap.
e. Provide continuous bead of acoustical sealant between bottom edge
of gypsum board panels and floor slab. Cut gypsum board panels at
top of wall to fit undulations of metal deck structures and seal
all gaps with drywall taping compound.
f. Install R-8 unfaced fiberglass sound batts in cavity between
studs, full height of partition.
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
2.0 COLUMN COVERS, CORE WALLS, PERIMETER SOFFITS
- --------------------------------------------------------------------------------
a. Provide either 1-1/2" or 2-1/2"-25 gage metal studs at 16" O.C.
(or as otherwise noted or configured) per details illustrated on
drawings.
b. Furnish and install 5/8" standard gypsumboard, one layer around
interior and perimeter columns, attached to studs with screws as
required by code and as recommended by the Gypsum Association.
c. Provide and install R-8 unfaced sound batt insulation at all
furred columns where plumbing lines occur, typical.
d. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint or wallcovering (Note: no texture on
painted walls; all painted surfaces shall be 'smooth').
3.0 DOORS, FRAMES, HARDWARE
- --------------------------------------------------------------------------------
3.1 ONE-HOUR CORRIDOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 20 minute rated, 3'-0" x 8'-10" x
1-3/4" (U.N.O.). Doors shall conform to A.W.I. standards and carry
a lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness, minimum 20
minute rated with applicable listing labels provided and securely
fastened to frame. Color: Black Anodized.
c. Hardware:
i. Single
4 each Butts
1 each Lockset
1 each Closer
1 each Stop
1 each Smokeseal
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
ii. Pair
8 each Butts
2 each Closer
1 each Lockset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
2 each Smokeseal
1 each Dustproof
Strike
2 each Electro Magnetic
Hold Open
3.2 INTERIOR DOOR ASSEMBLY:
a. Doors shall be WEYERHAEUSER Architectural Doors, Solid Core Wood
Veneer Door with matching edges, 3'-0" x 8'-10" x 1-3/4"
(U.N.O.). Doors shall conform to A.W.I. standards and carry a
lifetime guarantee. Doors shall be pre-finished with Weyerhaeuser
Plain Sliced Cherry with Standard Finish 28-95 "Toast". All
applicable listing labels shall be provided and securely fastened
to doors.
b. Aluminum door frames shall be WESTERN INTEGRATED MANUFACTURING,
throat size as varies with partition type and thickness. Color:
Black Anodized.
c. Hardware.
i. Single
4 each Butts
1 each Latchset
1 each Stop
ii. Single Locking
a. All the above. In place of latchset, provide lockset.
iii. Single with Closer
a. All the above, plus closer.
SCHEDULE 2
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[Peregrine Systems]
<PAGE>
TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
- --------------------------------------------------------------------------------
CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
iv. Pair
8 each Butts
2 each Closer
1 each Latchset
1 each Dummy
1 each Flushbolt
1 each Coordinator
1 each Astragal
2 each Stop
1 each Dustproof
Strike
4.0 SUSPENDED GRID CEILINGS
- --------------------------------------------------------------------------------
4.1 GENERAL INSTALLATION REQUIREMENTS:
a. Install ceiling under the supervision of an experienced
superintendent. Consult with and coordinate installation with other
trades. Install ceiling using laser level within a tolerance of
1/8" in 12 feet in any direction.
b. Pattern: Unless otherwise indicated or specified, install
ceilings in a regular pattern without border, joint lines parallel
to walls. Install acoustical units symmetrically about centerlines
of each room or space (unless specifically noted otherwise on
drawings), avoiding narrow units at walls.
c. Framing for Lighting and Mechanical Fixtures: Obtain necessary
data from other trades and provide additional hanger wire and
framing in suspended grids as required to support lighting and
mechanical fixtures.
d. Lateral Bracing: Lateral bracing for suspended ceiling must be
provided (UBC Table 23-j). Where ceiling loads are less than 5PSF
and not supporting interior partitions, ceiling bracing shall be
provided by four (4) No. 12 gauge wires secured to the main runner
within 2 inches from the cross runner intersection and splayed 90
degrees from each other at an angle not exceeding 45 degrees from
the plane of the ceiling. These horizontal restraint points shall
be placed 12 feet o.c. in both directions with the first point
within 4 feet from each wall. Attachment of the restraint wires to
the structure above shall be adequate for the load imposed.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
e. Hanger Wires: Space wires at maximum 48" centers along main tees
and connect to structure above. Provide: 2 safety wires per
mechanical diffuser, 2 per light fixture and 4 at main runner
within 3" of fixture.
f. Ceiling Offsets: Provide trim pieces and/or accessories where
illustrated on drawings or as necessary to properly finish or
transition offsets or ceiling breaks.
g. Seismic Bracing: Provide splayed bracing wires as shown and
required by the Uniform Building Code. Provide compression struts
at 12'-0" o.c., both directions fastened to the main runner and a
structural member above. Repair, Cleaning and Completion: Remove
and replace all discolored, broken or damaged materials. Completed
ceilings shall present a smooth level surface free of edge or corner
offsets, cupping, scratches, gouges or other defects. Clean exposed
surfaces and remove foreign matter.
4.2 2 x 2 ACOUSTICAL CEILING:
a. Suspension Grid: ARMSTRONG, "Suprafine" XL 9/16" Exposed Tee.
b. Ceiling Tile: ARMSTRONG, "Hi-LR Ultima" RH90 2 x 2 #1792 beveled
tegular lay in.
c. Ceiling heights vary and are as noted on plans.
4.3 DRYWALL CEILING:
a. Carrying channel at 24" on center.
b. 1-1/2" cold-rolled carrying channel at 48" on center with hanger
wire spaced a maximum of 48" on center along carrying channel.
c. 5/8" gypsum wallboard.
d. Seismic bracing as required per the Uniform Building Code and as
noted on drawings.
e. All joints and surfaces shall be taped and sanded smooth to
receive primer and paint. (Note: no texture; all painted surfaces
shall be 'smooth').
f. Locate all mechanical and electrical equipment requiring access
in 2' x 2' lay-in ceiling to avoid access doors in gypsum board
ceilings, where possible.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
5.0 FINISHES
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NOTE: PROVIDE CUTTINGS, BRUSH-OUTS, SAMPLES, ETC. OF ACTUAL DYE LOTS,
OR PRODUCTION RUNS FOR ARCHITECT'S AND INTERIOR DESIGNER'S APPROVAL.
5.1 PAINT:
a. Provide paint color as specified on finish plans - one (1) coat
primer base, two (2) coats flat water base latex acrylic.
5.2 CARPET:
a. Standard multicolored loop tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
b. Standard cut pile tenant improvement carpet shall be:
Face weight: 32 oz.;
Guage: 1/10 inch;
Backing: Action Bac. Direct glue installation.
5.3 VINYL COMPOSITION TILE:
a. Vinyl composition tile (VCT) shall be: ARMSTRONG, "Imperial
Texture". Colors as selected from standard range.
5.4 RESILIENT SHEET FLOORING:
a. Resilient sheet flooring shall be: ARMSTRONG, "Standard
Excelon". Colors as selected from standard range.
5.5 RUBBER BASE:
a. Rubber base shall be: ROPPE, 4" topset; straight base at carpeted
areas and coved at all hard surface areas. Colors as selected from
standard range.
SCHEDULE 2
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TENANT IMPROVEMENT STANDARD SPECIFICATIONS KILROY CARMEL CENTER
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CARRIER JOHNSON PROJECT NO. 4246.00 MAY 4, 1999 (DRAFT)
6.0 MILLWORK
11.0 GENERAL:
a. See millwork plans, details and notes for configuration and
fabrication specifications.
b. Millwork shops drawings shall be WIC approved.
c. All fabrications shall conform to WIC standards for "Premium
Grade" U.N.O. and be certified as such.
d. Submit shop drawings, samples, finishes for Architect's and
Interior Designer's approval prior to fabrication and
installation.
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15300 - FIRE PROTECTION SYSTEMS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall include all work necessary for a
complete automatic fire sprinkler system for the tenant
improvement of the shell building.
b. The shell building includes necessary standpipes, tamper
switches, flow and alarm switches and alarm bell.
B. SYSTEM REQUIREMENTS
1. The entire tenant improvement of the building shall be provided
with a hydraulically calculated automatic fire sprinkler system for
each occupancy classification.
2. Minimum densities for areas of coverage shall be determined by
the City of San Diego Fire Department. Hydraulically calculate water
protection systems. Form sheets, summary sheets, detailed work
sheets and graphs shall be in strict accordance with the required
and advisory provisions of NFPA 13; 7-3.
3. Tenant spaces shall be sized for Ordinary Hazard Group 1.
4. The system shall be designed for earthquakes and shall include
all materials necessary to provide the system complete and ready
for use. Design and install the system to give full consideration
to blind spaces, piping, electrical equipment, ductwork and other
construction and equipment in accordance with detailed drawings to
be submitted for approval.
5. Devices and equipment for fire protection service shall be UL
listed and FM approved for the specific purpose for which the item
is used in sprinkler systems.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
C. MATERIALS
1. Buried pipe and fittings: N/A
2. Above ground pipe and fittings:
a. 2-inch and smaller: ASTM A53 or ASTM A135 Schedule 40 black
steel pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow or equal.
b. 2 1/2-inch and larger: ASTM A135 Schedule 40 black steel
pipe with ANSI B16.3 Class 150 malleable iron threaded
fittings, Dynaflow pipe, or rolled groove pipe with mechanical
joint grooved coupling fittings; or ASTM A135 Schedule 10
welded steel pipe with rolled groove ends and mechanical
joint grooved coupling fittings. Cut grooving of pipe will not
be permitted.
c. Flanged fittings: ANSI B16.1 Class 125 cast iron.
d. Flanges: ANSI B16.1 Class 125 cast iron.
3. Gate Valves:
a. 4-inch and larger: UL listed and labeled, FM approved, 175 psi
OS&Y type, iron body, bronze mounted.
b. 3-inch and smaller: UL listed and labeled, FM approved, 175
psi OS&Y type, bronze body gate with solid wedge.
4. Check Valves: UL listed and labeled, FM approved, 175 psi iron
body, bronze mounted, horizontal swing check valve with bolted
bonnet and flanged end connections. Check valves shall be designed
for replacement of internal parts without removal of valve body
from piping with the exception that water check valves may be used
with freestanding Fire Department Connections.
5. Butterfly Valves: UL listed and labeled. FM approved, 175 psi
bronze body, threaded ends, stainless steel disc and stem, two
inch maximum pipe size with integral tamper switch, and geared
slow-close mechanism.
6. Drain Valve: UL listed and labeled, FM approved, 175 psi bronze
body gate valve, OS&Y type, solid wedge bronze disc; or class 150,
400 lb. WWP, conventional port, bronze, two-piece construction ball
valve.
7. Sprinkler Heads:
a. Spacing and number of heads shall comply with recommendations
of NFPA 13 for type of occupancy involved.
b. Sprinkler Heads: UL listed and labeled and FM approved for
installation in the hazard classification as indicated and by
the agencies listed above; 165 degree F rated fusible link,
1/2 inch orifice, standard response.
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
.1 Finished ceiling Areas: Recessed, chrome-plated brass
pendant heads, matching chrome plated adjustable metal
escutcheon.
.2 Exposed Piping: Upright or pendant type; natural brass
finish.
D. EQUIPMENT
1. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15 - FIRE PROTECTION
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15400 - PLUMBING SYSTEMS DESCRIPTIONS
A. GENERAL
All work shall be in strict conformance with but not limited to:
Uniform Plumbing Code
Uniform Building Code
Uniform Fire Code
Local Fire Department Regulations
National Fire Protection Association
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Work Included:
a. This contract shall cover all plumbing systems for the tenant
improvement design. Utilities shall be connected to and
extended from points-of-connection from the original building
shell.
b. Piped utilities required by the installation of HVAC
equipment/systems for the tenant improvements to the building.
2. Work Excluded:
a. Plumbing sanitary and vent mains, potable water mains,
condensate drains for building shell rooftop units, roof and
storm water mains, shell toilet rooms and janitors closets.
B. SYSTEM REQUIREMENTS
1. Principal systems to be included in the tenant design:
a. Convenience sinks required by tenant for lunch/coffee rooms.
With local instahot water heater.
b. Potable cold water for drinking fountain system throughout the
building.
c. All drain piping from any HVAC equipment installed as part
of the tenant improvement that would generate condensate.
d. An hydraulically calculated automatic fire sprinkler system,
extended from the building shell to be installed in the tenant
improvement ceilings.
2. Materials:
a. Soil, Waste and Vent Above Ground: Service-weight, no-hub
cast-iron pipe and fittings.
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
b. Soil, Waste and Vent Below Ground and to 5'-0" Outside of
Building: Service-weight, cast-iron hub & spigot pipe and
fittings.
c. Water and Condensate Drain Piping Above Ground: Type "M"
hard-drawn copper type, ASTM B88, and wrought copper fittings,
ANSI B1 6.22. All hot water supply piping shall be insulated
with 1 inch thick fiberglass insulation for sizes up to 2-1/2
inch size, 1-1/2 inch thick above 2-inch size piping.
Condensate drain piping above ceilings shall be insulated.
d. Water Piping Below Ground 4-inches and Smaller: Type "K"
hard-drawn copper tubing, ASTM B88, and wrought copper fittings
ANSI B 16.22, silver brazed joints.
e. Natural Gas Piping: Buried piping shall be Polyethylene
(P.E.) per ASTM D2513. Above grade shall be Schedule 40 black
steel pipe per ASTM D2513.
f. Indirect Drains: Type "M" copper fittings, ANSI B16.22,
solder joint type. Insulate with Manville Micro-Lok 650AP.
3. Equipment:
a. N/A
4. Plumbing Fixtures:
a. Sinks as required and described in architectural floor
plans. If no description is provided, install 20 gage
stainless steel sink with standard single lever faucet.
b. Electric Water Cooler: Barrier-free, wall hung water cooler
with push bar control and equipped for handicap usage.
5. Drains:
a. N/A
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-PLUMBING
May 4, 1999 PAGE 15400 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
SECTION 15800 - HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS DESCRIPTIONS
A. CODES AND REGULATIONS
All work shall be in strict conformance with, but not limited to:
Uniform Mechanical Code - UMC 1997
Uniform Building Code - UBC 1997
CEC Title 24 Energy Standards
Fire Department Regulation
City of San Diego Requirements
All other Authorities Having Jurisdiction
B. SCOPE OF WORK
1. Tenant Improvement (TI) Work:
a. All main air moving equipment including all air handling
units, exhaust fans, hot water boilers and pumps, variable air
volume with hot water reheat terminals for the building core
and all associated vertical ductwork and heating hot water
piping, and DDC control backbone will be installed as part of
the shell work. Five rooftop VAV units, one per floor are
provided with cooling only, and are based on a nominal 350
sf/ton.
b. Tenant shall provide all extensions of duct, piping,
electronic VAV boxes, DDC thermostats, control power and
wiring, smoke/fire dampers, diffusers and grilles for all
tenant improvements. Any specialty tenant requirement, such as
Kitchen exhaust will be designed and installed during the TI
work.
c. Any controls associated with the operation of the VAV boxes,
reheat coils and equipment added as TI work including
sub-control panels and thermostats required for the
environmental controls will be done as part of the TI work.
C. ENVIRONMENTAL DESIGN CONDITIONS
The following criteria will be used for sizing the heating and
cooling plants:
1. Outdoor Ambient Design Conditions:
Summer (mean 0.5%): 83DEG F dB 69DEG F wB
13DEG F dB outdoor daily range
Winter (0.2%): 42DEG F dB
Note: 88DEG F dB, 70DEG F wB is the 0.1% mean temperature: we
assume the less conservative 0.5% temperature is acceptable
for this project.
2. Indoor Conditions for Air Conditioned Area:
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 1
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
All floors 70DEG F dB +/- 2DEG F dB (winter)
72F dB +/- 2F dB (Summer)
60% RH (no low end humidity
control)
Electrical, Telecommunication No Temperature Control -
Rooms: Ventilation only - if Tenant
Equipment mounted within a
room requires a controlled
environment, it shall be
provided as part of the TI
D. VENTILATION AIR REQUIREMENTS
Outdoor air for ventilation will be based on the American Society of
Heating Ventilation and Air Conditioning Engineers (ASHRAE) Standard
62-1989, Ventilation for Acceptable Indoor Air Quality.
E. ENERGY USE AND CONSERVATION
The Energy Efficiency Standard, Title 24, will be used as the basis of
the design.
F. HEATING HOT WATER SYSTEM
1. The heating for the building will be by hot water, generated on
site by a rooftop boiler plant. The boilers, pumps and controls
will be installed as part of the building shell, along with valved
riser system to each floor.
2. Tenant improvement shall extend the heating hot water system to
heating coils at each VAV terminal with automatic flow control
valves, two way solenoids and a three way valve at four of the most
remote VAV boxes on each floor.
3. Heating hot water piping shall be type M copper with wrought
fittings, insulated.
G. MISCELLANEOUS VENTILATION/EXHAUST SYSTEMS
The following exhaust system will be installed within the scope of the
shell building design, it is assumed that ambient outside air (1) and
building air (2) (3) shall provide makeup air to the exhausted area:
(1) Elevator Machinery Room on roof.
(2) Electrical/telecom Rooms
(3) Janitors closets.
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15800 - 2
SCHEDULE 2
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KILROY CARMEL CENTER BUILDING STANDARD TENANT
SAN DIEGO, CA IMPROVEMENT SPECIFICATION
H. TI CONTROLS
1. An electronic direct digital control (DDC) system shall
incorporate stand alone, remote control units at each of the new
air handling units. Electronic digital control will be provided at
the zone level.
2. The controls will automatically operate the HVAC system and provide
the necessary change-over commands for the occupied and non-occupied
temperature and ventilation schedules. The system shall provide the
necessary monitoring, alarm, and by-pass for efficient energy
management.
I. Specification Sections
The following specification sections will be provided:
1. Division 15
a. Section 15010 Mechanical General Requirements
b. Section 15060 Hangers and Supports
c. Section 15090 Mechanical Identification
d. Section 15240 Vibration and Seismic Isolation
e. Section 15250 Mechanical Insulation
f. Section 15500 HVAC Pumps, Piping, Valves, and Accessories
g. Section 15850 Ductwork and Accessories
h. Section 15900 HVAC Controls
i. Section 15990 Testing, Adjusting and Balancing
END OF SECTION
PRELIMINARY DRAFT DIVISION 15-MECHANICAL
May 4, 1999 PAGE 15300 - 3
SCHEDULE 2
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Section 16050 BASIC ELECTRICAL REQUIREMENTS
PART 1 GENERAL REQUIREMENTS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions and Division 1 are part of this section
and the contract for this work and apply to this section as fully
as if repeated herein. This section, 16050, applies to all
Division 16 categories.
1.1.2 Reference to other sections: The applicable requirements from
other Division 16 sections shall form a part of the electrical
work and each section shall be referenced to the other sections.
1.2 EXPLANATION OF DRAWINGS
1.2.1 These construction documents are intended to be diagrammatic
and reflect the scope, quality, and character of the work to be
performed; all miscellaneous materials and work, though not
specifically mentioned, shall be furnished and installed by the
Contractor.
1.2.2 The Contractor shall confirm sizes, dimensions, weights and
locations of all equipment prior to installation. Dimensioned
architectural drawings shall take precedence over diagrammatic
layouts shown on these contract documents.
1.2.3 The specifications and the drawings are an integral document and
shall be considered complementary to each other. In the case of a
conflict between the specifications and the drawings, the more
constricting condition shall be enforced.
1.2.4 The Contractor shall be responsible for reporting any
discrepancies, errors, or omissions noted prior to bid.
1.2.5 It is the intent of the drawings to indicate schematic routing
and placement of devices, fixtures, equipment and conduit. Exact
locations shall be dimensioned on these documents or in other
trade documents (architectural, mechanical, etc.). Offsets,
elbows, or extensions shall be furnished and installed by the
Contractor as necessary to avoid structure, piping, clearances
and to provide a complete and workmanlike installation.
1.3 QUALITY ASSURANCE
1.3.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.3.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
Section 16050 Basic Electrical Requirements
Master Specs 16050-1
SCHEDULE 2
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.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriters' Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.3.3 All items shall be listed by Underwriter's Laboratories and
shall bear the U.L. label.
1.3.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.3.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the Contractor.
1.4 SUBMITTALS
1.4.1 Shop drawings for materials, equipment, devices, fixtures, and
systems shall be submitted by the Contractor for review within 30
days after award of the contract. In addition to the requirements
for submittals stated herein, the Contractor shall be responsible
for compliance with the requirements of Division 1.
1.4.2 The Contractor shall bear the responsibility for any materials
installed which were not submitted for review or not installed in
compliance with the review comments and the contract documents.
1.4.3 Verbal authorization of submittal documents or changes to the
requirements of the contract documents shall not be acceptable.
All submittal material must be documented in a written format.
1.4.4 All submittal packages must be submitted at one time and in
accordance with the specification section appropriate for the
material. All packages must be identical and clearly labeled
indicating the specification section, project name, submittal
date, Contractor's name, Engineer's name, preparer's name and
submission version (first submission, resubmittal #1, etc.).
1.4.5 Product catalog cutsheets and descriptive literature shall be
cross-referenced to the specification section by paragraph.
1.4.6 All submittal packages shall be permanently bound in brochure
or booklet format. A minimum quantity of six submittal booklets
shall be provided by the Contractor; additional copies may be
required if so noted.
Section 16050 Basic Electrical Requirements
Master Specs 16050-2
SCHEDULE 2
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1.4.7 Materials which bear a certification or approval of a testing
agency, performance criteria, society, agency, or other
organization shall be submitted with all labels identified.
1.4.8 The submittal shall be complete and with catalog data and
information properly marked to show, among other things,
materials, capacity and performance data to meet the specified
requirements.
1.4.9 Incomplete submittals will be rejected at the discretion of the
reviewing Engineer.
1.4.10 Review of the submittal is only for general conformance with
the contract documents. The Contractor is responsible for
confirmation and coordination of dimensions, quantities, sizes,
fabrication, installation methods, and for coordination of work
of other trades with electrical work.
1.4.11 Detailed working drawings shall be prepared and submitted showing
items which are to be fabricated including transformer mounting
racks, unistrut mounting frames, equipment room layouts, pull
boxes, splice boxes, gutters, etc.
1.4.12 Minimum scale for submitted drawings shall be 1/8". Details shall
be drawn to 1/4" scale. All drawings shall be 8.5"x11" or larger.
1.4.13 Submittal brochures shall be complete and descriptive of the
type, make, manufacturer, application, quantity, performance,
capacity, ratings, options, dimensions, clearances, weights,
nameplate data, special installation requirements, mounting
method, NEMA type, NEMA class, environmental restrictions, layout
requirements or other information as may be necessary for review
of the material.
1.4.14 Submittal brochures for switchgear shall include, as a minimum,
the following: singleline diagrams; fault current ratings of
buses and devices; device identification, ratings, layout and
characteristics; dimensions; circuit identification;
identification label type and method of affixing; mounting;
conduit entry point and quantities; NEMA enclosure type; and
additional data as required for a complete review.
1.4.15 Submittal brochures for lighting systems shall include, as a
minimum, the following: manufacturer; detailed drawing or
photograph; dimensions; lamp data; ballast data; certified
photometric data from a third-party testing agency; U.L. label
listing; fixture number or identification from the drawings;
finish color and material; mounting equipment; socket type and
rating; environmental ratings (damp location, watertight,
explosionproof, etc.); voltage; input wattage; and additional
information as necessary for a complete review.
1.4.16 The Contractor shall be responsible for all aspects of
substitutions of material including any additional cost or delay
incurred as a result of the substitution. The Contractor shall
coordinate all substitutions with other trades, verify code
compliance, verify clearances, photometric performance,
appearance, suitability, constructability, and availability of the
material prior to submitting the substitution for review. The
Contractor shall bear the responsibility of any increased costs
to other trades with are directly related to the substitution.
1.5 MATERIAL HANDLING
Section 16050 Basic Electrical Requirements
Master Specs 16050-3
SCHEDULE 2
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1.5.1 The Contractor shall deliver all equipment and material to the site
in the manufacturer's original packaging without seals broken.
1.5.2 The Contractor shall handle, store, and protect all equipment and
materials in accordance with the manufacturer's recommendations.
1.5.3 The Contractor shall immediately replace damaged or defective
equipment or materials with identical new equipment or material at
no cost, inconvenience, or delay to the Owner.
1.6 EXISTING CONDITIONS
1.6.1 The Contractor shall verify all existing conditions prior to bid and
include all costs in bid.
1.6.2 The Contractor shall match the finish and appearance of all existing
conditions where constructing new work adjacent to existing surfaces
or equipment.
1.6.3 Coordinate with the Owner's Representative for all ongoing projects
or the work of other trades which may affect the Contractor's work.
Verify Owner schedule requirements for special or standard events
which may impact the Contractor's work.
1.6.4 Coordinate work to be performed in occupied areas and comply with
the Owner's requirements such that the Owner's work is not disrupted
by the Contractor. Verify the need for work to be performed during
premium hours, evenings, weekends, or holidays prior to bid and
include all costs in bid. Bring to the Owner's attention the need
for all disruptive work prior to commencement of work.
1.7 UTILITY COMPANY REQUIREMENTS
1.7.1 The contractor shall contact the serving utility company for all
utility system requirements prior to commencement of work. Utility
work shall include electric power, telephone, data, fiber optic
cable, cable television or other utilities as may require connections
as a part of this contract. Coordinate and comply with all serving
utility company requirements.
1.7.2 The utility information depicted on the contract documents is for
bidding purposes only and shall not be used for construction
purposes. All construction shall be performed according to
engineered documents from the serving utility company. The
Contractor shall obtain and coordinate with utility company
requirements as a part of this contract and furnish and install all
work as a part of this contract.
1.7.3 Verify all connection points, routing, and requirements with the
serving utility company prior to commencement of work and coordinate
final requirements with other trades.
1.7.4 The Contractor shall be responsible for all costs associated with
his failure to contact or coordinate with utility company
requirements.
1.8 CONSTRUCTION UTILITY REQUIREMENTS
1.8.1 Power, telephone or other temporary construction utility services
required by the Contractor shall be the responsibility of the
Contractor.
Section 16050 Basic Electrical Requirements
Master Specs 16050-4
SCHEDULE 2
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1.8.2 Arrangements for construction utility services shall be made by the
Contractor in coordination with the Owner's Representative and the
serving utility company.
1.9 CONTINUITY OF SERVICE
1.9.1 The Contractor shall coordinate all shutdowns with the Owner's
Representative. Electrical shutdowns shall be kept to the minimum
number necessary to complete the work.
1.9.2 The Contractor shall coordinate all work done on overtime or premium
time with Owner's Representative prior to commencement of work.
1.9.3 All work performed in or through occupied spaces, or other work
disruptive to existing occupants shall be considered as performed
during premium time or as overtime for the purposes of the
bid; include all costs in bid.
1.9.4 The Contractor shall notify Owner's Representative of all shutdowns
or disruptive work minimum of 72 hours prior to commencement of
work. The Contractor shall obtain approval from the Owner's
Representative prior to commencement of work.
1.9.5 The Contractor shall provide all necessary temporary power, including
temporary power generation, to accommodate shutdowns and minimize
disruption of work.
1.9.6 The Owner reserves the right to provide emergency repairs or
temporary power to maintain service continuity at the Contractor's
cost in the event Contractor fails to provide adequate service
continuity.
1.10 RECORD DOCUMENTS
1.10.1 The Contractor shall prepare as-built documents depicting all
revisions to branch circuits, conduit routing, equipment, or
materials. Drawings shall be legible, reproducible, and properly
identified such they may be used as a reference for maintenance or
construction.
1.10.2 The Contractor shall provide a minimum of three copies of the
operation and maintenance manuals to the Owner's Representative at
the completion of the project. Each copy shall be bound in a
three-ring binder and labeled indicating: the project name; system
name; Contractor's name, telephone number, and contact person; and
Owner's name. The Contractor shall provide the following information
within each manual:
.1 List of the Subcontractors performing work on the system
including contact names and telephone numbers.
.2 Routine and emergency service contacts and telephone numbers
for each system.
.3 Description of system operation.
.4 Single line diagrams and control wiring diagrams.
.5 Detailed product literature with technical information.
Section 16050 Basic Electrical Requirements
Master Specs 16050-5
SCHEDULE 2
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.6 Sequence of starting, shutdown and operation.
.7 Installation instructions and safety requirements.
.8 Maintenance schedule, testing instructions and performance
parameters.
.9 Parts list including recommended spare parts.
1.11 GUARANTEE
All electrical work, materials and equipment provided under this
contract shall be guaranteed for a period of one year from the date
of acceptance of the work by the Owner. Any failures, problems, or
deficiencies experienced during this period due to defective
materials or faulty workmanship shall be immediately corrected by
the Contractor without cost to the Owner. The Contractor shall be
responsible for all damages to the Owner's facility due to
deficiencies in the electrical system. Equipment guarantees in
excess of one year shall not be superseded by this guarantee.
PART 2 PRODUCTS
2.1 MATERIALS
2.1.1 All materials shall be new, of prime quality, listed as suitable for
the application, and bear factory-applied U.L. labels.
2.1.2 Materials shall be currently in production and shall be supported by
spare parts, repair service, maintenance, and factory technical
support.
2.1.3 Materials of one assembly (switchboards, substations, motor control
centers, etc.) shall be of one manufacturer unless specifically stated
otherwise in the contract documents.
PART 3 EXECUTION
3.1 INSTALLATION REQUIREMENTS
3.1.1 All work shall conform to National Electrical Contractors
Association standards of installation and the requirements of the
manufacturer, Division 1, Division 16, and the Owner's Representative.
3.1.2 The Contractor shall field-verify all dimensions and coordinate
dimensions with equipment sizes and locations.
3.1.3 The Contractor shall coordinate and install all penetrations, openings,
slots, chases, or sleeves as necessary for the routing and installation
of raceways, conductors, or equipment. The Contractor shall provide
approved fire sealant to maintain fire ratings at all penetrations.
3.1.4 The Contractor shall coordinate the placement and sequence of
installation of all mounting bolts, conduits, sleeves, etc. which are
to be set in poured-in-place concrete slabs per the structural
drawings.
3.1.5 The Contractor shall install access panels in walls or ceilings in
coordination with the Architect for all junction boxes or electrical
equipment which requires access.
Section 16050 Basic Electrical Requirements
Master Specs 16050-6
SCHEDULE 2
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3.1.6 All equipment shall be installed plumb, parallel, or orthogonal to
structure and in a neat orderly fashion. All material shall be
accessible for maintenance, inspection, servicing or replacement.
3.1.7 Verify final locations for devices during the rough-in phase with
dimensioned architectural drawings, fabrication drawings, or other
space planning requirements included in the contract documents.
3.1.8 The Contractor shall coordinate and arrange for the proper sequence
of construction including scheduling of long-lead items, shutdowns,
work of other trades, and Owner-scheduled events.
3.1.9 The Contractor shall provide adequate and qualified supervision for
the work performed: no work shall be performed without the
supervision of a representative of the Contractor.
3.1.10 The Contractor shall coordinate and cooperate with all other trades
for a successful completion of the project.
3.2 SEISMIC BRACING
The Contractor shall seismically brace all equipment in accordance
with Title 24 requirements for Seismic Zone 4 and provide
certification of seismic compliance upon request.
3.3 CUTTING AND PATCHING
3.3.1 The Contractor shall provide cutting and patching as required to
install the electrical system in this contract.
3.3.2 Coordinate the schedule of all cutting such that the work may be
performed in an expeditious manner with minimum inconvenience to
the Owner.
3.3.3 Remove or cut structures or materials as necessary for demolition
prior to the installation of new electrical work.
3.3.4 The Contractor shall protect all surfaces, structure, furnishings,
and finishes not directly affected by cutting or patching.
3.3.5 Provide dust and moisture barriers as required during cutting and
prior to patching openings.
3.3.6 All penetrations through roofs shall be performed per architectural
requirements.
3.3.7 Patching shall be performed with materials which exactly match the
adjacent surfaces in color, texture, character, and appearance.
3.3.8 All patches must maintain the fire ratings of the original surface
and shall be sealed with a U.L. listed and Fire Marshal approved
sealant.
3.4 COMMISSIONING
Section 16050 Basic Electrical Requirements
Master Specs 16050-7
SCHEDULE 2
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3.4.1 The Contractor shall initiate start up of all electrical equipment
including operation of all devices, switches, generators, transfer
switches, overcurrent protection, disconnect switches, etc. to verify
normal operation of all moving parts and electrical performance.
3.4.2 The Contractor shall test, adjust, aim, align, label, clean and
complete all systems prior to acceptance by the Owner's
Representative.
3.4.3 The Contractor shall demonstrate that all systems operate within the
manufacturer's recommended performance characteristics, the
electrical construction documents, system requirements, and Owner
requirements.
3.4.4 The Contractor shall test each system per the manufacturer's
requirements and shall perform the following system tests:
.1 Inspect cables for physical damage and proper connection.
.2 Torque test cable connection and tighten in accordance with
industry standards.
.3 Infrared scan all connections under loaded conditions.
.4 Insulation resistance test of each cable.
.5 Inspect ground system connections.
.6 Voltage drop tests on the main grounding electrode of system.
.7 Determine the ground resistance between the main grounding
system and all major electrical equipment frames, system neutral
points.
.8 Check rated voltage and phase balance at all equipment, motors
and selected devices at full load conditions. Measure no load
voltage conditions at each location.
.9 Furnish all material, equipment, instruments and labor as
required to complete testing.
3.5 TRAINING
3.5.1 Furnish at least one copy operating instructions from the
manufacturer for all electrical equipment to the Owner's
Representative. Instructions shall be clean, legible, and properly
bound.
3.5.2 The Contractor shall provide training for the Owner's staff as
directed by the Owner's Representative for a minimum of one
man-day (eight hours).
3.5.3 Provide classroom training by a qualified instructor for the
operation, installation, and maintenance of designated equipment or
systems including, but not limited to, generation systems, transfer
switches, uninterruptible power supplies, energy management
systems, lighting control systems, power distributions systems, and
other systems which may require instruction.
3.6 CLEANING
Section 16050 Basic Electrical Requirements
Master Specs 16050-8
SCHEDULE 2
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<PAGE>
Contractor shall clean all equipment, panelboard interiors, conduit
interiors, fixtures, devices, etc. of all extraneous paint, drywall
mud, overspray, dust, dirt, debris, trash, grease or markings. All
cleaning shall be performed by the Contractor in accordance with the
appropriate manufacturer's recommendations.
END OF SECTION
Section 16050 Basic Electrical Requirements
Master Specs 16050-9
SCHEDULE 2
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<PAGE>
Section 16110 RACEWAYS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Basic Electrical Requirements
(Section 16050) are part of this section and the contract for this
work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16110 Raceways
Master Specs 16110-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Raceway materials
.2 Fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Rigid Galvanized Steel (RGS) Conduit
2.1.1 Continuous hot-dipped galvanized manufactured per UL and ANSI
requirement.
2.1.2 Rigid aluminum conduit is not acceptable.
2.1.3 Fittings for use with steel conduit, rigid or flexible, shall be
manufactured per UL requirements and shall be cast metal with
gasketed closures.
2.1.4 Fittings for RGS conduit shall be malleable iron or forged steel
with cadmium or zinc coating.
2.1.5 Union couplings for joining rigid conduit at intermediate runs shall
be of the same material as the conduit. Couplings shall be threaded
concrete-tight to permit completing conduit runs when neither
conduit can be turned and to permit breaking the conduit run at the
union.
2.1.6 Set screw connectors or threadless type are not acceptable.
2.1.7 Minimum raceway size shall not be less than 3/4".
2.2 Electrical Metallic Tubing (EMT)
2.2.1 Conduit shall be cold rolled zinc coated steel and manufactured per
UL and ANSI requirements.
2.2.2 Fittings for EMT shall be watertight steel or malleable gripping ring
compression type.
2.2.3 Pressure cast material for nuts of compression ring type fittings
and set screw connections are not acceptable.
2.2.4 Minimum raceway size shall be 1/2".
2.3 Flexible Metallic Conduit
2.3.1 Flexible conduit shall bear the UL label and be zinc coated steel.
2.3.2 Fittings for flexible metallic conduit shall be steel or malleable
iron. Fittings shall clamp to conduit securely.
2.3.3 Screw in type, sheet metal or set screw type fittings are not
acceptable.
Section 16110 Raceways
Master Specs 16110-2
SCHEDULE 2
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2.3.4 Minimum raceway size shall not be less than 3/4".
2.4 Liquid Tight Flexible Conduit
2.4.1 Conduit shall be manufactured in accordance with UL and ANSI
requirements. Conduit shall be approved for grounding and compatible
with approved fittings. Flexible steel conduit shall be hot dipped
galvanized with extruded PVC covering manufactured per UL
requirements.
2.4.2 Fittings shall be liquid tight type with body and gland nut of steel
or malleable iron with provisions for grounding flexible conduit to
fittings.
2.4.3 Minimum raceway size shall be 3/4".
2.5 Polyvinyl Chloride (PVC) Conduit
2.5.1 PVC shall be constructed of a virgin homopolymer PVC compound and be
manufactured according to NEMA and UL specifications. PVC conduit shall
be Schedule 40 or 80.
2.5.2 Minimum raceway size shall be 3/4".
PART 3 EXECUTION
3.1 Rigid Galvanized Steel (RGS) Conduit
3.1.1 RGS shall be used where exposed to weather or where subject to
physical damage in exposed areas below 8'0" above finished floor.
3.1.2 RGS shall be used in NEC classified hazardous locations with seal
connections per NEC requirements.
3.2 Electrical Metallic Tubbing (EMT)
3.2.1 EMT shall be run indoors concealed in drywall type
construction, above suspended ceilings, and exposed indoors not less
than 8'0" above finished floor in unfinished areas.
3.2.2 EMT shall not be installed underground or embedded in concrete.
3.3 Flexible Metallic Conduit
3.3.1 Flexible conduit shall be used for indoor lighting connections in
suspended ceiling areas and shall not exceed 6'0" in length.
3.3.2 Flexible conduit shall be used for final connection to control
equipment and not to exceed 2'0" in length.
3.3.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL approved.
3.4 Liquid Tight Flexible Conduit
Section 16110 Raceways
Master Specs 16110-3
SCHEDULE 2
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3.4.1 Flexible conduit shall be used for final connection to
machines, motors, transformers and equipment that requires vibration
isolation.
3.4.2 Flexible conduit shall be used for final connection to equipment in
wet or damp locations or where exposed to grease, water, dust, or dirt.
3.4.3 The conduit grounding system shall be continuous as recommended by
the manufacturer and UL requirements.
3.5 Polyvinyl Chloride (PVC) Conduit
3.5.1 All sweeps, bends, and risers shall be concrete encased Schedule 80.
3.5.2 All underground high voltage conduit, telephone conduit, service
entrance conduit and feeders 100A and over shall have 3" of red
mixed concrete cover.
3.5.3 All PVC conduit feeders shall contain a copper green grounding
conductor sized per NEC requirements and continuity shall be
maintained throughout conduit runs and pullboxes.
3.6 All conduit installation methods shall comply with the latest
enforced edition of the National ELectrical Code and the authority
having jurisdiction.
3.7 All conduit installations shall comply with the manufacturer's
installation requirements.
3.8 All spare conduit shall be provided with a pullwire.
END OF SECTION
Section 16110 Raceways
Master Specs 16110-4
SCHEDULE 2
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Section 16120
WIRE AND CABLE
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
Section 16120 Wire and Cable
Master Specs 16120-1
SCHEDULE 2
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<PAGE>
.1 Conductor materials
.2 Connector and fitting materials
.3 Installation materials and methods
PART 2 PRODUCTS
2.1 Conductors shall be copper; conductors size #10AWG and smaller shall
be solid, conductors size #8AWG and larger shall be stranded.
Conductors shall be minimum size #12AWG for power and lighting
circuits; control circuits shall use a minimum conductor size of
#14AWG.
2.2 Insulation shall be type THW or THHN/THWN for all branch circuits up
to and including size #2AWG. Insulation for conductors over size
#2AWG shall be XHHN.
2.3 Jackets shall be nylon of PVC material.
2.4 All cables shall be UL listed for the application.
2.5 All conductors shall be installed in conduit in the field, unless
specifically noted otherwise in these documents. Type AC and type NM
cable is not acceptable; type MC cable may be used where
specifically noted for purposes of flexibility, maintenance, or ease
of installation but shall not be used without permission.
2.6 Multi-conductor flexible cords shall be types SO, SJO, STO, or SJTO.
2.7 Connectors shall be UL listed and suitable for the conductor
material being connected and rated appropriately. Connectors shall
be solderless metal pressure type for conductors #10AWG and smaller.
Connectors shall be compression type for conductors #8AWG and larger.
PART 3 EXECUTION
3.1 All wiring methods shall comply with the latest enforced edition of
the National Electrical Code and the authority having jurisdiction.
3.2 Conductors shall be installed in clean raceways using nylon
cord, polypropylene cord, hemp rope, or other material which will not
damage the conductors or conduit. Do not use metal fish tape. Use
lubricant when necessary for pulling.
3.3 Conductors shall be pulled into conduit simultaneously so as to not
damage conductors during pulling.
3.4 Conductors installed at outlets and switches shall have a minimum of
6" pigtail left in the box for future connections. All conductors
not connected to devices shall be terminated with splice caps or
tape.
3.5 Conductors shall be terminated such that no copper material is
exposed. Conductors shall be trained and labeled at terminations in
a neat and workmanlike manner.
3.6 All terminations shall comply with the manufacturer's installation
and torquing requirements.
3.7 Splices on conductors #10AWG and smaller shall be made with splice
caps twisted
Section 16120 Wire and Cable
Master Specs 16120-2
SCHEDULE 2
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onto the conductors. Tape all splices.
3.8 Splices on conductors #8AWG and larger shall be made with pressure
connectors and terminal lugs. Where exposed to water, damp air, or
moisture splices shall be watertight.
3.9 Splices shall be not be made in feeders; splices to branch circuits
shall not be made within panelboards or similar enclosures.
3.10 When combining homeruns, the Contractor shall derate all conductors
per code requirements including reducing the capacity, using high
temperature insulation where necessary. Conduit sizes shall be
adjusted by the Contractor as suitable for the conductor revisions.
3.11 The Contractor shall provide a code-sized insulated ground
conductor, in addition to the feeder conductors indicated on the
drawings, where non-metallic conduit is used.
3.12 Conductors shall be color-coded as follows:
208Y/120V Phase 480Y/277V
Black A Brown
Red B Orange
Blue C Yellow
White Neutral Gray
Green Ground Green
3.13 Where tape or labels are used for color-coding, apply material at each
end of the conductor, splices, boxes, and all terminations.
END OF SECTION
Section 16120 Wire and Cable
Master Specs 16120-3
SCHEDULE 2
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Section 16130 BOXES
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the
codes, ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and any
participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the contractor.
1.2.3. All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by
the contractor.
Section 16130 Boxes
Master Specs 16130-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Box materials
.2 Accessory materials
PART 2 PRODUCTS
2.1 Boxes shall be flat rolled steel sized as required by code and as
suitable for the application. Boxes shall have mounting holes and
knock-outs in sides and back. Grounding shall be accommodated by
means of threaded holes.
2.2 Provide accessories, extension rings, gaskets, supports, trim
rings, hangers, straps, and other material as necessary for a
complete code complying installation.
2.3 Boxes installed outdoors shall be weathertight, dusttight, and
corrosion resistant. Provide gaskets and conduit hubs.
2.4 Provide Type FS boxes for surface mounted applications.
2.5 Provide additional support for boxes as necessary when mounting
fixtures or devices from boxes.
2.6 Provide ganged boxes for multiple switches and devices; provide
barriers for boxes served by separate voltages.
2.7 Acceptable manufacturers shall be Appleton, Crouse Hinds, Steel
City, or Raco.
PART 3 EXECUTION
3.1 All box installation method shall comply with the latest enforced
edition of the National Electrical Code and the authority having
jurisdiction.
3.2 Install all boxes plumb, square, and securely fastened to
structure.
3.3 Boxes shall be placed such that they are readily accessible.
3.4 Cover or plug all unused openings in boxes where knockout blanks
have been removed.
3.5 Install boxes such that they are flush with the finished surface
of the wall or surface within which they are mounted.
3.6 Install all boxes at mounting heights per architectural,
electrical code, and ADA requirements.
3.7 Boxes shall not be mounted back to back in walls.
3.8 Boxes in sealed environments shall be sealed with an approved
sealant suitable for the application.
3.9 Boxes penetrating fire rated walls or surfaces shall be sealed
with a Fire Marshall approved fire sealant to maintain the fire
rating of the wall or surface.
Section 16130 Boxes
Master Specs 16130-2
SCHEDULE 2
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3.10 Boxes located above inaccessible ceilings shall be made accessible
by means of access doors or hatches in the ceiling.
3.11 Install all boxes per manufacturer's recommendations and
requirements.
3.12 Provide for ground continuity at all boxes.
END OF SECTION
Section 16130 Boxes
Master Specs 16130-3
SCHEDULE 2
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PEREGRINE SYSTEMS CORPORATE CENTER
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Section 16140 WIRING DEVICES AND CONNECTORS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and
the contract for this work and apply to this section as fully
as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations
prior to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-1
SCHEDULE 2
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<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Receptacles
.2 Switches
.3 Wiring devices
.4 Accessories
PART 2 PRODUCTS
2.1 RECEPTACLES
2.1.1 Wiring devices shall be UL listed and suitable for the application.
2.1.2 Devices shall be color coded per the system to which they are
connected: normal power shall be white; emergency power shall
be red; dedicated outlets shall be grey; unless otherwise noted
on the construction documents.
2.1.3 Receptacles shall be heavy duty with the screw type, side wired,
120V, 20A, duplex type, unless noted otherwise on the contraction
documents. Verify NEMA configuration with construction documents.
2.1.4 Weathertight receptacles shall be gasketed in cast metal boxes
with cast metal coverplates with spring-loaded hinged covers over
each opening.
2.1.5 Ground fault interrupting receptacles shall be duplex type and
capable of detecting a leaking current of 5mA.
2.2 TOGGLE SWITCHES
2.2.1 Toggle wall switches shall be quiet AC type, rated 120/277V, 20A
and UL listed for the application.
2.2.2 Switches shall be single pole, double throw with white finish
unless noted otherwise.
2.3 COVERPLATES
2.3.1 Single, combination coverplates shall be used at all ganged device
locations.
2.3.2 Provide white plastic coverplates with white screws in all office
areas. Provide stainless steel coverplates with matching screws in
laboratory, process, manufacturing, and clean room areas or as
noted on the construction documents.
2.3.3 Provide labeled plates as noted on the construction documents.
2.3.4 Provide labeled plates at all receptacles with circuit and panel
designation. Labeling method shall utilize clear adhesive printed
labels with black bold letters.
2.4 ACCEPTABLE MANUFACTURERS
2.4.1 Acceptable manufacturers shall be Arrow Hart, Hubbell, Leviton, or
Pass and Seymour.
Section 16140 Wiring Devices and Connectors
Master Specs 16140-2
SCHEDULE 2
-37-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of wiring devices shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all devices in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate device mounting height, location and type with
architectural and interior drawings. Coordinate with other
trades to identify conflicts with device locations and notify
the Engineer of any conflicts.
3.4 Install devices only in clean boxes.
3.5 Install all trim rings and coverplates in coordination with other
trades and their installation schedules.
3.6 Tighten and inspect all connections prior to covering devices and
reconnect or repair wiring as necessary.
3.7 Test all devices for voltage level, continuity, ground fault, and
short circuits.
3.8 Install all devices plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to covering device.
3.10 Demonstrate the proper operation of all ground fault interrupting
devices.
END OF SECTION
Section 16140 Wiring Devices and Connectors
Master Specs 16140-3
SCHEDULE 2
-38-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16170 CIRCUIT AND MOTOR DISCONNECTS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities and
any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-1
SCHEDULE 2
-39-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage and current ratings
.2 NEMA enclosure type
.3 Horsepower rand fault current rating
.4 Dimensions
.5 Fuse type and class
PART 2 PRODUCTS
2.1 Disconnects shall NEMA 1, indoor type, or rated for the location
in which they are installed as noted on the construction documents.
2.2 Disconnects shall be UL listed and suitable for the application.
2.3 Exterior disconnects shall be raintight, dusttight, have raintight
hubs, and be rated NEMA 3R.
2.4 Disconnects shall be heavy duty type, rated 600V with current
capacity as noted on the construction documents. Verify NEMA
configuration with construction documents.
2.5 Disconnects shall have hinged, lockable, dead-front doors wit
permanently marked ON/OFF indicators. Enclosures shall be baked
enamel factory painted steel with conduit knockouts.
2.6 Disconnects shall be operated by a handle accessible from the
exterior of the enclosure. Handles shall have provision to be
padlocked in the OFF position.
2.7 All current carrying parts shall be high conductivity copper
designed to carry rated load without damage from heat and plated
to resist corrosion.
2.8 Switch mechanism shall be a quick-make, quick-break type such that
the operation of the contact is restrained by the handle during the
closing or opening operation.
2.9 Switches shall have a minimum fault current rating of 200,000A RMS.
All switches shall be fused unless specifically noted otherwise.
2.10 The disconnect door cover shall have an interlocking mechanism to
prevent opening the cover when the switch is in the ON position.
2.11 Fuses serving motor loads shall be Class L and Class RK1, 250V and
600V, time delay, dual element unless noted otherwise on the
construction documents.
2.12 Fuses serving non-motor loads shall be Class L and Class RK1, 250V
and 600V, fast acting, dual element unless noted otherwise on the
construction documents.
2.13 Provide built-in fuse pullers.
2.14 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. and Westinghouse. Fuses shall be Gould-Shawmut
or Bussman.
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-2
SCHEDULE 2
-40-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
PART 3 EXECUTION
3.1 Installation method of disconnects shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all disconnects in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate disconnect mounting height, location and type with
architectural and interior drawings. Coordinate with other trades
to identify conflicts with device locations and notify the
Engineer of any conflicts. Mount switches 42" above finished
floor unless noted otherwise.
3.4 Provide suitable galvanized metal strut framework where no wall or
structure is available for the mounting of vibrating equipment.
3.5 Provide flexible conduit connections for disconnects mounted to
strut framework, motors, or vibrating equipment.
3.6 Tighten and inspect all connections and reconnect or repair wiring
as necessary.
3.7 Test all disconnects for voltage level, continuity, ground fault,
and short circuits. Check switch mechanism operation under no load
conditions prior to operating under load.
3.8 Install all disconnects plumb and square to structure and adjacent
surfaces.
3.9 Provide and install all fuses sized per the equipment
manufacturer's recommendation.
END OF SECTION
Section 16170 Circuit and Motor Disconnects
Master Specs 16170-3
SCHEDULE 2
-41-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16420 SWITCHBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the
contract for this work and apply to this section as fully as if
repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having
jurisdiction, including the regulations of serving utilities
and any participating government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other
regulations which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards.
Any conflicts or changes required to the contract documents in
order to obtain compliance with applicable codes shall be brought
to the immediate attention of the Owner's Representative by the
Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the U.L. label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify
all dimensions and clearance prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior
to installation. The actual dimensions, weights, clearance
requirements and installation requirements shall be verified and
coordinated by the contractor.
Section 16420 Switchboards
Master Specs 16420-1
SCHEDULE 2
-42-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Switchboards
.2 Overcurrent protection
.3 Instrumentation
.4 Dimensions, weights, ratings, and layouts
.5 Device settings and trip ratings
PART 2 PRODUCTS
2.1 Switchboards shall be factory assembled, dead-front, metal
enclosed, self-supporting floor standing sections as noted in the
construction documents.
2.2 Vertical sections shall contain overcurrent protective devices
including circuit breakers and fuses and shall be nominally
90" in height.
2.3 Switchboard finish shall be baked enamel factory paint of
manufacturer's standard color.
2.4 Provide front accessibility for wireways on each side of
overcurrent protective devices for entire height of section.
Provide welded steel framework with screw covers removable from
the front; covers may be hinged.
2.5 All bussing shall be silver-coated copper with ratings as
indicated in the construction documents.
2.6 Switchboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Switchboards shall be equipped with lifting eyes.
2.8 Switchboards shall be suitable for the environment in which they
are located and shall be NEMA 1, indoor, unless noted otherwise on
the construction documents.
2.9 Main circuit breakers shall be provided and shall be solid state
trip with ratings as noted. Distribution circuit breakers shall be
molded case type. All circuit breakers shall be bolt-on type.
2.10 Cross bussing shall be fully rated for the length of the
switchboard.
2.11 Instrumentation shall be provided where noted. Utility company
metering shall be provided in accordance with the serving utility
company requirements.
2.12 The switchgear manufacturer shall submit a coordination and short
circuit study for the entire system provided including long time,
short time, instantaneous, and ground fault.
2.13 Provide permanently adhered bakelite labels indicating the
identification of each device on the switchboard adjacent to the
device and visible on the enclosure exterior.
2.14 Provide a ground bus in each switchboard section with connecting
ground bonds between sections.
Section 16420 Switchboards
Master Specs 16420-2
SCHEDULE 2
-43-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square
D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of switchboards shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all switchboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate switchboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with switchboard locations and notify the Engineer of any conflicts.
3.4 Coordinate switchboard size with concrete housekeeping pads.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Ground fault protective devices shall be testing by an approved
third party testing agency and a written report submitted with the
operation manual for review.
3.7 Test all switchboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all switchboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing switchboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all switchboard interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation. Set ground fault
protective device as per the written report recommendations.
END OF SECTION
Section 16420 Switchboards
Master Specs 16420-3
SCHEDULE 2
-44-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16460 TRANSFORMERS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and contract for
this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electric Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with the applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16460 Transformers
Master Specs 16460-1
SCHEDULE 2
-45-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Voltage, KVA, impedance, frequency, taps, and efficiency
.2 Temperature rating above ambient
.3 Regulation and sound levels
.4 Mounting details and vibration isolation
.5 Nameplate data
PART 2 PRODUCTS
2.1 Transformers shall be general purpose, ventilated dry type, factory
assembled, dead-front, metal enclosed, self-supporting floor standing
as noted in the construction documents.
2.2 Transformers shall be 480V-208Y/120V 3 amps 4W(primary-secondary)
voltage rated, unless noted otherwise.
2.3 Transformers shall be rated for 80DEG. C rise above an ambient
temperature of 40DEG C.
2.4 Coils shall be continuously wound non-hygroscopic type with
thermosetting varnish. Windings shall be aluminum or copper.
2.5 Taps shall be provided at primary windings with (6)2 1/2 % taps,
three above and three below.
2.6 Intergral vibration isolators shall be provided between the core and
coil assembly and the transformer enclosure in addition to the
vibration isolation located between the enclosure and the floor.
2.7 Grounding shall be provided by means of a flexible grounding strap.
2.8 Transformers shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Transformers shall have lifting lugs and be enclosed in a heavy
gauge, sheet steel housing with baked enamel finish. The enclosure
shall be ventilated.
2.10 Transformers located in exterior areas shall be NEMA 3R, with drip
shield and corrosion resistant finish.
2.11 Acceptable manufacturers shall be General Electric, Cutler-Hammer,
Siemens, Square D. Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of transformers shall comply with the latest
enforced edition of the National Electrical Code and the authority
having jurisdiction.
3.2 Install all transformers in accordance with the manufacturer's
recommendations and requirements.
Section 16460 Transformers
Master Specs 16460-2
SCHEDULE 2
-46-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
3.3 Coordinate transformer location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with transformer locations and notify the Engineer of any conflicts.
3.4 Coordinate transformer size with concrete housekeeping pads,
structural frames, and mounting hardware.
3.5 Brace transformers per California Code of Regulations, Title 24,
Seismic Zone 4 requirements.
3.6 Provide rubber vibration isolation between transformer and floor,
structure, or any fixed surface (including wireways).
3.7 Test all transformers for voltage level at primary and secondary
windings.
3.8 Install all transformers plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing transformer.
3.10 Install all conduit connections to transformer with liquid tight
flexible conduit.
3.11 Clean all transformer interiors and exteriors prior to handing over
to Owner. Touch up scratched paint and finishes as necessary.
3.12 Tighten and test all connections prior to energizing the transformer.
END OF SECTION
Section 16460 Transformers
Master Specs 16460-3
SCHEDULE 2
-47-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
Section 16470 PANELBOARDS
PART 1 GENERAL PROVISIONS
1.1 RELATED DOCUMENTS
1.1.1 The general conditions, Division 1, and Electrical General
Requirements (Section 16050) are part of this section and the contract
for this work and apply to this section as fully as if repeated herein.
1.2 QUALITY ASSURANCE AND STANDARDS
1.2.1 All work, material or equipment shall comply with the codes,
ordinances and regulations of the local government having jurisdiction,
including the regulations of serving utilities and any participating
government agencies having jurisdiction.
1.2.2 All electrical work shall comply with the latest edition under
enforcement of the following codes and standards or other regulations
which may apply:
.1 American Disabilities Act
.2 American National Standards Institute
.3 American Society for Testing and Materials
.4 Institute of Cable Engineers Association
.5 Institute of Electrical and Electronic Engineers
.6 Local Code Enforcement Agency Requirements
.7 National Electrical Code
.8 National Electrical Contractor's Association
.9 National Electrical Manufacturer's Association
.10 National Electrical Testing Association
.11 National Fire Protection Association
.12 Underwriter's Laboratories, Inc.
.13 Uniform Building Code
No requirement of these drawings and specifications shall be
construed to void any of the provisions of the above standards. Any
conflicts or changes required to the contract documents in order to
obtain compliance with applicable codes shall be brought to the
immediate attention of the Owner's Representative by the Contractor.
1.2.3 All items shall be listed by Underwriter's Laboratories and shall
bear the UL label.
1.2.4 Equipment shown to scale is approximate only and based upon a
general class of equipment specified. The Contractor shall verify all
dimensions and clearances prior to commencement of work.
1.2.5 The Contractor shall verify all points of connection with the
manufacturer's requirements, instructions, or recommendations prior to
installation. The actual dimensions, weights, clearance requirements
and installation requirements shall be verified and coordinated by the
contractor.
Section 16470 Panelboards
Master Specs 16470-1
SCHEDULE 2
-48-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
1.3 SUBMITTALS
1.3.1 Submit shop drawings per Section 16050 for review including the
following:
.1 Panelboards
.2 Overcurrent protection, bus capacity, main ratings, AIC rating
.3 Mounting, enclosure, dimensions
.4 Dimensions, voltage, ratings and phases
.5 Device settings, trip ratings, and layout
PART 2 PRODUCTS
2.1 Panelboards shall be factory assembled, dead-front, metal enclosed,
wall mounted type as noted in the construction documents.
2.2 Panelboards shall be rated 600VAC and shall not exceed 1200A current
capacity.
2.3 Panelboard finish shall be baked enamel factory paint of manufacturer's
standard color.
2.4 Provide front accessibility for wireways on each side of overcurrent
protective devices for entire height of panelboard.
2.5 All bussing shall be silver-plated copper with ratings as indicated in
the construction documents.
2.6 Panelboard, bussing, and devices shall be rated for the minimum
available fault current as indicated on the construction documents.
2.7 Enclosures shall be galvanized sheet steel cabinet type with hinged
and lockable doors, dead front, and permanently adhered identification
labels on the front.
2.8 Switchboards shall be suitable for the environment in which they are
located and shall be NEMA 1, indoor, unless noted otherwise on the
construction documents.
2.9 Circuit breakers shall be molded case type; all circuit breakers shall
be bolt-on type.
2.10 Main lugs shall be anti-turn solderless pressure type for use with
copper conductors.
2.11 Instrumentation shall be provided where noted.
2.12 Enclosures, panel interiors, and devices shall be of one manufacture.
2.13 Provide a typewritten panel schedule located in a sleeve on the
interior of the panelboard door indicating loads and areas connected
to each circuit.
2.14 Provide a ground bus in each panelboard.
2.15 Acceptable manufacturers shall be General Electric, Siemens, Square D,
Cutler Hammer.
PART 3 EXECUTION
3.1 Installation method of panelboards shall comply with the latest
enforced edition of the
Section 16470 Panelboards
Master Specs 16470-2
SCHEDULE 2
-49-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
National Electrical Code and the authority having jurisdiction.
3.2 Install all panelboards in accordance with the manufacturer's
recommendations and requirements.
3.3 Coordinate panelboard location and size with architectural and
interior drawings. Coordinate with other trades to identify conflicts
with panelboard locations and notify the Engineer of any conflicts.
3.4 Fasten panelboards securely to structural wall or surface to Seismic
Zone 4 requirements. Panelboards shall be mounted no higher than 6'0"
to the highest device from finished floor and no lower than 24" above
finished floor. Provide panel skirts where noted.
3.5 Check all connections, phase rotation, ground resistance and
insulation resistance levels.
3.6 Complete the panel schedule card and place in the sleeve on the
interior of the panelboard door.
3.7 Test all panelboards and overcurrent protection devices for voltage
level, continuity, ground fault, and short circuits.
3.8 Install all panelboards plumb and square to structure and adjacent
surfaces.
3.9 Connect and inspect all ground bonds prior to energizing panelboard.
3.10 Demonstrate the proper operation of all ground fault protective
devices.
3.11 Clean all panelboard interiors and exteriors prior to handing over to
Owner. Touch up scratched paint and finishes as necessary.
3.12 Adjust and set all devices for proper operation.
END OF SECTION
Section 16470 Panelboards
Master Specs 16470-3
SCHEDULE 2
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
(Peregrine Systems)
<PAGE>
SCHEDULE 3
SUMMARY OF BUILDING WORKING DRAWINGS
BLDG. ONE - PROJECT NO. 4085.10
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
GRADING PERMIT (WO# 980807)
CIVIL
1D GENERAL NOTES, LEGEND, KEY MAP
2D GRADING/UTILITY PLAN
LANDSCAPE
3D IRRIGATION PLAN
4D PLANTING PLAN
5D ENTRY ROAD IRRIGATION PLAN
6D ENTRY ROAD PLANTING PLAN SEPARATE
7D IRRIGATION DETAILS SITE
8D IRRIGATION DETAILS PACKAGE
9D PLANTING DETAILS
10D LANDSCAPE SPECIFICATIONS
11D LANDSCAPE SPECIFICATIONS
12D LANDSCAPE SPECIFICATIONS
13D LANDSCAPE SPECIFICATIONS
14D LANDSCAPE SPECIFICATIONS
15D RIGHT OF WAY IRRIGATION PLAN
16D RIGHT OF WAY PLANTING PLAN
- -------------------------------------------------------
SHELL ONLY BUILDING PERMIT
(PLAN FILE #A108210-98)
TS-1 TITLE SHEET 12-18-98
TS-2 ACCESSIBILITY NOTES 12-18-98
ARCHITECTURAL-ALL "A" DRAWINGS DATED 12-18-98
A1.1 SITE PLAN
A1.2 SITE DETAILS
A2.1 FIRST FLOOR PLAN
A2.2 SECOND FLOOR PLAN
A2.3 THIRD FLOOR PLAN
A2.4 ROOF PLAN
A3.1 EXTERIOR ELEVATIONS
A3.2 EXTERIOR ELEVATIONS
A3.3 BUILDING SECTIONS
A3.4 BUILDING SECTIONS
A3.5 WALL SECTIONS
A3.6 WALL SECTIONS
A3.7 WALL SECTIONS
A4.1 STAIR PLANS AND SECTIONS
A4.2 ENLARGED PLANS, INTERIOR ELEVATIONS
A4.3 ENLARGED DECK PLAN, REFLECTED SOFFIT PLANS
A4.4 SCHEDULES
A5.1 DETAILS
A5.2 DETAILS
A5.3 DETAILS
A5.4 DETAILS
- -------------------------------------------------------
FOUNDATION/FRAMING PERMIT
(PLAN FILE #A107551-98)
STRUCTURAL--ALL "S" DRAWINGS DATED 11-10-98
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S1.2 TYPICAL DETAILS
S1.4 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 SECOND FLOOR FRAMING PLAN
S2.3 THIRD FLOOR FRAMING PLAN
S2.4 ROOF FRAMING PLAN
S3.1 FRAME ELEVATIONS AND STAIR DETAILS
S4.1 SECTIONS AND DETAILS
S4.2 SECTIONS AND DETAILS
S5.2 PANEL ELEVATIONS
S5.3 PANEL DETAILS
- -------------------------------------------------------
MECHANICAL--ALL "M" DRAWINGS DATED 12-18-98
M1 MECHANICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
M2 TITLE 24
M3 MECHANICAL FIRST FLOOR PLAN
M4 MECHANICAL SECOND FLOOR PLAN
M5 MECHANICAL THIRD FLOOR PLAN
M6 MECHANICAL ROOF PLAN
M7 MECHANICAL DETAILS
M8 MECHANICAL DETAILS
M9 MECHANICAL DETAILS
PLUMBING--ALL "P" DRAWINGS DATED 12-18-98
P1 PLUMBING SYMBOLS, ABBREVIATIONS, SCHEDULES
P2 PLUMBING SITE PLAN
P3 PLUMBING FIRST FLOOR PLAN
P4 PLUMBING SECOND FLOOR PLAN
P5 PLUMBING THIRD FLOOR PLAN
P6 PLUMBING ROOF PLAN
P7 PLUMBING DIAGRAMS
P8 PLUMBING DETAILS
ELECTRICAL--ALL "E" DRAWINGS DATED 12-18-98
E1 ELECTRICAL SYMBOLS, ABBREVIATIONS, SCHEDULES
E2 SINGLE LINE DIAGRAM
E3 ELECTRICAL SITE PLAN
E4 ELECTRICAL FIRST FLOOR PLAN
E5 ELECTRICAL SECOND FLOOR PLAN
E6 ELECTRICAL THIRD FLOOR PLAN
E7 ELECTRICAL ROOF PLAN
E8 ELECTRICAL PANEL SCHEDULES
E9 ELECTRICAL PARTIAL PLAN AND DETAILS
E10 TITLE 24 AND ELECTRICAL DETAILS
- -------------------------------------------------------
SCHEDULE 3
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
BLDG. TWO - PROJECT NO. 4085.20
- -------------------------------------------------------
SHEET INDEX
- -------------------------------------------------------
- -------------------------------------------------------
[ILLEGIBLE]
SCHEDULE 3
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT C
PEREGRINE SYSTEMS CORPORATE CENTER
NOTICE OF LEASE TERM DATES
To: ______________________
______________________
______________________
Re: Office Lease dated _________________, ______ between KR-CARMEL
PARTNERS, LLC, a Delaware limited liability company ("LANDLORD"), and
PEREGRINE SYSTEMS, INC., a Delaware corporation ("TENANT") concerning
that certain office building located at ______ Valley Center Drive,
San Diego, California 92130.
Ladies and Gentlemen:
In accordance with the referenced Office Lease (the "LEASE"), we wish to
advise you and/or confirm as follows:
1. The Substantial Completion of the Premises or Floor Group) has
occurred, and the Lease Term shall commence on or has commenced on
_________________ for a term of ______________________ ending on
__________________.
2. Rent commenced to accrue on ____________________, in the amount of
___________________.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to _________________ at
______________________________________________________.
5. The exact number of rentable and usable square feet within the
Premises (or Floor Group) are _________ and ___________ square feet,
respectively.
6. Base Rent, as adjusted based upon the exact number of rentable
square feet within the Premises (or Floor Group), is as
follows: ___________________________________________________.
7. Tenant's Share, as adjusted based upon the exact number of rentable
square feet within the Building(s), is _________%.
EXHIBIT C
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The street address(es) of the Building is _________________ Valley
Center Drive, San Diego, California 92130.
"LANDLORD":
KR-CARMEL PARTNERS, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership
Managing Member
By: Kilroy Realty Corporation,
a Maryland corporation
General Partner
By: _________________________
Name: _______________________
Its: ___________________
By: _________________________
Name: _______________________
Its: ___________________
Agreed to and Accepted as
of _______________, _____.
"TENANT":
_________________________________,
a _______________________________
By: ____________________________
Its: _______________________
By: ____________________________
Its: _______________________
EXHIBIT C
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT D
PEREGRINE SYSTEMS CORPORATE CENTER
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by or otherwise with
respect to the acts or omissions of any other tenants or occupants of the
Project.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors, windows or mailboxes of the Premises without
giving to Landlord prior written notice. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.
Notwithstanding the foregoing, Tenant shall have the right to install its own
security system within the Premises in accordance with the provisions of the
Lease.
2. All doors opening to public corridors (other than Building lobbies
(which shall be kept closed if required by law)) shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Any tenant, its employees, agents or any other persons entering or
leaving any Building at any time when it is considered to be after normal
business hours for such Building will be required to sign the Building
register. Access to the Building may be refused unless the person seeking
access has proper identification or has a previously arranged pass for access
to the Building. Landlord and its agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from any
Building of any person. In case of invasion, mob, riot, public excitement,
or other commotion, Landlord reserves the right to prevent access to the
Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.
Notwithstanding the foregoing, Tenant may adopt its own rules and regulations
with respect to access to any building for which Tenant leases the entire
building.
4. All moving activity into or out of the Building shall be done in
such manner as Landlord reasonably designates; Landlord shall at all times
reasonably cooperate with Tenant with respect to such activities. Service
deliveries (other than messenger services) shall be allowed only during hours
reasonably approved by Landlord. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building. Safes and other heavy objects shall stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord
will not be responsible for loss of or damage to any such safe or property in
any case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be
the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be reasonably
designated by Landlord. Landlord shall at all times reasonably cooperate
with Tenant with respect to such activities.
6. Any requests of Tenant shall be directed to the management office
for the Project or at such office location designated by Landlord.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Project and shall cooperate with Landlord and its agents to prevent such
activities.
EXHIBIT D
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and
no foreign substance of any kind whatsoever shall be thrown therein. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the tenant who, or whose employees or agents,
shall have caused it.
9. Tenant shall not overload the floor of the Premises, Tenant shall
not mark, drive nails or screws, or drill into the partitions, woodwork or
plaster or deface the Premises without Landlord's prior consent other than in
connection with any Alterations for which Landlord's consent is not required.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. Notwithstanding the foregoing, the
foregoing limitation shall not apply to Tenant's cafeteria, workout facility,
showers and lockers which are contemplated to be a part of Tenant's
improvements.
11. Tenant shall not use or keep in or on the Premises, the Building,
or the Project any kerosene, gasoline or other inflammable or combustible
fluid or material other than as expressly permitted in Section 5.2 of the
Lease.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by
Landlord other than supplemental heating and air conditioning approved by
Landlord, which approval shall not be unreasonably withheld.
13. Tenant shall not use, keep or permit to be used or kept, any foul
or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having
business therein.
14. Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals or birds. Bicycles are permitted in
designated areas, and Tenant may install bike racks at appropriate locations
designated by Landlord in the Common Areas to accommodate bicycles.
15. No cooking shall be done or permitted on the Premises, nor shall
the Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used
in the Premises for heating food and brewing coffee, tea, hot chocolate and
similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations. The foregoing rule and restriction shall
not apply to any cafeteria facility of Tenant.
16. Landlord will approve where and how telephone and telegraph wires
are to be introduced to the Premises. Boring or cutting for wires shall be
allowed only at locations reasonably designated by Landlord. The location of
telephone, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
17. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of these Rules and Regulations.
18. Tenant, its employees, contractors and agents (i) shall not loiter
in the entrances or corridors, nor in any way obstruct the sidewalks, lobby,
halls, stairways or elevators, and shall use them only as a means of ingress
and egress for the Premises, and (ii) shall only be permitted to smoke in the
areas of the Project designated for smoking.
EXHIBIT D
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and garbage
in the "Carmel Valley" area of San Diego, California without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse
disposal shall be made only through entry-ways and elevators provided for
such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises if visible from the
exterior of the Building without the prior written consent of Landlord. All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent and/or of a quality, type, design and bulb
color approved by Landlord provided Tenant shall have the right to install
specialty lighting in the Premises not visible from the exterior of the
Building. Tenant shall abide by Landlord's regulations concerning the
opening and closing of window coverings which are attached to the windows in
the Premises, if any, which have a view of any interior portion of the
Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in
the Building shall not be covered or obstructed by Tenant, nor shall any
bottles, parcels or other articles be placed on the windowsills.
25. Any access by Tenant or its agents, employees or contractors to the
roof of any Building shall be subject to coordination with Landlord and
Landlord's reasonable rules and regulations.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to
time be necessary for the management, safety, care and cleanliness of the
Premises, Building, the Common Areas and the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein; provided, however, Landlord shall not change
or make any Rules and Regulations which materially adversely affects Tenant's
rights under this Lease, including without limitation Tenant's use and
enjoyment of the Premises. Landlord shall cooperate with Tenant in connection
with changing or making any Rules and Regulations. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as
a condition of its occupancy of the Premises. Landlord may waive any one or
more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of
such Rules and Regulations in favor of any other tenant, nor prevent Landlord
from thereafter enforcing any such Rules or Regulations against any or all
tenants of the Project.
EXHIBIT D
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT E
PEREGRINE SYSTEMS CORPORATE CENTER
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "LEASE")
made and entered into as of _____________, _____ by and between as Landlord,
and the undersigned as Tenant, for Premises on the ____ floor(s) of the
office building located at ______ Valley Center Drive, San Diego, California
92130, certifies as follows:
1. Attached hereto as EXHIBIT A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained
in EXHIBIT A represent the entire agreement between the parties as to the
Premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on __________________, and the Lease Term
expires on __________________.
4. Base Rent became payable on ________________________.
5. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in EXHIBIT A.
6. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows: __________________________________________________
______________________________.
7. Tenant shall not modify the documents contained in EXHIBIT A
without the prior written consent of the holder of the first deed of trust on
the Premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _______________. The current monthly installment of Base Rent is
$________.
9. All conditions of the Lease to be performed by Landlord necessary
to the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the Security Deposit held by Landlord is
$_________.
11. No rental has been paid more than thirty (30) days in advance and
no security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets
that the undersigned has against Landlord nor have any events occurred that
with the passage of time or the giving of notice, or both, would constitute a
default on the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that
receipt by it of this certificate is a condition of making of such loan or
acquisition of such property.
14. If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
EXHIBIT E
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
to execute and deliver this Estoppel Certificate and that each person signing
on behalf of Tenant is authorized to do so.
Executed at ____________________ on the ____ day of _____________, 19__.
"TENANT": ____________________________________,
a __________________________________
By: _______________________________
Name:__________________________
Title:_________________________
By: _______________________________
Name:__________________________
Title:_________________________
EXHIBIT E
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT F
PEREGRINE SYSTEMS CORPORATE CENTER
CC&R'S
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
KR-CARMEL PARTNERS, LLC
4365 Executive Drive, Suite 850
San Diego, California 92121
Attention: Mr. Steven L. Black
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Space Above For Recorder's Use)
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
EXHIBIT F
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS...........................................................3
ARTICLE 2 MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION...........................6
2.1 Membership.....................................................6
2.2 Voting Rights..................................................6
ARTICLE 3 COVENANT FOR PAYMENT OF ASSESSMENTS TO
ASSOCIATION...........................................................7
3.1 Creation of Lien and Personal Obligation for Assessments.......7
3.2 Purpose of Assessments.........................................7
3.3 Budgets........................................................7
3.4 Parcel Area....................................................8
3.5 Parcels Subject to Assessment; Allocation of Assessments ......8
3.6 Regular Assessments............................................8
3.7 Special Assessments............................................9
3.8 Reimbursement Assessments.....................................10
3.9 Effect of Non-Payment of Assessments; Remedies of
Association...................................................10
3.10 Right of Owner to Audit Books and Records of Association......11
3.11 Subordination of the Lien to First Mortgages..................11
3.12 Estoppel Certificate..........................................11
3.13 Personal Liability of Owner...................................11
ARTICLE 4 ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE ......................11
4.1 Committee Composition.........................................12
4.2 Alternate Members.............................................12
4.3 Appointment...................................................12
4.4 Removal.......................................................12
4.5 Terms of Office...............................................12
4.6 Resignations; Vacancies.......................................12
4.7 Duties and Appeals............................................12
4.8 Meetings......................................................12
4.9 Design Guidelines.............................................12
ARTICLE 5 LAND USE.............................................................13
5.1 Permitted Uses................................................13
5.2 Use Restrictions .............................................13
5.3 Prohibited Operations and Uses ...............................14
-i-
EXHIBIT F
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
5.4 Other Operations and Uses.....................................15
5.5 Laws..........................................................15
ARTICLE 6 REGULATION OF IMPROVEMENTS...........................................16
6.1 Approval of Application Required..............................16
6.2 Filing Fee....................................................16
6.3 Basis for Approval............................................17
6.4 Result of Inaction............................................17
6.5 Proceeding With Work..........................................18
6.6 Completion of Work............................................18
6.7 Estoppel Certificate..........................................18
6.8 Indemnity and Limitation of Liability.........................19
6.9 Limitations on Improvements...................................19
6.10 Certain Improvements Exempt from Application..................21
6.11 Disclosure and Waiver of Conflict of Interest.................21
ARTICLE 7 OPERATIONS GENERALLY.................................................22
7.1 Slope and Drainage Easements..................................22
7.2 Shared Parking; Common Parking Areas..........................22
7.3 Storage and Loading Areas.....................................23
7.4 Inspection....................................................23
7.5 Division of Land..............................................23
7.6 Hazardous Materials...........................................23
7.7 Payment of Taxes, Liens.......................................24
ARTICLE 8 COMMON AREA..........................................................25
8.1 Use...........................................................25
8.2 Modification of Common Area...................................26
8.3 Parking Regulations...........................................26
8.4 Construction and Repair.......................................26
8.5 Interim Improvements and Maintenance of Parcels...............27
8.6 Lighting the Common Area......................................28
ARTICLE 9 EMINENT DOMAIN.......................................................28
ARTICLE 10 MUTUAL RELEASE.......................................................29
ARTICLE 11 EASEMENTS............................................................29
11.1 Grants of Reciprocal Easements over Common Areas..............29
11.2 Utility Easements.............................................30
11.3 Construction and Repair.......................................31
11.4 Obstructions Within Common Area...............................31
11.5 Right of Entry by Declarant, Association, Board...............31
-ii-
EXHIBIT F
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
11.6 Entry by Owners...............................................32
11.7 Reservation by Declarant......................................32
11.8 Termination of Former Declaration and Confirmation of
Termination of 1990 Grant of Easements........................32
ARTICLE 12 BUILDING MAINTENANCE.................................................33
12.1 Owner's Maintenance Obligations...............................33
12.2 Closure.......................................................33
12.3 Repair or Replacement of Damaged Building.....................34
ARTICLE 13 COMMON AREA MAINTENANCE..............................................34
13.1 Association Maintenance.......................................34
13.2 Common Area Insurance.........................................35
13.3 Association's Right to Repair Neglected Parcels...............36
13.4 Property Management Company...................................36
ARTICLE 14 THE ASSOCIATION......................................................36
14.1 Organization..................................................36
14.2 Duties........................................................36
14.3 Powers........................................................37
14.4 Election of New Board of Directors............................38
14.5 Subsequent Board of Directors.................................38
14.6 Personal Liability............................................38
14.7 Annual Membership Meetings....................................38
ARTICLE 15 APPROVAL OF OWNERS AND NOTICES.......................................38
ARTICLE 16 MODIFICATION PROVISION...............................................40
ARTICLE 17 NOT A PUBLIC DEDICATION..............................................40
ARTICLE 18 INJUNCTIVE RELIEF....................................................40
ARTICLE 19 BREACH SHALL NOT PERMIT TERMINATION..................................40
ARTICLE 20 INDEMNITY BY OWNERS..................................................41
20.1 Indemnity.....................................................41
20.2 Building Area Liability Insurance.............................41
ARTICLE 21 SEVERABILITY.........................................................41
ARTICLE 22 ENFORCEMENT AND REMEDIES.............................................41
22.1 Right to Enforce..............................................41
-iii-
EXHIBIT F
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
22.2 Owner's Remedies..............................................42
22.3 Waiver........................................................42
ARTICLE 23 LITIGATION EXPENSES..................................................42
ARTICLE 24 NO ASSIGNMENT OR TRANSFER............................................42
ARTICLE 25 SALE BY OWNER........................................................42
25.1 Notice........................................................42
25.2 Constructive Notice and Acceptance............................43
25.3 Release of Owner..............................................43
25.4 Liability of Transferee.......................................43
ARTICLE 26 TERM OF DECLARATION..................................................43
ARTICLE 27 MISCELLANEOUS........................................................43
27.1 Captions......................................................43
27.2 Gender........................................................44
27.3 Declarant's Reserved Rights...................................44
27.4 Exhibits......................................................44
27.5 Governing Law.................................................44
27.6 Mortgage Protection...........................................44
27.7 Mutuality, Reciprocity; Runs With Land........................44
</TABLE>
EXHIBITS
Exhibit "A" Site Plan of the Center
Exhibit "B" Legal Descriptions of Parcels Comprising the Center
Exhibit "C" Table of Parcel Areas
-iv-
EXHIBIT F
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
AGREEMENT BETWEEN LANDOWNERS
INCLUDING
COVENANTS, CONDITIONS AND RESTRICTIONS
AND GRANTS OF EASEMENTS FOR
CARMEL CENTER
AND INCLUDING TERMINATION
OF BOTH FORMER DECLARATION
AND PRIOR GRANTS OF EASEMENTS
This AGREEMENT BETWEEN LANDOWNERS INCLUDING COVENANTS, CONDITIONS AND
RESTRICTIONS AND GRANTS OF EASEMENTS FOR CARMEL CENTER AND INCLUDING
TERMINATION OF BOTH FORMER DECLARATION AND PRIOR GRANTS OF EASEMENTS is made as
of _________, 1999, with reference to the following:
RECITALS:
A. Declarant (defined in Article 1) owns those certain Parcels (defined in
Article 1) of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels B and E
through K, inclusive (and sometimes referred to herein as the "Carmel Center
Office Campus"). The legal descriptions of such Parcels are also set forth on
EXHIBIT "B".
B. Piazza Partners, L.P., a California limited partnership, owns that
certain Parcel of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcel A. The
legal description of such Parcel is also set forth on EXHIBIT "B".
C. Carmel Valley, LLC, a California limited liability company, owns those
certain Parcels of real property located in the City of San Diego, County of San
Diego, California, identified on EXHIBIT "B" attached hereto as Parcels D and M.
The legal descriptions of such Parcels are also set forth on EXHIBIT "B".
D. Acacia Gasoline and Car Wash of Carmel Valley, LLC, a California limited
liability company, owns that certain Parcel of real property located in the City
of San Diego, County of San Diego, California, identified on EXHIBIT "B"
attached hereto as Parcel L. The legal description of such Parcel is also set
forth on EXHIBIT "B".
E. RFS Financing Partnership, L.P., a Tennessee limited partnership, owns
that certain Parcel of real property located in the City of San Diego, County of
San Diego, California, identified on EXHIBIT "B" attached hereto as Parcel C.
The legal description of such Parcel is also set forth on EXHIBIT "B". A hotel
is currently open for business on Parcel C.
EXHIBIT F
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
F. Previous owners of the properties comprising the Center (defined in
Article 1) intended to develop a retail shopping center and an adjacent
commercial complex, and in furtherance of that objective recorded that certain
Agreement Between Landowners Including Easements With Covenants and Restrictions
Affecting Land for Carmel Valley Commercial, recorded in the Office of the
County Recorder of San Diego County, California, on September 29, 1994, as
Document No. 19940579026 ("FORMER DECLARATION"). Except for the hotel on Parcel
C, in most respects the properties comprising the Center have not been
developed as contemplated under the Former Declaration. The Former Declaration
is not consistent with the manner in which the current Owners intend to develop
the property comprising the undeveloped portions of the Center. Therefore, the
Owners intend to terminate the Former Declaration and to replace the Former
Declaration in its entirety with this Declaration.
G. The Owners intend to develop and operate the Center as a commercial
common interest development described in Section 1351(k) of the California
CIVIL CODE as a "Planned Development". The Center will include certain Common
Area which is shown on the Site Plan attached hereto as Exhibit "A". Portions
of the Common Area are or may be designated as Exclusive Use Areas for the
exclusive use of one or more Occupants. "Common Area" and "Exclusive Use
Area" are defined in Article 1.
H. The Association was formed by certain previous owners of portions of the
property comprising the Center. Substantially concurrently with the recordation
of this Declaration, the membership of the Association will be changed so that
the current Owners of the Parcels become the current members of the Association.
Among other things, the Association will maintain, repair and replace the
portions of the Parcels designated as Common Area, except any Exclusive Use
Areas, and except as otherwise provided in this Declaration. Each Owner or
Occupant will maintain, repair and replace the building(s) and any Exclusive Use
Area(s) on the Owner's or Occupant's Parcel(s).
I. The Owners wish to subject the Center, in accordance with a common plan,
to certain covenants, conditions and restrictions for the benefit of the Owners
and any and all future owners of the Center or of a Parcel in the Center. The
purposes of this Declaration are to ensure proper development and use of the
Center, to protect the Owner of each Parcel against any improper development or
use of surrounding Parcels which might depreciate the value of the Parcel, to
prevent the erection on the Center of structures built of improper design or
materials, to encourage the erection of attractive Improvements, to prevent
haphazard and inharmonious Improvements, to secure and maintain proper setbacks
from streets and adequate free spaces between structures, to provide for
reciprocal parking and reciprocal pedestrian and vehicular access, ingress and
egress upon certain portions of the Center for the benefit of certain of the
Parcels, to enhance and protect the value, desirability and attractiveness of
the entire Center, and in general to provide adequately for a high type and
quality of improvement of the Center in accordance with a uniform plan of
development.
J. The Center is presently comprised of thirteen (13) legal parcels as of
the date of this Declaration, which in this Declaration will be designated and
referred to as Parcel A through Parcel M, inclusive. The Owners intend that the
provisions of this Declaration be restrictive
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
covenants made pursuant to Section 1468 of the California CIVIL CODE, and that
this Declaration will bind and inure to the benefit of the Parcels and the
respective Owners of the Parcels during their respective periods of ownership.
Declarant is processing with the City a new Parcel Map (the "New Parcel Map")
which, upon recordation, shall effect a reparcelization and lot line adjustment
of that portion of the Center owned by Declarant and presently described as Lots
1 through 6 and 9 of Piazza Carmel II, Unit No. 1, of Map No. 13138 into seven
(7) newly configured parcels which will be more particularly described as
Parcels 1 through 7 of the New Parcel Map. Exhibit "B" attached hereto sets
forth the tentative description of these Parcels contained within the New Parcel
Map, and upon recordation of the New Parcel Map, the legal description of the
Parcels contained therein shall supersede those descriptions of their
predecessor Parcels.
NOW, THEREFORE, the Owners hereby certify, declare and establish the
following general plan for the protection and benefit of the Center, and hereby
fix the following protective covenants, conditions and restrictions upon each
and every ownership interest in the Center. Each ownership interest in the
Center shall be hereafter held, used, occupied, leased, sold, encumbered,
conveyed and transferred under and pursuant to such covenants, conditions and
restrictions. Each and all of the covenants, conditions and restrictions set
forth herein are for the purpose of protecting the value and desirability of the
Center and shall bind and inure to the benefit of the Parcels and the respective
Owners of the Parcels during their respective periods of ownership.
ARTICLE 1
DEFINITIONS
In addition to any other terms defined in this Declaration, the following
definitions shall apply unless otherwise indicated:
"APPLICATION" - Any plans, specifications and other documentation required
to be submitted to the Committee pursuant to the provisions of Article 6.
"APPROVED DECLARANT IMPROVEMENTS" - Those Improvements more particularly
described and defined in Section 4.9.
"ARCHITECT" - A Person holding a certificate to practice architecture in
the State of California under authority of Division 3, Chapter 3 of the
BUSINESS & PROFESSIONS CODE of the State of California or any successor
legislation thereto.
"ARTICLES" - The Articles of Incorporation of the Association filed with
the California Secretary of State on September 20, 1994, amended in their
entirety by those Restated Articles of Incorporation of Carmel Center
Association filed with the Secretary of State on ___________, 1999, and as
may be further amended from time to time.
"ASSOCIATION" - Carmel Center Association, a California Nonprofit Mutual
Benefit Corporation.
"BOARD" - The Board of Directors of the Association.
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[Peregrine Systems]
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"BYLAWS" - The Restated Bylaws of the Association dated _____, 1999, as
may be further amended from time to time.
"CARMEL CENTER OFFICE CAMPUS" - Parcels B and E through K, inclusive, which
Declarant intends to improve with multi-story buildings primarily for office use
and the Parking Structure.
"CENTER" - All of the Parcels of real property shown on the Site Plan and
described on EXHIBIT "B".
"CITY" - The City of San Diego, California, a municipal corporation.
"COMMITTEE" - The Architectural and Development Review Committee created
pursuant to Article 4.
"COMMON AREA" - Those portions of the Center shown on Exhibit "A" attached
hereto intended for the common use of Owners and Occupants, and comprised of
parking areas, vehicular and pedestrian access areas and driveways, sidewalks,
Common Landscaping, curbs, loading areas and lighting facilities; EXCEPTING
THEREFROM, HOWEVER, portions of the Common Area which are, or from time to
time may be, designated for the exclusive use of one or more Occupants, and as
such are "Exclusive Use Areas" as defined in this Article 1. The Common Area and
Exclusive Use Areas may be modified from time to time to change the location or
configuration thereof or to reflect the requirements of the City or other
governmental authorities by recordation of a supplement to this Declaration by
Declarant or the Association.
"COMMON EXPENSES" - The actual and estimated expenses of maintaining and
operating the Association, including property management fees, maintaining and
operating the Common Areas and the Improvements located thereon (excluding
Exclusive Use Areas), the cost of utility services for the Common Areas
(excluding Exclusive Use Areas), the cost of insurance maintained by the Board
as described herein or in the Bylaws, exercising the powers and performing the
duties of the Association and the Board under this Declaration, the Articles,
the Bylaws and any rules or regulations adopted by the Association, and
maintaining any reasonable reserves for such purposes as determined by the
Board.
"COMMON LANDSCAPING" - The landscaping and related irrigation system
improvements to be maintained by the Association, the approximate location of
which is shown on Exhibit "A" attached hereto.
"DECLARANT" - KR-CARMEL PARTNERS, LLC, a Delaware limited liability company
("KRCP") and its successor-in-interest (defined below). As used in this
definition, a "SUCCESSOR-IN-INTEREST" of KRCP shall mean a Person which, through
a purchase or acquisition of stock or partnership interest(s), amalgamation,
consolidation, reorganization, dissolution, merger or similar transaction (as
opposed to a purchase, transfer or conveyance of one or more Parcels), becomes
vested with the rights and assumes the obligations of KRCP, as "Declarant",
pursuant to this Declaration. "DECLARANT" shall also mean the transferee from
KRCP or its successor-in-interest of three (3) or more Parcels comprising the
Center, provided KRCP or its
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[Peregrine Systems]
<PAGE>
successor-in-interest assigns to such transferee the rights of "Declarant", and
such transferee assumes the obligations of "Declarant", under this Declaration;
any such assignment and assumption of the rights and obligations of "Declarant"
shall be in writing and signed by both KRCP or its successor-in-interest and by
the transferee in recordable form and shall be recorded by the transferee in the
Office of the County Recorder of San Diego County, California.
"DECLARATION" - This Agreement Between Landowners Including Covenants,
Conditions and Restrictions and Grants of Easements for Carmel Center and
Including Termination of Both Former Declaration and Prior Grants of Easements,
as it may be amended from time to time.
"DESIGN GUIDELINES" - Guidelines, rules and regulations which may be
prepared and issued from time to time (and which may be amended from time to
time) by the Committee, and approved and adopted by the Board for the purpose of
assisting Owners in preparing plans and specifications for Improvements and in
preparing other plans, specifications and other materials (including designs for
signs and the like) which are subject to review by the Committee pursuant to
this Declaration.
"ELIGIBLE OCCUPANT" - An Occupant of an Owner's entire Parcel (or of all of
the usable area within the building(s) on the Parcel): (a) pursuant to a lease
or sublease which, as of the date of the Owner's designation of the Occupant as
an Eligible Occupant, has a remaining term which exceeds five (5) years, not
including periods for which the term thereof may be extended by unexercised
options to extend; and (b) designated as such by the Owner of the Parcel
pursuant to Section 2.1.
"EXCLUSIVE USE AREAS" - Those portions of the Common Area within a Parcel
for the exclusive use of one or more Occupants and either (i) designated as
Exclusive Use Areas on the Site Plan, or (ii) subject to the provisions of
Section 8.2, subsequently designated as Exclusive Use Areas from time to time by
the Board or the Committee in writing.
"IMPROVEMENTS" - Buildings, outbuildings, underground installations, slope
and grade alterations, roads, curbs, gutters, storm drains, utilities,
driveways, parking areas, fences, screening walls and barriers, retaining walls,
stairs, decks, windbreaks, plantings, planted trees and shrubs, sidewalks,
poles, signs, loading areas, docks and all other structures, land development or
landscaping improvements of every type and kind.
"MEMBER" - An Owner entitled to membership in the Association as provided
in this Declaration.
"MORTGAGE" - A deed of trust as well as a mortgage encumbering a Parcel.
"MORTGAGEE" - The beneficiary of a deed of trust as well as the mortgagee
of a mortgage encumbering a Parcel.
"OCCUPANT" - Any Person from time to time entitled by right of ownership or
under any lease, sublease or license to use and occupy any portion of the
building Improvements on any Parcel within the Center.
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[Peregrine Systems]
<PAGE>
"OWNER" - Any Person (including Declarant) who from time to time holds fee
title to any Parcel within the Center.
"PARCEL" - Any separate legal lot or parcel which is a portion of the
Center. Any lot or parcel of real property created after this Declaration is
recorded, whether created by a legal split, subdivision or parcelization of a
Parcel, lot line adjustment, or by combination or merger of one or more Parcels,
shall be included in the definition of Parcel for purposes of this Declaration.
"PARCEL AREA" - The total gross square footage of a Parcel as shown on
EXHIBIT "C".
"PARKING STRUCTURE" - The multi-level parking garage to be constructed by
Declarant, at Declarant's cost and expense, on Parcels E, F and G (Parcels 1, 6,
and 7 of the New Parcel Map). The Parking Structure and the parking spaces
within the Parking Structure are not Common Area and are for the exclusive use
and benefit of the Owners and Occupants of the Carmel Center Office Campus and
their customers, guests and invitees.
"PERSON" - An individual, partnership, association, corporation, limited
liability company, trust, governmental agency, administrative tribunal or any
other form of business or legal entity.
"PROJECT DOCUMENTS" - This Declaration, the exhibits attached hereto, the
Articles and Bylaws, the Sign Plan, and any Design Guidelines and rules and
regulations as may be adopted from time to time by the Board or the Association,
all as amended or supplemented from time to time.
"SIGN PLAN" - The Carmel Center Sign Guidelines and Criteria, dated
February 24, 1999, on file with the Association, as may be amended and
supplemented from time to time.
"SITE PLAN" - The Site Plan attached to this Declaration as EXHIBIT "A".
ARTICLE 2
MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION
2.1 MEMBERSHIP. Every Owner of a Parcel which is subject to assessment by
the Association shall be a Member of the Association. Membership shall be
appurtenant to ownership of any Parcel subject to assessment, and membership
shall not be separated from such ownership or transferred, pledged or alienated
in any way, except that an Owner, upon giving written notice to the Association,
may, at its option, grant to an Eligible Occupant a power coupled with an
interest to act as the Owner's agent in all matters relating to the Association;
any such power shall automatically terminate upon expiration of the Eligible
Occupant's lease or the earlier termination of the Eligible Occupant's tenancy
for any reason. Any attempt to transfer a membership in violation of this
Section shall be void and shall not be reflected in the books and records of the
Association.
2.2 VOTING RIGHTS. The Association shall have one (1) class of voting
membership.
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[Peregrine Systems]
<PAGE>
Each Owner shall be entitled to one (1) vote for each four hundred (400)
square feet of Parcel Area owned which is subject to assessment, rounded down to
the next lowest whole four hundred (400) square feet of Parcel Area subject to
assessment; PROVIDED, HOWEVER, any Owner of a Parcel comprised of less than four
hundred (400) square feet of Parcel Area subject to assessment shall be entitled
to one (1) vote for such Parcel. (For example and illustration only, the Owner
of a Parcel comprised of 16,000 square feet of Parcel Area subject to assessment
would be entitled to 40 votes, and the Owner of a Parcel comprised of 15,950
square feet of Parcel Area subject to assessment would be entitled to 39 votes.)
When more than one (1) Person holds an ownership interest in any Parcel subject
to assessment, all such Persons shall be Members, the vote(s) for such Parcel
shall be exercised as they among themselves determine, and the authorized voter
shall be designated in a writing delivered to the Association signed by a
majority of the co-Owners.
ARTICLE 3
COVENANT FOR PAYMENT OF ASSESSMENTS TO ASSOCIATION
3.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Each Owner,
for each Parcel owned which is subject to assessment hereunder, hereby covenants
and agrees to pay to the Association: (a) annual Regular Assessments described
in Section 3.6 for the periodic maintenance, repair and replacement of the
Common Area (except any Exclusive Use Areas); (b) Special Assessments described
in Section 3.7; (c) Reimbursement Assessments described in Section 3.8; and (d)
such other assessments which the Board is authorized to levy pursuant to this
Declaration or the Bylaws, such assessments to be established and collected as
provided in this Declaration. Assessments, together with interest pursuant to
Section 3.9, reasonable collection costs and attorney's fees, shall (except as
otherwise provided in Section 3.8) be a charge on the Parcel and shall be a
continuing lien upon the Parcel against which each such assessment is made, the
lien to be effective upon recordation of a notice of delinquent assessment. Each
such assessment, together with interest pursuant to Section 3.9, reasonable
collection costs and attorney's fees, shall also be the personal obligation of
the Person who was the Owner of such Parcel at the time the assessment fell due.
If more than one Person is the Owner of a Parcel subject to assessment, the
personal obligation to pay such assessment shall be joint and several. The
personal obligation for delinquent assessments shall not pass to an Owner's
successors in title, however, unless expressly assumed by them, but any lien
established hereunder shall remain a charge against the Parcel except to
bonafide purchasers or encumbrancers for value without notice and further except
as set forth in Section 3.11.
3.2 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall
be used exclusively to pay the Common Expenses (as defined in Article 1),
reimburse the Association for the costs incurred in bringing an Owner into
compliance with the Project Documents and only such other purposes expressly set
forth in this Declaration.
3.3 BUDGETS. At least thirty (30) days prior to the date for commencement
of Regular Assessments pursuant to Section 3.6, and at least thirty (30) days
prior to each calendar year thereafter, the Board shall prepare or cause to be
prepared and distribute to all Members of the
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[Peregrine Systems]
<PAGE>
Association a pro forma operating budget ("Budget") for such first or successive
calendar year setting forth the estimated revenue and expenses on an accrual
basis. The Budget shall include a reasonable allowance for contingencies,
replacements and reserves. The Association shall deliver, together with the
Budget: (a) notice of the Members' right to obtain copies of minutes of Board
meetings, to the extent required under California Civil Code Section 1363; and
(b) the summary of the provisions of California Civil Code Section 1354, as
required by such Section.
3.4 PARCEL AREA. The Parcel Area of each Parcel subject to assessment as of
the date of recordation of this Declaration is indicated on EXHIBIT C. The
Parcel Area of one or more Parcels shall be redetermined and shall be subject to
the approval of Declarant and the Board in the event of: (a) resubdivision of
any Parcel or a merger affecting two or more Parcels, in which event the Parcel
Area shall be redetermined for each resulting Parcel; (b) a lot line or boundary
adjustment affecting two or more Parcels; or (c) any other change in the gross
square footage of any Parcel. The Board shall maintain a current schedule of the
Parcel Area of the Parcels, which shall be available for inspection by any Owner
upon request. From time to time, as deemed appropriate by the Board, Declarant
or the Board shall have the right to execute and record a supplement to this
Declaration, which includes the modified Parcel Areas in an updated EXHIBIT C.
Such supplement need only be executed by the Board and the EXHIBIT C
incorporated in such supplement shall replace the EXHIBIT C hereto or in any
previously recorded supplement.
3.5 PARCELS SUBJECT TO ASSESSMENT; ALLOCATION OF ASSESSMENTS. Except as
provided below, all Parcels within the Center are subject to Regular Assessments
and to Special Assessments. All assessments (except for Reimbursement
Assessments described in Section 3.8) shall be allocated among the Owners in the
proportion the Parcel Area of each Owner's Parcel or Parcels subject to
assessment bears to the total Parcel Area of all Parcels then subject to
assessment under this Declaration. The Parking Structure Parcels shall not be
subject to any assessments levied by the Association or otherwise under this
Declaration. Parcels L and M shall not be assessed for any expenses of
maintenance and repair of the Common Parking Area.
3.6 REGULAR ASSESSMENTS.
(a) PURPOSE. Regular Assessments shall be used to defray the
Common Expenses.
(b) DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES. The
Regular Assessments shall commence for Parcel C upon recordation of this
Declaration. The Regular Assessments shall commence for each Parcel other than
Parcel C on the date on which construction of any building Improvements on the
Parcel have been substantially completed, and the Regular Assessments for all
Parcels then subject to assessment shall be recalculated, on a going forward
basis, as Parcels are added to the assessment roll. The first Regular Assessment
for a Parcel shall be adjusted according to the number of months and any
partial month (prorated on the basis of a 30-day month) remaining in the
calendar year. The Board shall fix the amount of the Regular Assessment against
each Parcel at least thirty (30) days in advance of each Regular Assessment
period. Written notice of the Regular Assessment shall be sent to every Owner of
a Parcel subject thereto.
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[Peregrine Systems]
<PAGE>
(c) REVISED REGULAR ASSESSMENT. If the Board reasonably
determines that the Regular Assessment established for any year is, or will
become, insufficient to meet all Common Expenses, it may determine the
approximate amount of such deficiency and revise the amount of the Regular
Assessments for each Owner for the balance of such year to reduce or avoid the
deficiency. After the end of each calendar year, the Board shall cause an
accounting to be made of all Common Expenses for such year and the amount of
Regular Assessments paid for such year. If the Regular Assessments collected
exceed the Common Expenses, the Board may refund the excess to Owners, or apply
such excess toward Regular Assessments next becoming due from Owners, in either
event in the same proportion as the Regular Assessments were paid.
(d) PAYMENT OF ASSESSMENTS. Regular Assessments shall be due and
payable by the Owners to the Association in advance in four (4) equal quarterly
installments, on or before the first (1st) day of January, April, July and
October of each calendar year, or in such other manner as the Board shall
designate.
3.7 SPECIAL ASSESSMENTS.
(a) PURPOSE. Special Assessments may be levied by the Board:
(i) If the Board determines that the Regular Assessments
are or will be insufficient to defray actual Common Expenses of the
Association for a given year due to unanticipated delinquencies or cost
increases or unexpected repairs, replacements or reconstruction of any
Improvements in those Common Areas maintained by the Association;
(ii) If funds are otherwise required for any authorized
activity of the Association; or
(iii) For the purpose of defraying, in whole or in part, the
cost of construction of any capital improvements within the Common Area
(excluding Exclusive Use Areas) deemed reasonably necessary by the Board
for the benefit of the Center, provided that any such capital improvement
assessment in excess of five percent (5%) of all Regular Assessments
budgeted for that calendar year shall require approval by the vote or
written consent of Members holding a majority of the voting power of the
Association Members, and the Declarant for so long as Declarant owns any
portion of the Center.
(b) ESTABLISHMENT. The Board shall determine the approximate
amount necessary to defray the expenses set forth in Section 3.7(a), and, if the
amount is approved by the Board, it shall become a Special Assessment; provided,
however, that the Board may, in its discretion, prorate such Special Assessment
over the remaining months of the calendar year or levy the full assessment
immediately against each Parcel subject to assessment. Any Special Assessment in
excess of ten percent (10%) of the budgeted Common Expenses of the Association
for the calendar year in which a Special Assessment is levied shall require
approval by Members holding a majority of the voting power of the Association
Members, and the Declarant for so long as Declarant owns any portion of the
Center.
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[Peregrine Systems]
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(c) PAYMENT OF ASSESSMENTS. Special Assessments shall be due and
payable within thirty (30) days after a Member receives written notice from the
Board specifying the amount of the Special Assessment, unless the Board
specifies in such notice a later date for payment.
3.8 REIMBURSEMENT ASSESSMENTS. The Association may also impose a
Reimbursement Assessment against any Owner to reimburse the Association for
costs incurred in bringing the Owner and the Owner's Parcel into compliance with
the provisions of this Declaration, the Articles, the Bylaws and the rules and
regulations of the Association, which assessment may be imposed upon the vote of
the Board after notice and an opportunity for a hearing which satisfy the
requirements of Section 7341 of the California CORPORATIONS CODE, as set forth
in the Bylaws; PROVIDED, HOWEVER, except to the extent such Reimbursement
Assessment is to reimburse the Association for the cost of (i) repairing damage
to Common Areas for which the Owner or its Occupants, guests or invitees are
responsible, or (ii) collecting assessments, any Reimbursement Assessment shall
not constitute a lien on the Owner's Parcel.
3.9 EFFECT OF NON-PAYMENT OF ASSESSMENTS; REMEDIES OF ASSOCIATION. Any
assessment made in accordance with this Declaration shall be a debt of the Owner
of a Parcel from the time the assessment is due. Any assessment not paid within
thirty (30) days after the due date shall bear interest from thirty (30) days
following the due date at the rate of the greater of (a) twelve percent (12%)
per annum, or (b) two percent (2%) per annum over the Prime Rate published in
the California Edition of the Wall Street Journal most recently before the due
date. The Association may bring an action at law against the Owner personally
obligated to pay the assessment, and in addition thereto, or in lieu thereof,
may foreclose the lien against the Parcel. Any assessment not paid within
fifteen (15) days after the due date shall be delinquent. Except as otherwise
provided in Section 3.8, the amount of any such delinquent assessment plus costs
of collection, late charges, penalties, interest and attorneys' fees, shall be
and become a lien upon the Parcel when the Association causes to be recorded in
the Office of the County Recorder of San Diego County, California, a Notice of
Delinquent Assessment, which shall state the amount of such delinquent
assessment and such other charges thereon as may be authorized by this
Declaration, a description of the Parcel against which the same has been
assessed, the name of the record owner of the Parcel and, in order for the lien
to be foreclosed by non-judicial foreclosure, the name and address of the
trustee authorized by the Association to enforce the lien by sale. The Notice of
Delinquent Assessment shall be signed by the person designated by the
Association for that purpose or, if no one is designated, by the President of
the Association. Upon payment of the delinquent assessment and charges in
connection with which the Notice of Delinquent Assessment has been recorded, or
other satisfaction thereof, the Association shall cause to be recorded a further
notice stating the satisfaction and the release of the lien thereof. Such lien
may be enforced by sale by the Association after failure of the Owner to pay
such assessment in accordance with its terms, such sale to be conducted in
accordance with the provisions of Section 2924, Section 2924b and Section 2924c
of the California CIVIL CODE applicable to the exercise of powers of sale in
mortgages or in any other manner permitted by law. The Association shall have
the power to purchase the Parcel at the foreclosure sale and to hold, lease,
mortgage and convey the same. Suit to recover a money judgment for unpaid
assessments, interest and attorney's fees may be commenced and maintained
without foreclosing or waiving the lien
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[Peregrine Systems]
<PAGE>
securing the same. Any sale or transfer of any Parcel pursuant to this Section
3.9 shall not disturb the possession, or otherwise diminish the rights or
enlarge the obligations, of any Occupant under any then-existing lease.
3.10 RIGHT OF OWNER TO AUDIT BOOKS AND RECORDS OF ASSOCIATION. Each year,
each Owner shall have the right, exercisable by delivering ten (10) days advance
written notice to the Chief Financial Officer of the Association, to have
conducted, at such Owner's cost and expense, one (1) audit of the books and
records of the Association. Any such audit may encompass any or all of the three
(3) previous years of the operation of the Association; provided, however, any
Owner shall be entitled to audit any given year only once. If any such audit
discloses any error in the determination of the proportionate share of Regular
Assessments of any Owner or in the composition of any cost comprising the
Regular Assessments: (a) an appropriate adjustment shall be made promptly
between the Owner(s) and the Association to correct the error; and (b) if the
error is greater than ten percent (10%) of the auditing Owner's actual
proportionate share of the Regular Assessments, then the Association shall
reimburse the auditing Owner for the reasonable auditor's fees and costs
incurred by the auditing Owner in having the audit performed.
3.11 SUBORDINATION OF THE LIEN TO FIRST MORTGAGES. The lien of any
assessment levied upon a Parcel pursuant to this Declaration shall be
subordinate to the lien of any first Mortgage upon such Parcel, and the sale or
transfer of such Parcel pursuant to judicial or nonjudicial foreclosure of a
first Mortgage shall extinguish the lien of such assessments as to payments
which became due prior to such sale or transfer. No sale or transfer shall
relieve such Parcel from lien rights for any assessments thereafter becoming
due. Where the Mortgagee of a first Mortgage or other purchaser of a Parcel
obtains title to the same as a result of foreclosure, such acquirer of title,
its successors and assigns, shall not be liable for the share of assessments
chargeable to such Parcel which became due prior to the acquisition of title to
such Parcel by such acquirer.
3.12 ESTOPPEL CERTIFICATE. The Association shall furnish or cause an
appropriate officer to furnish, within ten (10) days of a written demand by any
person, a certificate signed by an officer of the Association setting forth
whether the assessments on a specified Parcel have been paid. A properly signed
certificate of the Association with respect to the status of assessments on a
Parcel is binding upon the Association as of the date of its issuance.
3.13 PERSONAL LIABILITY OF OWNER. No Owner may exempt itself from personal
liability for assessments, nor any part thereof, levied by the Association, nor
release the Parcel it owns from the liens and charges of assessments pursuant to
this Declaration, by waiving the use and enjoyment of the Common Area and
facilities thereof, or by abandonment of its Parcel(s).
ARTICLE 4
ARCHITECTURAL AND DEVELOPMENT REVIEW COMMITTEE
Declarant hereby creates an architectural and development review Committee,
which shall be organized as follows:
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[Peregrine Systems]
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4.1 COMMITTEE COMPOSITION. The Committee shall consist of three (3)
individuals, at least one (1) of which shall not be an employee, contractor or
other affiliate of Declarant.
4.2 ALTERNATE MEMBERS. There shall also be two (2) alternate members,
either of whom may be designated by the Committee to act as a substitute for any
member of the Committee in the event of the member's unavailability or
disability.
4.3 APPOINTMENT. The Board shall have the right to appoint all members and
alternate members of the Committee.
4.4 REMOVAL. The right to remove any member or alternate member of the
Committee shall be and is hereby vested solely in the Board.
4.5 TERMS OF OFFICE. The term of all Committee members appointed shall be
one (1) year. Any new member appointed to replace a member who has resigned or
has been removed shall serve such member's unexpired term. Members whose terms
have expired may be reappointed.
4.6 RESIGNATIONS; VACANCIES. Any member of the Committee may, at any time,
resign from the Committee upon written notice to the Board.
4.7 DUTIES AND APPEALS. It shall be the duty of the Committee to perform
the functions required of it pursuant to this Declaration; to consider and
act upon each Application which is submitted to it pursuant to the terms of
this Declaration; to enforce the Design Guidelines if any are adopted; and to
perform all other duties delegated to it by the Board or imposed upon it by
this Declaration. Any Owner may appeal any decision of the Committee to the
Board.
4.8 MEETINGS. The Committee shall meet as often as it, in its sole,
absolute and unfettered discretion, considers necessary or proper to perform
properly its duties and obligations pursuant to this Declaration. The vote,
written consent or written approval of any two (2) members shall constitute an
act by the Committee, unless the unanimous decision of its members is otherwise
required pursuant to this Declaration. The Committee shall keep written records
of all actions the Committee takes.
4.9 DESIGN GUIDELINES. The Committee may, from time to time, and in its
sole, absolute and unfettered discretion, adopt Design Guidelines and amend
the Sign Plan and any Design Guidelines adopted by the Committee, provided,
however, that no such amendment shall apply to any previously approved (or
deemed approved) Improvement within the Center. The Design Guidelines may
include (a) standards and procedures for Committee review; and (b) guidelines
for Improvements, which may include, but not necessarily be limited to,
guidelines for the architectural design of Improvements, site plans, floor
plans and exterior elevations, the size and location of buildings (including
setback requirements), the height of buildings (including architectural
features), the location and pitch of slopes, requirements for grading,
excavation and drainage, the location and capacity of facilities for
utilities, parking areas, loading areas and docks, trash areas (including
compactor pads), Exclusive Use Areas, landscaping designs and
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irrigation plans, color schemes, signs, exterior lighting, and finishes and
materials for use in the Center. Notwithstanding the foregoing, and
notwithstanding anything in the Design Guidelines to the contrary (or which may
be interpreted as being to the contrary), the following are exempt from the
Design Guidelines: (i) Improvements existing or under construction on the date
of this Declaration; and (ii) Improvements for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration including, without limitation, the five office buildings and the
Parking Structure comprising the Carmel Center Office Campus and related
Improvements (herein the "Approved Declarant Improvements") approved by the City
for construction upon Parcel B and Parcels E, F, G, H, I, J and K pursuant to
Carmel Valley Planned District and Coastal Development Permit No. 98-0227
(Amendment to Carmel Valley Planned District, Coastal Development and
Conditional Use Permit No. 93-0451) for Kilroy Carmel Center (the "KILROY CARMEL
CENTER PERMIT").
4.10 EXERCISE OF RIGHTS. Exercise of the Board's right of appointment and
removal, as set forth in this Declaration, shall be evidenced by the Board's
recording among the Committee's regular records a declaration identifying each
new Committee member appointed and each member replaced or removed from the
Committee.
ARTICLE 5
LAND USE
5.1 PERMITTED USES. The following Parcels and the Improvements constructed
or to be constructed thereon may be used for those purposes set forth below
provided such uses comply with all Laws as defined in Section 5.5 in effect as
of the date of this Declaration and the provisions of this Declaration and the
other Project Documents:
(a) With respect to Parcels B and Parcels E through K, inclusive,
those uses set forth in the Kilroy Carmel Center Permit.
(b) With respect to Parcel C, hotel and other related uses as set
forth in North City West Planned District Development Plan Permit No. 88-0941
("PERMIT NO. 88-0941").
(c) With respect to Parcel A, restaurant use pursuant to Permit No.
88-0941.
(d) With respect to Parcel L, those uses set forth in that certain
Carmel Valley Planned District Development/Conditional Use/Coastal Development
Permit Amendment No. 96-7784 issued to Acacia Gasoline and Car Wash of Carmel
Valley, LLC (the "PARCEL L PERMIT")
5.2 USE RESTRICTIONS. Except as otherwise consented to in writing by the
Declarant (or the Board, after there is no longer a Declarant), which may be
withheld in its sole, absolute and unfettered discretion:
(a) There shall be no children's play areas or day care facilities in
the Center, except that (i) a play area may be located and operated on
Parcel M in connection with any fast-food restaurant located and operated
thereon; (ii) the hotel on Parcel C may
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contain related recreational facilities; and (iii) a day care center and
related play areas may be located within the Carmel Center Office Campus.
(b) There shall be no tavern, night club or bar in the Center, except
that a bar may be located in a restaurant or a hotel.
(c) Neither Parcels B nor D may be used for a fast food or
drive-through restaurant.
(d) No portion of the Center or any Improvements constructed thereon
may be put to any use which is not allowed pursuant to the Laws applicable
to the Center and in effect as of the date of this Declaration.
To be effective, any written consent of Declarant for the purpose of this
Section 5.2 must be (i) signed by Declarant in recordable form; and (ii)
recorded in the Office of the County Recorder of San Diego County. After there
is no longer a Declarant, to be effective, any written consent of the Board for
the purpose of this Section must be (A) evidenced by a duly adopted resolution
of the Board, certified as such in writing by the Secretary or an Assistant
Secretary of the Association in recordable form; and (B) recorded in the Office
of the County Recorder of San Diego County.
5.3 PROHIBITED OPERATIONS AND USES. No use or operation will be made,
conducted or permitted on or with respect to all or any part of any Parcel or
Improvement which is obnoxious to, or out of harmony with the development or
operation of the business conducted on any other Parcel or on other sites in the
general vicinity of the Center. Included among the uses or operations which are
prohibited because of their obvious detrimental effect on the general appearance
of the Parcels and their conflict with the reasonable standards of appearance
and maintenance required by Declarant and the Board, are uses or operations
which produce, or are accompanied by, the following characteristics:
(a) Any public or private nuisance;
(b) Any use which, in the Board's sole and absolute discretion, is
considered to be objectionable as an intrusion into the environment of
sound, odor, visual effect or physical impact or that will disturb or tend
to disturb the other Owners or Occupants or their customers or invitees in
the Center;
(c) Any use that produces intense glare or heat, unless such use is
performed only within an enclosed or screened area in a manner such that
the glare or heat emitted will not be discernible from any property line of
the Parcel;
(d) Any use or operation that results in a discharge or release of
Hazardous Materials (defined in Section 7.7) on or under the surface of a
Parcel or into the surface or ground water of the Center, unless such
discharge or release is in compliance with all applicable Laws relating to
Hazardous Materials;
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(e) Any use or operation that results in air omissions of pollutants
or contaminants unless such emissions are in compliance with all applicable
laws relating to Hazardous Materials;
(f) Any emission of odorous, noxious, caustic or corrosive matter or
gas, whether toxic or non-toxic;
(g) Any unusual litter, dust, dirt or debris, except as generated
during construction of Improvements;
(h) Any unusual firing, explosion or other damaging or dangerous
hazard, including, but not limited to, storage, display or sale of
explosives or fireworks;
(i) Any mobile home or trailer court, labor camp, junk yard, stock
yard, distillation of bones, or raising, storing, slaughtering or disposing
of animals of any kind;
(j) Any drilling for, excavation, refining and/or removal of earth
materials, oil, gas, hydrocarbon substance, water, geothermal steam or any
other subsurface substance of any nature whatsoever, except as part of
normal grading operations in connection with construction of
approved Improvements;
(k) Any dumping, disposal, incineration or reduction of garbage or
reuse of the same, other than handling or reducing such garbage in a
reasonably clean and sanitary manner;
(l) Any auction, public sale (except as may be conducted inside the
hotel Improvements located on Parcel C by clients or patrons of the hotel)
or other auction house operation;
(m) Any display or sale of merchandise or any storage or placement of
merchandise, portable signs or other objects belonging to an Owner or
Occupant of the Center outside the defined exterior walls, roof and
permanent doorways of any building.
(n) Any commercial excavation of building or construction materials;
and
(o) Any smelting of iron, tin, zinc or other metals or ores.
5.4 OTHER OPERATIONS AND USES. Operations and uses which are neither
specifically prohibited nor specifically authorized by this Declaration may
be permitted in a specific case if an Application containing operational
plans and specifications are submitted to and approved in writing by the
Committee. Approval or disapproval of and compatibility with such operational
plans and specifications shall be based upon the effect of such proposal
operations or uses on the balance of the Center and the Owners and Occupants
thereof, but shall be in the sole discretion of the Committee.
5.5 LAWS. As used herein, "Laws" means, collectively, all laws, statutes,
ordinances, rules, regulations, requirements, permits, approvals, or
certificates of occupancy promulgated by
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any federal, state or local governmental entity with jurisdiction over the
Center or any business, use or operation thereon. No Owner or Occupant shall
permit any activity, use or operation on any portion of the Center in violation
of any Law. Each Owner and Occupant shall, upon written notice from Declarant,
or the Board, discontinue any use which is finally determined by any
governmental entity having such jurisdiction to be a violation of any Law. Each
Owner and Occupant shall, immediately upon receipt from any governmental entity
of an alleged violation of any Law, provide a copy of such allegation to the
Board, notwithstanding such party's belief that meritorious defenses to such
allegations exist.
ARTICLE 6
REGULATION OF IMPROVEMENTS
6.1 APPROVAL OF APPLICATION REQUIRED. Subject to Section 6.10, no
Improvement shall be constructed, reconstructed, rebuilt, erected, placed,
altered, used, maintained or permitted to remain in the Center (i) unless the
Improvement and intended use thereof conforms with all applicable Laws; and (ii)
until plans, specifications and other documentation required by the Committee
(or as otherwise specified in any Design Guidelines adopted by the Committee)
for the Improvement and the intended use thereof ("APPLICATION") have been
submitted to and approved in writing by the Committee. Each Application,
including all exhibits and supporting materials and documentation, must be
submitted in duplicate. Such Applications shall be in such form and shall
contain such information as may be required by the Committee, but shall in any
event include the following:
(a) A site development plan of the Parcel showing the nature, grading
scheme, kind, shape, composition, and location of all structures with respect to
the particular Parcel (including proposed front, rear and side setback lines),
and with respect to structures on adjoining Parcels, and the number and location
of all parking spaces and driveways on the Parcel;
(b) A landscaping plan for the particular Parcel;
(c) A plan for the location of signs and lighting; and
(d) A building elevation plan showing dimensions, materials and
exterior color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit.
Material changes to previously approved plans must be similarly
submitted to and approved by the Committee.
6.2 FILING FEE. As a means of defraying its costs and expenses, the
Committee may institute and require that a reasonable filing and review fee
("REVIEW FEE") accompany an Application. The initial schedule of Review Fees is
set forth in the following schedule:
(a) If an Application is prepared by an Architect, the Review Fee
shall be Two Hundred Fifty Dollars ($250) per building per Parcel.
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(b) In all other cases, the Review Fee shall be Five Hundred Dollars
($500) per building per Parcel.
(c) If an Application is resubmitted, the Committee may require an
additional Review Fee in an amount not to exceed One Hundred Dollars ($100)
for each resubmission.
(d) The schedule of Review Fees may be modified from time to time by
the Committee to reflect increased costs and expenses or changed
circumstances, such as, but not limited to, inflation.
6.3 BASIS FOR APPROVAL. The Committee shall have the right to disapprove an
Application submitted to it in the event any part of the Application: (a) is not
in accordance with this Declaration, the Sign Plan and any Design Guidelines or
other requirements adopted by the Committee; or (b) is incomplete; or (c) is not
in compliance with the applicable governmental approvals and regulations for the
Center; or (d) is deemed by the Committee to be contrary to the best interests
of the Center or the Owners; or (e) any combination of the foregoing. The
Committee shall not unreasonably withhold its approval of an Application
submitted to it, but may condition its approval on the satisfaction of one or
more conditions set forth in writing. In this regard, the Committee may base its
approval or disapproval on criteria which may include, but are not limited to,
the following: (i) the adequacy of the building locations and dimensions on the
Parcel; (ii) the adequacy of the parking to be provided; (iii) conformity and
harmony of external design with neighboring structures; (iv) effect of location
and proposed use of proposed Improvements on neighboring Parcels and the types
of operations and uses thereof; (v) relation of topography, grade and finish
ground elevation of the Parcel being improved to that of neighboring Parcels;
(vi) proper facing of main elevation with respect to nearby streets and other
buildings; (vii) adequacy of screening trash facilities and mechanical, air
conditioning or other rooftop installations; (viii) adequacy of landscaping; and
(ix) conformity of the Application to the purpose and general plan and intent of
this Declaration. No Application shall be approved which does not provide for
the underground installation of all utility services. The Committee may
condition its approval of an Application on such changes therein as it deems
appropriate such as, and without limitation, the approval of such Improvements
by a holder of an easement which may be impaired thereby or upon approval of any
such Improvements by the appropriate governmental entity. Any Committee approval
conditioned upon the approval by a governmental entity shall not imply the
Association is enforcing any government codes or regulations, nor shall the
failure to make such conditional approval imply that any such governmental
entity approval is not required.
6.4 RESULT OF INACTION. The Committee shall approve or disapprove an
Application within thirty (30) days after receipt of a complete Application
and the Review Fee. If the Committee fails either to approve or disapprove an
Application within such thirty-day (30-day) period, then it shall be
conclusively presumed that the Committee has disapproved the Application,
unless the applicant has delivered to the Committee, within fifteen (15) days
after the expiration of the thirty-day (30-day) period, a notice in writing
setting forth a date of initial submittal of the complete Application to the
Committee and the fact that no approval or
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disapproval has been given as of the date of such notice. If the Committee
thereafter fails to either approve or disapprove the Application on or before
the fifteenth (15th) day after the Committee's receipt of such notice, the
provisions of this Declaration requiring approval of such Application shall be
deemed to have been waived by the Committee with respect to such Improvements;
provided, however, that such waiver shall not be deemed to be a waiver of any
other covenant, condition or restriction provided herein. One (1) set of the
Application shall, with the approval or disapproval of the Committee endorsed
thereon, be returned to the Owner submitting it, and the other set shall be
retained by the Committee for its permanent files. In the case of a conditional
approval of an Application, the written conditions shall accompany the
Committee's written conditional approval.
6.5 PROCEEDING WITH WORK. Upon the Committee's approval of an Application
pursuant to this Article 6, the Owner to whom the approval is granted and
delivered, shall, as soon as practicable, satisfy all conditions thereof (if
any) and diligently proceed with the commencement and completion of all approved
construction, refinishing, alterations, excavations and landscaping so that no
Improvement remains in a partly-finished condition any longer than reasonably
necessary for completion thereof. In addition, each Owner shall cause all work
to be as nondisruptive as practicable to the Center and the guests, invitees,
tenants, employees and Owners who use the Center. Each Owner shall disrupt
traffic flow and parking as little as possible during construction and shall
clean up daily any construction debris to the extent reasonably practicable. In
all cases, work shall be commenced within one (1) year following the date of
such approval. If work is not commenced within one (1) year following the date
of such approval, then the approval given pursuant to this Article 6 shall be
deemed revoked; PROVIDED, HOWEVER, upon written request made prior to the
expiration of said one (1) year period, the Committee may, in its sole, absolute
and unfettered discretion, extend the time for commencing work.
6.6 COMPLETION OF WORK. Construction, refinishing, alteration or excavation
of any Improvements previously approved under this Article 6 shall be completed
within two (2) years following the commencement thereof, except for so long as
such completion is rendered impossible or would result in hardship due to action
of the elements, fire or other casualty, war, riot, labor dispute, inability to
procure or general shortage of labor or material in the normal channels of
trade, delay in transportation, delay in inspections, governmental action or
inaction or moratorium or any other cause beyond the reasonable control of the
Owner so obligated, whether similar or dissimilar to the foregoing, financial
inability excepted. Failure to comply with this Section 6.6 shall constitute a
breach of this Declaration and subject the defaulting Owner or Owners to all
enforcement procedures set forth in this Declaration or any other remedies
provided by law or in equity. Upon completion of construction of any
Improvement, one complete set of as-built plans shall be submitted to and
maintained by the Committee.
6.7 ESTOPPEL CERTIFICATE. The Committee shall deliver to any Owner an
estoppel certificate within thirty (30) days following receipt of a written
request therefor. If the Committee does not have an as-built survey of the
Owner's Parcel in its files, then any such request shall be accompanied by an
ALTA map of survey or a certified as-built survey of the Owner's Parcel. The
estoppel certificate shall certify that as of the date of the certificate either
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(a) all Improvements made or work done on or within the Owner's Parcel
comply with this Declaration; or (b) such Improvements or work do not
so comply, in which event the certificate shall identify the
non-complying Improvements and shall set forth the cause or causes for
such noncompliance. Any existing or prospective Owner, Occupant or
Mortgagee in good faith for value shall be entitled to rely on the
certificate with respect to the matters set forth therein, such matters
being conclusive as between the Committee and all such subsequent
parties in interest.
6.8 INDEMNITY AND LIMITATION OF LIABILITY. Neither Declarant, the
Association, the Board nor the Committee, nor any member of the Board or the
Committee, nor any agents, employees or contractors of Declarant, the
Association, the Members, Occupants, the Board or the Committee (individually or
collectively, "INDEMNITEE") shall be liable for any liability, damage, loss,
cost, expense or prejudice suffered, incurred or claimed by any Owner, Occupant
or other person (an "Applicant") who submits an Application, or by any other
Person (including any other Owner or Occupant); and each Applicant who submits
an Application shall forever hold each and every Indemnitee harmless from and
against any liability, damage, loss, cost, expense or prejudice suffered,
incurred or claimed by such Applicant, and shall forever indemnify, defend,
protect and hold each Indemnitee harmless for any liability, damage, loss, cost,
expense or prejudice suffered, incurred or claimed by any other Person
(including any other Owner or Occupant), arising from, our of or in connection
with (a) any defects in any plans, drawings, specifications or other
documentation submitted in any Application, revised or approved in accordance
with this Declaration, or for any structural or other defects in any work done
according to such plans, drawings, specifications or other documentation; (b)
the approval or disapproval of any Application, whether or not defective; (c)
the construction or performance of any work, whether or not constructed or
performed pursuant to an approved Application; (d) the development of any Parcel
within the Center; (e) the execution and filing of an estoppel certificate
pursuant to Section 6.7, whether or not the facts therein are correct, provided
that the Committee has acted in good faith in issuing such estoppel certificate
on the basis of such information as may be possessed by it; or (f) any
combination of the foregoing.
6.9 LIMITATIONS ON IMPROVEMENTS. All limitations contained in this
Declaration supplement the controls established by applicable zoning, land
use-related entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules and
regulations; and of the foregoing, the more restrictive shall apply. Each Owner
and Occupant is responsible for identifying and conforming with all Laws.
(a) SETBACK LINES. Buildings, structures of any kind (or any part
thereof), Exclusive Use Areas and parking areas shall be subject to the
minimum setback requirements of applicable zoning, land use-related
entitlements and approvals granted for development of the Center and
applicable building, fire and other governmental ordinances, codes, rules
and regulations.
(b) LANDSCAPING. Every Parcel on which a building is constructed in
the Center shall be landscaped by the Owner in accordance with the
Application approved by the Committee pursuant to this Article 6; and, if
not previously installed, the Owner shall
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also install the Common Landscaping upon the Parcel in accordance with the
plans and specifications adopted by the Declarant, or as otherwise approved
by the Committee. Landscaping for each Parcel, as approved by the
Committee, shall be installed before the earlier of (a) the date on which
the first Occupant occupies the building (or any portion thereof) on the
Parcel; or (b) the date of substantial completion of the building;
PROVIDED, HOWEVER, the Committee may, in its sole, absolute and unfettered
discretion, approve in writing another final date of landscape
installation. As used in this Section, "SUBSTANTIAL COMPLETION" means the
date on which final City inspection is obtained for the building shell.
Once installed, landscaping in the Center shall be maintained, repaired and
replaced as provided in Section 12.1 and Section 13.1 of this Declaration.
(c) EXCLUSIVE USE AREAS. Any Exclusive Use Areas within a Parcel shall
be as designated on the Site Plan, or as otherwise approved by the Board or
by the Committee in its written approval of an Application pursuant to this
Article 6. Exclusive Use Areas shall be maintained, repaired and replaced
in accordance with Article 12.
(d) SIGNS. Except for street and traffic control signs and such other
signs as may be required by applicable law, no sign, billboard or other
advertising shall be erected, placed or maintained within the Center
without written approval by the Committee, which, unless such signage is
consistent with the Sign Plan, may be withheld in its sole, absolute and
unfettered discretion. Nothing contained herein shall preclude Declarant or
any subsequent Owner of the Carmel Center Office Campus from renaming it
after such Owner, an Eligible Occupant, or a major tenant that leases in
excess of twenty-five percent (25%) of the space within the buildings
comprising the Carmel Center Office Campus, and installing signage
consistent with the Sign Plan to reflect such name change.
(e) PARKING AREAS. The Committee shall have the authority to
disapprove any Application for the construction of any building on a Parcel
in the Center if the Application does not provide for parking substantially
in accordance with the Site Plan and in compliance with applicable
ordinances, rules and regulations of the City. The purpose and intent of
this requirement is to ensure that all development and parking arrangements
comply with the Site Plan and that this Declaration satisfies any
City-imposed requirements for shared parking existing on the date of this
Declaration.
(f) EXTERIOR LIGHTING. Exterior lighting shall conform to the Design
Guidelines and shall not be of such intensity, size, color or location as
to be a nuisance to Owners or the public.
(g) UTILITY LINES AND ANTENNAS. No sewer, drainage or utility
lines, cables or wires or other devices for the communication or
transmission of electric current, power or signals (including, but not
limited to, telephone, television, microwave or radio signals) shall be
constructed, placed or maintained anywhere in or upon any Parcel other than
within buildings or structures unless contained in underground conduits;
PROVIDED, HOWEVER, transformers and terminal equipment related thereto may
be installed above
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ground if screened from view of adjacent streets and Parcels in a manner
satisfactory to the Committee. No antenna, satellite dish or disc for
transmitting or receiving telephone, television, microwave or radio signals
shall be placed on any Parcel unless (i) such antenna, dish or disc,
whether on the ground or on a building, is screened from view of adjacent
streets and Parcels in a manner satisfactory to the Committee; and (ii) the
prior written consent of the Committee is obtained. Nothing contained in
this Section shall prohibit (x) the erection or use of temporary power or
telephone facilities incidental to the construction or repair of
Improvements on any Parcel, or (y) the installation and maintenance of
security and surveillance devices upon the exterior of buildings, within
Common Areas adjacent to such buildings or elsewhere upon an Owner's Parcel
and Exclusive Use Areas. No Owner shall enter into any contract or
agreement with the City, the County of San Diego or any other governmental
agency or entity or public utility with respect to sewer lines or
connections, water lines or connections, or street improvements (including,
but not limited to, curbs, gutters, parkways, street lighting or other
utility connections, lines or easements) relating to the Center or any
Parcel without the prior written consent of the Committee (including the
Committee's approval of the contract or agreement proposed to be entered
into), which may be withheld if the Committee determines such contract or
agreement, or the improvements to be constructed pursuant thereto, are not
consistent with the Declaration or any of the other Project Documents.
(h) EXCAVATION AND UNDERGROUND UTILITIES. No excavation shall be made
except in connection with construction of an Improvement, and upon
completion thereof, exposed openings shall be back filled and disturbed
ground shall be graded, leveled and restored to its original or approved
similar condition.
6.10 CERTAIN IMPROVEMENTS EXEMPT FROM APPLICATION. Notwithstanding
anything in this Declaration to the contrary (or which may be interpreted as
being to the contrary), the following Improvements shall be exempt from the
provisions of this Article 6 and are not required to be the subject of an
Application pursuant to this Article 6: (i) Improvements existing or under
construction on the date of this Declaration; (ii) Improvements which are
substantially consistent with the Site Plan and for which the discretionary
governmental approvals have been obtained from the City before the date of this
Declaration which include, without limitation, the Approved Declarant
Improvements; and (iii) Improvements within the interior of a building such as
tenant improvements, lobbies and other interior space.
6.11 DISCLOSURE AND WAIVER OF CONFLICT OF INTEREST. Committee members may
be appointed by, affiliated with or employed by Declarant. If Declarant submits
an Application to the Committee for approval, Committee members appointed by
Declarant may have a conflict of interest in rendering their decisions. Neither
Declarant nor any Committee member shall have any liability to any Owner,
Occupant or other Person as a result of decisions which may benefit Declarant
rendered in good faith by the Committee or any Committee member, and each Owner
hereby waives any claim of liability against Declarant, the Committee or any
Committee member, based upon such conflict of interest. Nothing in this Section
6.11 is intended to limit the application or meaning of Section 14.6.
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ARTICLE 7
OPERATIONS GENERALLY
7.1 SLOPE AND DRAINAGE EASEMENTS. The Owner of each Parcel will permit free
access by Owners of adjacent or adjoining Parcels and by Declarant to slopes or
drainageways located on the Owner's Parcel which affect such adjacent or
adjoining Parcels when such access is required for the maintenance of permanent
stabilization on said slopes, or maintenance of the drainage facilities for the
protection and use of property other than the Parcel on which the slope or
drainageway is located. No Owner shall in any way interfere with the established
drainage pattern over the Owner's Parcel from adjoining or other Parcels, and
each Owner shall make adequate provisions for proper drainage in the event it is
necessary to change the established drainage over the Owner's Parcel. For the
purpose of this paragraph, "ESTABLISHED" drainage is defined as the drainage
patterns at the time the overall grading of each Parcel is completed in
accordance with the City-approved grading plans therefor. Upon completion of
final grading of a Parcel, no surface drainage shall be directed across any
portion of an adjoining Building Area, all surface drainage shall be directed to
a public street or into the underground drainage system.
7.2 SHARED PARKING; COMMON PARKING AREAS.
(a) The Owners intend that this Declaration satisfies any City-imposed
requirements for shared parking existing on the date of this Declaration.
(b) Those portions of the Common Area improved, or to be improved,
with parking spaces as generally shown on the Site Plan and not designated
or subsequently designated as Exclusive Use or Exclusive Parking Area or,
with respect to Parcel D, improved with a building (herein "Common Parking
Area") shall be reciprocal parking area for the common use and enjoyment of
all Parcels (excluding Parcels L and M) and their respective Owners,
Occupants, customers, guests and invitees. The Owners of Parcels L and M
shall have no rights to use any of the Common Parking Area.
(c) The Parking Structure, the parking spaces included therein and
those additional surface parking areas within the Carmel Center Office
Campus and shown on the Site Plan as Exclusive Parking Area shall be for
the exclusive use and enjoyment of the Carmel Center Office Campus and
their respective Owners, Occupants, customers, guests and invitees (herein
"Exclusive Parking Area").
(d) In addition to the Exclusive Parking Areas described in subsection
(c) above, Declarant (and the Board when there no longer is a Declarant)
may designate other portions of a Parcel improved as parking as Exclusive
Parking Area, subject to the provisions of Section 8.2.
(e) No commercial truck is permitted to be parked on any Parcel unless
hidden from view from other Parcels within the Center and from public
streets by attractive visual barriers. Notwithstanding the immediately
preceding sentence, commercial trucks may park for the purpose of loading
and unloading on all Parcels; PROVIDED HOWEVER, reasonable restrictions
concerning permitted times for parking,
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loading and unloading commercial trucks, which may be applicable to one or
more Parcels, may be adopted by the Board.
(f) No charge of any kind shall ever be made for ingress to, egress
from or parking in the Center, unless ordered or permitted by governmental
authority. The Owner of the Carmel Center Office Campus may install a card
access system in the Parking Structure and receive reimbursement from the
Occupants of the Carmel Center Office Campus for the cost of installing
such system and the cost of access cards and replacement cards.
7.3 STORAGE AND LOADING AREAS. Subject to Committee approval, which may be
withheld in its sole, absolute and unfettered discretion:
(a) No materials, supplies or equipment, including any trucks, shall
be stored in any area on a Parcel, except inside a closed building or on a
temporary basis behind a Committee approved visual barrier which screens
such areas from the view of adjoining Parcels and public streets.
(b) Loading areas and docks shall be set back and screened to
minimize the visual and noise effects from the street. All loading areas
shall be hidden from view from public streets by visual barriers approved
by the Committee. Notwithstanding the foregoing, it may not be practical or
feasible for all loading areas and docks to comply with this restriction,
in which event, as to those loading areas and docks, the Committee shall
have the right to designate hours for loading and unloading and the rules
reasonably necessary to minimize the visual and noise effects thereof.
7.4 INSPECTION. Declarant, members of the Board, members of the Committee
and their authorized representatives may from time to time, at any reasonable
hours, enter upon and inspect any Parcel, or any portion thereof, or
Improvements thereon, to ascertain compliance with this Declaration and other
Project Documents, but without obligation to do so or liability therefor
provided, however, no such entry shall be permitted to inspect the interior or
exterior of any building improvements without at least five (5) business days'
prior written notice and a statement for the reasons such entry is permitted or
required under the Project Documents.
7.5 DIVISION OF LAND. No Parcel shall be subdivided or resubdivided without
the prior written approval of Declarant (or the Board, if there is no
Declarant), which may be withheld in its sole, absolute and unfettered
discretion. The creation of a "condominium project" on any Parcel or Parcels
pursuant to Section 1351, ET SEQ. of the California CIVIL CODE shall not
constitute a subdivision or resubdivision of a Parcel which is prohibited by the
provisions of this Section.
7.6 HAZARDOUS MATERIALS. Each Owner with respect to the Parcel(s) owned by
such Owner covenants to do as follows:
(a) At all times and in all respects to comply, and cause all of its
Occupants to comply, with all federal, state and local laws, ordinances and
regulations, including, but
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not limited to, the Federal Water Pollution Control Act (33 U.S.C. Section
1251, ET SEQ.), Resource Conservation & Recovery Act (42 U.S.C. Section
6901, ET SEQ.), Safe Drinking Water Act (42 U.S.C. Section 3000f, ET SEQ.),
Toxic Substances Control Act (15 U.S.C. Section 2601, ET SEQ.), the Clean
Air Act (42 U.S.C. Section 7401, ET SEQ.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, ET
SEQ.), California Health & Safety Code (Section 25100, ET SEQ.; Section
39000, ET SEQ.), California Safe Drinking Water & Toxic Enforcement Act of
1986 (California Health & Safety Code Section 25249.5, ET SEQ.), California
Water Code (Section 13000, ET SEQ.), and other comparable state and federal
laws, currently in force or enacted in the future ("HAZARDOUS MATERIALS
LAWS"), relating to industrial hygiene, environmental protection or the
use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" under any such laws, ordinances or regulations (collectively,
"HAZARDOUS MATERIALS").
(b) Each Owner, Occupant and all other users of a Parcel shall, at its
own expense, procure, maintain in effect and comply with all conditions of
any and all permits, licenses, and other governmental and regulatory
approvals required for its or its use of the Center, including, without
limitation, discharge of (appropriately treated) materials or wastes into
or through any sanitary sewer serving the Center. Except as discharged into
the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, no Person shall cause any and all Hazardous
Materials removed from the Center to be removed and transported except
solely by duly licensed haulers to duly licensed facilities for final
disposal of such materials and wastes. Each Owner, Occupant and user shall
in all respects handle, treat, deal with and manage any and all Hazardous
Materials in, on, under or about the Center in total conformity with all
applicable Hazardous Materials Laws and prudent industry practices
regarding management of such Hazardous Materials.
7.7 PAYMENT OF TAXES, LIENS. Each Owner shall pay or cause to be paid prior
to delinquency the real estate taxes, assessments, special district charges and
all other public, governmental, quasi-public or quasi-governmental charges which
are or may become a lien upon the Owner's Parcel or Parcels ("Impositions"), and
all other liens or charges which may be or become superior to this Declaration
or any amendments thereto. If any Owner fails to pay any Imposition or other
lien or charge as provided herein, the Association shall have the right, but no
obligation, to cure such default. All costs and expenses, including attorneys'
fees and costs, incurred by the Association in connection with any such cure may
be recovered by the Association as a Reimbursement Assessment against said Owner
and its Parcel or Parcels. An Owner shall have the right, at its own cost and
expense, and in its own name, to contest or protest or seek to have reviewed,
reduced, equalized or abated any Imposition levied upon its Parcel(s) by first
paying such Imposition and thereafter filing a claim for refund or pursuing
such other remedy as may then be available under and in accordance with
California law. Upon final determination of any such proceeding, the protesting
Owner shall pay the Impositions for which
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it is responsible pursuant to this Section as they are finally determined and
all penalties, interest, costs and expense which may thereupon be due or have
resulted therefrom. An Owner shall notify the Association in writing of any
contest or protest so filed by an Owner, and shall provide the Association,
upon request, with any and all documents pertaining thereto.
ARTICLE 8
COMMON AREA
8.1 USE. Subject to the provisions of this Article 8 and such other
provisions of the Declaration regarding restrictions upon use, the Common Area
of each Parcel shall be used solely for the purposes specified in Sections
7.2(b) and 11.1. In addition, no Owner or Occupant shall use or permit to be
used the Common Area for any use other than the following:
(a) Parking motor vehicles, and pedestrian and vehicular ingress and
egress by Occupants, their agents, employees, customers and other invitees,
to and from buildings, the Common Area and adjacent public streets;
(b) Parking stalls, sidewalks, walls, ramps, driveways, lanes, curbs,
gutters, seating areas, flagpoles, bike racks, kiosks, automatic teller
machines, bus stops and similar facilities for accommodating public
transportation, traffic control areas, signals, traffic islands, landscaped
areas, traffic and parking lighting facilities and monument signs with
appropriate underground electrical connections, and all things incidental
thereto, all as approved by the Committee and only in locations approved by
the Committee;
(c) Public utility installations serving buildings or the Common Area;
(d) Ingress and egress of delivery and service vehicles to and from
the Center or any portion thereof and adjacent public streets, and parking
thereof only in unloading and truck loading and unloading areas;
(e) Delivery of goods, wares, merchandise and providing services to
Occupants of the Center;
(f) Perimeter walls and fences shown on the Site Plan;
(g) If required by law, recycling facilities or pickup points, the
location of which are approved by the Committee; and
(h) Lighting standards, Common Landscaping, and any other landscaping
or Common Area Improvements as may be required under applicable controls
and regulations of the City. The Owners and/or Eligible Occupants of
Parcels may also install and maintain security and surveillance devices
upon the Common Areas within their respective Parcels.
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The Common Area shall be used reasonably for the foregoing purposes so as not to
interfere with parking.
8.2 MODIFICATION OF COMMON AREA. The initial design of the Common Parking
Areas and pattern of traffic flow over the Common Area within the Center shall
be as shown on the Site Plan, and there shall be no material change thereto
unless:
(a) In the case of any material change to the Common Area located on
Parcels A, B, C, D, E and H, the prior written consent of Declarant and the
Owners of all such Parcels, which shall not be unreasonably withheld, has
been obtained;
(b) With respect to any material change to the Common Area (excluding
Common Parking Area) within Parcels G, K, L or M, the prior written consent
of Declarant and the Owners of all such Parcels, which shall not be
unreasonably withheld, has been obtained;
(c) With respect to any material change to the Common Parking Area
within Parcels E through K, the prior written consent of the Declarant and
the Owners of all such Parcels, which shall not be unreasonably withheld by
any of them, has been obtained;
(d) In all other cases, the prior written consent of Declarant (or the
Board, after there is no longer a Declarant), which may be withheld in its
sole, absolute and unfettered discretion, has been obtained; and
(e) In all cases, the resulting Common Parking Area layout and pattern
of traffic flow over the Common Area comply with all applicable Laws.
8.3 PARKING REGULATIONS. Occupants within the Center will have widely
varying parking requirements. To ensure Common Parking Areas are used in the
most efficient manner and in the best interest of all Occupants entitled to the
use thereof, the Board may adopt reasonable rules and regulations governing
the use of the Common Parking Areas; PROVIDED, HOWEVER, that no such rule or
regulation shall diminish the parking rights of any Occupant under any lease
existing at the time such rule or regulation is adopted; and PROVIDED FURTHER,
any and all such rules or regulations shall be subject to Section 8.2.
8.4 CONSTRUCTION AND REPAIR. All construction, alteration or repair work
requiring workers to perform activity or to use or locate materials, tools or
equipment (such as, but not limited to, compressors, sawhorses, tool boxes,
scaffolds, ladders and barricades) in the Common Area (other than Exclusive Use
Areas) during the course of performing such work, whether such work is
undertaken with respect to building Improvements located on a Parcel or in the
Common Area, shall be subject to the prior written approval of the Board (or any
committee of the Board established in accordance with the Bylaws for the purpose
of administering this Section) and shall be accomplished in the most expeditious
and speedy manner consistent with ongoing business operations within the Center.
The Owner or Occupant undertaking such work shall take all measures necessary to
minimize any disruption or inconvenience caused by such work. Such work shall be
accomplished by the Owner or Occupant undertaking it in a reasonable manner so
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that any damage or adverse effect which might be caused by such work to any
other Owner or Occupant or to any Parcel (including the Parcel on which the work
is being accomplished) is minimized. The Owner or Occupant undertaking such work
shall repair at its own cost any and all damage caused by such work and shall
restore the affected portion of any Parcel (including the Parcel upon which such
work is performed) to a condition which is equal to or better than the condition
which existed prior to the beginning of such work. In addition, the Owner or
Occupant undertaking such work shall pay all costs and expenses associated
therewith and shall indemnify, protect, defend and hold the Association and all
other Owners and Occupants harmless from all liabilities, damages, losses,
costs, expenses or claims arising out of, in connection with or attributable to
the performance of such work. Except in cases of emergency, all such work
shall be undertaken only after giving the Board ten (10) days prior written
notice of the work to be undertaken, the scope and nature of the work, the
duration of the work and the area in which the work is to be performed.
Notwithstanding the foregoing, construction, alteration or repair work to be
accomplished outside the Common Area may be made without the consent of or
prior written notice to the Board (or committee thereof) required under this
Section.
8.5 INTERIM IMPROVEMENTS AND MAINTENANCE OF PARCELS.
(a) Commencing as required in paragraph (b) of this Section and
continuing until such time as the commencement of construction of a building
or buildings upon a Parcel in the Center, the Owner of such Parcel shall, at its
sole cost, and subject to the discretion and approval of the Committee, pave
with asphalt for parking or landscape with ground cover (or both) and take such
other measures as are reasonably necessary to control weeds, blowing dirt and
sand, accumulation of refuse and other matters with respect to the undeveloped
portions of such Parcel. The cost of design and construction of such interim
parking or landscaping improvements (or, if applicable, both) shall be borne
solely by the Owners of the respective Parcels upon which such improvements are
constructed. Once constructed, the Association shall maintain any such interim
improvements within the Common Area and the cost and expense thereof shall be
Common Expenses; and the Owner shall maintain such other interim improvements.
Each Owner's paving plans or landscaping plans (or, if applicable, both) for the
Parcel shall be subject to the Committee's written approval to ensure
consistency and harmony with (a) the landscaping plan and theme of the Center;
and (b) the parking configuration and pattern of traffic flow in the Center. The
Committee's approval shall not be unreasonably withheld or delayed, and neither
paving nor landscaping the Parcel shall commence unless and until the
Committee's written approval has been obtained. After the Committee's written
approval has been obtained, the Parcel shall be paved and landscaped pursuant to
and in accordance with the plans approved by the Committee. Nothing contained in
this Section 8.5 regarding interim improvements of Parcels shall restrict or
impair the Owners' rights to fully develop and improve their respective Parcels
with buildings and other Improvements consistent with the Project Documents.
(b) The Owners of all Parcels shall pave with asphalt or landscape
with ground cover, or a combination of both as provided in subsection (a)
above, the otherwise unimproved portions of their respective Parcels within
six (6) months after the first Occupant of any building constructed within
the Carmel Center Office Campus opens for business in its
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premises; PROVIDED, HOWEVER, the Owner of any Parcel on which construction of a
building and related improvements has commenced before or during such six (6)
month period shall not be bound by this subparagraph (b) as to such Parcel.
(c) At least ten (10) days before commencing construction of any
Improvements upon a Parcel, the Owner of the Parcel must deliver written notice
to the Board of its intent to commence construction, and the Association shall
have the right to remove any Association property from the Parcel.
8.6 LIGHTING THE COMMON AREA. The provisions of this Section shall be
subject to any resolution or resolutions to the contrary which may be adopted by
the Board from time to time. Lighting for the Common Area (other than lighting
necessary for security of the Center or portions thereof) shall be turned on at
least thirty (30) minutes before sunset (but not more than one (1) hour before
sunset) and shall remain on each day until at least 11:00 p.m., unless to do so
is contrary to any law, rule, statute or ordinance then in effect, in which
event, the standard so prescribed shall be adhered to while in effect. Lighting
representing not less than twenty-five percent (25%) of full intensity of the
Common Area lighting system, uniformly distributed throughout the Common Area,
shall remain on each day after 11:00 p.m. until dawn for security purposes,
unless all of the Owners consent to a lesser amount of lighting in writing, or
unless to do so is contrary to any law, rule, statute or ordinance then in
effect, in which event, the standard so prescribed shall be adhered to while in
effect. If "special" lighting (other than lighting necessary for security of the
Center) is required or if regular lighting is required for a time later than the
foregoing by any Owner or Occupant of the Center, then the electricity to
service such lighting requirements shall, if reasonably feasible, be separately
metered and all expenses thereof shall be paid by the Owner(s) or Occupant(s)
who requires the special service. If such separate metering is not reasonably
feasible, then the cost of such special lighting shall be determined and
equitably prorated based on the amount of time required by each such Owner or
Occupant and the Parcel Area of each Owner or Occupant in relation to the Parcel
Area of all of the Owners or Occupants requiring the special service; all such
prorated expenses shall be paid by the Owners or Occupants which require the
special service.
ARTICLE 9
EMINENT DOMAIN
In the event the whole or any part of the Center is taken by right of
eminent domain or any similar authority of law, the entire award for the value
of the land and improvements so taken shall belong to the Owner(s) of the
property so taken or to their Occupants, as their interest may appear, and no
other Owner of land in the Center shall claim any portion of such award by
virtue of any interest, easement or other right created by this Declaration;
PROVIDED, HOWEVER, any such other Owner may file a collateral claim with the
condemning authority over and above the value of the land and improvements being
so taken to the extent of any damage suffered by such Owner resulting from the
severance of the area so taken, provided such collateral claim does not diminish
the amount recoverable by the Owner(s) of the property so taken. In the event of
a partial taking, the Owner(s) of the portion of the Center so condemned shall
restore the remaining portion of the Center owned by such Owner(s), including
improvements in the
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Common Area, as nearly as possible to the condition existing just prior to such
condemnation, without contribution from the Owners of the area not so taken and
any condemnation award necessary therefore shall be held in trust and applied
for such purpose; PROVIDED, HOWEVER, that if any Mortgagee of any property in
the Center makes the requirement pursuant to a provision in a Mortgage that the
portion of the award representing compensation for severance damage to property
not taken be paid to the Mortgagee, then the party required to make such payment
to such Mortgagee shall not be obligated to restore the remaining portion of its
Parcel(s) so taken, except to the extent necessary to clear and pave for parking
and/or landscape in accordance with plans approved by the Committee.
ARTICLE 10
MUTUAL RELEASE
Each Owner, for itself and, to the extent it is legally possible for it to
do so, on behalf of its insurer, hereby releases the other Owners from any
liability for (a) any loss or damage to the property of each Owner located upon
or in the Center, including buildings or other improvements in the Center or the
contents thereof caused by fire or other risks of the type generally covered by
a standard policy insuring against "all risk" perils (also known as "special
causes of loss"); and (b) any other direct or indirect loss or damage caused by
fire or other risks, which loss or damage is of the type generally covered by a
standard policy insuring against "all risk" perils (also known as "special
causes of loss").
ARTICLE 11
EASEMENTS
11.1 GRANTS OF RECIPROCAL EASEMENTS OVER COMMON AREAS. Each Owner, as
grantor, grants to and reserves from all other Owners, for the benefit of the
Association and each other Owner and their respective successors, assigns,
Occupants, customers and invitees, and for the benefit of the respective
Parcel(s) belonging to said other Owners, as grantees, the following
non-exclusive easements upon, over, under, across and through that portion of
the Common Area lying within the grantor's Parcel(s):
(a) For ingress and egress by vehicular and pedestrian traffic and
vehicle parking upon, over and through the Common Area and the entryways,
driveways, roads, pedestrian pathways and parking areas as may be
constructed thereon for those purposes, provided, that, Parcels L and M and
their Owners, Occupants, guests, customers and invitees shall have no
rights hereunder to use the Common Parking Areas;
(b) For grading and installation of utilities, landscaping, irrigation
and drainage facilities, and other Improvements, as necessary or
appropriate to complete the improvement of such Common Areas within the
Center pursuant to City approvals and other applicable Laws;
(c) To the Declarant and Association, and their agents and
representatives, an easement over all Common Areas for the purpose of
operation, maintenance, repair,
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reconstruction, restoration and landscaping, and, as necessary, to exercise
the rights and to perform the duties set forth in this Declaration.
(d) For the installation, maintenance, repair and replacement from
time to time of any monument or other freestanding sign permitted under
this Declaration and in accordance with the Sign Plan, including any
permitted Occupant identification signs which have been placed thereon or
made a part thereof;
(e) For construction staging, storage of construction materials and
equipment, temporary construction trailers, erection of ladders,
scaffolding and barricades upon Common Areas owned by the Owner during
construction, remodeling or repair of buildings and building appurtenances
upon such Owner's Parcel or Parcels; and
(f) For the purpose of entering onto the grantor's Parcel(s) to cure
any default or breach under this Declaration.
11.2 UTILITY EASEMENTS. There is hereby reserved for the use and benefit of
the Association and all Owners, non-exclusive easements within the Common Areas
for the location, installation and maintenance of utilities and drainage
facilities of convenience or necessity as may be requested or required by the
Association or any Owner provided that the grant thereof does not unreasonably
interfere with the normal operation, improvement, and use of the Common Area and
the buildings constructed within the Center, and no affirmative monetary
obligation is imposed upon the Owners (other than the Owner benefiting from such
easement). The Declarant (and the Board where there no longer is a Declarant)
shall have the authority to grant easements or rights-of-way for utilities over
the Common Areas as necessary to serve the Common Areas and/or the Parcels. The
Owner of any Parcel and any of his Occupants or licensees shall have the right
at all reasonable times to enter upon the land subject to said easements and to
install, maintain, operate, repair and service utilities and drainage facilities
thereon for the use and benefit of his Parcel; provided, however, any such
Person shall restore said land, at his own expense, as nearly as practicable, to
the same condition as existed prior to such entry and shall comply with the
provisions of Section 11.6. The Owner of any Parcel shall have the right to
assign the benefit and use of any such easement to any public or private utility
company, agency or district for the purpose of installing, operating, repairing,
servicing and maintaining utilities or drainage facilities and enforcing the
easement rights. For purposes hereof, "utilities" shall include electricity, gas
mains and lines, water distribution lines, storm water sewers, sanitary sewers,
telephone, fiberoptic, cable TV, and telegraph cables and lines, and other
similar or related facilities commonly regarded as utilities.
All storm drains, utility lines, transformers and meters shall be
maintained under the terms of this Declaration in a safe and good working
condition by the party responsible therefor. No grantee of a utility easement
shall in the use, construction, reconstruction, operation, maintenance or repair
of any storm drains, utility lines, transformers and meters in any way
interfere, obstruct or delay the business of the grantor of said easement or any
other Owner or Occupant, or the public access to and from said business or
interfere, obstruct or delay in any way the receiving of merchandise by said
grantor or any Owner or Occupant.
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11.3 CONSTRUCTION AND REPAIR. In addition to the foregoing and in
connection with any work performed upon a Parcel, incidental encroachments into
or upon the Common Area within that Parcel shall be permitted in connection with
the use of ladders, scaffolding, storefront barricades and similar facilities
resulting in temporary obstruction of portions of the Common Area, all of which
are permitted under this Section so long as their use is kept within reasonable
requirements of construction work expeditiously pursued. The Common Area may be
used for ingress and egress of vehicles transporting construction materials,
equipment and Persons employed in connection with any work provided for in this
Declaration and that Common Area within the Parcel upon which the construction
is taking place may also be used for temporary storage of material and vehicles
being used in connection with such construction, subject to all of the other
terms of this Declaration. Reasonable precautions and measures shall be taken so
that any disturbance to the use of the Common Area generated by such
encroachments will be minimized.
11.4 OBSTRUCTIONS WITHIN COMMON AREA. Except as otherwise expressly
provided in Sections 8.1, 8.4, 11.1 and 11.3, no walls, fences, barriers or
obstructions of any sort or kind shall be constructed or maintained in the
Center, or any portion thereof, by any Owner, its agent or Occupant, which
prevent or impair the use or exercise of any of the easements granted in this
Article 11, including, but not limited to, the ingress and egress of vehicular
and pedestrian traffic and parking within the Common Area and the Common Parking
Area; PROVIDED, HOWEVER, reasonable traffic controls (including speed bumps) as
may be necessary to guide and control the orderly flow of traffic may be
installed so long as access driveways to the Common Parking Area are not closed
or blocked and the traffic circulation pattern of the Common Area, as shown on
the Site Plan, is not changed or affected in a substantial way; AND PROVIDED
FURTHER, temporary fences made of security chain link may be erected to cordon
off areas of construction activity (including staging areas for equipment and
materials). The Owners and Occupants of the Parking Structure and the Exclusive
Parking Areas may also establish and install control devices and measures such
as a card entry system to the Parking Structure, restricted parking signs,
security gates, or other mechanisms to secure the Parking Structure and
Exclusive Parking Areas from unauthorized use and traffic.
11.5 RIGHT OF ENTRY BY DECLARANT, ASSOCIATION, BOARD. Declarant, the
Association, the Board, and their employees, agents, and contractors are hereby
granted the right to enter upon the Common Areas and upon any other portion of
the Center, to the extent reasonably necessary, to repair, improve, maintain and
operate the Common Areas and to exercise the rights and to perform the duties
imposed by this Declaration on the Board or the Association. Such right of entry
upon portions of the Center other than the Common Areas shall be exercised so as
to interfere as little as reasonably possible with the possession, use and
enjoyment of the Owner or Occupants of such portion and shall be subject to the
provisions of Section 7.4. The Association shall indemnify, protect, hold
harmless and defend the Owner and Occupants of each Parcel over which the
foregoing easements are reserved from and against all liabilities, losses,
liens, damages, claims, costs and expenses and arising from or caused by the use
of such Common Areas by the Declarant, Association, and Board.
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11.6 ENTRY BY OWNERS. In connection with any entry by an Owner onto any
Common Areas for purposes of exercising such Owner's rights pursuant to utility
or drainage easements pursuant to Section 11.2, or performing any other work on
the Common Areas (not including Exclusive Use Areas within such Owner's Parcel)
permitted under this Declaration or otherwise approved by the Board, such Owner
shall, at its expense:
(a) Maintain, at all times during such period of entry, commercial
general liability insurance with a combined single limit per occurrence of
at least $1,000,000, naming the Association (and the Owner and Occupants
of such Common Areas if not owned by the entering Owner) as additional
insureds, and providing that such coverage shall not be terminated or
modified without at least thirty (30) days' prior written notice to the
Board;
(b) Deliver to the Board a certificate evidencing that such insurance
is in full force and effect prior to entry onto such Common Areas;
(c) Perform all work in a safe manner, insure that no hazardous
condition remains on such Common Areas, and repair any damage thereto;
(d) Keep such Common Areas free and clear of all mechanics' or
materialmen's liens arising out of such Owner's activities;
(e) Comply with all applicable Laws in connection with such work;
and
(f) Indemnify, protect, hold harmless and defend the Association, the
Board and the Owner and Occupants of such Common Areas from and against all
liabilities, losses, liens, claims, damages, costs and expenses (including
attorneys' fees and court costs) for labor or services performed
or materials furnished to or for such Owner, or for personal injury, death
or property damage, arising out of or related to such Owner's entry or
breach of the provisions of this Section 11.6.
11.7 RESERVATION BY DECLARANT. The Declarant hereby reserves the right to
subsequently grant and create additional easements over one or more of the
Parcels owned by Declarant, including the Common Areas contained therein, for
the benefit of one or more other Parcels owned by Declarant provided, and upon
condition that, the grant of any such additional easements shall not materially
interfere or impede with the grant and use of the other easements established
hereunder.
11.8 TERMINATION OF FORMER DECLARATION AND CONFIRMATION OF TERMINATION OF
1990 GRANT OF EASEMENTS. The Former Declaration (defined in Recital F) is hereby
terminated in its entirety and is declared to be of no further force or effect;
PROVIDED, HOWEVER, the termination of the 1990 Grant of Easements (as defined in
Section X(e) of the Former Declaration), which is set forth in Section X(e) of
the Former Declaration, shall remain in effect (I.E., the 1990 Grant of
Easements are hereby confirmed previously terminated and of no further force or
effect). The easements granted in this Article 11 replace and supersede the
easements
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granted in that Grant of Easement dated February 12, 1990 and recorded in the
Office of the County Recorder at San Diego County on February 13, 1990 as
Document No. 1990-080110, and that Grant of Easement and the easements granted
thereunder are hereby terminated and declared to be of no further force or
effect.
ARTICLE 12
BUILDING MAINTENANCE
12.1 OWNER'S MAINTENANCE OBLIGATIONS. Subject to Section 12.3, each Owner
shall maintain, repair and replace (or cause to be maintained, repaired and
replaced) the following:
(a) All exterior surfaces and roofs of buildings and other structures
located on the Owner's Parcel(s), so that the exterior walls, exterior
signs, roofing materials and painted surfaces, are at all times maintained
in a first-class condition. All painted portions of building exteriors
shall be repainted no less frequently than once each five (5) years with
the same colors as such portions were originally painted or stained, unless
the Committee approves a change in color, which approval may be withheld in
the Committee's sole, absolute and unfettered discretion.
(b) All other portions of the Owner's Parcel, other than Common Area,
in a neat, clean, sightly and well-kept condition, free and clear of
weeds, debris and rubbish. All landscaping, other than Common Landscaping,
shall be maintained in a first-class condition and, as and when necessary,
replaced.
(c) Any and all monument signs on which the name of an Occupant of the
Owner's Parcel appears, even if the monument sign is located on another
Owner's Parcel.
(d) Those portions of facilities for water, sewer, gas, telephone,
electricity and other utilities serving such Owners' buildings so as to not
interfere, interrupt or otherwise impair delivery of utilities required for
maintenance of the Common Areas and by other buildings within the Center.
(e) Each Owner and or its Occupants shall also contract for the
removal of trash from its buildings.
Each Owner shall also adopt and maintain such standards of property maintenance,
appearance and housekeeping as are necessary or appropriate to keep and maintain
the foregoing in first-class condition, repair and appearance.
12.2 CLOSURE. The Owner of a Parcel shall, following the permanent closure
or cessation of any business operation which is expected to continue for any
extended period of time take such measures as may be reasonably required under
the circumstances to prevent vandalism, including preventing graffiti and
preventing windows from being broken, and to keep the vacant building or
premises in a reasonably attractive manner.
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12.3 REPAIR OR REPLACEMENT OF DAMAGED BUILDING. In the event of any damage
to or destruction of any building within the Center, the Owner of the Parcel
upon which such building is located shall, subject to the requirements and
limitations stated in this Declaration and any Mortgage encumbering such Parcel,
(a) repair, restore and rebuild such building as quickly as reasonably
practicable subject to the requirements and limitations stated in this
Declaration; (b) tear down and remove all parts of said damaged or destroyed
building then remaining and the debris resulting therefrom and otherwise clean
and restore the Building Area affected by such casualty to a level and clean
condition; or (c) any combination of the above in a manner satisfactory to the
Committee. The Owner of any Parcel on which damaged building improvements are
located shall be obligated to proceed with all due diligence hereunder, and such
Owner shall cause cleanup and/or reconstruction to commence within three (3)
months after the damage occurs and to be completed within twelve (12) months
thereafter, unless prevented by causes beyond such Owner's reasonable control.
ARTICLE 13
COMMON AREA MAINTENANCE
13.1 ASSOCIATION MAINTENANCE. Upon completion of construction of the
Improvements on a Parcel (which as of the date of this Declaration includes only
Parcel C), the Association shall manage, maintain, repair and replace (or cause
to be managed, maintained, repaired and replaced) the Common Area on such Parcel
(except any portion thereof which is an Exclusive Use Area) and all Improvements
within the Common Area on such Parcel (except in any portion of the Common Area
which is an Exclusive Use Area) in good repair and appearance, including, but
not limited to, contracting for and paying costs of or related to (i) utility
services provided to such Common Area including, but not limited to, water,
electricity and natural gas (if applicable); (ii) sweeping and cleaning
(including steam cleaning) the parking areas, sidewalks and other hardscape, as
necessary; (iii) repairing and replacing asphalt paving using materials equal to
or better than those originally installed; (iv) bumpers; (v) parking lot
striping and directional signs; (vi) light bulbs and light standards; (vii)
perimeter walls; (viii) electrical lines, gas lines (if applicable), storm
drains, water lines and sanitary sewers which serve such Common Area or which
are within such Common Area; (ix) planters, landscaping and sprinkler systems
comprising the Common Landscaping; (x) hiring and supervising private security,
if any; (xi) the insurance for which Section 13.2 provides; and (xii) all other
items of maintenance, repair or replacement that may be needed from time to time
to maintain such Common Area properly and in a first-class condition.
The foregoing notwithstanding, the following exceptions shall apply:
(a) During the period of construction or repair of any building on any
Parcel, the Owner of such Parcel shall maintain (or cause to be maintained)
those portions of the Common Area within its Parcel, if any, which are
affected by such building construction or repair and shall be responsible
for controlling blowing dust and debris resulting from such construction or
repair activity.
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(b) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving more than one
building with different Owners and lying beneath the Common Area (e.g., an
electric trunk line from which individual lateral lines are routed to serve
different individual buildings), the Association will perform any required
maintenance, repair or replacement (or cause the same to be performed), and
will bill each Owner's share of the cost of the work to the Owners of the
Parcels whose buildings are served by the facilities. Each Owner's share of
the total bill shall be determined by multiplying the total bill by a
fraction, the numerator of which is the Parcel Area of the Owner's Parcel
or Parcels served by the facility, and the denominator of which is the
Parcel Area of all Parcels served by the facility. Each Owner shall be
responsible for maintenance and repair of the lateral lines serving his
Parcel or Parcels.
(c) With respect to those portions of facilities for water, sewer,
gas, telephone, electricity and other utilities serving one or more
buildings owned by the same Owner and lying beneath the Common Area, the
Association will perform any required maintenance, repair or replacement
(or cause the same to be performed), and will bill the Owner of the
Parcel(s) whose building(s) is served by the facilities. With the consent
of the Association, the Owner of the affected building or buildings may
contract directly for any such required maintenance, repair or replacement
work to be performed at the sole cost and expense of such Owner.
13.2 COMMON AREA INSURANCE.
(a) As part of its obligation to maintain the Common Area within
the Center except those portions designated Exclusive Use Areas, the
Association shall at all times maintain in force and effect commercial or
comprehensive general liability insurance insuring the Association and, as
additional insureds, all Owners and Eligible Occupants who now or hereafter
own or hold any Parcel or any qualifying leasehold estate (I.E., qualifying the
lessee thereunder to be an Eligible Occupant) or other interest therein as
their respective interests may appear (provided that the Association is given
prior written notice of such interest), against claims for bodily injury,
personal injury, death or property damage occurring in, upon or about the
Common Area. Such insurance shall be written with an insurer licensed to do
business in the State of California. All such insurance shall be primary
coverage, endorsed to name as additional insureds all Owners and Eligible
Occupants under leases of which the Association has been notified in writing,
and shall not require that any other insurance be called upon to contribute
to a loss under such coverage, and shall have liability limits of not less
than Three Million Dollars ($3,000,000) combined single limit coverage for
bodily injury, personal injury, death and/or property damage arising out of
any single occurrence, which amount shall be reviewed annually and changed to
reflect the current practice in mixed use commercial centers in San Diego
County, California which are of a similar size and which have a similar mix
of Occupants. The Association shall cause certificates of insurance to be
issued by the insurer to each of the Owners and Eligible Occupants of whom
the Association has been notified in writing, certifying that such insurance
is in full force and effect and shall not be canceled or materially amended
without thirty (30) days prior written notice thereof to each of such Owners
and Eligible Occupants.
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(b) Association shall obtain and maintain in force property damage
insurance under a standard form policy or policies of all-risk insurance
then in use in California, covering retaining walls and other walls,
lighting facilities and lighting standards, landscaping (in the reasonable
business judgment of the Association), and other improvements in the Common
Area (excluding Exclusive Use Areas);
(c) Worker's compensation insurance, as required by law;
(d) Association Directors' and Officers' errors and omissions
insurance, in form and amount determined by the Board; and
(e) Insurance against any other risk which the Board considers
appropriate.
13.3 ASSOCIATION'S RIGHT TO REPAIR NEGLECTED PARCELS. In addition to
maintaining the Common Area, if an Owner fails to maintain the Improvements, and
other portions of Owner's Parcel so as to violate Section 12.1, then the
Association, after approval of the Board, shall have the right, through its
agents, contractors and employees, to enter onto the Owner's Parcel to repair,
maintain and restore the Parcel, any Exclusive Use Areas, and the exteriors of
any building and other Improvements erected thereon. However, entry into a
Building Area or Exclusive Use Area may be made only after not less than five
(5) business days notice has been given to the Owner and any Eligible Occupant.
Entry shall be made with as little inconvenience to the Owner and Occupants as
possible and any damage caused thereby shall be repaired by the Association at
its cost and expense. The cost of such exterior maintenance shall be levied as a
Reimbursement Assessment against such Parcel pursuant to Section 3.8.
13.4 PROPERTY MANAGEMENT COMPANY. Nothing in this Article 13 or in this
Declaration shall preclude or be interpreted as precluding the Association from
retaining a "managing agent" within the meaning of Section 1363.1 of the
California CIVIL CODE, as it may be amended or replaced from time to time. In
the event the Association so retains such a "managing agent", then the "managing
agent" and the Association shall make all arrangements necessary or proper to
ensure that funds accepted or received by the "managing agent" and belonging to
the Association are deposited and handled in compliance with Section 1363.2 of
the California CIVIL CODE, as it may be amended or replaced from time to time.
The Association may retain the Declarant or an affiliate of the Declarant as
managing agent.
ARTICLE 14
THE ASSOCIATION
14.1 ORGANIZATION. The Association is a California nonprofit mutual benefit
corporation.
14.2 DUTIES. The Association shall be charged with the duties set forth in
the Articles, the Bylaws and this Declaration, including, but not limited to,
the following:
(a) ASSESSMENTS. The Association shall fix, levy, collect and
enforce Assessments as further described in Article 3.
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(b) COMMON AREAS. The Association shall maintain, repair,
replace, restore, operate, control and manage the Common Areas (excluding
Exclusive Use Areas) and all facilities, Improvements and equipment located
thereon, as further described in Article 13, except to the extent such
maintenance has been assumed by a governmental agency or public or private
utility, and except as otherwise set forth herein.
(c) PAYMENT OF EXPENSES. The Association shall pay all expenses
and obligations incurred by the Association in the conduct of its business,
including, without limitation, all licenses, taxes or governmental charges
levied or imposed against the property of the Association.
14.3 POWERS. The Association shall have the following powers, rights and
duties, in addition to those provided elsewhere in this Declaration, the
Articles and the Bylaws and those powers granted to a nonprofit mutual benefit
corporation pursuant to the California Corporations Code:
(a) ACQUISITION OF PROPERTY. The Association shall have the power
to acquire (by gift, purchase or otherwise), own, hold, improve, operate,
maintain, convey, sell, lease, transfer, dedicate for public use or otherwise
dispose of real or personal property in connection with the affairs of the
Association.
(b) ASSESSMENTS, LIENS. The Association shall have the power to
levy and collect assessments pursuant to Article 3 and to perfect and enforce
liens in accordance with the provisions of Article 3.
(c) BORROWING. The Association shall have the power to borrow
funds to pay costs of operation, secured by assessment revenues due for
succeeding years or by assignment or pledge of rights against delinquent Owners;
provided, however, that the affirmative vote or written consent of Declarant and
other Owners holding a majority of the total voting power of the Class A Members
shall be required to borrow, during any calendar year, in excess of an amount
equal to Ten Thousand Dollars ($10,000) multiplied by the number of Parcels
within the Center subject to assessment. Such borrowing may be from Declarant if
Declarant agrees to advance funds; and, in such event, Declarant shall receive,
as interest, no more than the published Wall Street Journal Prime Rate, as
modified from time to time, plus two percent (2%).
(d) CONTRACTS. The Association shall have the power to contract
for goods and/or services for the Common Areas or for the performance of any
power or duty of the Association, subject to limitations set forth elsewhere in
this Declaration, the Articles or the Bylaws. The Association's power to
contract shall include, but is not limited to, the right to enter into
agreements with one or more other owners' associations for the purposes
described in this Section.
(e) DELEGATION. The Association shall have the power to delegate
its authority and powers to committees, officers or employees of the
Association.
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(f) ENFORCEMENT. The Association shall have the power to enforce
this Declaration pursuant to the provisions hereof.
(g) SECURITY SERVICES. The Association shall have the power to
provide, or to contract for the provision of, security patrols or other security
measures, or both, as the Board deems necessary.
(h) VARIANCES. The Board, acting for the Association, shall have
the power to grant reasonable variances from the provisions of this Declaration
from time to time, as the Board may deem, in its sole discretion, to be in the
best interests of the Center, in order to overcome practical difficulties and to
prevent unnecessary hardship in the application of the provisions contained
herein; provided, however, that: (a) a variance shall not materially injure any
of the Parcels or Improvements in the Center; and (b) the Owner seeking the
variance shall otherwise be subject to and conform with all applicable
governmental laws, ordinances, regulations and requirements. No variance granted
pursuant to the authority granted herein shall constitute a waiver of any
provision of this Declaration as applied to any person or real property.
14.4 ELECTION OF NEW BOARD OF DIRECTORS. Concurrently with the recordation
of this Declaration, the Members shall elect a new Board of Directors of the
Association consisting of three (3) directors who shall hold office until the
next annual meeting of Members pursuant to Section 14.7.
14.5 SUBSEQUENT BOARD OF DIRECTORS. At each annual meeting of Members, a
new Board consisting of three (3) directors shall be elected, and such Board
shall serve until the next annual meeting. The Bylaws may provide for staggered
terms and lengths of terms for directors different from those initially set
forth in this Declaration and may provide for a greater or lesser number of
directors than set forth herein; provided, however, in no event shall there be
more than seven (7) directors or less than three (3) directors. The Board shall
undertake all duties and responsibilities of the Association and the management
and conduct of the affairs thereof, except as expressly reserved herein to a
vote of the Members.
14.6 PERSONAL LIABILITY. No member of the Board, or of any committee of the
Association, or any officer or manager of the Association shall be personally
liable to any Owner, or to any other party, including the Association, for any
damage, loss or prejudice suffered or claimed on account of any act, omission,
error or negligence of any such Person.
14.7 ANNUAL MEMBERSHIP MEETINGS. The Association shall hold annual meetings
of the Members in accordance with the Bylaws of the Association.
ARTICLE 15
APPROVAL OF OWNERS AND NOTICES
All notices, demands or requests for consent or approval of any kind which
the Association or any Owner or Occupant is required or desires to give or make
upon the
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Association or any other Owner or Occupant shall (a) be in writing; (b) specify
the Section of this Declaration which requires or authorizes that such notice be
given or requires that such consent or approval be obtained; and (c) be given or
made (subject to the right of the Association or any Owner or Occupant to
designate a different address by giving notice of such change in the manner
provided in this Section) by personal delivery, private express courier, or by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed, in the case of Declarant and the consenting parties, as
follows:
DECLARANT: KR-Carmel Partners, LLC
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
PIAZZA PARTNERS, L.P.: Piazza Partners, L.P.
c/o The Allen Group
401 "B" Street, Suite 2150
San Diego, CA 9101
Attention: Mr. David L. Dick
CARMEL VALLEY, LLC: Carmel Valley, LLC
___________________________________
___________________________________
Attention:_________________________
ACACIA GASOLINE AND CAR WASH Acacia Gasoline and Car Wash of
OF CARMEL VALLEY, LLC Carmel Valley, LLC
___________________________________
___________________________________
___________________________________
Attention:_________________________
RFS FINANCING PARTNERSHIP, L.P.: RFS Financing Partnership, L.P.
___________________________________
___________________________________
Attention:_________________________
ASSOCIATION: Carmel Center Association
c/o Kilroy Realty Corporation
4365 Executive Drive, Suite 850
San Diego, CA 92121
Attention: Mr. Steven L. Black
When given in the manner prescribed in this Section, all notices, demands
or requests for consent or approval shall be deemed given, received, made or
communicated on the date
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personal delivery is effected or, if mailed, on the delivery date or the date on
which delivery is refused by the addressee.
ARTICLE 16
MODIFICATION PROVISION
This Declaration may not be modified in any respect whatsoever, or
rescinded, in whole or in part, except by written instrument duly recorded in
the Office of the County Recorder of San Diego County, after first being duly
signed and acknowledged by Declarant for so long as there is a Declarant, and by
those Owners (which may include Declarant) holding at least seventy-five percent
(75%) of the Members' voting power. Notwithstanding the foregoing, any
modification or rescission of any of the provisions of Section 8.2 regarding the
Common Area and the provisions of Article 11 regarding the grant of easements
with respect to the Common Area shall require the written consent of those
Owners as set forth in Section 8.2.
ARTICLE 17
NOT A PUBLIC DEDICATION
Nothing contained in this Declaration shall be deemed to be a gift or
dedication of any portion of the Center to the general public or for the benefit
of the general public or for any public purposes whatsoever, it being the intent
of Declarant that this Declaration shall be strictly limited to and for the
purposes expressed in this Declaration. The right of the public or any Person to
make any use whatsoever of the Center or any portion thereof (other than any use
expressly allowed by a written or recorded map, agreement, deed or dedication)
is by permission and subject to control of the Owners.
ARTICLE 18
INJUNCTIVE RELIEF
In the event of any violation or threatened violation by any Owner or
Occupant of any portion of the Center of any of the terms, covenants, conditions
and obligations of this Declaration, in addition to the other remedies for which
this Declaration provides, any or all of the Owners shall have the right to
enjoin such violation or threatened violation in a court of competent
jurisdiction.
ARTICLE 19
BREACH SHALL NOT PERMIT TERMINATION
No breach of this Declaration shall entitle any Owner to cancel, rescind or
otherwise terminate this Declaration, but such limitation shall not affect in
any manner any other rights or remedies which such Owner may have under this
Declaration by reason of any breach of this Declaration. Any breach of any of
the covenants, conditions or restrictions set forth in this Declaration,
however, shall not defeat or render invalid the lien of any Mortgage made in
good faith and for value, but such covenants, conditions or restrictions shall
be binding upon and be effective against such Owner of any of said property or
any portion thereof whose title thereto is acquired by foreclosure, trustee's
sale or otherwise.
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ARTICLE 20
INDEMNITY BY OWNERS
20.1 INDEMNITY. Each Owner shall indemnify, protect, defend and hold the
Association and the other Owners harmless from and against all claims, expenses,
liabilities, loss, damage and costs, including any actions or proceedings in
connection therewith and including reasonable attorneys' fees and costs,
incurred in connection with, arising from, due to or as a result of the death of
or any accident, injury, loss or damage, howsoever caused, to any Person or loss
or damage to the property of any Person as shall occur on the indemnifying
Owner's Parcel (excluding Common Areas), except claims resulting from the
negligence or willful act or omission of (a) the Association or the indemnified
Owner, whichever is applicable; (b) any Occupant of the indemnified Owner's
Parcel (including such Occupant's agents, servants and employees); or (c) the
agent, servants or employees of such indemnified Owner, wherever such negligence
or willful act or omission may occur.
20.2 BUILDING AREA LIABILITY INSURANCE. Each Owner shall at all times
during the term of this Declaration maintain or cause to be maintained
commercial or comprehensive general liability insurance covering the Owner's
Parcel (excluding Common Area) insuring against the risks of bodily injury,
property damage and personal injury liability, with a limit of not less than
Three Million Dollars ($3,000,000) per occurrence, which amount shall be
reviewed and adjusted by the Board every three (3) years for increases
recommended by insurance industry-recommended standards for mixed use commercial
centers in San Diego County, California.
ARTICLE 21
SEVERABILITY
If any provision of this Declaration is held by a court of competent
jurisdiction to be invalid, the invalidity of such provision shall not affect
the validity of the remaining provisions of this Declaration, and all remaining
provisions shall continue unimpaired, in full force and effect.
ARTICLE 22
ENFORCEMENT AND REMEDIES
22.1 RIGHT TO ENFORCE. The Declarant or the Association shall have the
right to enforce, by all appropriate legal and equitable proceedings, all
conditions, covenants, restrictions, reservations, liens, and charges now or
hereafter imposed by the provisions of this Declaration. It is hereby agreed
that money damages are an inadequate remedy for breach of any of the conditions,
covenants and restrictions contained herein, other than a default in the payment
of any assessment when due. Every Owner and Occupant of a Parcel subject to
these restrictions expressly waives the benefit of California Code of Civil
Procedure Section 731 (a) and any other comparable statute or rule, and agrees
that such violation or breach may be enjoined whether or not monetary damages
may be provided or provable. Prior to commencing litigation, the requirements of
California Civil Code Section 1354 relating to alternative dispute resolution
shall be satisfied.
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22.2 OWNER'S REMEDIES. After written request to the Association to prevent
any violation of this Declaration, and failure to act by Declarant or the
Association within fifteen (15) days after receipt of such request, any Owner
shall additionally have all enforcement rights provided for in this Declaration.
In addition, any other party to whose benefit this Declaration inures shall have
the right, in the event of violation or breach of this Declaration, to prosecute
a proceeding at law or in equity against the Person or Persons who have violated
or are attempting to violate this Declaration, to enjoin or prevent them from
doing so, to cause said violation to be remedied and to recover damages for said
violation.
22.3 WAIVER. The failure of any Owner, Declarant or the Association to
enforce any provision of this Declaration shall in no event be deemed a waiver
of the right to do so thereafter, and neither any Owner, Declarant nor the
Association shall have any liability for such failure of such Owner, Declarant
or the Association to enforce any provision of this Declaration.
ARTICLE 23
LITIGATION EXPENSES
If any Owner or the Association brings an action against any other Owner or
Occupant by reason of a breach or alleged violation of any covenant, term or
obligation of this Declaration, or for the enforcement of any provision of this
Declaration or otherwise arising out of this Declaration, the prevailing party
in such action shall be entitled to its cost of suit and reasonable attorneys'
fees, which shall be made part of any judgment rendered in such action.
ARTICLE 24
NO ASSIGNMENT OR TRANSFER
The rights, powers, duties and obligations conferred upon the Owners
pursuant to this Declaration shall not at any time be transferred or assigned by
any Owner, except (a) in the case of the rights, powers, duties and obligations
of Declarant, by Declarant pursuant to the definition of "Declarant" set forth
in Article 1; or (b) in the case of any Owner, (i) through a transfer of the
Owner's interest in its Parcel in the manner provided in Article 25, or (ii) to
an Eligible Occupant pursuant to Section 2.1.
ARTICLE 25
SALE BY OWNER
Upon the sale, transfer, conveyance or assignment by any Owner of its
right, title and interest in its Parcel, the following shall apply:
25.1 NOTICE. The transferring Owner shall give prompt written notice of the
sale, transfer, conveyance or assignment to the Association, Declarant and each
other Owner. Such notice shall set forth the name of the transferee and the
transferor, the description of the affected Parcel, the nature of the interest
transferred, the transferee's mailing address and the date of transfer. Prior to
receipt of such notification, any and all communications required or permitted
to be given under the Project Documents shall be deemed to be duly given to the
transferee if duly and timely given to said transferee's transferor.
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25.2 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Each Owner and Occupant, and every
other person who now or hereafter owns or acquires any right, title, estate or
interest in or to any portion of the Center, by acceptance of a deed, lease or
other interest therein, shall be conclusively deemed to have consented and
agreed to hold such title, leasehold or interest subject to and to comply with
every covenant, condition and restriction contained herein and to the rights of
Declarant and the Association hereunder, whether or not any reference to this
Declaration is contained in the deed, lease or other instrument by which such
person acquired said interest in the Center. Every provision of this
Declaration, regardless of its characterization herein, shall be deemed a
covenant, condition, restriction, reservation, easement or servitude, as the
circumstances may require, to permit the enforcement thereof and to carry out
the intent of this Declaration.
25.3 RELEASE OF OWNER. A transferring Owner shall be released from all
obligations of this Declaration as of the effective date of the transfer;
provided that with respect to the period before the effective date of the
transfer, such Owner is not in default in the performance of any duties or
obligations arising under this Declaration or in the payment of any amounts due
and payable under this Declaration.
25.4 LIABILITY OF TRANSFEREE. In no event shall any transferee of any Owner
be liable for any default of the transferring Owner under this Declaration which
occurred prior to the effective date of the transfer; PROVIDED, HOWEVER, nothing
contained in this Section shall affect the existence, priority, validity or
enforceability of any lien placed upon the transferred Parcel or portion thereof
pursuant to Section 3.9.
ARTICLE 26
TERM OF DECLARATION
This Declaration shall continue for a period of fifty (50) years and
thereafter year to year, unless, before the expiration of the term (as it may be
so extended), this Declaration is terminated or modified by written instrument
duly signed and acknowledged by the Declarant, if the Declarant still owns a
Parcel within the Center, and Owners (which may include Declarant) holding at
least seventy-five percent (75%) of the Members voting power, and such
instrument is recorded in the Office of the County Recorder of San Diego County,
California. This Declaration shall terminate upon the expiration of the term
following such recordation. Notwithstanding any such termination, the provisions
of Section 8.2 regarding the Common Area and the provisions of Article 11
regarding the grant of easements with respect to the Common Area shall survive
and remain in full force and effect unless terminated or otherwise modified by
the requisite written consent of the Owners as set forth in Section 8.2.
ARTICLE 27
MISCELLANEOUS
27.1 CAPTIONS. Captions and Section headings, where used in this
Declaration, are for convenience of reference only, are not intended to be a
part of this Declaration and in no way
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EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
define, limit, amplify, change, alter or describe the scope or intent of the
particular paragraphs to which they refer.
27.2 GENDER. For the purpose of this Declaration, the neuter gender
includes the feminine or masculine and the singular number includes the plural.
27.3 DECLARANT'S RESERVED RIGHTS. Wherever it appears in this Declaration
that the Declarant has the right to waive compliance with certain provisions,
the right to approve or deny certain matters or the right to exercise its
discretion in various areas, these rights of the Declarant are expressly
reserved or retained by the Declarant, and all of the provisions of this
Declaration are subject to such retained and reserved rights.
27.4 EXHIBITS. All exhibits referred to herein are attached hereto and
incorporated by reference.
27.5 GOVERNING LAW. This Declaration shall be governed, construed and
enforced in accordance with the laws of the State of California.
27.6 MORTGAGE PROTECTION. No breach of this Declaration shall affect,
impair, defeat or render invalid the lien of any Mortgage now or hereafter
executed in good faith and for value upon any part of the Center. However, if
any portion of the Center is sold under a foreclosure of any Mortgage or is
conveyed to the party so secured in lieu of foreclosure, any purchaser at such
sale, and his successors and assigns, shall hold any and all property so
acquired subject to all of the restrictions and other provisions of this
Declaration. Such a purchaser shall not be obligated to cure any preexisting
breach of this Declaration which is non-curable by payment of money (subject to
the provisions of Section 3.11 subordinating the lien of delinquent assessments
to the lien of a first priority Mortgage) or of a type which is not practical or
feasible to cure. Any loan to facilitate the resale of any portion of the
Property after a foreclosure sale or deed in lieu of foreclosure is a loan made
in good faith and for value. If a Mortgagee delivers written notice of its
Mortgage to the Board together with a request for notices of default with
respect to the Parcel or Parcels encumbered by the Mortgage, the Association
shall deliver copies of all such notices of default to such Mortgagee (a
"Requesting Mortgagee") concurrently with delivery to the Owner or Owners. A
Requesting Mortgagee shall also be entitled to timely written notice of any
destruction, taking or threatened taking that affects a material portion of the
Common Area (including without limitation any Common Parking Area) benefiting a
Parcel securing the Mortgage, and any lapse, cancellation or material
modification of any insurance policy maintained by the Association. Mortgagees
are hereby authorized to furnish information to the Board concerning the status
of any Mortgage. Nothing contained in this Declaration or the other Project
Documents shall give the Association, any Owner, or any other party priority
over the rights of a first Mortgagee with respect to distributions of insurance
proceeds or condemnation awards for losses to or a taking of a Parcel, or any
portion thereof, encumbered by a Mortgage held by such Mortgagee.
27.7 MUTUALITY, RECIPROCITY; RUNS WITH LAND. This Declaration is made for
the direct, mutual and reciprocal benefit of each and every Parcel; shall create
mutual, equitable servitudes upon each Parcel in favor of every other Parcel;
shall create reciprocal rights and
-44-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
obligations between and among the respective Owners during their respective
periods of ownership and privity of contract and estate between and among all
grantees of each Parcel, their respective heirs, successors and assigns; and
shall, with respect to the Owner of each Parcel, its heirs, successors and
assigns during their respective periods of ownership, operate as covenants
running with the land, for the benefit of all other Parcels.
IN WITNESS WHEREOF, the Owners have signed and made this Declaration as of
the date first above written.
-45-
EXHIBIT F
-50-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
DECLARANT KR-CARMEL PARTNERS, LLC, a Delaware
limited liability company
By: Kilroy Realty, L.P., a Delaware limited
partnership, Managing Member
By: Kilroy Realty Corporation, a
Maryland corporation, its
General Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PIAZZA PARTNERS, L.P. PIAZZA PARTNERS, L.P.,
a California
limited partnership
By: Allen Development, Inc., a California
corporation, Its General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-46-
EXHIBIT F
-51-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ACACIA GASOLINE AND CAR WASH ACACIA GASOLINE AND CAR WASH OF
OF CARMEL VALLEY, LLC CARMEL VALLEY, LLC, a California limited
liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
RFS FINANCING PARTNERSHIP, L.P. RFS FINANCING PARTNERSHIP, L.P., a
Tennessee limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSENT OF ASSOCIATION
The Association hereby manifests its assent to the foregoing Declaration as
of the date of its recordation in the Office of the County Recorder of San Diego
County, California.
CARMEL CENTER ASSOCIATION, a California
nonprofit mutual benefit corporation
-47-
EXHIBIT F
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-48-
EXHIBIT F
-53-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-49-
EXHIBIT F
-54-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ____________________________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-50-
EXHIBIT F
-55-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-51-
EXHIBIT F
-56-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-52-
EXHIBIT F
-57-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-53-
EXHIBIT F
-58-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
-54-
EXHIBIT F
-59-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
SUBORDINATION AGREEMENT
_______________________________________________________, being the
beneficiary under that certain deed of trust dated _____________________, 199__
and recorded in the Office of the County Recorder of San Diego County,
California on ____________, 1999__ as Document No. ________________, hereby
declares that the lien and charge of said deed of trust are and shall be
subordinate and inferior to the Agreement Between Landowners Including
Covenants, Conditions and Restrictions and Grants of Easements for Carmel Center
and Including Termination of Both Former Declaration and Prior Grants of
Easements to which this Subordination Agreement is attached.
[NAME OF LENDER]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STATE OF_____________________)
)ss.
COUNTY OF____________________)
On _________________________, before me, ______________________, a Notary
Public in and for said state, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------------------------
Notary Public in and for said State
EXHIBIT F
-60-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "A"
SITE PLAN OF THE CENTER
[MAP]
EXHIBIT F
-61-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTIONS OF PARCELS COMPRISING THE CENTER
PARCEL A: Parcel 2 of Parcel Map 15957 (NW corner site)
PARCEL B: Parcel 1 of Parcel Map 17382 (office building - west of parking
garage)
PARCEL C: Parcel 1 of Parcel Map 18098 (hotel)
PARCEL D: Parcel 2 of Parcel Map 18098 (Frank's pad immediately east of
hotel)
PARCEL E: Parcel 1 of New Parcel Map (parking garage)*
PARCEL F: Parcel 6 of New Parcel Map (parking garage)*
PARCEL G: Parcel 7 of New Parcel Map (parking garage)*
PARCEL H: Parcel 2 of New Parcel Map (office building - most westerly)*
PARCEL I: Parcel 3 of New Parcel Map (office building)*
PARCEL J: Parcel 4 of New Parcel Map (office building)*
PARCEL K: Parcel 5 of New Parcel Map (office building - most easterly)*
PARCEL L: Lot 7 of Parcel Map 13138 (gas station - car wash)
PARCEL M: Lot 8 of Parcel Map 13138 (Frank's pad at far east end of site)
EXHIBIT "B"
EXHIBIT F
-62-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
* - These Parcels are presently described as Lots 1 through 6 and 9 of
Piazza Carmel II, Unit No. 1, in the City of San Diego, County of San Diego,
State of California, according to map thereof No. 13138, filed in the Office of
the County Recorder of San Diego County, September 13, 1994.
EXHIBIT F
-63-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT "C"
TABLE OF PARCEL AREAS (PRELIMINARY)
PARCEL A: 47,568 square feet of Parcel Area
PARCEL B: 104,326 square feet of Parcel Area
PARCEL C: 168,839 square feet of Parcel Area
PARCEL D: 18,861 square feet of Parcel Area
PARCEL E: N/A (Parking Garage) square feet of Parcel Area
PARCEL F: N/A (Parking Garage) square feet of Parcel Area
PARCEL G: N/A (Parking Garage) square feet of Parcel Area
PARCEL H: 756,677 (total for Parcels H-K) square feet of Parcel Area
PARCEL I: _________________ square feet of Parcel Area
PARCEL J: _________________ square feet of Parcel Area
PARCEL K: _________________ square feet of Parcel Area
PARCEL L: 76,404 square feet of Parcel Area
PARCEL M: 58,501 square feet of Parcel Area
----------------------------
Total Parcel Area 1,229,176 square feet
Subject to Assessment
EXHIBIT F
-64-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
HVAC AND ELECTRICAL STANDARDS
HEATING, VENTILATING & AIR CONDITIONING
Description of System: The system design
shall include roof-top mounted variable air
column (VAV) cooling units with associated
valves, pipes and fittings. Capacity and
number of units as indicated on the plans.
Ductwork stubbed to each floor. Medium
pressure duct loop provided as a Tenant
Improvement.
A. Five (5) VAV rooftop package units
variable frequency drive motors per
Building.
B. Controls: The controls will be an
electronic type and give individual zone
control.
C. Exhaust System: Provide all toilet rooms
with acceptable exhaust systems with
quiet operation. Exhaust to roof.
Exhausting to meet code requirements.
Provide exhaust in stair enclosures as
required by code.
ELECTRICAL
Main Service Main service to each building to be 277/480
volt, 3 phase 4 wire, 4000 amp located
within an electric room with distribution
and subpanel for core functions only to
each floor as a part of the Base, Shell and
Core improvements.
Building Power and Lighting Electrical work shall include metering
facilities, conduit, conductors, main
switch board, subpanels, branch circuits,
J-boxes, lighting fixtures, wall light
switches, power receptacles, etc. for the
site common areas, Base, Shell and Core
improvements and parking structure.
Switchgear and conductors, for conduits,
subpanels, etc. for Tenant access in Tenant
Improvements.
Power & Utility Core Electrical for the Base, Shell and Core
improvements and parking structure work
shall include a service and distribution
including conduit, conductors, switch
board, subpanels, branch circuits, J-boxes,
lighting fixtures, wall light switches,
power receptacles, etc.
Power for Equipment Power wiring and connection to air
condition equipment as well as control
wiring and control devices to be included
in Tenant Improvements.
Telephone & Data Communication Telephone and data communication cabling
provided by Tenant. Provide (4) 4" conduit
between Buildings.
Installation All electrical work to be in accordance
with applicable codes. All necessary
outlets, conduit, wiring, trenching and
concrete encasing shall be provided as
required.
Interior Lighting Fluorescent lighting (exit corridors,
janitor closet): Provide 2' x 4' recessed
fixtures with parabolic lens and electronic
ballast in suspended ceilings. Provide
recessed down lighting in lobbies. Provide
1' x 4' recess mounted fixtures at toilet
rooms, electrical and telephone rooms. All
lighting in lobby and exit enclosures to be
controlled by wall mounted motion sensors
with override switch as required by Title
24.
EXHIBIT G
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-1
PEREGRINE SYSTEMS CORPORATE CENTER
JANITORIAL SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 6
--------------
SPECIFICATIONS
ENTRANCE LOBBIES/BUILDING CORRIDORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum carpets completely.
3. Empty all waste containers and spot-clean.
4. Spot clean carpeted floor surface.
5. Dust ledges within reach.
6. Damp mop spillage as needed.
7. Empty cigarette receptacles.
8. Spot clean walls and doors.
9. Clean entrance mats as necessary.
10. Clean all metal door frames and thresholds.
11. Clean building directory board glass.
12. Vacuum entrance mats as necessary.
13. Only designated lights will be left on.
Weekly Services:
1. Spot clean walls, woodwork, and doors.
2. Perform high dusting.
3. Edge all carpets.
4. Polish entrance metals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 6
--------------
SPECIFICATIONS - CONTINUED
5. Dust all baseboards.
6. Dust all horizontal surfaces.
Monthly Services:
1. Dust and vacuum air supply and exhaust diffusers.
2. Vacuum all furniture in lobby area.
ELEVATORS
Daily Services: Five (5) Days Per Week
1. Sweep and spot clean non-resilient flooring.
2. Vacuum and spot clean carpets.
3. Clean and polish doors.
4. Clean and polish interior of cab.
5. Vacuum tracks thoroughly.
6. Clean all bright work.
Weekly Services:
1. Polish all bright work.
2. Clean tracks thoroughly.
Monthly Services:
1. Vacuum ceiling grate.
STAIRWAYS AND LANDINGS
Daily Services: Five (5) Days Per Week
1. Police area to remove refuse.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 3 OF 6
--------------
SPECIFICATIONS - CONTINUED
2. Damp mop to remove spillage as needed.
3. Spot sweep stairs as needed.
Weekly Services:
1. Sweep stairways and landings.
2. Dust all handrails.
3. Wet mop as needed.
OFFICE/TENANT AREAS
Daily services: Five (5) Days Per Week
1. Sweep with chemically treated dust-mop or vacuum all high traffic
areas.
2. Spot clean composition floors.
3. Dust desks, chairs, and all other office furniture.
4. Clean all ash trays and sand urns.
5. Empty all waste baskets and carry trash to pick up area.
6. Spot clean partition door glass.
7. Clean and polish drinking fountains.
8. Install plastic waste basket liners furnished by customer, replace as
necessary.
Weekly Services:
1. Dust ledges and window sills.
2. Perform High Dusting.
3. Dust picture frames and book shelves.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-3-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 4 OF 6
--------------
SPECIFICATIONS - CONTINUED
4. Remove fingerprints from woodwork, walls and partitions.
5. Dust vertical surfaces of office furniture.
6. Dust chair rungs and furniture legs.
7. All in suite carpet to be vacuumed completely.
8. Spot clean around wall switches.
9. Spot clean doors, door frames, and counters.
10. Dust all horizontal surfaces.
11. Spot clean all glass partitions.
Monthly Services:
1. Perform high dusting, i.e. door sashes and tops of partitions.
2. Wipe down plastic and leather furniture.
3. Dust venetian blinds.
4. Dust and vacuum ceiling and wall vents.
RESTROOM AND LOUNGES
Daily Services: Five (5) Days Per Week
1. Empty and wipe out all waste paper containers.
2. Empty sanitary napkin containers and replace insert.
3. Polish all metal and mirrors.
4. Clean all dispensers.
5. Clean and disinfect wash basins, toilets and urinals.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-4-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 5 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Disinfect undersides and tops of toilet seats.
7. Clean floors with germicidal solution.
8. Vacuum carpets.
9. Refill soap, towel, and tissue dispensers.
10. Report to Building Manager any fixture not working.
Weekly Services:
1. Perform high dusting.
2. Dust all air supply and exhaust diffusers.
3. Polish all dispensers.
4. Spot clean tile walls and toilet partitions.
5. Spot clean walls around wash basins.
Monthly Services:
1. Wash down toilet compartment partitions.
KITCHEN, VENDING OR LUNCHROOM
Daily Services: Five (5) Days Per Week
1. Clean sink if empty.
2. Clean counter top.
3. Empty trash.
4. Damp mop floor.
5. Wipe off tables and chairs and arrange.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-5-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 6 OF 6
--------------
SPECIFICATIONS - CONTINUED
6. Wipe off fronts of vending machines.
7. Vacuum carpeting.
8. Wipe down microwaves.
FLOOR CARE
ENTRANCE LOBBIES AND BUILDING CORRIDORS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
OFFICE/TENANT AREAS
1. Scrub and refinish floors monthly.
2. Strip and refinish floors semi-annually.
RESTROOMS
1. Scrub and seal floors monthly.
- -------------------------------------------------------------------------------
EXHIBIT H-1
-6-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT H-2
PEREGRINE SYSTEMS CORPORATE CENTER
DAY PORTER SPECIFICATIONS
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 1 OF 2
--------------
SPECIFICATIONS
DAY PORTER JOB DESCRIPTION
A. ENTRANCE LOBBY AND BUILDING CORRIDORS
1. Spot clean entrance door glass and lobby glass.
2. Wipe down all interior and exterior window sills at lobby level.
3. Dust lobby, including guard station and vacuum as needed. Empty trash
at guard station and clean counters.
4. Remove trash from receptacles in elevator lobbies on each floor.
5. Clean lobby directory as necessary throughout the day.
6. Empty and clean sand urns and replace sand as needed.
7. Polish and clean all metal and brightwork as necessary.
8. Spot clean carpets for spills.
9. Spot vacuum carpets as necessary.
10. Clean drinking fountains.
B. BUILDING EXTERIOR
1. Police for trash, sidewalks, curbs, around trees, planters and pots
around entire building.
2. Damp mop walkway for spills and stains.
3. Clean hose bib cover plates, as needed.
4. Sweep entrance sidewalks as needed.
5. Police balconies daily for leaves and debris.
6. Sweep balconies as needed.
7. Wipe down handrails on balconies.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
--------------
- ------------------------------------------------------------------ YOUR
SPECIFICATIONS
PAGE 2 OF 2
--------------
SPECIFICATIONS - CONTINUED
C. PARKING GARAGE AND TRASH ENCLOSURES
1. Police and clean around trash bins.
2. Empty and break down all boxes before disposing in dumpsters.
3. Clean pay phones in garage and keep area around them clean.
4. Spot clean garage lobby door and glass.
5. Dust exterior of lobby doors and wall in garage.
6. Check mail room daily, and wipe down counters and mail boxes.
Vacuum as needed.
D. STAIRWELLS, LANDINGS AND ELEVATORS
1. Police stairwells daily for trash and debris.
2. Damp mop for spills and stains.
3. Thoroughly sweep two flights of stairs per day.
4. Check stairwells for cobwebs, dustballs and burned out lights.
5. Dust and wipe handrails after sweeping.
6. Check elevator cabs several times daily.
7. Spot vacuum elevator cabs as necessary.
8. Spot clean elevator doors and walls.
9. Keep elevator cab emergency phones clean and sanitary at all times.
E. RESTROOMS
1. Empty trash containers if necessary.
2. Clean and restock restroom supplies after the noon hour.
- -------------------------------------------------------------------------------
EXHIBIT H-2
-2-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
SECURITY SYSTEMS AND PERSONNEL
A card key access system will be included in the Base, Shell and Core. One
(1) security guard will be on duty at the Project on a twenty-four (24) hour
per day, seven (7) days per week basis commencing upon the Lease Commencement
Date for Building 1. Security rounds will be made at applicable shift
changes. If Tenant constructs a security desk and security console (as a
Tenant Improvement or as an Alteration), Tenant shall have the option to
cause such security guard to be stationed at such desk and console; however,
if Tenant elects to construct such desk and console on a permanent basis at
Building 1, and if Tenant's occupancy in the Project falls below 182,000
rentable square feet, Landlord shall have the option, at Landlord's sole cost
and expense, to relocate such security desk and console to a location in
Building 2 reasonably designated by Landlord. An additional security guard
will be hired to patrol the Project during the hours of 6:00 a.m. to 10:00
p.m. Monday through Friday and 8:00 a.m. to 12:00 noon on Saturday (except
Holidays) commencing upon the Lease Commencement Date for Building 2; the
cost of such additional security guard will be included in Operating Expenses
and Operating Expenses for the Base Year shall be grossed up to include such
guard's services as if provided throughout the Base Year.
EXHIBIT I
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT J
PEREGRINE SYSTEMS CORPORATE CENTER
SIGNAGE CRITERIA
CARMEL CENTER
SIGN GUIDELINES AND CRITERIA
February 24, 1999
EXHIBIT J
-1-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SUBMITTALS AND APPROVALS.....................................................1
RESTRICTIONS.................................................................2
NONCONFORMING SIGNS.......................................................4
ILLEGAL SIGNS.............................................................4
ABANDONED SIGNS...........................................................4
GENERAL PROVISIONS...........................................................5
CONSTRUCTION REQUIREMENTS....................................................7
DESIGN GUIDELINES............................................................9
SIGN CRITERIA...............................................................12
PROJECT AND TENANT SIGNAGE...............................................12
GAS STATION IDENTIFICATION SIGNS.........................................14
SECONDARY SITE SIGNS.....................................................15
ANCILLARY SIGNAGE........................................................15
TEMPORARY SIGNAGE: .........................................................16
PROJECT LEASING / CONSTRUCTION / FUTURE FACILITIES.......................16
TENANT LEASE SPACE BANNERS...............................................16
SEASONAL / SPECIAL EVENT SIGNAGE.........................................16
EXHIBITS....................................................................17
</TABLE>
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
OBJECTIVE
The objective of The Carmel Center Sign Guidelines and Criteria is to provide
design standards and specifications that assure consistency in quality,
color, size, placement, and configuration for signage throughout the project,
and to provide signage that will be an integral part of the overall
architectural character and design theme suitable for the prestigious
corporate image of the Carmel Center project.
SUBMITTALS AND APPROVALS
1. There is a formal process for the creation, review and approval of
signage throughout The Carmel Center project. Prior to sign fabrication,
plans for all proposed signage shall be submitted to the Owner who will
review plans for conformance with the Sign Guidelines and Criteria. All plans
submitted for approval must conform to requirements of the criteria contained
in The Carmel Center Sign Guidelines and Criteria. Only those sign types
specifically approved in writing by the Owner will be allowed. The Owner
shall have the discretionary authority to deny approval for any submittal
which does not comply with the intent or purpose of the sign criteria.
The Tenant shall submit all sign designs to Owner and obtain his written
approval prior to sign fabrication. Approval or disapproval shall remain the
sole right and discretion of the Owner. The Tenant must continue to revise
and resubmit rejected designs until approval is obtained.
Prior to sign fabrication, the Tenant or his sign contractor shall submit for
Owner approval three (3) sets of complete and fully-dimensioned shop drawings
reflecting the sign design approved by the Owner. The shop drawings submittal
shall include:
a. Name, address and phone number of tenant / user
b. Name, address and phone number of Sign Contractor, Designer.
c. Elevation of structure showing all proposed signs indicating sign
type, design, location, size and layout of sign drawn to scale and
indicating dimensions, attachment devices and construction details,
colors, materials and lighting details.
d. Section detail of letters and/or sign element showing the
dimensioned projection of the face of letters, method and intensity
of illumination.
e. Color board with actual sample colors (8-1/2" x 11" format).
f. Site plan showing property lines, buildings, location and
dimensions from public right of way.
1
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<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. Requests to establish signs that vary from the provisions of this sign
program shall be submitted to the Owner for approval in writing prior to
being submitted to the City of San Diego.
4. Following approval of proposed signage by the Owner, applications for all
permits for fabrication and installation by Sign Contractor may be submitted
to the City of San Diego for approval, along with applicable sign permit
applications.
5. Fabrication and installation of all signs shall be performed in accordance
with the standards and specifications outlined in these guidelines and in the
final approved plans and working drawings.
RESTRICTIONS
Only those sign types provided for herein and specifically approved in writing
by the Owner will be allowed. The following signs are prohibited:
1. PROHIBITED SIGNS
a. Exposed junction boxes, transformers, lamps, tubing, conduits,
raceways or neon crossovers of any type.
b. Signs using "Trim Cap" retainers that do not match the color of the
letter returns and logo returns.
c. Rooftop signs.
d. Rotating, revolving, flashing or moving signs, except as provided in
this text.
e. Advertising or promotional signs on parked vehicles.
f. Advertising signs on bus benches, within or outside of the public
right-of-way.
g. Off-premise signs (other than directional signs) installed for the
purpose of advertising a project, event, person or subject not related
to the premises upon which said sign is located.
h. No signs, decals or advertising may be placed on windows except as
provided for in the Sign Guidelines and Criteria and specifically
approved in writing by the Owner.
i. No temporary promotional signs, appliances, or advertising shall be
permitted such as banners, pennants, streamers, temporary wall signs,
portable signs, including
2
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
signs on vehicles, sandwich boards, inflatable displays or any other
attention getting devices except as provided for herein.
3
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
2. NONCONFORMING SIGNS
The Owner may, at its sole discretion, correct, replace or remove any
sign that is installed without written approval and/or that is deemed not to
be in conformance with the plans as submitted and with the Carmel Center
Signage Plan.
3. ILLEGAL SIGNS
Any sign that is deemed not to be in conformance with the approved
guidelines or erected without government approval or permits is considered
an illegal sign. The Owner may, at its sole discretion, correct, replace or
remove any illegal sign.
4. ABANDONED SIGNS
An abandoned sign is one whose use is discontinued because the premises
upon which it is located becomes vacated and unoccupied for a period of more
than 90 days. The Owner may, at its sole discretion, replace or remove any
abandoned sign.
4
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
GENERAL PROVISIONS
1. Signs shall be designed in a manner that is compatible with and
complementary to the overall project and adjacent facades.
2. Only those sign types provided for in the Sign Guidelines and Criteria
and/or specifically approved in writing by the Owner will be allowed.
3. Signage that incorporates logos, business identity, and/or images
denoting the type of business shall be encouraged. Logo design and colors
to be approved by the Owner.
4. Logo, letter heights and sign square footages, where specified, shall be
determined by measuring the normal capital letter of type exclusive of
typographic swashes, ascenders, descenders or exaggerated initial capitals.
Maximum copy areas shall be calculated exclusive of display surfaces,
backings, architectural elements, and mounting devices.
Logos and/or images that are in use on similar buildings operated by the
tenant in California may be used, provided that said images are
architecturally compatible and approved by the Owner and shall be counted in
overall allowable square footage for tenant signs.
5. Notwithstanding the maximum square footages specified for copy area
allowances, signs and typography in all cases shall appear balanced and in
scale within the context of the sign spaces - monuments and building walls -
as a whole. Thickness, height, and color of sign lettering shall be visually
balanced and in proportion to other signs on the building.
6. Wall signs shall be affixed without visible means of attachment, unless
attachments make an intentional statement. Wall signs need not be attached
directly to the lease space to which they refer.
5
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
7. Ground signs or monument signs may be located within landscaped zones
between property lines and building setback lines, allowing for adequate
site-lines for approaching vehicular traffic at street intersections and
project entries, but may not be located in the public right-of-way. Ground
signs identifying any tenant or use within the project area may be located
on any lot within the project area.
8. All sign fabrication work shall be of excellent quality. All logo images
and typestyles shall be accurately reproduced. Lettering that approximates
typestyles shall not be acceptable. The Owner reserves the right to reject
any fabrication work deemed to be below standard.
6
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
CONSTRUCTION REQUIREMENTS
1. All formed metal, such as letter forms, shall be fabricated using
full-weld construction.
2. All ferrous and non-ferrous metals shall be separated with non-conductive
gaskets to prevent electrolysis. In addition to gaskets, stainless steel
fasteners shall be used to secure ferrous to non-ferrous metals.
3. Threaded rods or anchor bolts shall be used to mount sign letters which
are spaced out from background panel. Angle clips attached to letter sides
will not be permitted.
4. Surfaces with color mixes and hues prone to fading (e.g., pastels,
fluorescent, complex mixtures, and intense reds, yellows and purples) shall
be coated with ultraviolet-inhibiting clear coat in a matte, gloss, or
semi-gloss finish.
5. Joining of materials (e.g., seams) shall be finished in such a way as to
be unnoticeable. Visible welds shall be continuous and ground smooth.
Rivets, screws, and other fasteners that extend to visible surfaces shall
be flush, filled, and finished so as to be unnoticeable.
6. Finished surfaces of metal shall be free from canning and warping. All
sign finishes shall be free of dust, San Diego peel, drips, and runs and
shall have a uniform surface conforming to the highest standards of the
industry.
7. Reverse channel letters shall be pinned 2" off building wall. Return
depth shall be 2-1/4", maximum, for letters less than 12" in height, and
such signs shall have a clear acrylic backing. Double tube neon shall be
used where width of letter stroke exceeds 2-1/4".
8. Depth of open channel letters shall not exceed 2". All hardware and neon
tube supports inside open channel letters shall be painted to match interior
letter color. Neon tubing shall be sufficient to make letters read "solid"
and shall be installed so that top surface of neon is flush with front edges
of open channel.
9. Signs illuminated with neon shall use 30 m.a. transformers. The ballast
for fluorescent lighting shall be 430 m.a. Fluorescent lamps shall be single
pin (slimline) with 12" center-to-center lamp separation. All lighting must
match the exact specifications of the approved shop drawings.
10. Surface brightness of all illuminated materials shall be consistent in
all letters and components of the sign. Light leaks will not be permitted.
7
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11. The back side of all bare neon used for signage shall be painted to
provide an opaque finish. Paint color shall exactly match the
Owner-approved specification.
12. All conduit, raceways, crossovers, wiring, ballast boxes, transformers,
and other equipment necessary for sign connection shall be concealed. All
bolts, fastenings and clips shall consist of enameling iron with porcelain
enamel finish, stainless steel, anodized aluminum, brass or bronze; or
carbon-bearing steel with painted finish. No black iron materials will be
allowed.
13. Underwriter's Laboratory-approved labels shall be affixed to all
electrical fixtures. Fabrication and installation of electrical signs shall
comply with all national and local building and electrical codes.
14. Penetrations into building walls, where required, shall be made
waterproof.
15. Location of all openings for conduit sleeves and support in sign panels
and building walls shall be indicated by the sign contractor on drawings
submitted to the Owner. Sign contractor shall install same in accordance
with the approved drawings.
16. In no case shall any manufacturer's label be visible from normal viewing
angles.
17. Sign permit stickers shall be affixed to the bottom edge of signs, and
only that portion of the permit sticker that is legally required to be
visible shall be exposed.
8
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
DESIGN GUIDELINES
1. DESIGN OBJECTIVE
The primary objective of these guidelines is to generate signage of the
highest quality design, fabrication and installation, consistent with the
project architecture and design theme.
2. ACCEPTABLE SIGN TREATMENTS
The following treatments are considered appropriate:
- painted metal
- etched or polished metal
- dimensional letter forms with seamless edge treatment
- opaque acrylic materials with matte finishes
- internally illuminated channel or reverse channel letters
9
EXHIBIT J
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PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
3. LIGHTING
The following treatments are considered appropriate:
- reverse channel neon with silhouette illumination
- open channel neon
- exposed neon
- internal illumination
- front lighting
- area lighting
All front lighting should be baffled and obscured in channels where
possible. Where fixtures, shades, or other elements are exposed, they
should contribute to the design of the tenant's lease space.
All exposed or skeletal neon must be backed with a opaque coating,
unless otherwise specified herein or approved in writing by the Owner. All
housings and posts for exposed neon signs must be painted out to match the
building background immediately behind and adjacent to the sign.
The following shall be prohibited:
- animated lights
- exposed conduits and raceways
- front lighting fixtures that compete with the storefront design
4. COLORS
The following guidelines are to be adhered to in selecting colors for
tenant signage:
- sign colors should be selected to provide sufficient contrast against
building background colors
- colors within each sign should be harmoniously blended
- sign colors should be compatible with building background colors
- color of letter returns should contrast with face colors for good
daytime readability
- interior of open channel letters should be painted dark when against
light backgrounds
- neon colors should complement related signage elements
All sign colors are subject to review and approval by the Owner as part
of the tenant sign submittal.
10
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
5. TYPESTYLES AND LOGOS
Tenants may adapt established typestyles, logos and/or images that are in
use on similar buildings operated by them in California, provided that
said images are architecturally compatible and approved by the Owner. Type
may be arranged in one or more lines of copy and may consist of upper
and/or lower case letters.
6. SIZES AND QUANTITIES
Sizes and quantities for tenant signs shall be as outlined in the
criteria for each sign type. Notwithstanding the maximum square footage
specified for copy area allowances, adequate amounts of visual open space
shall be provided around wall signs so that signs appear balanced and in
scale in relation to their backgrounds.
11
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
SIGN CRITERIA
PROJECT AND TENANT SIGNAGE
Signs shall be designed to be harmonious with the overall project design
theme and architecture, and shall be consistent with the provisions of the
Sign Guidelines and Criteria for the project. Minor tenant or directional
signs not oriented towards the public right-of-way are allowed with Owner's
prior written approval in addition to the signs below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Sign Type Max. Qty. Single-Faced/ Dimensions, Wall/ Max. Copy Copy Location
Double-faced Monument Height Area
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(B) Building (1) sign per bldg. s.f. 24" max. letter Building address/ Address
Address Wall elevation, not to height street number locations to
Signs exceed four signs satisfy Fire
max. per bldg. Dept.
regulations
- -----------------------------------------------------------------------------------------------------------------------------------
(C) Directional As required for s.f. or d.f. 5' 12 sq. ft. + - Directional As necessary
Signs facilitating project logo per information and
traffic sign face arrows
- Project name
and logo
- -----------------------------------------------------------------------------------------------------------------------------------
(D) Secondary As required/
Site Signs see general
guidelines and
provisions for
secondary site
signage
- -----------------------------------------------------------------------------------------------------------------------------------
(E) Restaurant (1) sign per s.f., d.f. 6' 40 sq. ft. Restaurant name As shown on
Identification restaurant and/or logo sign location
Monument Sign frontage plan
- -----------------------------------------------------------------------------------------------------------------------------------
(E2)Restaurant 2 signs per s.f. 50 sq. ft. Restaurant name On
Identification restaurant each and logo restaurant
Wall Sign building
wall
- -----------------------------------------------------------------------------------------------------------------------------------
(H1)Carmel Center 2 along El s.f. 6 ft max. ht. 60 sq. ft. - Project name, As shown on
Project Camino Real each logo and address site map
Identification
Monument
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Sign Type Max Qty. Single- Dimensions. Max. Copy Location
Faced / Wall / Copy
Double- Monument Area
faced Height
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(H2) Office Project 2 per entry s.f. or 5 ft. max ht. 32 sq. ft. - Project As shown on
Entry d.f. each Identification sign location
Identification logo and address plan
Monument - Tenant
Identification and
/or logo
- -------------------------------------------------------------------------------------------------------------------------------
(H3) Tenant 2 signs s.f. -- 100 sq. Building As shown on
Identification total each ft. identification sign location
Wall Signs building; 1 Max. and/or tenant name plan
max. per each and/or logo
tenant each
building
elevation
- -------------------------------------------------------------------------------------------------------------------------------
(H4) Office Building (1) sign per s.f. or 4' max. ht. 32 sq. ft. Building and/or
Monument building d.f. each tenant
Sign identification
Note: Where signs
orient to the
public right of
way, tenant
listings will not
be allowed.
- -------------------------------------------------------------------------------------------------------------------------------
(H5) Tenant (1) sign per s.f. 4 ft. 12 sq. ft. Tenant name As shown on
Identification tenant with Max. and/or logo sign location
Signs individual each plan. May be
entry wall or ground
sign
- -------------------------------------------------------------------------------------------------------------------------------
(H6) Project 1 on s.f. Project name and On retaining
Identification retaining logo wall south side
Sign (on wall south of project
retaining wall) side of
project
- -------------------------------------------------------------------------------------------------------------------------------
(J5) Retail Pad 2 per pad s.f. 32 sq. ft. Tenant name and/or On exterior
Tenant tenant logo building wall
Identification (a third wall
Wall Sign sign may be
allowed in
lieu of Sign
Type J6
monument
sign)
- -------------------------------------------------------------------------------------------------------------------------------
(J6) Retail Pad 1 per pad s.f., d.f. 5 ft. 25 sq. ft. Tenant name and/or As shown on
Tenant tenant 12" max logo sign location
Identification letter ht. plan.
Monument
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
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GAS STATION IDENTIFICATION SIGNS
G1. Gas Station Identification Wall Sign
1 per each street frontage, single or double-faced; 50 sq. ft. each maximum
copy area. Copy limited to name and logo of company and product/service.
Color, letter style and logo may be used with Owner's prior written approval.
Signs for associated uses (e.g. car wash) shall conform to criteria for
Tenant Identification Sign Type H5.
G2. Gas Station Identification Monument Sign
1 per street frontage, single or double-faced; 6 ft max. ht., 60 sq. ft. each
face maximum copy area. Copy limited to name and logo of company, associated
uses and gas pricing information.
14
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SECONDARY SITE SIGNS
Secondary Site Signs are signs other than the primary project or tenant
identification signs and include:
- address signage
- entrance signs
- directory maps and listings
- directional signs, both pedestrian and automobile-oriented
- unit number signs
- parking and traffic control signs
- informational signs such as identification for public restrooms
- building entrance signs
- restaurant menuboards
- other code required signs
Secondary site signs are not to be visible from the public right-of-way, with
the exception of entrance signs, parking control signs, and address signs
which should be oriented toward the public right-of-way. All secondary site
signs shall be designed as a family of signs. Selected elements such as
typestyle, layout, form, detail, colors and materials, shall remain
consistent within each sign "family".
A strong connection shall be maintained between secondary site signs and the
project architecture and landscaping. Elements of color, material, scale,
form and detail shall be reflected in the signage. Signs shall fit
comfortably, never crowding the architectural and landscape elements in the
immediate vicinity.
Secondary signs may be freestanding or wall-mounted. Freestanding signs
should generally be less than (4) feet in height, with the exception of
tow-away, handicapped, address, clearance and traffic regulatory signs, which
shall conform to the regulations and safety standards established by the City
of San Diego. Traffic regulatory signs may be reduced in scale where viewing
distances are diminished. Maximum copy area for all secondary site signs shall
be 12 square feet.
ANCILLARY SIGNAGE
Ancillary signage are signs other than primary tenant identification signs,
and are not included in maximum tenant signage area. Ancillary signage is
subject to Owner's prior written approval. Typical ancillary signage includes:
- Window Signs
- Suite Identification Signs
- Tenant Door Signs
- Delivery Entrance Identification Signs
15
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- -------------------------------------------------------------------------------
TEMPORARY SIGNAGE:
PROJECT LEASING/CONSTRUCTION/FUTURE FACILITIES
Temporary signs will be required for various activities at Carmel Center
during and after completion of the development phase. Shapes, base colors and
proportions of the signage must be consistent with sign design guidelines
(see Exhibit for specific sign type).
- - may be ground-mounted.
- - may be externally illuminated.
TENANT LEASE SPACE BANNERS
- - temporary signs may be allowed at individual lease spaces displaying
"for lease", "coming soon" and similar messages.
- - tenants will be allowed use of a temporary identification banner for a
period of time not to exceed 60 days with prior written approval of the
Owner:
- one sign per street frontage
- 32 square feet maximum copy area per banner
- placed below roof eave
SEASONAL/SPECIAL EVENT SIGNAGE
Cooperative seasonal or special event signage will be permitted upon review
and approval by the Owner.
- - Typical message:
- "Now Open"
- "Grand Opening"
- Themes related to seasonal, holiday or community events
- Design to be compatible with project design theme
- 50 square feet maximum copy area per banner
- placed below roof eave
- use of special event signage for a period of time not to exceed 45
days per event
16
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- -------------------------------------------------------------------------------
EXHIBITS
NOTE: All maps and figures indicate typical design concepts and locations.
Exhibits are not intended to suggest final sign designs or exact locations
17
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- -------------------------------------------------------------------------------
18
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- -------------------------------------------------------------------------------
[MAP]
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- -------------------------------------------------------------------------------
[MAP]
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- ------------------------------------------------------------------------------ B
[DIAGRAM]
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EXHIBIT J
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- ------------------------------------------------------------------------------ C
[DIAGRAM]
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- ------------------------------------------------------------------------------ D
[DIAGRAM]
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EXHIBIT J
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[Peregrine Systems]
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CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- E1
[DIAGRAM]
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EXHIBIT J
-26-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- F2
[DIAGRAM]
25
EXHIBIT J
-27-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ------------------------------------------------------------------------------ G
[DIAGRAM]
26
EXHIBIT J
-28-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H1
[DIAGRAM]
27
EXHIBIT J
-29-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H2
[DIAGRAM]
28
EXHIBIT J
-30-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H3
[DIAGRAM]
29
EXHIBIT J
-31-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H4
[DIAGRAM]
30
EXHIBIT J
-32-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
CARMEL CENTER SIGN GUIDELINES AND CRITERIA
- ----------------------------------------------------------------------------- H5
[DIAGRAM]
31
EXHIBIT J
-33-
PEREGRINE SYSTEMS CORPORATE CENTER
[Peregrine Systems]
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Peregrine Federal Systems, Inc. (Illinois)
Peregrine Asset Management Corporation (Delaware)
Prototype, Inc. (California)
XVT Software, Inc. (Delaware)
Peregrine Bridge Subsidiary, Inc. (Delaware)
Peregrine Systems of Canada, Inc. (Canadian)
Peregrine Systems, GmbH (Germany)
Peregrine Systems, B.V. (Netherlands)
Peregrine Systems, Ltd. (UK)
Peregrine Systems Int'l, Inc. (Barbados)
Peregrine Systems Australia Pty, Ltd. (Australia)
Peregrine Systems, Private, Ltd. (Singapore)
Peregrine Systems, K.K. (Japan)
FPrint UK, Ltd. (UK)
Peregrine Systems, S.A. (France)
AGDS (France)
Apsylog, Inc. (California)
Apsylog, GmbH (Germany)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated April 26, 1999 included in this Form 10-K into the Company's
previously filed Registration Statements (File Nos. 333-37105, 333-44699,
333-60423 and 333-65333).
San Diego, California
June 29, 1999
ARTHUR ANDERSEN LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 21,545
<SECURITIES> 2,000
<RECEIVABLES> 40,195
<ALLOWANCES> (1,248)
<INVENTORY> 0
<CURRENT-ASSETS> 78,660
<PP&E> 28,110
<DEPRECIATION> (12,215)
<TOTAL-ASSETS> 207,713
<CURRENT-LIABILITIES> 53,358
<BONDS> 0
0
0
<COMMON> 49
<OTHER-SE> 150,732
<TOTAL-LIABILITY-AND-EQUITY> 207,713
<SALES> 138,063
<TOTAL-REVENUES> 138,063
<CGS> 32,581
<TOTAL-COSTS> 151,802
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> (13,075)
<INCOME-TAX> 10,295
<INCOME-CONTINUING> (23,370)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,370)
<EPS-BASIC> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
