Document:

Exhibit
      10.5

    

     

    Agreement

    

    Between

    

    RBC
      Heim
      Bearings

    

    And

    

    Local
      No.
      376

    

    

    International
      Union, 

    United
      Automobile, 

    Aerospace
      and Agricultural

    Implement
      Workers

    Of
      America

    

    

    

    Effective
      from February 1, 2008

    To
      midnight January 31, 2013

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE

            	
              INDEX
                SUBJECT

            	
              PAGE

            
	
              11

            	
              Arbitration
                Procedure

            	
              16

            
	 	
              Assignability

            	
              2

            
	
              14

            	
              Bereavement
                Pay

            	
              19

            
	
              10

            	
              Call
                Time

            	
              16

            
	
              D

            	
              Check-Off

            	
              3

            
	
              16

            	
              Discharge
                Notice

            	
              20

            
	
              D

            	
              Dues,
                Fees - Union

            	
              3

            
	
              22

            	
              Duplication
                of compensation

            	
              23

            
	
              22

            	
              Educational
                Assistance

            	
              23

            
	
              A

            	
              Employees
                Covered

            	
              2

            
	
              22

            	
              Equal
                Pay Equal Work

            	
              22

            
	
              11

            	
              Grievance
                Committee

            	
              16

            
	
              12

            	
              Health
                and Safety

            	
              18

            
	
              2

            	
              Holidays/Holiday
                Pay

            	
              7

            
	
              1

            	
              Hours
                of work

            	
              5

            
	
              23

            	
              Insurance
                Program Changes

            	
              23

            
	
              6

            	
              Job
                Posting

            	
              12

            
	
              15

            	
              Jury
                Duty

            	
              20

            
	
              8

            	
              Layoff-Recalls

            	
              14

            
	
              13

            	
              Leadperson

            	
              19

            
	
              9

            	
              Leave
                of Absence

            	
              15

            
	
              19

            	
              Lockouts

            	
              21

            
	
              18

            	
              Management

            	
              21

            
	
              C

            	
              Membership
                in Union

            	
              2

            
	 	
              Memos
                of Understanding

            	
              27-30

            
	
              9

            	
              Military
                Service

            	
              15

            
	
              21

            	
              Non-covered
                Employees

            	
              22

            
	
              22

            	
              Non-discrimination

            	
              22

            
	
              1

            	
              Overtime

            	
              5

            
	
              20

            	
              Paid
                Sick or Personal Leave

            	
              21

            
	
              22

            	
              Part
                Time Employees

            	
              22

            
	
              24

            	
              Plant
                Closure Agreement

            	
              25

            
	 	
              Preamble

            	
              2

            
	
              23

            	
              Premium
                Conversion

            	
              24

            
	
              5

            	
              Probationary
                Employees

            	
              11

            
	
              8

            	
              Recall

            	
              14

            
	
              B

            	
              Recognition
                Clause

            	
              2

            
	
              5

            	
              Seniority

            	
              10

            
	
              3

            	
              Shift
                Premium

            	
              8

            
	
              22

            	
              Subcontracting

            	
              23

            
	
              8

            	
              Super
                Seniority

            	
              15

            
	
              22

            	
              Supervisory
                Representatives

            	
              22

            
	
              7

            	
              Temporary
                Transfers

            	
              13

            
	
              25

            	
              Termination
                Date

            	
              25

            
	
              5

            	
              Trans.
                Out of Bargaining Unit

            	
              11

            
	
              22

            	
              Union
                Business

            	
              23

            
	
              17

            	
              Union
                Cooperation

            	
              20

            
	
              C

            	
              Union
                Security

            	
              2

            
	
              4

            	
              Vacations

            	
              9

            
	
              3

            	
              Wages
                and Rates of Pay

            	
              8

            
	
              Appendix
                A

            	
              Wage
                Schedules

            	
              31-36

            
	 	 	 

    

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

    
      	
              ARTICLE

            	 	
              PAGE

            
	 	 	 
	
              Preamble

            	 	
              2

            
	
              Assignability

            	 	
              2

            
	
              A

            	
              Employees
                Covered By This

            	 
	 	
              Agreement

            	
              2

            
	
              B

            	
              Recognition

            	
              2

            
	
              C

            	
              Union
                Security

            	
              2

            
	
              D

            	
              Check-Off

            	
              3

            
	
              1

            	
              Hours
                and Overtime

            	
              5

            
	
              2

            	
              Holidays

            	
              7

            
	
              3

            	
              Wages
                and Rates of Pay

            	
              8

            
	
              4

            	
              Vacations

            	
              9

            
	
              5

            	
              Seniority

            	
              10

            
	
              6

            	
              Job
                Posting

            	
              12

            
	
              7

            	
              Temporary
                Transfers

            	
              13

            
	
              8

            	
              Layoff-Recalls

            	
              14

            
	
              9

            	
              Leave
                of absence - Emergency

            	
               

            
	 	
              Time
                Off

            	
              15

            
	
              10

            	
              Call
                time

            	
              16

            
	
              11

            	
              Committeepersons,
                Grievance

            	 
	 	
              and
                Arbitration Procedure

            	
              16

            
	
              12

            	
              Health
                and Safety

            	
              18

            
	
              13

            	
              Leadperson’s
                Scope

            	
              19

            
	
              14

            	
              Bereavement
                Pay

            	
              19

            
	
              15

            	
              Jury
                Duty

            	
              20

            
	
              16

            	
              Notice
                of Discharge

            	
              20

            
	
              17

            	
              Union
                Cooperation

            	
              20

            
	
              18

            	
              Management

            	
              21

            
	
              19

            	
              No
                Strikes or Lockouts

            	
              21

            
	
              20

            	
              Paid
                Sick and/or Personal

            	 
	 	
              Leave
                Allowance

            	
              21

            
	
              21

            	
              Non-Covered
                Employees

            	
              22

            
	
              22

            	
              General
                Provisions

            	
              22

            
	
              23

            	
              Insurance
                Programs

            	
              23

            
	
              24

            	
              Plant
                Closure Agreement

            	
              25

            
	
              25

            	
              Termination
                Date

            	
              25

            
	 	
              Memoranda
                of Understanding

            	
              27-30

            
	
              Appendix
                A

            	
              Wage
                Schedules

            	
              31-36

            

    

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    STATEMENT
      OF EEO POLICY

    

    It
      is the
      policy of Heim Bearings and the UAW to uphold and maintain a continuing
      nondiscriminatory “Equal Employment Opportunity” policy. Our goal shall be a
      realistic attempt to insure genuine equal opportunity, in every sense of its
      meaning, in every operational area.

    

    “Equal
      Employment Opportunity” will be maintained for all present employees, as well as
      applicants applying for positions with this company, through the following
      Corporation policy: “It is the policy through a positive and continuing program,
      to provide equal opportunity in employment for all qualified persons, to
      prohibit discrimination in employment because of age, race, creed, color, sex,
      handicap, national origin, disabled veterans and veterans of the Vietnam era,
      and to promote the full realization of equal employment opportunity. The program
      also extends to and encompasses the providing of equal opportunity in employment
      for all qualified personnel without regard to politics or marital
      status.

    

    It
      is our
      intent to incorporate a strong EEO policy throughout virtually every personnel
      activity or function to assure full utilization of all available human resources
      and to review these policies on a semi-annual basis.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PREAMBLE

    

    This
      Agreement is entered into this 19th
      day of November, 2007
      by and
      between Heim Bearing division, Roller Bearing Company, hereinafter called the
      COMPANY, AND THE INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND
      AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, U.A.W., AND AMALGAMATED LOCAL 376,
      UAW, the certified bargaining representative of all employees in the appropriate
      unit, a signatory party hereto, hereinafter referred to as the
      UNION.

     

    ASSIGNABILITY

    

    This
      Agreement shall be binding upon the Successors and Assignees of the parties
      hereto, and no provisions, terms, or obligations herein contained shall be
      affected, modified, altered or changed in any respect whatsoever by any change
      in the regular status, ownership or management of either party herein, provided
      the plant and facilities of the Company remain within the State of Connecticut.
      In the event the present owners sell or assign the plant, or sell their interest
      in the business, the present owners agree to make this Agreement a condition
      of
      such sale or assignment, provided such sale or assignment contemplates that
      the
      plant and facilities of the Company will remain within the State of Connecticut,
      and the present owners shall be relieved of any personal liability whatsoever
      under the Agreement thereafter.

     

    ARTICLE
      A

    EMPLOYEES
      COVERED BY THIS

    AGREEMENT

    

    Section
      1.
      The
      Company recognizes the Union as the sole and exclusive bargaining agency of
      the
      following employees: all production and maintenance employees, including
      stockroom employees and tool clerks, also shipping and receiving clerks,
      excluding, however, engineering and clerical employees and supervisory employees
      as defined in the Labor-Management Relations Act of 1947, and any amendments
      thereto.

     

    ARTICLE
      B

    RECOGNITION

    

    Section
      1. The
      Union
      represents that it has been authorized by a majority of the Company’s employees
      in a unit appropriate for such purposes, as the representative designated or
      selected for the purpose of collective bargaining in respect to rates of pay,
      wages, hours of employment, or other conditions of employment.

     

    ARTICLE
      C

    UNION
      SECURITY

    

    Section
      1. All
      present employees within the Bargaining Unit on the effective date of this
      Agreement shall, within thirty days thereafter, as a condition of employment,
      become and/or remain members of the Union in good standing to the extent of
      paying membership dues and initiation fees.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    Section
      2. Employees
      in the bargaining Unit who have not on the effective date of this Agreement
      completed thirty days of employment with the Company shall, as a condition
      of
      employment, within thirty days after the effective date of this Agreement or
      at
      the expiration of thirty days of employment, whichever period is longer, become
      and remain members of the Union in good standing to the extent of paying
      membership dues and initiation fees.

    

    Section
      3. All
      new
      employees hired during the life of this Agreement shall, as a condition of
      employment, within thirty days after date of hire or thirty days after the
      signing of this Agreement, whichever period is longer, become and remain members
      of the Union in good standing to the extent of paying membership dues and
      initiation fees.

    

    Section
      4. The
      Company will give to each present employee a printed copy of this
      Agreement.

    

    Section
      5. The
      Company will give a printed copy of this agreement, together with an
      authorization form for check-off of dues to all new hires.

     

    ARTICLE
      D

    CHECK-OFF

    

    Section
      1. 
      The
      Company shall deduct, for employees covered by this Agreement who are members
      of
      the Union, their Union membership dues and initiation fees levied against all
      Union members in accordance with the Constitution and Bylaws of the Union and
      promptly remit the same, together with a list of employees for whom deductions
      were made, to the Financial Secretary of the Union who is authorized to receive
      said payments, provided that the Company has received from such employees
      individual and voluntary signed authorizations. Authorization cards shall be
      in
      the following form:

    

    AUTHORIZATION
      FOR CHECK-OFF OF DUES

    

    To
      Heim
      Bearings Division, Roller Bearing Company, Inc.

    

    Date______________________

    

    I
      hereby
      assign to Local Union No. 376, International Union, United Automobile Aerospace
      and Agricultural Implement Workers of America (UAW), from any wages earned
      or to
      be earned by me as your employee (in my present or in any future employment
      by
      you), such sums as the Financial Officer of said Local Union No. 376 may certify
      as due and owing from me as membership dues, including an initiation or
      reinstatement fee and monthly dues in such sum as may be established from time
      to time as union dues in accordance with the Constitution of the International
      Union, UAW. I authorize and direct you to deduct such amounts from my pay and
      to
      remit same to the Union at such times and in such manner as may be agreed upon
      between you and the Union at any time while this authorization is in
      effect.

    

    This
      assignment, authorization and direction shall be irrevocable for the period
      of
      one (1) year from the date of delivery hereof to you, or until the termination
      of the collective agreement between the Company and the Union which is in force
      at the time of delivery of this authorization, whichever occurs sooner; and
      I
      agree and direct that this assignment, authorization and direction shall be
      automatically renewed and shall be irrevocable for successive periods of one
      (1)
      year each or for the period of each succeeding applicable collective period
      of
      each succeeding applicable collective agreement between the Company and the
      Union, whichever shall be shorter, unless written notice is given by me to
      the
      Company and the Union, not more than twenty (20) days and not less than ten
      (10)
      days prior to the expiration of each period of one (1) year, or of each
      applicable collective agreement between the Company and the Union whichever
      occurs sooner.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    This
      authorization is made pursuant to the provisions of Section 392 (c) of the
      Labor
      Management Relations Act of 1947 and otherwise.

     

    
      
        	
                 

              	 	 
	
                (Signature
                  of Employee here)

              
	 	 	 
	 	 	 
	
                 

              	 	 
	
                (Type
                  of print name of employee here)

              
	 	 	 
	 	 	 
	
                 

              	 	 
	
                (Date
                  of sign.)

              	 	
                (Emp.
                  Clock No.)

              
	 	 	 
	 	 	 
	
                 

              	 	 
	
                (Address
                  of Employee)

              	 	 
	 	 	 
	 	 	 
	
                 

              	 	 
	
                (City)

              	
                (State)

              	
                (Zip)

              
	 	 	 
	 	 	 
	
                 

              	 	 
	
                (Soc.
                  Sec. No.)

              	 	
                (Date
                  of del. to Employer)

              

      

       

    

    Section
      2. All
      deductions covered by this Agreement shall be made in a manner agreed upon
      with
      the Union, except that dues and initiation fees will be on a monthly basis.
      However, local practices, relative to number of hours per month to be worked
      before dues deductions shall be made, shall be in accord with the Constitution
      of the International Union. If in any month full dues are not deducted, the
      Company and Union may agree upon an orderly manner of collection in the
      succeeding month or months.

    

    Section
      3. All
      sums
      deducted under the Agreement shall be remitted to the Financial Secretary of
      the
      local Union, prior to the first of the month following the deduction and the
      Company will furnish the financial Secretary of the local Union, monthly, a
      record of those for whom deductions have been made, together with the amount
      of
      such deductions and also a record of all terminations and employees absent
      during the week of the check-off.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      1

    HOURS
      AND OVERTIME

    

    Section
      1.     The
      normal work week shall be:

    

    
      	
              (a)

            	
              Forty
                (40) hours, based on eight (8) hours per day, five (5) days per week,
                Monday through Friday inclusive.

            

    

    

    
      	
              (b)

            	
              The
                normal work week shall begin on Sunday night at 11:00 p.m. with the
                start
                of the third (3rd) shift and end 168 hours
                later.

            

    

    

    
      	
              (c)

            	
              The
                first day shall be the 24 hour period beginning with the employees
                regular
                scheduled shift starting time.

            

    

    

    
      	
            	(1)	
              First
                shift hours 6:00 a.m. to 2:30 p.m.

            

    

    

    
      	
            	(2)	
              Second
                shift hours 3:30 p.m. to midnight

            

    

    

    
      	
            	(3)	
              Third
                shift hours 11:00 p.m. to 7:00 a.m.

            

    

    

    
      	
              (d)

            	
              Third
                shift employees will be entitled to a paid 20 minute
                lunch.

            

    

    

    
      	
              (e)

            	
              Friday
                will be the third shift’s “Saturday” for overtime pay calculation
                purposes.

            

    

    

    
      	
              (f)

            	
              Saturday
                will be the third shift’s “Sunday” for overtime pay calculation
                purposes.

            

    

    

    
      	
              (g)

            	
              Third
                shift employees will not be required to work overtime prior to the
                start
                of the shift on Sunday night.

            

    

    

    
      	
              (h)

            	
              First
                and second shift employees presently working twelve (12) hour shifts
                will
                revert to the schedules in paragraph (c) respectively in the event
                that
                the twelve (12) hour shifts are discontinued for any
                reason.

            

    

    

    Section
      2. Time
      and
      one-half shall be paid for all work performed.

    

    
      	(a)	
              In
                excess of eight (8) hours in any one
                day.

            

    

    

    
      	(b)	
              In
                excess of forty (40) hours in any one
                week.

            

    

    

    
      	(c)	
              On
                Saturdays as such.

            

    

    

    
      	
              (d)

            	
              Any
                employee called in to work outside of the regularly scheduled shift
                hours
                shall be paid not less than four (4) hours at his/her base rate as
                follows:

            

    

     

    
      	 	(1)	Time actually worked at prevailing rate,
              plus

      	 	 	 

      	 	
              (2)

            	
              The
                remaining of the four (4) hours not worked at straight time pay unless
                it
                is a premium day and the premium rate shall
                prevail.

            

    

    

    (e) Double
      time will be paid for all work performed on Sundays.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    Section
      3. Notification
      of Overtime

    

    
      	
              (a)

            	
              Employees
                shall not be required to work overtime when insufficient notice is
                given.
                Notification at any time prior to the close of the prior day’s shift will
                be considered sufficient notice for daily
                overtime.

            

    

    

    
      	
              (b)

            	
              Employees
                will be charged for all overtime hours where proper notification
                has been
                given, whether the employee works or
                not.

            

    

    

    
      	
              (c)

            	
              Employees
                shall not be required to work Saturday or Sunday overtime when
                insufficient notice is given or when there is a reasonable excuse
                for not
                working. Notice of Saturday of Sunday overtime must be given to the
                employee no later than the end of the shift on the preceding
                Thursday.

            

    

    

    Section
      4.

    

    
      	
              (a)

            	
              Overtime
                will be equally distributed among those employees within the departments
                by classification provided they have the ability to perform the available
                overtime work.

            

    

    

    
      	
              (b)

            	
              Overtime
                records will be maintained in each department next to the work
                instructions for employees to inspect at any time. All records will
                be
                updated weekly.

            

    

    

    
      	
              (c)

            	
              Employees
                with the lowest overtime hours will be asked to work first within
                their
                department by job classification.

            

    

    

    
      	
              (d)

            	
              Employees
                working overtime outside their departments shall be charged for actual
                hours worked back to their department for overtime
                equalization.

            

    

    

    
      	
              (e)

            	
              The
                company shall keep a record of overtime worked and overtime refused
                by
                employees and shall furnish the Union with a copy of such record
                at the
                end of each month. If the difference in overtime hours worked between
                the
                employee with the greatest number of overtime hours and the other
                employees in the same work classification shall exceed ten (10) hours
                at
                the end of every three (3) month period, such difference shall be
                paid at
                time and one-half the other employee’s
                regular hourly rate, except when such difference results from the
                other
                employee’s refusal to work in accordance with this
                article.

            

    

     

    
      
        Section
          5.
          Overtime
          hours available will be recorded according to the
          following:

      

    

    

    
      	
              (a)

            	
              Overtime
                hours offered and refused will be considered hours worked for the
                purpose
                of equalizing overtime.

            

    

    

    
      
        	(b)	
                Employees
                  absent for any reason will be charged for all overtime hours they
                  would
                  have been offered had they been at
                  work.

              

      

    

    

    Section
      6. There
      shall be no duplication of compensation for overtime for the same hours worked
      by an employee by reason of daily, weekly or other overtime provisions of any
      kind.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    ARTICLE
      2

    HOLIDAYS

    

    Section
      1.

    

    
      	
              (a)

            	
              Except
                as hereinafter provided, all work done on the holidays set forth
                below
                shall be paid for at the rate of double time plus holiday pay. The
                specified holidays shall also be considered as days worked for the
                purpose
                of computing overtime pay only.

            

    

     

    
      
        	
                Floating
                  Holiday

              	
                Labor
                  Day

              
	
                Good
                  Friday

              	
                Thanksgiving
                  Day

              
	
                Memorial
                  Day

              	
                Friday
                  after Thanksgiving

              
	
                Independence
                  Day

              	
                Employee’s
                  Birthday 

              

      

    

     

    
      	 	
              The
                Company will provide the following Christmas and New Year’s Holidays with
                pay per the following schedule:

            

    

    

    2008
      Dec. 24, 25, 26, 29, 30, 31 and January 1, 2009

    2009
      Dec. 24, 25, 28, 29, 30, 31 and January 1, 2010

    2010
      Dec. 24, 27, 28, 29, 30 and 31 (for January 1, 2011)

    2011
      Dec. 26, 27, 28, 29 and 30 (for January 1, 2012)

    2012
      December 24, 25, 26, 27, 28, 31 and January 1, 2013

    

    
      	
              (b)

            	
              It
                is understood between the parties that an employee who is off work
                receiving sick and accident benefits during a week in which a holiday
                falls will be paid such holiday pay in addition to S & A benefits.
                Similarly, employees receiving Workers’ Compensation will receive holiday
                pay for a period not to exceed the agreed upon time limits for S
& A
                coverage.

            

    

    

    
      	Section
              2.	
              When
                a holiday falls on a Saturday, it shall be celebrated on the preceding
                Friday. When a holiday falls on a Sunday, such holiday shall be celebrated
                on the following Monday, excluding Christmas and New Year’s
                week.

            

    

    

    
      	Section
              3.	
              The
                holidays mentioned above shall be with pay. Consequently, all employees
                shall receive an amount equal to eight (8) hours pay at their hourly
                rate
                for the specified holiday even though no work is performed. In order
                to be
                eligible for holiday pay, the employees
                must:

            

    

    

    
      	
              (a)

            	
              Have
                been in attendance on the work days preceding and following the holiday
                unless the absence is for:

            

    

    

    
      	 	
              (1)

            	
              Death
                in the immediate family as defined in Article
                9.

            

    

    

    
      	 	
              (2)

            	
              Jury
                Duty.

            

    

    

    
      	 	
              (3)

            	
              Important
                Union business on the part of stewards, Shop Committee persons, Officers
                or Appointees made known to and approved by the Company prior to
                such
                holidays.

            

    

    

    
      	 	
              (4)

            	
              An
                employee who is laid off and again recalled within thirty (30) days,
                during which period a paid holiday falls, shall receive holiday pay
                for
                that holiday.

            

    

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    
      	 	
              (5)

            	
              For
                other reasonable cause.

            

    

    

    
      	
              (b)

            	
              Employees
                on twelve (12) hour shifts will revert to their normal eight (8)
                hour
                shifts and will not be required to work overtime on the day prior
                to Good
                Friday, Thanksgiving and 

            

    

    Independence
      Day.

    

    
      	Section
              4. 	
              When
                a holiday falls within a scheduled vacation period, another day off
                be
                between Monday and Friday will be granted for that vacation day not
                taken
                or paid for during the vacation
                period.

            

    

    

    
      	Section
              5.	
              Employees
                on leave of absence shall not be entitled to any holiday pay during
                such
                leave.

            

    

    

    

    ARTICLE
      3

    WAGES
      AND RATES OF PAY

    

    Section
      1.

    

    
      	(a)	
              Effective
                November 19, 2007, a general wage increase of
                3.75%

            

    

    

    Effective
      February 2, 2009, a general wage increase of 3%

     

    Effective
      February 1, 2010, a general wage increase of 3% 

     

    Effective
      February 1, 2011 a general wage increase of 3%

     

    Effective
      February 6, 2012 a general wage increase of 4%

    

    
      	 	
              The
                hourly rates of pay shown in Appendix A, and Appendix B attached
                hereto
                and made a part hereof, shall remain in effect for the life of this
                Agreement.

            

    

    

    
      	
              (b)

            	
              It
                is agreed that during the period of this Agreement, each employee
                covered
                by this Agreement, shall receive a guaranteed cost of living allowance
                which will be added to the employee’s straight time hourly earnings as set
                forth in Appendix A of the Agreement. The guaranteed
                cost of living increases will be as
                follows:

            

    

     

    
      
        	 	 	
                Hired
                  before 2/1/96

              	 	
                Hired
                  after 2/1/96

              	 
	
                August
                  4, 2008

              	 	 	
                10
                  cents

              	 	 	 	
                15
                  cents

              	 	 
	
                August
                  3, 2009

              	 	 	
                10
                  cents

              	 	 	 	
                15
                  cents

              	 	 
	
                August
                  1, 2010

              	 	 	
                10
                  cents

              	 	 	 	
                15
                  cents

              	 	 
	
                August
                  1 , 2011

              	 	 	
                10
                  cents

              	 	 	 	
                15
                  cents

              	 	 
	
                August
                  6, 2012

              	 	 	
                15
                  cents

              	 	 	 	
                20
                  cents

              	 	 

      

    

     

    
      	(c)  	
              Should
                the effective date of the increases mentioned above fall on a Monday,
                Tuesday or Wednesday, the increase specified shall revert to Monday.
                Should the increases specified above fall on a Thursday or Friday,
                the
                increases shall become effective on the following
                Monday.

            

    

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    Section
      2.

    

    
      	 	
              Employees
                required to work on a shift other than the day shift will be paid
                a shift
                premium equal to 10% of their hourly rate in addition to their regular
                earnings for such hours worked.

            

    

    

    Section
      3.

    

    
      	
              (a)

            	
              The
                Company and the Union have negotiated job descriptions and evaluations
                by
                Labor Grade. Such descriptions and evaluations are apart of this
                Agreement.

            

    

    

    
      	
              (b)

            	
              Newly
                hired employees will start at the hire rate unless their training,
                knowledge or experience justify hiring at a higher rate. They will
                progress to the maximum rate by receiving a twenty (20) cent per
                hour
                increase after each sixty (60) days worked, payable starting in the
                nearest Monday. It is recognized that the last raise may be less
                than
                twenty (20) cents per hour.

            

    

    

    
      	 	
              Employees,
                still in progression, who are successful bidders on another job in
                a
                higher labor grade will receive a twenty (20) cent per hour increase
                when
                they start the new job and then will progress in twenty (20) cent
                increments after each sixty (60) days worked until they reach the
                maximum.
                Rate changes will be made on the nearest Monday. The last raise may
                be
                less than twenty (20) cents.

            

    

    

    
      	
              (c)

            	
              Employees
                who are promoted from the maximum rate of one job to a higher paying
                job
                will receive the maximum rate of the higher job on the date of
                promotion.

            

    

    

    
      	
              (d)

            	
              Employees
                who are at maximum and have been transferred to a higher rated job
                and are
                later transferred back to a lower rated job will receive the maximum
                of
                the lower rated 

            

    

    job.

    

    
      	
              (e)

            	
              Employees
                who have not progressed to the maximum and who move from a higher
                rated
                job to a lower rated job will go down to a rate in the lower grade
                that is
                equivalent to the progression point that they were in the higher
                rated
                job.

            

    

    

    
      	
              (f)

            	
              All
                employees currently in Labor Grade
                1

            

    

    
      	 	
              will
                be promoted to Labor Grade 2.

            

    

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      4

    VACATIONS

    

    Section
      1. Effective
      February 1, 1996, the continuous service requirements and earned vacation with
      pay at straight time as detailed in the following vacation schedule table shall
      apply. The service requirement will be based upon seniority as of August 1st
      of
      the vacation year. 

    

    Service
      Requirement Earned Vacation

     

    
      
        	
                1
                  year but less than 2 years

              	
                1
                  week ( 40 hrs)

              
	
                2
                  years but less than 5 years

              	
                2
                  weeks ( 80 hrs)

              
	
                5
                  years but less than 10 years

              	
                2-1/2
                  weeks (100 hrs)

              
	
                10
                  years but less than 15 years

              	
                3
                  weeks (120 hrs)

              
	
                15
                  years but less than 20 years

              	
                3-1/2
                  weeks (140 hrs)

              
	
                20
                  years but less than 25 years

              	
                4
                  weeks (160 hrs)

              
	
                25
                  years and over

              	
                5
                  weeks (200 hrs)

              

      

    

     

    Section
      2. A
      vacation shutdown period of up to two weeks may be designated by the Company
      upon notice to the Union by January 31 of each calendar year. If an employee
      has
      scheduled a vacation relying on the Company's shutdown notice, the employee
      will
      not be compelled to work.

    

    Section
      3. Employees
      entitled to at least two (2) weeks of vacation must take the same during the
      plant shutdown. Employees entitled to more than two (2) weeks of vacation may
      take same at a time of their choice but seniority and Company production
      schedules shall be taken into consideration.

    

    Section
      4. Employees
      must have worked a minimum of 1000 hours in order to qualify for full vacation
      pay as provided in Section 1 above. Employees working less than 1000 hours
      shall
      be paid on a pro-rated basis. The period for determining hours worked shall
      be
      from August 1 of the prior year through July 31 of the current year. Employees
      terminated for any reason shall receive a pro-rated vacation pay. Absence due
      to
      sickness or injury shall be counted as hours worked.

    

    Section
      5. The
      Company agrees to provide a vacation bonus of $100 to all employees with 20
      years of service. The Company agrees to provide a vacation bonus of $200 to
      all
      employees with 25 years service or more. The
      vacation bonus shall be paid prior to Christmas.

    

    Section
      6. Employees
      who are entitled to and wish to schedule a vacation should notify their
      supervisor in writing by March 15. Permission will be granted based upon Company
      seniority and Company production schedules and specific written responses will
      be made by April 1.

    

    Once
      an
      employee’s vacation has been approved, it will not be changed unless
      circumstances mandate a change and more senior employees may not displace an
      employee’s approved vacation.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    An
      employee who does not request vacation by March 15 or who requests additional
      vacation time must submit a request in writing no later than three weeks prior
      to the time requested. This three week notice requirement will not apply in
      emergencies.

    

    Section
      7. The
      employee can elect, by June 30, to be paid all of their vacation time in a
      lump
      sum on or about August 1st,
      or as they take vacation time. 

     

    ARTICLE
      5

    SENIORITY

    

    Section
      1. A
      seniority list including date of birth, hiring date, job classification,
      department, labor grade, total points and social security number shall be
      maintained and a copy shall be furnished to the Union quarterly.

    

    
      	
              (a)

            	
              The
                Company shall furnish the Union with a monthly report showing the
                names
                and dates of new hires, layoffs, recalls, quits, discharges, leaves
                of
                absence (granted and expired) and adjustments in the seniority listings
                with respect to dates. Any errors in the seniority lists, layoffs
                and
                recalls that are discovered due to this submission shall be corrected
                immediately.

            

    

    

    
      	
              (b)

            	
              The
                Shop Chairperson shall be notified promptly of any additions or
                deletions.

            

    

    

    
      
        Section
          2.    Employees
          will lose their seniority status if they:

      

    

    

    
      	
              (a)

            	
              Quit.

            

    

    

    
      	
              (b)

            	
              Are
                discharged for justifiable cause.

            

    

    

    
      	
              (c)

            	
              Do
                not report for work within five (5) working days following a notification
                by certified 

            

    

    
      	
               

            	
              letter
                of restoration after a layoff, except where a reasonable excuse is
                provided.

            

    

    

    
      	
              (d)

            	
              Are
                absent without a leave of absence or excused absence for three (3)
                consecutive working days without notifying the Company, except where
                reasonable cause is provided.

            

    

    

    
      	
              (e)

            	
              Are
                on layoff in excess of thirty-six (36) months. Probationary employees
                who
                are laid-off will not be listed on the layoff
                list.

            

    

    

    
      	
              (f)

            	
              Are
                absent from work because of a non-occupational disability for a continuous
                period in excess of eighteen (18)
                months.

            

    

    

    
      	Section
              3.	
              New
                employees shall be regarded as temporary or probationary employees
                for the
                first sixty (60) calendar days of their
                employment.

            

    

    

    
      	Section
              4.	
              Employees
                advanced from hourly status to salary status shall lose seniority
                and
                privileges under this contract thirty (30) calendar days after such
                appointment unless returned to the Bargaining Unit within said
                period.

            

    

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                5. 

            	
              Employees
                who are absent from work because of illness or injury will be returned
                to
                their “original” job upon presenting the Company with a copy of their
                unconditional medical release to return to
                work.

            

    

    

    If
      their
“original” job is no longer available, they will exercise their contract rights
      in accordance with Article 8 of this contract.

    

    Jobs
      that
      become vacant, because the employee in that job classification has been absent
      from work because of injury or illness for a period of more than thirty (30)
      days and,

     

    In
      the
      judgment of the Company, that job needs to be filled it shall be handled as
      follows:

    

    
      	 	
              1.

            	
              The
                Company shall offer recall rights to all eligible employees in an
                equal or
                higher labor grade in accordance with Article 8, Section 1 (b) of
                the
                contract.

            

    

    

    
      	 	
              2.

            	
              If
                no employee(s) have recall rights as describe in item 1 above, the
                Company
                , at its discretion may post the job as “Temporary”
                job.

            

    

    

    
      	 	 	
              Bids
                on the “Temporary” job shall be handled in accordance with Article 6 of
                the contract.

            

    

    

    
      	 	
              3.

            	
              If
                there are no successful bids on the “Temporary” job, the Company shall
                offer recall rights to all eligible employees in a lower labor
                grade.

            

    

    

    
      	 	
              4.

            	
              If
                there is a reduction in force in a department where a “Temporary” job
                exists, the employee in the “Temporary” job must be returned to the same
                status he/she had prior to accepting the “Temporary” job before the layoff
                commences.

            

    

    

    
      	 	
              5.

            	
              If
                the “Temporary” job is not filled after the above three actions have been
                taken and, in the judgement of the Company, the job needs to be filled,
                the Company may hire “from the street” to fill the job with the
                understanding that it is a “Temporary” job. The person hired from the
                street to fill the “Temporary” job shall exercise his/her rights, if any,
                under Article 8 of the contract when such “Temporary” job ceases to
                exist.

            

    

    

    
      	 	
              6.

            	
              When
                it is determined the disabled employee will not or cannot return
                to work
                the opening will be posted in accordance to Article
                6.

            

    

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      6

    JOB
      POSTING

    

    
      	Section
              1.	
              Job
                openings will be filled based on plantwide seniority and basic
                qualifications regardless of shift.

            

    

     

    
      	
              (a)

            	
              New
                jobs and vacancies in existing jobs to which no employee has recall
                rights
                will be posted on the plant bulletin board for a period of three
                (3)
                working days. A general description of each job responsibility will
                be
                shown on the posting.

            

    

    

    
      	
              (b)

            	
              If
                the same job opening occurs within a period of thirty (30) days from
                the
                first date of an original job posting, no new posting will be required.
                The new job opening will be filled from the original bidding list.
                If
                there are no remaining qualified bidders on the original list, the
                new job
                opening shall be posted immediately. However, a new posting will
                be
                required at the end of the original thirty (30) day job
                posting.

            

    

    

    
      	
              (c)

            	
              During
                the posting period, eligible employees may bid on the posted jobs
                by
                completing a Bid Slip and submitting it to their Supervisor. The
                Company
                will notify the Union in writing and state the reason for withdrawing
                the
                posting for any job.

            

    

    

    
      	
              (d)

            	
              Employees
                will be eligible to bid on higher, equal or lower paying job
                provided:

            

    

    

    
      	
            	(1)	
              They
                have completed the probationary
                period.

            

    

    

    
      	 	
              (2)

            	
              Those
                who have bid and been accepted on lower paying jobs under this procedure
                must remain in the new department for a period of at least six (6)
                months
                before being eligible to again bid on another job outside their
                department. However, these employees may bid upward or lateral through
                all
                labor grades within their department at any
                time.

            

    

    

    
      	
              (e)

            	
              Following
                the closing of the posting, bidders will be considered and interviewed
                by
                the Personnel Department for each job opening in order of seniority;
                a
                Shop Commiteeperson shall be present. The most senior employee who
                has the
                basic qualifications to perform the required work will be promoted
                to the
                job within a period of thirty (30) calendar days. Unsuccessful bidders
                will be notified by the company in writing. A copy of the notice
                of
                disaward which will include the grounds for disaward will be given
                to the
                Shop Chairperson. Bidders may withdraw their bids at any time before
                starting the new job by signing a refusal slip provided by the Company,
                a
                copy of which will be given to the Shop
                Chairperson.

            

    

    

    
      	
              (f)

            	
              Job
                openings in a “Training Program” will also be filled under this
                procedure.

            

    

    

    
      	
              (g)

            	
              Should
                an employee with basic qualifications grieve the Company’s selection in
                filling the vacancy, the employee must be shown the basic requirements
                of
                the job and have the assistance of the Leadperson and/or Supervisor
                for a
                five (5) day period in order to prove his/her ability to meet the
                basic
                qualifications.

            

    

    

    
      	
              (h)

            	
              The
                shop chairperson or an appointee will be notified prior to all permanent
                transfers and promotions within the Bargaining
                Unit.

            

    

    

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      7

    TEMPORARY
      TRANSFERS

    

    Section
      1. The
      Union
      will be notified at the time when temporary transfers become necessary.

    

    Temporary
      work assignments:

    
      	
              (a)

            	
              Employees
                may be temporarily transferred from one department to another for
                a period
                not to exceed six (6) days per month, and provided that during the
                transfer, the job he/she left shall not be filled and he/she shall
                be
                returned to his/her permanent job upon completion of temporary assignment
                or for longer periods of time if agreed by the Union and the
                Company.

            

    

    

    
      	
              (b)

            	
              Employees
                shall be transferred by seniority, lowest senior person first within
                the
                department to a lower rated job.

            

    

    

    
      	
              (c)

            	
              Employees
                shall be transferred by seniority, highest senior person first within
                the
                department to a higher rated job.

            

    

    

    
      	
              (d)

            	
              No
                employee will be required to perform work in a higher labor grade
                on any
                basis (temporary or permanent) unless they are paid according to
                the
                prevailing rate of pay on said higher labor grade. No employee will
                be
                forced or coerced into taking a
                promotion.

            

    

    

    
      	
              (e)

            	
              No
                employee will be required to perform work in a lower labor grade
                on a
                temporary basis at the rate of pay in said lower labor grade. That
                is,
                employees will be guaranteed their former (higher) rate of pay while
                working on a temporary transfer in a lower labor
                grade.

            

    

    

    
      	
              (f)

            	
              The
                shop Committeeperson in the area involved in a transfer will receive
                a
                copy of a transfer notice. This transfer notice will state the department,
                job title and labor grade to which the employee is being transferred.
                The
                Shopcommittee- person will be notified immediately by a written transfer
                notice in any of the following
                conditions:

            

    

    

    A. Any
      transfer lasting more than one day.

    

    B. Any
      change in labor grade at any time.

    

    
      	
              (g)

            	
              Employees
                shall have the privilege of exchanging shifts temporarily by individual
                arrangement provided they notify their supervisor in advance and
                have the
                necessary qualifications to perform the work. The change must be
                effected
                without additional cost or penalty to the Company. If the period
                of such
                exchange of shifts is in excess of one (1) week, the Company and
                the Union
                must mutually agree to such
                arrangements.

            

    

    

    Section
      2. An
      employee with one (1) year of seniority or more shall be permitted to use this
      seniority to exercise shift preference in writing one week in advance to
      displace another employee with less seniority in the same job classification
      and
      department on another shift. The shift change option is limited to only one
      (1)
      time per year.

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      8

    LAYOFF
      RECALLS

    

    Section
      1.

    

    
      	
              (a)

            	
              All
                layoffs, recalls, transfers and promotions within the Bargaining
                Unit
                shall be made on the basis of plantwide seniority provided the employee
                has the basic qualifications to perform the required
                work.

            

    

    

    
      	
              (b)

            	
              When
                it becomes necessary to reduce the workforce it shall be done as
                follows
                by laying off all probationary and part-time employees
                first.

            

    

    

    
      	
              (c)

            	
              The
                Company shall, in the event of layoff, provide notification to affected
                employees early enough to furnish at least three (3) working days
                notice
                to the Shop Committee and employees affected by any layoff for any
                period
                of time, or pay such employees hourly base rates in lieu of said
                notice.
                This requirement shall not apply to interruption resulting from any
                condition beyond the Company’s controls. All layoffs must commence on the
                last working day of the week
                (Friday).

            

    

    

    
      	
              (d)

            	
              Employees
                in classifications affected by layoff will have an option to accept
                a
                lay-off slip stating lack-of-work or bump a junior service employee
                provided they have the basic qualifications to perform the work.
                The
                initial notification mentioned in paragraph (c) will begin the bumping
                process and employees must make their bumping decision immediately.
                Upon
                request by the employee, the bumping decision can be delayed, but
                not
                beyond two (2) hours and then is bound by that
                choice.

            

    

    

    
      	
              (e)

            	
              Employees
                will have five (5) days in which to demonstrate their ability to
                perform a
                job in case of layoff and recall. Employee must be shown basic
                requirements of job and have assistance of Leadperson and/or Foreperson
                for a five (5) day period.

            

    

    

    
      	
              (f)

            	
              There
                shall be no upward bumping.

            

    

    

    
      	
              (g)

            	
              In
                the event of a layoff, the Shop Chairperson, the members of the Shop
                Committee and Company employees who are Executive Officers of the
                Local
                Union shall be accorded top seniority, but they must have the basic
                qualifications to perform the available
                work.

            

    

    

    
      	
              (h)

            	
              Recalls
                shall be in reverse order of layoff. The most senior employee with
                basic
                qualifications on the layoff list will be recalled for available
                work.
                Employees recalled to fill a temporary job vacancy may refuse this
                assignment without prejudicing their recall
                rights.

            

    

    

    
      	
              (i)

            	
              Employees
                affected by bumping procedure must return to their original job when
                such
                opening occurs.

            

    

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      9

    LEAVE
      OF ABSENCE-EMERGENCY TIME OFF

    

    Section
      1.     When
      the
      requirements of the Company will permit, employees upon written request on
      account of illness or death in their immediate family or other reasonable cause
      approved by the Company, will be granted a leave of absence without pay for
      a
      period of not more than ninety (90) days, which shall be renewable if production
      requirements permit. Any such employees on leave who engaged in other
      employment, or who fail to report for work on the expiration of their leave,
      will be considered as having quit. All such leaves of absences shall be granted
      in writing by the Company.

    

    Section
      2.     Employees
      granted a leave of absence must prepay all insurance premiums prior to their
      departure for said leave. This prepayment must also be made in the event the
      leave is extended by mutual agreement.

    

    Section
      3.     Any
      employee who enters the Armed Forces shall be entitled to a leave of absence,
      accumulations of seniority and re-employment rights, in accordance with Federal
      and State Laws. In addition, an employee who is a member of the Military Reserve
      or National Guard shall be granted leave for annual training or special tour
      not
      to exceed three (3) weeks per calendar year. Such employee during this period
      shall receive the difference in pay, if any, between their normal rate of pay
      and wages paid by the service branch.

    

    Section
      4.     Seniority
      will be accumulated during leaves of absences as described above.

    

    Section
      5.     Employees
      may be granted emergency time off of not more than fourteen (14) calendar days
      by contacting the Company by telephone or telegram within three (3) working
      days
      giving the reasons for such request. Such time off will be granted for
      legitimate emergency reasons. Extensions of emergency time off may be requested
      under the provisions of Section 1 of the Article 9.

    

    Section
      6.     Employees
      will be granted pregnancy leave of absence and such leaves will be treated
      as
      any other type of medical leave of absence.

     

    ARTICLE
      10

    CALL
      TIME

    

    Section
      1.

    

    (a)     Employees
      reporting for work on their regular shift without notice from the Company that
      no work will be available for them, shall be offered other work for at least
      four (4) hours or shall be paid the base rate of their regular job for four
      (4)
      hours if there is no other work for them. If they refuse the work offered,
      they
      shall forfeit the right to receive reporting pay.

    

    
      	
              (b)

            	
              Notice
                to the employees by the company will be given not later that the
                end of
                their regular shift.

            

    

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    
      	
              (c)

            	
              This
                Article shall not apply where the lack of work is due to conditions
                beyond
                the control of the Company, or in the case of an employee who has
                been
                absent and has not given the Company adequate notice of return to
                work.

            

    

     

    ARTICLE
      11

    COMMITTEE
      PERSONS, GRIEVANCE AND

    ARBITRATION
      PROCEDURE

    

    Section
      1.     In
      addition to the Shop Chairperson, the Union shall have a Committee-Person for
      each sixty (60) employees, except that there shall be a minimum of three (3)
      Committeepersons on the first shift, two (2) on the second shift and one (1)
      on
      the third shift. The Union will provide the Company with a current list of
      the
      Committeepersons and their departmental responsibilities.

    

    Section
      2.     Time
      necessarily spent during the normal working hours (and during scheduled
      overtime) by the Shop Chairperson, Committeeperson, grievant and Union employees
      of the Company on negotiations, grievances or arbitration hearings will be
      paid
      for by the Company. If in the opinion of the Company such time becomes
      unreasonable, the Company will notify and confer with the Union.

    

    (a)    The
      Company shall pay the Shop Chairperson for all time spent during the normal
      working hours (and during scheduled overtime) on Union business including the
      handling and investigations of grievances as set out in this Agreement, for
      time
      spent on arbitration hearings and for negotiations.

    

    Section
      3.   
 A
      grievance is a difference of opinion between the Company and the Union or an
      employee involving the interpretation of application of the terms of this
      Agreement.

    

    Section
      4.       
Grievances
      shall be processed as follows:

    

    
      	
              (a)

            	
              The
                grievance must be submitted within fifteen (15) working days after
                the
                employee and the Union are aware of
                it.

            

    

    

    
      	
              (b)

            	
              The
                Shop Chairperson or Committeeperson and employee shall discuss the
                grievance with the immediate Supervisor of the department in which
                the
                grievance has occurred. If the immediate Supervisor’s oral answer is not
                satisfactory, the grievance shall be submitted to Step
                1.

            

    

    

    
      	
              (c)

            	
              Step
                1: The grievance shall be reduced to writing and presented to the
                employee’s immediate Supervisor by the Union within three (3) working days
                from the date of the oral answer. The Supervisor shall write the
                answer on
                the grievance form and return three (3) copies to the Union
                Committeeperson before the end of the third (3rd) working day after
                receipt of the grievance. Failing a satisfactory settlement, the
                Union
                will have three (3) working days in which to appeal to the Supervisor
                for
                referral to Step 2.

            

    

    

    
      	
              (d)

            	
              Step
                2. The Union Shop Chairperson shall meet with the Company representative
                designated to handle the second step within three (3) days from the
                date
                of the appeal. The Company will give its written answer within three
                (3)
                working days after the meeting. Failing a satisfactory settlement,
                the
                Union will have three (3) working days in which to appeal to the
                Personnel
                Manager for referral to Step 3.

            

    

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    
      	
              (e)

            	
              Step
                3: The President of the Local Union and/or the Business Agent and/or
                the
                International Representative, together with the Union Shop Committee
                shall
                take up the grievance with the Committee of Management which shall
                include
                an executive of the Company. This meeting will be scheduled within
                seven
                (7) working days after the date of the
                appeal.

            

    

    

    
      	 	
              The
                Company will have five (5) working days following the date of the
                meeting
                in which to make a written disposition of the grievance. Failing
                a
                satisfactory settlement, the Union will have fourteen (14) days in
                which
                to notify the Company in writing of its intent to arbitrate the
                issue.

            

    

    

    
      	
              (f)

            	
              Upon
                receipt of the Union’s notice of their intention to arbitrate, a
                prearbitration hearing shall be scheduled within thirty (30) working
                days.
                After the pre-arbitration hearing, the Company General Manager will
                have
                ten (10) working days to answer. If the answer is not satisfactory,
                the
                Union will have thirty (30) days following that answer in which to
                appeal
                for arbitration. If the Union does not appeal within said time limit,
                the
                grievance shall be considered as being satisfactorily
                settled.

            

    

    

    
      	
              (g)

            	
              All
                of the above stated time limits may be extended by mutual
                agreement.

            

    

    

    
      	
              (h)

            	
              The
                Grievant may be present upon request of either party at any of the
                steps
                outlined above.

            

    

    

    
      	
              (i)

            	
              If
                grievances are appealed to arbitration, the parties will alternate
                between
                the American Arbitration Association and the State Board of Mediation
                and
                Arbitration.

            

    

    

    
      	
              (j)

            	
              If
                submitted to the Connecticut State Board of Mediation and Arbitration,
                the
                parties shall operate under the procedures set forth by said Board,
                whose
                decision shall be final and binding upon the
                parties.

            

    

    

    
      	
              (k)

            	
              If
                submitted to the American Arbitration Association, the parties shall
                operate under the procedure set forth by the American Arbitration
                Association, whose decision shall be final and binding upon the
                parties.

            

    

    

    
      	
              (l)

            	
              The
                Arbitrator may interpret this agreement and apply it to the particular
                case under consideration but shall, however, have no authority to
                add to,
                subtract from or modify the terms of this agreement in any
                way.

            

    

    

    
      	
              (m)

            	
              The
                cost of Arbitration shall be shared equally by the Company and the
                Union.

            

    

    

    
      	
              (n)

            	
              Arbitration
                cases involving time study, job evaluation and job standards shall
                be
                submitted only to the American Arbitration
                Association.

            

    

    

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    
      	
              (o)

            	
              The
                Company shall not be required to pay back pay for any period in excess
                of
                thirty (30) working days prior to the time a written grievance is
                properly
                filed with the Company.

            

    

    

    Section
      5.     The
      local
      Union President and/or two (2) appointees, and/or a representative of the
      International UAW Engineering Department, shall be permitted to enter the plant
      for the purpose of investigating, advising or negotiating on grievances.
      However, they shall first make known their intent to the Company and shall
      receive permission for said visit. This shall be restricted to entrance during
      working hours only.

     

    ARTICLE
      12

    HEALTH
      AND SAFETY

    

    Section
      1.

    

    
      	
              (a)

            	
              The
                Company agrees it will provide proper safety devices and sanitary
                conditions in the plant. Failure to do so may be a matter of grievance.
                Furthermore, the Company agrees that it will pay the full cost of
                Company
                mandated safety equipment.

            

    

    

    
      	
              (b)

            	
              Once
                each month starting in February, 1989, at a time to be scheduled
                by
                management, a safety tour between two (2) members of management and
                two
                (2) employee representatives of the Union will make a plant safety
                tour.
                At the end of the tour, unsafe practices and conditions found in
                the plant
                will be listed. Appropriate actions will be taken by management to
                correct
                unsafe conditions found. This committee will jointly plan to prevent
                accidents, investigate accidents, review accident reports, and OSHA
                compliance. Regular meetings will be scheduled to facilitate the
                promotion
                of health and safety in the plant.

            

    

    

    
      	
              (c)

            	
              The
                Company will issue and fill out accident forms on all injuries and
                give
                the Shop Committeeperson a copy
                immediately.

            

    

    

    Section
      2.     The
      Company shall provide first aid facilities and a qualified attendant to perform
      first aid duties. 

    

    Section
      3.     Employees
      who are injured on the job can be sent home and receive pay for the balance
      of
      their day only if authorized by written instruction from the Medical Department
      or the Company doctor. The Company will issue a form to be used in such cases,
      a
      copy of which will be given to the employee’s Foreperson and to the
      Union.

    

    Section
      4.     Where
      possible, employees sustaining injuries at work, or affected by occupational
      diseases during the course of their employment, and who are physically
      handicapped as a result thereof, shall be given other suitable employment as
      may
      be then available.

    

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      13

    LEADPERSON’S
      SCOPE

    

    Section
      1.     To
      relay
      general instructions from Foreperson to operators with reference to product,
      operations, tools, equipment and duties.

    

    Section
      2.     All
      matters involving personnel problems are to be handled by the Forepersons who
      have full supervisory authority over all employees in their departments,
      including Leadpersons.

    

    Section
      3.     Leadpersons
      shall not have the right to hire, fire, or recommend disciplinary action or
      recommend promotions or demotions.

     

    ARTICLE
      14

    BEREAVEMENT
      PAY

    

    Section
      1.     Employees
      (including probationary) shall be entitled to three (3) working days off with
      pay in the event of a death within the “immediate family.”

    

    Section
      2.     Immediate
      family shall be limited to spouse, child, mother, father, sister, brother,
      grandparent, mother or father-in-law, brother or sister-in-law, daughter or
      son-in-law, legal guardian or stepchild.

     

    ARTICLE
      15

    JURY
      DUTY

    

    Section
      1.     Employees
      who have completed their probationary period, and who are called and report
      for
      Jury Duty on days they would have otherwise worked for the Company, shall be
      paid regular wages for thirty (30) days. Should Jury Duty continue past 30
      days,
      the employee shall be paid the difference between the payment they receive
      for
      such service and the amount calculated by multiplying eight (8) times their
      regular hourly rate for each day involved limited, however, to Monday through
      Friday.

    

    Section
      2.     In
      order
      to receive Jury Duty make-up payment, the employees must give Management prior
      notice of said Duty and furnish evidence that they actually performed such
      service, showing the amount of payment received accordingly. These provisions
      are not applicable to employees who, without being called, volunteer for Jury
      Duty.

     

    ARTCILE
      16

    NOTICE
      OF DISCHARGE

    

    Section
      1.     The
      Company agrees to give immediate written notice to the Shop Committeeperson
      and
      the employee involved of all discharges and suspensions made within the unit,
      except in emergencies.

    

    Section
      2.     The
      Chairperson and/or Committeeperson shall be present at time of employee
      discharge and suspension except in emergencies.

    

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    Section
      3.     If
      an
      employee is discharged or suspended, he/she shall have the right to a hearing
      within twenty-four (24) hours after suspension or discharge. He/she shall be
      represented by the Shop Chairperson and Committeeperson and/or Business Agent
      and/or International Representative.

    

    Section
      4.     When
      employees are discharged or suspended and file a complaint claiming that they
      were unjustly discharged or suspended, the Shop Committeeperson may invoke
      the
      grievance procedure at the third step within (5) days after the discharge or
      suspension.

    

    Section
      5.     If,
      upon
      appeal, any discharge or suspension shall be found to be unfair or
      discriminatory, the employee will be reinstated with seniority rights unimpaired
      and will be given retroactive pay for all time lost due to the discharge or
      suspension, less the earnings he/she may have received from gainful employment
      or unemployment insurance obtained in the interim.

     

    ARTICLE
      17

    UNION
      COOPERATION

    

    The
      Union
      agrees that in exchange for a fair day’s pay for a fair day’s work, it must
      maintain a high level of productivity. The Union and its members will cooperate
      in attaining such a level of productivity as is consistent with the health
      and
      welfare of its members. The Union and its members will seek to assist in
      effectuating economies and the utilization of improved methods and
      machinery.

    

    ARTICLE
      18

    MANAGEMENT

    

    It
      is
      understood and agreed that with the exception of the specific provisions of
      this
      contract, nothing in this Agreement shall be considered to limit or restrict
      the
      Company in the exercise of the customary functions of Management.

    

    

    ARTICLE
      19

    NO
      STRIKES OR LOCKOUTS

    

    Section
      1.     The
      Union
      agrees that there shall be no strikes during the term of this Agreement on
      any
      issues which may be the subject of arbitration or on which the contract is
      silent.

    

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    Section
      2.     The
      Company agrees that there shall be no lockouts during the terms of this
      Agreement on any issues which may be the subject of arbitration or on which
      the
      contract is silent.

     

    ARTICLE
      20

    PAID
      SICK
      AND/OR

    PERSONAL
      LEAVE ALLOWANCE

    

    Section
      1.     Each
      employee, upon vacation eligibility date, shall be credited with six (6) days
      (48 hours) paid sick and or personal leave allowance in accordance with the
      following provisions:

    

    (a)     Employee
      must have worked at least 1000 hours in the prior twelve (12) month period.
      The
      period for determining hours worked shall be from August 1st of the prior year
      through July 31st of the current year.

    

    (b)     In
      the
      event an employee worked less than 1000 hours in said period, paid sick and/or
      personal leave allowance will be credited in the same proportion as the hours
      worked are to 1000. New employees must have worked at least 1000 hours in order
      to be eligible for paid sick and/or personal leave allowance. Employees
      terminated for any reason shall receive a pro-rated sick or personal
      pay.

    

    Section
      2.     Any
      employee with credited sick and/or personal leave allowance, as provided in
      Section 1 above, may use such allowance during the following twelve (12) month
      period for illness (when not receiving accident and health insurance benefits),
      or personal reasons, but provided that absence from work has been excused,
      is
      for not less than four (4) continuous hours and has at least four (4) hours
      paid
      sick and/or personal leave allowance credit remaining. Employees shall notify
      the Company when electing to take personal days off.

    

    Section
      3.     Paid
      sick
      and/or personal leave allowance shall be computed on the basis of the employee’s
      regular rate of pay as of the day of absence and shall be paid on the pay check
      for said period so long as application for same has been submitted on a timely
      basis. Application for payment shall be made through the employee’s supervisor
      on forms so provided.

    

    Section
      4.     Unused
      sick and/or personal leave allowance, at the time of the employee’s next
      eligibility date, will be paid to the employee in a lump sum calculated on
      the
      basis of the employee’s regular rate of pay at such time.

     

    ARTICLE
      21

    NON-COVERED
      EMPLOYEES

    

    Section
      1.     Persons
      excluded from the Bargaining Unit shall not perform work of the type customarily
      performed by employees of the Bargaining Unit, except in the following
      situations:

    

    
      	(a)	
              In
                emergencies when employees are not
                available.

            

    

    

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    
      	
              (b)

            	
              In
                the bona fide instruction or training of
                employees.

            

    

    

    
      	(c)	
              Duties
                of an experimental nature or in the case of vendors or warrantees,
                tryouts.

            

    

    

    Section
      2.    When
      it
      is determined that bargaining Unit work has been performed by a non-bargaining
      unit employee in violation of Section 1, the employee in the appropriate job
      description with the least amount of accumulated overtime hours will receive
      pay
      at the applicable rate for the hours of work performed.

    

    Section
      3.    The
      Company shall notify the Union Chairperson and/or the Committee person in the
      section affected prior to the assignment of any persons excluded from the
      Bargaining Unit to any of the situations listed in Section 1.

    

    Section
      4.    Any
      grievance involving interpretation of this Article may be submitted in writing
      directly to Step 3.

     

    ARTICLE
      22

    GENERAL
      PROVISIONS

    

    Section
      1.    The
      Company shall notify the Union of its supervisory representatives; the Union
      shall notify the Company of its Committee members operating under the
      Contract.

    

    Section
      2.    Employees
      will be paid equal pay for equal work.

    

    Section
      3.    The
      Company and the Union agree that they will not discriminate against any employee
      or applicant for employment because of age, race, color, religious creed, sex,
      national origin, ancestry or physical disability, disabled veterans, and
      veterans of the Vietnam era.

    

    Section
      4.    Part
      time
      employees shall have seniority only among other part-time employees, and shall
      share in monetary benefits under the contract on a prorated basis only, with
      the
      exception of general wage rates which they shall share fully.

    

    Section
      5.    Officers,
      Stewards and Committee persons of the Union shall be permitted to leave work
      in
      connection with official Union business whenever authorized by the President
      or
      the Business Agent of the Amalgamated Local Union, and members elected or
      appointed to official Union conventions or conferences, or authorized by the
      Local Union to attend any official Union functions shall be permitted to leave
      work for such purposes provided permission shall be obtained in advance from
      the
      Company, which permission will not unreasonably be withheld and provided further
      that the Company shall not be liable for any pay during the period of
      absence.

    

    Section
      6.    Except
      as
      provided herein, it is understood between the parties that there shall be no
      duplication of Compensation for the same hours for any reason.

    

    Section
      7.    The
      Company and the Union agree to institute a mutually agreeable training or
      apprenticeship program.

    

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    Section
      8.    The
      Company shall print and distribute copies of this contract to all Bargaining
      Unit employees within one hundred twenty (120) days of the effective date of
      this Agreement.

    

    Section
      9.    The
      Company will offer educational assistance to any employee with three or more
      years of service under the following conditions:

    

    
      	
              (a)

            	
              Courses
                must be job related and approved by Management prior to starting
                the
                program of instruction for which payment will be
                made.

            

    

    

    
      	
              (b)

            	
              Courses
                must be successfully passed prior to
                payment.

            

    

    

    
      	
              (c)

            	
              There
                will be a semester limitation of assistance not to exceed $200 per
                individual, effective February 1,
                1992.

            

    

    

    Section
      10.    Bargaining
      unit work within the plant shall not be sub-contracted when the work is normally
      and usually performed by bargaining unit employees with appropriate equipment
      and qualified employees are available, except where circumstances demand or
      economics warrant it. If such decision is based on cost, the Company will notify
      and discuss with the Union as soon as possible the reasons why it believes
      such
      action to be necessary, so the parties may explore alternatives to such transfer
      of work.

     

    ARTICLE
      23

    INSURANCE
      PROGRAM

    

    Section
      1.     Health
      Maintenance Organization

    

    Each
      employee covered by this Agreement shall have their hospital, medical, surgical,
      and related insurance coverage under the
      Health Net Charter Outtlook POS $1,500 hospital/outpatient deductible per
      covered family member per calendar year (employee pays first $400, and company
      pays the next $1,100). Contract formula for determining increases
      applies.

    

    Section
      2.     The
      Company
      agrees to provide insurance coverage as outlined in the Health Net plan
      description as provided to all employees upon enrollment. Details are explained
      in the insurance contract.

    

    Section
      3.     Employee
      Contributions

    

    Effective
      3/1/08 and
      beyond
      the
      employee contribution will be the existing contribution plus 50% of the premium
      increase up to a maximum of $5.00 from the prior contribution.

     

    If
      during
      the life of the contract the projected cost of premium increases would result
      in
      an increase of more than $5.00 above the previous year's employee contribution,
      the Company and the Union will meet to develop an alternate plan which will
      not
      result in an increase in Company cost. If the parties agree on a plan which
      results in a lesser premium cost the parties will share the
      savings.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    If
      the
      parties do not agree on an alternate plan, the Company and the employee will
      share the increased cost of the premium on a 50%/50% basis.

     

    Premium
      Conversion

    

    Current
      tax laws allow us to provide you with a tax-advantaged way to pay your share
      of
      Medical premiums. You may elect to contribute toward the cost of your coverage
      on a pre-tax basis. That means your premiums will be deducted from your paycheck
      before Social Security, federal, and state taxes are taken out. This lowers
      your
      taxable income and, in effect, lowers your share of the premiums.

    

    Section
      4.     Accident
      and Sickness weekly benefits for employees with accidents or sickness will
      be
      paid as follows:

     

    2/08
      - $325 per week

     

    Section
      5.     The
      Company shall pay $35 per month per employee for dental insurance to Local
      376,
      UAW Dental Plan in the first, second, third and fourth year of the agreement
      and
      in the last year of the agreement this will increase to $40 per month
      .

    

    Section
      6.     Employees
      who retire early may continue their life and/or medical insurance at group
      rates
      until age sixty-five (65). In order to receive retiree life paid for by the
      company and $50/month towards retiree medical and/or Medicare Part B
      Reimbursement paid for by the Company at age sixty-five (65), the employee
      must
      elect to carry the retiree life and/or medical insurance until age sixty-five
      (65).

    

    Section
      7.     Employees
      who retire on or after 2/1/96 are entitled to $50 per month paid for by the
      Company toward both medical and/or Medicare Part B reimbursement when they
      reach
      age sixty-five (65).

    

    Section
      8.     The
      Company will provide Life Insurance Coverage and Accidental Death and
      Dismemberment Coverage in the following amounts:

     

    
      
        	
                February
                  2008

              	 	
                $

              	
                25,000

              	 
	
                February
                  2009

              	 	
                $

              	
                26,000

              	 
	
                February
                  2010

              	 	
                $

              	
                27,000

              	 
	
                February
                  2011

              	 	
                $

              	
                28,000

              	 
	
                February
                  2012

              	 	
                $

              	
                29,000

              	 

      

       

    

    Section
      9.     The
      Pension Plan Monthly Benefit shall be increased from $25.50 as follows for
      employees retiring after: 2/1/08: $26.25; 2/1//09: $27.00; 2/1/10: $28.00;
      2/1/11: $28.75; 2/1/12: $29.50. Employees hired on or after March 1, 2005 will
      not be covered by the defined benefit pension plan, but will instead be entitled
      to participate in the Company’s 401k plan, which includes a 25% match on the
      first 4% of the employee’s contribution. 

    

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    Section
      10.     Survivor
      Income Benefit Insurance
      - If you
      should die the Company shall pay a monthly benefit of $100 to your spouse
      commencing on the first day of the calendar month following the date of death
      and on the first day of each month thereafter until 24 such monthly payments
      have been made. No survivor Income Benefit shall be subject in any manner to
      assignment, pledge, attachment of encumbrance of any kind, nor subject to the
      debts or liability of any eligible survivor except as required by applicable
      law.

    

    Section
      11.     Prescription
      Safety Glasses

    

      The
        following prescription safety glass program is in effect for employees
        only:

    

     

    
      
        	
                Expenses
                  Covered

              	 	 	 
	 	 	 	 
	
                Every
                  12 months:

              	 	
                Up
                  to:

              	 
	 	 	 	 
	
                Lenses
                  (per lens)

              	 	 	 
	 	 	 	 
	
                Single
                  Vision

              	 	
                $

              	
                10.00

              	 
	 	 	 	 	 
	
                Bifocal

              	 	
                $

              	
                15.00

              	 
	 	 	 	 	 
	
                Trifocal

              	 	 	
                20.00

              	 
	 	 	 	 	 
	
                Contact
                  Lens

              	 	
                $

              	
                15.00

              	 
	 	 	 	 	 
	
                Every
                  24 months:

              	 	 	 	 
	 	 	 	 	 
	
                Frames

              	 	 	
                14.00

              	 

      

    

     

    Section
      12.     Provisions
      Applicable to Coverage if you cease active work because of certain specified
      reasons -If
      you
      cease work because of non-occupational disability, all your coverage except
      insurance for Death or Dismemberment by Accidental means and Weekly Accident
      and
      Sickness insurance will be continued during absence due to such disability
      up to
      a maximum of 18 months from the end of the calendar month in which you last
      worked. This provision runs concurrently with your COBRA Rights.

    

    Section
      13.     Layoff
      or Leave of Absence
      -Your
      insurance for Death or Dismemberment by Accidental Means and your Weekly
      Accident and Sickness Insurance will terminate on the date you cease active
      work, and all your other coverage
      will be continued during such lay-off up to the end of the calendar month in
      which you cease work. If your lay-off continues beyond that period, you may
      elect on or before the 15th
      day of
      the next calendar month to continue all of your insurance other than your
      insurance for Death or Dismemberment by Accidental means and your Weekly
      Accident and Sickness insurance for not more than the next 18 months by paying
      the full cost of the coverage thus continued for you. Failure to make such
      contribution on or before the 15th
      day of
      any month will terminate such insurance at the end of the last month for which
      payment has been made. If your are on lay-off, this provision will run
      concurrently with your COBRA rights under COBRA.

    

    Section
      14.     What
      Happens to Your Insurance at Retirement
      - All
      employees retiring under the Pension Plan, upon attaining their normal
      retirement date, will receive $4,000 of life insurance.

    

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    If
      an
      employee retires early under the Pension Plan and pays the required
      contributions for the amount of life insurance he is entitled to as a retiree,
      until attainment of age 65, the Company will then continue this amount of life
      insurance at no cost to the employee.

     

    ARTICLE
      24

    PLANT
      CLOSURE AGREEMENT

    

    An
      employee whose employment is terminated as a direct result of the plant being
      closed shall receive:

    

    (a) Separation
      pay in an amount equal to $200 for each year of continuous service;

    

    (b) Any
      vacation benefits accrued but not yet paid, and

    

    
      
        (c)
          The
          continuation of the hospital, medical, surgical, dental and life insurance
          in
          effect at the time of their termination for four (4)
          months.

      

    

     

    ARTICLE
      25

    TERMINATION
      DATE

    

    This
      Agreement shall commence February 1, 2008 and terminate midnight, January
      31,
      2013.
      The
      first year wage increase of 3.75% became payable upon the Monday following
      the
      ratification of this contract which occurred on November 19, 2007.

    

    This
      Agreement shall be in full force and effect for a period of five
      (5) years
      from the
      date hereof and for additional periods of one (1) year thereafter except that
      should either party hereto intend to terminate this Agreement or modify any
      portion of any of the terms hereof, it shall give written notice by certified
      mail to the other party not less than sixty (60) no more than seventy-five
      (75)
      days prior to its expiration date.

    

    Should
      notice of termination be given by either party as herein provided, this Contract
      shall terminate as of its expiration date.

    

    Should
      either party hereto give the other party such written notice requesting
      amendment or modification of this Agreement, such notice shall be specific
      as to
      the amendments or modifications proposed. Negotiations on such proposed
      amendments or modifications shall begin not later than twenty (20) days after
      the date of mailing of such notice. During such negotiation, this Agreement
      shall remain in full force and effect except that should negotiations extend
      beyond the termination date then either party, upon ten (10) days notice to
      the
      other in writing and by certified mail may terminate the Contract in which
      event
      this Agreement shall terminate on the tenth day after mailing of such
      notice.

    

    Notice
      shall be in writing and shall be sent by certified mail addressed, if to the
      Union, to the International Union, United Automobile, Aerospace and Agricultural
      Implement Workers or America, UAW, and Amalgamated Local 376, 30 Elmwood Court,
      Newington, Connecticut and if to the Company, to The Heim Bearings Division
      of
      Roller Bearing Company, 60 Round Hill Road, Fairfield, Connecticut,
      06430.

    

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused their names to be subscribed
      by
      their duly authorized officers and representatives this

     

     

    
      	
              INTERNATIONAL
                UNION, 
                UNITED
                  AUTOMOBILE, AEROSPACE

                AND
                  AGRICULTURAL IMPLEMENT

                WORKERS
                  OF AMERICA, UAW

                AND
                  AMALGAMATED LOCAL 376 

              

            	 HEIM BEARINGS DIVISION
              OF
              RBC BEARINGS
	 	 
	/s/ Wendel Askew	/s/
              Jamie King
	Wendel Askew, Chairperson	Jamie King 
	 	Plant Manager
	 	 
	/s/ Mary Pereira	/s/ Pamela S. Kaczer
	Mary Pereira, Committee person	Pamela S. Kaczer 
	 	Human Resources Manager  
	 	 
	/s/ Ron Jarkes	/s/ Jeffrey M. Post
	Ron Jarkes, Committee person	Jeffrey M. Post
	 	
              General
                Manager

            
	/s/ Gene Piscane 	 
	Gene Piscane, Committee Person	 
	 	 
	/s/ Carmen Burhnam	 
	Carmen Burhnam 
              President,
                UAW Local 376

            	 
	 	 

    

    
 

    
      
        
        

      

      
        -28-OFFICE LEASE

LAKESHORE TOWERS

LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE
II,

a California limited partnership,

as Landlord,

and

QUALITY
SYSTEMS, INC.,

a California corporation,

as Tenant.

LAKESHORE TOWERS BUILDING III

[Quality Systems, Inc.]

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Page

	
ARTICLE
 1          PREMISES,
 BUILDING, PROJECT, AND COMMON AREAS

	
 

	
4

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1.1

	
 

	
Premises,
 Building, Project and Common Areas

	
 

	
4

	
 

	
1.2

	
 

	
Verification
 of Rentable Square Feet and Usable Square Feet of Premises, Building, and
 Project

	
 

	
4

	
 

	
1.3

	
 

	
Right of
 First Offer

	
 

	
5

	
 

	
 

	
 

	
ARTICLE
 2          LEASE TERM;
 OPTION TERM

	
 

	
6

	
 

	
 

	
 

	
 

	
2.1

	
 

	
Lease Term

	
 

	
6

	
 

	
2.2

	
 

	
Lease
 Commencement Date Delay

	
 

	
6

	
 

	
2.3

	
 

	
Option Term

	
 

	
7

	
 

	
2.4

	
 

	
Early
 Termination

	
 

	
9

	
 

	
 

	
 

	
ARTICLE
 3          BASE RENT

	
 

	
9

	
 

	
 

	
 

	
ARTICLE
 4          ADDITIONAL RENT;
 SECURITY DEPOSIT

	
 

	
10

	
 

	
 

	
 

	
 

	
4.1

	
 

	
General
 Terms

	
 

	
10

	
 

	
4.2

	
 

	
Definitions
 of Key Terms Relating to Additional Rent

	
 

	
10

	
 

	
4.3

	
 

	
Allocation
 of Direct Expenses

	
 

	
16

	
 

	
4.4

	
 

	
Calculation
 and Payment of Additional Rent

	
 

	
16

	
 

	
4.5

	
 

	
Taxes and
 Other Charges for Which Tenant Is Directly Responsible

	
 

	
16

	
 

	
4.6

	
 

	
Landlord’s
 Books and Records

	
 

	
17

	
 

	
4.7

	
 

	
Security
 Deposit

	
 

	
18

	
 

	
 

	
 

	
ARTICLE
 5          USE OF PREMISES

	
 

	
18

	
 

	
 

	
 

	
 

	
5.1

	
 

	
Permitted
 Use

	
 

	
18

	
 

	
5.2

	
 

	
Prohibited
 Uses

	
 

	
18

	
 

	
5.3

	
 

	
Tenant’s
 Security Responsibilities

	
 

	
19

	
 

	
 

	
 

	
ARTICLE
 6          SERVICES AND
 UTILITIES

	
 

	
19

	
 

	
 

	
 

	
 

	
6.1

	
 

	
Standard
 Tenant Services

	
 

	
19

	
 

	
6.2

	
 

	
Overstandard
 Tenant Use

	
 

	
19

	
 

	
6.3

	
 

	
Interruption
 of Use

	
 

	
20

	
 

	
 

	
 

	
ARTICLE
 7          REPAIRS

	
 

	
20

	
 

	
 

	
 

	
ARTICLE
 8          ADDITIONS AND
 ALTERATIONS

	
 

	
21

	
 

	
 

	
 

	
 

	
8.1

	
 

	
Landlord’s
 Consent to Alterations

	
 

	
21

	
 

	
8.2

	
 

	
Manner of
 Construction

	
 

	
21

	
 

	
8.3

	
 

	
Payment for
 Improvements

	
 

	
22

	
 

	
8.4

	
 

	
Construction
 Insurance

	
 

	
22

	
 

	
8.5

	
 

	
Landlord’s
 Property

	
 

	
22

	
 

	
8.6

	
 

	
Communications
 and Computer Lines

	
 

	
22

	
 

	
 

	
 

	
ARTICLE
 9          COVENANT AGAINST
 LIENS

	
 

	
23

	
 

	
 

	
 

	
ARTICLE
 10        INSURANCE

	
 

	
23

	
 

	
 

	
 

	
 

	
10.1

	
 

	
Indemnification
 and Waiver

	
 

	
23

	
 

	
10.2

	
 

	
Tenant’s
 Compliance With Landlord’s Fire and Casualty Insurance

	
 

	
23

	
 

	
10.3

	
 

	
Tenant’s
 Insurance

	
 

	
24

	
 

	
10.4

	
 

	
Form of
 Policies

	
 

	
24

	
 

	
10.5

	
 

	
Subrogation

	
 

	
24

	
 

	
10.6

	
 

	
Additional
 Insurance Obligations

	
 

	
25

	
 

	
 

	
 

	
ARTICLE
 11        DAMAGE AND
 DESTRUCTION

	
 

	
25

	
 

	
 

	
 

	
 

	
11.1

	
 

	
Repair of
 Damage to Premises by Landlord

	
 

	
25

	
 

	
11.2

	
 

	
Landlord’s
 Option to Repair

	
 

	
25

	
 

	
11.3

	
 

	
Tenant’s
 Option to Cause Early Expiration

	
 

	
26

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
-i-

	
[Quality Systems, Inc.]

TABLE OF CONTENTS

(continued)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Page

	
 

	
11.4

	
 

	
Waiver of
 Statutory Provisions

	
 

	
26

	
 

	
 

	
 

	
ARTICLE
 12          NONWAIVER

	
 

	
26

	
 

	
 

	
 

	
ARTICLE
 13          CONDEMNATION

	
 

	
27

	
 

	
 

	
 

	
ARTICLE 14          ASSIGNMENT
 AND SUBLETTING

	
 

	
27

	
 

	
 

	
 

	
 

	
14.1

	
 

	
Transfers

	
 

	
27

	
 

	
14.2

	
 

	
Landlord’s
 Consent

	
 

	
28

	
 

	
14.3

	
 

	
Transfer
 Premium

	
 

	
28

	
 

	
14.4

	
 

	
Landlord’s
 Option as to Subject Space

	
 

	
29

	
 

	
14.5

	
 

	
Effect of
 Transfer

	
 

	
29

	
 

	
14.6

	
 

	
Occurrence
 of Default

	
 

	
30

	
 

	
14.7

	
 

	
Non-Transfers

	
 

	
30

	
 

	
 

	
 

	
ARTICLE
 15          SURRENDER OF
 PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

	
 

	
30

	
 

	
 

	
 

	
 

	
15.1

	
 

	
Surrender of
 Premises

	
 

	
30

	
 

	
15.2

	
 

	
Removal of
 Tenant Property by Tenant

	
 

	
30

	
 

	
 

	
 

	
ARTICLE
 16          HOLDING OVER

	
 

	
31

	
 

	
 

	
 

	
ARTICLE
 17          ESTOPPEL
 CERTIFICATES; FINANCIAL STATEMENTS

	
 

	
31

	
 

	
 

	
 

	
 

	
17.1

	
 

	
Estoppel
 Certificates

	
 

	
31

	
 

	
17.2

	
 

	
Financial
 Statements

	
 

	
31

	
 

	
 

	
 

	
ARTICLE
 18          SUBORDINATION

	
 

	
31

	
 

	
 

	
 

	
ARTICLE
 19          DEFAULTS;
 REMEDIES

	
 

	
32

	
 

	
 

	
 

	
 

	
19.1

	
 

	
Events of
 Default

	
 

	
32

	
 

	
19.2

	
 

	
Remedies
 Upon Default

	
 

	
32

	
 

	
19.3

	
 

	
Subleases of
 Tenant

	
 

	
33

	
 

	
19.4

	
 

	
Efforts to
 Relet

	
 

	
34

	
 

	
19.5

	
 

	
Landlord
 Default

	
 

	
34

	
 

	
 

	
 

	
ARTICLE
 20          COVENANT OF
 QUIET ENJOYMENT

	
 

	
34

	
 

	
 

	
 

	
ARTICLE
 21          34

	
 

	
 

	
 

	
 

	
 

	
[INTENTIONALLY
 DELETED]

	
 

	
34

	
 

	
 

	
 

	
ARTICLE
 22          SIGNS

	
 

	
34

	
 

	
 

	
 

	
 

	
22.1

	
 

	
Full Floor

	
 

	
34

	
 

	
22.2

	
 

	
Prohibited
 Signage and Other Items

	
 

	
34

	
 

	
22.3

	
 

	
Building
 Directory

	
 

	
34

	
 

	
 

	
 

	
ARTICLE
 23          COMPLIANCE WITH
 LAW

	
 

	
35

	
 

	
 

	
 

	
 

	
23.1

	
 

	
Applicable
 Laws

	
 

	
35

	
 

	
23.2

	
 

	
Hazardous
 Materials

	
 

	
35

	
 

	
23.3

	
 

	
Warranties;
 Notice of Release and Investigation

	
 

	
35

	
 

	
23.4

	
 

	
Indemnification

	
 

	
36

	
 

	
23.5

	
 

	
Remediation
 Obligations; Tenant’s Rights on Cleanup by Landlord

	
 

	
36

	
 

	
23.6

	
 

	
Definition
 of “Hazardous Material”

	
 

	
36

	
 

	
 

	
 

	
ARTICLE
 24          LATE CHARGES

	
 

	
37

	
 

	
 

	
 

	
ARTICLE
 25          LANDLORD’S
 RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

	
 

	
37

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
-ii- 

	
[Quality Systems, Inc.]

TABLE OF CONTENTS

(continued)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Page

	
 

	
25.1

	
 

	
Landlord’s
 Cure

	
 

	
37

	
 

	
25.2

	
 

	
Tenant’s
 Reimbursement

	
 

	
37

	
 

	
 

	
 

	
ARTICLE
 26          ENTRY BY
 LANDLORD

	
 

	
37

	
 

	
 

	
 

	
ARTICLE
 27          TENANT PARKING

	
 

	
38

	
 

	
 

	
 

	
 

	
27.1

	
 

	
Parking In
 General

	
 

	
38

	
 

	
27.2

	
 

	
Landlord
 Reservations

	
 

	
38

	
 

	
27.3

	
 

	
Visitor
 Validations

	
 

	
38

	
 

	
27.4

	
 

	
Parking Pass
 System

	
 

	
38

	
 

	
 

	
 

	
ARTICLE
 28          MISCELLANEOUS
 PROVISIONS

	
 

	
39

	
 

	
 

	
 

	
 

	
28.1

	
 

	
Terms;
 Captions

	
 

	
39

	
 

	
28.2

	
 

	
Binding
 Effect

	
 

	
39

	
 

	
28.3

	
 

	
No Air
 Rights

	
 

	
39

	
 

	
28.4

	
 

	
Modification
 of Lease

	
 

	
39

	
 

	
28.5

	
 

	
Transfer of
 Landlord’s Interest

	
 

	
39

	
 

	
28.6

	
 

	
Prohibition
 Against Recording

	
 

	
39

	
 

	
28.7

	
 

	
Landlord’s
 Title

	
 

	
39

	
 

	
28.8

	
 

	
Relationship
 of Parties

	
 

	
39

	
 

	
28.9

	
 

	
Application
 of Payments

	
 

	
39

	
 

	
28.10

	
 

	
Time of
 Essence

	
 

	
40

	
 

	
28.11

	
 

	
Partial
 Invalidity

	
 

	
40

	
 

	
28.12

	
 

	
No Warranty

	
 

	
40

	
 

	
28.13

	
 

	
Landlord
 Exculpation

	
 

	
40

	
 

	
28.14

	
 

	
Entire
 Agreement

	
 

	
40

	
 

	
28.15

	
 

	
Right to
 Lease

	
 

	
40

	
 

	
28.16

	
 

	
Force
 Majeure

	
 

	
40

	
 

	
28.17

	
 

	
Waiver of
 Redemption by Tenant

	
 

	
41

	
 

	
28.18

	
 

	
Notices

	
 

	
41

	
 

	
28.19

	
 

	
Joint and
 Several

	
 

	
41

	
 

	
28.20

	
 

	
Authority

	
 

	
41

	
 

	
28.21

	
 

	
Attorneys’
 Fees

	
 

	
41

	
 

	
28.22

	
 

	
GOVERNING
 LAW; WAIVER OF TRIAL BY JURY

	
 

	
41

	
 

	
28.23

	
 

	
Submission
 of Lease

	
 

	
42

	
 

	
28.24

	
 

	
Brokers

	
 

	
42

	
 

	
28.25

	
 

	
Independent
 Covenants

	
 

	
42

	
 

	
28.26

	
 

	
Project or
 Building Name and Signage

	
 

	
42

	
 

	
28.27

	
 

	
Counterparts

	
 

	
42

	
 

	
28.28

	
 

	
Confidentiality

	
 

	
42

	
 

	
28.29

	
 

	
Development
 of the Project

	
 

	
42

	
 

	
28.30

	
 

	
Building
 Renovations

	
 

	
43

	
 

	
28.31

	
 

	
No Violation

	
 

	
43

	
 

	
28.32

	
 

	
No Discrimination

	
 

	
43

	
 

	
28.33

	
 

	
OFAC
 Compliance

	
 

	
43

	
 

	
28.34

	
 

	
Definition
 of Landlord

	
 

	
44

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
-iii- 

	
[Quality Systems, Inc.]

LIST OF DEFINED TERMS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Accountant

	
 

	
17

	
 

	
 

	
 

	
Additional
 Rent

	
 

	
10

	
 

	
 

	
 

	
Additional
 Required Work

	
 

	
22

	
 

	
 

	
 

	
Affiliate

	
 

	
31

	
 

	
 

	
 

	
Alterations

	
 

	
21

	
 

	
 

	
 

	
Anticipated
 First Offer Date

	
 

	
5

	
 

	
 

	
 

	
Applicable
 Laws

	
 

	
35

	
 

	
 

	
 

	
Arbitration
 Fair Market Rental Value

	
 

	
8

	
 

	
 

	
 

	
Base
 Building

	
 

	
22

	
 

	
 

	
 

	
Base Rent

	
 

	
9

	
 

	
 

	
 

	
Base Taxes

	
 

	
15

	
 

	
 

	
 

	
Base Year

	
 

	
10

	
 

	
 

	
 

	
BOMA

	
 

	
16

	
 

	
 

	
 

	
Brokers

	
 

	
43

	
 

	
 

	
 

	
Building

	
 

	
4

	
 

	
 

	
 

	
Building
 Common Areas

	
 

	
4

	
 

	
 

	
 

	
Building
 Direct Expenses

	
 

	
10

	
 

	
 

	
 

	
Building
 Hours

	
 

	
19

	
 

	
 

	
 

	
Building
 Operating Expenses

	
 

	
10

	
 

	
 

	
 

	
Building Tax
 Expenses

	
 

	
10

	
 

	
 

	
 

	
CEW Report

	
 

	
36

	
 

	
 

	
 

	
Comparable
 Buildings

	
 

	
4

	
 

	
 

	
 

	
Contemplated
 Effective Date

	
 

	
29

	
 

	
 

	
 

	
Contemplated
 Transfer Space

	
 

	
29

	
 

	
 

	
 

	
Control

	
 

	
31

	
 

	
 

	
 

	
Current
 Premises

	
 

	
7

	
 

	
 

	
 

	
Direct
 Expenses

	
 

	
10

	
 

	
 

	
 

	
Effective
 Date

	
 

	
6

	
 

	
 

	
 

	
Electricity
 Usage Standard

	
 

	
20

	
 

	
 

	
 

	
Embargoed
 Person

	
 

	
44

	
 

	
 

	
 

	
Environmental
 Laws

	
 

	
36

	
 

	
 

	
 

	
Estimate
 Statement

	
 

	
16

	
 

	
 

	
 

	
Estimated
 Excess

	
 

	
16

	
 

	
 

	
 

	
Expense Year

	
 

	
10

	
 

	
 

	
 

	
Extended
 Repair Notice

	
 

	
26

	
 

	
 

	
 

	
Fair Market
 Rental Value

	
 

	
8

	
 

	
 

	
 

	
First Offer
 Notice

	
 

	
5

	
 

	
 

	
 

	
Force
 Majeure

	
 

	
41

	
 

	
 

	
 

	
Hazardous
 Material

	
 

	
37

	
 

	
 

	
 

	
Holidays

	
 

	
19

	
 

	
 

	
 

	
HVAC

	
 

	
19

	
 

	
 

	
 

	
Intention to
 Transfer Notice

	
 

	
29

	
 

	
 

	
 

	
Landlord

	
 

	
1

	
 

	
 

	
 

	
Landlord
 Parties

	
 

	
23

	
 

	
 

	
 

	
Landlord
 Repair Notice

	
 

	
25

	
 

	
 

	
 

	
Lease

	
 

	
1

	
 

	
 

	
 

	
Lease
 Commencement Date

	
 

	
6

	
 

	
 

	
 

	
Lease
 Expiration Date

	
 

	
6, 7

	
 

	
 

	
 

	
Lease Term

	
 

	
6

	
 

	
 

	
 

	
Lines

	
 

	
23

	
 

	
 

	
 

	
List

	
 

	
44

	
 

	
 

	
 

	
Mail

	
 

	
41

	
 

	
 

	
 

	
Management
 Fee Cap

	
 

	
13

	
 

	
 

	
 

	
None-Month
 Period

	
 

	
30

	
 

	
 

	
 

	
Notices

	
 

	
41

	
 

	
 

	
 

	
OFAC

	
 

	
44

	
 

	
 

	
 

	
Operating
 Expenses

	
 

	
10

	
 

	
 

	
 

	
Option Term

	
 

	
7

	
 

	
 

	
 

	
Original
 Improvements

	
 

	
24

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
iv 

	
[Quality Systems, Inc.]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Original
 Tenant

	
 

	
7

	
 

	
 

	
 

	
Other
 Improvements

	
 

	
43

	
 

	
 

	
 

	
Outside
 Agreement Date

	
 

	
8

	
 

	
 

	
 

	
Outside Date

	
 

	
6

	
 

	
 

	
 

	
Parking
 Structure

	
 

	
39

	
 

	
 

	
 

	
Premises

	
 

	
4

	
 

	
 

	
 

	
Project

	
 

	
4

	
 

	
 

	
 

	
Proposition
 13

	
 

	
14

	
 

	
 

	
 

	
Renovations

	
 

	
44

	
 

	
 

	
 

	
Rent

	
 

	
10

	
 

	
 

	
 

	
Security
 Deposit

	
 

	
18

	
 

	
 

	
 

	
Subject
 Space

	
 

	
28

	
 

	
 

	
 

	
Summary

	
 

	
1

	
 

	
 

	
 

	
Superior
 Leases

	
 

	
5

	
 

	
 

	
 

	
Superior
 Rights

	
 

	
5

	
 

	
 

	
 

	
Tax Expenses

	
 

	
14

	
 

	
 

	
 

	
Tenant

	
 

	
1, 7

	
 

	
 

	
 

	
Tenant
 Auditor

	
 

	
17

	
 

	
 

	
 

	
Tenant Work
 Letter

	
 

	
4

	
 

	
 

	
 

	
Tenant’s
 Share

	
 

	
15

	
 

	
 

	
 

	
Tenant’s
 Transfer Costs

	
 

	
29

	
 

	
 

	
 

	
Termination
 Notice

	
 

	
6

	
 

	
 

	
 

	
Transfer
 Notice

	
 

	
28

	
 

	
 

	
 

	
Transfer
 Premium

	
 

	
29

	
 

	
 

	
 

	
Transfer(s)

	
 

	
28

	
 

	
 

	
 

	
Transferee

	
 

	
28

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
v 

	
[Quality Systems, Inc.]

EXHIBITS

	
 

	
 

	
A

	
OUTLINE OF
 PREMISES 

	
 

	
 

	
B

	
TENANT WORK
 LETTER

	
 

	
 

	
C

	
LEGAL
 DESCRIPTION

	
 

	
 

	
D

	
FORM OF
 NOTICE OF LEASE TERM DATES

	
 

	
 

	
E

	
DIRECT
 EXPENSES ALLOCATION

	
 

	
 

	
F

	
RULES AND
 REGULATIONS

	
 

	
 

	
G

	
FORM OF
 TENANT’S ESTOPPEL CERTIFICATE

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III

	
vi 

	
[Quality Systems, Inc.]

LAKESHORE TOWERS

OFFICE LEASE

          This
Office Lease (the “Lease”) , dated as of the date set
forth in Section 1 of the Summary of Basic Lease Information (the “Summary”), below, is made by and
between LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE II, a California
limited partnership (“Landlord”), and QUALITY SYSTEMS, INC., a
California corporation (“Tenant”).

SUMMARY OF BASIC LEASE INFORMATION

	
 

	
 

	
 

	
 

	
 

	
TERMS OF
 LEASE

	
 

	
DESCRIPTION

	

	
 

	

	
 

	
 

	
 

	
 

	
 

	
1.

	
Date:

	
 

	
 

	
October 18,
 2007

	
 

	
 

	
 

	
 

	
 

	
2.

	
Premises

 (Article 1):

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.1

	
Building:

	
 

	
Lakeshore
 Towers Building III 18111 Von Karman Avenue Irvine, California 

	
 

	
 

	
 

	
 

	
 

	
 

	
2.2

	
Premises:

	
 

	
Approximately
 23,759 rentable (21,548 usable) square feet of space located on the sixth
 floor of the Building and commonly known as Suite 600, as further set
 forth in Exhibit A to the Lease.

	
 

	
 

	
 

	
 

	
 

	
3.

	
Lease Term

 (Article 2).

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
3.1

	
Length of
 Term of Lease of Premises:

	
 

	
Sixty (60)
 months, plus the partial month, if any, between the Lease Commencement Date
 and the first day of the following calendar month.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.2

	
Lease
 Commencement Date:

	
 

	
The Lease
 Commencement Date shall be as set forth in Section 2.1.

	
 

	
 

	
 

	
 

	
 

	
 

	
3.3

	
Lease
 Expiration Date:

	
 

	
The last day
 of the sixtieth (60) month of the Lease Term.

	
 

	
 

	
 

	
 

	
 

	
4.

	
Base Rent

 (Article 3):

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Lease Year

	
 

	
Annual

 Base Rent

	
 

	
Monthly

 Installment

 of Base Rent

	
 

	
Annual

 Rental Rate

 per Rentable

 Square Foot

	
 

	

	
 

	

	
 

	

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Lease

 Commencement

 Date

 through Month 48*

	
 

	
$

	
776,919.30

	
 

	
$

	
64,743.28

	
 

	
$

	
32.70

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Month 49

 through Month 60

	
 

	
$

	
812,557.80

	
 

	
$

	
67,713.15

	
 

	
$

	
34.20

	
 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
1

	
[Quality Systems, Inc.] 

	
 

	
 

	
 

	
 

	
 

	
As used
 herein a “month” means a calendar month. If the Lease Commencement Date is
 other than the first day of a calendar month, the Base Rent for such partial
 calendar month shall be prorated pursuant to Article 3 of the Lease and
 such prorated Base Rent shall be due and payable on the tenth (10th) day
 following the Lease Commencement Date. For example, if the Lease Commencement
 Date is the 15th day of February 2008, prorated Base Rent for
 February 2008 would be due on February 25, 2008.

	
 

	
 

	
 

	
 

	
 

	

*Notwithstanding
 anything herein to the contrary, monthly installments of Base Rent for the
 period from the Lease Commencement Date through May 31, 2008 shall be
 $60,244.78.

	
 

	
 

	
 

	
 

	
 

	
5.

	
Base Year

 (Article 4):

	
 

	
Calendar
 year 2008

	
 

	
 

	
 

	
 

	
 

	
6.

	
Tenant’s
 Share

 (Article 4):

	
 

	
Approximately
 10.265%

	
 

	
 

	
 

	
 

	
 

	
7.

	
Permitted
 Use

 (Article 5):

	
 

	
General
 office use consistent with a first-class office building.

	
 

	
 

	
 

	
 

	
 

	
8.

	
Security
 Deposit

 (Article 4):

	
 

	
$64,149.30

	
 

	
 

	
 

	
 

	
 

	
9.

	
Parking

 (Article 27):

	
 

	
81
 unreserved parking spaces of which four (4) spaces may, subject to the terms
 of Article 27 of this Lease, be for the use of reserved parking spaces in the
 Building. To the extent available, Tenant shall have the right to use an
 additional thirteen (13) unreserved parking spaces in the Parking Structure
 at the rates provided below subject to Tenant’s advising Landlord not less
 than thirty (30) days in advance of the date Tenant desires to use such
 additional unreserved parking spaces. To the extent available, Tenant shall
 have the right to use additional reserved parking spaces in the Building at
 the reserved rate then being charged by Landlord to other tenants; provided
 such use may be terminated by Landlord on ten (10) days advance written
 notice to Tenant.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Parking 

 Space Fees:

	
 

	
Unreserved
 Rate 

 Per Space

 Per Month

	
 

	
Reserved
 Rate

 Per Space

 Per Month

	
 

	
Building

 Reserved Rate

 Per Space

 Per Month

	
 

	
 

	
 

	

	
 

	

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
      Lease Commencement

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Date through May 31, 2008

	
 

	
$

	
50.00

	
 

	
$

	
125.00

	
 

	
$

	
145.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
June 1, 2008 through

 Lease Expiration Date

	
 

	
$

	
65.00

	
 

	
$

	
125.00

	
 

	
$

	
150.00

	
 

	
 

	
 

	
 

	
 

	
 

	
10.

	
Address of
 Tenant

 (Section 28.18):

	
 

	
Prior to
 Lease Commencement Date:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Quality
 Systems, Inc.

 18191 Von Karman Avenue, Suite 450

 Irvine, California 92612

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
2

	
[Quality Systems, Inc.] 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
After Lease
 Commencement Date:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Quality
 Systems, Inc.

 18111 Von Karman Avenue, Suite 600

 Irvine, California 92612

	
 

	
 

	
 

	
 

	
 

	
11.

	
Address of
 Landlord

 (Section 28.18):

	
 

	
See Section
 28.18 of the Lease.

	
 

	
 

	
 

	
 

	
 

	
12.

	
Broker(s)

 (Section 28.24):

	
 

	
Kern Olson
 Real Estate Services

 4101 Birch Street, Suite 150

 Newport Beach, California 92660

 Attention: James F. Kern

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
and

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Cushman
 & Wakefield of California, Inc.

 1920 Main Street, Suite 600

 Irvine, California 92614

 Attention: Rick Kaplan and Robert Lambert

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
3

	
[Quality Systems, Inc.] 

ARTICLE 1

                       PREMISES, BUILDING, PROJECT, AND COMMON
AREAS

          1.1     Premises,
Building, Project and Common Areas. 

                    1.1.1          
The Premises. Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the premises set
forth in Section 2.2 of the Summary (the “Premises”).
The outline of the Premises is set forth in Exhibit A attached hereto and the Premises has the number
of rentable square feet as set forth in Section 2.2 of the Summary. 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 Exhibit
A is to show the approximate location of the Premises in the
Building (as defined below) 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 defined below) or the elements thereof or of the accessways to the Premises
or the Project (as defined below). 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 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 Building and The Project. The
Premises are a part of the building set forth in Section 2.1 of the Summary
(the “Building”). The Building is
part of an office project known as “Lakeshore Towers”. The term “Project”, as used in this Lease, shall
mean (i) the land on which the Project is located which land is described in Exhibit C hereto, (ii) the Building,
(iii) the Common Areas, (iv) the other buildings located in the Project, and
(v) at Landlord’s discretion, any additional real property, areas, land,
buildings or other improvements added thereto outside of the Project. 

                    1.1.3          Common
Areas. Tenant shall have the
non-exclusive right to use in common with Project tenants the Project Common
Areas and the non-exclusive right to use in common with other Building tenants
the Building Common Areas, 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 and such other portions of the Project designated by Landlord, in
its discretion, including certain areas designated for the exclusive use of
certain tenants, or to be shared by Landlord and certain tenants, 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” shall mean (i) the portion of the Project designated
as such by Landlord and (ii) all common areas designated in that certain
Declaration of Covenants, Conditions and Restrictions and Reservation of
Easements for the Lakeshore Towers, dated October 17, 1989, recorded October
23, 1989, as Instrument No. 89569018 of the Official Records of Orange County,
California (the “CC&Rs”). The
term “Building Common Areas” shall
mean the portions of the Common Areas located within the Building designated as
such by Landlord. The manner in which the Common Areas are maintained and
operated shall be at the sole discretion of Landlord, provided that Landlord
shall maintain and operate same in a manner consistent with that of other
first-class, high-rise office buildings in the John Wayne Airport/South Coast
Plaza, Costa Mesa, California area, which are comparable in size (containing at
least 250,000 rentable square feet), quality of construction, and services and
amenities to the Building (the “Comparable
Buildings”) and the use thereof shall be subject to such rules,
regulations and restrictions as Landlord may make from time to time. Landlord
reserves the right to close temporarily, make alterations or additions to, or
change the location of elements of the Project and the Common Areas. 

          1.2     Verification
of Rentable Square Feet and Usable Square
Feet of Premises, Building, and Project. For purposes of this
Lease, “rentable square feet” and “usable square 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
4

	
[Quality Systems, Inc.] 

feet” shall be
calculated pursuant to BOMA (as defined below). In the event that the rentable
area of the Premises, the Building and/or the Project shall hereafter change
due to subsequent alterations and/or other modifications to the Premises, the
Building and/or the Project, the rentable area of the Premises, the Building
and/or the Project, as the case may be, shall be appropriately adjusted as of
the date of such alteration and/or other modification, based upon the written
verification by Landlord’s space planner of such revised rentable area. In the
event of any such adjustment to the rentable area of the Premises, the Building
and/or the Project, all amounts, percentages and figures appearing or referred
to in this Lease based upon such rentable area (including, without limitation,
the amount of the Rent (as defined below)) shall be modified in accordance with
such determination. 

          1.3     Right
of First Offer. Landlord hereby
grants to Original Tenant (as defined below), a right of first offer with
respect to any space on the fourth (4th) floor of the Building (the “First
Offer Space”). Notwithstanding the foregoing, (i) such first offer right of
Tenant shall commence only following the expiration or earlier termination of
(A) that certain Lease between Landlord and Ernst & Young U.S. LLP, (B)
that certain lease between Landlord and Pepperdine University and (C) that
certain lease between Landlord and City National Bank (items (A), (B) and (C),
collectively, the “Superior Leases”),
including any renewal or extension of such Superior Leases, provided such
renewal or extension is pursuant to an express written provision in such
Superior Lease, but regardless of whether any such renewal or extension is
consummated strictly pursuant to the terms of such express written provisions,
or pursuant to a lease amendment or a new lease, and (ii) such first offer
right shall be subordinate and secondary to all rights of expansion, first
refusal, rights of first offer or similar rights previously granted to the
tenants of the Superior Leases (the rights described in items (i) and (ii)
above to be known collectively as “Superior
Rights”). Tenant’s Right of First Offer shall be on the terms and
conditions set forth in this Section 1.3. 

                    1.3.1          Procedure
for Offer. Landlord shall
notify Tenant (the “First Offer Notice”)
from time to time when Landlord determines that marketing for any portion of
the First Offer Space will commence because such portion of the First Offer
Space shall become available for lease to third parties, provided that no
holder of a Superior Right wishes to lease such space. Pursuant to such First
Offer Notice, Landlord shall offer to lease to Tenant the then available First
Offer Space. The First Offer Notice shall describe the space so offered to
Tenant, shall set forth the date (“Anticipated
First Offer Date”) upon which Landlord anticipates that the First
Offer Space shall become available for lease to third parties (subject to any
holdover of any then existing tenant). 

                    1.3.2          
Procedure for Acceptance. During the
fifteen (15) day period following receipt of the First Offer Notice, Landlord
and Tenant shall meet and negotiate in good faith in an attempt to reach an
agreement with respect to rent, length of lease and other terms and conditions
for the lease by Tenant from Landlord of the First Offer Space (if Tenant
elects to lease the First Offer Space, such election shall be with respect to
all of the First Offer Space offered by Landlord to Tenant at any particular
time, and Tenant may not elect to lease only a portion thereof). If Landlord
and Tenant are unable to agree upon the terms and conditions for Tenant’s lease
of the First Offer Space during such fifteen (15) day period, Landlord may
lease the First Offer Space to any other person or entity on such terms and
conditions as are acceptable to Landlord and Tenant shall have no further
rights with respect to such First Offer Space. 

                    1.3.3
          Construction In First Offer Space.
Tenant shall lease the First Offer Space in its “as is” condition (except to
the extent an improvement allowance is agreed upon by Landlord and Tenant
during negotiations as contemplated at Section 1.3.2 above). 

                    1.3.4          
Amendment to Lease. If
Tenant and Landlord reach agreement on Tenant’s lease of the First Offer Space
as set forth herein, Landlord and Tenant shall within fifteen (15) days after
such agreement execute a lease for such First Offer Space or an amendment to
this Lease adding such First Offer Space to the Premises upon the terms and
conditions agreed upon by Landlord and Tenant. 

                    1.3.5          
Termination of Right of First Offer.
The rights contained in this Section 1.3 shall be personal to the Original
Tenant and may only be exercised by the Original Tenant (and not any other
assignee, sublessee or transferee of the Original Tenant’s interest in 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
5

	
[Quality Systems, Inc.] 

this Lease) if
the Original Tenant occupies all of the Premises as of the date of the First
Offer Notice. 

ARTICLE 2

LEASE TERM; OPTION TERM

          2.1     Lease
Term. The terms 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 3.1 of the Summary and shall, subject to Force Majeure,
commence on the date (the “Lease Commencement
Date”) that Landlord delivers the Premises substantially complete
(as defined in the Tenant Work Letter attached hereto as Exhibit B). The term of this Lease
shall terminate on the date set forth in Section 3.3 of the Summary (the “Lease Expiration Date”) unless this Lease
is sooner terminated as hereinafter provided. At any time during the Lease
Term, Landlord may deliver to Tenant a notice in the form as set forth in Exhibit D, attached hereto, as a
confirmation only of the information set forth therein, which Tenant shall
execute and return to Landlord within five (5) days of receipt thereof. 

          2.2     Lease
Commencement Date Delay.

                    2.2.1          
Delay In Possession. If Landlord is
unable to deliver possession of the Premises to Tenant with the Tenant
Improvements substantially complete on or before April 1, 2008, Landlord shall
not be subject to any liability for its failure to do so. If Landlord is unable
to deliver possession of the Premises to Tenant with the Tenant Improvements
substantially complete on or before the Outside Date, Tenant’s sole remedy
shall be to terminate this Lease as provided in Section 2.2.2 below. For
purposes of this Lease, the “Outside Date”
shall be July 1, 2008 as extended by the number of days of “Tenant Delays” as
described in Exhibit B
hereto and by the number of days of delay due to Force Majeure (as defined
below). 

                    2.2.2
          Tenant’s Notice of Termination. If
Landlord fails to deliver the Premises to Tenant with the Tenant Improvements
substantially complete by the Outside Date, Tenant’s sole remedy shall be the
right to deliver a notice to Landlord (“Termination
Notice”) electing to terminate this Lease effective on Landlord’s
receipt of the Termination Notice (“Effective
Date”). Except as provided below, the Termination Notice must be
delivered to Landlord by Tenant, if at all, no later than fifteen (15) business
days after the Outside Date. In the event that the Termination Notice is
delivered, upon the Effective Date (subject to any suspension of such date
pursuant to Section 2.2.3 below) Tenant’s right to occupy the Current Premises
(as defined below) shall be extended until the date which is the later of the
“Expiration Date” under the Current Premises Lease (as defined below) or three
(3) calendar months following the Effective Date (subject to any suspension of
such date pursuant to Section 2.2.3 below). Landlord shall cause the landlord
of the Current Premises to waive any holdover rent which is in excess of the
amount of base rent and/or additional rent that would then be due under the
Current Premises Lease during such three month period. 

                    2.2.3          
Landlord’s Suspension of Effective Date.
If Tenant delivers the Termination Notice to Landlord, Landlord shall have the
right to suspend the Effective Date until thirty (30) days after the original
Effective Date. In order to suspend the Effective Date, Landlord must deliver
to Tenant, within five (5) business days after receipt of the Termination
Notice, a certificate of the general contractor in charge of construction
certifying that it is that contractor’s best good faith judgment that the
delivery of the Premises with the Tenant Improvements substantially complete
will occur within thirty (30) days after the original Effective Date. If
Landlord provides this certificate and delivery of the Tenant Improvements
substantially complete occurs within that thirty (30) day suspension period,
the Termination Notice shall be of no force or effect. If, however, such
delivery does not occur within that thirty (30) day suspension period, this
Lease shall terminate as of the date of expiration of the thirty (30) day
period.

                    2.2.4           Extension
of Outside Date. If before
the Outside Date Landlord determines that delivery of the Premises with the
Tenant Improvements substantially complete will not occur by the Outside Date,
Landlord shall have the right to deliver a written notice to Tenant stating
Landlord’s reasonable, good faith estimate of the date by which such delivery
will occur. Tenant will be required within ten (10) business days after receipt
of such notice either to 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
6

	
[Quality Systems, Inc.] 

deliver the
Termination Notice (which will mean that this Lease shall terminate and be of
no further force and effect) or agree to extend the Outside Date to the date
stated in Landlord’s notice. Tenant’s failure to respond in writing within such
ten (10) business day period shall constitute Tenant’s agreement to extend the
Outside Date to the date stated in Landlord’s notice. If the Outside Date is so
extended, Landlord’s right to request Tenant to elect to either terminate or
further extend the Outside Date shall remain and continue to remain, with each
of the notice periods and response periods set forth above, until possession of
the Premises with Tenant Improvements substantially complete have been
delivered to Tenant or until this Lease is terminated. 

                   2.2.5          
Tenant’s Current Lease.
Tenant currently leases Suite 450 at 18191 Von Karman Avenue, Irvine,
California (“Current Premises”)
pursuant to that certain Office Lease dated September 15, 2004 (“Current Premises Lease”). The building in
which the Current Premises are located is part of the Project. Tenant shall
deliver possession of the Current Premises to the landlord of the Current
Premises within fifteen (15) days following the Lease Commencement Date and
such delivery date shall be the “Lease Expiration Date” for purposes of the
Current Premises Lease. 

          Landlord
shall cause the landlord under the Current Premises Lease to accept the
following: 

                    (i)
if the “Lease Expiration Date” under the Current Premises Lease occurs prior to
the Lease Commencement Date, the Current Premises landlord shall waive any
holdover rent which is in excess of the amount of base rent and/or additional
rent that would then be due under the Current Premises Lease. If the Current
Premises have not been delivered to the Current Premises landlord within
fifteen (15) days following the Lease Commencement Date, the foregoing waiver
shall be of no force or effect. 

                    (ii)
the Current Premises landlord shall waive any base rent and/or additional rent
that would be due under the Current Premises Lease during the fifteen-day
period following the Lease Commencement Date. If the Current Premises have not
been delivered to the Current Premises landlord within fifteen (15) days
following the Lease Commencement Date, the foregoing waiver shall be of no
force or effect. 

          The
foregoing shall not relieve Tenant of any obligation to pay for additional
services or work by the Current Premises landlord at Tenant’s specific request
(e.g., after hours HVAC costs, visitor parking validation and parking charges
in excess of parking charges under the Current Premises Lease). Nothing herein
modifies Tenant’s duties and obligations under the Current Premises Lease
including, without limitation, the condition of the Current Premises upon
delivery to the Current Premises landlord. 

          2.3          Option
Term. 

                         2.3.1          
Option Right. Landlord
hereby grants Quality Systems, Inc. (the “Original
Tenant”) one (1) option to extend the Lease Term for a period of
five (5) years (the “Option Term”),
which option shall be exercisable only by written notice delivered by Tenant to
Landlord as provided below, provided that, as of the date of delivery of such
notice, Tenant is not in default under this Lease, after the expiration of
applicable cure periods, and Tenant has not previously been in default under
this Lease, after the expiration of applicable cure periods, more than once.
Upon the proper exercise of such option to extend, and provided that, as of the
end of the initial Lease Term, Tenant is not in default under this Lease, after
the expiration of applicable cure periods, and Tenant has not previously been
in default under this Lease, after the expiration of applicable cure periods,
more than once, the Lease Term, as it applies to the Premises, shall be
extended for a period of five (5) years. The rights contained in this Section
2.3 shall be personal to Tenant and may only be exercised by Tenant (and not
any other assignee, sublessee or transferee of Tenant’s interest in this Lease)
if Original Tenant occupies the entire Premises. (References to “Tenant” in
this Section 2.3 and elsewhere in this Lease with respect to the Option Term shall
mean Original Tenant.) 

                        2.3.2
          Option Rent. The rent payable by Tenant
during the Option Term (the “Option Rent”)
shall be equal to the “Fair Market Rental Value” for the Premises. As used
herein, “Fair Market Rental Value”
shall be equal to the rent (including additional rent and 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
7

	
[Quality Systems, Inc.] 

considering
any “base year” or “expense stop” applicable thereto), including all
escalations, at which, as of the commencement of the Option Term taking into
consideration only those transactions involving the services of a professional
real estate broker, tenants are leasing non-sublease, non-encumbered,
non-equity space comparable in size, location and quality to the Premises for a
term of five (5) years which comparable space is located in the Project and in
Comparable Buildings, in either case taking into consideration the following:
(a) rental abatement concessions, if any, being granted such tenants in
connection with such comparable space; (b) tenant improvements or allowances
provided or to be provided for such comparable space, taking into account, and
deducting the value of, the existing improvements in the Premises, such value
to be based upon the age, quality and layout of the improvements and the extent
to which the same can be utilized by Tenant based upon the fact that the
precise tenant improvements existing in the Premises are specifically suitable
to Tenant; and (c) other reasonable monetary concessions being granted or
charges being imposed upon such tenants in connection with such comparable
space, including parking concessions or charges; provided, however, that in
calculating the Fair Market Rental Value, 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 Tenant’s extension of its lease of the Premises,
or the fact that landlords are or are not paying real estate brokerage
commissions in connection with such comparable space. When considering rental
rates in the Comparable Buildings, adjustments shall be made to such rates to
increase or decrease such rates, as applicable, based on substantial historical
differences between the rental rates of the Building and any applicable Comparable
Building. In calculating the Option Rent, no consideration shall be given to
any period of rental abatement granted to tenants in comparable transactions in
connection with the design, permitting and construction of tenant improvements
in such comparable spaces.

                    2.3.3          
Exercise of Option. The
option contained in this Section 2.3 shall be exercised by Tenant, if at all,
delivering written notice (“Option Exercise
Notice”) to Landlord not more than fifteen (15) months nor less than
twelve (12) months prior to the expiration of the initial Lease Term, stating
that Tenant is exercising its option. Landlord, after receipt of Option
Exercise Notice, shall deliver notice (the
“Option Rent Notice”) to Tenant not less than six (6) months prior
to the expiration of the initial Lease Term setting forth the Option Rent.
Within thirty (30) days after Tenant’s receipt of the Option Rent Notice,
Tenant may, at its option, object to the Option Rent contained in the Option
Rent Notice. If Tenant timely and appropriately objects to the Option Rent
contained in the Option Rent Notice, the parties shall follow the procedure and
the Option Rent shall be determined as set forth in Section 2.3.4, below. 

                    2.3.4          
Determination of Option Rent.
If Tenant fails to timely and appropriately object to Option Rent, then the
Option Rent shall be as set forth in the Option Rent Notice. If Tenant timely
and appropriately objects to the Option Rent, Landlord and Tenant shall attempt
to agree upon the applicable Fair Market Rental Value using their best
good-faith efforts. If Landlord and Tenant fail to reach agreement within ten
(10) days following Tenant’s objection to the Option Rent (the “Outside Agreement Date”), then each party shall
make a separate determination of the applicable Fair Market Rental Value (the “Arbitration Fair Market Rental
Value(s)”),
within fifteen (15) days following the Outside Agreement Date and such
determinations shall be submitted to arbitration in accordance with Sections
2.3.4.1 through 2.3.4.7 below. 

                                   2.3.4.1          Landlord
and Tenant shall each appoint one arbitrator who shall by profession be a real
estate broker or appraiser who shall have been active over the five (5) year
period ending on the date of such appointment in the leasing or appraisal, as
the case may be, of commercial high rise properties in the South Coast
Plaza/John Wayne Airport area. The determination of the arbitrators shall be
limited solely to the issue of whether Landlord’s or Tenant’s submitted
Arbitration Fair Market Rental Value is the closest to the actual Fair Market
Rental Value as determined by the arbitrators, taking into account the
requirements of Section 2.3.2 of this Lease. Each such arbitrator shall be
appointed within twenty (20) days after the applicable Outside Agreement Date. 

                                   2.3.4.2          The
two arbitrators so appointed shall within ten (10) days of the date of the
appointment of the last appointed arbitrator agree upon and appoint a third
arbitrator who shall be qualified under the same criteria set forth hereinabove
for qualification of the initial two arbitrators. 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
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[Quality Systems, Inc.] 

                                   2.3.4.3          The
three arbitrators shall within thirty (30) days of the appointment of the third
arbitrator reach a decision as to whether the parties shall use Landlord’s or
Tenant’s submitted Fair Market Rental Value, and shall notify Landlord and Tenant
thereof. 

                                   2.3.4.4          The
decision of the majority of the three arbitrators shall be binding upon
Landlord and Tenant. 

                                   2.3.4.5          If
either Landlord or Tenant fails to appoint an arbitrator within twenty (20)
days after the applicable Outside Agreement Date, the arbitrator appointed by
one of them shall reach a decision, notify Landlord and Tenant thereof, and
such arbitrator’s decision shall be binding upon Landlord and Tenant. 

                                   2.3.4.6          If
the two arbitrators fail to agree upon and appoint a third arbitrator, or both
parties fail to appoint an arbitrator, then the appointment of the third
arbitrator or any arbitrator shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration under the provisions of the
American Arbitration Association Commercial Rules of Arbitration, but subject
to the instruction set forth in this Section 2.3.4. 

                                   2.3.4.7          The
cost of the arbitrator appointed by Landlord shall be paid by Landlord. The
cost of the arbitrator appointed by Tenant shall be paid by Tenant. The cost of
the third arbitrator shall be shared equally by Landlord and Tenant. 

          2.4          Early
Termination. If a majority of the
outstanding voting stock of Tenant is acquired by a person or entity which is
not an Affiliate of Tenant (“Ownership
Change”) at any time prior to the date which is the last day of the
thirty-third (33rd) full calendar month of the Lease Term (the “Election Date”), Tenant may deliver, not
later than the Election Date, written notice to Landlord electing to cause the
Expiration Date to be the last day of the forty-second (42nd) full calendar
month of the Lease Term (the “Early
Expiration Date”). Such notice shall be effective only if reasonable
evidence of such Ownership Change and the Termination Payment accompanies the
Tenant’s notice electing the Early Expiration Date. As used herein, the “Termination Payment” means an amount
equal
to (i) the total unamortized out-of-pocket cost to Landlord as of the Early
Expiration Date for the Tenant Improvements and payments to the brokers (as
contemplated by Section 28.24 below) (such out-of-pocket costs to be amortized
on a straight line basis assuming an eight percent (8%) interest rate over a
sixty (60) month period commencing on the Lease Commencement Date or, if the
Lease Commencement Date is not the first date of a calendar month, then the
first day of the calendar month immediately following the Lease Commencement
Date), plus (ii) Two Hundred Sixty-Six Thousand One Hundred and 80/100 Dollars
($266,100.80). Notwithstanding anything herein to the contrary, Tenant’s rights
under Section 2.3 above shall automatically terminate without notice to Tenant
upon Tenant’s delivery of the notice electing an early termination of this
Lease. 

ARTICLE 3

BASE RENT

          Tenant
shall pay, without prior notice or demand, to Landlord or Landlord’s agent at
the management office of the Project or, at Landlord’s option, at such other
place as Landlord may from time to time designate in writing, by 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 4 of the Summary, payable
in equal monthly installments as set forth in Section 4 of the Summary in
advance on or before the first day of each and every calendar month during the
Lease Term, without any setoff or deduction whatsoever. If any Base 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 Base Rent is
for a period which is shorter than one month, the Base 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 applicable annual Base 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. 

	
 

	
 

	
 

	
LAKESHORE TOWERS BUILDING III 

	
9

	
[Quality Systems, Inc.] 

ARTICLE 4

ADDITIONAL RENT; SECURITY DEPOSIT

          4.1
    General Terms. In addition to paying
the Base Rent specified in Article 3 of this Lease, Tenant shall pay Tenant’s
Share (as defined below) of the annual Building Direct Expenses (as defined
below) which are in excess of the amount of Building Direct Expenses for the
Base Year (as defined below); provided, however, that in no event shall any
decrease in Building Direct Expenses for any Expense Year (as defined below)
below Building Direct Expenses for the Base Year entitle Tenant to any decrease
in Base Rent or any credit against sums due under this Lease. Such payments by
Tenant, together with any and all other amounts payable by Tenant to Landlord
pursuant to the terms of this Lease, are hereinafter collectively referred to
as the “Additional Rent”, and the
Base Rent and the Additional Rent are herein collectively referred to 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 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. “Base Year” shall mean the
period set forth in Section 5 of the Summary. 

                    4.2.2
          Building Direct Expenses. “Building Direct
Expenses” shall mean
Building Operating Expenses and Building Tax Expenses (as defined below). 

                    4.2.3
          Building Operating Expenses. “Building
Operating Expenses” shall mean
the portion of Operating Expenses (as defined below) allocated to the tenants
of the Building pursuant to the terms of Section 4.3 below. 

                    4.2.4
          Building Tax Expenses. “Building Tax
Expenses” shall mean that
portion of Tax Expenses (as defined below) allocated to the tenants of the
Building pursuant to the terms of Section 4.3 below. 

                    4.2.5
          Direct Expenses. “Direct Expenses” shall
mean Operating
Expenses and Tax Expenses. 

                    4.2.6
          Expense Year. “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. Landlord, upon notice to Tenant,
may change the Expense Year from time to time to any other twelve (12)
consecutive month period and, in the event of any such change, Tenant’s Share
of Building Direct Expenses shall be equitably adjusted for any Expense Year
involved in any such change. 

                    4.2.7
          Operating Expenses.

                              4.2.7.1
          Inclusions to Operating Expenses. “Operating
Expenses” shall mean all
expenses, costs and amounts of every kind and nature which Landlord pays 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, subject to the terms and provisions of Section
4.2.7. 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, 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 and the cost of
  contesting any governmental enactments which may affect 

	
 

	
 

	
 

	
 

	
10

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.]

Operating
Expenses, and the costs incurred in connection with a governmentally mandated
transportation system management program or similar program; 

	
 

	
 

	
 

	
 

	
 

	
                    (iii)
            the cost of
  earthquake insurance and all other insurance carried by Landlord in
  connection with the Project as reasonably determined by Landlord; 

	
 

	
 

	
 

	
 

	
 

	
                    (iv)
            the cost of
  landscaping, relamping, and all supplies, tools, equipment and materials used
  in the operation, repair and maintenance of the Project, or any portion
  thereof; 

	
 

	
 

	
 

	
 

	
 

	
                    (v)
            the cost of
  non-capital (as determined pursuant to generally accepted accounting
  principles) parking area repair, restoration, and maintenance; 

	
 

	
 

	
 

	
 

	
 

	
                    (vi)
            fees and other
  costs, including reasonable management fees, consulting fees, legal fees 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 management
  office space; 

	
 

	
 

	
 

	
 

	
 

	
                    (viii)
            subject to
  Section 4.2.7.2(vi) below, wages, salaries and other compensation and
  benefits, including taxes levied thereon, of all persons engaged in the
  operation, maintenance and security of the Project; 

	
 

	
 

	
 

	
 

	
 

	
                    (ix)
            operation, repair
  and maintenance of all systems and equipment and components thereof of the
  Project; 

	
 

	
 

	
 

	
 

	
 

	
                    (x)
            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 and walkways, and repair to roofs and reroofing; 

	
 

	
 

	
 

	
 

	
 

	
                    (xi)
            amortization
  (including interest on the unamortized cost) over the useful life, determined
  in accordance with generally accepted accounting principles, 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; 

	
 

	
 

	
 

	
 

	
 

	
                    (xii)
            the cost of
  capital improvements or other costs incurred in connection with the Project
  (A) which are intended to effect economies in the operation or maintenance of
  the Project, or any portion thereof (but only to the extent of the annual
  cost savings reasonably anticipated by Landlord), (B) that are required to
  comply with present or anticipated reasonable conservation programs, (C)
  which are replacements of nonstructural items located in the Common Areas
  required to keep the Common Areas in good order or condition, or (D) that are
  required under any governmental law or regulation enacted after the date of
  this Lease; provided, however, that any capital expenditure shall be
  amortized (including interest on the amortized cost) over its useful life
  reasonably determined in accordance with generally accepted accounting
  principles; 

	
 

	
 

	
 

	
 

	
 

	
                    (xiii)
            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; and 

	
 

	
 

	
 

	
 

	
 

	
                    (xiv)
            payments under
  any easement, license, operating agreement, declaration, restrictive
  covenant, or instrument pertaining to the sharing of costs by the Building
  with other buildings in the Project. 

	
 

	
 

	
 

	
                    
     4.2.7.2           Exclusions to Operating Expenses.
  Notwithstanding the provisions of Section 4.2.7.1 above, for purposes of this
  Lease, Operating Expenses shall not, however, include:

	
 

	
 

	
 

	
 

	
11

	
LAKESHORE TOWERS BUILDING III 

  [Quality Systems, Inc.] 

	
 

	
 

	
 

	
 

	
 

	
                    (i)
        costs, including marketing costs, legal
  fees, space planners’ fees, advertising and promotional expenses, and
  brokerage fees incurred in connection with the original construction or
  development, or original or future leasing of the Project, and costs, including
  permit, license and inspection costs, incurred with respect to the
  installation of tenant improvements made for new tenants initially occupying
  space in the Project after the Lease Commencement Date or incurred in
  renovating or otherwise improving, decorating, painting or redecorating
  vacant space for tenants or other occupants of the Project (excluding,
  however, such costs relating to any Common Areas or parking facilities); 

	
 

	
 

	
 

	
 

	
 

	
                    (ii)
       except as set forth in Sections 4.2.7. 1
  (xi), (xii), and (xiii) 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; 

	
 

	
 

	
 

	
 

	
 

	
                    (iii)
      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 by anyone else, and electric power costs for which any
  tenant directly contracts with the local public service company; 

	
 

	
 

	
 

	
 

	
 

	
                    (iv)
      any bad debt loss, rent loss, or reserves for bad debts or rent loss; 

	
 

	
 

	
 

	
 

	
 

	
                    (v)
       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 include
  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; 

	
 

	
 

	
 

	
 

	
 

	
                    (vi)
      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 Project manager; 

	
 

	
 

	
 

	
 

	
 

	
                    (vii)
     amounts paid as ground rental for the Project by Landlord; 

	
 

	
 

	
 

	
 

	
 

	
                    (viii)
    except for a Project management fee to the
  extent allowed pursuant to item (xiii), below, overhead and profit increment
  paid to the Landlord or to subsidiaries or affiliates of Landlord for
  services in the Project to the extent the same exceeds the costs of such
  services rendered by qualified, first-class unaffiliated third parties on a
  competitive basis; 

	
 

	
 

	
 

	
 

	
 

	
                    (ix)
      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 shall be
  includable as an Operating Expense; 

	
 

	
 

	
 

	
 

	
 

	
                    (x)
       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 

	
 

	
 

	
 

	
 

	
12

	
LAKESHORE TOWERS BUILDING III 

  [Quality Systems, Inc.] 

similar
services and, further excepting from this exclusion such equipment rented or
leased to remedy or ameliorate an emergency condition in the Project; 

	
 

	
 

	
 

	
 

	
 

	
                    (xi)
      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; 

	
 

	
 

	
 

	
 

	
 

	
                    (xii)
     costs, other than those incurred in
  ordinary maintenance and repair, for sculpture, paintings, fountains or other
  objects of art; 

	
 

	
 

	
 

	
 

	
 

	

                    (xiii)
    fees payable by Landlord for management of
the Project in excess of five percent (5%) (the “Management Fee Cap”) of
Landlord’s gross rental revenues, adjusted and grossed up to reflect a one
hundred percent (100%) occupancy of the Building with all tenants paying
rent, including base rent, pass-throughs, and parking fees (but excluding the
cost of after hours services or utilities) from the Project for any calendar
year or portion thereof;  

	
 

	
 

	
 

	
 

	
 

	
                    (xiv)
    any costs expressly excluded from Operating Expenses elsewhere in this Lease; 

	
 

	
 

	
 

	
 

	
 

	
                    (xv)
      rent for any office space occupied by
  Project management personnel to the extent the size or rental rate of such
  office space exceeds the size or fair market rental value of office space
  occupied by management personnel of the Comparable Buildings in the vicinity
  of the Building, with adjustment where appropriate for the size of the
  applicable project; 

	
 

	
 

	
 

	
 

	
 

	
                    (xvi)
    costs arising from the negligence or
  willful misconduct of Landlord or its agents, employees, vendors,
  contractors, or providers of materials or services; 

	
 

	
 

	
 

	
 

	
 

	
                    (xvii)
   costs (A) incurred to comply with laws
  relating to the removal of Hazardous Material (as defined below) except for
  immaterial amounts completed in connection with routine maintenance and
  repairs; which was in existence in the Building or on the Project prior to
  the Lease Commencement Date, and was of such a nature that a federal, State
  or municipal governmental authority, if it then had knowledge of the presence
  of such Hazardous Material, in the state, and under the conditions that it
  then existed in the Building or on the Project, would have then required the
  removal of such Hazardous Material or other remedial or containment action
  with respect thereto; and (B) costs incurred to remove, remedy, contain, or
  treat Hazardous Material, which hazardous material is brought into the
  Building or onto the Project after the date hereof by Landlord or any other
  tenant of the Project and is of such a nature, at that time, that a federal,
  State or municipal governmental authority, if it had then had knowledge of
  the presence of such Hazardous Material, in the state, and under the
  conditions, that it then exists in the Building or on the Project, would have
  then required the removal of such Hazardous Material or other remedial or
  containment action with respect thereto except for immaterial amounts
  completed in connection with routine maintenance and repairs; 

	
 

	
 

	
 

	
 

	
 

	
                    (xviii)
  costs arising from Landlord’s charitable or political contributions; 

	
 

	
 

	
 

	
 

	
 

	
                    (xix)
    any gifts provided to any entity
  whatsoever, including, but not limited to, Tenant, other tenants, employees,
  vendors, contractors, prospective tenants and agents; 

	
 

	
 

	
 

	
 

	
 

	
                    (xx)
     the cost of any magazine, newspaper, trade or other subscriptions; 

	
 

	
 

	
 

	
 

	
 

	
                    (xxi)
    any amount paid to Landlord or to
  subsidiaries or affiliates of Landlord for services in the Project to the
  extent the same exceeds the cost of such services rendered by qualified,
  first-class unaffiliated third parties on a competitive basis; 

	
 

	
 

	
 

	
 

	
13

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

	
 

	
 

	
 

	
 

	
 

	
                    (xxii)
    costs arising from Landlord’s failure to
  comply with any applicable governmental laws or regulations in existence at
  the time of the Lease Commencement Date; 

	
 

	
 

	
 

	
 

	
 

	
                    (xxiii)
   costs relating to categories of expenses
  for the Project parking areas which were not included in Operating Expenses
  during the Base Year, except to the extent the Base Year is retroactively
  adjusted to include such categories; and 

	
 

	
 

	
 

	
 

	
 

	
                    (xxiv)
   any entertainment expenses and travel
  expenses of Landlord, its employees, agents, partners and affiliates.

          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, 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 Project 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 incurred had the Project been
ninety-five percent (95%) occupied; and the amount 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, and utility rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, or amortized costs relating to capital improvements. 

                    4.2.8
          Taxes.  

                                   4.2.8.1
Tax Expenses. “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 including the parking areas. 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;  

	
 

	
 

	
 

	
 

	
14

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

	
 

	
 

	
 

	
                    (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 with respect to
  the receipt 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; 

	
 

	
 

	
 

	
                    (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; and 

	
 

	
 

	
 

	
                    (v)          
  all of the real estate taxes and assessments imposed upon or with respect to
  the Building and Project. To the extent such taxes are not currently known,
  Landlord shall reasonably estimate the taxes and the Base Year Tax Expenses
  shall be adjusted accordingly upon receipt of the actual tax adjustment based
  upon such reassessment. 

                              4.2.8.2          
Other Costs. Any costs and
expenses (including, without limitation, reasonable attorneys’ and consultants’
fees) incurred in attempting to protest, reduce or minimize Tax Expenses shall
be included in Tax Expenses in the Expense Year such expenses are incurred. 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, however, in no event shall the amount to be refunded
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. 

                              4.2.8.3          
Base Taxes. The amount of
Tax Expenses for the Base Year attributable to the valuation of the Project,
inclusive of tenant improvements, shall be known as the “Base Taxes.” If in any comparison year
subsequent to the Base Year the amount of Tax Expenses decreases below the
amount of Base Taxes for the Premises, then for purposes of all subsequent
comparison years, including the comparison year in which such decrease in Tax
Expenses occurred, the Base Taxes and therefore the Base Year shall be
decreased by an amount equal to the decrease in Tax Expenses; provided,
however, if the amount of Tax Expenses for the Premises subsequently increases
in any comparison year from that decreased amount, the Base Taxes for the
Premises shall be increased by an amount equal to the increase in the Tax Expenses
for the Premises but not in excess of the Base Taxes for the Base Year
(calendar year 2008).

                    4.2.9          
Tenant’s Share. “Tenant’s Share” shall mean the percentages
set forth in Section 6 of the Summary. Tenant’s Share is calculated by
multiplying the number of rentable square feet of the Premises as set forth in
Section 2 of the Summary by 100, and dividing the applicable product by the
rentable square feet in the Building. The rentable square feet in the Premises
and Building is measured pursuant to the Building Owners and Managers
Association Standard Method for Measuring Floor Area in Office Buildings,
ANSI/BOMA Z65.1 - 1996 (“BOMA”),
provided that the rentable square footage of the Building shall include all of,
and the rentable square footage of the Premises therefore shall include a
portion of, the square footage of the ground floor Common Areas located within
the Building and the Common Area and occupied space of the portion of the
Building or Project, dedicated to the service 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, Tenant’s Share for the Premises
shall be appropriately adjusted and, as to the Expense Year in which such
change occurs, Tenant’s Share for the Premises 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.

	
 

	
 

	
 

	
 

	
15

	
LAKESHORE TOWERS BUILDING III
 [Quality Systems,
Inc.]

          4.3          
Allocation of Direct Expenses.
The parties acknowledge that the Building is 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 between the tenants of the Building and
the tenants of the other buildings in the Project. Accordingly, as set forth in
Section 4.2 above, Direct Expenses (which consist of Operating Expenses and Tax
Expenses) are determined annually for the Project as a whole, and a portion of
the Direct Expenses, which portion shall be determined by Landlord in
accordance with the CC&Rs, shall be allocated to the tenants of the
Building (as opposed to the tenants of any other buildings in the Project) and
such portion shall be the Building Direct Expenses for purposes of this Lease
(such allocation in accordance with the CC&Rs is further described in Exhibit E hereto). Such portion of
Direct Expenses allocated to the tenants of the Building shall include all
Direct Expenses attributable solely to the Building and an equitable portion of
the Direct Expenses attributable to the Project as a whole. 

          4.4          
Calculation and Payment of Additional Rent.
If for any Expense Year ending or commencing within the Lease Term, the
applicable Tenant’s Share of Building Direct Expenses for such Expense Year
exceeds the applicable Tenant’s Share of Building Direct Expenses applicable to
the Base Year for the Premises, 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 Actual Building Direct
Expenses and Payment by Tenant. 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 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 (as defined below), 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. The failure of Landlord to timely furnish the Statement 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 is present, Tenant shall immediately pay to Landlord such amount,
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 4.4.1 shall survive the
expiration or earlier termination of the Lease Term. 

                          4.4.2          
Statement of Estimated Building Direct
Expenses. 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. 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 last sentence of this Section 4.4.2). 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 (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant. 

          4.5          
Taxes and Other Charges for Which Tenant
Is Directly Responsible. 

                          4.5.1          
Personal Property Taxes. Tenant
shall be liable for and shall pay ten (10) days before delinquency, taxes levied
against Tenant’s equipment, furniture, fixtures and  

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
16

	
LAKESHORE TOWERS BUILDING III
 [Quality Systems,
Inc.]

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          
Taxes on Improvements in Premises.
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 valuation at which tenant improvements conforming to
Landlord’s “building standard” in other space in the Building are assessed,
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; provided that Landlord uniformly applies such excess assessed valuation
for the same period uniformly to all tenants in the Building. 

                          4.5.3          
Other Taxes.
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 facility, 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. 

          4.6          
Landlord’s Books and Records.
Within six (6) months after receipt of a Statement by Tenant, if Tenant
disputes the amount of Additional Rent set forth in the Statement, an
independent certified public accountant (which accountant is a member of a
nationally recognized accounting firm, has previous experience in reviewing
financial operating records of landlords of office buildings, and is retained
by Tenant on a non contingency fee basis) (the “Tenant Auditor”), designated and paid for by Tenant, may,
after reasonable notice to Landlord and at reasonable times, inspect Landlord’s
records with respect to the Statement at Landlord’s offices, provided that
Tenant is not then in default under this Lease and Tenant has paid all amounts
required to be paid under the applicable Estimated Statement and Statement, as
the case may be. In connection with such inspection, Tenant and Tenant’s agents
must agree in advance to follow Landlord’s reasonable rules and procedures
regarding inspections of Landlord’s records, and shall execute a commercially
reasonable confidentiality agreement regarding such inspection. Tenant’s
failure to dispute the amount of Additional Rent set forth in any Statement
within six (6) months following Tenant’s receipt of such Statement 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, Tenant still disputes such Additional Rent, a
determination as to the proper amount shall be made, at Tenant’s expense, by an
independent certified public accountant (the “Accountant”)
selected by Landlord and subject to Tenant’s reasonable approval; provided that
if such certification by the Accountant proves that Direct Expenses were
overstated by more than five percent (5%), then the cost of the Accountant, and
the cost of such determination certification, shall be paid by Landlord. Any
reimbursement amounts determined to be owing by Landlord to Tenant or by Tenant
to Landlord shall be (i) in the case of amounts owing from Tenant to Landlord,
paid within thirty (30) days following such determination, and (ii) in the case
of amounts owing from Landlord to Tenant, credited against the next payment of
Rent due Landlord under the terms of this Lease, or if the Lease Term has
expired, paid to Tenant within thirty (30) days following such determination.
In no event shall this Section 4.6 be deemed to allow any review of any of
Landlord’s records by any subtenant of Tenant. Tenant agrees that this Section
4.6 shall be the sole method to be used by Tenant to dispute the amount of any
Direct Expenses payable or not payable by Tenant pursuant to the terms of this
Lease, and Tenant hereby waives any other rights at law or in equity relating
thereto. 

	
 

	
 

	
 

	
 

	
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          4.7          
Security Deposit. 

                          4.7.1          
Security Deposit. The
amount of Sixty-Four Thousand One Hundred Forty-Nine and 30/100 Dollars
($64,149.30) shall serve as the security deposit hereunder (the “Security Deposit”). On the Lease
Commencement Date, at Tenant’s request, Landlord shall cooperate with Tenant in
the transfer of Tenant’s security deposit for the Current Premises subject to
the rights of the landlord under the Current Premises Lease. Such sum shall be
accepted by Landlord as a portion of the Security Deposit and Tenant shall on
the Lease Commencement Date deliver to Landlord such additional funds as are
necessary so that the Security Deposit held by Landlord under this Lease equals
Sixty-Four Thousand One Hundred Forty-Nine and 30/100 Dollars ($64,149.30).
Landlord shall hold the Security Deposit as security for the performance of
Tenant’s obligations under this Lease. If Tenant defaults on any provision of
this Lease, Landlord may, after such notice as may be required under this Lease
and without prejudice to any other remedy it has, apply all or a part of the
Security Deposit to: 

                                              4.7.1.1          
Any Rent or other sum in default; or 

                                              4.7.1.2          
Any expense, loss, or damage that Landlord may suffer because of Tenant’s
default including, without limitation, Rent that would accrue after such
default. 

                          4.7.2          
Landlord’s Transfer of Security Deposit on
Transfer of Real Property. If Landlord disposes of its interests
in the Premises, Landlord may deliver or credit the Security Deposit to
Landlord’s successor-in-interest in the Premises and thereupon be relieved of
further responsibility with respect to the Security Deposit. 

                          4.7.3          
Restoration of Security Deposit.
If Landlord applies any portion of the Security Deposit pursuant to Section
4.7.1 above, Tenant shall, within thirty (30) days after demand by Landlord,
deposit with Landlord an amount sufficient to restore the Security Deposit to
its original amount. 

                          4.7.4          
Interest on Security Deposit.
Tenant is not entitled to any interest on the Security Deposit. 

                          4.7.5          
Return of Security Deposit.
If Tenant performs every provision of this Lease to be performed by Tenant, the
unused portion of the Security Deposit shall be returned to Tenant or the last
assignee of Tenant’s interest under this Lease within thirty (30) days
following the expiration or termination of the Lease Term. 

ARTICLE 5

USE OF PREMISES

          5.1          
Permitted Use. Tenant shall
use the Premises solely for the Permitted Use set forth in Section 7 of the
Summary and Tenant shall not use or permit the Premises or the Project to be
used for any other purpose or purposes whatsoever without the prior written
consent of Landlord, 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 F, 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
including, without limitation, any such laws, ordinances, regulations or
requirements relating to Hazardous Material. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building or
Project, or injure or annoy them or use or allow the Premises to be used for
any improper, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall
comply with, and Tenant’s rights and obligations under the Lease and Tenant’s
use of the Premises shall be subject and subordinate to, all recorded
easements, covenants, conditions and restrictions now or hereafter affecting
the Project; provided, however, Landlord warrants that such recorded easements,
covenants, conditions and restrictions do not materially interfere with
Tenant’s use or occupancy of the Premises or Common Areas.  

	
 

	
 

	
 

	
 

	
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          5.3          
Tenant’s Security Responsibilities.
Tenant shall (1) lock the doors to the Premises and take other reasonable steps
to secure the Premises and the personal property of all Tenant Parties and any
of Tenant’s transferees, contractors or licensees in the Common Areas and
parking facilities of the Building and Project, from unlawful intrusion, theft,
fire and other hazards; (2) keep and maintain in good working order all
security and safety devices installed in the Premises by or for the benefit of
Tenant (such as locks, smoke detectors and burglar alarms); and (3) cooperate
with Landlord and other tenants in the Building on Building safety matters.
Tenant acknowledges that Landlord is not obligated to provide security
personnel or measures for the protection of Tenant, its employees, invitees or
personal property. Tenant further acknowledges that any security or safety
measures employed by Landlord are for the protection of Landlord’s own
interests; that Landlord is not a guarantor of the security or safety of the
Tenant Parties or their property; and that such security and safety matters are
the responsibility of Tenant and the local law enforcement authorities. 

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 limitations imposed by all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating, ventilation and
air conditioning (“HVAC”) when necessary
for normal comfort for normal office use in the Premises from 8:00 A.M. to 6:00
P.M. Monday through Friday, and on Saturdays from 9:00 A.M. to 1:00 P.M.
(collectively, the “Building Hours”),
except for the date of observation of New Year’s Day, Independence Day, Labor
Day, Memorial Day, Thanksgiving Day, Christmas Day and, at Landlord’s
discretion, other locally or nationally recognized holidays (collectively, the
“Holidays”). 

                          6.1.2          
Landlord shall provide adequate electrical wiring and facilities for connection
to Tenant’s lighting fixtures and incidental use equipment, provided that (i)
the connected electrical load of the incidental use equipment does not exceed
an average of six (6) watts per usable square foot of the Premises, and (ii)
the connected electrical load of Tenant’s lighting fixtures does not exceed an
average of two (2) watts per usable square foot of the Premises, which
electrical usage shall be subject to applicable laws and regulations, including
Title 24. Tenant shall bear the cost of replacement of lamps, starters and
ballasts for non-Building standard lighting fixtures within the Premises. 

                          6.1.3          
Landlord shall provide city water from the regular Building outlets for drinking,
lavatory and toilet purposes in the Building Common Areas. 

                          6.1.4          
Landlord shall provide janitorial services to the Premises and window washing
services in a manner consistent with Comparable Buildings. 

                          6.1.5          
Landlord shall provide nonexclusive, non-attended automatic passenger elevator
service during the Building Hours and shall have one elevator available at all
other times, including on the Holidays. 

                          6.1.6          
Landlord shall provide nonexclusive freight elevator service subject to
scheduling by Landlord. 

          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. 

          6.2          
Overstandard Tenant Use. 

                          6.2.1          
Non-Electrical Usage.
Tenant shall not, without Landlord’s prior written consent, use heat-generating
machines, machines other than normal fractional horsepower office machines, or
equipment or lighting other than Building standard lights in the Premises,
which may affect the temperature otherwise maintained by the air conditioning
system or increase the water normally furnished for the Premises by Landlord
pursuant to the terms of 

	
 

	
 

	
 

	
 

	
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Section 6.1 of
this Lease. If Tenant uses water, heat or air conditioning in excess of that
supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to
Landlord, upon billing, the actual cost of such excess consumption, the cost of
the installation, operation, and maintenance of equipment which is installed in
order to supply such excess consumption, and the cost of the increased wear and
tear on existing equipment caused by such excess consumption; and Landlord may
install devices to separately meter any increased use and in such event Tenant
shall pay the cost of such increased use directly to Landlord, on demand, at
the rates charged by the public utility company furnishing the same, including
the cost of such additional metering devices. If Tenant desires to use HVAC
during non-Building Hours, Tenant shall give Landlord such prior notice, if
any, as Landlord shall from time to time establish as appropriate, of Tenant’s
desired use in order to supply HVAC, and Landlord shall supply HVAC to the
Premises. The cost of after-hours HVAC is currently Sixty-Five Dollars ($65.00
) per hour, per floor. Such cost shall increase hereafter to the extent of an
increase occurring after the date of this Lease in the direct and indirect cost
to Landlord of providing such HVAC services. The cost of HVAC supplied by
Landlord during non-Building Hours shall be paid by Tenant as Additional Rent.

                        6.2.2          Electrical
Usage. If in any month
Tenant uses electricity (not including any electricity consumed in connection
with the operation of the Building’s main HVAC system) in excess of the
Electricity Usage Standard (as defined below), Tenant shall pay to Landlord,
upon billing, Landlord’s cost of such excess consumption and the reasonable
cost of the installation, operation, and maintenance of equipment which is
required to be installed to supply such excess capacity and/or consumption to
Tenant. For purposes hereof, the “Electricity
Usage Standard” shall be an average of five (5) watts per rentable
square foot of the Premises of actual consumption, on a monthly Business Hours
basis. Tenant’s use of electricity shall not exceed the capacity of the feeders
to the Project or the risers or wiring installation (which capacity is eight
(8) watts per rentable square foot) and Tenant shall promptly discontinue any
such excess use promptly following receipt of notice of the same from Landlord.
In those cases where Landlord proposes to install equipment to be paid for by
Tenant or otherwise is proposing to require Tenant to pay for any cost related
to such excess consumption, Tenant may require Landlord, as a condition of such
charge by Landlord, to reasonably demonstrate that Landlord’s actions and such
charges are consistent with the requirements of this Lease.

          6.3          Interruption
of Use. Tenant agrees that
Landlord shall not be liable for damages, by abatement of Rent or otherwise,
for failure to furnish or delay in furnishing any service (including telephone
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 breakage, 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 Project after reasonable effort to
do so, by any riot or other dangerous condition, emergency, 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
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.

ARTICLE 7

REPAIRS

          Tenant
shall, at Tenant’s own expense, keep the Premises, including all improvements,
fixtures and furnishings therein, in good order, repair and condition at all
times during the Lease Term. In addition, Tenant shall, at Tenant’s own
expense, but under the supervision and subject to the prior approval of
Landlord, and within any reasonable period of time specified by Landlord,
promptly and adequately repair all damage to the Premises and replace or repair
all damaged, broken, or worn fixtures and appurtenances, except for damage
caused by ordinary wear and tear or beyond the reasonable control of Tenant;
provided however, that, at Landlord’s option, or if Tenant fails to make such
repairs, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the

	
 

	
 

	
 

	
 

	
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cost thereof (to be uniformly established for the Building
and/or the Project) sufficient to reimburse Landlord for all overhead, general
conditions, fees and other costs or expenses arising from Landlord’s
involvement with such repairs and replacements forthwith upon being billed for
same. Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make such repairs, alterations, improvements or additions
to the Premises or to the Project or to any equipment located in the Project as
Landlord shall desire or deem necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree. Tenant
hereby waives any and all rights under and benefits of subsection 1 of Section
1932 and Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.

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 or any mechanical, plumbing or HVAC facilities or systems pertaining
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 shall not be
unreasonably withheld by Landlord, provided it shall be deemed reasonable for
Landlord to withhold its consent to any Alteration which adversely affects the
structural portions or the systems or equipment of the Building or is visible
from the exterior of the Building. 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.

          8.2          Manner
of Construction.

                         8.2.1          Conditions
to Alterations. 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 in its
reasonable discretion may deem desirable, including, but not limited to, (i)
the requirement that Tenant utilize for such purposes only contractors,
subcontractors, materials, mechanics and materialmen selected by Tenant from a
list provided and approved by Landlord, and (ii) the requirement that upon
Landlord’s request Tenant shall, at Tenant’s expense, remove such Alterations
upon the expiration or any early termination of the Lease Term. Tenant shall
construct such Alterations and perform such repairs in a good and workmanlike
manner, in conformance with any and all applicable federal, state, county or
municipal laws, rules and regulations and pursuant to a valid building permit,
issued by the City of Irvine, all in conformance with Landlord’s construction
rules and regulations; provided, however, that prior to commencing to construct
any Alteration, Tenant shall meet with Landlord to discuss Landlord’s design
parameters and code compliance issues. In performing the work of any such
Alterations, Tenant shall have the work performed in such manner 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 Landlord or other
tenants in the Project. Tenant shall not use (and upon notice from Landlord
shall cease using) contractors, services, workmen, labor, materials or
equipment that, in Landlord’s reasonable judgment, would disturb labor harmony
with the workforce or trades engaged in performing other work, labor or
services in or about the Building or the Common Areas. 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 Orange in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and Tenant
shall deliver to the Project construction manager a reproducible copy of the
“as built” drawings of the Alterations, as well as all permits, approvals and
other documents issued by any governmental agency in connection with the
Alterations.

                         8.2.2          Base
Building Changes. In the event any
Alterations which Tenant proposes to make to the Premises require or give rise
to governmentally-required changes (“Additional
Required Work”) to the Base Building, Landlord and Tenant shall work
together to eliminate, if possible, or otherwise minimize the Additional
Required Work. Absent elimination of such Additional Required Work or a
mutually acceptable allocation of such changes as between Landlord and Tenant,
the cost of such changes shall be borne by Tenant. As used herein, (i) “Base Building” means the structural
portions of the Building, the Base Building

	
 

	
 

	
 

	
 

	
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Systems, the
public restrooms, elevators, exit stairwells and the systems and equipment
located in the internal core of the Building, and (ii) “Base Building Systems” means all systems
and equipment (including plumbing, HVAC, electrical fire/life/safety elevator
and security systems) that serve all or part of the Building.

          8.3          Payment
for Improvements. If payment is
made directly to contractors, Tenant shall (i) comply with Landlord’s
requirements for final lien releases and waivers in connection with Tenant’s
payment for work to contractors, and (ii) cause its contractors to sign
Landlord’s standard contractor’s rules and regulations. If Tenant orders any
work directly from Landlord, Tenant shall pay to Landlord an amount equal to
five percent (5%) of the cost of such work 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 any work
directly from Landlord, Tenant shall reimburse Landlord for Landlord’s
reasonable, actual, out-of-pocket costs and expenses actually incurred in
connection with Landlord’s review of such work.

          8.4          Construction
Insurance. In addition to
the requirements of Article 10 of this Lease, in the event that Tenant makes
any Alterations, prior to the commencement of such Alterations, Tenant shall
provide Landlord with evidence that Tenant carries “Builder’s All Risk”
insurance in an amount approved by Landlord 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, in connection with any Alteration, Landlord may, in its 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, equipment and/or appurtenances which may be installed
or placed in 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 Alterations, improvements, fixtures and/or equipment
which Tenant can substantiate to Landlord have not been paid for with any
Tenant improvement allowance funds provided to Tenant by Landlord, provided
Tenant repairs any damage to the Premises and Building caused by such removal
and returns the affected portion of the Premises to a building standard tenant
improved condition as determined by Landlord. Furthermore, Landlord may, by
written notice to Tenant prior to the end of the Lease Term, or given following
any earlier termination of this Lease, require Tenant, at Tenant’s expense, to
remove any such Alterations or improvements and to repair any damage to the
Premises and Building caused by such removal and returns the affected portion
of the Premises to a building standard tenant improved condition as determined
by Landlord. If Tenant fails to complete such removal and/or to repair any
damage caused by the removal of any Alterations or improvements in the Premises
and return the affected portion of the Premises to a building standard tenant
improved condition as reasonably determined by Landlord, Landlord may do so and
may charge the cost thereof to Tenant. Tenant hereby protects, defends,
indemnifies and holds Landlord harmless from any liability, cost, obligation,
expense or claim of lien in any manner relating to the installation, placement,
removal or financing of any such Alterations, improvements, fixtures and/or
equipment in, on or about the Premises, which obligations of Tenant shall survive
the expiration or earlier termination of this Lease.

          8.6          Communications
and Computer Lines.
Tenant may install, maintain, replace, remove or use any communications or
computer wires and cables (collectively, the “Lines”)
in or serving the Premises, provided that (i) Tenant shall obtain Landlord’s
prior written consent, use an experienced and qualified contractor approved in
writing by Landlord, and comply with all of the other provisions of Articles 7
and 8 of this Lease, (ii) an acceptable number of spare Lines and space for
additional Lines shall be maintained for existing and future occupants of the
Project, as determined in Landlord’s reasonable opinion, (iii) the Lines
(including riser cables) 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, (v) as a condition to permitting the installation of new Lines,
Landlord may require that Tenant remove existing Lines located in or serving
the Premises and repair any damage in connection with such removal, and (vi)
Tenant shall pay all costs in connection therewith. Landlord reserves the right
to require that Tenant remove any Lines located in or serving the

	
 

	
 

	
 

	
 

	
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LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

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.

ARTICLE 9

COVENANT AGAINST LIENS

          Tenant
shall keep the Project and Premises free from any liens or encumbrances arising
out of the work performed, materials furnished or obligations incurred by or on
behalf of Tenant, and shall protect, defend, indemnify and hold Landlord
harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys’ fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least twenty (20) days prior to the commencement of any such work on the
Premises (or such additional time as may be necessary under Applicable Laws (as
defined below)) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within ten (10) days after notice by Landlord,
and if Tenant shall fail to do so, Landlord may pay the amount necessary to
remove such lien or encumbrance, without being responsible for investigating
the validity thereof. The amount so paid shall be deemed Additional Rent under
this Lease payable upon demand, without limitation as to other remedies
available to Landlord under this Lease. Nothing contained in this Lease shall
authorize Tenant to do any act which shall subject Landlord’s title to the
Building or Premises to any liens or encumbrances whether claimed by operation
of law or express or implied contract. Any claim to a lien or encumbrance upon
the Building or Premises arising in connection with any such work or respecting
the Premises not performed by or at the request of Landlord shall be null and
void, or at Landlord’s option shall attach only against Tenant’s interest in
the Premises and shall in all respects be subordinate to Landlord’s title to
the Project, Building and Premises.

ARTICLE 10

INSURANCE

          10.1          Indemnification
and Waiver. Tenant
hereby assumes all risk of damage to property or injury to persons in, upon or
about the Premises from any cause whatsoever (including, but not limited to,
any personal injuries resulting from a slip and fall in, upon or about the
Premises) and agrees that Landlord, its partners, subpartners and their
respective officers, agents, servants, employees, and independent contractors
(collectively, “Landlord Parties”)
shall not be liable for, and are hereby released from any responsibility for,
any damage either to person or property or resulting from the loss of use
thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant. Tenant shall indemnify, defend, protect, and hold harmless the
Landlord Parties from any and all loss, cost, damage, expense and liability
(including without limitation court costs and reasonable attorneys’ fees)
incurred in connection with or arising from any cause in, on or about the
Premises (including, but not limited to, a slip and fall), any acts, omissions
or negligence of Tenant or of any person claiming by, through or under Tenant,
or of the contractors, agents, servants, employees, invitees, guests or
licensees of Tenant or any such person, in, on or about the Project or any
breach of the terms of this Lease, either prior to, during, or after the
expiration of the Lease Term, provided that the terms of the foregoing
indemnity shall not apply to the gross negligence or willful misconduct of
Landlord. Should Landlord be named as a defendant in any suit brought against Tenant
in connection with or arising out of Tenant’s occupancy of the Premises, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its actual professional fees such as reasonable
appraisers’, accountants’ and attorneys’ fees. The provisions of this Section
10.1 shall survive the expiration or sooner termination of this Lease with
respect to any claims or liability arising in connection with any event
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.

	
 

	
 

	
 

	
 

	
23

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

          10.3          Tenant’s
Insurance. Tenant shall
maintain the following coverages in the following amounts.

                           10.3.1          Commercial
General Liability Insurance covering the insured against claims of bodily injury,
personal injury and property damage (including loss of use thereof) arising out
of Tenant’s operations, and contractual liabilities (covering the performance
by Tenant of its indemnity agreements) including a Broad Form 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

	
$3,000,000
  each occurrence

	
Property
  Damage Liability

	
$3,000,000
  annual aggregate

	
 

	
Personal
  Injury Liability

	
$3,000,000
  each occurrence

	
 

	
$3,000,000
  annual aggregate

	
 

	
0% Insured’s
  participation

                            10.3.2          Physical
Damage Insurance covering (i) all office furniture, business and trade
fixtures, office equipment, free-standing cabinet work, movable partitions,
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 any
other improvements which exist in the Premises as of the Lease Commencement
Date (excluding the Base Building) (the “Original
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 (subject to
reasonable deductible amounts) 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 coverage for damage or other loss caused by fire or
other peril including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, bursting or
stoppage of pipes, and explosion, and providing business interruption coverage
for a period of one year.

                            10.3.3          Worker’s
Compensation and Employer’s Liability or other similar insurance pursuant to
all applicable state and local statutes and regulations.

           10.4          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. Such insurance shall (i) name
Landlord, and any other party the Landlord so specifies, as an additional
insured, including Landlord’s managing agent, if any; (ii) 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; (iii) 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; (iv) be primary insurance as to all claims
thereunder and provide that any insurance carried by Landlord is excess and is
non-contributing with any insurance requirement of Tenant; (v) be in form and
content reasonably acceptable to Landlord; and (vi) 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 of Landlord.
Tenant shall deliver said policy or policies or certificates thereof to
Landlord on or before the Lease Commencement Date 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 policies or certificate, Landlord may, at its
option, procure such policies for the account of Tenant, and the cost thereof
shall be paid to Landlord within five (5) days after delivery to Tenant of
bills therefor. 

          10.5          Subrogation.
Landlord and Tenant intend
that their respective property loss risks shall be borne by insurance carriers
to the extent above provided, and Landlord and Tenant hereby agree to look
solely to, and seek recovery only from, their respective insurance carriers in
the event of a property loss to the extent that such coverage is agreed to be
provided hereunder. The parties each hereby waive all rights and claims against
each other for such losses, and waive all rights of subrogation of their
respective insurers, provided such waiver of subrogation shall not affect the
right to the insured to recover thereunder. The parties agree that their
respective insurance policies are now, or shall be, endorsed such that the
waiver of subrogation shall not affect the right of the insured to recover
thereunder, so long as no material additional premium is charged therefor.

	
 

	
 

	
 

	
 

	
24

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

          10.6          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, but in no event
in excess of the amounts and types of insurance then being required of tenants
in Comparable Buildings occupying comparable space and engaged in a similar use
as Tenant.

ARTICLE 11

DAMAGE AND DESTRUCTION

          11.1          Repair
of Damage to Premises by Landlord.

                           11.1.1          Damage
to Building. Tenant shall
promptly notify Landlord of any damage to the Premises resulting from fire or
any other casualty. If the Premises or any Common Areas serving or providing
access to the Premises 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 Building and such
Common Areas. Such restoration shall be to substantially the same condition of
the Base Building 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, which are consistent with the
character of the Project, provided that access to the Premises and any
restrooms serving the Premises shall not be materially impaired.

                           11.1.2          Damage
to Premises. Upon the occurrence
of any damage to the Premises, upon notice (the “Landlord Repair Notice”) to Tenant from Landlord, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant’s insurance required under Section
10.3.2(ii) and (iii) of this Lease, and Landlord shall repair any injury or damage
to the Tenant Improvements and the Original Improvements installed in the
Premises and shall return such Tenant Improvements and Original Improvements 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, the cost of such repairs shall be
paid by Tenant to Landlord prior to Landlord’s commencement of repair of the
damage. In the event that Landlord does not deliver the Landlord Repair Notice
within sixty (60) days following the date the casualty becomes known to
Landlord, Tenant shall, at its sole cost and expense, repair any injury or
damage to the Tenant Improvements and the Original Improvements installed in the
Premises and shall return such Tenant Improvements and Original Improvements to
their original condition. Whether or not Landlord delivers a Landlord Repair
Notice, prior to the commencement of construction, Tenant shall submit to
Landlord, for Landlord’s review and approval, all plans, specifications and
working drawings relating thereto, and Landlord shall select the contractors 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 Premises or
Common Areas necessary to Tenant’s occupancy, and the Premises are not occupied
by Tenant as a result thereof, then during the time and to the extent the
Premises are unfit for occupancy, the Rent shall be abated in proportion to the
ratio that the amount of rentable square feet of the Premises which is unfit
for occupancy for the purposes permitted under this Lease bears to the total
rentable square feet of the Premises. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant’s right to rent abatement pursuant
to the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.

          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 Premises, Building and/or Project, and instead terminate
this Lease, by notifying Tenant in writing of such termination within sixty
(60) days after the date of discovery of the damage, such notice to include a
termination date giving Tenant sixty (60) days to vacate the Premises, but
Landlord may so elect only if the

	
 

	
 

	
 

	
 

	
25

	
LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.] 

Building or
Project shall be damaged by fire or other casualty or cause, whether or not the
Premises are affected, and one or more of the following conditions is present:
(i) in Landlord’s reasonable judgment, repairs cannot reasonably be completed
within one hundred eighty (180) days after the date of discovery of the damage
(when such repairs are made without the payment of overtime or other premiums);
(ii) the holder of any mortgage on the Building or Project or ground lessor
with respect to the Building or Project shall require that the insurance
proceeds or any portion thereof be used to retire the mortgage debt, or shall
terminate the ground lease, as the case may be; (iii) the damage is not fully
covered by Landlord’s insurance policies; (iv) Landlord decides to rebuild the
Building or Common Areas so that they will be substantially different
structurally or architecturally; or (v) the damage occurs during the last
twelve (12) months of the Lease Term. In the event Landlord does not terminate
this Lease as set forth above, and in Landlord’s reasonable judgment, (A) the
repairs cannot be completed within such one hundred eighty (180) days, as set
forth in (i) above, or (B) if the damage occurs during the last twelve (12)
months of the Lease Term and the repairs cannot be completed within one hundred
twenty (120) days after the date of discovery of the damage, Landlord shall
provide Tenant with written notice (“Extended
Repair Notice” ) of the time within which such repairs may be
completed, in Landlord’s reasonable judgment.

          11.3
          Tenant’s Option to Cause Early Expiration.
If damage to the Project, Building or Premises causes the Premises to be
unusable for their intended purposes and Landlord advises Tenant in the
Extended Repair Notice that (i) repairs cannot be completed within one hundred
eighty days (180) days after the date of discovery of the damage, or (ii) if
the damage occurs during the last twelve (12) months of the Lease Term, repairs
cannot be completed within one hundred twenty (120) days after the date of
discovery of the damage, Tenant may elect to cause the Expiration Date to be
accelerated. Such election shall be made in writing to Landlord within thirty
(30) days after receipt of the Extended Repair Notice. Tenant’s election to
accelerate the Expiration Date shall be made by written notice to Landlord
within thirty(30) days after receipt of Landlord’s Notice and shall specify the
new Expiration Date, which date shall not be later than forty-five (45) days
after Tenant’s receipt of the Extended Repair Notice. 

          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, Sections 1932(2) and 1933(4) of the California Civil Code, 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 Building
or the Project. 

ARTICLE 12

NONWAIVER

No provision
of this Lease shall be deemed waived by either party hereto unless expressly
waived in a writing signed thereby. The waiver by either party hereto of any
breach of any term, covenant or condition herein contained shall not be deemed
to be a waiver of any subsequent breach of same or any other term, covenant or
condition herein contained. The subsequent acceptance of Rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant
of any term, covenant or condition of this Lease, other than the failure of
Tenant to pay the particular Rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of such Rent. No
acceptance of a lesser amount than the Rent herein stipulated shall be deemed a
waiver of Landlord’s right to receive the full amount due, nor shall any
endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the full amount due. 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 Rent shall not waive or affect said notice, suit or judgment. 

	
   

  	
   

  
	
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  LAKESHORE TOWERS BUILDING III

  [Quality Systems, Inc.]

  

ARTICLE 13

CONDEMNATION

If the whole
or any material part of the Premises, Building or Project 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 any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the use, reconstruction or remodeling of any material part
of the Premises, Building or Project, 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 effective as of the date
possession is required to be surrendered to the authority. If more than
twenty-five percent (25%) of the rentable square feet of the Premises is taken,
or if access to the Premises is substantially impaired, in each case for a
period in excess of one hundred eighty (180) days, Tenant shall have the option
to terminate this Lease effective as of the date possession is required to be
surrendered to the authority. Tenant shall not because of such taking assert
any claim against Landlord or the authority for any compensation because of
such taking and 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 the 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. If any part of the Premises shall be taken, and this Lease
shall not be so terminated, the Rent shall be proportionately abated. Tenant
hereby waives any and all rights it might otherwise have pursuant to Section
1265.130 of the California Code of Civil Procedure. 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 hundred eighty (180)
days or less, then this Lease shall not terminate but the Base Rent and the
Additional Rent shall be abated for the period of such taking in proportion to
the ratio that the amount of rentable square feet of the Premises taken bears
to the total rentable square feet of the Premises. 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, 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 enter into any license or concession
agreements or otherwise permit the occupancy or use of the Premises or any part
thereof by any persons other than Tenant and its employees and contractors (all
of the foregoing are hereinafter sometimes referred to collectively as “Transfer(s)” and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
“Transferee”). 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 thirty (30) 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 terms of the proposed Transfer and the
consideration therefor, including calculation of the Transfer Premium (as
defined 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, (iv) current financial statements of the proposed
Transferee certified by an officer, partner or owner thereof, business credit
and personal references and history of the proposed Transferee and any other
information reasonably required by Landlord which will enable 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 (v) an executed estoppel certificate from Tenant in the
form attached hereto as Exhibit G.
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, 

	
   

  	
   

  
	
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[Quality Systems, Inc.]

  

constitute a
default by Tenant under this Lease. Whether or not Landlord consents to any
proposed Transfer, Tenant shall pay Landlord’s reasonable review and processing
fees, as well as any reasonable professional fees (including, without
limitation, attorneys’, accountants’, architects’, engineers’ and consultants’
fees) incurred by Landlord, within thirty (30) days after written request by
Landlord, in an amount not to exceed One Thousand Five Hundred Dollars ($1,500)
in the aggregate, for a Transfer in the ordinary course of business (for
purposes hereof, a Transfer shall be deemed not to be in the “ordinary course
of business” if Landlord is required to review documentation related to such
Transfer on more than two (2) separate occasions). 

          14.2          
Landlord’s Consent.
Landlord shall not unreasonably withhold or delay 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 is
  not consistent with the quality of the Building or the Project; 

  
	
   

  
	
                              14.2.2          The
  Transferee intends to use the Subject Space for purposes which are not
  permitted under this Lease; 

  
	
   

  
	
                              14.2.3          The
  Transferee is either a governmental agency or instrumentality thereof; 

  
	
   

  
	
                              14.2.4          The
  Transferee is not a party of reasonable financial worth and/or financial
  stability in light of the responsibilities to be undertaken in connection
  with the Transfer on the date consent is requested; 

  
	
   

  
	
                              14.2.5          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 

  
	
   

  
	
                              14.2.6          Either
  the proposed Transferee, or any person or entity which directly or
  indirectly, controls, is controlled by, or is under common control with, the
  proposed Transferee, (i) occupies space in the Project at the time of the
  request for consent, or (ii) is negotiating with Landlord or has negotiated
  with Landlord during the six (6) month period immediately preceding the date
  Landlord receives the Transfer Notice, to lease space in the Project. 

  

          If Landlord
consents to any Transfer pursuant to the terms of this Section 14.2, 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 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 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 the Transferee 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. Notwithstanding anything to the
contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under Section 14.2 or
otherwise has breached or acted unreasonably under this Article 14, their sole
remedies shall be a suit for declaratory judgment and an injunction for the
relief sought, and Tenant hereby waives all other remedies, including, without
limitation, any right at law or equity to terminate this Lease, on its own
behalf and, to the extent permitted under all applicable laws, on behalf of the
proposed Transferee. 

          14.3          
Transfer Premium. If
Landlord consents to a Transfer as a condition thereto which the parties hereby
agree is reasonable, Tenant shall pay to Landlord one hundred percent (100%) of
any Transfer Premium received by Tenant from such Transferee. “Transfer Premium” shall mean all rent,
additional rent or other consideration payable by such Transferee in connection
with the Transfer in excess of the Base Rent and Additional Rent payable by
Tenant under this Lease during the term of the Transfer (on a per rentable
square foot basis if less than all of the Premises is transferred), after
deducting the reasonable expenses incurred by 

	
   

  	
   

  
	
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Inc.]

  

Tenant for (i)
any changes, alterations and improvements to the Premises in connection with
the Transfer, (ii) any free base rent reasonably provided to the Transferee in
connection with the Transfer, (iii) any brokerage commissions in connection
with the Transfer, and (iv) twenty-five percent (25%) of the amount of any Base
Rent and Additional Rent paid by Tenant to Landlord with respect to the Subject
Space during the period commencing on the later of (a) the date Tenant
contracts with a reputable broker to market the Subject Space, and (b) the date
Tenant vacates the Subject Space, until the commencement of the term of the
Transfer (collectively, “Tenant’s Transfer
Costs”). “Transfer Premium” shall also include, but not be limited
to, key money, bonus money or other cash consideration 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. The determination of the amount of
Landlord’s applicable share of the Transfer Premium shall be made on a monthly
basis as rent or other consideration is received by Tenant under the Transfer.
For purposes of calculating the Transfer Premium on a monthly basis, Tenant’s
Transfer Costs shall be deemed to be expended by Tenant in equal monthly
amounts over the entire term of the Transfer.

          14.4
          Landlord’s Option as to Subject Space.
Notwithstanding anything to the contrary contained in this Article 14, in the
event Tenant contemplates a Transfer of all or a portion of the Premises (or in
the event of any other Transfer or Transfers entered into by Tenant as a
subterfuge in order to avoid the terms of this Section 14.4), Tenant shall give
Landlord notice (the “Intention to Transfer
Notice”) of such contemplated transfer (whether or not such contemplated
transfer or any of the terms of such contemplated transfer have been
determined). The Intention to Transfer Notice shall specify the portion of the
rentable amount of square feet of the Premises which Tenant intends to transfer
(the “Contemplated Transfer Space”),
the contemplated date of commencement of the contemplated transfer (the “Contemplated Effective Date”) and the
contemplated length of the term of such contemplated transfer, and shall
specify that such Intention to Transfer Notice is delivered to Landlord
pursuant to this Section 14.4 in order to allow Landlord to elect to recapture
the Contemplated Transfer Space for the term set forth in the Intention to
Transfer Notice. Thereafter, Landlord shall have the option, by giving written
notice to Tenant within thirty (30) days after receipt of any Intention to
Transfer Notice, to recapture the Contemplated Transfer Space. Such recapture
shall cancel and terminate this Lease with respect to such Contemplated
Transfer Space as of the Contemplated Effective Date until the last day of the
term of the contemplated transfer is set forth in the Intention to Transfer
Notice. In the event of a recapture by Landlord, this Lease shall be cancelled
with respect to less than the entire Premises, 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
Premises, 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 elect in a timely
manner, to recapture such Contemplated Transfer Space under this Section 14.4,
then, subject to the other terms of this Article 14, for a period of nine (9)
months (the “Nine Month Period”)
commencing on the last day of such thirty (30) day period, Landlord shall not
have any right to recapture the Contemplated Transfer Space with respect to any
transfer made during the Nine Month Period, provided that any such transfer is
substantially on the terms set forth in the Intention to Transfer Notice and,
provided further, that any such transfer shall be subject to the remaining
terms of this Article 14. If such a transfer is not so consummated within the
Nine Month Period (or if the transfer is so consummated, then upon the
expiration of the term of any transfer of such Contemplated Transfer Space
consummated within such Nine Month Period), Tenant shall again be required to
submit a new Intention to Transfer Notice to Landlord with respect to any
contemplated transfer, as provided above in this Section 14.4. 

          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 or any guarantor of the Lease from any liability 

	
   

  	
   

  
	
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[Quality Systems,
Inc.]

  

under this
Lease, including, without limitation, in connection with the Subject Space.
Landlord or its authorized representatives shall have the right at all
reasonable times 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 if understated by
more than five percent (5%), Tenant shall pay Landlord’s costs of such audit. 

          14.6          Occurrence of Default. Any Transfer
hereunder shall be subordinate and subject to the provisions of this Lease, and
if this Lease shall be terminated during the term of any Transfer, Landlord
shall have the right to: (i) treat such Transfer as canceled and repossess the
Subject Space by any lawful means, or (ii) require that such Transferee attorn
to and recognize Landlord as its landlord under any such Transfer. If Tenant
shall be in default under this Lease, Landlord is hereby irrevocably
authorized, as Tenant’s agent and attorney-in-fact, to direct any Transferee to
make all payments under or in connection with the Transfer directly to Landlord
(which Landlord shall apply towards Tenant’s obligations under this Lease)
until such default is cured. Such Transferee shall rely on any representation
by Landlord that Tenant is in default hereunder, without any need for
confirmation thereof by Tenant. Upon any assignment, the assignee shall assume
in writing all obligations and covenants of Tenant thereafter to be performed
or observed under this Lease. No collection or acceptance of rent by Landlord
from any Transferee shall be deemed a waiver of any provision of this Article
14 or the approval of any Transferee or a release of Tenant from any obligation
under this Lease, whether theretofore or thereafter accruing. In no event shall
Landlord’s enforcement of any provision of this Lease against any Transferee be
deemed a waiver of Landlord’s right to enforce any term of this Lease against
Tenant or any other person. If Tenant’s obligations hereunder have been
guaranteed, Landlord’s consent to any Transfer shall not be effective unless
the guarantor also consents to such Transfer. 

          14.7          Non-Transfers. Notwithstanding anything
to the contrary contained in this Article 14, an assignment or subletting of
all or a portion of the Premises to an entity which is controlled by, controls,
or is under common control with, Tenant (an “Affiliate”),
shall not be deemed a Transfer under this Article 14, provided that Tenant
notifies Landlord of any such assignment or sublease and promptly supplies
Landlord with any documents or information requested by Landlord regarding such
assignment or sublease or such Affiliate, and further provided that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. “Control”, as
used in this Section 14.7, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person or entity, whether by the ownership of voting securities, by contract
or otherwise. 

ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND 

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 writing by
Landlord. The delivery of keys to the Premises to Landlord or any agent or
employee of Landlord shall not constitute a surrender of the Premises or effect
a 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
or terminate any or all such sublessees or subtenancies. 

          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, 

	
 

	
 

	
 

	
 

	
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and such items
of furniture, equipment, business and trade fixtures, free-standing cabinet
work, movable partitions 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 Premises and Building resulting from such
removal. 

ARTICLE 16

HOLDING OVER

          If
Tenant holds over after the expiration of the Lease Term or earlier termination
thereof, with or without the express or implied consent of Landlord, such
tenancy shall be from month-to-month only, and shall not constitute a renewal
hereof or an extension for any further term, and in such case Rent shall be
payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to 150%. Such month-to-month tenancy shall be subject to every
other applicable term, covenant and agreement contained herein. Nothing
contained in this Article 16 shall be construed as consent by Landlord to any
holding over by Tenant, 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 or other termination of this Lease. 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 upon the termination or expiration of this Lease, 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 and
any lost profits to Landlord resulting therefrom. 

ARTICLE 17

ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS

          17.1
          Estoppel Certificates. Within
ten (10) business days following a request in writing by Landlord, Tenant shall
execute, acknowledge and deliver to Landlord an estoppel certificate, which, as
submitted by Landlord, shall be substantially in the form of Exhibit G, attached hereto (or such other
form as may be required by any prospective mortgagee or purchaser 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. Any such certificate may be relied upon by any prospective mortgagee
or purchaser of all or any portion of the Project. Tenant shall execute and
deliver whatever other instruments may be reasonably required for such
purposes. Failure of Tenant to timely execute, acknowledge and deliver such
estoppel certificate or other instruments shall constitute an acceptance of the
Premises and an acknowledgment by Tenant that statements included in the
estoppel certificate are true and correct, without exception. 

          17.2
          Financial Statements. At any time
during the Lease Term, Landlord may require Tenant to provide Landlord with a
current financial statement and financial statements of the two (2) years prior
to the current financial statement year. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant. 

ARTICLE 18

SUBORDINATION

          This
Lease shall be subject and subordinate to all present (including that certain
Second Amended and Restated Ground Lease (Parcel 1), dated September 25, 1989,
between Parker-Hannifin Corporation, as lessor, and Landlord, as lessee, as
amended by that certain First Amendment to Second Amended and Restated Ground
Lease (Parcel 1), dated October 17, 1989) and future ground or underlying
leases of the Building or Project and to the lien of any mortgage, trust deed
or other encumbrances now or hereafter in force against the Building or Project
or any part thereof, if any, and to all renewals, extensions, modifications,
consolidations and 

	
 

	
 

	
 

	
 

	
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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, trust
deeds or other encumbrances, or the lessors under such ground lease or
underlying leases, require in writing that this Lease be superior thereto.
Tenant covenants and agrees in the event any proceedings are brought for the
foreclosure of any such mortgage or deed in lieu thereof (or if any ground
lease is terminated), to attorn, without any deductions or set-offs whatsoever,
to the lienholder or purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof (or to the ground lessor), if so
requested to do so by such purchaser or lienholder or ground lessor, and to
recognize such purchaser or lienholder or ground lessor as the lessor under
this Lease, provided such lienholder or purchaser or ground lessor shall agree
to accept this Lease and not disturb Tenant’s occupancy, so long as Tenant
timely pays the Rent and observes and performs the terms, covenants and
conditions of this Lease to be observed and performed by Tenant. Landlord’s
interest herein may be assigned as security at any time to any lienholder.
Tenant shall, within ten (10) days of request by Landlord, execute such further
instruments or assurances as Landlord 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. 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 the Tenant hereunder in the
event of any foreclosure proceeding or sale. 

ARTICLE 19

DEFAULTS; REMEDIES

          19.1
          Events of Default. 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 unless such failure is cured within
five (5) days after notice; or 

                            19.1.2          Except
where a specific time period is otherwise set forth for Tenant’s performance in
this Lease, in which event the failure to perform by Tenant within such time
period shall be a default by Tenant under this Section 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
that if the nature of such default is such that the same cannot 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 such default; or 

                            19.1.3          Abandonment
or vacation of all or a substantial portion of the Premises by Tenant and
Tenant is otherwise in default under this Lease; or 

                            19.1.4          The
failure by Tenant to observe or perform according to the provisions of Articles
5, 14, 17 or 18 of this Lease where such failure continues for more than five
(5) days after notice from Landlord, provided however, such notice shall be in
addition to, and not in lieu of, the periods, if any, for performance set forth
in such Articles of this Lease; or

                            19.1.5          
         Tenant’s failure to occupy the
Premises within ten (10) days after the Lease Commencement Date. 

          The
notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law. 

          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 (all of which
remedies shall be distinct, separate and cumulative), 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 

	
 

	
 

	
 

	
 

	
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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 the amount 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 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 Paragraphs 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 24 of this Lease, but in no case greater than
the maximum amount of such interest permitted by law. As used in Paragraph
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. 

                     19.2.3          Landlord
shall at all times have the rights and remedies (which shall be cumulative with
each other and cumulative and in addition to those rights and remedies
available under Sections 19.2.1 and 19.2.2, above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable law, to seek any declaratory, injunctive or other equitable relief,
and specifically enforce this Lease, or restrain or enjoin a violation or
breach of any provision hereof. 

          19.3
   Subleases 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. 

	
 

	
 

	
 

	
 

	
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          19.4
          Efforts to Relet. No re-entry or
repossession, repairs, maintenance, changes, alterations and additions,
reletting, appointment of a receiver to protect Landlord’s interests hereunder,
or any other action or omission by Landlord shall be construed as an election
by Landlord to terminate this Lease or Tenant’s right to possession, or to
accept a surrender of the Premises, nor shall same operate to release Tenant in
whole or in part from any of Tenant’s obligations hereunder, unless express
written notice of such intention is sent by Landlord to Tenant. Tenant hereby
irrevocably waives any right otherwise available under any law to redeem or
reinstate this Lease. 

          19.5
          Landlord Default. Notwithstanding
anything to the contrary set forth in this Lease, Landlord shall not be in
default in the performance of any obligation required to be performed by
Landlord pursuant to this Lease unless (i) in the event such default is with
respect to the payment of money, Landlord fails to pay such unpaid amounts
within five (5) business days of written notice from Tenant that the same was
not paid when due, or (ii) in the event such default is other than the
obligation to pay money, Landlord fails to perform such obligation within
thirty (30) days after the receipt of notice from Tenant specifying in detail
Landlord’s failure to perform; provided, however, if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be in default under this Lease if it shall
commence such performance within such thirty (30) day period and thereafter
diligently pursue the same to completion. Upon any such default by Landlord
under this Lease, Tenant may, except as otherwise specifically provided in this
Lease to the contrary, exercise any of its rights provided at law or in equity.

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. 

ARTICLE 21

[INTENTIONALLY DELETED]

ARTICLE 22

SIGNS

          22.1
          Full Floor. Subject to Landlord’s prior
written approval, in its sole discretion, and provided all signs are in keeping
with the quality, design and style of the Building and Project, Tenant, so long
as the Premises comprise an entire floor of the Building, at its sole cost and
expense, may install identification signage anywhere in the Premises including
in the elevator lobby of the Premises, provided that such signs must not be
visible from the exterior of the Building. Upon expiration or earlier
termination of this Lease, Tenant shall reimburse Landlord for the reasonable
cost of removal of such signage.

          22.2
          Prohibited Signage and Other Items. Any
signs, notices, logos, pictures, names or advertisements which are installed
and that have not been separately approved by Landlord may be removed without
notice by Landlord at the sole expense of Tenant. Tenant may not install any
signs on the exterior or roof of the Project or the Common Areas. Any signs, window
coverings, or blinds (even if the same are located behind the Landlord-approved
window coverings for the Building), or other items visible from the exterior of
the Premises or Building, shall be subject to the prior approval of Landlord,
in its sole discretion 

          22.3
          Building Directory. A building
directory will be located in the lobby of the Building. Tenant shall have the
right, at Tenant’s sole cost and expense, to designate three (3) 

	
 

	
 

	
 

	
 

	
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name strips to
be displayed under Tenant’s entry in such directory for the Premises. Upon
expiration or earlier termination of this Lease, Tenant shall reimburse
Landlord for the reasonable cost of removal of such name strips. 

ARTICLE 23

COMPLIANCE WITH LAW

          23.1          Applicable
Laws. Tenant shall not do
anything or suffer anything to be done in or about the Premises or the Project
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 (“Applicable
Laws”). At its sole cost and expense, Tenant shall promptly comply
with all such Applicable Laws which relate to (i) Tenant’s use of the Premises,
(ii) the Alterations or Tenant Improvements in the Premises, or (iii) the Base
Building, but as to the Base Building, only to the extent such obligations are
triggered by Tenant’s Alterations, the Tenant Improvements, or Tenant’s use of
the Premises for non-general office use. 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. Tenant shall be responsible, at its sole
cost and expense, to make all alterations to the Premises as are required to
comply with the governmental rules, regulations, requirements or standards
described in this Article 23. 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.

          23.2          Hazardous
Materials. Tenant shall not
cause or permit any Hazardous Material to be generated, brought into, used, stored,
or disposed of in or about the Premises, Building or Project by Tenant or its
agents, employees, contractors, subtenants, or invitees, except for such
substances that are required in the ordinary course of Tenant’s business
conducted on the Premises or are otherwise approved by Landlord. Tenant shall: 

                           23.2.1          Use,
store, and dispose of all such Hazardous Material in strict compliance with all
applicable statutes, ordinances, and regulations in effect during the Lease
Term that relate to public health and safety and protection of the environment
(“Environmental Laws”), including
those Environmental Laws identified in Section 23.6; and 

                           23.2.2          Comply
at all times during the Lease Term with all Environmental Laws. 

          23.3          Warranties;
Notice of Release and Investigation.
Tenant acknowledges receipt of that certain letter dated October 8, 1998 from
the California Regional Quality Control Board to Parker Hannifin Corporation,
the prior owner of the real property which comprises the Project, confirming
completion of site investigation and remedial action for underground storage
tanks formerly located the Project (the “RWQCB
Letter”). Landlord warrants and represents to Tenant that, to Landlord’s
actual knowledge without independent investigation or inquiry, as of the date
of this Lease: 

                           23.3.1          Except
as provided in the RWQCB Letter, there has been no release onto or under the
Project of any Hazardous Material in violation of any Environmental Law; 

                           23.3.2          The
Building shall contain no PCBS, PCB-contaminated electrical equipment, or
asbestos-containing materials; and 

                           23.3.3          Except
as provided in the RWQCB Letter, Landlord has received no notice that the
Project is in violation of any Environmental Law. 

If, during the
Lease Term (including any extensions), either Landlord or Tenant becomes aware
of (i) any actual or threatened release of any Hazardous Material on, under, or
about the Premises, Building or Project, or (ii) any inquiry, investigation,
proceeding, or claim by any government agency or other person regarding the
presence of Hazardous Material on, under, or about the Premises, Building or
Project, that party shall give the other party written notice of the 

	
 

	
 

	
 

	
 

	
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 [Quality Systems, Inc.]

release or
investigation within five (5) days after learning of it and shall
simultaneously furnish to the other party copies of any claims, notices of
violation, reports, or other writings received by the party providing notice
that concern the release or investigation. 

          23.4          Indemnification.
Landlord and Tenant
shall, at that party’s sole expense and with counsel reasonably acceptable to
the other party, indemnify, defend, and hold harmless the other party and the
other party’s shareholders, directors, officers, employees, partners,
affiliates, and agents with respect to all losses arising out of or resulting from
the release of any Hazardous Material in or about the Premises, Building or
Project, or the violation of any Environmental Law, by that party or that
party’s employees, agents, contractors, or invitees. This indemnification
includes all losses, liabilities, obligations, penalties, fines, claims,
actions (including remedial or enforcement actions of any kind and
administrative or judicial proceedings, orders, or judgments), damages
(including consequential and punitive damages), and costs (including attorney,
consultant, and expert fees and expenses) resulting from the release or
violation. This indemnification shall survive the expiration or termination of
this Lease. 

          23.5          Remediation
Obligations; Tenant’s Rights on Cleanup by
Landlord. If the presence of any Hazardous Material brought onto
the Premises, Building or Project by either Landlord or Tenant or by Landlord’s
or Tenant’s employees, agents, contractors, or invitees results in
contamination of the Premises, Building or Project, that party shall promptly
take all necessary actions, at the party’s sole expense, to return the
Premises, Building or Project to the condition that existed before the
introduction of such Hazardous Material. Tenant shall first obtain Landlord’s
approval of the proposed remedial action, which shall not be unreasonably
withheld or delayed. This provision does not limit the indemnification
obligations set forth in Section 23.4 above. 

          If
Landlord undertakes any cleanup, detoxification, or similar action, whether or
not required by any government or quasi-government agency, as a result of the
presence, release, or disposal in or about the Building or Project of any
Hazardous Material, and that action requires that Tenant be denied access to
the Premises or Tenant is otherwise unable to conduct its business on the
Premises for a period of greater than twenty-four (24) hours, Base Rent shall
be abated for the period that Tenant is unable to conduct its business at the
Premises. Subject to Section 23.4, the costs of any Hazardous Material testing,
cleanup or remediation undertaken by Landlord during the Lease Term shall be
borne by Landlord, shall not be included in Operating Expenses and shall not be
the obligation of Tenant. 

          23.6          Definition
of “Hazardous Material”. As
used herein, the term “Hazardous Material”
shall mean any hazardous or toxic substance, material, or waste that is or
becomes regulated by the United States, the State of California, or any local
government authority having jurisdiction over the Building or Project.
Hazardous Material includes: 

                           23.6.1          Any
“hazardous substance,” as that term is defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42
United States Code Sections 9601-9675); 

                           23.6.2          “Hazardous
waste,” as that term is defined in the Resource Conservation and Recovery Act
of 1976 (RCRA) (42 United States Code Sections 6901-6992k); 

                           23.6.3          Any
pollutant, contaminant, or hazardous, dangerous, or toxic chemical, material,
or substance, within the meaning of any other applicable federal, state, or
local law, regulation, ordinance, or requirement (including consent decrees and
administrative orders imposing liability or standards of conduct concerning any
hazardous, dangerous, or toxic waste, substance, or material, now or hereafter
in effect); 

                           23.6.4          Petroleum
products; 

                           23.6.5          Radioactive
material, including any source, special nuclear, or byproduct material as
defined in 42 United States Code Sections 2011-2297g-4; 

                           23.6.6          Asbestos
in any form or condition; and 

	
 

	
 

	
 

	
 

	
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                           23.6.7          Polychlorinated
biphenyls (PCBS) and substances or compounds containing PCBS. 

ARTICLE 24

LATE CHARGES

          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 Tenant’s receipt
of written notice from Landlord that said amount is due, then Tenant shall pay
to Landlord a late charge equal to five percent (5%) of the overdue amount plus
any reasonable attorneys’ fees incurred by Landlord by reason of Tenant’s
failure to pay Rent and/or other charges when due hereunder. 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 ten (10) days after the
date they are due shall bear interest from the date when due until paid at a
rate per annum equal to ten percent (10%) or, if less, the highest rate
permitted by applicable law. 

ARTICLE 25

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY
TENANT

          25.1          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, except to the extent, if any, otherwise expressly provided herein. If
Tenant shall fail to perform any obligation under this Lease, and such failure
shall continue in excess of the time allowed under Section 19.1.2, above,
unless a specific time period is otherwise stated in this Lease, Landlord may,
but shall not be obligated to, 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. 

          25.2          Tenant’s
Reimbursement. Except as may
be specifically provided to the contrary in this Lease, Tenant shall pay to
Landlord, upon 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 25.1; (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 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 reasonable legal fees and other amounts so expended.
Tenant’s obligations under this Section 25.2 shall survive the expiration or
sooner termination of the Lease Term. 

ARTICLE 26

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, or to current or prospective
mortgagees, ground or underlying lessors or insurers, or prospective tenants;
(iii) post notices of nonresponsibility; or (iv) alter, improve or repair the
Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Building’s systems and equipment.
Notwithstanding anything to the contrary contained in this Article 26, Landlord
may enter the Premises at any time to (A) perform services required of
Landlord, including janitorial service; (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, except as otherwise provided in this Lease, and
may take such reasonable steps as required to accomplish the stated purposes.
Tenant hereby waives any claims for damages (other than personal injury and
property damage to the extent caused by Landlord’s 

	
 

	
 

	
 

	
 

	
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negligence or
willful misconduct in connection with an entry by Landlord into the Premises)
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. 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 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. No provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decorations except as otherwise
expressly agreed to be performed by Landlord herein. 

ARTICLE 27

TENANT PARKING

          27.1          Parking
In General. Tenant shall have
the right, but not the obligation, to rent from Landlord, commencing on the
Lease Commencement Date, up to the amount of parking spaces set forth in
Section 9 of the Summary, on a monthly basis throughout the Lease Term, which
parking spaces shall pertain to the Project parking structure (“Parking Structure”) and, with respect to
Building reserved parking spaces and in the Building subterranean reserved
parking area. The location of the reserved parking spaces shall be mutually
agreed upon by Landlord and Tenant. Tenant shall pay Landlord for automobile
parking spaces at the time Base Rent is due on a monthly basis at the
prevailing rate set forth in Section 9 of the Summary. In addition, Tenant
shall be responsible for the full amount of any taxes imposed by any
governmental authority in connection with the renting of such parking spaces by
Tenant or the use of the Parking Structure and/or the Building subterranean
reserved parking area by Tenant. Tenant’s continued right to use the parking
spaces is conditioned upon Tenant abiding by all rules and regulations which
are prescribed from time to time for the orderly operation and use of the
Parking Structure and in the Building subterranean reserved parking area
including any sticker or other identification system established by Landlord,
Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply
with such rules and regulations and Tenant not being in default under this
Lease. 

          27.2          Landlord
Reservations. So long as
Tenant’s use is not adversely and materially affected (and it is deemed not to
be adversely and materially affected if reasonably comparable substitute
parking is made available), Landlord specifically reserves the right to change
the size, configuration, design, layout and all other aspects of the Parking
Structure and in the Building subterranean reserved parking area, at any time
and 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, close-off or restrict access to the Parking Structure and in the
Building subterranean reserved parking area, for purposes of permitting or facilitating
any such construction, alteration or improvements. Landlord may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall operate the Parking Structure and any other parking facilities
at the Project in a first class manner and shall have all the rights of control
attributed hereby to the Landlord. The parking spaces used by Tenant pursuant
to this Article 27 are provided to Tenant solely for use by Tenant’s own
personnel and such spaces may not, except in the case of a Transfer approved by
Landlord pursuant to Article 14 above, be transferred, assigned, subleased or
otherwise alienated by Tenant without Landlord’s prior approval. 

          27.3          Visitor
Validations. Tenant may
validate visitor parking by such method or methods as Landlord may establish,
at the validation rate from time to time generally applicable to visitor
parking. 

          27.4          Parking
Pass System. Landlord shall
install as part of the security system for the Building an access card
recognition system for the Parking Structure and the Building subterranean
reserved parking area. The number of parking facility access cards available to
Tenant shall equal the number of parking spaces rented by Tenant. Effective on
the first day of a calendar month, on at least thirty (30) days’ prior notice
to Landlord, Tenant may decrease or increase the number of parking spaces which
it rents in the Parking Structure or the Building 

	
 

	
 

	
 

	
 

	
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LAKESHORE TOWERS BUILDING III 

 [Quality Systems, Inc.] 

subterranean
reserved parking area subject to
the maximum number of parking spaces as set forth in the Summary. Tenant shall
pay the deposit established by Landlord for the Building and Parking Structure
access cards which deposit shall initially be Fifteen Dollars ($15) per card. 

ARTICLE 28

MISCELLANEOUS PROVISIONS

          28.1          Terms;
Captions. The words “Landlord”
and “Tenant” as used herein shall include the plural as well as the singular.
The necessary grammatical changes required to make the provisions hereof apply
either to corporations or partnerships or individuals, men or women, as the
case may require, shall in all cases be assumed as though in each case fully
expressed. 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. 

          28.2          Binding
Effect. Subject to all other
provisions of this Lease, each of the covenants, conditions and 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
heirs, personal representatives, successors or assigns, provided this clause
shall not permit any assignment by Tenant contrary to the provisions of Article
14 of this Lease. 

          28.3          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. 

          28.4          Modification
of Lease. Should any
current or prospective mortgagee or ground lessor for the Building or Project
require modification of this Lease, which modification will not cause an
increase in cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, 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. At the
request of Landlord or any mortgagee or ground lessor, Tenant agrees to execute
and acknowledge a short form of lease and deliver the same to Landlord within
ten (10) days following the request therefor. 

          28.5          Transfer
of Landlord’s Interest. Tenant
acknowledges that Landlord has the right to transfer all or any portion of its
interest in the Project or Building 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 and Tenant agrees to look solely to such
transferee for the performance of Landlord’s obligations hereunder after the
date of transfer and such transferee shall be deemed to have fully assumed and
be liable for all obligations of this Lease to be performed by Landlord,
including the return of any Security Deposit, and Tenant shall attorn to such
transferee. 

          28.6          Prohibition
Against Recording. Neither
this Lease, nor any memorandum, affidavit or other writing with respect
thereto, shall be recorded by Tenant or by anyone acting through, under or on
behalf of Tenant. 

          28.7          Landlord’s
Title. Landlord’s title is
and always shall be paramount to the title of Tenant. Nothing herein contained
shall empower Tenant to do any act which can, shall or may encumber the title
of Landlord. 

          28.8          Relationship
of Parties. Nothing
contained in this Lease shall be deemed or construed by the parties hereto or
by any third party to create the relationship of principal and agent,
partnership, joint venturer or any association between Landlord and Tenant. 

          28.9          Application
of Payments. Landlord shall
have the right to apply payments received from Tenant pursuant to this Lease,
regardless of Tenant’s designation of such payments, to satisfy any obligations
of Tenant hereunder, in such order and amounts as Landlord, in its sole
discretion, may elect.

	
 

	
 

	
 

	
 

	
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          28.10
     Time of
Essence. Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor. 

          28.11
     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. 

          28.12
     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. 

          28.13
     Landlord
Exculpation. The liability of Landlord or the Landlord Parties
to Tenant for any default by Landlord under this Lease or arising in connection
herewith or with Landlord’s operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the interest of
Landlord in the Building, provided that in no event shall such liability extend
to any sales or insurance proceeds received by Landlord or the Landlord Parties
in connection with the Project, Building or Premises. Neither Landlord nor any
of the Landlord Parties shall have any personal liability therefor, and Tenant
hereby expressly waives and releases such personal liability on behalf of
itself and all persons claiming by, through or under Tenant. The limitations of
liability contained in this Section 28.13 shall inure to the benefit of
Landlord’s and the Landlord Parties’ present and future partners,
beneficiaries, officers, directors, trustees, shareholders, agents and employees,
and their respective partners, heirs, successors and assigns. Under no
circumstances shall any present or future partner of Landlord (if Landlord is a
partnership) or trustee or beneficiary (if Landlord or any partner of Landlord
is a trust) have any liability for the performance of Landlord’s obligations
under this Lease. Notwithstanding any contrary provision herein, neither
Landlord nor the Landlord Parties shall be liable under any circumstances for
injury or damage to, or interference with, Tenant’s business, including but not
limited to, loss of profits, loss of rents or other revenues, loss of business
opportunity, loss of goodwill or loss of use, in each case, however occurring. 

          28.14
     Entire
Agreement. It is understood and acknowledged that there are no
oral agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties’ entire agreement with respect to the leasing of the
Premises and 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. 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. 

          28.15
     Right to
Lease. 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. 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. 

          28.16
     Force
Majeure. An actual delay or stoppage resulting from fire,
earthquake, explosion, flood, hurricane, the elements, acts of God or the
public enemy, war, invasion, insurrection, rebellion, riots, industry-wide
labor strikes or lock-outs (which objectively preclude Landlord or Tenant from
obtaining from any reasonable source, labor or substitute materials at a
reasonable cost necessary for performing its respective obligations hereunder),
or governmental acts, 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,
a “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 

	
 

	
 

	
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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. 

          28.17
     Waiver of
Redemption by Tenant. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and 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. 

          28.18
     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 or by law
shall be in writing, shall be (A) sent by United States certified or registered
mail, postage prepaid, return receipt requested (“Mail”), (B) transmitted by facsimile, if such facsimile is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier with verification of delivery requested, or (D)
delivered personally. Any Notice shall be sent, transmitted, or delivered, as
the case may be, to Tenant at the appropriate address set forth in Section 10 of
the Summary, or to such other place as Tenant may from time to time designate
in a Notice to Landlord, or to Landlord at the addresses set forth below, or to
such other places as Landlord may from time to time designate in a Notice to
Tenant. Any Notice will be deemed given (i) three (3) days after the date it is
posted if sent by Mail, (ii) the date the facsimile is transmitted if
transmitted before 5:00 p.m. Pacific Time on a business day, otherwise on the
next business day, (iii) the date the overnight courier delivery is made, or
(iv) the date personal delivery is made (if made on a business day, otherwise
on the next business day). As of the date of this Lease, any Notices to
Landlord must be sent, transmitted, or delivered, as the case may be, to the
following addresses: 

	
 

	
 

	
 

	
Lakeshore
 Towers Limited Partnership Phase II 

	
 

	
Attention:
 Building Manager 

	
 

	
18101 Von
 Karman Avenue, Suite 1220 

	
 

	
Irvine, CA
 92612 

	
 

	
 

	
 

	
and 

	
 

	
 

	
 

	
LTLP II
 Corp.

	
 

	
 c/o GE Investments 

	
 

	
Attention:
 Asset Manager 

	
 

	
2029 Century
 Park East, Suite 2000 

	
 

	
Los Angeles,
 CA 90067 

          28.19
     Joint and
Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several. 

          28.20
     Authority.
If Tenant is a corporation, trust 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. In such event,
Tenant shall, within ten (10) days after execution of this Lease, deliver to
Landlord satisfactory evidence of such authority and, if a corporation, upon
demand by Landlord, also deliver to Landlord satisfactory evidence of (i) good
standing in Tenant’s state of incorporation and (ii) qualification to do
business in California. 

          28.21
     Attorneys’
Fees. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provision of this Lease or
for any other relief against the other, then all costs and expenses, including
reasonable attorneys’ fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment. 

          28.22
     GOVERNING
LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING THEREFROM, LANDLORD AND TENANT 

	
 

	
 

	
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HEREBY CONSENT
TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH
COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE
RELEGATED TO AN INDEPENDENT ACTION AT LAW. 

          28.23
     Submission
of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant. 

          28.24
     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 12
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, 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, occurring by, through, or under the indemnifying party. 

          28.25
     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. 

          28.26
     Project or
Building Name and Signage. Landlord shall have the right at any
time to change the name of the Project or Building and to install, affix and
maintain any and all signs on the exterior and on the interior of the Project
or Building as Landlord may, in Landlord’s sole discretion, desire. Tenant
shall not use the words “Lakeshore” or the name of the Project or Building or
use pictures or illustrations of the Project or Building in advertising or
other publicity or for any purpose other than as the address of the business to
be conducted by Tenant in the Premises, without the prior written consent of
Landlord. 

          28.27
     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. 

          28.28
     Confidentiality.
Tenant acknowledges that the content of this Lease and any related documents
are confidential information. Tenant shall keep such confidential information
strictly confidential and shall not disclose such confidential information to
any person or entity other than Tenant’s financial, legal, and space planning
consultants. 

          28.29
     Development
of the Project.

                  
      28.29.1
     Subdivision.
Landlord reserves the right to further subdivide all or a portion of the
Project. Tenant agrees to execute and deliver, upon demand by Landlord and in
the form requested by Landlord, any additional documents needed to conform this
Lease to the circumstances resulting from such subdivision. 

                  
      28.29.2
     The Other
Improvements. If portions of the Project or property adjacent to
the Project (collectively, the “Other
Improvements”) are owned by an entity other 

	
 

	
 

	
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than Landlord,
Landlord, at its option, may enter into an agreement with the owner or owners
of any or all of the Other Improvements to provide (i) for reciprocal rights of
access and/or use 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 the Other Improvements, provided that Tenant’s
rights under this Lease are not materially impaired, (iii) for the allocation
of a portion of the Direct Expenses to the Other Improvements and the operating
expenses and taxes for the Other Improvements to the Project, and (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. Nothing contained herein shall be deemed or construed to
limit or otherwise affect Landlord’s right to convey all or any portion of the
Project or any other of Landlord’s rights described in this Lease. 

                         28.29.3
     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. 

          28.30
     Building
Renovations. It is specifically understood and agreed that
Landlord has no obligation and has made no promises to alter, remodel, improve,
renovate, repair or decorate the Premises, Building, or any part thereof and
that no representations respecting the condition of the Premises or the
Building have been made by Landlord to Tenant except as specifically set forth
herein or in the Tenant Work Letter. However, Tenant hereby acknowledges that
Landlord is currently renovating or may during the Lease Term renovate,
improve, alter, or modify (collectively, the “Renovations”)
the Project, the Building and/or the Premises. Except for (i) emergencies, or
(ii) repairs, alterations, improvements or additions required by governmental
or quasi governmental authorities or court order or decree, such Renovations
shall be performed in a manner so as not to materially interfere with Tenant’s
access to the Premises or Parking Structure. Subject to the forgoing, Tenant
hereby agrees that such Renovations shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall
have no responsibility and shall not be liable to Tenant for any injury to or
interference with Tenant’s business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or of Tenant’s personal property
or improvements resulting from the Renovations, or for any inconvenience or
annoyance occasioned by such Renovations. 

          28.31
     No Violation.
Tenant hereby warrants and represents that neither its execution of nor
performance under this Lease shall cause Tenant to be in violation of any
agreement, instrument, contract, law, rule or regulation by which Tenant is
bound, and Tenant shall protect, defend, indemnify and hold Landlord harmless
against any claims, demands, losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys’ fees and costs, arising
from Tenant’s breach of this warranty and representation. 

          28.32
     No
Discrimination. Tenant covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, 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 sex, marital status, age, race, color,
religion, creed, national origin or ancestry, in the leasing, subleasing,
renting, transferring, use, occupancy, tenure or enjoyment of the Premises
herein leased, nor shall Tenant itself, or any person claiming under or through
it, establish or permit such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenant’s
lessees, sublessees, subtenants or vendees in the Premises. 

          28.33
     OFAC
Compliance. Tenant represents and warrants that (a) Tenant and
each person or entity owning an interest in Tenant is (i) not currently
identified on the Specially Designated Nationals and blocked Persons Listed
maintained by the Office of Foreign Assets Control, Department of the Treasury
(“OFAC”) and/or on any other
similar list maintained by OFAC pursuant to any authorizing statute, executive
order or regulation (collectively, the “List”),
and (ii) not a person or entity with whom a citizen of the United States is
prohibited to engage in transactions by any trade embargo, economic sanction,
or other prohibition of United States law, regulation, or Executive Order of
the President of the United States, (b) none of the

	
 

	
 

	
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funds or other
assets of Tenant constitute property of, or are beneficially owned, directly or
indirectly, by any Embargoed Person (as hereinafter defined), (c) no Embargoed
Person has any interest of any nature whatsoever in Tenant (whether directly or
indirectly), (d) none of the funds of Tenant have been derived from any
unlawful activity with the result that the investment in Tenant is prohibited
by law or that this Lease is in violation of law, and (e) Tenant has
implemented procedures, and will consistently apply those procedures, to ensure
the foregoing representations and warranties remain true and correct at all
times. The term “Embargoed Person”
means any person, entity or government subject to trade restrictions under U.S.
law, including but not limited to, the International Emergency Economic Powers
Act, 50 U.S.C.A. § 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App.
1 et seq., and any Executive Orders or regulations promulgated thereunder with
the result that the investment in Tenant is prohibited by law or Tenant is in
violation of law. 

          Tenant
covenants and agrees (a) to comply with all requirements of law relating to
money laundering, anti-terrorism, trade embargos economic sanctions, now or
hereafter in effect, (b) to immediately notify Landlord in writing if any of
the representations, warranties or covenants set forth in this Section 28.33
are no longer true or have been breached or if Tenant has a reasonable basis to
believe that they may no longer be true or have been breached, (c) not to use
funds from any “Prohibited Person” (as such term is defined in the September
24, 2001 Executive Order Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any
payment due to Landlord under this Lease and (d) at the request of Landlord, to
provide such information as may be requested by Landlord to determine Tenant’s
compliance with the terms hereof. 

          Tenant
hereby acknowledges and agrees that Tenant’s inclusion on the List at any time
prior to the expiration or earlier termination of this Lease shall be a
material default of this Lease. Notwithstanding anything to the contrary,
Tenant shall not permit the Premises or any portion thereof to be used or
occupied by any person or entity on the List or by any Embargoed Person (on a
permanent, temporary or transient basis), and any such use or occupancy of the
Premises by any such person or entity shall be a material default of this
Lease. 

          28.34
     Definition
of Landlord. The term “Landlord,” as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time such covenant
or obligation is to be performed, of the Building or the lessees under any ground
lease of the Building, if any. 

	
 

	
 

	
44

	
LAKESHORE TOWERS BUILDING III

 [Quality Systems, Inc.]

QUALITY SYSTEMS INC. A
Higher IQ For Healthcare IT 

RESOLUTION
 Of
 Quality Systems, Inc.

The Chief
Executive Officer of Quality Systems, Inc. (NASDAQ:
QSll), hereby authorizes Paul Holt, Chief Financial Officer of Quality Systems,
Inc., by his signature, to enter into the Office Lease dated October 18, 2007
between Lakeshore Towers Limited Partnership
Phase II as Landlord and Quality Systems, Inc. as Tenant for 18111 Von
Karman Avenue, Suite 600.

	
 

	
 

	
 

	

	
 

	
11/2/07

	

	
 

	

	
Louis Silverman, CEO, Quality Systems, Inc.

	
 

	
Date

18191 Von Karman Avenue • Suite 450 • Irvine, California 92612

tel. 949.255.2600 • fax 949.255.2605 • www.qsii.com

IN WITNESS
WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and
date first above written.

	
 

	
 

	
 

	
 

	
 

	
“Landlord”:

	
 

	
 

	
 

	
 

	
LAKESHORE
 TOWERS LIMITED PARTNERSHIP PHASE II, a California limited partnership

	
 

	
 

	
 

	
By:

	
LTLP II
 CORP., a Delaware corporation, the sole General Partner of Lakeshore Towers
 Limited Partnership Phase II

	
 

	
 

	
By:

	

	
 

	
 

	
 

	

	
 

	
 

	
Its:

	
President

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
“Tenant”:

	
 

	
 

	
 

	
QUALITY
 SYSTEMS, INC.

	
 

	
a California
 corporation

	
 

	
 

	
 

	
 

	
By:

	

	
 

	
 

	

	
 

	
Its:

	
CFO

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
45

	
[Quality
Systems, Inc.]  

EXHIBIT A  

LAKESHORE TOWERS  

OUTLINE OF PREMISES  

	
 

	
 

	
EXHIBIT A - Page 1

	
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.] 

EXHIBIT B

LAKESHORE TOWERS

TENANT WORK LETTER

(Landlord Build) 

          This
Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the tenant improvements in the Premises. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of “this Lease” shall mean the relevant portion of
Articles 1 through 28 of the 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 6 of this Tenant Work Letter. All
references in this Tenant Work Letter to the “Premises” shall be deemed to
refer to the Premises. 

SECTION 1

DELIVERY OF THE PREMISES

          Tenant
acknowledges that Tenant has thoroughly examined the Premises. Except as
otherwise set forth in this Tenant Work Letter, Tenant shall accept the
Premises from Landlord in their presently existing, “as-is” condition as of the
date of this Lease. The Base Building (as defined in this Lease) shall as of
the date of delivery, be in good condition and working order, and, to the
extent necessary to allow Tenant to legally occupy the Premises for general
office use, shall comply with applicable building codes and other governmental
laws, ordinances and regulations which were enacted prior to the date of
delivery of the Premises to Tenant. 

SECTION 2

TENANT IMPROVEMENTS

          2.1
          Tenant Improvement Allowance. Tenant
shall be entitled to a one-time tenant improvement allowance (the “Tenant
Improvement Allowance”) in the amount of One Million Fifty-Five Thousand Eight
Hundred Fifty-Two and no/Dollars ($1,055,852.00) (which is Forty-Nine Dollars
($49.00) multiplied by 21,548 which is the usable square feet of the Premises)
for the costs relating to the initial design and construction of Tenant’s
improvements which are permanently affixed to the Premises (the “Tenant Improvements”). 

          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 Landlord’s disbursement process) for costs related to the
construction of the Tenant Improvements and for the following items and costs
(collectively, the “Tenant Improvement
Allowance Items”) and no portion of the Tenant Improvement
Allowance, if any, remaining after the completion of the Tenant Improvements
shall be available for use by Tenant: 

                                         (i)
          payment of the fees
of the Architect/Space Planner (as defined below) and the Engineers (as defined
below); 

                                        (ii)
          the cost of any
changes in the Base Building when such changes are required by the Construction
Documents; 

                                       (iii)
          the cost of any
changes to the Construction Documents or Tenant Improvements required by Code; 

                                        (iv)
          the cost of
construction of the Tenant Improvements, including, without limitation, testing
and inspection costs, trash removal costs, parking fees, after-hours utilities
usage, and contractors’ fees and general conditions; and 

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 B – Page 1

	
[Quality
Systems, Inc.]  

                                        (v)
          a portion of the
costs of the tenant demising walls and public corridor walls and materials, if
any, as designated by Landlord. 

          2.3
          Building Standards. Landlord has
established specifications for the Building standard components to be used in
the construction of the Tenant Improvements in the Premises (the “Building
Standards”). The quality of Tenant Improvements shall be equal to or of greater
quality than the quality of the Building Standards, provided that Landlord may,
at Landlord’s option, require the Tenant Improvements to comply with certain
Building Standards. Landlord may make changes to the Building Standards from
time to time. 

SECTION 3

CONSTRUCTION DOCUMENTS

          3.1
          Selection of Architect/Space Planner/Construction
Documents. Landlord shall retain (i) an architect (the
“Architect/Space Planner”) to prepare the Construction Documents and (ii) the
engineering consultants designated by Landlord (the “Engineers”) to prepare all engineering working drawings and
specifications relating to the structural, mechanical, electrical, plumbing,
HVAC, lifesafety, and sprinkler work of the Tenant Improvements. The working
drawings, specification and contract documents to be prepared by
Architect/Space Planner and the Engineers hereunder shall be known collectively
as the “Construction Documents.”
All Construction Documents shall comply with the drawing format and
specifications as determined by Landlord, and shall be subject to Landlord’s
approval.  

          3.2
          Final Space Plan. As soon as reasonably
possible, Tenant shall provide to the Architect/Space Planner all necessary
information and requirements of Tenant Improvements so that the Architect/Space
Planner can prepare the final space plan for Tenant Improvements in the
Premises (collectively, the “Final Space
Plan”), which Final Space Plan shall include a layout and
designation of all offices, rooms and other partitioning, their intended use,
and equipment to be contained therein. When complete, Architect/Space Planner
shall deliver the Final Space Plan to Landlord for Landlord’s approval. 

          3.3
          Final Construction
Documents. As soon as reasonably possible after Landlord’s approval of the
Final Space Plan, the Architect/Space Planner and the Engineers shall complete
the architectural and engineering drawings and specifications for the Premises,
and the final architectural working drawings in a form which is complete to
allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Construction
Documents”) and shall submit the same to Landlord for Landlord’s
approval.  

          3.4
          Permits. The Final Construction
Documents shall be approved by Landlord (the “Approved
Construction Documents”) prior to the commencement of the
construction of the Tenant Improvements. Landlord shall submit the Approved
Construction Documents to the appropriate municipal authorities for all
applicable building permits necessary to allow Contractor (as defined below) to
commence and fully complete the construction of the Tenant Improvements (the
“Permits”). No changes, modifications or alterations in the Approved
Construction Documents may be made without the prior written consent of
Landlord, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Construction Documents if such change
would directly or indirectly delay the Substantial Completion of the Premises
(as defined below).  

          3.5
          Time Deadlines. Tenant shall use its
best, good faith, efforts and all due diligence to cooperate with the
Architect/Space Planner, the Engineers, and Landlord to complete all phases of
the Construction Documents and the permitting process and to receive the
permits, and with Contractor for approval of the Cost Proposal (as defined) as
soon as possible after the execution of the Lease, and, in that regard, shall
meet with Landlord on a scheduled basis to be determined by Landlord, to
discuss Tenant’s progress in connection with the same. The applicable times for
approval of items, plans and drawings are described in this Tenant Work Letter
(the “Time Deadlines”). Tenant
agrees to comply with the Time Deadlines. 

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 B – Page 2

	
[Quality
Systems, Inc.]  

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

          4.1
          Contractor. A general contractor
(“Contractor”) shall be retained by Landlord and shall construct Tenant
Improvements; provided, that (i) before selecting the Contractor, Landlord
shall seek bids pursuant to Section 4.2 below for the Tenant Improvements from
JJS Associates and JLC Contractors (each a “Bidding
Contractor”) and (ii) Landlord shall retain as the Contractor the
Bidding Contractor providing the lowest bid for the Tenant Improvements.  

          4.2
          Cost Proposal. Landlord shall (i)
solicit cost proposal bids for the cost of all Tenant Improvements Allowance
Items to be incurred in connection with the design and construction of the
Tenant Improvements from the two (2) Bidding Contractors and (ii) select as the
Contractor the Bidding Contractor providing the lowest bid for the Tenant
Improvements. Upon selecting the Contractor, Landlord shall provide Tenant with
a cost proposal (the “Cost Proposal”)
from the Contractor in accordance with the Approved Construction Documents,
which Cost Proposal shall include, as nearly as possible, the cost of all
Tenant Improvement Allowance Items to be incurred in connection with the design
(including, without limitation, all fees of the Architect/Space Planner and the
Engineers and all other “soft costs”) and construction of the Tenant
Improvements. If the Cost Proposal is equal to or less than the Tenant
Improvement Allowance, Tenant shall be deemed to have approved the Cost
Proposal upon receipt. If the Cost Proposal is greater than the Tenant
Improvement Allowance, then Landlord shall cooperate with Tenant’s efforts to
value engineer the Approved Construction Documents to reduce the amount of the
Cost Proposal so long as achievement of a Lease Commencement Date of April 1,
2008 will not, in Landlord’s reasonable judgment, be jeopardized; provided,
however, (i) any modification of the Approved Construction Documents as a
result of Tenant’s value engineering efforts shall be subject to Landlord’s
reasonable approval and (ii) if the efforts of Tenant to value engineer the
Cost Proposal do not result in Tenant’s written approval of a revised Cost
Proposal (as value engineered) by the date which is fifteen (15) business days
following delivery of the original Cost Proposal to Tenant, then Tenant shall
be deemed to have approved the original Cost Proposal. Upon Tenant’s approval or
deemed approval of the original or revised Cost Proposal and, in the case of a
revised Cost Proposal, approval by Landlord, Landlord shall be released by
Tenant to (i) retain the Contractor and (ii) purchase the items set forth in
the approved or deemed approved Cost Proposal and commence the construction
relating to such items. The date by which Tenant must approve and deliver the
Cost Proposal to Landlord shall be known hereafter as the “Cost Proposal
Delivery Date.”  

          4.3
          Construction of Tenant Improvements by Contractor
under the Supervision of Landlord. 

                          4.3.1
          Over-Allowance Amount. On the Cost
Proposal Delivery Date, Tenant shall deliver to Landlord cash in an amount (the
“Over-Allowance Amount”) equal to
the amount by which the difference between (i) the amount of the Cost Proposal
and (ii) the amount of the Tenant Improvement Allowance. The Over-Allowance
Amount shall be disbursed by Landlord prior to the disbursement of any then
remaining portion of the Tenant Improvement Allowance, and such disbursement
shall be pursuant to the same procedure as the Tenant Improvement Allowance. In
the event that, after the Cost Proposal Delivery Date, any revisions, changes,
or substitutions shall be made to the Construction Documents or the Tenant
Improvements, any additional costs which arise in connection with such
revisions, changes or substitutions or any other additional costs shall be paid
by Tenant to Landlord immediately upon Landlord’s request as an addition to the
Over-Allowance Amount. 

                          4.3.2
          Landlord’s Retention of Contractor.
Landlord shall independently retain Contractor, on behalf of Tenant, to
construct the Tenant Improvements in accordance with the Approved Construction
Documents and the Cost Proposal and Landlord shall supervise the construction
by Contractor. 

                          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. 

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 B – Page 3

	
[Quality
Systems, Inc.]  

SECTION 5

COMPLETION OF THE TENANT IMPROVEMENTS; 

LEASE COMMENCEMENT DATE

          5.1
          Ready for Occupancy. The Premises shall
be deemed ready for occupancy by Tenant upon the Substantial Completion of the
Premises. For purposes of this Lease, the Premises shall be deemed “substantially complete” and “Substantial
Completion” of the Premises
shall occur upon the issuance of a temporary certificate of occupancy for the
Premises (except as delayed as set forth in Section 5.2.4 of this Tenant Work
Letter) and the completion of construction of the Tenant Improvements in the
Premises pursuant to the Approved Construction Documents, with the exception of
any punch list items and any tenant fixtures, work-stations, built-in
furniture, or equipment to be installed by Tenant or under the supervision of
Contractor. As soon as reasonably possible after the Lease Commencement Date,
Landlord and Tenant shall conduct a walk-through of the Premises to identify
punch list items with respect to the Tenant Improvements. Landlord shall
correct all such punch list items as soon as reasonably possible after the
walk-through. 

          5.2
          Delay of the Substantial Completion of the Premises.
Except as provided in this Section 5.2, the Lease Commencement Date shall occur
as set forth in Article 2 of the Lease and Section 5.1, above. If there shall
be a delay or there are delays in the Substantial Completion of the Premises or
in the occurrence of any of the other conditions precedent to the Lease
Commencement Date, as set forth in Article 2 of the Lease, as a direct,
indirect, partial, or total result of (collectively “Tenant Delays”):

                          5.2.1
          Tenant’s failure to
comply with the Time Deadlines; 

                          5.2.2
          Tenant’s failure to
timely approve any matter requiring Tenant’s approval; 

                          5.2.3
          A breach by Tenant
of the terms of this Tenant Work Letter or the Lease; 

                          5.2.4
          Changes in any of
the Construction Documents after approval of the same by Landlord or because
the same do not comply with Code or other applicable laws; 

                          5.2.5
          Tenant’s request
for changes in the Approved Construction Documents; 

                          5.2.6
          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 Building Standards; 

                          5.2.7
          Changes to the Base
Building required by the Approved Construction Documents; or 

                          5.2.8
          Any other acts or
omissions of Tenant, or its agents, or employees

then, notwithstanding anything
to the contrary set forth in the Lease or this Tenant Work Letter and
regardless of the actual date of the Substantial Completion of the Premises,
the Substantial Completion of the Premises shall be deemed to be the date the Substantial
Completion of the Premises would have occurred if no Tenant delay or delays, as
set forth above, had occurred. 

SECTION 6

MISCELLANEOUS

          6.1
          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 Building and the Premises, Landlord shall allow
Tenant access to the Premises prior to the Substantial Completion of the
Premises for the purpose of Tenant installing overstandard equipment or
fixtures (including Tenant’s data and telephone equipment) in the Premises.
Prior to Tenant’s entry into the Premises as permitted by the terms of this
Section 6.1, 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 harmless from and indemnify, protect and
defend 

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 B – Page 4

	
[Quality
Systems, Inc.]  

Landlord
against any loss or damage to the Building or Premises and against injury to
any persons caused by Tenant’s actions pursuant to this Section 6.1. 

          6.2
          Tenant’s Representative. Tenant has
designated Julie Farlow as its sole representative with respect to the matters
set forth in this Tenant Work Letter, who, until further notice to Landlord,
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Tenant Work Letter. 

          6.3
          Landlord’s Representative. Landlord has
designated Lori Schulte 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. 

          6.4
          Tenant’s Agents. All subcontractors,
laborers, materialmen, and suppliers retained directly by Tenant shall all be
union labor in compliance with the master labor agreements existing between
trade unions and the Southern California Chapter of the Associated General
Contractors of America. 

          6.5
          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 Tenant is required to
approve or deliver an item, if no written notice of approval is given or the
item is not delivered within the stated time period, at Landlord’s sole option,
at the end of such period the item shall automatically be deemed approved or
delivered by Tenant and the next succeeding time period shall commence. 

          6.6
          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, or a default by Tenant under this
Tenant Work Letter, has occurred at any time on or before the Substantial
Completion of the Premises, then (i) in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or 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 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. 

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 B – Page 5

	
[Quality
Systems, Inc.]  

EXHIBIT C

LAKESHORE TOWERS

PROJECT LEGAL DESCRIPTION

Parcels 1
through 7 of Parcel Map 89-274 in the City of Irvine, County of Orange,
State of California as recorded in Book 267, Pages 18-26 of Parcel
Maps.

	
 

	
 

	
EXHIBIT C – Page 1

	
LAKESHORE
TOWERS BUILDING III 

[Quality Systems, Inc.] 

EXHIBIT D 

LAKESHORE TOWERS 

NOTICE OF LEASE COMMENCEMENT DATE 

	
 

	
 

	
 

	
To:

	
Quality
  Systems, Inc.

	
 

	
Attention: ________________

	
 

	
18111 Von
  Karman Avenue, Suite 600

	
 

	
Irvine, CA
  92612

	
 

	
 

	
 

	
 

	
Re:

	
Office Lease
  dated October 18, 2007 between Lakeshore Towers Limited Partnership
  Phase II, a California limited partnership (“Landlord”), and Quality
  Systems, Inc., a California corporation (“Tenant”) concerning Suite 600
  on the sixth floor of the office building located at 18111Von Karman Avenue,
  Irvine, California.

Gentlemen:

          In
accordance with the Office Lease (the “Lease”), we wish to advise you and/or
confirm as follows:

	
 

	
 

	
1.

	
The Lease
  Term shall commence on or has commenced on ___________, 200__ (“Lease
  Commencement Date”) for a term of ___________ ending on _________, 200__
  (“Lease Expiration Date”).

	
 

	
 

	
2.

	
Base Rent
  commenced to accrue on ____________, 200__, in the amount of $______________
  per month.

	
 

	
 

	
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.

	
Rent checks
  shall be made payable to _____________ at _______________, ________________,
  California.

	
 

	
 

	
5.

	
The exact
  number of rentable/usable square feet within the Premises is        /   
       square feet.

	
 

	
 

	
6.

	
Tenant’s
  Share as adjusted based upon the exact number of rentable square feet within
  the Premises is ___________%.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
“Landlord”:

	
 

	
 

	
 

	
 

	
 

	
 

	
LAKESHORE
  TOWERS LIMITED 
PARTNERSHIP PHASE II, a California limited partnership

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
LTLP II
  CORP., a Delaware corporation, the 
sole General Partner of Lakeshore Towers

  Limited Partnership Phase II

	
 

	
 

	
 

	

    By:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
    Its:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
EXHIBIT D – Page 1

	
LAKESHORE
TOWERS BUILDING III 

[Quality Systems, Inc.] 

	
 

	
 

	
 

	
Agreed to and accepted as

	
 

	
of _________________, 200_.

	
 

	
 

	
 

	
“Tenant”:

	
 

	
 

	
 

	
Quality Systems, Inc.,

	
 

	
a California corporation

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
EXHIBIT D – Page 2

	
LAKESHORE
TOWERS BUILDING III 

[Quality Systems, Inc.] 

EXHIBIT E 

LAKESHORE TOWERS 

DIRECT EXPENSES ALLOCATION 

          Common
Area Expenses as defined in Paragraph 2.12 of the CC&Rs shall be assessed
to the various buildings in the Project pursuant to paragraph 10 of the
CC&Rs. Paragraph 10.5 of the CC&Rs provides for allocation of
assessments in an equitable manner based on relative gross square footage of
the buildings. The ratios are as follows:

	
 

	
 

	
 

	
 

	
 

	

	

	

	

	

	
Building I – Office

	
 

	
401,789 sq. ft.

	
 

	
45.6%

	
 

	
 

	
 

	
 

	
 

	
Building I – Retail

	
 

	
6,000 sq. ft.

	
 

	
0.7%

	
 

	
 

	
 

	
 

	
 

	
Restaurant

	
 

	
12,100 sq. ft.

	
 

	
1.4%

	
 

	
 

	
 

	
 

	
 

	
Sporting Club

	
 

	
89,940 sq. ft.

	
 

	
10.2%

	
 

	
 

	
 

	
 

	
 

	
Building II

	
 

	
129,206 sq. ft.

	
 

	
14.7%

	
 

	
 

	
 

	
 

	
 

	
Building III

	
 

	
241,505 sq. ft.

	
 

	
27.4%

	
 

	
 

	
 

	
 

	
 

	
TOTAL

	
 

	
880,540 sq. ft.

	
 

	
100.0%

	
 

	

	

	

	

	

	
 

	
 

	
 

	

LAKESHORE TOWERS BUILDING III

	
EXHIBIT E – Page 1

	
[Quality Systems, Inc.] 

EXHIBIT F 

LAKESHORE TOWERS 

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. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control. 

          1.          Tenant
shall not alter any lock or install any new or additional locks or bolts on any
doors or windows of the Premises without obtaining Landlord’s prior written
consent. 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. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, Tenant and in the event
of the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes. 

          2.          All
doors opening to public corridors shall be kept closed at all times except for
normal ingress and egress to the Premises. 

          3.          Landlord
reserves the right to close and keep locked all entrance and exit doors of the
Building during such hours as are customary for comparable buildings in the
Irvine, California area. Tenant, its employees and agents must be sure that the
doors to the Building are securely closed and locked when leaving the Premises
if it is after the normal hours of business for the Building. Any tenant, its
employees, agents or any other persons entering or leaving the Building at any
time when it is so locked, or any time when it is considered to be after normal
business hours for the Building, may 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 will furnish passes to persons for whom Tenant requests same
in writing. Tenant shall be responsible for all persons for whom Tenant
requests passes and shall be liable to Landlord for all acts of such persons.
Landlord and his agents shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the 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. 

          4.          No
furniture, freight or equipment of any kind shall be brought into the Building
without prior notice to Landlord. All moving activity into or out of the
Building shall be scheduled with Landlord and done only at such time and in
such manner as Landlord designates. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought
into the Building and also the times and manner of moving the same in and out
of the Building. Safes and other heavy objects shall, if considered necessary
by Landlord, 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, in
such specific elevator and by such personnel as shall be designated by
Landlord. 

          6.          The
requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord. 

	
 

	
 

	
 

	
 

	
EXHIBIT
  F – Page 1

	
LAKESHORE
TOWERS BUILDING III 
[Quality
Systems, Inc.] 

          7.          No
sign, advertisement, notice or handbill shall be exhibited, distributed,
painted or affixed by Tenant on any part of the Premises or the Building
without the prior written consent of the Landlord. Tenant shall not disturb,
solicit, peddle, or canvass any occupant of the Project and shall cooperate
with Landlord and its agents of Landlord to prevent same. 

          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 servants, employees, agents, visitors or licensees
shall have caused same. 

          9.          Tenant
shall not overload the floor of the Premises, nor mark, drive nails or screws,
or drill into the partitions, woodwork or drywall or in any way deface the
Premises or any part thereof without Landlord’s prior written consent. Tenant
shall not purchase spring water, ice, towel, linen, maintenance or other like
services from any person or persons not approved by Landlord. 

          10.          Except
for vending machines intended for the sole use of Tenant’s employees and invitees,
no vending machine or machines other than fractional horsepower office machines
shall be installed, maintained or operated upon the Premises without the
written consent of Landlord. 

          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, chemical,
substance or material. 

          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. 

          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 with
other tenants or those having business therein, whether by the use of any
musical instrument, radio, phonograph, or in any other way. Tenant shall not
throw anything out of doors, windows or skylights or down passageways. 

          14.          Tenant
shall not bring into or keep within the Project, the Building or the Premises
any animals, birds, aquariums, or, except in areas designated by Landlord,
bicycles or other vehicles. 

          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, county and city laws, codes, ordinances, rules and
regulations. 

          16.          The
Premises shall not be used for manufacturing or for the storage of merchandise
except as such storage may be incidental to the use of the Premises provided
for in the Summary. Tenant shall not occupy or permit any portion of the
Premises to be occupied as an office for a messenger-type operation or dispatch
office, public stenographer or typist, or for the manufacture or sale of
liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises. 

          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 and agents shall not loiter in or on the entrances, corridors,
sidewalks, lobbies, courts, halls, stairways, elevators, vestibules or any
Common Areas for the 

	
 

	
 

	
 

	
 

	
EXHIBIT
  F – Page 2

	
LAKESHORE
TOWERS BUILDING III
[Quality
Systems, Inc.] 

purpose of
smoking tobacco products or for any other purpose, nor in any way obstruct such
areas, and shall use them only as a means of ingress and egress for the
Premises. 

          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 Irvine, 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.          Any
persons employed by Tenant to do janitorial work shall be subject to the prior
written approval of Landlord, and while in the Building and outside of the
Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons. 

          23.          No
awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and 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 other than Landlord standard drapes. All
electrical ceiling fixtures hung in the Premises or spaces along the perimeter
of the Building must be fluorescent and/or of a quality, type, design and a
warm white bulb color approved in advance in writing by Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the prior written consent of Landlord. 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.          Tenant
must comply with requests by the Landlord concerning the informing of their
employees of items of importance to the Landlord. 

          26.          Tenant
must comply with the State of California “No Smoking” law set forth in
California Labor Code Section 6404.5, and any local “No Smoking” ordinance
which may be in effect from time to time and which is not superseded by such
State law. 

          27.          Tenant
hereby acknowledges that Landlord shall have no obligation to provide guard
service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and security
devices, services and programs which Landlord elects, in its sole discretion,
to provide may not be effective, or may malfunction or be circumvented by an
unauthorized third party, and Tenant shall, in addition to its other insurance
obligations under this Lease, obtain its own insurance coverage to the extent
Tenant desires protection against losses related to such occurrences. Tenant
shall cooperate in any reasonable safety or security program developed by
Landlord or required by law. 

          28.          All
office equipment of any electrical or mechanical nature shall be placed by
Tenant in the Premises in settings approved by Landlord, to absorb or prevent
any vibration, noise and annoyance. 

	
 

	
 

	
 

	
 

	
EXHIBIT
  F – Page 3

	
LAKESHORE
TOWERS BUILDING III
[Quality
Systems, Inc.] 

          29.          Tenant
shall not use in any space or in the public halls of the Building, any hand
trucks except those equipped with rubber tires and rubber side guards. 

          30.          No
auction, liquidation, fire sale, going-out-of-business or bankruptcy sale shall
be conducted in the Premises without the prior written consent of Landlord. 

          31.          No
tenant shall use or permit the use of any portion of the Premises for living
quarters, sleeping apartments or lodging rooms. 

          32.          Tenant
shall have the exclusive right to use its reserved parking spaces, if any, from
8:00 A.M. to 6:00 P.M. Monday through Friday. 

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. 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. 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. 

	
 

	
 

	
 

	
 

	
EXHIBIT
  F – Page 4

	
LAKESHORE
TOWERS BUILDING III
[Quality
Systems, Inc.] 

EXHIBIT G

LAKESHORE TOWERS

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 ______________, _______________,
California ____________, 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, the Lease
Term commenced on __________, and the Lease Term expires on ___________, and
the undersigned has no option to terminate or cancel the Lease or to purchase
all or any part of the Premises, the Building and/or the Project.

          3.          Base
Rent became payable on ____________.

          4.          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.

          5.          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:

          6.          Tenant
shall not modify the documents contained in Exhibit A without the prior written
consent of Landlord’s mortgagee.

          7.          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 $_____________________.

          8.          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. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.

          9.          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.

          10.         As
of the date hereof, there are no existing defenses or offsets, or, to the
undersigned’s knowledge, claims or any basis for a claim, that the undersigned
has against Landlord.

          11.         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 to execute and deliver this Estoppel Certificate
and that each person signing on behalf of Tenant is authorized to do so.

          12.         There
are no actions pending against the undersigned under the bankruptcy or similar
laws of the United States or any state.

          13.         Other
than in compliance with all applicable laws and incidental to the ordinary
course of the use of the Premises, the undersigned has not used or stored any
hazardous substances in the Premises.

          14.         To
the undersigned’s knowledge, all tenant improvement work to be performed by
Landlord under the Lease has been completed in accordance with the Lease and
has been accepted by the undersigned and all reimbursements and allowances due
to the undersigned under the Lease in connection with any tenant improvement
work have been paid in full.

	
 

	
 

	
 

	
LAKESHORE
TOWERS BUILDING III 

	
EXHIBIT
 G – Page 1

	
[Quality
Systems, Inc.]  

          The
undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or 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 such loan or acquiring such property. 

Executed at
______________ on the ____ day of ___________, ______. 

	
 

	
 

	
 

	
 

	
 

	
 

	
“Tenant”:  

	
 

	
_____________________________ ,

	
 

	
a ____________________________

	
 

	
 

	
By: 

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	

	
 

	
 

	
By: 

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
EXHIBIT
  G – Page 2

	
LAKESHORE
TOWERS BUILDING III
[Quality
Systems, Inc.]

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