EXHIBIT 10.17
AMENDED AND RESTATED
SECOND AMENDMENT TO OFFICE LEASE
This
Amended and Restated Second Amendment to Office Lease (this “
Amendment ”) is executed as of May 31, 2006. between
HUB PROPERTIES LLC , a Massachusetts limited liability
company having an address c/o Reit Management & Research LLC,
400 Centre Street, Newton, Massachusetts 02458 (“
Landlord ”), and QUALITY SYSTEMS, INC., a
California corporation having an address at 18191 Von Karman
Avenue, #420, Irvine, CA 92612, Attention: Chief Financial Office
(“ Tenant ”).
RECITALS
Landlord
and Tenant entered into that certain Office Lease dated May 8,
2002, as amended by that certain Expansion and Extension Amendment
to Office Lease dated October 8, 2004 and as may be further amended
from time to time (collectively, the “ Lease ”)
pursuant to which Tenant is currently leasing 46,357 Rentable
Square Feet (based on a remeasurement of the space which Tenant
agrees is accurate) of space in the Building (as more particularly
described in the Lease, the “Original Premises and
Expansion Premises ”).
Landlord
and Tenant entered into that certain Second Amendment to Office
Lease dated February 14, 2006 (the “Second Amendment”)
pursuant to which Tenant has agreed to lease an additional 22,333
Rentable Square Feet of space on the (1 st ) floor of
the Building and (ii) extended the Term for a period of sixty (60)
calendar months.
Prior
to completion of the Additional Expansion Work (as defined in the
Second Amendment), Tenant notified Landlord that Tenant desired to
expand the Additional Expansion Premises (as defined in the Second
Amendment).
Landlord
and Tenant desire to amend and restate the Second Amendment and
Landlord desires to lease additional space to Tenant on the terms
and conditions contained herein.
Capitalized
terms used herein but not defined shall be given the meanings
assigned to them in the Lease.
AGREEMENTS
For
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant, intending to be legally
bound, agree as follows:
1.
Recitals . The foregoing recitals are hereby
incorporated into the body of this Amendment as if they were set
forth in full herein.
2.
Amendment . This Amendment amends, restates and
supersedes the Second Amendment.
3.
Additional Expansion Premises; Use; Tenant’s Tax Share
and Tenant’s Expense Share . As of the Additional
Expansion Premises Commencement Date (as
hereinafter
defined), Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, 25,230 Rentable Square Feet of Space (the
“ Additional Expansion Premises ”) located on
the 1 st floor of the Building, shown on the schematic
plans prepared by Space Design Incorporated, drawings A l.1, A l.2,
A2.1 A2.2, A3.1, A3.2, A4.1, A4.2, and Dl .2, dated March 27, 2006
and drawing Dl .1 dated January 3, 2005 (collectively, the “
Additional Expansion Schematic Plan ”), on the terms
and conditions of the Lease, as amended hereby, which Additional
Expansion Premises, or any part thereof, Tenant shall not use or
occupy, or permit or suffer to be used or occupied, other than for
the Permitted Use. From and after the Additional Expansion Premises
Commencement Date, the term “ Premises ” shall
refer collectively to the Original Premises and Expansion Premises
and the Additional Expansion Premises, and both Tenant’s Tax
Share and Tenant’s Expense Share shall be increased to
65.0791%, which is the ratio of the Rentable Area of the Original
Premises and Expansion Premises, the Additional Expansion Premises
(71,587 Rentable Square Feet) to the total Rentable Area of the
Building (110,000 Rentable Square Feet). Landlord and Tenant
stipulate that the aggregate Rentable Square Feet in the Original
Premises and the Expansion Premises, the Additional Expansion
Premises is 71,587 Rentable Square Feet and the aggregate Rentable
Square Feet in the Building is 110,000 Rentable Square
Feet.
4.
Conference Center; Use; Tenant’s Tax Share and
Tenant’s Expense Share . As of the Conference Center
Commencement Date (as hereinafter defined), Landlord hereby leases
to Tenant, and Tenant hereby leases from Landlord, 6,245 Rentable
Square Feet of Space (the“ Conference Center ”)
located on the 1 st floor of the Building, shown on the
schematic plan prepared by Space Design Incorporated, dated April
12, 2006, drawings Al, A2, and A3 (the “ Conference Center
Schematic ”), on the terms and conditions of the Lease,
as amended hereby, which Conference Center, or any part thereof,
Tenant shall not use or occupy, or permit or suffer to be used or
occupied, other than for the Permitted Use. From and after the
Conference Center Commencement Date, the term “
Premises ” shall refer collectively to the Original
Premises and Expansion Premises, the Additional Expansion Premises
and the Conference Center, and both Tenant’s Tax Share and
Tenant’s Expense Share shall be increased to 70.7564%, which
is the ratio of the Rentable Area of the Original Premises and
Expansion Premises, the Additional Expansion Premises and the
Conference Center (77,832 Rentable Square Feet) to the total
Rentable Area of the Building (110,000 Rentable Square Feet).
Landlord and Tenant stipulate that the aggregate Rentable Square
Feet in the Original Premises and the Expansion Premises, the
Additional Expansion Premises and the Conference Center is 77,832
Rentable Square Feet and the aggregate Rentable Square Feet in the
Building is 110,000 Rentable Square Feet. Landlord and Tenant
acknowledge and agree that if the Additional Expansion Premises
Commencement Date and the Conference Center Commencement Date
occurs on the same date, Tenant’s Tax Share and
Tenant’s Expense Share shall be calculated as provided in
this Section 4.
5.
Additional Expansion and Conference Center Work
.
(a)
Additional Expansion Work . Landlord shall construct
within the Additional Expansion Premises, at Landlord’s
expense (subject to Tenant’s obligation to pay certain excess
costs under Section 5(i)), those certain improvements depicted on
the Additional Expansion Schematic Plan. Landlord and Tenant hereby
approve the Additional Expansion Schematic Plan. All work agreed to
be performed by Landlord pursuant to this Section 5(a) (including
all materials, supplies, components, labor and services required
therefor) is herein referred to as the “ Additional
Expansion Work ”).
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(b)
Conference Center Work . Landlord shall construct
within the Conference Center, at Landlord’s expense (subject
to Tenant’s obligation to pay certain excess costs under
Section 5(i)), those certain improvements depicted on the
Conference Center Schematic Plan. Landlord and Tenant hereby
approve the Conference Center Schematic Plan. All work agreed to be
performed by Landlord pursuant to this Section 5(b) (including all
materials, supplies, components, labor and services required
therefor) is herein referred to as the “ Conference Center
Work ”; the Additional Expansion Work and the Conference
Center Work are herein collectively referred to as the “
Work ”).
(c)
Tenant’s Expansion Representative .
Tenant hereby designates Bob Ellis as the “ Tenant’s
Expansion Representative ,” who Tenant agrees shall be
available to meet and consult with Landlord on a continuing basis
at the Building as Tenant’s representative concerning the
matters which are the subject of this Section 5 and who, as between
Landlord and Tenant, shall have the power legally to bind Tenant in
giving direction to Landlord respecting the Expansion Construction
Documents (as defined in Section 5(d)(i)) and the Work, in giving
approvals of design documents and work, and in making requests and
approval for changes.
(d)
Preparation, Review and Approval of Expansion Construction
Documents.
(i)
Expansion Construction Documents . Landlord, at
Tenant’s expense, shall cause to be prepared construction
documents consistent with the Additional Expansion Schematic Plan
and Landlord, at Landlord’s cost, shall cause to be prepared
construction documents consistent with the Conference Center
Schematic Plan (collectively, “ Expansion Construction
Documents ”), to be approved by Tenant pursuant to
Section 5(d)(ii). The Expansion Construction Documents shall be
signed and sealed by a reputable architect or professional engineer
(where applicable) licensed and registered in the Commonwealth of
Pennsylvania and shall contain, at a minimum, floor plans,
reflected ceiling plans, power and telephone plans, mechanical
plans, electrical plans, fire protection plans and all other
details and schedules which designate the locations and
specifications for all mechanical, electrical, fire protection and
life safety equipment to be installed in the Additional Expansion
Premises and the Conference Center, and all partitions, doors,
lighting fixtures, electric receptacles and switches, telephone
outlets, special air conditioning and other improvements to be
installed within the Additional Expansion Premises and Conference
Center. Landlord, at its sole option, may prepare separate
Expansion Construction Documents for the Additional Expansion
Premises and the Conference Center.
(ii)
Tenant Approval . Landlord shall submit for
Tenant’s approval the Expansion Construction Documents for
the Additional Expansion Premises and the Conference Center (which
submission by Landlord and subsequent approval or comments by
Tenant may occur separately), in accordance with the following
procedural requirements:
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(A)
Tenant shall review each draft of the Expansion Construction
Documents received from Landlord, and either (a) approve the same
or (b) return the same to Landlord with a written notice detailing
only those requested modifications which are required in order to
correct material deviations from the Additional Expansion Schematic
Plan and/or the Conference Center Schematic Plan, in either event
within five (5) business days after receipt thereof from Landlord.
Any other
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changes to
the Expansion Construction Documents desired by Tenant shall be
requested under
Section 5(i).
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(B) If
Tenant shall return the Expansion Construction Documents to
Landlord in timely fashion with written requested modifications,
Landlord shall, subject to Section 5(d)(ii)(D), revise the
Expansion Construction Documents within a reasonable period of time
and resubmit same to Tenant for approval pursuant to Section
5(d)(ii)(A), until the Expansion Construction Documents are
approved.
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(C) The
Expansion Construction Documents shall be deemed approved by Tenant
upon the first to occur of (i) Landlord’s receipt of
Tenant’s written notice approving same, or (ii)
Tenant’s failure to deliver written notice to Landlord either
approving or suggesting modifications of the Expansion Construction
Documents of the sort permitted under Section 5(d)(ii)(A), within
the time required under Section 5(d)(ii)(A), or (iii) if all of
Tenant’s requested modifications of the Expansion
Construction Documents are disapproved by Landlord pursuant to
Section 5(d)(ii)(D).
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(D) Landlord
shall not unreasonably disapprove modifications of the Expansion
Construction Documents requested by Tenant pursuant to Section
5(d)(ii)(A). Without limiting the generality of the foregoing,
Tenant acknowledges that it shall be reasonable for Landlord to
disapprove modifications requested by Tenant under this Section
5(d)(ii) because the work detailed in the proposed modification is
inconsistent with the work contemplated in the Additional Expansion
Schematic Plan or the Conference Center Schematic Plan, or because
the work detailed in the proposed modification; (a) is likely to
adversely affect Building systems, the structure of the Building or
the safety of the Building and/or its occupants; (b) might impair
Landlord’s ability to furnish services to Tenant or other
tenants in the Building; (c) would materially increase the cost of
operating the Building; (d) would violate any governmental laws,
rules or ordinances (or interpretation thereof); (e) contains or
uses hazardous or toxic materials or substances; (f) would
adversely affect the appearance of the Building; (g) might
adversely affect another tenant’s premises; (h) is prohibited
by a ground lease affecting the Building or any mortgage, trust
deed or other instrument encumbering the Building; or (i) is likely
to be substantially delayed because of unavailability or shortage
of labor or materials necessary to perform such work or the
difficulties or unusual nature of such work. The foregoing reasons,
however, shall not be the only reasons for which Landlord may
withhold its approval whether or not such other reasons are similar
or dissimilar to the foregoing. Neither the preparation by or for
Landlord of the Additional Expansion Schematic Plan, the Conference
Center Schematic Plan or the Expansion Construction Documents, nor
Landlord’s performance, supervision or monitoring of the
construction of the Work, shall constitute any warranty by Landlord
to Tenant of the adequacy of the design for Tenant’s intended
use of the Additional Expansion Premises or Conference
Center.
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(e)
Tenant Delays . Each of the following shall
constitute a “ Tenant Delay ” under this
Amendment:
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(i) Failure
of Tenant to have given Landlord written notice approving the
Expansion Construction Documents within five (5) business days
after receipt of each set of Expansion Construction Documents from
Landlord.
(ii) Any
changes to the Expansion Construction Documents requested by Tenant
following Tenant’s approval or deemed approval of such
documents, or any Additional Work to the Expansion Premises (as
defined in Section 5(i)) requested by Tenant, provided that if
Tenant’s request for Additional Work to the Expansion
Premises is specifically conditioned upon its approval of
Landlord’s estimate of such delay, Landlord shall promptly
notify Tenant of Landlord’s good-faith estimate of the
anticipated delay, and the Additional Work to the Expansion
Premises shall not be constructed unless Tenant shall have approved
such estimated delay within five (5) business days after receipt of
such estimates.
(iii) Delays
in furnishing materials, services, supplies, labor or components
that Tenant has requested be specified or required in the Expansion
Construction Documents; provided, that if Landlord anticipates that
any such item specified by Tenant will result in Tenant Delay,
Landlord shall promptly notify Tenant of Landlord’s
good-faith estimate of the anticipated delay, and the items
specified by Tenant shall not be incorporated in the Expansion
Construction Documents unless Tenant shall have approved such
estimated delay within five (5) business days after receipt of such
estimate.
(iv)
Delays caused by the performance of or
failure to perform any work or any activity in the Additional
Expansion Premises and/or the Conference Center by Tenant or any of
its employees, agents, or contractors.
(v)
Delays caused by any fault of Tenant or its agents, employees or
contractors, including, without limitation, its designers and
consultants.
(f)
Substitutions and Changes . In constructing the Work,
Landlord reserves the right (a) to make substitutions of material
or components of equivalent grade and quality when and if any
specified material or component shall not be readily or reasonably
available, and (b) to make changes to the work necessitated by
conditions met in the course of construction, provided that if
Landlord reasonably believes any change is material and substantial
in nature, then Tenant’s approval of such change shall first
be obtained (which approval shall not be unreasonably withheld so
long as there shall be general conformity with the Expansion
Construction Documents and shall be deemed given unless withheld in
writing within five (5) days following Landlord’s request
therefor).
(g)
Landlord’s Contractor . The Work is to be
performed by Landlord’s contractor, which shall be selected
by Landlord.
(h)
Tenant’s Expansion
Representative’s Access, Inspection, and
Approval .
(i)
Landlord, upon
reasonable notice, shall afford Tenant and Tenant’s Expansion
Representative or agent(s) access to the Additional Expansion
Premises and Conference Center, at reasonable times during the
course of construction and at Tenant’s sole risk and expense,
for the purposes of inspecting work completed or in progress, and
of taking field measurements.
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(ii) As
to all Work performed by or on behalf of Landlord and not objected
to by Tenant in accordance with this Section 5, it shall be
conclusively deemed on the Substantial Completion Date for the
Additional Expansion Premises or the Substantial Completion Date
for the Conference Center, as applicable, that such work was
satisfactorily performed in accordance with and meets the
requirements of this Amendment; provided, however, that the
foregoing presumption shall not apply: (i) to latent defects in
such work which could not reasonably have been discovered by the
Substantial Completion Date for the Additional Expansion Premises
or the Substantial Completion Date for the Conference Center Work,
as applicable, provided Tenant notifies Landlord thereof within
sixty (60) days after such date, or (ii) to defects discoverable by
a visual inspection or by ordinary use of the Additional Expansion
Premise or the Conference Center for the purpose for which each
space is leased in this Amendment, provided Tenant notifies
Landlord thereof within sixty (60) days after the Substantial
Completion Date for the Additional Expansion Premises or the
Substantial Completion Date for the Conference Center, as
applicable. As to any item of Work remaining to be completed
hereunder after the Substantial Completion Date for the Additional
Expansion Premises or the Substantial Completion Date for the
Conference Center, as applicable, the parties shall jointly prepare
a punch-list on or about such dates, and Landlord shall complete
such items within sixty (60) days thereafter (except for items
which cannot reasonably be completed within such sixty (60) day
period, which items shall be completed as promptly as practicable
using diligent efforts thereafter).
(i)
Additional Work to the Expansion Premises . Upon
Tenant’s written request and submission by Tenant (at
Tenant’s sole cost and expense) of the necessary information
and/or plans and specifications for work other than the work
described in the approved Additional Expansion Schematic Plan and
the Conference Center Schematic Plan (and the Expansion
Construction Documents prepared consistent therewith) (“
Additional Work to the Expansion Premises ”) and the
approval by Landlord of such Additional Work to the Expansion
Premises which approval Landlord agrees shall not be unreasonably
withheld, Landlord shall perform such Additional Work to the
Expansion Premises, at Tenant’s sole cost and expense,
subject, however, to the following provisions of this Paragraph
(i). Prior to commencing any Additional Work to the Expansion
Premises requested by Tenant, Landlord shall submit to Tenant a
written statement of the cost of such Additional Work to the
Expansion Premises, and an additional charge payable to Landlord in
the amount of five percent (5%) of the total cost of the Additional
Work to the Expansion Premises as compensation for Landlord’s
general conditions (such fee and additional charge being
hereinafter referred to collectively as “ Landlord’s
Expansion Compensation ”) and, concurrently with such
statement of cost, Landlord shall also submit to Tenant a proposed
tenant extra order (the “ Expansion TEO ”) for
the Additional Work to the Expansion Premises in the standard form
then in use by Landlord. Tenant shall execute and deliver to
Landlord such Expansion TEO and shall pay to Landlord the entire
cost of the Additional Work to the Expansion Premises, including
Landlord’s Expansion Compensation (as reflected in
Landlord’s statement of such cost), within five (5) days
after Landlord’s submission of such statement and Expansion
TEO to Tenant. If Tenant fails to execute or deliver such Expansion
TEO or pay the entire cost of such Additional Work to the Expansion
Premises within such 5-day period, then Landlord shall not be
obligated to do any of the Additional Work to the Expansion
Premises and may proceed to do only the Additional Expansion Work,
as specified in the approved Expansion Construction
Documents.
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(j)
Tenant’s Contractors . During the Term of the
Lease, as amended hereby, in making any alterations and
improvements or performing any other work of any kind within the
Additional Expansion Premises and the Conference Center through the
services of any contractor or contractors, the following conditions
shall be fulfilled, and Tenant, by undertaking to have such work
performed by its contractor or contractors, shall be deemed to have
agreed to cause such conditions to be fulfilled:
(i) Prior
to commencing any such work, Tenant shall (a) furnish Landlord with
a written description of the proposed work and reasonably detailed
plans and specifications therefor and (b) obtain the approval of
Landlord, in writing, for the specific work it proposes to perform
and all such plans and specifications.
(ii) The
work shall be performed at Tenant’s expense by responsible
contractors and subcontractors approved in advance by Landlord, who
shall not in Landlord’s sole opinion, and who in fact do not,
prejudice Landlord’s relationship with Landlord’s
contractors or subcontractors or the relationship between such
contractors and their subcontractors or employees, or disturb
harmonious labor relations. Tenant’s contractors and
subcontractors shall comply with all insurance requirements and
undertakings set forth in Exhibit D attached to the Lease, as the
same may be changed by written notice from Landlord to Tenant from
time to time during the Term.
(iii)
Each of such contractors
being paid $5,000.00 or more shall, prior to the commencement of
their work and not later than ten (10) days after the execution of
their respective contracts, file waivers of mechanic’s liens
in the appropriate public office, which waivers shall be effective
to preclude the filing of any mechanic’s liens on account of
the work to be performed by any of Tenant’s contractors,
subcontractors or materialmen.
(iv) No
such work shall be performed in such manner or at such times as to
interfere with any work being done by any of Landlord’s
contractors or subcontractors in the Additional Expansion
Prem