Document:

EX-10.25

Exhibit
10.35

NET LEASE AGREEMENT

Between

BED BATH & BEYOND INC.

as Landlord

and

BREEZE-EASTERN CORPORATION

as Tenant

Dated as
of February
8th, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Article 1.
	 	BASIC LEASE PROVISIONS	 	 	1	 
	Article 2.
	 	LEASE	 	 	3	 
	Article 3.
	 	TERM	 	 	3	 
	Article 4.
	 	NET RENT 	 	 	4	 
	Article 5.
	 	REAL ESTATE TAXES 	 	 	5	 
	Article 6.
	 	INSURANCE 	 	 	6	 
	Article 7.
	 	ELECTRIC, WATER AND SEWER FEES 	 	 	7	 
	Article 8.
	 	CARE, MAINTENANCE AND ALTERATIONS OF PREMISES 	 	 	8	 
	Article 9.
	 	REPAIR AND MAINTENANCE 	 	 	9	 
	Article 10.
	 	ASSIGNMENT AND SUBLETTING	 	 	11	 
	Article 11.
	 	COMPLIANCE WITH LAWS, RULES AND REGULATIONS	 	 	12	 
	Article 12.
	 	PERMITTED USE AND ENVIRONMENTAL MATTERS 	 	 	13	 
	Article 13.
	 	DAMAGE AND DESTRUCTION 	 	 	18	 
	Article 14.
	 	EMINENT DOMAIN 	 	 	19	 
	Article 15.
	 	INSOLVENCY OF TENANT 	 	 	19	 
	Article 16.
	 	LANDLORD’S REMEDIES ON DEFAULT	 	 	20	 
	Article 17.
	 	DEFICIENCY 	 	 	20	 
	Article 18.
	 	ATTORNMENT	 	 	21	 
	Article 19.
	 	RIGHT TO CURE TENANT’S BREACH 	 	 	21	 
	Article 20.
	 	CONSTRUCTION LIENS	 	 	21	 
	Article 21.
	 	RIGHT TO INSPECT AND REPAIR	 	 	21	 
	Article 22.
	 	INTERRUPTION OF SERVICES OR USE 	 	 	22	 
	Article 23.
	 	ESTOPPEL	 	 	22	 
	Article 24.
	 	HOLDOVER TENANCY 	 	 	22	 
	Article 25.
	 	RIGHT TO SHOW PREMISES 	 	 	23	 
	Article 26.
	 	LATE CHARGE 	 	 	23	 
	Article 27.
	 	NO OTHER REPRESENTATIONS 	 	 	23	 
	Article 28.
	 	QUIET ENJOYMENT	 	 	23	 
	Article 29.
	 	INDEMNITY	 	 	23	 
	Article 30.
	 	ARTICLE HEADINGS 	 	 	23	 
	Article 31.
	 	APPLICABILITY TO HEIRS AND ASSIGNS 	 	 	23	 
	Article 32.
	 	WAIVER OF TRIAL BY JURY 	 	 	24	 
	Article 33.
	 	LANDLORD’S LIABILITY FOR LOSS OF PROPERTY 	 	 	24	 
	Article 34.
	 	PARTIAL INVALIDITY 	 	 	24	 
	Article 35.
	 	BROKER 	 	 	24	 
	Article 36.
	 	PERSONAL LIABILITY 	 	 	24	 
	Article 37.
	 	FORCE MAJEURE	 	 	25	 
	Article 38.
	 	NOTICES 	 	 	25	 
	Article 39.
	 	NO WAIVER	 	 	25	 
	Article 40.
	 	WRITING REQUIRED 	 	 	26	 
	Article 41.
	 	COMPLETE AGREEMENT 	 	 	26	 
	Article 42.
	 	SIGNS 	 	 	26	 
	Article 43.
	 	NO RECORDATION 	 	 	26	 
	Article 44.
	 	VALIDITY 	 	 	26	 
	Article 45.
	 	MISCELLANEOUS 	 	 	26	 

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THIS NET LEASE AGREEMENT, made as of February ___, 2008 between
BED BATH & BEYOND INC., a New York corporation having its principal
place of business at 650 Liberty Avenue, Union, NJ 07083

(referred to as “Landlord”)

And

BREEZE-EASTERN CORPORATION, with an address at 700 Liberty Avenue,
Union, New Jersey 07083-8198

(referred to as “Tenant”).

WITNESSETH: 

     Landlord, for and in consideration of the rents, covenants and agreements
hereinafter
reserved and contained on the part of Tenant to be paid, kept and
performed, does hereby lease to
Tenant, and Tenant does hereby hire from Landlord, the entire premises
including the land (the
“Land”) as more particularly described on Exhibit A attached hereto and
made a part hereof, and
building, together with all fixtures, equipment, improvements and
installations attached thereto
and improvements erected thereon (the “Building”) known as 700 Liberty
Avenue, Union
Township, Union County, New Jersey and a tax map reference of Lot 1.01,
Block 3503 on the tax
map of Union Township, together with all other improvements now or
hereafter located thereon,
and the parking areas immediately adjacent to the Building with unimpeded
ingress and egress to
the Building and parking areas, together with all and singular the
appurtenances, rights,
privileges and easements in anywise pertaining thereto: and together with
all the right, title and
interest, if any, of Landlord in and to any adjoining sidewalk, and in
and to any adjoining street
or alley to the center line thereon upon and subject to those terms,
covenants and conditions herein,
together with the right to use all appurtenances, rights, privileges and
easements now or hereafter
benefiting the Land or the land upon which the Building is situated. All
of the aforementioned
Land, Building, improvements, rights and easements are hereinafter
collectively called the
“Premises”.

     The use and occupancy by Tenant of the Premises are subject to (a) all
zoning ordinances
and regulations now or hereafter in force of any public authority or
governmental agency or
department having jurisdiction, and (b) all existing encumbrances,
conditions, rights, covenants,
restrictions and rights of way affecting the Premises or the land upon
which the Premises is
situated.

     To have and to hold the Premises for the term and at the rents and upon
the terms, covenants and conditions hereinafter provided:

     Article 1. BASIC LEASE PROVISIONS. As further supplemented in the balance
of this Lease and the preamble to this Lease, this Article 1 sets forth
the basic terms of the Lease and, where appropriate, defines certain terms used
in this Lease.

 

 

          (a) Premises: subject to the provisions of Article 2, the Premises consists of
the Land and Building located at 700 Liberty Avenue, Union Township, Union County, New Jersey 07083.

          (b) Tenant’s Address: 700 Liberty Avenue, Union, New Jersey 07083.

          (c) Landlord’s Address (for notices): 650 Liberty Avenue, Union, New Jersey 07083.

          (d) Lease Term: Twenty-four months.

          (e) Commencement Date: The date hereof.

          (f) Expiration Date: The last day of the twenty-fourth (24th) full calendar month after the Commencement Date.

          (g) Net Rent: As provided in Article 4.

          (h) Payee of Rent: Landlord.

          (i) Address for Payment of Rent: 650 Liberty Avenue, Union, New Jersey 07083. Attention: Jeff Cohen.

          (j) Description of Premises: the Land and Buildings at the Premises
containing about 1,76,600 gross square feet of space consisting of a two story office building (the
“Office Building”) and a one story assembly plant and warehouse (the “Assembly Plant”.)

          (k) Security Deposit: NONE.

          (l) Tenant’s Use (set forth with specificity): assembly, warehousing and
administrative offices in connection aircraft hoists, parts and related products and
all lawful uses ancillary thereto.

          (m) Broker: None.

          (n) Tenant’s North American Industry Classification System Code (NAICS Code): 336413.

          (o) Payable upon execution:

               (i) First Month’s Net Monthly Rent of $81,824.67 prorated for the
number of days in the first calendar month.

               (ii) Security Deposit in the amount of $ NONE.

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          (p) Landlord’s Work. None.

          (q) Tenant’s Work: None.

     Article 2. LEASE.

          (a) Landlord, for and in consideration of the rents herein reserved and of the
covenants and agreements herein contained on the part of the Tenant to be
performed, hereby leases to the Tenant, and the Tenant accepts from the
Landlord, the Premises.

          (b) Tenant and Landlord acknowledge and agree that, (i) on or before the one
(1) year anniversary of the Commencement Date, Tenant shall vacate and
surrender to Landlord approximately ten thousand (10,000) contiguous square
feet of floor area in the rear of the Assembly Plant and parking spaces for
sixty (60) cars in the parking lot located at the Premises (the “Surrender
Space”); (ii) Landlord and Tenant shall work together in good faith to mutually
agree upon the space to be so vacated and surrendered by Tenant and the
effective date of the surrender, and (iii) as of the date Tenant vacates and
surrenders the Surrender Space to Landlord (the “Surrender Date”), the
Premises shall no longer include the Surrender Space. Such Surrender Space
shall have its own entrance from the parking area and Landlord will be
responsible for the costs and expenses of a demising wall and all improvements
in the Surrender Space. As of the Surrender Date, the Net Rent payable by
Tenant hereunder shall be reduced (using the per square foot annual rate in
Article 4(a)) to reflect the Surrender Space is no longer occupied by the
Tenant and, subject to Landlord’s architect certifying the actual gross square
footage of the Surrender Space, Tenant’s Additional Rent and other financial
adjustments including Landlord’s pro rata share of the Real Estate Taxes, insurance and common area
maintenance costs shall be equitably determined. The Landlord shall reimburse
(or give Tenant a credit) or pay directly its pro rata share of Real Estate
Taxes, insurance, costs for maintenance and repair of the common areas of the
Premises and for all utility costs for the Surrender Space.
Common area maintenance and repair costs shall include all maintenance and
repair of the parking lot, exterior of the Assembly Plant, Assembly
Plant roof,
snow plowing, landscaping and similar items. Landlord will carry insurance on
its contents and leasehold improvements in the Surrender Space. Any Real Estate
Taxes resulting form an additional tax assessment due to the construction of
the Surrender Space shall be allocated entirely to the Landlord.

     Article 3. TERM.

          (a) A period of time commencing as of the Commencement Date, and unless
sooner terminated as herein provided, ending at noon on Expiration Date.
Tenant shall have the right at any time following the twelve (12) month
anniversary of the Commencement Date to terminate this Lease (the “Early
Termination Option”). The Early Termination Option shall be exercisable by
Tenant giving Landlord at least sixty (60) days’ notice of its intent to
terminate this Lease as of the date specified in said notice. In the event
Tenant elects to exercise the Early Termination Option, this Lease shall
terminate on the date set forth in Tenant’s notice to Landlord as if such date
were the Expiration Date hereunder and thereafter neither party shall have any
further obligation or liability to the other except to the extent such
obligation or liability would survive the Expiration Date originally set forth
herein, including, but not limited to, those obligations and liabilities of
Tenant set forth in Article 12.

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          (b) Tenant has certain service contracts in place which are listed on Exhibit C
attached hereto. Tenant will terminate all such service contracts unless
Landlord elects to assume one or more of such contracts by giving written
notice to the Tenant at least forty five (45) days prior to the Expiration
Date or earlier expiration if Tenant exercises the early termination option
(the “Early Expiration Date.”) If Landlord so elects, on or prior to the
Expiration Date or Early Expiration Date the Tenant will assign and Landlord
will assume those service contracts that Landlord has elected to assume. Any
service contracts that Landlord does not elect to assume will be terminated by
Tenant at Tenant’s cost and expense, if any. Notwithstanding the foregoing,
the Tenant retains the right to terminate any service contract on Exhibit C if
Tenant decides the vendor is no longer performing satisfactorily or the cost
is more than available elsewhere for comparable services. To the extent Tenant
is required to have a service contract by the terms of this Lease, any
terminated service contract will be replaced by a new vendor selected by
Tenant.

     Article 4. NET RENT.

          (a) The Tenant shall pay to the Landlord at the Landlord’s Address (or at such
other place as the Landlord may designate in writing from time to time),
without offset or deduction, beginning on the date hereof and, thereafter, on
the first day of each and every calendar month during the Lease Term, the sum
of Eighty One Thousand Eight Hundred Twenty Four and 67/100 DOLLARS
($81,824.67) (the “Monthly Net Rent”) which is calculated on the basis of
$5.56 per square foot per annum. The Monthly Net Rent is referred to as “Net
Rent” herein. If the Term commences or ends during the middle of a calendar
month, the Monthly Net Rent for such partial monthly period shall be adjusted
on a per diem basis by dividing the Monthly Net Rent by the number of days in
the month and multiplying the result by the number of days that the Tenant has
occupancy of the Premises during such month. Landlord and Tenant acknowledge
and agree that Tenant shall have no obligation to pay Net Rent on any portion
of the Premises that have been surrendered to Landlord pursuant to the
provisions of Article 2, therefore, the Net Rent payable with respect to any
month during the Term following the date Tenant vacates and surrenders the
Surrender Space to Landlord will be calculated based on the actual square
footage of the Building occupied by Tenant as of the first day of such month.

          (b) All charges, costs and sums required to be paid by Tenant to Landlord or
third parties for the benefit of the Premises under this Lease in addition
to Net Rent shall be deemed “Additional Rent,” and Net Rent and Additional Rent
shall hereinafter collectively be referred to as “Rent.” Tenant’s covenant to
pay Rent shall be independent of every other covenant in this Lease.

          (c) Monthly Net Rent and any Additional Rent due the Landlord are payable on
the first day of every calendar month in advance without notice, demand,
setoff, counterclaim or deduction of any kind except as provided in this Lease.
Additional Rent payable to third parties for the benefit of the Premises is due
when such obligation is payable to such third party without the benefit of any
grace period or late period.

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          (d) This is intended to be a “triple net lease” with the Net Rent
payable to the
Landlord, and the Tenant is also obligated to pay Real Estate Taxes (hereinafter defined)
as
hereinafter provided, and all charges and expenses incurred for the
maintenance, and repair of the non-structural portions of the Premises,
insurance, operating expenses for utilities, services, trash removal, and all
other costs of operating the Premises as specified elsewhere in this Lease
which costs shall be paid directly by Tenant or as Additional Rent excluding
only the mortgage debts, land lease rents or other encumbrances on the Premises
created by the Landlord. Subject to the specific provisions set forth in
Article 8, it is the intention of the parties that the Tenant shall pay all the
foregoing costs, expenses, repairs, maintenance, and operating costs during the
term hereof no matter when such costs and expenses are incurred during the Term
except for such costs and expenses which are expressly the obligation of the
Landlord under this Lease. If Landlord pays any of such expenses, the Landlord
shall bill Tenant for such expenses and Tenant shall pay Landlord such expenses
as Additional Rent.

          (e) For all Additional Rent expenses, other than Real Estate Taxes
(hereinafter
defined) on the Premises, the Landlord agrees that the Tenant may pay such
expenses directly to the
vendor providing such services so long as Tenant is not in default under this
Lease, Tenant provides
evidence of payment of any expenses if Landlord requests evidence of payment
and Tenant shall
promptly provide to Landlord duplicate copies of the service contract on the
heating and air
conditioning systems and sprinkler inspection agreement upon Landlord’s
written request. All
Additional Rent which is not due and payable on a monthly basis during the
Term, unless otherwise
specified herein, shall be due and payable, (i) if payable to a third party,
within the time permitted
for payment without interest, penalty or default, (ii) if payable to Landlord
without specific payment
terms set forth herein, within twenty (20) days of delivery by Landlord to
Tenant of notice to pay
the same, and (iii) if payable to Landlord in a specific time or manner set
forth herein, in accordance
therewith.

     Article 5. REAL ESTATE TAXES.

          (a) As Additional Rent, Tenant shall reimburse Landlord the amount of the Real
Estate Taxes applicable to the Premises during the term of this Lease. As
used herein Real Estate
Taxes shall mean the taxes and assessments now or hereafter imposed upon
the Premises. If, due to
a change in the method of taxation or assessment, any franchise, income,
profit or other tax,
however designated, shall be substituted by the applicable taxing
authority in whole or in part, for
the Real Estate Taxes now or hereafter imposed on the Premises, such
franchise, income, profit or
other tax shall be deemed to be included in the term “Real Estate Taxes”
to the extent of such
substitution.

          (b) Landlord shall provide Tenant with a copy of each invoice for Real Estate
Taxes received by Landlord within thirty (30) days after Landlord receives
same. Tenant shall pay
to Landlord the amount of each payment of Real Estate Taxes no less than thirty
(30) days before
the due date for same. If Tenant shall pay such payment of Real Estate Taxes to
Landlord at least
thirty (30) days in advance of the due date of any payment, then Landlord shall
make the payment
of Real Estate Taxes before any interest or penalty is imposed for late payment
and shall, upon

5

 

receipt of proof of payment, provide Tenant with a copy of same. If Landlord
shall not receive a payment of Real Estate Taxes at least thirty (30) days
before its due date, then, in addition to the other rights and remedies
available to Landlord as a result of such failure, Landlord shall have the
right to either (A) delay the payment of such Real Estate Taxes until the
later of such payment due date set forth above or ten (10) days following the
payment of such amounts to Landlord by Tenant (and if such payment is made by
check, the date of collection of same) in which event, all interest and
penalties imposed shall be paid by Tenant as Additional Rent hereunder; or (B)
pay such Real Estate Taxes from Landlord’s own funds.

          (c) If the Premises are assessed for any special assessments beneficial to
the
Tenant, Tenant shall pay all installments due during the Term of the Lease.
Tenant shall pay
directly all personal property taxes, water and sewer rents, and other
governmental charges relating
to Tenant’s use of the Premises, which may be assessed, levied, confirmed,
imposed upon, or grow
or become due and payable at any time during the term of this Lease (all such
real estate taxes,
assessments and personal property taxes, water and sewer rents, and other
government charges
which are payable by Tenant during the term of this Lease being deemed
“Additional Rent”).

          (d) If Landlord shall receive any real estate tax refund or reimbursement of
Real
Estate Taxes or a sum in lieu thereof (“Tax Refund”) with respect to any year
or portion thereof of
which falls within the Term, then out of any balance remaining of the Tax
Refund, after deducting
Landlord’s expenses in obtaining the same being the actual expenses for legal
fees and experts,
Landlord shall pay to Tenant an amount equal to such Tax Refund (apportioned if
such refund is for
a calendar year a portion of which falls outside the Term); provided that in no
event shall Tenant be
entitled to receive more than the payments by Tenant for such calendar year or
period.

          (e) Nothing herein contained shall require Tenant to pay state or federal income
taxes assessed against Landlord, state or federal capital levy, estate, succession,
inheritance or
transfer taxes of Landlord.

     Article 6. INSURANCE.

          (a) Tenant shall continue to maintain on the Premises, together with its own
policy of general liability insurance, the insurance coverage set forth on
Exhibit B attached hereto. Such policy shall provide that it shall not be
cancelable except on thirty (30) days prior written notice to the Landlord. The
Landlord and its mortgagee (provided Landlord has provided to the Tenant prior
written notice of the name of the mortgagee) shall be named additional insured
under the liability policy. All such insurance shall be written by a good and
solvent insurance carrier authorized to do business in the State of New Jersey.

          (b) Tenant’s personal property and fixtures and any other items which Tenant
may bring to the Premises or which may be under Tenant’s care, custody and
control which may be
subject to any claim for damages or destruction due to Landlord’s
negligence shall be fully insured
by a policy of insurance covering all risks which policy, if available
from such insurer, shall
specifically provide for a waiver of subrogation against the Landlord
without regard to whether or
not same shall cost an additional premium and notwithstanding anything to
the contrary contained

6

 

in this Lease. Prior to the Commencement Date Tenant shall deliver to
Landlord each policy or a
certificate evidencing such policies of insurance required to be
maintained by Tenant pursuant to
the terms of this Lease. At least thirty (30) days prior to the expiration
or termination date of any
such policy, the Tenant shall deliver a renewal or replacement policy with
proof of the payment of
the premium therefore. Such policy shall provide that it shall not be
cancelable except on thirty
(30) days prior written notice to the Landlord.

          (c) Should Tenant fail to maintain all insurance required, or fail to name the
Landlord or its mortgagee as an additional named insured under the liability
policy, then Tenant
shall be in default hereunder and shall be deemed to have breached its
covenants as set forth herein.

          (d) Neither Landlord nor Tenant shall be liable to the other or to any
insurance
company insuring the other party (by way of subrogation or otherwise) for
any loss or damage to
any structure, building or other tangible property, or any resulting loss
of income, even though
such damage or loss might have been occasioned by the negligence of
Landlord or Tenant or any
of their agents or employees, if any such loss or damage is required to be
covered by insurance
(as set forth herein) benefiting the party suffering such loss or damage.
To the extent that
Landlord and Tenant have separate insurance policies, Landlord and Tenant
shall each procure an
appropriate clause in, or endorsement to, each of their insurance policies
pursuant to which each
insurance company waives it right of subrogation. Each insurance policy
required to be
maintained under this Lease shall state that with respect to the interest
of Landlord the insurance
maintained pursuant to each such policy shall not be invalidated by any
action or inaction of
Tenant and shall insure Landlord regardless of any breach or violation of
any warranties,
declarations, conditions or exclusions by Tenant.

          (e) Each insurance policy required to be maintained under this Lease shall
state that all provisions of each such insurance policy, except for the
limits of liability, shall operate in the same manner as if a separate policy
had been issued to each person or entity insured there under.

          (f) Each insurance policy required to be maintained under this Lease shall
state that the insurance provided thereunder is primary insurance without any
right of
contribution from any other insurance which may be carried by or for the benefit
of Landlord.

          (g) Each insurance policy required to be maintained under this Lease shall
recognize the indemnification set forth in Article 29 of this Lease.

     Article 7. ELECTRIC, WATER AND SEWER FEES.

          (a) Tenant shall pay for the costs of all electricity, gas, water, sewer and other
utilities directly to the provider of such utilities to the Premises and the
Building, interior and
exterior. Any such items which are liens on the Premises shall be paid promptly
and before any
interest or penalties are due.

7

 

          (b) In the event that any tax is imposed upon Landlord with respect to electric
energy furnished to the Premises by any federal, state, county or municipal authority,
Tenant shall
pay to Landlord, on demand, such taxes so assessed against the Premises.

          (c) Landlord shall not be liable in any way to Tenant for any loss, damage or
expense which the Tenant may sustain or incur if either the quantity or character of
electric service
or other utilities furnished to the Premises is changed or is no longer available or
suitable for
Tenant’s requirements.

     Article 8. CARE, MAINTENANCE AND ALTERATIONS OF PREMISES.

          (a) The Tenant shall commit no act of waste and shall maintain and take good
care of the Premises and the fixtures and appurtenances therein at Tenant’s
sole cost and expense
and shall, in the use and occupancy of the Premises, conform to and comply with
all laws, orders
and regulations of the Federal, State and municipal governments. All of the
aforesaid
maintenance and repairs shall be consistent in quality with the condition of
the Premises on the
Commencement Date and in conformity with all fire and casualty insurance rating
services and
according to all applicable building codes and regulations. Further, in light
of the Landlord’s plans
to significantly renovate the Building upon termination of the Lease and short
term nature of the
Lease, Tenant need not make any repairs that are not essential to its continued
use and occupancy of
the Premises, except to the extent required pursuant to the provisions of
Article l 1 below.

          (b) Not later than the last day of the Term, the Tenant shall remove all of
the
Tenant’s personal property and fixtures, including, but not limited to all
cranes, lifts and shelving
systems (the “Personal Property”). Tenant shall use commercially reasonable
efforts not to cause
any damage to the Premises by reason of Tenant’s removal of such fixtures,
alterations,
improvements and Personal Property and shall repair any injury to the building
systems and
structure done by or in connection with the installation or removal of said
Tenant’s Personal
Property, alterations, fixtures, personalty or improvements excluding any
components or fixtures to
be replaced by Landlord in its renovation of the Premises. Except as may be
specifically provided
herein, Tenant need not repair or fill any cracks nor pits in the floors left
after the removal of its
Personal Property or otherwise remedy any defect or condition in the Premises.
Any Personal
Property not removed by Tenant as required herein shall be deemed abandoned
thirty (30) days after
the expiration or earlier termination of the Lease, and may be stored, removed
and disposed of by
Landlord in its sole discretion, and Tenant waives all claims against Landlord
for any damages
resulting from Landlord’s retention or disposal of same. Tenant shall be
entitled to no payment or
offset for the value of any abandoned property (even if sold by Landlord) and
Tenant shall pay on
demand all costs incurred by Landlord in connection with such removal, disposal
or storage. No
retention, disposal or sale of such abandoned property shall limit remedies
otherwise available to
Landlord hereunder for a breach of this Agreement by Tenant. The provisions of
this subparagraph,
shall be considered an express agreement in lieu of the provisions of N.J.S.A.
2A:18-72 et seq. and
shall in all cases govern the Landlord’s right to dispose of any Tenant’s
Personal Property left in the
Premises as provided herein. All obligations of Tenant hereunder not fully
performed as of the
termination or expiration of the Lease shall survive such termination or
expiration, until they are
performed.

8

 

          (c) Tenant shall not, without first obtaining the written consent of the
Landlord
(which consent shall be in Landlord’s sole and absolute discretion), make any
alterations or improvements in, to or about the Premises.

          (d) Tenant, at its expense, and with diligence and dispatch, shall procure
the
cancellation or discharge of all notices of violation arising from or
otherwise connected with
Tenant’s installation of any work performed by Tenant in the Premises
(“Tenant’s Work”) that
are issued by any public authority having or asserting jurisdiction.
Tenant shall defend,
indemnify and save harmless Landlord against any and all construction and
other liens filed in
connection with Tenant’s installation of the Tenant’s Work, including the
liens of any security
interest in, conditional sales of, or chattel mortgages upon, any
material, fixtures or articles so
installed in and constituting part of the Premises and, against all costs,
expenses and liabilities
incurred in connection with any such lien, security interest, conditional
sale or chattel mortgage
or any action or proceeding brought thereon. Tenant, at its expense, shall
procure the satisfaction
or discharge of all such liens within thirty (30) days after Landlord
makes written demand
therefor. However, nothing herein contained shall prevent Tenant from
contesting, in good faith and at its own expense, any such notice of violation,
provided such liens are bonded to the satisfaction of the Landlord and its
mortgage lender.

          (e) All of Tenant’s Work shall be removed from the Premises by Tenant at the
end of the term, unless otherwise agreed to in writing by Landlord. The provisions of this
Article
shall survive any termination of this Lease.

     Article 9. REPAIR AND MAINTENANCE.

          (a) As Additional Rent, Tenant shall furnish and pay for, maintain and repair the
following services: heat, ventilation and air conditioning in the Building
for which the Tenant shall obtain a service contract from a reputable
contractor and deliver a copy thereof to Landlord; all plumbing and electrical
fixtures; water for ordinary drinking and lavatory purposes, janitorial
services; security services, removal of any of Tenant’s rubbish; light bulbs
and ballasts and the repair of any interior of the Building and its
decorations, floor and wall coverings, ceilings, lighting fixtures or other
work within the Premises, exterminate all areas of the Premises; and snow
removal, parking lot and landscaping of the exterior portion of the Premises.
Notwithstanding the foregoing, subject to the provisions of Article 11, since
Landlord intends to significantly renovate the Building and this is a short
term Lease, the Tenant need not repair or maintain any systems or items that
are not essential for its continued use and occupancy of the Premises (unless
necessary to prevent waste to the Premises), and/or may affect a temporary
repair of such systems or items provided further that for all mechanical
systems and items that are less than five (5) years old, the Tenant shall
maintain and repairs such systems and items in accordance with the
manufacturer’s standards and specifications or customary industry standards.

          (b) Landlord shall not be responsible for any defect in workmanship or other
problem that arises with respect to the Premises or installation of the Tenant’s
Work by Tenant or
Tenant’s contractors. Further, Landlord shall not be responsible to the Tenant
for any condition in

9

 

or about the Premises or the Building that is caused by any act or neglect of
the Tenant or any agent, customer, invitee or licensee of the Tenant, and
where any repair is made necessary by any such act or neglect, the Tenant
shall pay directly for such repair.

          (c) The Landlord shall be responsible for the repair of the roof, floors (but
not
floor coverings), structural elements and parking lot not caused by
neglectful maintenance or
intentional conduct of the Tenant or its employees or invitees or damaged
or required to be
replaced by reason of Tenant’s compliance with its environmental
obligations pursuant to this
Lease Agreement. Any replacements or costs of a capital nature under
generally accepted
accounting principles consistently applied (referred to as “Capital
Replacements”), including, but
not limited to:

               (i) rentals and other related expenses incurred in leasing capital items
such as air conditioning systems, elevators or other equipment that would not be
considered
normal maintenance, repair, management or operation expenses;

               (ii) alterations to and replacements of capital items such as the roof,
structural components, sprinklers and the parking lot; or

               (iii) costs of equipment, tools and/or improvements not normally expensed in one year,

               (iv) roof and roofing, including flashing, gutters, downspouts, eaves and the like;

               (v) alterations to and replacements of capital items such as the
structural components (i.e. exterior and load-bearing walls), and the parking lot;

               (vi) mechanical and electrical services incorporated in or beneath the
structure of the Building including, without limitation, the HVAC system (excluding routine
maintenance and repair which is the obligation of Tenant); and

               (vii) parking lots, driveways, sidewalks and walkways (excluding the
obligation to keep same free from snow, ice and debris which are
obligations of Tenant hereunder)

shall be paid for by Landlord, but since this is a short term Lease and
Landlord plans to
substantially renovate the Premises at the end of the term, Landlord may
elect not to repair or
replace any of the Capital Replacements in which event Tenant may elect
either to (i) pay for a
temporary repair to such Capital Replacement, or (ii) terminate this Lease
by giving thirty (30)
days written notice of termination (or such termination notice may be
effective earlier if the
Premises cannot be used by Tenant for its business due to the need for
such Capital
Replacement), whereupon this Lease shall terminate as if such date were
the Expiration Date
hereunder and thereafter neither party shall have any further obligation
or liability to the other
except to the extent such obligation or liability would survive the
Expiration Date originally set
forth herein, including, but not limited to, those obligations and
liabilities of Tenant set forth in

10

 

Article 12. Provided however, if the Tenant advises the Landlord in writing that such
Capital Replacement is not essential for its continued use and occupancy, then
Tenant may continue to
occupy the Premises and need not reimburse the Landlord as provided
herein. If Landlord’s
election to not make such Capital Replacements will materially impair the
use and enjoyment of
only a portion of the Premises, the Tenant may elect to surrender such
portion to the Landlord
and the Net Rent, Real Estate Taxes and other financial obligations of
the Tenant and Landlord
shall be equitably adjusted as if such portion of the Premises were the
Surrender Space.

     Article 10. ASSIGNMENT AND SUBLETTING.

          (a) Notwithstanding any other provisions of this Lease to the contrary, the
Tenant covenants and agrees that it will not assign any of its rights
under this Lease, delegate any of
its duties hereunder nor sublet the whole or any part of the Premises;
allow any transfer thereof or
any lien upon Tenant’s interest by operation of law; sublet the Premises
or any part thereof; or
permit the occupancy of the Premises or any part thereof by anyone other
than Tenant without, in
each instance, having first received the express written consent of the
Landlord (which consent with
respect to a requested assignment or subleasing may be withheld, delayed
or conditioned in the
Landlord’s sole discretion). In the event that Tenant hereunder is a
corporation, limited liability
company or other legal entity, then any change in the ownership of the
majority of the
outstanding capital stock or beneficial ownership of the Tenant or any
merger or consolidation or
transfer of substantially all the assets of the Tenant, shall be deemed an
assignment of this Lease.
Any such request shall set forth, in detail reasonably satisfactory to the
Landlord, the identification
of the proposed assignee or subtenant, its financial condition and the
terms on which the proposed
assignment or subletting is to be made, including (without limitation) the
rent and any other
consideration to be paid in respect thereto. Notwithstanding the
foregoing, however, Tenant may
assign this Lease or participate in a transaction that is deemed to be an
assignment of this Lease
with at least twenty (20) days’ prior written notice to the Landlord (and
without Landlord’s prior
written consent) to any entity which is directly or indirectly controlled
by or under common control
with Tenant or to any entity which shall acquire all or substantially all
of the stock or assets of
Tenant, or participate in a merger or consolidation or a transaction where
the majority of the
beneficial interests are transferred, provided that the net worth of the
assignee (or deemed assignee)
is equal or greater than the net worth of the Tenant at the Commencement
Date of this Lease and
provided that the Tenant provides to the Landlord at least thirty (30)
days prior to the effective date
of such assignment in form satisfactory to Landlord a written agreement
whereby such assignee
assumes all the obligations under this Lease, agrees to bound by its
terms, provides the evidence of
its net worth and the insurance required hereunder with respect to the
assignee or deemed assignee.
Any and every such assignment, delegation, sublet, mortgage, transfer,
lien or occupancy is
expressly subject to the further requirements and limits provided in
Article 12 below.

          (b) It shall be a condition of the validity of any such consented-to
assignment or
consented-to subletting that the assignee or subtenant agrees directly with the
Landlord, in form
satisfactory to the Landlord, to be bound by all the obligations of the Tenant
hereunder, including
(without limitation) the obligation to pay Net Rent, Additional Rent and other
amounts provided
under this Lease and the covenant against assignment or subletting; provided,
however, the
acceptance by Landlord of any Rent from any subtenant or assignee or the
failure of Landlord to

11

 

insist upon a strict performance of any of the terms, conditions and
covenants herein from any assignee or subtenant shall not release Tenant
herein, from any and all of the obligations herein during and for the entire
Term of this Lease.

          (c) In the event the Tenant requests that the Landlord consents to an
assignment
or subleasing, then the Tenant shall provide the Landlord with a copy of the
proposed sublease or assignment documents,

          (d) Unless otherwise agreed to in writing by Landlord, no assignment or
subletting by Tenant shall reduce, diminish, or otherwise affect the
liability of Tenant hereunder and the Tenant named herein shall remain fully
liable for the obligations of the Tenant hereunder, including (without
limitation) the obligation to pay Net Rent, Additional Rent and other amounts
provided under this Lease.

     Article 11. COMPLIANCE WITH LAWS, RULES AND REGULATIONS.

          (a) Tenant shall promptly, at its own cost and expense, comply with all laws,
ordinances, rules, regulations, requirements and directives of any federal,
state, county and
municipal governments or public authorities and of all their departments,
bureaus and subdivisions,
applicable to and affecting the Premises, its use and occupancy, and with all
orders, regulations,
requirements, rating clauses and reasonable directives of the Board of Fire
Underwriters or similar
authority which promulgates fire safety codes, or of any fire insurance rating
company and of any
insurance companies which have issued or are about to issue policies of
insurance covering the
Premises and its contents, for the prevention of fire or other casualty damage
or injury. Compliance
with laws includes all existing and future laws that come into existence and
may be applicable to
the Premises.

          (b) Tenant covenants that Tenant shall not do or permit any act or thing to
be
done in or to the Premises which is contrary to the Certificate of Occupancy
that has been issued
with respect to the Premises or is hereafter issued, or which may, in law,
constitute a nuisance,
public or private, or which will invalidate or be in conflict with public
liability, fire or other policies
of insurance at any time carried by or for the benefit of Tenant or Landlord
with respect to the
Premises or which shall or might subject Landlord to any liability or
responsibility to any person or
for property damage. Tenant acknowledges again that it is accepting the
Premises “as is” and will
be responsible for compliance with all applicable laws with respect thereto in
connection with its or
its subtenants’ operations at the Premises, excluding, from and after the
Surrender Date, the
Surrender Space.

          (c) Landlord covenants and agrees that it shall, at all times during the Term
and at its sole cost and expense, promptly comply with all laws, ordinances,
rules, regulations, requirements and directives of any federal, state, county
and municipal governments or public authorities and all of their departments,
bureaus and subdivisions, which may in any way be applicable to and affecting
the Premises, except to the extent such compliance is required to be assumed by
Tenant as provided in this Lease.

12

 

     Article 12. PERMITTED USE AND ENVIRONMENTAL MATTERS.

          (a) Definitions:

               (i) The term “Hazardous Materials” as used in this Lease shall include,
without limitation, gasoline, petroleum products, explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, polychlorinated biphenyls, or related similar materials, asbestos
or any material containing asbestos, or any other substance or material as may
be defined as a hazardous or toxic substance by any Environmental Laws and,
shall include “Extraordinary Hazardous Material” as such term is defined in the
Superfund Amendments and Reauthorization Act of 1986 (“SARA”), Public Law No.
99499, 100 Stat. 1613) and/or all such materials as are or may be listed on and
described by the NJDEP’s lists of hazardous substances and/or extremely
hazardous substances.

               (ii) The term “Environmental Laws” as used in this Lease shall mean,
without limitation, and as in the future be amended (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq.
(“CERCLA”); (ii) the Industrial Site Recovery Act, N.J.S.A. 13:1 K-6 et seq. (and including the
Hazardous Discharge Site Remediation Site Act, N.J.S.A. 58:10B-1 et seq.) (collectively
“ISRA”);(iii) the New Jersey Spill Compensation and Control Act, as amended, N.J.S.A.
58:10-23.11 et seq. (“Spill Act”); (iv) the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq.
(“SWMA”); (v) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq.(“RCRA”); (vi) the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
§ 651 et seq. (“OSHA”); (vii) the New Jersey Underground Storage of Hazardous Substances
Act, as amended, N.J.S.A. 58:10A-21 et seq. (the “Tank Act”); (viii) the
New Jersey Water
Pollution Control Act, as amended, N.J.S.A. 58:10A-1 et seq .
(“WPCA”); (ix) the New Jersey
Air Pollution Control Act, as amended, N.J.S.A. 26:2C-1 et seq.
(“APCA”), (x) all regulations
and rules promulgated pursuant to the aforesaid statutes; and (xi) any and
all present and future guidance, orders, directives, and other laws, applicable
to the Premises, that may provide authority to require the remediation of
environmental contamination of the Premises.

               (iii) The term “Hazardous Discharge” as used in this Lease shall mean
any event during the Term of this Lease at the Premises, involving an emission,
spill, release or
discharge into or upon (i) the air, (ii) soils or any improvements located
thereon, (iii) surface
water or ground water, or (iv) the sewer, septic system or waste
treatment, storage or disposal system servicing the Premises, of any Hazardous
Material, which event is not expressly permitted to occur in accordance with
Environmental Law.

               (iv) The term “Environmental Complaint” as used in this Lease shall
mean any complaint, order, directive, claim, citation or notice by any
Governmental Authority
(as hereafter defined) or any other person or entity with respect to (a) a
Hazardous Discharge, (b)
noise or odor emissions, (c) solid or liquid waste, or Hazardous Material,
disposal, (d) the use,
generation, storage, transportation or disposal of Hazardous Materials, or (e)
other
environmental, health or safety matters, as to which any of the foregoing apply to or by
reason of,

13

 

or affect, Tenant, the Premises, any improvements located thereon, or the use
thereof, or the business or operations therein conducted by the Tenant during
the Term of the Lease.

               (v) The term “Governmental Authority” as used in this Lease shall
mean any and every federal, state, county or municipal government, or any
department, agency, bureau or other similar type body obtaining authority
therefrom or created pursuant to any applicable Law, and includes without
limitation NJDEP and the United States Environmental Protection Agency
(“USEPA”).

               (vi) The term “Occupant” as used in this Lease shall mean the Tenant or
any agent, permitted subtenant, licensee, customer or invitee of Tenant.

          (b) In the event of Tenant’s failure to comply in full with the provisions of
this
Article within a reasonable period of time following notice to Tenant of
such failure by Landlord or
any Governmental Authority, Landlord may, at its option, perform any and
all of Tenant’s
obligations as aforesaid, and Landlord may enter onto the Premises and/or
take any actions as it
deems necessary or advisable to remediate, remove, resolve or minimize
the impact of, or
otherwise deal with, any Hazardous Discharge or Environmental Complaint
upon Landlord’s
receipt of any notice from any person or entity asserting the happening
of a Hazardous Discharge
or an Environmental Complaint on or pertaining to the Premises. All costs
and expenses incurred
by Landlord in exercise of this self-help right shall be deemed to be
Additional Rent payable on
demand.

          (c) Tenant agrees that Tenant’s use of the Premises shall be strictly limited
to
the use set forth in Article 1(1) for Tenant’s business and Tenant shall at
no time use the Premises
for any other use and shall not generate, manufacture, refine, transport,
treat, store, handle, dispose.
transfer, produce, process or in any manner deal with any “Hazardous
Materials” in violation of
applicable Environmental Laws. In no event shall the Tenant install any
underground or above
ground storage tanks for any Hazardous Materials or other substances.
Tenant covenants that the
NAICS Code in Article 1(n) is accurate with respect to the Tenant and
Tenant agrees that it will not
change it NAICS Code nor conduct operations at the Premises that are not
consistent with such
NAICS Code without notifying Landlord at least thirty (30) days prior to
such event.

          (d) Compliance with ISRA/Environmental Laws.

               Tenant’s Compliance/Tenant Triggers ISRA

               (i) If Tenant believes that ISRA is not applicable to its operations at
the Premises during the Term of this Lease for any such event or transaction that otherwise
would require submission of a General Information Notice, then the Tenant shall, at Tenant’s
sole cost and expense, seek and obtain a Letter of Non-Applicability or De Minimis Quantity
Exemption or other exemption as may then be available under ISRA from NJDEP (an “ISRA
Exemption”).

               (ii) If Tenant is unable to obtain an ISRA Exemption for any such
transaction or event by Tenant, its assignees or subtenants, including any closing,
terminating or
transferring of ownership of or operations at the Premises, then Tenant shall be obligated
to

14

 

comply with ISRA. Except as expressly set forth herein, the provisions of
the Agreement of Sale Between Tenant (there Seller) and Landlord (there Buyer)
shall govern the scope and extent of Tenant’s and Landlord’s respective duties,
obligations, and alternatives in connection with that required ISRA compliance.

               (iii) Tenant shall, at Tenant’s own expense, subject to the provisions
herein, make all submissions to, provide all information to, and comply with all the requirements
of, the NJDEP under and with respect to ISRA. Sixty (60) days prior to the occurrence of any
event or circumstance obligating Tenant to comply with ISRA (or as soon thereafter as Tenant
learns of such event), Tenant shall promptly, diligently and in good faith pursue issuance by
NJDEP of a No Further Action letter with a covenant not to sue consistent with Tenant’s
obligations under this Lease (an “ISRA NFA”) for the Premises, including, subject to the
provisions of Section 12 (d)(vii), the Surrender Space. As to such event or circumstance, and
except as set forth in Section 12 (d)(vii), Tenant will be solely liable to comply with ISRA by
reason of same, and otherwise satisfy all obligations, duties and
liabilities arising from same, at Tenant’s sole cost and expense without
recourse to Landlord.

               (iv) Subject to Tenant’s obligation to commence and diligently proceed
with ISRA compliance sixty (60) days prior to the occurrence of an event
giving rise to such compliance requirement, Tenant’s obligation to comply with
ISRA may be satisfied prior to the expiration or after the termination of this
Lease; provided that to the extent any part of the Premises is not useable by
Landlord upon expiration of the Term for Landlord’s intended purpose of
general office or warehouse use, Tenant shall be deemed a holdover and shall
pay rent with respect to such unusable portion in accordance with Article 24
of this Lease.

               (v) Tenant’s obligations with respect to ISRA, and all other applicable
Environmental Laws shall be to proceed diligently and shall continue
until NJDEP determines
that ISRA and/or such applicable Environmental Laws has or have been
fully complied with and
until all remediation required of Tenant, whether under ISRA, those
Environmental Laws and/or
under other provisions of this Lease has or have been fully implemented
and completed.

               (vi) Subject to Section 12(d)(vii), Tenant shall complete ISRA remedial
requirements arising out of Hazardous Discharges occurring at the Premises
during the Term of
the Lease (or after the Term of the Lease if caused by Tenant or Tenant’s
agents), if any are
required, at the Premises to an unrestricted use standard and no Engineering
or Institutional
Controls (as defined at N.J.A.C. 7:26E-1.8) shall be permitted in connection
with such
remediation. This obligation applies only to the specific Hazardous
Materials spilled or discharged (i) by Tenant or its assignees or subtenants or
a third-party, other than the Landlord or its agents, at the Premises during
the Term of the Lease, or (ii) by Tenant or its agents after the Term of the
Lease. Otherwise, in accordance with the Agreement of Sale, Tenant is permitted
to utilize Permissible Institutional Controls and Permissible Engineering
Controls as those terms are defined in the Agreement of Sale.

               Landlord’s Compliance/Landlord Triggers ISRA

15

 

               (vii) In the event Landlord triggers obligations arising under
Environmental Laws, including ISRA, without material cost to Tenant, Tenant shall assist
Landlord by providing and reasonably executing any documents, to the extent
consistent with
this Lease, including but not limited to any notices, applications, filings,
affidavits, certifications,
permit submissions, remedial action work plan(s), or other supporting
documents, all as may be
necessary or advisable for Landlord to comply with Environmental Laws or
otherwise satisfy
Landlord’s obligations pursuant to this Lease, including obtaining an ISRA
NFA. It is Landlord’s
obligation to file all forms and pay all filing fees associated with obtaining
the ISRA NFA and
complying with Environmental Laws. Notwithstanding the above, however, in the
event any
investigatory or remedial activities are necessitated due to Hazardous
Discharges at the Premises
(i) during the Term of this Lease which are caused by Tenant or its assignees
or subtenants or a
third-party, other than the Landlord or its agents, or (ii) after the Term of
this Lease which are
caused by Tenant or its agents, then Tenant shall be responsible to undertake
and to pay for those
investigatory and remedial activities. If Landlord is responsible for those
Hazardous Discharges,
however, then Landlord shall be responsible to undertake and to pay for those
investigatory and
remedial activities.

               (viii) Landlord shall promptly provide to Tenant true, accurate and
complete copies of any and all documents, including without limitation,
reports, submissions,
applications, notices, orders, directives, findings and correspondence made by
Landlord to, or
received from, any Governmental Authority concerning any Hazardous Discharge
or
Environmental Complaint during the Term of this Lease. Landlord shall also
promptly provide
to Tenant true and complete copies of all investigation, sampling and test
results and/or data,
including maps, diagrams, charts and summaries pertaining to same as prepared
by or for
Landlord.

               (ix) Landlord has provided Tenant with access to the Premises to
satisfy Tenant’s obligations pursuant to this Article 12 after the end of the Lease
Term pursuant
to an Environmental Access Agreement dated the same date as this Lease between Landlord
and
Tenant.

          (e) Tenant’s Covenants.

               (i) Tenant covenants that the Premises shall not be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, process or in any manner deal with Hazardous Materials in violation of
applicable Environmental Laws, and Tenant shall not cause or permit, as a
result of any intentional or unintentional act or omission on the part of
Tenant or any Occupant (as hereinafter defined), a Hazardous Discharge. Tenant
shall comply with, and ensure compliance by all Occupants, if any, with all
applicable Environmental Laws with respect to any Hazardous Materials.

               (ii) If Tenant receives any notice of the happening of a Hazardous
Discharge or an Environmental Complaint during or after the Term of this
Lease (until Tenant
obtains the ISRA NFA or ISRA Exemption), then Tenant shall give immediate
oral and written
notice of same to Landlord, detailing all relevant facts and circumstances
and if such Discharge

16

 

or Complaint relates to an event or Discharge that occurred (i) during the Term of this
Lease and
was caused by Tenant or its agent or a third-party, other than the Landlord or
its agents, or (ii)
after the Term of this Lease and was caused by Tenant or its agent, then Tenant
shall initiate and
complete all steps and actions necessary or advisable to cleanup, remove,
restore, resolve and
minimize the impacts of the Hazardous Discharge or Environmental Complaint at or from the
Premises in accordance with Section 12(d) hereof.

               (iii) Tenant shall promptly provide to Landlord true, accurate and
complete copies of any and all documents, including without limitation,
reports, submissions, applications, notices, orders, directives, findings and
correspondence made by Tenant to, or received from, any Governmental Authority
concerning any Hazardous Discharge or Environmental Complaint. Tenant shall
also promptly provide to Landlord true and complete copies of all
investigation, sampling and test results and/or data, including maps, diagrams,
charts and summaries pertaining to same as prepared by or for Tenant.

          (f) The Tenant shall indemnify, defend and hold harmless the Landlord and its
affiliates and their respective directors, shareholders, officers, employees,
agents, consultants,
attorneys-in-fact and other representatives (collectively, “Landlord’s
Indemnitees”) and each
mortgagee of the Premises from and against any and all liabilities, damages,
suits, fines, claims,
losses, judgments, causes of action, costs and expenses (including reasonable
fees and expenses of
counsel, including those incurred to successfully enforce this provision) of
any kind which may be
incurred by the Landlord, Landlord’s Indemnitees or any such mortgagee or
threatened against the
Landlord, Landlord’s Indemnitees or such mortgagee, arising out of or in any
way connected with
(a) any breach by Tenant of the undertakings set forth in this Article 12, (b)
any Hazardous
Discharge at or from the Premises (i) due to acts or omissions of Tenant
or its agents or a third-
party, other than the Landlord or its agents, during the Term of this
Lease or (ii) due to acts or
omissions of Tenant or its agents after the Term of this Lease, and (c)
any Environmental
Complaint at or by reason of the Premises (i) due to acts or omissions of
Tenant or its agents, or a
third-party, other than the Landlord or its agents, during the Term of this
Lease, or (iii) due to acts
or omissions of Tenant or its agents after the Term of this Lease. Provided
such indemnity shall not
apply in any instances that a Hazardous Discharge or Environmental Complaint
was due to the acts
or omissions of the Landlord, Landlord’s Indemnitees, or Landlord’s invitees at
the Premises.
Tenant’s agreement to indemnify shall survive any and every assignment,
delegation, sublet,
mortgage, transfer, lien or occupancy subject to the requirements of Article
10, expiration or
sooner termination of this Lease.

          (g) The Landlord shall indemnify, defend and hold harmless the Tenant and its
affiliates and their respective directors, shareholders, officers, employees,
agents, consultants,
attorneys-in-fact and other representatives (collectively, “Tenant’s
Indemnitees”) from and against
any and all liabilities, damages, suits, fines, claims, losses, judgments,
causes of action, costs and
expenses (including reasonable fees and expenses of counsel, including those
incurred to
successfully enforce this provision) of any kind which may be incurred by the
Tenant, Tenant’s
Indemnitees arising out of or in any way connected with (a) any breach by
Landlord of its
representations as set forth in this Article 12, and (b) any Hazardous Discharge
at or from the Premises due to acts or omissions of Landlord or its agents
including, but not limited to, from the

17

 

Surrender Space (c) from a Hazardous Discharge at the Premises after the
term of this Lease, and (d) any Environmental Complaint at or by reason of the
Premises due to acts or omissions of Landlord or its agents, provided such
indemnity shall not apply in any instances that a Hazardous Discharge or
Environmental Complaint was due to the acts or omissions of the Tenant,
Tenant’s Indemnitees, or invitees at the Premises. Landlord’s agreement to
indemnify shall survive any and every assignment, delegation, sublet, transfer,
lien or occupancy subject to the requirements of Article 10, expiration or
sooner termination of this Lease.

          (h) Tenant shall promptly notify Landlord of any liens threatened or attached
against the Premises pursuant to the Spill Act or any other Environmental Law.
In the event that
such a lien is filed against the Premises as a result of the act or omission of
Tenant or any agent
or invitee thereof, Tenant shall, within thirty (30) days from the date that
the lien is placed
against the Premises, and at any rate prior to the date any Governmental
Authority commences
proceedings to sell the Premises pursuant to the lien, either: (1) pay the
claim and remove the
lien from the Premises; or (2) deliver to Landlord either (i) a bond in an amount and with
a surety
satisfactory to Landlord, (ii) a cash deposit in the amount of the lien plus
any interest that may accrue thereon, or (iii) other security satisfactory to
Landlord in an amount sufficient to satisfy or discharge the claim out of which
the lien arises.

          (i) The provisions of this Article shall survive any and every assignment,
delegation, sublet, mortgage, transfer, lien or occupancy subject to the
requirements of Article 10, as well as the expiration or earlier termination of
this Lease.

     Article 13. DAMAGE AND DESTRUCTION. If the Premises is damaged or
destroyed by reason of fire or any other cause to such extent that the cost of
restoration, as reasonably estimated by the Landlord on the basis of a report
by an architect or engineer designated by the Landlord, will equal or exceed
twenty-five percent (25%) of the replacement value of the Premises (exclusive
of foundations) just prior to the occurrence of the damage, then either party
may, no later than the ninetieth (90th) day following such damage or
destruction, give the other party a notice of election to terminate this Lease.
In the event of such election, Tenant shall immediately initiate ISRA
compliance consistent with this Lease, including for any Hazardous Discharge
resulting from such casualty, and this Lease shall be deemed to terminate on
the sixtieth (60th) day after the giving of said notice, and the Tenant shall
surrender possession of the Premises upon such termination, and the Net Rent,
and any Additional Rent, shall be apportioned as of the date of said surrender,
and any Net Rent or Additional Rent already paid by the Tenant for any period
beyond said date shall be returned to the Tenant. Absent such an election to
terminate this Lease, the Tenant shall remediate any Hazardous Discharge to the
extent such casualty caused such Hazardous Discharge and otherwise Landlord
shall restore the damage with reasonable promptness, subject to Force Majeure
(as such term is defined herein) and subject to the Landlord receiving
sufficient insurance proceeds to accomplish the restoration. The Landlord need
not restore any Personal Property, fixture or improvement owned by the Tenant
and the Landlord need not restore the Premises or Building unless it has
adequate insurance proceeds available to do so after any mortgagee deducts
therefrom any amount due to it. In case of any damage that renders the Premises
unusable in whole or in part, there shall be an appropriate abatement in Net
Rent and Additional Rent payable hereunder, for the period for which the
Premises or portion thereof are unusable to the

18

 

extent Landlord receives any rent interruption insurance in lieu thereof.
All Additional Rent
obligations of the Tenant shall likewise continue except to the extent
Landlord receives any rent
interruption insurance in lieu thereof. Notwithstanding anything contained
herein to the contrary,
since this is a short term Lease and Landlord plans to substantially
renovate the Premises at the
end of the term, Landlord may elect not to repair or restore the Premises
in which event Tenant
may give thirty (30) days written notice of termination (or such
termination notice may be
effective earlier if the Premises cannot be used by Tenant for its
business due to the need for such
repair or restoration or Tenant may pay for a temporary repair to such
damaged), whereupon this
Lease shall terminate as if such date were the Expiration Date hereunder
and thereafter neither
party shall have any further obligation or liability to the other except
to the extent such obligation
or liability would survive the Expiration Date originally set forth
herein, including, but not
limited to, those obligations and liabilities of Tenant set forth in
Article 12. Provided however, if
the Tenant advises the Landlord in writing that such repair or restoration
is not essential for its
continued use and occupancy, then Tenant may continue to occupy the
Premises and the Net
Rent, Real Estate Taxes and other financial obligations of Tenant and
Landlord will be equitably
adjusted as if the portion of the Premises that Landlord has elected not
to restore and as a result
thereof is no longer usable by the Tenant were the Surrender Space.

     Article 14. EMINENT DOMAIN.

          (a) If the Tenant’s use of the Premises is substantially impaired, in the
reasonable judgment of Tenant, due to the taking by eminent domain of all
or more than twenty
five percent (25%) of the Building (or conveyance in lieu of taking), this
Lease shall terminate
on the date when title vests pursuant to such taking or conveyance. The
Net Rent, and any
Additional Rent, shall be apportioned as of said termination date, any Net
Rent or Additional
Rent already paid by the Tenant for any period beyond said date shall be
returned to the Tenant
and the security deposit, if any, to the extent not applied by Landlord in
accordance with the
provisions of this Lease, shall be returned to Tenant without interest.
The Tenant shall not be
entitled to any part of the award for such taking or any payment in lieu
thereof, but the Tenant
may file a separate claim for moving and relocation expenses, provided the
same shall in no way
affect or diminish the Landlord’s award. Upon termination of the Lease,
Tenant shall
immediately initiate ISRA compliance consistent with this Lease, if any,
as required.

          (b) In the event of a temporary condemnation or taking that renders part or
all of
the Premises unusable by the Tenant, the Net Rent and Additional Rent shall be
equitably abated in the reasonable judgment of the Landlord during the pendency
of such temporary condemnation or taking and any claim for compensation from
the condemnation or taking authority shall belong solely to the Landlord except
for Tenant’s temporary moving and relocation costs; however, but upon the
cessation of such temporary taking or condemnation, the terms and conditions of
the Lease shall apply for the balance of the term.

     Article 15. INSOLVENCY OF TENANT. The (a) appointment of a receiver to
take possession of all or substantially all of the assets of the Tenant which
appointment is not
stayed or vacated in thirty (30) days, or (b) general assignment by the Tenant
for the benefit of
creditors, or (c) the initiation of a proceeding by or against the Tenant under
any bankruptcy or

19

 

insolvency law not vacated or stayed in thirty (30) days, or (d) the
Tenant’s inability or failure to pay its creditors on a timely basis, shall
constitute a default of this Lease by the Tenant, and the Landlord may
terminate this Lease forthwith, and upon notice of such termination Tenant’s
right to possession of the Premises shall cease, and the Tenant shall then
quit and surrender the Premises to the Landlord, but the Tenant shall remain
liable as provided in this Lease.

     Article 16. LANDLORD’S REMEDIES ON DEFAULT. If Tenant (a) defaults in
any payment of Net Rent, Additional Rent or other amounts due hereunder for ten (10) days
or
more, or (b) defaults in the due keeping, observance or performance of any
covenant, agreement, term, provision or condition of Article 6 and such
default is not remedied by Tenant within 48 hours after Landlord gives to
Tenant a notice specifying the same or more, or (c) defaults in the performance
of any of the other covenants and conditions hereof following not less than
thirty (30) days notice of default and the opportunity to cure (or if such
default cannot be cured within such thirty (30) day period, if Tenant fails to
continue to diligently prosecute such cure), or (d) permits the Premises to
become deserted, abandoned or vacated for more than thirty (30) days without
notifying the
Landlord at least thirty (30) days prior thereto reconfirming Tenant’s
obligation to pay all Rent and Additional Rent hereunder and provide security
service for the Premises during the vacancy, then the Landlord shall have the
right of re-entry and this Lease shall, at the option of the Landlord,
terminate on fifteen (15) days notice, and the Tenant’s right to possession of
the Premises shall cease, and the Tenant shall then immediately quit and
surrender the Premises to the Landlord, but the Tenant shall remain liable
notwithstanding such termination for all Net Rent, Additional Rent and all
other sums due hereunder and for the observance and performance of any and all
covenants, agreements, terms, provisions and conditions set forth in Article 12. If this Lease shall have so
terminated, the Landlord may at any time thereafter resume possession of the
Premises by any lawful means and remove the Tenant and any other occupants and
their effects, at Tenant’s expense. In addition to any amount or Net or
Additional Rent, the Tenant shall also pay to the Landlord as Additional Rent
all of Landlord’s reasonable legal fees and costs in enforcing the Landlord’s
rights under this Lease.

     Article 17. DEFICIENCY.

          (a) In any case where the Landlord has recovered (or has a right pursuant to
the
terms of this Lease to recover) possession of the Premises by reason of the
Tenant’s default, the Landlord may, at the Landlord’s option but without any
obligation to do so, occupy the Premises or cause the Premises to be
redecorated, altered, divided, consolidated with other adjoining Premises, or
otherwise change or prepare for reletting, and may relet the Premises or any
part thereof as agent of the Tenant or otherwise, for a term or terms to expire
prior to, at the same time as, or subsequent to, the original expiration date
of the Term of this Lease, at the Landlord’s option, and receive the rent
therefore. Rent so received shall be applied first to the payment of such
reasonable expenses as Landlord may have incurred in connection with the
recovery of possession, redecorating, altering, dividing, consolidating with
other adjoining Premises, or otherwise changing or preparing for reletting, and
the reletting, including brokerage and attorneys’ fees, and then to the payment
of damages in amounts equal to the rent hereunder and to the costs and expenses
of performance of the other covenants of the Tenant as herein provided. The
Tenant agrees, in any such case, whether or not the Landlord has relet, to pay
to the Landlord damages equal to the Net and Additional Rent

20

 

 

and other sums herein agreed to be paid by the Tenant, less the net
proceeds of the reletting, if any, as ascertained from time to time; and the
same shall be payable by the Tenant at the time and in the manner specified
above. The Tenant shall not be entitled to any surplus accruing as a result of
any such reletting. In reletting the Premises as aforesaid, the Landlord may
grant reasonable rent concessions, and the Tenant shall not be credited
therewith. No such reletting shall constitute a surrender and acceptance or be
deemed evidence thereof.

          (b) Tenant hereby waives all rights of redemption to which the Tenant might be
entitled by any law now or hereafter in force.

          (c) Landlord’s remedies hereunder are in addition to any remedy allowed by
law. Tenant agrees to pay, as Additional Rent, all reasonable attorneys’
fees and disbursements, and other expenses incurred by the Landlord in
enforcing any of the obligations under this Lease, this covenant to survive the
expiration or sooner termination of this Lease.

     Article 18. ATTORNMENT.

     Upon execution hereof and thereafter Landlord agrees to obtain from its
current or any future mortgagee or ground lessor a subordination,
non-disturbance and attornment agreement in writing providing in substance
that so long as Tenant shall have entered into possession and occupancy of the
Premises and commenced payment of Rent hereunder, and so long as Tenant is not
in default in its obligations for the payment of Rent and in the performance of
other terms, covenants and conditions to be performed on its part under the
Lease, Tenant’s possession of the Premises will not be disturbed during the
Term hereof, notwithstanding the foreclosure of any such mortgage or
termination of such land lease, and Tenant will not be named as a party
defendant in any foreclosure or other proceedings brought for the recovery of
possession except as required by law.

     Article 19. RIGHT TO CURE TENANT’S BREACH. If the Tenant breaches any
covenant or condition of this Lease and such breach is not cured in the
applicable cure period, the Landlord may, on reasonable notice to the Tenant
(except that no notice need be given in case of emergency), cure such breach at
the expense of the Tenant and the reasonable amount of all expenses, including
attorneys’ fees and expenses, incurred by the Landlord in so doing (whether
paid by the Landlord or not) shall be deemed Additional Rent payable on demand.
In addition, the Tenant shall pay to the Landlord as Additional Rent an
administrative fee of ten percent (10%) of the amount Landlord advanced. In no
way whatsoever shall the Landlord be obligated to effect such cure.

     Article 20. CONSTRUCTION LIENS. The Tenant shall, within thirty (30) days after
it becomes aware thereof, discharge or satisfy by bonding or otherwise any
construction lien for materials or labor claimed to have been furnished to the
Premises on the Tenant’s behalf.

     Article 21. RIGHT TO INSPECT AND REPAIR. The Landlord may enter the
Premises (but shall not be obligated to do so) at all reasonable times on
reasonable advance notice to the Tenant (except that no notice need be given in
case of emergency) for the purposes of inspection, or the making of such
repairs, replacements or additions, in, to, on and about the

21

 

 

Premises and Building, as are necessary or desirable. Provided that the
Landlord shall have acted reasonably as contemplated herein, Landlord shall not
be liable for any interruption of the Tenant’s business as a result of the
making of any such repair, replacement or addition that is necessary, and in
all events Landlord shall use commercially reasonable efforts to minimize the
interruption of Tenant’s business.

     Article 22. INTERRUPTION OF SERVICES OR USE. Interruption or curtailment
of any service maintained in the Building or use of the Premises shall not
entitle the Tenant to any claim against the Landlord or to any abatement in
rent, and shall not constitute a constructive or partial eviction except if
caused by the gross negligence or willful misconduct of the Landlord.

     Article 23. ESTOPPEL. Each party shall, from time to time, on not less than fifteen
(15) days prior written request by the other party, execute, acknowledge
and deliver to the requesting party a written statement certifying on a form
provided by the requesting party that the Lease is unmodified and in full
force and effect, or that the Lease is in full force and effect as modified
and listing the instruments of modification; the dates to which the rents and
charges have been paid; whether or not the party is in default hereunder, and,
if so, specifying the nature of such default; and, to the best of the party’s
knowledge, whether or not other party is in default hereunder, and if so,
specifying the nature of the default and such other matters that the
requesting party may reasonably require. It is intended that any such statement
delivered pursuant to this Article may be relied on by a prospective purchaser
of the requesting party’s interest or a lender or mortgagee of the requesting
party’s interest or assignee of any mortgagee of the requesting party’s
interest.

     Article 24. HOLDOVER TENANCY. Unless agreed to otherwise by the parties in a
writing signed by both parties, if the Tenant holds possession of the
Premises after the expiration of the Term (and, unless the Landlord has agreed
in writing to permit the Tenant to remain in possession thereafter), Tenant
shall become a Tenant from month-to-month under the provisions herein provided.
During the first three (3) calendar months of any such month to month tenancy
the Monthly Net Rent payable hereunder shall be equal to one hundred
seventy-five percent (175%) of the Monthly Net Rent installment and the
Additional Rent (which includes all operating expenses, taxes, insurance and
other costs of the Premises) payable immediately prior to the end of the Term,
and thereafter the Monthly Net Rent installment and the Additional Rent shall be
equal to two hundred percent (200%) of said amount, which amounts shall be
payable in advance on the first day of each month or part thereof that the
Tenant remains in occupancy and without the requirement for demand or notice by
the Landlord to the Tenant demanding delivery of possession of the Premises.
All other terms and conditions of this Lease shall apply during any such month
to month holdover tenancy. Tenant agrees to indemnify and save Landlord
harmless from and against all claims, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) resulting from delay by Tenant in surrendering the Premises,
including, without limitation, any claims, losses, damages, liabilities, costs
and expenses incurred in connection with contractors and subcontractors hired
to perform Landlord’s renovation of the Building for its intended use. Nothing
herein contained shall be deemed to permit Tenant to retain possession of the
Premises after the Expiration Date or to limit in any manner Landlord’s right to
regain possession of the Premises through summary proceeding or otherwise, and
no acceptance by

22

 

 

Landlord of payments from Tenant after the Expiration Date shall be deemed to
be other than on account of the amount to be paid by Tenant in accordance
with the provisions of this Article 24.

     Article 25. RIGHT TO SHOW PREMISES. The Landlord may show the Premises
to prospective purchasers, mortgagees and tenants, during normal business
hours on reasonable advance, written notice to the Tenant.

     Article 26. LATE CHARGE. If any Net Rent, Additional Rent or other amount
payable by the Tenant to the Landlord hereunder is not paid within seven (7)
days of the date due (which seven (7) day period is inclusive of any
applicable notice/cure period), the Tenant shall pay to the Landlord (as
Additional Rent) a late fee of two percent (2%) of the late payment, and, if
such payment is not paid within thirty (30) days of its due date, interest
thereon at the rate of six percent (6%) per annum (but not more than the
highest legal rate permissible), from the due date day until the same is paid
in full.

     Article 27. NO OTHER REPRESENTATIONS. No representations or promise
shall be binding on either party hereto except representations and promises
contained in this Lease or in some future writing signed by the party making
such representation(s) or promise(s).

     Article 28. QUIET ENJOYMENT. The Landlord covenants that if, and so long as,
the Tenant pays the Net Rent and any Additional Rent as herein provided, and
performs the other covenants required to be performed by the Tenant
hereunder, the Landlord shall do nothing to affect the Tenant’s right
peaceably and quietly to have, hold and enjoy the Premises for the term herein
mentioned, subject to the provisions of this Lease,

     Article 29. INDEMNITY. The Tenant shall indemnify and save harmless and defend
the Landlord and its agents and Landlord’s Indemnitees against and from
(i) any and all claims arising from (x) the conduct by the Tenant, or any
agent, customer, invitee or licensee of the Tenant or any other party that
comes on the Premises during the Term of this Lease (“Tenant Invitee”), of any
business in or about the Premises or any negligent or otherwise wrongful act of
any of them and (y) any act or thing whatsoever done by Tenant or any Tenant
Invitee, or any condition created in or about the Premises, during the Term of
this Lease by Tenant or a Tenant Invitee, and (ii) all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon. In case any action or proceeding be brought
against the Landlord or Landlord’s Indemnitees by reason of any such claim,
the Tenant, upon notice from the Landlord or Landlord’s Indemnitees, shall
resist and defend such action or proceeding with counsel satisfactory to the
Landlord and such Landlord’s Indemnitees involved in such matter. The forgoing
indemnity shall not apply to any events caused by the gross negligence or
willful misconduct of the Landlord.

     Article 30. ARTICLE HEADINGS. The Article headings in this Lease and position
of its provisions are intended for convenience only and shall not be taken into
consideration in any construction or interpretation of this Lease or any of its
provisions.

     Article 31. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this
Lease shall apply to, bind and inure to the benefit of the Landlord and the Tenant, and
their

23

 

 

respective heirs, successors, legal representatives to except that no violation of the provisions of
Article 10 shall operate to vest any rights in any successor, assignee or legal representative of
Tenant.

     Article 32. WAIVER OF TRIAL BY JURY. The parties hereby waive trial by jury
in any action or proceeding brought in connection with this Lease or the Premises.

     Article 33. LANDLORD’S LIABILITY FOR LOSS OF PROPERTY. The
Landlord shall not be liable for any loss of Tenant’s Property from any
cause whatsoever, including but not limited to theft or burglary from the
Premises, and Tenant agrees to make no claim against the Landlord for any such
loss at any time, unless such loss is due to Landlord’s gross negligence or
willful misconduct.

     Article 34. PARTIAL INVALIDITY. If any of the provisions of this Lease, or the
application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision or provisions to persons or circumstances other than those as
to whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Lease shall be valid and enforceable to
the fullest extent allowed by law.

     Article 35. BROKER. The Landlord and the Tenant represent and warrant to each
other that no broker represented it in connection with this Lease. Each
party agrees to indemnify and hold the other harmless from the payment of any
brokerage commission and from any claim advanced by the other party or by any
third party in breach of such representation hereunder, including any
expenses, costs of suit and attorneys’ fees incurred by the non-breaching
party in connection therewith. Tenant acknowledges that this Lease is being
entered into by Landlord with Tenant as an accommodation to Tenant pursuant to
Agreement of Sale between Tenant as Seller and Landlord as Buyer dated
November 28, 2007. Accordingly, Tenant agrees to indemnify and hold Seller
harmless from the payment of any brokerage commission and from any claim
advanced by GVA Williams in connection with this Lease. This Article 35 shall
survive the expiration or sooner termination of the Term.

     Article 36. PERSONAL LIABILITY. All obligations of Landlord under this Lease
will be deemed binding upon Landlord only during the period of its
ownership of the Premises and not thereafter. The term “Landlord” in this
Lease shall mean only the owner, for the time being of the Premises, and in
the event of the transfer by such owner of its interest in the Premises, such
owner shall thereupon be released and discharged from all obligations of
Landlord thereafter accruing (but not from defaults accruing during such
Landlord’s ownership), but such obligations shall be binding during the Lease
Term upon each new owner for the duration of such owner’s ownership. Landlord
shall provide written notice to the Tenant of any such transfer within ten (10)
days thereof. Tenant acknowledges and agrees that neither Landlord, nor any
shareholder, officer, director, partner (general or limited), limited
liability company member, tenant-in-common,
venturer, trustee, trust beneficiary, grantor, trustee-grantor, or other
individual or entity having an interest in Landlord shall have any personal
liability for the performance of any of the terms, covenants, or conditions
to be performed by Landlord under this Lease; rather, Tenant agrees to

24

 

 

look solely to Landlord’s interest in the Premises and in no event shall
any personal liability be asserted against such current Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets
of such current Landlord.

     Article 37. FORCE MAJEURE. As used in this Lease, the term “Force Majeure”
shall mean and include those situations beyond the Landlord’s or Tenant’s
control, including by way of example and not by way of limitation, acts of
God; accidents; strikes; shortages of labor, supplies or materials; inclement
weather; or, where applicable, the passage of time while waiting for an
adjustment of insurance proceeds governmental action, or lack thereof, or due
to shortages of or unavailability of materials and/or supplies, labor
disputes, strikes, slow downs, job actions, picketing, secondary boycotts,
fire or other casualty, delays in transportation, acts of declared or
undeclared war, public disorder, riot or civil commotion, or due to any other
cause beyond the reasonable control of Landlord. Landlord shall in any or all
such events be excused from its obligation to perform and comply with such
provisions of this Lease for a period of time commensurate with any delay so
caused, without any liability to the Tenant therefor whatsoever, and all time
periods provided for herein for performance of any such obligations shall be
extended for a period of time commensurate with any such delay, provided that
nothing herein shall be deemed or construed to limit the Tenant’s right to
terminate this Lease as provided in Article 3 above.

     Article 38. NOTICES. Any notice by either party to the other must be in writing and
shall be deemed to have been duly given if delivered personally or sent
by hand delivery, certified mail, return receipt requested, postage prepaid,
or by a national courier service that obtains a signature on delivery,
addressed, if to the Tenant, at the Premises; if to the Landlord, at the
Landlord’s Address as set forth above; or, to either, at such other address as
the Tenant or the Landlord may designate to the other in writing. Notice
shall be deemed to have been duly given, if delivered personally or by
courier, on delivery thereof, and if mailed, upon the second (2nd)
business day after the mailing thereof.

     Article 39. NO WAIVER. Waiver by the Landlord of any breach by the Tenant of any
covenant or condition herein contained, or failure by the Landlord to
exercise any right or remedy in respect of any such breach, shall not
constitute a waiver or relinquishment for the future of such covenant or
condition or of any subsequent breach thereof, or bar any right or remedy of the
Landlord in respect of any subsequent breach, nor shall the receipt by the
Landlord of any rents or any portion thereof (regardless of any endorsement on
any check or any statement in any letter accompanying any payment or rent)
operate as an accord or satisfaction; or as a waiver of the right of the
Landlord to enforce the payment of rents previously due or any other covenant of
this Lease; or as a bar to the termination of this Lease or the recovery of the
Premises by any lawful means. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly Net Rent and Additional Rent herein stipulated
shall be deemed to be other than on account of the earliest Net Rent or
Additional Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice
to Landlord’s right to recover the balance of such rent or pursue any other
remedy in this Lease or at law provided.

25

 

 

     Article 40. WRITING REQUIRED. No provision of this Lease may be changed or
waived orally, but only by an instrument in writing signed by the party
to be charged therewith. This Lease may be executed in counterparts and each
such counterpart, when so executed by each party hereto, shall constitute but
one instrument and agreement and shall be enforceable against the party whose
signature is set thereon.

     Article 41. COMPLETE AGREEMENT. This Lease contains the entire agreement
of the parties hereto with respect to the leasing of the Premises by the
Landlord to the Tenant and supersedes completely all prior agreements and
understandings, whether written or oral, and all contemporaneous oral
agreements and understandings with respect to the leasing of the Premises by
the Landlord to the Tenant.

     Article 42. SIGNS. The Tenant may place signs upon, in or about the Premises or any
part thereof. Signs shall at all times conform with all municipal ordinances
or other laws and regulations applicable thereto at Tenant’s expense, and
Tenant shall obtain any required permits or licenses for the installation of
such signs at Tenant’s expense.

     Article 43. NO RECORDATION. Tenant shall not record this Lease or any short
form Memorandum thereof. Any such recordation by Tenant in violation of this
prohibition shall be a default hereunder and Landlord, among Landlord’s rights
upon default, may execute and record in Tenant’s name, place and stead, an
instrument adequate and sufficient to discharge such document from the public
records, and for such purposes, Tenant hereby grants an irrevocable power of
attorney to Landlord.

     Article 44. VALIDITY. Tenant represents and warrants to Landlord that this Lease is
valid, enforceable and binding upon Tenant, that no consent(s) are necessary to render this Lease
valid, enforceable and binding and that the person whose signature is set forth below is authorized
to execute and deliver this Lease on behalf of Tenant.

     Article 45. MISCELLANEOUS.

          (a) Without incurring any liability to Tenant, Landlord may permit access to
the Premises and open the same, whether or not Tenant shall be present, upon
demand of any receiver, trustee, assignee for the benefit of creditors,
sheriff, marshal or court officer entitled to, or reasonably purporting to be
entitled to, such access for the purpose of taking possession of, or removing,
Tenant’s property or for any other lawful purpose (but this provision and any
action by Landlord hereunder shall not be deemed a recognition by Landlord
that the person or official making such demand has any right or interest in or
to this Lease, or in or to the Premises), or upon demand of any representative
of the fire, policy, building, sanitation or other department of the city,
state or federal governments.

          (b) The terms “person” and “persons” as used in this Lease, shall be deemed
to include natural persons, firms, corporations, associations and any other private or
public
entities.

26

 

 

          (c) No receipt of moneys by Landlord from Tenant, after any reentry or after
the cancellation or termination of this Lease in any lawful manner, shall reinstate the
Lease; and
after the service of notice to terminate this Lease, or after the commencement
of any action, proceeding or other remedy, Landlord may demand, receive and
collect any monies due, and apply them on account of Tenant’s obligations
under this Lease but without affecting such notice, action, proceeding or
remedy, except that if a money judgment is being sought in any such action or
proceeding, the amount of such judgment shall be reduced by such payment.

          (d) If Tenant is in arrears in the payment of Net Rent or Additional Rent,
Tenant waives its right, if any, to designate the items in arrears against
which any payments made by Tenant are to be credited and Landlord may apply
any of such payments to any such items in arrears as Landlord, in its sole
discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which such payments shall be credited.

          (e) Tenant agrees to provide for use by Landlord and its mortgagee or
prospective mortgagee or purchaser, its annual report on Form l0-K as filed
with the Securities and Exchange Commission.

          (f) Neither Tenant nor Landlord, nor any person who owns a controlling
interest in or otherwise controls Tenant or Landlord, is (i) listed on
the Specially Designated
Nationals and Blocked Persons List or any other similar list maintained
by the Office of Foreign
Assets Control, Department of the Treasury, pursuant to any authorizing
statute, Executive Order
or regulation, (ii) a “specially designated global terrorist” or other
person listed in Appendix A to
Chapter V of 31 C.F.R., as the same has been from time to time updated and amended, or
(iii) a
person either (A) included within the term “designated national” as defined in
the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (B) designated under Sections 1
(a), 1(b), 1 (c) or 1(d)
of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25,
2001) or a person
similarly designated under any related enabling legislation or any other
similar Executive Orders.

[Signatures appear on the next page; balance of this page left intentionally blank]

27

 

 

     IN WITNESS WHEREOF the parties have caused this Lease Agreement to be
executed by their duly authorized representatives as of the day and year
first above written.

	 	 	 	 	 
	WITNESS: 	LANDLORD:

 BED BATH & BEYOND INC.

 	 
	 

	By:  	Steven H. Temares	 
	 	 	Name:  	Steven H. Temares 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	TENANT:

BREEZE-EASTERN CORPORATION

 	 
	 

	By:  	Gerald C. Harvey	 
	 	 	Name:  	Gerald C. Harvey 	 
	 	 	Title:  	Executive Vice President 	 
	 

 

 

     EXHIBIT A

All that certain tract, parcel and lot of land lying and being situate
in the Township of Union, County of Union, State of New Jersey, being
more particularly described as follows:

Beginning at a point formed by the intersection of the
northwesterly right of way line of Liberty Avenue (60 feet wide) with
the southwesterly line of Lot 2, Block 3503, said point being South 38
degrees 47 minutes 43 seconds West a distance of 100.13 feet from the
intersection of the southwesterly right of way line of Hickory Road (50
feet wide) and the northwesterly right of way line of Liberty Avenue;
thence

	1.	 	Along the northwesterly right of way line of Liberty Avenue, South 40 degrees 16
minutes 13 seconds West a distance of 429.64 feet to a point on
the northeasterly line of Lot 1, Block 200; thence
	 
	2.	 	Along the northeasterly line of Lot 1, Block 200, North 54 degrees 37 minutes 17
seconds West a distance of 858.83 feet to a point on the southeasterly line of
Lot
1.02, Block 3503; thence
	 
	3.	 	Along the southeasterly line of Lot 1.02, Block 3503, North 35 degrees 22
minutes 43 seconds East a distance of 502.35 feet to a point on the rear line of
the
lots fronting Hickory Road; thence
	 
	4.	 	Along the rear line of the lots fronting Hickory Road, South 49 degrees 52
minutes 47 seconds East a distance of 898.54 feet to the point and place of
Beginning.

Together with the benefits of that certain Declaration of Easements,
Covenants and Restrictions made by TransTechnology Corporation, as
successor by merger to Breeze Corporations, Inc. dated March 28, 2002,
recorded April 12, 2002 in Deed Book 5255,
Page 199.

Being in accordance with a survey prepared by P S & S, LLC, dated
January 11, 2008, revised January 28, 2008, and last revised to February
6, 2008, Job No. 03239.001.

Being also known as Lot 1.01, Block 3503, on the Official Tax Map of the
Township of Union, County of Union, State of New Jersey.

 

 

EXHIBIT B

TENANT’S INSURANCE COVERAGE

Provided by Tenant to Landlord.

30

 

 

EXHIBIT C

SERVICE CONTRACTS

	1.	 	A.D.T. (building alarm)
	 
	2.	 	Approved Fire Protection (fire protection systems)
	 
	3.	 	Brooksite Contractors (snow plowing services)
	 
	4.	 	Correct Temp (HVAC computer controls)
	 
	5.	 	Hatch Mott McDonald (sampling reporting and water flow meter calibration for
the Joint Meeting of Essex and Union County)
	 
	6.	 	Jersey National Cleaning Service (office cleaning)
	 
	7.	 	M.C.M. Mechanical Corp (HVAC units for office area)
	 
	8.	 	Newark Carting (dumpster service)
	 
	9.	 	OTIS Elevator (elevator maintenance)
	 
	10.	 	Philip Services (waste pickup)
	 
	11.	 	Western Pest Service (pest control)

31exv10w1

Exhibit 10.1

BROCADE COMMUNICATIONS SYSTEMS, INC.

1999 DIRECTOR PLAN

(Amended and restated as of April 10, 2008)

     1. Purposes of the Plan. The purposes of this 1999 Director Plan, amended and
restated as of April 10, 2008, are to attract and retain the best available personnel for
service as Outside Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.

          The Plan permits the grant of options and restricted stock units. All options granted
hereunder shall be nonstatutory stock options.

          As part of the amendment to the Plan, it is intended that the subsequent annual grants will be
made on the date of the Company’s Annual Meeting instead of the anniversary of the date each
director joined the Board. In order to transition from an anniversary date grant cycle to an
Annual Meeting grant cycle, the size of the Subsequent Options (as defined below) will be reduced
on a pro-rata basis as we approach the 2009 Annual Meeting as described in more detail below in
Section 8(c). A similar adjustment is made when a new director receives his first Subsequent
Option and Subsequent RSU (as defined below) as described in Section 9(a).

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Annual Meeting” means the Company’s annual meeting of stockholders.

          (b) “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.

          (c) “Award” means, individually or collectively, a grant under the Plan of Options or
Restricted Stock Units.

          (d) “Board” means the Board of Directors of the Company, or a duly authorized
committee of the Board of Directors of the Company.

          (e) “Code” means the Internal Revenue Code of 1986, as amended.

          (f) “Common Stock” means the common stock of the Company.

          (g) “Company” means Brocade Communications Systems, Inc., a Delaware corporation.

          (h) “Director” means a member of the Board.

          (i) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

          (j) “Employee” means any person, including officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor the payment
of

-1-

 

a Director’s fee by the Company will be sufficient in and of itself to constitute “employment”
by the Company.

          (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (l) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or
the Nasdaq Capital Market, its Fair Market Value shall be the closing sales price for such stock
(or, if no closing sales price was reported on that date, as applicable, on the last trading date
such closing sales price was reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as the Board deems
reliable;

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination (or, if no bids and asks were reported on
that date, as applicable, on the last trading date such bids and asks were reported); or

               (iii) In the absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Board.

          (m) “Inside Director” means a Director who is an Employee.

          (n) “Option” means a stock option granted pursuant to the Plan.

          (o) “Outside Director” means a Director who is not an Employee.

          (p) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (q) “Participant” means the holder of an outstanding Award.

          (r) “Plan” means this 1999 Director Plan, as amended and restated. The Plan was
previously referred to as the 1999 Director Option Plan.

          (s) “Restricted Stock Unit” or “RSU” means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, and granted to a Participant pursuant to
Section 6 of the Plan. Each Restricted Stock Unit represents an unfunded and unsecured obligation
of the Company.

          (t) “Share” means a share of the Common Stock, as adjusted in accordance with Section
15 of the Plan.

          (u) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Internal Revenue Code of 1986.

-2-

 

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of
Shares which may be granted as Restricted Stock Units or optioned and sold pursuant to an Option
under the Plan is 1,600,000 Shares (the “Pool”). The Shares may be authorized, but unissued, or
reacquired Common Stock.

          (b) If an outstanding Award expires or becomes unexercisable without having been exercised in
full, the unpurchased Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for future distribution
under the Plan.

          (c) An Award of Restricted Stock Units will be counted against the Pool as two and a half (2
1/2) Shares for every one (1) Share subject to such Award. To the extent that an Award counted as
two and a half (2 1/2) Shares against the Pool at the time of grant pursuant to the preceding
sentence is recycled back into the Plan (e.g., upon Award termination), the Plan will be credited
with two and a half (2 1/2) Shares that will thereafter be available for future issuance under the
Plan.

     4. Options.

          (a) Administration of Option Grants.

               (i) All grants of Options to Outside Directors under this Plan shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following provisions; provided,
however, that the Board may, in its sole discretion, provide that certain Outside Directors are not
eligible to receive grants of Options for specified periods of time.

               (ii) No person shall have any discretion to determine the number of Shares to be covered by
Options.

               (iii) In the event that any Option granted under the Plan would cause the number of Shares
subject to outstanding Options plus the number of Shares previously purchased under Options to
exceed the Pool, then the remaining Shares available for Option grant shall be granted under
Options to the Outside Directors on a pro rata basis. No further grants shall be made until such
time, if any, as additional Shares become available for grant under the Plan through action of the
Board or the stockholders to increase the number of Shares which may be issued under the Plan or
through cancellation or expiration of Options previously granted hereunder.

          (b) Prohibition Against Repricing. Subject to the provisions of Section 15 of the
Plan, the terms of any Option may not be amended to reduce the exercise price of outstanding
Options or cancel outstanding Options in exchange for cash, other Awards or Options with an
exercise price that is less than the exercise price of the original Option without stockholder
approval.

     5. Exercise of Options.

          (a) Procedure for Exercise of an Option; Rights as Stockholder.

               (i) Any Option granted hereunder shall be exercisable at such times as are set forth in
Section 7(a) or 8(a), as applicable, hereof; provided, however, that no Options shall be

-3-

 

exercisable until stockholder approval of the Plan in accordance with Section 21 hereof has
been obtained.

               (ii) An Option may not be exercised for a fraction of a Share.

               (iii) An Option shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person entitled to exercise
the Option and full payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and method of payment
allowable under Section 13 of the Plan. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. A
share certificate for the number of Shares so acquired shall be issued to the Participant as soon
as practicable after exercise of the Option. No adjustment shall be made for a dividend or other
right for which the record date is prior to the date the stock certificate is issued, except as
provided in Section 15 of the Plan.

               (iv) Exercise of an Option in any manner shall result in a decrease in the number of Shares
which thereafter may be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.

          (b) Termination of Continuous Status as a Director. Subject to Section 15 hereof, in
the event an Participant’s status as a Director terminates (other than upon the Participant’s death
or Disability), the Participant may exercise his or her Option, but only within three (3) months
following the date of such termination, and only to the extent that the Participant was entitled to
exercise it on the date of such termination (but in no event later than the expiration of its ten
(10) year term). To the extent that the Participant was not entitled to exercise an Option on the
date of such termination, and to the extent that the Participant does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

          (c) Disability of Participant. In the event Participant’s status as a Director
terminates as a result of Disability, the Participant may exercise his or her Option, but only
within twelve (12) months following the date of such termination, and only to the extent that the
Participant was entitled to exercise it on the date of such termination (but in no event later than
the expiration of its ten (10) year term). To the extent that the Participant was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

          (d) Death of Participant. In the event of an Participant’s death, the Participant’s
estate or a person who acquired the right to exercise the Option by bequest or inheritance may
exercise the Option, but only within twelve (12) months following the date of death, and only to
the extent that the Participant was entitled to exercise it on the date of death (but in no event
later than the expiration of its ten (10) year term). To the extent that the Participant was not
entitled to exercise an Option on the date of death, and to the extent that the Participant’s
estate or a person who acquired the right to exercise such Option does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

-4-

 

     6. Restricted Stock Units.

          (a) Procedures for Grants.

               (i) All grants of Restricted Stock Units to Outside Directors under this Plan shall be
automatic and nondiscretionary and shall be made strictly in accordance with the following
provisions; provided, however, that the Board may, in its sole discretion, provide that certain
Outside Directors are not eligible to receive grants of Restricted Stock Units for specified
periods of time.

               (ii) No person shall have any discretion to determine the number of Shares to be covered by
Restricted Stock Units.

          (b) Form and Timing of Payment. Restricted Stock Units shall be settled in Shares, on
a one unit for one Share basis. When Shares are paid to the Participant in payment for the
Restricted Stock Units, par value ($.001 per share) will be deemed paid by the Participant for each
Restricted Stock Unit by services rendered by the Participant. Payment of earned Restricted Stock
Units shall be made as soon as practicable after the date(s) determined by the Board but no later
than March 15th of the calendar year following the applicable vesting date.

          (c) Cancellation. On the date of Participant’s termination as a Director, all
unvested Restricted Stock Units shall be forfeited to the Company.

          (d) Additional RSU Terms.

               (i) Company’s Obligation to Pay. Unless and until the Restricted Stock Units have vested in
the manner set forth above, the Participant will have no right to payment of such Restricted Stock
Units. Prior to actual payment of Shares upon the vesting of any Restricted Stock Units, such
Restricted Stock Units will represent an unsecured obligation. Payment of any vested Restricted
Stock Units shall be made in whole Shares.

               (ii) Rights as Stockholder. Neither the Participant nor any person claiming under or through
the Participant will have any of the rights or privileges of a stockholder of the Company in
respect of any Shares deliverable hereunder unless and until certificates representing such Shares
(which may be in book entry form) will have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Participant (including through electronic
delivery to a brokerage account). After such issuance, recordation and delivery, the Participant
will have all the rights of a stockholder of the Company with respect to voting such Shares and
receipt of dividends and distributions on such Shares.

     7. First Awards.

          (a) First Option Grant. Each Outside Director shall be automatically granted an
Option to purchase 50,000 shares (the “First Option”) on the date on which such person first
becomes an Outside Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases
to be an Inside Director but who remains a Director shall not receive a First Option. The terms of
a First Option granted hereunder shall be as follows:

               (i) the term of the First Option shall be ten (10) years.

-5-

 

               (ii) the First Option shall be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Sections 5 and 15 hereof.

               (iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the
date of grant of the First Option.

               (iv) subject to Sections 10 and 15 hereof, the First Option shall become exercisable as to
one-third of the Shares subject to the First Option each anniversary following its date of grant,
so as to become 100% vested on the third anniversary of the date of grant, provided that the
Participant continues to serve as a Director on such dates.

          (b) First RSU Grant.

               (i) Grant. Each Outside Director shall be automatically granted 15,000 Restricted
Stock Units (“First RSU”) on the date on which such person first becomes an Outside Director,
whether through election by the stockholders of the Company or appointment by the Board to fill a
vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who
remains a Director shall not receive a First Option.

               (iii) Vesting.
Subject to Sections 10 and 15, the First RSU shall vest and become
payable as to one-third of the Shares subject to the First RSU on the one (1) year anniversary of
the date of grant, and as to one-third of the Shares subject to the First RSU at each anniversary
thereafter, so that the First RSU shall be fully vested and become payable in full three (3) years
after its date of grant, provided that the Participant continues to serve as a Director on such
dates.

     8. Subsequent Awards.

          (a) Subsequent Option Grant On or After 2009 Annual Meeting. Commencing at the 2009
Annual Meeting and subject to proration under Section 9(a) below, each Outside Director shall be
automatically granted an Option to purchase 20,000 shares (“Subsequent Option”) annually on the
date of the Annual Meeting, provided that such Outside Director had served as an Outside Director
prior to such Annual Meeting and that he or she continues to be an Outside Director at and
immediately following such Annual Meeting. The terms of a Subsequent Option granted hereunder shall
be as follows:

               (i) the term of the Subsequent Option shall be ten (10) years.

               (ii) the Subsequent Option shall be exercisable only while the Outside Director remains a
Director of the Company, except as set forth in Sections 5 and 15 hereof.

               (iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the
date of grant of the Subsequent Option.

               (iv) subject to Sections 10 and 15 hereof, the Subsequent Option will become exercisable as to
100% of the Shares subject to the Subsequent Option on the one (1) year anniversary of the date of
grant, provided that the Participant continues to serve as a Director on such date.

-6-

 

          (b) Subsequent RSU Grant.

               (i) Grant. Commencing at the 2008 Annual Meeting and subject to proration under
Section 9(a), each Outside Director shall be automatically granted 10,000 Restricted Stock Units
(the “Subsequent RSU”) annually on the date of the Annual Meeting, provided that such Outside
Director had served as an Outside Director prior to such Annual Meeting and that he or she
continues to be an Outside Director at and immediately following such Annual Meeting.

               (ii) Vesting. Subject to Sections 10 and 15, the Subsequent RSU shall vest and become
payable as to 100% of the Shares subject to the Subsequent RSU on the one (1) year anniversary of
the date of grant, provided that the Participant continues to serve as a Director on such date.

          (c) Subsequent Option Grants Prior to 2009 Annual Meeting (Transition Year). Each
Outside Director who was appointed or elected to the Board prior to the 2008 Annual Meeting and
that continues to be an Outside Director through their respective anniversary date of appointment
or election to the Board will be entitled to receive a Subsequent Option in an amount based on the
anniversary date of such Outside Director’s becoming a Director as follows:

               (i) Anniversary date occurs during the Company’s 2nd fiscal quarter 2008 (following
the 2008 Annual Meeting): an option to purchase 20,000 Shares.

               (ii) Anniversary date occurs during the Company’s 3rd fiscal quarter 2008: an
option to purchase 15,000 Shares.

               (iii) Anniversary date occurs during the Company’s 4th fiscal quarter 2008: an
option to purchase 10,000 Shares.

               (iv) Anniversary date occurs during the Company’s 1st fiscal quarter 2009: an
option to purchase 5,000 Shares.

               (v) An Outside Director with an anniversary date that occurs during the Company’s
2nd fiscal quarter 2009 but prior to the 2009 Annual Meeting will not be entitled to
receive a Subsequent Option on such anniversary date, but will receive a full Subsequent Option and
Subsequent RSU at the 2009 Annual Meeting pursuant to Sections 8(a) and 8(b), respectively.

               The terms of a Subsequent Option granted pursuant to this Section 8(c) shall otherwise be
subject to the terms described in Section 8(a)(i)-(iv). Outside Directors who receive grants
pursuant to this Section 8(c) will also be entitled to receive full grants of the Subsequent Option
and the Subsequent RSU Grant at the 2009 Annual Meeting pursuant to Section 8(a) and 8(b),
respectively. Subsequent Options pursuant to this Section 8(c) shall be granted on such Outside
Director’s applicable anniversary date. There shall not be any grants pursuant to this Section
8(c) after the 2009 Annual Meeting.

     9. Subsequent Award Pro Ration Policy.

          (a) New Directors Appointed Before an Annual Meeting. At the first (and only
the first) Annual Meeting after an Outside Director first becomes an Outside Director (commencing
at the 2009 Annual Meeting), such Outside Director will receive at such Annual Meeting, a
proportionate
amount of the Subsequent Option and Subsequent RSU (in lieu of the full Subsequent Option and
Subsequent RSU) based on the date of such Outside Director’s appointment as follows:

-7-

 

               (i) Appointment on the date of the Annual Meeting, or after the date of the Annual Meeting but
prior to the end of the Company’s 2nd fiscal quarter of the fiscal year prior to the
fiscal year during which the Annual Meeting occurs: 100% of both the Subsequent Option and
Subsequent RSU.

               (ii) Appointment in the Company’s 3rd fiscal quarter of the fiscal year prior to
the fiscal year during which the Annual Meeting occurs: 75% of both the Subsequent Option and
Subsequent RSU.

               (iii) Appointment in the Company’s 4th fiscal quarter of the fiscal year prior to
the fiscal year during which the Annual Meeting occurs: 50% of both the Subsequent Option and
Subsequent RSU.

               (iv) Appointment in the Company’s 1st fiscal quarter of the fiscal year during
which the Annual Meeting occurs: 25% of both the Subsequent Option and Subsequent RSU.

               (v) Appointment in the Company’s 2nd fiscal quarter of the fiscal year during which
the Annual Meeting occurs and before the Annual Meeting date for such fiscal year: 0% of both the
Subsequent Option and Subsequent RSU.

     10. Certain Acceleration of Vesting Based on Timing of Annual Meeting.

          (a) Subsequent Awards. In the event that the Company’s next annual meeting of stockholders
following the award of a Subsequent Option or Subsequent RSU is held prior to the one year
anniversary of the date of grant of such Subsequent Option or Subsequent RSU, and an Outside
Director is not standing for re-election upon the expiration of his or her term at such annual
meeting but continues to serve until such annual meeting, then the applicable Subsequent Option and
Subsequent RSU shall vest on the date of such annual meeting.

          (b) First Awards. In the event that the Company’s annual meeting of stockholders is held
prior to a partial vesting anniversary date for a First Option or First RSU that was originally
granted on the date of an annual meeting, and an Outside Director is not standing for re-election
upon the expiration of his or her term at an annual meeting but continues to serve until such
annual meeting, then the applicable portion of the First Option and First RSU scheduled to vest in
such year shall vest on the date of such annual meeting.

     11. Eligibility. Awards may be granted only to Outside Directors. All Options shall
be automatically granted in accordance with the terms set forth in Section 4 hereof. All
Restricted Stock Units will be granted in accordance with the terms set forth in Section 6 hereof.

     The Plan shall not confer upon any Participant any right with respect to continuation of
service as a Director or nomination to serve as a Director, nor shall it interfere in any way with
any rights which the Director or the Company may have to terminate the Director’s relationship with
the Company at any time.

     12. Term of Plan. This Plan is an amendment and restatement of the 1999 Director
Option Plan effective as of its approval by the stockholders of the Company at the Company’s 2008
Annual Meeting as described in Section 21 of the Plan. It shall continue in effect until the tenth
anniversary of the Plan’s initial effectiveness unless sooner terminated under Section 16 of the
Plan.

-8-

 

     13. Form of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check,
(iii) other Shares which have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, (iv) consideration
received by the Company under a cashless exercise program implemented by the Company in connection
with the Plan, or (v) any combination of the foregoing methods of payment.

     14. Non-Transferability of Awards. Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Participant, only by the
Participant. Upon any attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose
of an Award, the Award immediately will become null and void.

     15. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.

          (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Award, the number of Shares which
have been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Award, as well as the
price per Share covered by each such outstanding Award shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or any other increase
or decrease in the number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration”; provided, further, that the
number of Shares subject to subsequently granted First Options, Subsequent Options, First RSUs, and
Subsequent RSUs shall not be proportionately adjusted. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of Shares subject to an Award.

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously exercised or a
Restricted Stock Unit has not vested, it shall terminate immediately prior to the consummation of
such proposed action.

          (c) Merger or Asset Sale.

               (i) In the event of a merger of the Company with or into another corporation or the sale of
substantially all of the assets of the Company, outstanding Awards may be assumed or equivalent
Awards may be substituted by the successor corporation or a Parent or Subsidiary thereof (the
“Successor Corporation”). If an Award is assumed or substituted for, the Award or equivalent award
shall continue to be exercisable or vest as provided in Section 7 or 8, as applicable, hereof for
so long as the Participant serves as a Director or a director of the Successor Corporation.
Following such assumption or substitution, if the Participant’s status as a Director or director of
the Successor
Corporation, as applicable, is terminated other than upon a voluntary resignation by the
Participant, the Award or award shall become fully exercisable, including as to Shares for which it
would not otherwise be exercisable. Thereafter, the Award or award shall remain exercisable in
accordance with Sections 5 (b) through (d) above.

-9-

 

               (ii) If the Successor Corporation does not assume an outstanding Option or substitute for it
an equivalent option, the Option shall become fully vested and exercisable, including as to Shares
for which it would not otherwise be exercisable. In such event the Board shall notify the
Participant that the Option shall be fully exercisable for a period of thirty (30) days from the
date of such notice, and upon the expiration of such period the Option shall terminate. If the
Successor Corporation does not assume an outstanding grant of Restricted Stock Units or substitute
for it an equivalent award, the grant of Restricted Stock Units shall vest immediately prior to the
consummation of the applicable transaction.

               (iii) For the purposes of this Section 15(c), an Award shall be considered assumed if,
following the merger or sale of assets, the Award confers the right to purchase or receive, for
each Share subject to the Award immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in the merger or sale
of assets by holders of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares). If such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its Parent, the Board
may, with the consent of the successor corporation, provide for the consideration to be received
upon the exercise of the Option, or upon the payout of a Restricted Stock Unit, for each Share
subject to the Award, to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common Stock in the merger
or sale of assets.

     16. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made
which would impair the rights of any Participant under any grant theretofore made, without his or
her consent. In addition, to the extent necessary and desirable to comply with Applicable Laws,
the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

          (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan
shall not affect Awards already granted and such Awards shall remain in full force and effect as if
this Plan had not been amended or terminated.

     17. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued under any Award unless the issuance and delivery of such Shares
pursuant thereto, and in the case of an Option, the exercise of such Option, shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such compliance.

          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares,
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

-10-

 

          (c) Inability of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority shall not have been obtained.

     18. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     19. Award Agreement. Awards shall be evidenced by written award agreements in such
form as the Board shall approve.

     20. Stockholder Approval. The Plan shall be subject to approval by the stockholders
of the Company at the Company’s 2008 Annual Meeting. Such stockholder approval shall be obtained
in the degree and manner required under Applicable Laws.

     21. No Guarantee of Continued Service. The Plan shall not confer upon any
Participant any rights with respect to continuation of service as a Director or other service
provider to the Company or nomination to serve as a Director, nor shall it interfere in any way
with any rights which the Director of the Company may have to terminate the Director’s relationship
with the Company at any time.

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BROCADE COMMUNICATIONS SYSTEMS, INC.

DIRECTOR OPTION AGREEMENT

     Brocade Communications Systems, Inc., (the “Company”), has granted to [       ] (the
“Optionee”), an option to purchase a total of [       ] shares of the Company’s Common Stock
(the “Optioned Stock”), at the price determined as provided herein, and in all respects subject to
the terms, definitions and provisions of the Company’s 1999 Director Plan, as amended (the “Plan”),
adopted by the Company which is incorporated herein by reference. The terms defined in the Plan
shall have the same defined meanings herein.

     1. Nature of the Option. This Option is a nonstatutory option and is not intended to
qualify for any special tax benefits to the Optionee.

     2. Exercise Price. The exercise price is $___for each share of Common Stock.

     3. Exercise of Option. This Option shall be exercisable during its term in accordance
with the provisions of Section 5 of the Plan as follows:

          (a) Right to Exercise.

               (i) This Option shall become exercisable in installments cumulatively with respect to [       ]
percent (%) of the Optioned Stock one year after the date of grant, and as to an additional [      
] percent (%) of the Optioned Stock on each anniversary of the date of grant, so that one hundred
percent (100%) of the Optioned Stock shall be exercisable [       ] years after the date of grant;
provided, however, that in no event shall any Option be exercisable prior to the date the
stockholders of the Company approve the Plan.

               (ii) This Option may not be exercised for a fraction of a share.

               (iii) In the event of Optionee’s death, disability or other termination of service as a
Director, the exercisability of the Option is governed by Section 5 of the Plan.

          (b) Method of Exercise. This Option shall be exercisable by written notice which
shall state the election to exercise the Option and the number of Shares in respect of which the
Option is being exercised. Such written notice, in the form attached hereto as Exhibit A, shall be
signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of
the Company. The written notice shall be accompanied by payment of the exercise price.

     4. Method of Payment. Payment of the exercise price shall be by any of the following,
or a combination thereof, at the election of the Optionee:

          (a) cash;

          (b) check; or

          (c) surrender of other shares which (x) in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six (6) months on the date of

-12-

 

surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised; or

     (iv) delivery of a properly executed exercise notice together with such other documentation as
the Company and the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the exercise price.

     5. Restrictions on Exercise. This Option may not be exercised if the issuance of such
Shares upon such exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other law or regulations,
or if such issuance would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be required by any
applicable law or regulation.

     6. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

     7. Term of Option. This Option may not be exercised more than ten (10) years from the
date of grant of this Option, and may be exercised during such period only in accordance with the
Plan and the terms of this Option.

     8. Taxation Upon Exercise of Option. Optionee understands that, upon exercise of this
Option, he or she will recognize income for tax purposes in an amount equal to the excess of the
then Fair Market Value of the Shares purchased over the exercise price paid for such Shares. Since
the Optionee is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, under
certain limited circumstances the measurement and timing of such income (and the commencement of
any capital gain holding period) may be deferred, and the Optionee is advised to contact a tax
advisor concerning the application of Section 83 in general and the availability a Section 83(b)
election in particular in connection with the exercise of the Option. Upon a resale of such Shares
by the Optionee, any difference between the sale price and the Fair Market Value of the Shares on
the date of exercise of the Option, to the extent not included in income as described above, will
be treated as capital gain or loss.

	 	 	 	 	 	 	 
	DATE OF GRANT:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	BROCADE COMMUNICATIONS SYSTEMS, INC.,
	a Delaware corporation
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 

     Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts
this
Option subject to all of the terms and provisions thereof. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the Board upon any questions
arising under the Plan.

	 	 	 	 	 
	Dated:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	 
	Optionee	 	 

-13-

 

EXHIBIT A

DIRECTOR OPTION EXERCISE NOTICE

Brocade Communications Systems, Inc.

1745 Technology Drive

San Jose CA 95110

Attention: Corporate Secretary

	1.	 	Exercise of Option. The undersigned (“Optionee”) hereby elects to
exercise Optionee’s option to purchase ___shares of the Common Stock (the “Shares”)
of Brocade Communications Systems, Inc. (the “Company”) under and pursuant to the
Company’s 1999 Director Plan, as amended, and the Director Option Agreement dated
___(the “Agreement”).
	 
	2.	 	Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
	 
	3.	 	Federal Restrictions on Transfer. Optionee understands that the Shares
must be held indefinitely unless they are registered under the Securities Act of 1933,
as amended (the “1933 Act”), or unless an exemption from such registration is
available, and that the certificate(s) representing the Shares may bear a legend to
that effect. Optionee understands that the Company is under no obligation to register
the Shares and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.
	 
	4.	 	Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee’s purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultant(s)
Optionee deems advisable in connection with the purchase or disposition of the Shares
and that Optionee is not relying on the Company for any tax advice.
	 
	5.	 	Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase and has
made provision for the payment of any federal or state withholding taxes required to be
paid or withheld by the Company.
	 
	6.	 	Entire Agreement. The Agreement is incorporated herein by reference.
This Exercise Notice and the Agreement constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof. This Exercise Notice and the
Agreement are governed by Delaware law except for that body of law pertaining to
conflict of laws.

	 	 	 	 	 	 	 	 	 
	Submitted by:	 	Accepted by:
	OPTIONEE:	 	BROCADE COMMUNICATIONS SYSTEMS, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Address:
	 	1745 Technology Drive
	 

	 	 	 	 	 	 	 	San Jose CA 95110
	Dated:

	 	 	 	Dated:	 	 	 	 
	 	 	 	 	 	 	 

-14-

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