Document:

exv10w1

 

Exhibit 10.1

RESIDENTIAL MASTER LEASE

     THIS RESIDENTIAL MASTER LEASE (this “Lease”), dated as of ___, ___, 2005, is by and
between ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate investment trust [or other entity
which is the fee simple owner of the property, as applicable] (“Landlord”), and [SPE], a ___
corporation (“Tenant”). [NOTE: SOME BRACKETED PROVISIONS TO BE CONSIDERED AND ADDED OR EXCLUDED
DEPENDING ON SUBJECT PROPERTY, AND WILL NEED TO BE REVISED TO REFLECT LOCAL LAWS]

     Landlord and Tenant hereby agree as follows:

1. BASIC LEASE INFORMATION AND CERTAIN DEFINED TERMS

     The following is a summary of basic lease information (the “Basic Lease Information”). Each
item below shall be deemed to incorporate all of the terms in this Lease pertaining to such item.
In the event of any conflict between the information in this Section and any more specific
provision of this Lease, the more specific provision shall control.

	 	 	 
	Landlord:

	 	Archstone-Smith Operating Trust, a
Maryland real estate investment
trust [or other entity which is the
fee simple owner of the property,
as applicable].
	 
	 	 
	[Landlord Guarantor

	 	Archstone-Smith Operating Trust, a
Maryland real estate investment
trust] (if Landlord is not ASOT)
	 
	 	 
	Tenant:

	 	[SPE], a ___
	 
	 	 
	Tenant Guarantor:

	 	R&B Realty Group, a California
limited partnership (“R&B”)
	 
	 	 
	Premises (Section 3.1):

	 	The Premises consist of the Land
and all improvements thereon
(including the Building) and the
FF&E (as such terms are defined
below)[, but excluding therefrom
the Excluded Premises]. [Note for
San Jose the Land will not include
the Development Parcel]
	 
	 	 
	[Excluded Premises (Section 3.2):]

	 	[That portion of the Building
consisting of ___—
Identify office and retail space in
the Urban properties which is to be
retained by Landlord].
	Term (Section 2):

	 	Seven (7) years, commencing upon
the Commencement Date and expiring
upon the Expiration Date (as such
terms are defined below), subject
to early termination as

 

 

	 	 	 
	

	 	provided in
this Lease. There are no extension
options.
	 
	 	 
	Tenant Termination Right (Section

2) (Term):

	 	Terminable at any time following
the first (1st)
anniversary of the Commencement
Date, at Tenant’s option, on 90
days’ written notice to Landlord in
accordance with the provisions of
this Lease. [In Chicago Lease,
delete the phrase “following the
first (1st) anniversary
of the Commencement Date"]
	 
	 	 
	Base Rent (Section 4.1):

	 	Annual Base Rent: $___
	 
	 	 
	

	 	Monthly Base Rent:
	

	 	$___[insert per
schedule attached to the Master
Agreement]
	 
	 	 
	Base Rent Adjustment Dates
(Section 4.2):

	 	On January 1 of each calendar year
during the Term (each, a “Base Rent
Adjustment Date”), the Base Rent
shall be adjusted as provided for
in Section 4.2.
	 
	 	 
	Use (Section 5.1):

	 	Tenant may use the Premises for the
purpose of providing and/or
performing the following services,
each in accordance with and subject
to the terms of this Lease: (i)
renting residential dwelling units,
including the rental of
Conventional Units (defined below)
and Corporate Units (defined
below), and providing usual and
customary utilities and other
support services, facilities and
amenities provided to residential
apartment dwellings [including
parking in the parking facilities
of the Premises] and various
additional services, facilities
and/or amenities as Tenant may
elect to provide (with Landlord’s
consent, where such consent is
required under this Lease) or is
required under the terms of this
Lease to provide, including,
without limitation, those services,
facilities and/or amenities
comprising of and/or related to the
Extended Stay Services (as defined
below) with respect to the
Corporate Units; [(ii) the
following commercial and/or retail
uses in those portions of the
Building as identified on Exhibit
A-2 attached hereto (collectively,
the “Retail Service Areas”): convenience and/or sundry store,
dry cleaners, tennis pro-shop,
and/or any other existing uses
	 

	 	 

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	 	currently operated in such portions
of the Building and/or any other
uses which Tenant elects to provide
in the future as an amenity and/or
support for the residential
dwelling uses in the Building
(collectively, the “Retail
Services”]; and [(ii)] (iii)
operating an on-site leasing, sales
and/or management offices within
portions of the Building as
designated by Tenant from time to
time for general administrative use
associated with the operation of
leasing and/or corporate business
activities of Tenant and/or any
Affiliate of Tenant.
	 
	 	 
	Notice Address of Landlord

	 	

	(Section 22.1):

	 	

	

	 	

	

	 	Facsimile number:
	 
	 	 
	With a copy to:

	 	

	

	 	

	

	 	

	

	 	Facsimile number:
	 
	 	 
	Notice Address for Tenant

	 	

	(Section 22.1):

	 	

	

	 	

	

	 	Facsimile number:
	 
	 	 
	with a copy to:

	 	R&B Realty Group
	

	 	2222 Corinth Avenue
	

	 	Los Angeles, California 90064
	

	 	Attn: Steven Selcer, CFO
	

	 	Facsimile number:

     Defined Terms:

Certain defined terms used in this Lease are set forth below:

     “Abatement Amount” shall mean, with respect to any event described in this Lease which
provides for an abatement of Base Rent (or a proportionate reduction in Base Rent following a
partial termination of this Lease) payable by Tenant under this Lease (herein, an “Abatement
Event”), an amount equal to the Base Rent payable under this Lease with respect to the Units rendered untenantable by the
Abatement Event minus the amount of any business interruption insurance proceeds received by Tenant
with respect to the sublease rent payable to Tenant for such affected Units on account of such
Abatement Event. For purposes of

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determining the amount of Base Rent that will abate following an
Abatement Event, Base Rent shall be allocated entirely to the Units and not the common areas or any
other areas of the Premises, and the Abatement Amount shall be determined based upon the total
number of Units affected, as compared to the total number of Units at the Premises.

     “ACI” means those specific Same-Store Properties in the geographic area denoted as the
“Initial Archstone Comparable Index” on Schedule 1, attached hereto and made a part hereof,
which Same-Store Properties are also listed in such Schedule 1. If, from time to time, an
ASOT Party acquires or develops an additional residential apartment property in such geographic
area, such additional property will not be included in the Initial Archstone Comparable
Index without the consent of Tenant (not to be unreasonably withheld or delayed), irrespective of
whether ASOT may otherwise consider such property to be a Same-Store Property. In the event any
such additional residential property is a Same-Store Property, but Tenant does not consent to the
inclusion of any such Same-Store Property in the Initial Archstone Comparable Index by the date
upon which any subsequent reference to the ACI is required under the terms of this Lease, then the
ACI that will be used for such comparison purposes will be the Same-Store Properties from time to
time included in the geographic area denoted as the “First Default ACI” in Schedule 1, or
if the number of Same-Store Properties that are then in the First Default ACI is less than ___,
then the Same-Store Properties from time to time included in the geographic area denoted in
Schedule 1 as the “Second Default ACI” will be the ACI for such comparison purposes. So
long as the Initial Archstone Comparable Index, as modified from time to time with the consent of
Tenant as hereinbefore provided, continues as the ACI, if at any time the number of Same-Store
Properties in such Initial Archstone Comparable Index drops below ___(such as, for example, due to
a sale of such property by an ASOT Party to a non-ASOT Party or because such property is no longer
considered a Same-Store Property by ASOT), then Landlord and Tenant will endeavor in good faith to
reach agreement on appropriate adjustments to the Initial Archstone Comparable Index to arrive at a
mutually acceptable revised ACI which will, upon such agreement, become the ACI. Thereafter,
whenever the number of Same-Store Properties in any agreed upon ACI drops below ___, Landlord and
Tenant will endeavor in good faith to reach agreement on appropriate adjustments to the agreed upon
ACI to arrive at a mutually acceptable revised ACI. If, however, by any date upon which reference
to the ACI is necessary under any provision of this Lease, Landlord and Tenant are unable to reach
agreement on any other modifications to the ACI that may be required as hereinbefore provided, then
the ACI that will be used for the relevant comparison purposes will be the First Default ACI,
unless and until the number of Same-Store Properties in the First Default ACI is less than or drops
below ___, in which case the ACI will be the Second Default ACI. If at any time the First Default
ACI or the Second Default ACI is used as the ACI under this Lease in accordance with the foregoing
provision, such default ACI shall continue as the ACI hereunder unless and until Landlord and
Tenant thereafter reach agreement on a modified ACI.

     “Affiliate” means (i) any entity which controls, is controlled by or is under common control
with the subject party, or (ii) with respect to Tenant only, (A) Worldwide
Corporate Housing, LP (“WCH”), so long as it is controlled by Howard Ruby and/or Edward Broida
and/or any of their respective family trusts or estates, (B) R&B, so long as it is controlled by
Howard Ruby and/or Edward Broida and/or any of their respective family trusts or estates, (C) any
other entity which is controlled by Howard Ruby and/or Edward Broida and/or any of their respective
family trusts or estates, or (D) any entity approved by Landlord in its reasonable

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discretion
(provided that good faith objections based upon whether Landlord objects to having a business
relationship with such entity are hereby agreed to be reasonable) that (1) is other than an entity
described in clauses (A), (B) and (C) hereinabove, and (2) either (x) is merged into or
consolidated with Tenant, WCH or R&B, or into which Tenant, WHC or R&B are merged or consolidated,
or (y) acquires Tenant, WCH or R&B, a controlling interest in Tenant, WCH or R&B, or all or a
substantial portion of the assets of Tenant, WCH or R&B, or all or a substantial portion of the
corporate housing business of Tenant, WCH or R&B. For this purpose, “control” shall mean the
possession of the power to direct or cause the direction of the management and policies of such
entity, whether through the ownership of voting securities or by contract or otherwise.

     “Agents” with respect to either party, means the agents, employees, officers and contractors
of such party, but shall not include any Subtenants.

     “Alterations” has the meaning specified in Section 6.1.

     “ASOT” means Archstone-Smith Operating Trust, a Maryland real estate investment trust.

     “ASOT Party” or “ASOT Parties” has the meaning specified in Section 21.1.2.

     “ASOT Standards” means the standard of care and quality generally employed in the leasing
activities and in the maintenance, repair, operation and capital improvement with respect to
properties in the ACI of the same asset type (garden or high rise) as the Premises that are
operated under the “Archstone Communities” or “Charles E. Smith Residential” brand, or any
subsequent brand used by ASOT for a particular asset type in the ACI (excluding any assets operated
under “AMERTION Properties Incorporate,” or its successor).

     “Award” has the meaning specified in Section 12.1.

     “Base Rent” has the meaning specified in Section 1.

     “Base Rent Adjustment Date” has the meaning specified in Section 1.

     “Building” has the meaning specified in Section 3.1.

     “Business Day” means any day other than Saturday, Sunday and any other day on which banks are
allowed or required by law to close in the state in which the Premises are located.

     “Claims” has the meaning specified in Section 14.4.1.

     “Closing” has the meaning specified in Section 19.1.

     “Closing Agreements” has the meaning specified in Section 19.1.

     “Commencement Date” means the date of execution of this Lease by Landlord and Tenant.

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     “Conventional Units” means those Units that are not Corporate Units.

     “Conventional Unit Below Market Deficiency” has the meaning specified in Section 19.2.

     “Corporate Units” means those Units that are available for rent with furnishings provided by
Tenant and for which the occupant of the Unit is provided Extended Stay Services by Tenant.

     “Date of Taking” has the meaning specified in Section 12.1.

     “Default Rate” means the lesser of (i) prime rate of Bank of America as announced from time to
time plus six percent (6%), and (ii) the maximum rate permitted under law.

     [“Development Parcel” has the meaning specified in Section 3.3.]

     “Early Termination Date” has the meaning specified in Section 19.1.

     “Eligibility Period” means with respect to any given Unit following an Abatement Event, the
period that is three (3) Business Days after Tenant shall have provided notice to Landlord of the
onset of such event.

     “Exclusivity Period” shall mean the period comprising the entire Term of this Lease.

     “Environmental Laws” has the meaning specified in Section 18.1(a).

     “Event of Default” has the meaning specified in Section 14.1.1.

     “Expiration Date” means the date that is one (1) day prior to the day that is seven (7) years
after the Commencement Date.

     “Expiration Statement” has the meaning specified in Section 19.1.

     “Expiration Statement Date” has the meaning specified in Section 19.1.

     “Extended Stay Services” means the provision of house-wares, linens, electronics, small
appliances and other items and services of a type that are typically associated with an extended
stay lease arrangement.

     [“Excluded Premises” has the meaning specified in Section 1.]

     “Exclusive ROFR Properties” has the meaning specified in Section 21.1.2.

     “Final Designation Date” has the meaning specified in Section 19.1. 

     “FF&E” means, collectively, the following items, and all modifications, improvements and
replacements thereof or thereto made by or on behalf of Tenant or Landlord from time to time
pursuant to this Lease: (i) the permanently affixed fixtures, furnishings, furniture and equipment
located on the Land and/or on or in the Building from time, including without

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limitation, Unit
FF&E; and (ii) the movable furnishings, fixtures and equipment that are (A) from time to time
located in the common areas of the Premises, the leasing and/or management offices of the Premises,
and/or in the model Units in the Building existing as of the Commencement Date, including without
limitation, those furnishings, furniture and equipment and listed on Exhibit B-1 attached hereto,
and (B) not encompassed within Tenant’s Personal Property.

     “Future Mortgage” has the meaning specified in Section 10.

     “GAAP” means generally accepted accounting principles.

     “Hazardous Materials” has the meaning specified in Section 18.1(b).

     “Indemnified Party” has the meaning specified in Section 14.4.4.

     “Indemnifying Party” has the meaning specified in Section 14.4.4.

     “Information” has the meaning specified in Section 22.21.1.

     “Invitees” with respect to Tenant means permitted Subtenants, licensees and invitees of
Subtenants or Tenant, and with respect to Landlord means permitted [tenants,] licensees and
invitees of [such tenants or] Landlord.

     “Land” has the meaning specified in Section 3.1.

     “Landlord” has the meaning specified in the Recitals.

     “Landlord Cost Item” has the meaning specified in Section 7.2.1.

     “Landlord Cost Item Budget” has the meaning specified in Section 7.2.1.

     [“Landlord Guarantor” has the meaning specified in the Basic Lease Information of this
Section 1.]

     “Laws” has the meaning specified in Section 9.

     “Lease” has the meaning specified in the Recitals.

     “Lease Year” means, in the case of the first Lease Year, the period commencing on the
Commencement Date and terminating on December 31, 2005. Thereafter, “Lease Year” means each
successive twelve (12) month period of the Lease Term, commencing
on the day after the expiration of the first Lease Year, and the final Lease Year shall
commence on January 1, 2012 and end on the Expiration Date, unless this Lease is earlier terminated
in accordance with the terms hereof.

     “Leased Conventional Units” has the meaning specified in Section 20.

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     “Major Systems” mean the following systems of the Building: the elevator and the HVAC system;
the electrical system; that portion of the interior plumbing and sewer system which is not
maintained by the utility provider; and the fire safety/sprinkler system.

     “Master Agreement” means that certain Master Agreement by and among Archstone-Smith Trust,
ASOT, R&B and the Property Partnerships (as defined in the Master Agreement) dated February 28,
2005.

     “Master Lease Guaranty” means the guaranty by R&B of the performance of Tenant’s obligations
under this Lease in the form set forth as Exhibit F.

     “Master OCH Agreement” means the agreement between Landlord and OCH in the form attached as
Exhibit E hereto to be executed in accordance with the provisions of Section 19.1 and
Schedule 19.1.

     “Maximum Give-Back Amount” means one-twelfth (1/12th) of the Corporate Units in
place (or the nearest whole number of Units thereto) upon the earlier to occur of (i) the
termination of this Lease, (ii) the Termination Notice Date, or (iii) the Expiration Statement
Date. The Maximum Give-Back Amount is not applicable to the extent otherwise provided in
Sections 8.1 (Utilities; Utility Interruptions) or 14.3 (Landlord’s Default), or
Articles 11 (Damage and Destruction) or 12 (Eminent Domain).

     “Memorandum of Lease” has the meaning specified in Section 22.22.

     “NOI” means net operating income as then defined by ASOT in connection with ASOT’s public
financial reporting and public filings in compliance with any applicable SEC guidelines.

     “NOI Growth” means, for any calendar year, the percentage change in property NOI, in the
aggregate, over the prior year’s property NOI, in the aggregate, for the Same-Store Properties in
the ACI. NOI Growth may be positive or negative.

     “Normal Surrender Condition” has the meaning specified in Section 20.

     “OCH” means an Affiliate of Tenant to be designated by Tenant upon the execution of the Master
OCH Agreement.

     “OCH Guaranty” means the guaranty by R&B of the performance of OCH’s obligations under the
Master OCH Agreement and the Retained Corporate Leases substantially in the form set forth as
Exhibit I.

     “Permitted Aggregate Budget Overage” has the meaning specified in Section 7.2.2(i).

     “Permitted Floor Amount” has the meaning specified in Section 21.1.2.

     “Permitted Line Item Overage” has the meaning specified in Section 7.2.2(i).

     “Premises” has the meaning specified in Section 3.1.

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     “R&B” has the meaning specified in Basic Lease Information of this Section 1.

     “Real Estate Taxes” has the meaning specified in Section 4.3.

     “Removable Alterations” means any Alterations made by Tenant to the FF&E and other portions of
the Premises that (i) are not in accordance with the ASOT Standards, and (ii) have not been
approved by Landlord prior to Tenant’s installation thereof.

     “Rent” means, collectively, Base Rent and any additional charges payable by Tenant to Landlord
from time to time under this Lease (if any).

     “Rent Ready Condition” has the meaning specified in Section 20.

     “Release” has the meaning specified in Section 18.1(c).

     “Residential Lease” has the meaning specified in Section 13.2.

     [“Retail Services” has the meaning set forth in Section 1 in the definition of Use.]

     [“Retail Services Areas” has the meaning set forth in Section 1 in the definition of
Use.]

     “Retained Corporate Leases” has the meaning specified in Section 19.1.

     “Retained Corporate Units” has the meaning specified in Section 19.1.

     “Revenue” means revenue as then defined by ASOT in connection with ASOT’s public financial
reporting and public filings in compliance with any applicable SEC guidelines.

     “Revenue Growth” means, for any calendar year, the percentage change in total Revenues for the
current calendar year as compared to the prior calendar year for the Same-Store Properties in the
ACI, all as determined in accordance with the then current policies and practices applied in
connection with ASOT’s public financial reporting and public filings in compliance with any
applicable SEC guidelines. Revenue Growth may be positive or negative

     “Risk Management Policies and Procedures” has the meaning specified in Section 15.1.

     “ROFR” has the meaning specified in Section 21.1.2.

     “Same-Store Property” means any residential apartment property that ASOT includes in its
same-store analysis from time to time in connection with its public financial reporting and public
filings in compliance with any applicable SEC guidelines.

     “Subleases” has the meaning specified in Section 13.2.

     “Subtenants” means the subtenants under Residential Leases that are permitted pursuant to the
terms of this Lease [and those subtenants or businesses of Tenant providing the Retail Services
from the Premises.]

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     “Surrendered Corporate Unit” has the meaning specified in Section 20.

     “Taking” has the meaning specified in Section 19.1.

     “Tenant” has the meaning specified in the Recitals.

     “Tenant Guarantor” has the meaning specified in the Basic Lease Information of this
Section 1.

     “Tenant Termination Right” has the meaning specified in Section 1.

     “Tenant’s Personal Property” means, collectively, the following, together with all additions,
replacements, improvements and modifications thereof and thereto made by or on behalf of Tenant
from time to time: (i) all items listed on Exhibit B-2 attached hereto; and (ii) movable items of
furniture, furnishings and equipment, trade fixtures and personal property now located in the
Corporate Units or storage areas of the Premises or placed or installed in the Corporate Units or
such storage areas after the Commencement Date by or on behalf of Tenant (whether or not currently
listed on Exhibit B-2), including, without limitation, all beds (other than attached beds in studio
Units), small appliances, linens, electronics, housewares and other personal property items
provided by Tenant as part of its Extended Stay Services.

     “Tenant Repair Items” has the meaning specified in Section 7.1.

     “Term” has the meaning specified in Section 1.

     “Termination Notice” has the meaning specified in Section 19.1.

     “Termination Notice Date” has the meaning specified in Section 19.1.

     “Transfer Closing Date” has the meaning specified in Section 19.1.

     “Termination Closing Procedures” has the meaning specified in Section 19.1.

     “Unbudgeted Landlord Cost Item” has the meaning specified in Section 7.2.2(i).

     “Unit” means a residential apartment unit in the Building.

     “Unit FF&E” means all window coverings, cabinets, countertops, wall finishes, carpeting,
refrigerators, dishwashers, trash compactors, stoves, ovens, installed/attached
microwave ovens and other built-in appliances now or hereafter located in the Units, and
attached beds now or thereafter located within studio apartment Units.

     “Use” has the meaning specified in Section 1.

2. TERM

     The term of this Lease (“Term”) shall commence as of the Commencement Date and shall expire on
the Expiration Date, unless sooner terminated in accordance with this Lease. Notwithstanding
anything to the contrary contained in this Lease, Tenant shall have the on-going

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right to terminate
this Lease prior to the Expiration Date in accordance with, and subject to the limitations set
forth in, the provisions of Article 19 (Termination of Lease; Retained Corporate Units).
Upon the expiration or sooner termination of this Lease, Tenant shall vacate and surrender
possession of the Premises to Landlord in the condition required under Article 6
(Alterations) and Article 20 (Surrender of Premises) subject, however, to the provisions of
Article 19 regarding retention by OCH of possession of the Retained Corporate Units and
Landlord’s obligation to enter into with OCH (and Tenant’s obligation to cause OCH to enter into
with Landlord) the Master OCH Agreement and Retained Corporate Leases for such Retained Corporate
Units.

3. PREMISES

     3.1 Premises.

     Landlord leases to Tenant and Tenant leases from Landlord, subject to the provisions of this
Lease, the following (collectively, the “Premises”): (i) the land particularly described in
Exhibit A-1 (the “Land”); (ii) all landscaping and improvements now or hereafter located on the
Land, including, without limitation, the existing building(s) located thereon and more particularly
identified as                      and depicted on the site plan attached hereto as Exhibit A-2 [but excluding
the Excluded Premises] ([if multiple Buildings: individually or collectively (as the context
requires)]the “Building”), including but not limited to all Units in the Building, all common areas
in or around the Building and Land (including entrances, lobbies, hallways, common restrooms,
common recreational facilities, and parking facilities, if applicable), the on-site leasing and
management offices of the Building, and meeting rooms and storage areas and facilities (if any);
and (iii) the FF&E.

     3.2 [Delete if N/A]Excluded Premises.

     Landlord retains from the Building and excludes from the Premises hereunder that portion of
the Building described as                                                               and depicted on Exhibit A-2 as the “Excluded
Premises.” The Excluded Premises may only be used by Landlord and its tenants for the following
purposes: (i) with respect to the office space areas of the Excluded Premises (i.e., those
portions of the Excluded Premises located at                                         ), solely for general office use, and any other uses
(and/or modifications to any existing office uses) as Landlord may from time to time deem
appropriate, and (ii) with respect to the retail space areas of the Excluded Premises
(i.e., those portions of the Excluded Premises located at                                         ), solely for
the current retail uses being operated therein as of the Commencement Date, and any other uses
(and/or modifications to any existing retail uses) as Landlord may from time to time deem
appropriate, provided that, in each case, such new and/or modified uses described in these clauses
(i) and (ii) are consistent with and do not materially interfere with the operation of the Premises
in accordance with the ASOT Standards. To the extent utilities for the Excluded Premises are not
separately metered, Tenant shall reasonably determine the cost of the utilities consumed by the
Excluded Premises and Landlord shall pay such costs to Tenant within thirty (30) days after
Landlord’s receipt of Tenant’s invoice therefor.

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     Tenant hereby grants Landlord and its Invitees and their respective Agents (subject to
compliance by such parties with Tenant’s reasonable rules and regulations for use of such areas as
adopted by Tenant from time to time), the non-exclusive right (in common with Tenant, Tenant’s
Agents, the Subtenants and their Invitees) during the Term to use only the following common areas
of the Premises, but no other areas of the Premises: (A) up to a total of ___(___) unreserved
parking spaces in the Building’s parking facility [INSERT # OF SPACES COMMITTED IN EXISTING
LEASES], in such locations as shall be designated by Tenant, subject to Landlord’s payment to
Tenant on or before the first (1st) day of each month during the Term, the monthly
prevailing parking rates (plus applicable parking taxes) charged by Tenant from time to time for
parking in such parking facilities; and (B) to the extent reasonably necessary for access to, and
beneficial enjoyment of, the Excluded Premises by Landlord and its Invitees and their respective
Agents, the stairwells, elevators, accessways and other common areas of the Premises providing
access to such Excluded Premises (and to the parking spaces provided to such tenants pursuant to
clause (A) hereinabove, if applicable). Tenant also grants Landlord and its Invitees and their
respective Agents any easement rights as may be necessary for such parties to exercise such rights
with respect to such common areas described in the previous sentence. [REVISE AS NECESSARY BASED
ON LEASE REVIEW:] Notwithstanding the foregoing, the tenants or licensees of the Excluded Premises
which are in existence on the date of this Lease shall be entitled to whatever rights to use the
common areas of the Premises as they may currently have under their existing leases or licenses to
the extent such rights are expressly provided therein as of such date.

     3.3 [San Jose And Toluca Properties: Development Parcel.

     Tenant acknowledges and agrees that, subject to the parties reaching the agreements herein
provided for, Landlord has the exclusive right to develop additional buildings and other
improvements on the land depicted/described in Exhibit ___(the “Development Parcel”). If from time
to time, or at anytime, Landlord should desire to undertake any such development, Landlord will
provide Tenant with written notice advising Tenant of the extent of the improvements Landlord
desires to install. Thereafter, Landlord and Tenant shall cooperate in good faith to reach
agreement on (i) the type, nature and scope of such improvements, (ii) any reciprocal access,
parking and other easements and joint use and/or operating agreements required or desired in
connection with the management and operation of the Development Parcel and the Premises, (iii)
Tenant’s right, if any, to lease the completed apartment buildings (if any) that may be constructed
by or for Landlord on the Development Parcel, and if so the rental rate therefor, (iv) Tenant’s
right, if any, to manage such apartment buildings upon completion, and/or (v) Tenant’s right, if
any, to provide corporate housing activities at such apartment
buildings, and/or Tenant’s right to prohibit Landlord from providing Extended Stay Services in
such apartment buildings through anyone other than Tenant (which rights in this clause (v) shall,
at minimum, contain Tenant’s ROFR set forth in Section 21.1 below). Landlord and Tenant
will also cooperate in good faith in reaching agreement on Landlord’s access, staging, and other
matters relating to the performance of the work so that Landlord will not unreasonably interfere
with Tenant’s activities at the Premises or the use and enjoyment of the Premises by the occupants
thereof, and on the relocation or replacement of any parking facilities, driveways, accessways and
other improvements and

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facilities that are located on the Development Parcel that service or
otherwise benefit the Premises.

4. RENT

     4.1 Base Rent.

     Beginning on the Commencement Date, Landlord hereby reserves, and Tenant shall pay to Landlord
during the Term, the annual Base Rent specified in the Basic Lease Information (the “Base Rent”).
The Base Rent shall be payable in equal consecutive monthly payments on or before the first
(1st) day of each month, in advance, at the address specified for Landlord in the Basic
Lease Information, or such other place as Landlord may designate in writing upon not less than
thirty (30) days’ advance notice to Tenant. Tenant shall pay the Base Rent without any prior
demand and without any deductions or setoff except as expressly otherwise provided in this Lease.
If the Commencement Date occurs on a day other than the first day of a calendar month or the
Termination Date or Expiration Date occurs on a day other than the last day of a calendar month,
then the monthly payment of the Base Rent for such fractional month shall be prorated based on a
thirty (30) day month.

     4.2 Adjustments in Base Rent.

     On each Base Rent Adjustment Date, the Base Rent payable under Section 4.1 shall be
adjusted as follows:

     On each Base Rent Adjustment Date, the Base Rent for the next Lease Year shall be adjusted to
equal the Base Rent for the prior twelve (12) month period plus or minus the product of such Base
Rent and the NOI Growth budgeted by ASOT for the upcoming Lease Year. Landlord shall cause such
budgeting of NOI Growth to be done in good faith and in the ordinary course of ASOT’s budgeting
practices. Landlord shall provide written notice to Tenant of such budgeted NOI Growth for the
upcoming Lease Year and such new Base Rent amount, together with supporting documentation thereof,
at least thirty (30) days prior to January 1 of the Lease Year at issue. Tenant shall thereafter
make Base Rent payments at the new Base Rent amount, as such rate shall be subsequently further
adjusted as of the next succeeding Base Rent Adjustment Date. If Landlord fails to timely provide
the notice described above in this Section 4.2, Tenant shall continue to pay at the monthly
Base Rent rate for the prior year until Landlord provides Tenant such notice, whereupon within
thirty (30) days after Landlord’s notice (i) Tenant shall pay to Landlord the difference between
the monthly Base Rent rate for the present Lease Year less the monthly Base Rent rate for the prior
Lease Year (if such difference is a positive amount) multiplied by the number of months that have
elapsed prior to Tenant paying monthly Base Rent at the rate for the present Lease Year, and (ii) Landlord shall pay to
Tenant the difference (expressed as a positive number) between the monthly Base Rent rate for the
present Lease Year less the monthly Base Rent rate for the prior Lease Year (if such difference is
a negative amount) multiplied by the number of months that have elapsed prior to Tenant paying
monthly Base Rent at the rate for the present Lease Year.

     Each Lease Year, the parties will determine, in accordance with the provisions of this
paragraph, whether the budgeted NOI Growth was greater than or less than the actual NOI

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Growth for
the Lease Year just ending, and whether, as a consequence, the adjustment in Base Rent made at the
commencement of the subject Lease Year was over- or under-stated. After the conclusion of each
Lease Year, Landlord shall determine the actual NOI Growth for such Lease Year. Not later than
February 28 of the succeeding Lease Year, Landlord shall deliver to Tenant a reconciliation of (A)
the actual NOI Growth to the budgeted NOI Growth for the Lease Year in question, (B) the amount of
Base Rent that was due under this Lease for such Lease Year calculated on the basis of budgeted NOI
Growth, and (C) the amount of Base Rent that would have been paid had the adjustment in Base Rent
been made on the basis of the actual NOI Growth for the subject Lease Year.

     If such reconciliation shows that the Base Rent based on budgeted NOI Growth was greater than
or less than the Base Rent that would have been due if the adjustment has been based upon actual
NOI Growth, thus resulting in an overpayment or underpayment of Base Rent, Landlord shall pay any
such overpayment to Tenant, or Tenant shall pay any such shortfall to Landlord, as the case may be,
within thirty (30) days of delivery of Landlord’s reconciliation. If Landlord has not provided
Tenant such reconciliation by February 28 of the succeeding Lease Year, or, if later, by the
earlier of (1) April 30 of such succeeding Lease Year, or (2) the date Landlord or ASOT first
announces to the public the NOI Growth results for such prior Lease Year, Tenant may provide
Landlord with a notice reminding Landlord of this obligation and if Landlord does not then within
ten (10) Business Days after receipt of Tenant’s notice provide Tenant such reconciliation, any
overpayment amount due to Tenant shall accrue interest at the Default Rate commencing on the
expiration of such 10-business day period until paid to Tenant. Both parties’ obligation to pay
reconciled Base Rent payments as described above shall survive any termination of this Lease.

     4.3 Payment of Real Estate Taxes.

     During the Term, Landlord shall be solely responsible for payment of all Real Estate Taxes for
or attributable to the Premises [and the Excluded Premises], and all other taxes and assessments
imposed upon or assessed against Landlord and/or the Premises [and/or the Excluded Premises] with
respect to Landlord’s ownership and/or use of the Premises [and the Excluded Premises]. Tenant
shall be solely responsible for payment of all taxes and assessments imposed upon or assessed
against Tenant, Landlord or the Premises with respect to Tenant’s subleasing activity at the
Premises.

     “Real Estate Taxes” means all general real property taxes and general and special assessments,
charges, fees, or assessments for transit, housing, police, fire, or other governmental services
thereof, service payments in lieu of taxes, and, except to the extent Tenant would receive a credit
therefor against similar taxes imposed in connection with the
Subleases (in which event the payment of such taxes shall be Tenant’s sole responsibility),
any tax, fee, or excise on the act of entering into this Lease, or on the rent payable under this
Lease or in connection with the business of Landlord’s renting the Premises and space to Tenant in
the Building (including, without limitation, any gross receipts taxes and/or commercial rent taxes
pertaining to the Rent payable under this Lease), that are now or hereafter levied or assessed
against Landlord by the United States of America, the State in which the Premises is located, or
any political subdivision thereof, public corporation, district, or any other political or public
entity, and shall also include any personal property tax, other tax, fee or other excise, however
described, that may be levied

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or assessed as a substitute for, or as an addition to, in whole or in
part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the
parties on the date of this Lease; provided that, notwithstanding anything in the foregoing to the
contrary, Real Estate Taxes shall not include, and Tenant shall be solely responsible for, any of
the taxes, charges or amounts, including taxes and charges of the foregoing types, which are
levied or charged with respect to Tenant’s subleasing activity at the Premises. Real Estate Taxes
also includes expenses (including attorneys’ fees) incurred in reviewing, protesting or seeking a
reduction of real estate taxes and/or assessments. To the extent Landlord needs to have financial
or other information relating to the operation of the Premises in order to protest or seek a
reduction in real estate taxes and/or assessments, Tenant agrees to cooperate in good faith in
providing such information as Landlord may reasonably request. [REVISE AS NECESSARY FOR APPLICABLE
STATE LAWS]

     4.4 Payment of Personal Property Taxes.

     Notwithstanding anything in Section 4.3 to the contrary, Tenant is solely responsible
for the required filing and payment of all state and local taxes, fees, licenses and charges
attributable or due to the Tenant’s Personal Property (but not any personal property taxes assessed
as part of the real property taxes for the Premises which shall be part of the Real Estate Taxes),
and subleasing and other revenue generating activities of Tenant at the Premises, including
business license fees, gross receipts tax, use taxes and income or franchise taxes on the net
income of Tenant in connection with such revenue generating activities at the Premises. [REVISE AS
NECESSARY FOR APPLICABLE STATE LAWS]

     4.5 Ground Lease Payments. [Delete if N/A]

     [Applicable to Marina del Rey Property.] Landlord covenants to pay and perform when due, all
of its obligations under                                          [identify ground lease]. [Parties to reach good faith
agreement on issues regarding (1) furniture sinking fund and allocation of responsibilities to the
parties to continue making payments to such fund during and after the Term, and (2) providing cure
rights in favor of Tenant in the event of Landlord’s failure to perform its obligations under the
Ground Lease.]

     4.6 Records.

     Landlord shall maintain (or cause ASOT to maintain) at ASOT’s corporate offices currently
located in Englewood, Colorado or at one of its other offices located in the continental United
States (as determined by Landlord), in accordance with the normal document retention policies of
ASOT, its records pertaining to this Lease, the Real Estate Taxes and the Premises
and any maintenance, repair and capital improvement activities of Landlord at the Premises.
Tenant shall maintain at its offices located at the Premises and/or at Tenant’s corporate offices
currently located in Los Angeles, California or at one of its other offices located in the
continental United States (as determined by Tenant), in accordance with Tenant’s normal document
retention policies, its records pertaining to this Lease, the Premises, and any maintenance,
repair, and capital improvement activities of Tenant, as well as for all Alterations (but not for
corporate housing issues, policies or rents). Each party shall maintain such records on a current
basis and in sufficient detail to facilitate review thereof. Upon prior reasonable

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notice, all
such books and records shall be available for inspection, copying and audit by the other party and
its representatives during normal business hours, at the inspecting party’s expense.

5. USE

     5.1 Permitted Use.

     Tenant may use the Premises for any or all of the uses specified in Section 1 (Basic
Lease Information), and for any other use incidental thereto. Tenant may not use the Premises for
any other uses without the prior written consent of Landlord, which shall not be unreasonably
withheld, conditioned, or delayed.

     5.2 Condition of the Premises.

     Tenant acknowledges and agrees that the election of Tenant to lease the Premises was based
solely upon Tenant’s inspection and investigation of the Premises and all documents related
thereto, or its opportunity to do so, and that Tenant has accepted the Premises in its “AS IS,
WHERE IS” condition, without relying upon any representations or warranties, express, implied or
statutory, of any kind other than as expressly set forth in this Lease. Without limiting the
above, Tenant acknowledges that neither Landlord, except as expressly set forth in this Lease, nor
any other party has made any representations or warranties, express or implied, on which Tenant is
relying as to any matters, directly or indirectly, concerning the Premises (or any portion thereof)
including, without limitation, the Land, the Building, expenses associated with the Premises,
taxes, assessments, bonds, permissible uses, title exceptions, water or water rights, topography,
utilities, availability or capacity of utilities, general plan designations, zoning or other
entitlement condition of the Premises, soil, subsoil, the purposes for which the Premises is to be
used, drainage, Environmental Law or building codes, laws, rules or regulations, toxic waste or
Hazardous Materials or any other matters affecting or relating to the Premises. Except as
expressly set forth in this Lease, Tenant hereby expressly acknowledges that no such
representations or warranties have been made.

     Tenant shall perform and rely solely upon its own investigation concerning the proposed use of
the Premises, the Premises’ fitness therefor, and the availability of such intended use under
applicable statutes, ordinances, and regulations. The foregoing shall not, however, relieve
Landlord of its obligations under Section 7.2 (Landlord Cost Items) or Section 9.1
(Compliance with Laws; Premises Condition), or under any other provision of this Lease.

6. ALTERATIONS

     6.1 Alterations By Tenant.

     Except as may be incident to the discharge of its duties or the exercise of its rights under
Sections 7, 11, or 14.3 (or elsewhere under this Lease), Tenant
shall not make any alterations, installations, additions, replacements or improvements
(collectively, “Alterations”, including Alterations made pursuant to the Landlord Cost Item Budget)
to the FF&E or other portions of the Premises which adversely affect the Major Systems or the
structural components of the Building without first obtaining Landlord’s written consent (which
consent Landlord shall not

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unreasonably withhold or delay); provided, however, if Landlord fails to
respond to Tenant’s notice within ten (10) business days after Tenant’s request (which request
shall include copies of plans and specifications and other reasonable backup materials for such
Alteration), Landlord shall be deemed to have consented to such Alteration.

     Tenant may, without Landlord’s consent, make any Alterations (including, without limitation,
the installation or replacement of any FF&E) that do not adversely affect the Major Systems or
structural components of the Building. Notwithstanding anything to the contrary contained in this
Lease, but subject to the provisions of Section 6.2 (Title to Improvements), if any such
Alterations are Removable Alterations, Landlord may require Tenant at the end of the Term to remove
such Removable Alterations and either (i) restore the affected portions of the Premises resulting
from such removal with items comparable to those existing prior to the installation of such
Removable Alterations, or (ii) replace such Removable Alterations with new items that are in
accordance with the ASOT Standards. Landlord shall notify Tenant whether Landlord will require any
such Removable Alterations to be removed at least sixty (60) days prior to the Termination Date
(or, if sooner, within ten (10) business days after request for such determination is made by
Tenant to Landlord), and if Landlord fails to timely notify Tenant of such removal requirement,
Landlord shall be deemed to have waived such requirement. If Landlord timely notifies Tenant of
such removal requirement, Tenant shall be entitled to elect which of the foregoing alternatives in
clauses (i) and (ii) it will undertake, unless the cost to install new items consistent with the
ASOT Standards is the same or less than the cost of restoring items to a condition comparable to
what had previously existed, in which case, Landlord may compel Tenant to replace these items with
such new items that are consistent with the ASOT Standards. To the extent the work Tenant is
required to perform in connection with the foregoing can only be performed as Units are vacated,
upon the expiration of the Term, Tenant shall pay to Landlord, as additional Rent hereunder, the
reasonable out-of-pocket cost (exclusive of any internal handling costs, fees or overhead cost
allocations) to execute such work in all Leased Conventional Units that cannot be completed prior
to the expiration of the Term because the Leased Conventional Units are not vacant and Landlord
will complete the subject work as such Leased Conventional Units become available for such work.

     Notwithstanding anything to the contrary in the foregoing, at the end of the Term Tenant shall
not be obligated to remove and replace or restore any Removable Alterations in what become the
Retained Corporate Units, as provided for in Article 19 (Termination or Expiration of Term;
Retained Corporate Units), so long as OCH and Landlord enter into the Master OCH Agreement and
Retained Corporate Leases for such Retained Corporate Units. In such event, (A) prior to the
expiration of the Term, Tenant and Landlord shall memorialize in a written
agreement each such item of Removable Alterations in the Retained Corporate Units, and whether
such item is to be removed and restored or removed and replaced in accordance with the foregoing
provisions, and (B) OCH shall assume the obligations of Tenant to remove and restore or replace, as
applicable, any such Removable Alterations upon the expiration or termination of the applicable
Retained Corporate Leases.

     Except for Alterations that are Landlord Cost Items, any Alterations shall be made at Tenant’s
cost. Landlord shall reasonably cooperate with Tenant, at no cost to Landlord, in securing
building and other permits and authorizations needed in connection with any Alterations. Neither
Landlord nor Tenant shall be entitled to any construction or other

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administrative fee in connection
with any Alterations. Except as provided above in this Section 6.1, Tenant shall not be
required to remove any Alterations upon the expiration or sooner termination of this Lease. If
Landlord consents to an Alteration, Tenant shall furnish or cause its contractor to furnish
Landlord with builder’s risk insurance against liabilities thereunder that may arise out of the
Alteration. All Alterations shall be performed in accordance with the terms of Section 7.3
(Performance of Alterations, Landlord Cost Items and Tenant Repair Items) below.

     In no event, however, will any alterations, installations, additions, replacements or
improvements made by Tenant to any of Tenant’s Personal Property be deemed an “Alteration” for
purposes of this Lease (all of which Tenant may perform at its expense) but rather, all of Tenant’s
Personal Property and any alterations, installations, additions, replacements or improvements
thereto, shall remain Tenant’s Personal Property.

     6.2 Title to Improvements.

     Except for Tenant’s Personal Property and the personal property of Tenant’s Subtenants, Agents
or Invitees, (i) all appurtenances, improvements, additions and other property permanently
installed in any part of the Premises as of the Commencement Date or subsequently permanently
installed during the Term, and (ii) all FF&E shall be and remain Landlord’s property and shall be
surrendered by Tenant to Landlord upon the Termination Date [subject, however, to the provisions of
this Section 6.2 and Section 6.1 regarding Removable Alterations as provided
therein and the provisions of Article 19 (Termination and Expiration of the Term; Retained
Corporate Units) regarding the Retained Corporate Units, and subject to any Alterations made
thereto by Tenant or Landlord in accordance with the provisions of this Lease].

     If Tenant desires to upgrade any FF&E that is considered a Landlord Cost Item under this Lease
and that is located in the common areas of the Premises and/or in the leasing or management offices
of the Building or in any Conventional Units beyond what is permitted by the Landlord Cost Item
Budget, Landlord may decline to pay for such upgrade, or Landlord may, but shall not be obligated,
to either pay for such upgrade or share in the cost of such upgrade. If Tenant elects to go
forward with such upgrade, and Landlord does not elect to pay for, or share in the cost of, such
upgrade, then such upgraded item shall be deemed to be a Removable Alteration and at the end of the
Term, if Landlord has theretofore timely elected pursuant to the provisions of Section 6.1
above to have Tenant remove such Removable Alterations, Tenant shall return in good condition the
items the upgraded FF&E replaced or replace the upgraded FF&E with like-kind items required by the
ASOT Standards at the time. If Landlord and Tenant shared in the additional cost to upgrade the
FF&E above the ASOT Standards, at the end of the
Term Tenant can either leave the upgraded FF&E in place, or take such upgraded FF&E and
replace it with like-kind items consistent with the ASOT Standards at the time. To the extent the
work Tenant is required to perform in connection with the foregoing can only be performed as Units
are vacated, upon the expiration of the Term, Tenant shall pay to Landlord, as additional Rent
hereunder, the reasonable out-of-pocket cost (exclusive of any internal handling costs, fees or
overhead cost allocations) to execute such work in all affected Leased Conventional Units that
cannot be completed prior to the expiration of the Term because the subject Leased Conventional
Units are not vacant and Landlord will complete the subject work as Leased Conventional Units
become available for such work.

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     6.3 Tenant’s Personal Property.

     In consideration of the Rent paid under this Lease to Landlord, Landlord hereby assigns and
transfers to Tenant all of Landlord’s right, title and interest in and to those Tenant’s Personal
Property items which are located on or at the Premises immediately prior to the Commencement Date.

     Tenant’s Personal Property shall constitute and remain Tenant’s property and may be removed,
modified, disposed of and/or replaced by Tenant at Tenant’s sole cost and discretion at any time
during the Term or at the expiration thereof, provided that Tenant shall repair any damage to the
Premises resulting therefrom. Landlord acknowledges that some of Tenant’s Personal Property may be
financed by an equipment lease financing or otherwise subjected to a security interest, or owned by
an equipment company and leased to Tenant. Landlord, upon Tenant’s reasonable request, shall agree
in writing to waive any Landlord’s lien it may have to such Tenant’s Personal Property, or if
applicable state law does not permit Landlord’s liens, Landlord shall agree in writing to
subordinate its rights in said Tenant’s Personal Property to the lessor and/or secured party.

     6.4 Alterations by Landlord.

     Landlord shall not alter or modify the Premises except as required in connection with the
performance of its obligations under Sections 7.2 (Landlord Cost Items) and 9.1
(Compliance with Laws; Premises Condition) or under Articles 11 (Damage and Destruction)
and 12 (Eminent Domain) [or in connection with any development activities undertaken
pursuant to Section 3.3 (Development Parcel).]

7. REPAIRS AND MAINTENANCE; LANDLORD COST ITEMS

     7.1 Repairs and Maintenance.

     Subject to Articles 11 (Damage and Destruction) and 12 (Eminent Domain) hereof
(and subject to Sections 7.2 (Landlord Cost Items) and 9 (Compliance With Laws;
Premises Condition) containing Landlord’s obligations to pay for or perform certain work, Tenant
shall, at Tenant’s expense, maintain, repair and keep the Premises and all portions thereof,
including the Major Systems (through service agreements therefor with third party contractors
selected by Tenant, or pursuant to contracts assigned to Tenant pursuant to the Master Agreement),
and the FF&E in a condition which satisfies the ASOT Standards. The items Tenant is responsible
for maintaining and repairing as provided in the previous sentence are referred to herein
collectively as the “Tenant Repair Items.”

     7.2 Landlord Cost Items; Emergency Conditions.

          7.2.1 Notwithstanding the foregoing provisions of Section 7.1 above to the contrary,
Landlord shall be responsible for paying (by reimbursement to Tenant, or direct payment, as
provided and subject to the limitations set forth below in this Article 7) the costs of the
following items (collectively, the “Landlord Cost Items”) (i) all capital items which are
specifically identified in Exhibit C attached hereto as “Landlord Capital Expenditures”; and (ii)
all replacements of any portion of the Premises (including all FF&E other than the Unit FF&E)

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whether or not listed on Exhibit C, unless the same are specifically identified on Exhibit C as a
“Tenant Capital Expenditure”. Notwithstanding anything to the contrary in the foregoing, if a
Landlord Cost Item will reduce other expenses pertaining to the Building or Premises for which
Tenant is otherwise responsible for payment without reimbursement from Landlord, then prior to
performing the applicable work, Tenant and Landlord shall endeavor in good faith to reach agreement
on how a portion of such Landlord Cost Item, representing the actual expense savings therefrom that
Tenant will enjoy, will be amortized and reimbursed by Tenant. Absent the parties reaching such
agreement, Landlord shall have no obligation to complete such Landlord Cost Item irrespective of
whether failure to complete such Landlord Cost Item might otherwise be considered to be a deviation
from the ASOT Standards. It is specifically agreed by the parties that in no event shall the
Landlord Cost Items include the repair or replacement of any Unit FF&E, or any of Tenant’s Personal
Property, all of which repairs or replacements shall be Tenant’s sole responsibility to perform, at
Tenant’s cost, without reimbursement by Landlord.

     Attached hereto as Exhibit D is a budget of the Landlord Cost Items relating to the first
Lease Year (the “Landlord Cost Item Budget”). Initially under this Lease, Tenant shall be
responsible for performing or causing to be performed all Landlord Cost Items, except as provided
in this Section 7.2.1 and in Articles 11 and 12 below. Not less than
ninety (90) days prior to the end of each Lease Year (except the last Lease Year), Tenant will
provide to Landlord a proposed Landlord Cost Item Budget for the upcoming Lease Year (together with
supporting information), which budget shall be consistent with ASOT expenditure levels for
properties in the ACI of the same asset type (high-rise or garden) as the Premises. Landlord shall
cause the owners of such properties in the ACI to cooperate in good faith with Tenant in affording
Tenant, upon reasonable prior notice and during normal business hours, the opportunity to perform,
subject to tenants’ rights under leases at such properties, reasonable inspections of such
properties for purposes of assessing the level of capital expenditures being made at such
properties. Any such inspections shall be performed in a manner that does not unreasonably
interfere with the use and enjoyment of such property by its occupants or the business operations
of the owner of such property.

     Landlord and Tenant shall then meet at least sixty (60) days prior to January 1 of such
upcoming Lease Year and use good faith efforts to agree upon the Landlord Cost Item Budget relating
to the upcoming Lease Year. In arriving at a mutually acceptable Landlord Cost Item Budget,
Landlord and Tenant will take into consideration actual experience and will make such other
adjustments as appear prudent, based on their joint inspection of the Premises, the corresponding
budget items for ACI properties of the same asset type (high-rise or garden) as the
Premises, ASOT expenditure levels in the ACI for properties of the same type as the Premises,
and professional property management methodologies and the ASOT Standards.

     As a part of the Landlord Cost Item Budget process described above, Landlord and Tenant shall
decide for that Lease Year which party shall perform (at Landlord’s cost) each of the Landlord Cost
Items. Whether or not the parties agree as to the allocation of responsibility for performing a
Landlord Cost Item, Landlord or Tenant may at any time elect (upon thirty (30) days’ notice to the
other party), that Landlord take over responsibility for performing all or any of the Landlord Cost
Items, in which case Landlord shall, at its sole cost and expense, be responsible for (following
the expiration of such thirty (30) day period) performing such Landlord Cost Items so selected by a
party to be Landlord’s responsibility unless and until

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Landlord and Tenant agree that Tenant should
resume responsibility for performing such Landlord Cost Items.

          7.2.2 As soon as reasonably practicable after Tenant becomes aware of any condition at the
Premises that could reasonably be expected to cause damage or injury to persons or property and for
which the cost to remedy such condition is a Landlord Cost Item, Tenant shall provide Landlord with
notice thereof (which may be telephonic notice, provided in such event, Tenant will provide a
follow-up written notice to Landlord within five (5) business days thereafter) describing the
condition. As soon as reasonably practicable thereafter, Landlord and Tenant shall endeavor in
good faith to reach agreement on what corrective actions, if any, Tenant should take with respect
to such condition, or whether Landlord will assume responsibility for taking any required
corrective action. If the parties do not agree within a timeframe deemed appropriate by Landlord
given the nature of the condition, then Landlord shall assume responsibility for correcting such
condition, and shall thereafter undertake such work as may be necessary to correct such condition.
In the event Tenant fails to timely notify Landlord of any such emergency condition pursuant to the
foregoing provisions of this Section 7.2.2, then, provided Landlord submits a claim to its
insurance carrier(s) with respect to any such corrective work to the extent such work should be
covered in whole or in part under any of Landlord’s insurance policies, Tenant shall be obligated
to reimburse Landlord for any incremental additional out-of-pocket costs that Landlord incurs in
resolving such condition or addressing any damage resulting from such condition that could have
reasonably been avoided had Tenant timely notified Landlord of such condition, to the extent
Landlord does not receive proceeds from its insurance carriers sufficient to cover such costs
either because the costs do not exceed Landlord’s self-insured retention or deductible and/or
because the proceeds received by Landlord do not fully reimburse Landlord for all costs incurred by
Landlord in addressing such condition and/or related damage.

          7.2.3 In any Lease Year in which Tenant is performing any Landlord Cost Items the following
provisions shall apply:

               (i) In any particular Lease Year, before performing any Landlord Cost Item (a) that could in
any way adversely affect any Major Systems or any structural component of the Premises, (b) where
the anticipated cost to perform the same exceeds 110% of the related line item on the Landlord Cost
Item Budget for such Lease Year (a “Permitted Line Item Overage”), (c) where the anticipated cost
to perform the Landlord Cost Item will cause the aggregate amount spent on all Landlord Cost Items
for that Lease Year to exceed 105% of the aggregate Landlord Cost Item Budget (a “Permitted Aggregate
Budget Overage”), or (d) where the cost to perform such Landlord Cost Item is not contemplated in
the Landlord Cost Item Budget (an “Unbudgeted Landlord Cost Item”), Tenant shall submit to Landlord
for its review and approval, a description of the work to be performed, the name of the contractor
who will be performing the work and the item to which such work pertains on the Landlord Cost Item
Budget, and, in the case of any Unbudgeted Landlord Cost Item, the rationale for why such Landlord
Cost Item needs to be completed. Landlord shall then either approve or reasonably and in good
faith disapprove of such work within ten (10) business days after Tenant’s request, or in an
emergency in an amount of time commensurate with the situation, and if Landlord reasonably and in
good faith disapproves, Landlord shall send Tenant notice of the reason for disapproval. If
Landlord fails to respond in such ten (10) business day period, or such commensurate shorter

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time
in an emergency, Landlord shall be deemed to have approved such work as presented by Tenant. If
Landlord timely disapproves of any work proposed by Tenant, Landlord and Tenant shall use good
faith efforts to agree on potential alternatives to performing such work. All other Landlord Cost
Items shall not require prior consent.

               (ii) Within thirty (30) days after Tenant’s delivery to Landlord of the invoices and other
comparable evidence of such costs and expenses and evidence of the performance of the subject work
in accordance with either (A) the Landlord Cost Item Budget (plus any applicable Permitted Line
Item Overage, not to exceed the Permitted Aggregate Budget Overage in the aggregate in any given
Lease Year), or (B) Landlord’s approval or deemed approval, Landlord shall reimburse to Tenant
Tenant’s actual out-of-pocket costs and expenses of performing the subject work (exclusive of any
internal handling costs, fees or overhead cost allocations) and/or amounts paid to third party
vendors to perform such work, and any administrative fee due to Tenant to which the parties may
have mutually agreed prior to Tenant’s performing such work.

               (iii) If, pursuant to the foregoing, Landlord disapproves of a Landlord Cost Item requiring
Landlord’s approval such that in Tenant’s reasonable good faith judgment, Tenant cannot maintain
the ASOT Standards as to what that item would have covered, Tenant shall so advise Landlord in a
written notice delivered to Landlord within ten (10) business days after receipt by Tenant of
Landlord’s disapproval of the subject Landlord Cost Item. Upon receipt of such notice by Landlord,
Landlord and Tenant shall endeavor in good faith to reach agreement on whether or how the subject
work should proceed. If, however, the parties are unable to reach agreement within ten (10)
business days thereafter, then either party may elect, by delivering a written notice to the other
party, to have Landlord assume responsibility for performance of the subject Landlord Cost Item,
and (i) Tenant shall not be obligated to meet the ASOT Standards as to the item covered by such
Landlord Cost Item, and (ii) Landlord shall be solely responsible, at its cost, for performing such
Landlord Cost Item as and when necessary to meet the ASOT Standards. If Landlord at any time takes
over responsibility for performing any Landlord Cost Item, Landlord shall be required to perform
the same in compliance with all of the applicable provisions of this Article 7 (other than
this Section 7.2.2) and the other applicable provisions of this Lease.

     7.3 Performance of Alterations, Landlord Cost Items and Tenant Repair Items.

     The following terms shall govern both parties’ performance of all Alterations, Landlord Cost
Items and Tenant Repair Items:

          (i) Those required as the result of any emergency which could reasonably be expected to cause
damage or injury to persons or property shall be commenced by the responsible party immediately
upon oral notice from the other party of the need for same. If the notifying party is unable to so
notify the responsible party after making a reasonable attempt to do so (or if such notice is not
practicable to provide based upon the nature of such emergency), the notifying party may commence
such repairs and complete same at the responsible party’s expense (which expenses shall be the
out-of-pocket expenses of the notifying party, exclusive of internal handling costs, fees or
overhead cost allocations) to the extent reasonably necessary to

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avert the emergency, in which case
the notifying party shall provide written notice thereof to the responsible party as soon as is
reasonably possible.

          (ii) Except as set forth above and except that this clause (ii) shall not apply to
Alterations except any Alterations to be performed in an emergency, the responsible party shall
cause all other such repairs and replacements to be completed as soon as is reasonably practicable
following written notice from the notifying party of the need for same.

          (iii) Both parties shall perform work in such a manner and at times so as to not unreasonably
interfere with the reasonable use and enjoyment of the Premises by the Tenant and its Subtenants,
[or the Excluded Premises, by the Landlord and its subtenants,] and to minimize to the extent
reasonably practicable any noise, vibrations, particulates and dust infiltration or other
disturbance which would unreasonably disturb the use and enjoyment of the Premises [or Excluded
Premises] by any occupants thereof.

          (iv) Any work of repair or replacement by either party (including Alterations) shall be done
in a good and workmanlike manner, in compliance with applicable Laws (to the extent enforced from
time to time) and the ASOT Standards and using licensed, qualified contractors if other than a
minor repair or replacement.

     7.4 Liens.

     Each party shall keep the Premises free from liens arising out of any work performed by such
party or its Agents, or for material furnished or obligations incurred by such party during the
Term. Each party shall have the right to post on the Premises any notices permitted or required by
law or that are needed for the protection of them, the Premises, or the Building, from mechanics’
and material suppliers’ liens.

8. UTILITIES AND SERVICES

     8.1 Utilities; Utility Interruption.

     Tenant shall be responsible for contracting for and paying the cost of all utilities used by
Tenant and its Subtenants, including gas, electricity, water, sewer service, garbage collection and
telephone, with respect to the Premises.

     To the extent that a failure in the delivery of utilities, which is not caused by Tenant, its
Affiliates, Agents or Invitees, shall have resulted in all or a portion of the Premises being
untenantable and such failure continues beyond the expiration of the Eligibility Period, then
Tenant shall be entitled to an abatement of Base Rent relating to such portion (or all, as
applicable) of the Premises in an amount equal to the Abatement Amount, from and after the
Eligibility Period and continuing until such portion of the Premises (or all, as applicable), shall
no longer be untenantable. If such Abatement Event was not caused by Tenant, its Affiliates,
Agents or Invitees and affects more than 50% of the Units and shall continue for longer than one
hundred twenty (120) days, Tenant shall have the right to terminate this Lease (in which event the
Maximum Give-Back Amount shall not apply). If such Abatement Event is not caused by Landlord, its
Affiliates, Agents or Invitees and affects more than 50% of the Units and shall continue for longer
than three hundred sixty-five (365) days, Landlord shall have the right to

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terminate this Lease (in
which event the Maximum Give-Back Amount shall not apply). If Tenant’s right to abatement and/or
termination, or Landlord’s right to termination, occurs because of a damage or destruction pursuant
to Article 11 (Damage and Destruction) or a Taking pursuant to Article 12 (Eminent
Domain), then (i) the Eligibility Period shall not be applicable, and (ii) Tenant’s and Landlord’s
termination rights in this Section 8.1 shall not be applicable, as such abatement and
termination rights shall be governed by Articles 11 and 12, respectively, and not
this Section 8.1.

     8.2 Services.

     Tenant shall be responsible for contracting for and paying the cost of janitorial service,
refuse collection, security, and all other services necessary for Tenant’s use of the Premises
under this Lease. [Landlord shall be responsible for contracting for and paying the cost of
janitorial service, refuse collection, security, and all other services necessary for Landlord’s
use of the Excluded Premises.]

9. COMPLIANCE WITH LAWS; PREMISES CONDITION

     Landlord shall at all times during the Term cause, at its cost, any work it performs on the
Premises [and to the Excluded Premises,] to be in compliance with all applicable federal, state,
local and administrative laws, rules, regulations, orders and requirements (collectively, “Laws”),
including, without limitation, the Environmental Laws.

     To the extent any work Tenant is required to perform under this Lease or in accordance with
Laws requires the correction of any non-compliance of the Premises with applicable Laws in
existence as of the Commencement Date of which Tenant did not have actual knowledge of as of the
Commencement Date, Tenant shall provide Landlord with a written notice so advising Landlord of the
condition and the corrective work Tenant intends to perform. Upon receipt of any such notice,
Landlord shall have ten (10) business days within which to object to the work described in Tenant’s
notice by delivering written notice to Tenant. If Landlord does not timely object, Tenant may
proceed with the subject work. If, however, Landlord does timely object, Landlord and Tenant shall
meet and confer in good faith to reach agreement on whether and/or how any such corrective work
should be completed and the cost to complete such work. If Landlord and Tenant are not able to
agree within ten (10) business days after delivery of Landlord’s notice of objection, then either
party may elect, by delivering written notice to the
other party, to have Landlord assume the responsibility for performing such work, in which
event, Landlord shall cause such corrective work to be completed in accordance with applicable Laws
at Landlord’s cost and expense. Absent either party making such election, Tenant may cause such
work to be completed in accordance with applicable Laws, and Landlord will reimburse Tenant for
Tenant’s reasonable out-of-pocket costs and expenses (exclusive of internal handling costs, fees
and overhead cost allocations) of completing such corrective work and/or reasonable costs paid to a
third party vendor for performing such work, and any administrative fee due to Tenant to which the
parties may have mutually agreed prior to Tenant’s performing such work. Such reimbursement shall
be made by Landlord to Tenant within thirty (30) days after receiving evidence of the completion of
such work and invoices or comparable evidence of payment of such costs and expenses by Tenant. To
the extent that the corrective work is done in conjunction with other Alterations or work performed
by Tenant that is not otherwise a Landlord

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Cost Item, Landlord will only be responsible for the
incremental costs directly attributable to correcting the non-compliant condition. The foregoing
provisions of this paragraph shall not, however, apply with respect to any corrective work
pertaining to Hazardous Materials required to be performed by Landlord pursuant to the provisions
of Section 18 below (specifically including Section 18.4), which provisions shall
control.

     Tenant shall at all times during the Term cause, at its cost (subject to reimbursement as
provided in the preceding paragraph and reimbursement for Landlord Cost Items to the extent
applicable), (y) the work it performs on the Premises and the FF&E, and (z) the Tenant’s Personal
Property to be in compliance with all applicable Laws, exclusive of non-compliance (A) resulting
from the work Landlord performs on the Premises or for which Landlord is responsible to perform
under this Lease, (B) resulting from any physical defect or deferred maintenance of the Premises
resulting from Landlord’s disapproval of any Landlord Cost Item, and/or (C) which is Landlord’s
obligation pursuant to Section 18 (Hazardous Materials) below. In addition, Tenant shall at
all times comply with all Laws relating to discrimination in housing and employment practices and
governing occupancy of rental properties, including without limitation any applicable rent control
laws. Without limiting Section 14.4 (Indemnification) and Article 18 (Hazardous
Materials) below, but subject to the other terms of this Lease, Landlord shall indemnify, defend,
protect and hold Tenant harmless from and against any and all Claims (as defined in Section
14.4.1 (Tenant’s Indemnity) below) arising out of Landlord’s failure to comply with its
obligations under the terms of this Section and Tenant shall indemnify, defend, protect and hold
Landlord harmless from and against any and all Claims arising out of Tenant’s failure to comply
with its obligations under the terms of this Section.

10. SUBORDINATION

     Landlord represents to Tenant that Landlord has not placed any mortgages or deeds of trust
upon the Premises or any part thereof [(other than that certain deed of trust assumed by Landlord
pursuant to the Master Agreement, for which the parties have obtained and recorded a subordination,
non-disturbance and attornment agreement from such current lender with respect to this Lease, the
Master OCH Agreement and the Retained Corporate Leases as provided in the Master Agreement)].
Landlord shall have the right to cause this Lease to be subordinated to the lien of any future bona
fide mortgage or deed of trust to which the Premises is provided as security (herein a “Future
Mortgage”), provided that the Landlord causes such lender to provide to the Tenant a subordination,
nondisturbance and attornment agreement in a form and substance that is commercially
reasonable. Such agreement shall provide that if the Future Mortgage should terminate or be
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall pay
subsequent Rent and attorn to and become the tenant of such successor Landlord, provided that
Tenant has received proper written notice of such succession and the name and address of the
successor landlord, and further provided that, as a condition to such attornment the holder of such
Future Mortgage shall agree that, so long as there is no uncured Event of Default by Tenant
hereunder, such holder shall recognize this Lease and shall not disturb Tenant in its possession of
the Premises for so long as there is no uncured Event of Default by Tenant under this Lease and
such lender is not otherwise entitled to terminate this Lease or otherwise dispossess Tenant of the
Premises in accordance with the terms hereof. Such agreement shall also contain comparable
provisions with respect to the Retained

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Corporate Leases and the Master OCH Agreement and OCH’s
rights under such leases and the Master OCH Agreement.

11. DAMAGE AND DESTRUCTION

     If the Premises, the Building or any Major Systems are damaged by fire or other casualty,
Tenant shall notify Landlord in accordance with Landlord’s Risk Management Policies and Procedures
(as defined in Section 15.1 below), and shall notify Tenant’s insurance carrier, as soon as
reasonably possible after it becomes aware of the same. Within thirty (30) days after the date of
such casualty, Landlord shall notify Tenant of Landlord’s good faith determination of the time
period after the damage it will take to repair the damage. To the extent this Lease is not
terminated in whole or in part as provided below, Landlord shall repair the damaged portion of the
Premises for which this Lease has not been terminated, as soon as reasonably possible thereafter
without delay. In such event this Lease shall remain in full force and effect as to any portion of
the Premises for which it has not been terminated, but Tenant shall be entitled to an abatement of
Base Rent following the expiration of the Eligibility Period and continuing until such repairs are
completed, based upon the extent to which such damage and the making of such repairs renders the
Premises untenantable, in an amount equal to the Abatement Amount except to the extent the damage
or casualty occurred as a result of the gross negligence or willful misconduct by Tenant or its
Affiliates or Agents, in which event Tenant’s obligation to pay Base Rent shall continue without
abatement. In addition, in such event, provided Landlord submits a claim to its insurance
carrier(s) with respect to any such damage or casualty to the extent such damage or casualty should
be covered in whole or in part under any of Landlord’s insurance policies, Tenant shall be
responsible for reimbursing Landlord for any actual, documented and reasonable out-of-pocket costs
and expenses (exclusive of any internal handling costs, fees or overhead cost allocations) incurred
by Landlord in repairing such damage to the extent not recovered by Landlord from any of its
insurance carriers, including any deductible or self-insured retention amounts under Landlord’s
insurance policies. Tenant shall pay, as additional Rent hereunder, any such amount due from
Tenant within thirty (30) days of receipt by Tenant of invoices and other evidence of such costs
and expenses and the performance of the subject work if Landlord repairs and restores the Premises.

     If Landlord estimates that it will take one hundred twenty (120) days or longer to repair any
such damage, Tenant may terminate this Lease as to the damaged Units by providing notice to
Landlord within thirty (30) days after Landlord’s notice. If the estimate is that it will take
three hundred sixty-five (365) days or longer to so repair, Landlord may terminate this Lease as
to the damaged Units by providing notice to Tenant within thirty (30) days after its notice of
the estimated time to repair the Premises. In addition, if 50% or more of the Units are damaged
and Landlord’s estimate is that it will take longer than one hundred twenty (120) days to repair,
Tenant may terminate this entire Lease and not be subject to the Maximum Give-Back Amount by
providing written notice to Landlord within thirty (30) days after Landlord’s notice of such
estimate. In addition, if 50% or more of the Units are affected and Landlord’s estimate is that it
will take longer than three hundred sixty-five (365) days to repair, Landlord may terminate this
entire Lease by providing written notice to Tenant within thirty (30) days after its notice of the
estimated time to repair the Premises and the Maximum Give-Back Amount limitation shall not apply.

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     If either party terminates this Lease in whole or in part as described above, the termination
shall be effective as of the date specified in such notice, which date shall be not less than
thirty (30) nor more than ninety (90) days after notice is given by the terminating party.

     If at any time during the last six (6) months of the Term of this Lease there is material
damage that Landlord would otherwise be required to repair hereunder, either party may, at its
option, terminate this Lease as to the damaged Units, and with respect to this entire Lease if more
than fifty percent (50%) of the Units are damaged, which termination shall be effective as of the
date such damage occurred, by giving written notice to the other party of its election to do so
within thirty (30) days after the date of such damage, and any such termination of this entire
Lease shall not be subject to the Maximum Give-Back Amount.

     In case of termination, Base Rent shall be reduced by the Abatement Amount based upon the
extent to which such damage renders the Premises untenantable, and Tenant shall pay such reduced
Base Rent up to the date of termination. As to any portion of the Premises for which this Lease
shall have been terminated, Landlord shall refund to Tenant any Base Rent previously paid for any
period of time subsequent to such date of termination.

     The parties intend that the provisions of this Section govern fully their rights and
obligations in the event of damage or destruction, and Landlord and Tenant each hereby waives and
releases any right to terminate this Lease in whole or in part [under Section 1932, subdivision 2,
Section 1933, subdivision 4, and Sections 1941 and 1942 of the Civil Code of California or] under
any contrary provisions of applicable law, statute or ordinance now or hereafter in effect, to the
extent such rights are inconsistent with the provisions hereof.

12. EMINENT DOMAIN

     12.1 Definitions.

          (a) “Taking” means a taking or damaging, including severance damage, by eminent domain,
inverse condemnation or for any public or quasi-public use under law. A Taking may occur pursuant
to the recording of a final order of condemnation, or by voluntary sale or conveyance in lieu of
condemnation or in settlement of a condemnation action.

          (b) “Date of Taking” means the earlier of (i) the date upon which title to the portion of the
Premises taken passes to and vests in the condemnor, or (ii) the date on which Tenant is
dispossessed.

          (c) “Award” means all compensation, sums or anything of value paid, awarded or received for a
Taking, whether pursuant to judgment, agreement, settlement or otherwise.

     12.2 General.

     If during the Term, there is any Taking of all or any part of the Premises or any interest in
this Lease, the rights and obligations of the parties hereunder shall be determined pursuant to
this Section. Tenant and Landlord intend that the provisions hereof govern fully in the event of a
Taking and accordingly, the parties each hereby waive any right to terminate this Lease in whole

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or in part [under Sections 1265.10, 1265.40, 1265.120 and 1265.130 of the California Code of Civil
Procedure or] under any provisions of applicable law, statute or ordinance now or hereafter in
effect, to the extent such rights are inconsistent with the provisions hereof.

     12.3 Total Taking; Automatic Termination.

     If there is a total Taking of the Premises in its entirety, then this Lease shall terminate as
of the Date of Taking, and any such termination shall not be subject to the Maximum Give-Back
Amount.

     12.4 Partial Taking; Election to Terminate.

     If there is a Taking of any portion (but less than all) of the Premises, then this Lease shall
terminate in its entirety if all of the following exist: (i) the partial Taking, in Tenant’s
reasonable judgment, renders the remaining portion of the Premises untenantable or unsuitable for
continued use by Tenant for its intended purposes or otherwise materially adversely affect Tenant’s
normal operations in the Premises; (ii) the condition rendering the Premises untenantable or
unsuitable either is not curable or is curable but Landlord is unwilling or unable to cure such
condition; and (iii) Tenant elects to terminate. Tenant may terminate by giving written notice to
Landlord by not later than thirty (30) days after the Date of Taking, and thereafter this Lease
shall terminate upon the later of the thirtieth (30th) day after such written notice is
given or the Date of Taking, and any such termination of this entire Lease shall not be subject to
the Maximum Give-Back Amount.

     12.5 Partial Taking; Continuation of Lease.

     If there is a partial Taking of the Premises under circumstances where this Lease is not
terminated in its entirety under Section 12.4 (Partial Taking; Election to Terminate)
above, then this Lease shall terminate as to the portion of the Premises so taken, but shall remain
in full force and effect as to the portion not taken, and the rights and obligations of the parties
shall be as follows: (i) Base Rent shall be reduced by the Abatement Amount, and (ii) Landlord
shall be entitled to the entire Award in connection therewith, provided that Tenant shall receive
any Award made specifically for Tenant’s relocation expenses, the interruption of or damage to
Tenant’s business or damage to Tenant’s Personal Property, and/or for loss of goodwill.

     12.6 Temporary Taking.

     Notwithstanding anything to contrary in this Section, if a Taking occurs with respect to the
Premises for a limited period of time not in excess of one hundred twenty (120) consecutive days,
this Lease shall remain unaffected thereby, and Tenant shall continue to pay Rent and to perform
all of the terms, conditions and covenants of this Lease. In the event of such temporary Taking,
Tenant shall be entitled to receive that portion of any Award representing compensation for the use
or occupancy of the Premises during the Term.

     12.7 Rent; Award.

     Upon termination of this Lease pursuant to an election under Section 12.4 above, then:
(i) Tenant’s obligation to pay Rent shall continue up until the date of termination, and thereafter

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shall cease, except that Base Rent shall be reduced as provided in Section 12.5 for any
period during which this Lease continues in effect after the Date of Taking; and (ii) Landlord
shall be entitled to the entire Award in connection therewith, except that Tenant shall receive any
Award made specifically for Tenant’s relocation expenses, the interruption of or damage to Tenant’s
business or damage to Tenant’s Personal Property, and/or for loss of goodwill.

13. ASSIGNMENT AND SUBLETTING

     13.1 General.

     Except as provided in this Section and Section 13.2 below, Tenant shall not sell,
assign, or otherwise transfer all or any part of its interest in or rights with respect to the
Premises or its leasehold estate hereunder or permit all or any portion of the Premises to be
occupied or used by anyone other than itself or sublet all or any portion of the Premises, without
Landlord’s prior written consent, in Landlord’s sole discretion. Provided there does not then
exist a monetary or material non-monetary Event of Default by Tenant under this Lease, and no
circumstance exists which would be a monetary or material non-monetary Event of Default with the
giving of notice, the passage of time, or both, Tenant may assign its rights hereunder to any
Affiliate of Tenant upon no less than ten (10) days prior written notice to Landlord. Tenant
acknowledges that it shall not, as a result of any such assignment to an Affiliate, be relieved of
any responsibility, liability or other obligation to Landlord arising out of the Lease, all of
which shall be joint and several obligations of Tenant and the Affiliate transferee as of the
effective date of the transfer. As a condition precedent to the validity of any such assignment by
Tenant to any Affiliate of Tenant, (i) such Affiliate shall assume in writing all of Tenant’s
covenants, conditions and other obligations to Landlord hereunder arising from and after the date
of such assignment, and (ii) an executed original of such agreement of assumption shall be
delivered to Landlord prior to the effective date of such assignment.

     13.2 Subleasing.

     During the Term, Tenant shall have the right, without Landlord’s consent, to enter into
subleases (“Subleases”) (a) with any persons or entities providing the Retail Services therein [or
may otherwise permit occupancy of all or any portion of the Retail Services Areas by any such
persons or entities], provided the terms of such Subleases [or occupancy arrangements] cannot
extend beyond the Term of this Lease and may be terminated
by Landlord in the event this Lease is terminated; and (b) with individual subtenant rental
households (the “Subtenants”) for actual occupancy of the Units designated as Conventional Units
from time to time by Tenant provided (i) the subject Sublease for a Conventional Unit (each, a
“Residential Lease”) is on Tenant’s standard lease form and the term is for one (1) year or less;
(ii) the Residential Lease shall contain a provision subordinating such Residential Lease to this
Lease and any deed of trust or mortgage of any lender of Landlord recorded against the Premises,
and an agreement of the Subtenant thereunder to attorn to Landlord and such lender (at the election
of Landlord or such lender, as the case may be) if this Lease is terminated due to an Event of
Default by Tenant hereunder; and (iii) the Residential Lease form shall not obligate the landlord
thereunder following the Termination Date to incur any additional material liabilities or
obligations, or provide any additional material services, beyond those contained in ASOT’s standard
lease form in effect on the date the Residential Lease is signed (but Tenant shall not be bound by
any

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changes to the current ASOT’s standard lease form unless and until Landlord has provided Tenant
with at least thirty (30) days’ prior notice thereof), and (iv) the form of such Residential Leases
and the creditworthiness and criminal background of such Subtenants are in accordance with the ASOT
Standards. The parties hereby acknowledge that any obligation, liability or service which could
jeopardize the qualification of Archstone-Smith Trust to continue to qualify as a real estate
investment trust for federal income tax purposes is “material” for purposes of clause (iii) above.

     Tenant shall also have the right from time to time to enter into any occupancy leases or
agreements with respect to the Corporate Unit, and any amendments and terminations thereof, as
Tenant shall desire, with any corporate subtenants, for any rent and length of lease terms and upon
any other terms and conditions as Tenant shall desire, without any restrictions and without having
to obtain Landlord’s consent thereto. Each such sublease shall, however, be subject to the terms
of this Lease.

     Tenant shall further have the right to enter into license agreements with any person or
entities Tenant selects with respect to other areas of the Premises (including, for example,
roof-top licenses with telecommunication companies) and other contracts and agreements pertaining
to the Premises as Tenant shall determine so long as (1) such license, contract or agreement is
consistent with, and the Premises continue to comply with, the ASOT Standards, and (2) no such
licenses, contracts or agreements shall extend beyond the Termination Date without Landlord’s prior
written consent in Landlord’s sole discretion. In the event Landlord shall have so consented to
the continuation of the term of such license, contract or agreement beyond the Termination Date,
such licenses, agreements and consents shall be assigned to Landlord upon the Termination Date and
Landlord shall assume the obligations of the Tenant arising thereunder after the Termination Date.
Landlord shall have no right to determine or approve the amount of the sublease payments from the
Subtenants nor receive any portion of such sublease payments.

14. DEFAULT; REMEDIES; INDEMNIFICATION

     14.1 Events of Default by Tenant.

          14.1.1 Any of the following shall constitute an “Event of Default” by Tenant under this Lease:

          (a) Tenant’s failure to make any payment of Rent or any other payment due from Tenant to
Landlord under this Lease within five (5) business days after its due date, provided that such
failure shall have continued for more than five (5) business days beyond Landlord’s notice of such
failure; and further provided that, for payments of Base Rent, Tenant shall be entitled to such
notice on not more than two (2) occasions in any given Lease Year.

          (b) Tenant’s failure to perform any other covenant or obligation of Tenant hereunder (not
involving the payment of money) and to cure such non-performance within thirty (30) days of the
date of receipt of notice thereof from Landlord, provided that if more than thirty (30) days are
reasonably required for such cure, no Event of Default shall occur if Tenant commences such cure
within such period and diligently prosecutes such cure to completion. Notwithstanding anything to
the contrary in the foregoing, in the event that the Premises are

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encumbered by an existing deed of
trust or mortgage in effect as of the Commencement Date, if such non-performance by Tenant would
also give rise to a default or event of default under such deed of trust or mortgage if not cured
within the periods specified in such deed of trust or mortgage, Tenant’s failure to cure such
non-performance within the cure periods provided in such deed of trust or mortgage to the extent
different from the foregoing shall constitute an Event of Default by Tenant, provided Landlord has
advised Tenant of such cure periods.

     14.2 Landlord’s Remedies.

          (a) Upon the occurrence of any Event of Default by Tenant, Landlord shall have all rights and
remedies available at law or in equity or granted hereunder, including the following (but
specifically excluding the right to dispossess Tenant unless Landlord elects to terminate this
Lease pursuant to clause (a)(1) hereof):

               (i) Landlord may terminate this Lease (but only in the event of a monetary or material
non-monetary Event of Default), by giving Tenant written notice of Landlord’s election to do so, in
which event the Term and all right, title and interest of Tenant hereunder shall end on the date
stated in such notice, except that Landlord may elect to make the termination subject to the
Maximum Give-Back Amount.

               (ii) Landlord may elect to keep this Lease in place.

               (iii) Landlord may enforce the provisions of this Lease and may enforce and protect the
rights of Landlord hereunder by a suit or suits in equity or at law for the specific performance of
any covenant or agreement contained herein, and for the enforcement of any other appropriate legal
or equitable remedy, including without limitation (A) injunctive relief, (B) recovery of all moneys
due or to become due from Tenant under any of the provisions of this Lease, and (C) any other
damages incurred by Landlord by reason of Tenant’s Event of Default under this Lease.

               (iv) Landlord may elect to perform any obligation of Tenant under this Lease and be
reimbursed by Tenant for the reasonable costs and expenses incurred by Landlord in performing such
obligation, together with interest at the Default Rate from the date the charge was incurred,
within ten (10) days after providing Tenant with an invoice for the same.

          (b) If Landlord exercises the remedy provided for in clause (a)(i) above, (A) Tenant shall
surrender possession of and vacate the Premises and immediately deliver possession thereof to
Landlord, and Landlord may re-enter and take complete and peaceful possession of the Premises, and
(B) Landlord shall be entitled to recover from Tenant all damages and other sums which Landlord is
entitled to recover under any provision of this Lease or at law or in equity, including, but not
limited to, all the fixed dollar amounts of Base Rent accrued and unpaid for the period up to and
including such termination date, as well as all other additional sums payable by Tenant, or for
which Tenant is liable or in respect of which Tenant has agreed to indemnify Landlord under any of
the provisions of this Lease, which may be then owing and unpaid, and all costs and expenses, and,
in addition, any damages provable by Landlord as a matter of law including, without limitation, an
amount equal to the excess of the Base Rent provided to be paid for the remainder of the Term over
the fair market rental value of the Premises (determined at the

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date of termination of this Lease)
after deduction of all anticipated expenses of reletting. Landlord shall use commercially
reasonable efforts to mitigate its damages.

          (c) If Landlord elects to keep the Lease in place, Tenant shall remain obligated to pay the
Rent (and all other charges) hereunder as and when they become due.

          (d) In all cases, Tenant shall remain responsible for all past due Base Rent and other unpaid
charges. All amounts due under this Lease (including Rent), which Tenant shall not pay when due,
shall bear interest at the Default Rate.

     14.3 Landlord’s Default.

          (a) If at any time or times Landlord shall be in default in the performance or observance of
any of its covenants, agreements or undertakings provided in this Lease, and if Landlord shall not
cure or remedy such default within thirty (30) days after Tenant gives written notice thereof to
Landlord (or, in the case of an emergency which could reasonably be expected to cause damage or
injury to persons or property or where any of the Units are uninhabitable, such shorter period as
is commensurate given the nature of the emergency), or, if such default cannot reasonably be cured
and remedied within such time period, if Landlord shall not commence in good faith to cure and
remedy such default within such time period after receipt of such notice from Tenant and continue
with due diligence until such default is cured and remedied, then Landlord shall be deemed to be in
default under this Lease. In such event, Tenant may, but shall not be obligated to, take such
action as in Tenant’s good faith judgment is reasonably appropriate to cure and remedy such default
by Landlord, and Landlord shall, within ten (10) days after receipt of demand therefor, pay to
Tenant an amount equal to all reasonable costs and expenses incurred by Tenant in so curing and
remedying such default, together with interest at the Default Rate. After not less then thirty
(30) days from such notice of default without cure, Tenant may also sue Landlord for damages and/or
for specific performance. In no event may Tenant offset any amounts owing Tenant against Rent
unless Tenant receives a final judgment in a court of competent jurisdiction against Landlord and
Landlord shall have failed to pay such judgment within thirty (30) days thereafter. Except as
limited above in this Section 14.3, all of Tenant’s remedies under this Section
14.3 (Landlord’s Default) and elsewhere in this Lease shall be in addition to all other
remedies Tenant may have at law or in equity (including injunctive relief) as a result of
Landlord’s default.

          (b) In all cases, Landlord shall remain responsible for the payment of all Landlord Cost Items
that Landlord is required to pay or reimburse to Tenant under this Lease and all other unpaid
charges. If Landlord fails to pay any amount due to Tenant under this Lease (including the
Landlord Cost Items) as and when due, and such failure shall have continued for more than five (5)
business days beyond Tenant’s notice of such failure, such amounts shall bear interest at the
Default Rate until paid.

     14.4 Indemnification.

          14.4.1 Tenant’s Indemnity. Tenant agrees to indemnify and defend Landlord against,
and hold Landlord free and harmless from, any and all losses, costs, liabilities, damages, claims,
liens and expenses, including, without limitation, reasonable attorneys’ fees and costs

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arising
from claims made by third parties (collectively, “Claims”) as a result of or incurred in connection
with or arising from: (i) any Event of Default by Tenant under this Lease; or (ii) the negligence
or willful misconduct of Tenant or its Agents, in, on or about the Premises, except to the extent
caused by the negligence or willful misconduct of Landlord or it Affiliates, Agents or Invitees.
Tenant’s obligations under this subsection shall survive the termination of this Lease.

          14.4.2 Landlord’s Indemnity. Landlord agrees to indemnify and defend Tenant against,
and hold Tenant free and harmless from, any and all Claims as a result of or incurred in connection
with or arising from: (i) any default (which remains uncured following receipt of all required
notices and expiration of all applicable cure periods) by Landlord in the observance or performance
of any of the terms, covenants or conditions of this Lease on the Landlord’s part to be observed or
performed; or (ii) the negligence or willful misconduct of Landlord, or of Landlord’s Agents, in,
on or about the Premises, except to the extent caused by the negligence or willful misconduct of
Tenant or its Affiliates, Agents or Invitees. Landlord’s obligations under this subsection shall
survive the termination of this Lease.

          14.4.3 Other Indemnity Obligations. The parties’ indemnities under this Section
14.4 shall be in addition to and shall in no way limit any other specific indemnity obligations
contained elsewhere in this Lease.

          14.4.4 Procedure. The term “Indemnified Party” means the party or parties entitled
to, or claiming a right to, indemnification under this Section 14.4.2 or any other
provision of this Lease. The term “Indemnifying Party” means the party or parties claimed by the
Indemnified Party to be obligated to provide indemnification under this Lease.

          The Indemnified Party shall give notice as promptly as is reasonably practicable, but in any
event no later than fifteen (15) Business Days after receiving notice of any claim being made by a
third party, to the Indemnifying Party of the assertion of any Claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto in respect of which indemnity may be
sought under this Lease (which notice shall specify in reasonable detail the nature and amount of
such Claim); provided, that the failure of the Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations under this Section 14.4 or any other
provision of this Lease, except to the extent (if any) that the Indemnifying Party shall have been
prejudiced thereby. The Indemnifying Party may, at its own expense, (a)
participate in the defense of any such Claim, suit, action or proceeding and (b) upon notice
to the Indemnified Party, at any time during the course of any such Claim, suit, action or
proceeding, assume the defense thereof with counsel of its own choice and in the event of such
assumption, shall have the exclusive right, to settle or compromise such claim, suit, action or
proceeding. If the Indemnifying Party assumes such defense, the Indemnified Party shall have the
right (but not the duty) to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party. Whether or not the
Indemnifying Party chooses to defend or prosecute any such claim, suit, action or proceeding, all
of the parties hereto shall cooperate in the defense or prosecution thereof.

     Any settlement or compromise made or caused to be made by the Indemnified Party (unless the
Indemnifying Party has the exclusive right to settle or compromise under the preceding paragraph)
or the Indemnifying Party, as the case may be, of any such claim, suit,

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action or proceeding of the
kind referred to in the preceding paragraph shall also be binding upon the Indemnifying Party or
the Indemnified Party, as the case may be, in the same manner as if a final judgment or decree had
been entered by a court of competent jurisdiction in the amount of such settlement or compromise;
provided, that (i) no obligation, restriction or loss shall be imposed on the Indemnified
Party as a result of such settlement or compromise without its prior written consent, which consent
shall not be unreasonably withheld, and (ii) the Indemnified Party will not compromise or settle
any Claim, suit, action or proceeding without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld.

15. INSURANCE

     15.1 Landlord’s Insurance.

     At all times during the Term, Landlord, at its sole cost and expense, shall maintain insurance
that insures the Premises, the FF&E [and the Excluded Premises] (but excluding Tenant’s Personal
Property) against damage and destruction by fire, vandalism, malicious mischief, sprinkler damage
and other perils customarily covered under an All Risk form property insurance policy (but also
specifically including coverage for earthquake and flood) in an amount equal to one hundred percent
of the full insurance replacement value (replacement cost new, including, boiler and machinery
coverage, debris removal and demolition) thereof.

     Landlord, at no cost to the Tenant, shall procure and keep in effect at all times during the
Term Commercial General Liability (CGL) insurance with limits of Ten Million Dollars ($10,000,000)
each occurrence and in the aggregate applicable to each location separately (so long as per
location aggregates are available at commercially reasonable rates) for bodily injury and property
damage, including contractual liability (including the tort liability of another assumed in a
business contract), independent contractors, broad-form property damage, fire damage legal
liability, personal injury and advertising injury (employee and contractual liability exclusions
deleted), products and completed operations, and explosion, collapse and underground (XCU),
covering claims where Landlord or Tenant are deemed legally liable. Landlord’s commercial general
liability policy shall be primary as respects premises liability and Tenant’s general liability
insurance (as outlined in Section 15.2 below) shall be secondary, and Tenant’s general
liability insurance carrier shall not be required to make any contribution to Landlord’s insurance
carrier. Notwithstanding anything to the contrary in the foregoing, to the extent
Tenant is deemed liable due to the gross negligence or willful misconduct of Tenant or its
Agents, employees or contractors, Tenant’s general liability insurance shall be primary and
Landlord’s general liability policy shall be secondary and Landlord’s general liability insurance
carrier shall not be required to make any contribution to Tenant’s insurance carrier.

     Landlord shall cause Tenant to be named as an additional insured on the general liability
insurance policies procured by Landlord under this Section 15.1. Prior to or
contemporaneous with the execution of this Lease (and as requested by Tenant from time to time),
Landlord shall deliver to Tenant certificates of insurance (with Tenant listed as an additional
insured), evidencing the above described coverage. The insurance shall not be cancelable or
subject to material reduction of coverage or otherwise be subject to material modification except
after thirty (30) days’ prior written notice to Tenant.

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     Failure by Landlord to maintain any insurance specifically required hereunder shall not
relieve Landlord from any liability under this Lease, nor shall the insurance requirements hereof
be construed to conflict with or otherwise limit any contractual obligations, including those of
indemnification, of Landlord contained herein. In the event Landlord shall fail to maintain the
insurance coverage required by this Lease, Tenant may (but shall be under no obligation to) obtain
the required policies of insurance. All amounts advanced by Tenant in payment of the required
premiums for such insurance shall be reimbursed to Tenant as provided in Section 14.3
(Landlord’s Default).

     Tenant shall be subject to and follow Landlord’s current insurance or risk management policies
and procedures (the “Risk Management Policies and Procedures”), related claims handling policies
and procedures and Landlord’s response and remediation guidelines for water, moisture and mold
infiltration and any modifications to such policies and procedures which are applied by ASOT
generally to properties in its portfolio; provided any modifications to the current policies and
procedures shall not be binding upon Tenant unless and until Tenant has received thirty (30) days’
prior notice thereof from Landlord. Landlord has provided Tenant with the foregoing current
materials. Failure to follow the Risk Management Policies and Procedures or to report claims or
incidents with respect to such matters that could give rise to claims could void coverage. Any
such claims coverage, which becomes voided or not available due to the Tenant’s not following
procedures above, will be the sole financial responsibility of Tenant.

     15.2 Tenant’s Insurance.

     Tenant, at its sole cost and expense, shall maintain during the Term, and any extensions
thereof, the following insurance coverages required immediately below:

          15.2.1 Worker’s Compensation Insurance and Employer’s Liability Insurance in accordance with
all applicable laws, and with limits not less than the limits required by the state in which the
Premises is located.

          15.2.2 Commercial General Liability Insurance (CGL) insurance with limits of Ten Million
Dollars ($10,000,000) each occurrence and in the aggregate applicable to each location separately
(so long as per location aggregates are available at commercially reasonable rates) for
bodily injury and property damage, including contractual liability (including the tort
liability of another assumed in a business contract), independent contractors, broad-form property
damage, fire damage legal liability, personal injury and advertising injury (employee and
contractual liability exclusions deleted), products and completed operations, and explosion,
collapse and underground (XCU), covering claims where Landlord or Tenant are deemed legally liable.
Landlord’s commercial general liability policy (as outlined in Section 15.1 above) shall be
primary as respects premises liability and Tenant’s general liability insurance shall be secondary,
and Tenant’s general liability insurance carrier shall not be required to make any contribution to
Landlord’s insurance carrier. Notwithstanding anything to the contrary in the foregoing, to the
extent Tenant is deemed liable due to the gross negligence or willful misconduct of Tenant or its
Affiliates or Agents, employees or contractors, Tenant’s general liability insurance shall be
primary and Landlord’s general liability policy shall be secondary and Landlord’s general

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liability
insurance carrier shall not be required to make any contribution to Tenants insurance carrier.

          15.2.3 Professional Liability Insurance (errors and omissions) with the following limits of
liability: Two Million Dollars ($2,000,000) per claim and in the aggregate.

     Tenant shall cause Landlord to be named as an additional insured on the general liability
insurance policies procured by Tenant under this Section 15.2 but only as to Tenant’s
operations. Prior to or contemporaneous with the execution of this Lease (and as requested by
Landlord from time to time), Tenant shall deliver to Landlord certificates of insurance (with
Landlord listed as an additional insured), evidencing the above described coverage. The insurance
shall not be cancelable or subject to material reduction of coverage or otherwise be subject to
material modification except after thirty (30) days’ prior written notice to Landlord.

     Failure by Tenant to maintain any insurance specifically required hereunder shall not relieve
Tenant from any liability under this Lease, nor shall the insurance requirements hereof be
construed to conflict with or otherwise limit any contractual obligations, including those of
indemnification, of Tenant contained herein. In the event Tenant shall fail to maintain the
insurance coverage required by this Lease, Landlord may (but shall be under no obligation to)
obtain the required policies of insurance. All amounts advanced by Landlord in payment of the
required premiums for such insurance shall be reimbursed to Landlord as provided in Section
14.2 (Landlord’s Remedies).

     In accordance with the Risk Management Policies and Procedures, Tenant shall promptly notify
Landlord of any personal injury or property damage occurring to or claimed by any third party on or
with respect to the Premises, and shall forward copies to Landlord of any summons, subpoena or
other legal document served upon, delivered to or otherwise coming into the possession or attention
of Tenant relating to actual or alleged potential liability of Landlord, Tenant or the Premises.

     To the extent there is any damage to Tenant’s Personal Property due to the gross negligence or
willful misconduct of Landlord or Landlord’s Affiliates or Agents, Landlord shall be responsible
for reimbursing Tenant for the actual, documented and reasonable out-of-pocket costs and expenses
incurred by Tenant (exclusive of any internal handling costs, fees or overhead cost allocations) in
repairing any damage to or replacing such Tenant’s Personal Property, but
only to the extent of any deductible or self-insurance retention amounts under Tenant’s
property insurance policies covering Tenant’s Personal Property.

     15.3 Waiver of Subrogation.

     Notwithstanding anything to the contrary contained herein, Landlord hereby waives any right of
recovery against Tenant for any loss or damage sustained by Landlord with respect to the Building
or the Premises or any portion thereof or the contents of the same or any operation therein,
whether or not such loss is caused by the fault or negligence of Tenant, to the extent such loss or
damage is covered by insurance which Landlord is required to purchase under this Lease or is
otherwise actually recovered from valid and collectible insurance covering Landlord. To the extent
available at commercially reasonable rates, Landlord agrees to obtain a waiver of

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subrogation
endorsement from each insurance carrier issuing policies relative to the Building or the Premises;
provided, Landlord’s failure to do so shall not affect the above waiver. This waiver shall not
apply to Subtenants or lessees within the Units.

     Notwithstanding anything to the contrary contained herein, Tenant hereby waives any right of
recovery against Landlord for any loss or damage sustained by Tenant with respect to the Building
or the Premises or any portion thereof or the contents of the same or any operation therein,
whether or not such loss is caused by the fault or negligence of Landlord, to the extent such loss
or damage is covered by insurance which Tenant is required to purchase under this Lease or is
otherwise actually recovered from valid and collectible insurance covering Tenant. To the extent
available at commercially reasonable rates, Tenant agrees to obtain a waiver of subrogation
endorsement from each insurance carrier issuing policies relative to the Building or the Premises;
provided, Tenant’s failure to do so shall not affect the above waiver. This waiver shall not apply
to tenants or lessees within the Excluded Premises.

16. ACCESS BY LANDLORD

     Landlord reserves for (i) itself, (ii) any designated Agent or representative of Landlord,
(iii) any representative or agent of a mortgage lender or other debt holder of Landlord, and (iv)
Landlord’s shareholders, trustees, analysts, rating agency representatives, investors and other
parties ASOT provides with rights of entry to its other properties in the ACI from time to time,
the right to enter the Premises (but not spaces leased by Subtenants) at all reasonable times and
after giving Tenant at least twenty four (24) hours’ advance notice, except in cases of emergency
(in which event Landlord shall give such notice, if any, as is appropriate under the
circumstances), which notice need not be written, for any purpose. The foregoing right of entry
shall, however, be subject to the provisions of Section 22.17 (Quiet Enjoyment and Title).

17. ESTOPPEL CERTIFICATES

     Either party, from time to time during the Term upon not less than ten (10) days’ prior
written notice from the other party, shall execute, acknowledge and deliver to the other party, or
such persons or entities designated by such other party, a certificate stating: (i) the
Commencement Date and Expiration Date of this Lease; (ii) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that the Lease is in full force and effect
as modified and stating the modifications); (iii) that there are no defaults under this Lease (or
if so, specifying the same); (iv) the date to which Rent has been paid; and (v) any other
information that may be reasonably required by the requesting party.

18. HAZARDOUS MATERIALS

     18.1 Definitions.

          As used in this Lease, the following terms shall have the meanings hereinafter set forth:

          (a) “Environmental Laws” shall mean any federal, state, local or administrative law, rule,
regulation, order or requirement relating to industrial hygiene, environmental conditions or
Hazardous Material, whether now in effect or hereafter adopted.

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          (b) “Hazardous Material” shall mean any material that, because of its quantity, concentration
or physical or chemical characteristics, is deemed by any federal, state or local governmental
authority to pose a present or potential hazard to human health or safety or to the environment.
Hazardous Material includes, without limitation, any material or substance defined as a “hazardous
substance,” or “pollutant” or “contaminant” pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA,” also commonly known as the “Superfund” law), as
amended (42 U.S.C. Sections 9601 et seq.) [ONLY FOR CALIFORNIA PROPERTIES:, or
pursuant to Section 25316 of the California Health & Safety Code; any “hazardous waste” listed
pursuant to Section 25140 of the California Health & Safety Code]; any asbestos and asbestos
containing materials whether or not such materials are part of the structure of the Building or are
naturally occurring substances on or about the Premises; any biological agents, including mold,
fungi, mildew and other parasitic organisms; and petroleum, including crude oil or any fraction
thereof, natural gas or natural gas liquids.

          (c) “Release” when used with respect to Hazardous Material shall include any actual or
imminent spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into or inside the Building, or in, on, under or about the
Premises.

     18.2 Landlord’s Covenants.

     Subject to Tenant’s obligations under Section 18.4 below, and without limitation of
Section 5.2 (Condition of the Premises) above, Landlord shall not cause, or knowingly
permit any of its Agents, Affiliates, [tenants of Excluded Premises]or Invitees to cause, any
Hazardous Material to be brought upon, kept, used, stored, generated or disposed of in, on or
about the Premises, or transported to or from the Premises [or the Excluded Premises] in violation
of any applicable Environmental Laws [provided that tenants of Excluded Premises may use such
substances in such limited amounts as are customarily used in residential rental projects so long
as such use is in compliance with all applicable Environmental Laws]. In addition, Landlord, at
Landlord’s cost and expense, shall cause those portions of the Premises for which it is responsible
for repair, maintenance or replacement under this Lease and all portions of the Premises below the
surface of the Land, to comply with Environmental Laws (to the extent so
enforced by governmental authorities from time to time), except for any non-compliance that
results from any condition caused by Tenant, or any Affiliate or Agent of Tenant after the
Commencement Date.

     If Landlord reasonably and in good faith determines that Tenant, or any Affiliate, or Agent of
Tenant, is responsible for any condition at the Premises caused by such party after the
Commencement Date that is not in compliance with Environmental Laws, Landlord shall provide Tenant
with a written notice so advising Tenant of the condition and the corrective work Landlord believes
is necessary to correct such condition. Upon receipt of any such notice, Tenant shall have ten
(10) business days within which to object to the work described in Landlord’s notice by delivering
written notice to Landlord. If Tenant does not timely object, Landlord may proceed with the subject
work, at Tenant’s cost and expense. If, however, Tenant does timely object, Landlord and Tenant
shall meet and confer in good faith to reach agreement on whether Tenant is responsible for such
corrective work and/or how any such corrective work

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should be completed and the cost to complete
such work. If Landlord and Tenant are not able to agree within ten (10) business days after
delivery of Tenant’s notice of objection, then either party may elect, by delivering written notice
to the other party, to have Landlord assume the responsibility for performing such work, in which
event, Landlord shall cause such corrective work to be completed in accordance with applicable
Environmental Laws and, if such Hazardous Materials condition at the Premises was in fact caused
after the Commencement Date by Tenant, or any Affiliate or Agent of Tenant, at Tenant’s cost and
expense. Absent either party making such election, Landlord may cause such work to be completed in
accordance with applicable Environmental Laws, and if such Hazardous materials condition was in
fact caused after the Commencement Date by Tenant, or any Affiliate or Agent of Tenant, Tenant will
reimburse Landlord for Landlord’s reasonable out-of-pocket costs and expenses (exclusive of
internal handling costs, fees and overhead cost allocations) of completing such corrective work
within thirty (30) days after receiving evidence of the completion of such work and invoices or
comparable evidence of payment of such costs and expenses by Landlord.

     In the event the corrective work at the Premises described hereinabove deemed necessary by
Landlord requires immediate attention to avoid injury to persons or damage to property, Landlord
need not provide prior notice to Tenant and instead may proceed with the completion of such
corrective work as is necessary. In such event Tenant will reimburse Landlord for Landlord’s
reasonable out-of-pocket costs and expenses (exclusive of internal handling costs, fees and
overhead cost allocations) of completing such corrective work within thirty (30) days after
receiving evidence of the completion of such corrective work and invoices or comparable evidence of
payment of such costs and expenses by Landlord to the extent Hazardous Materials condition at the
Premises was in fact caused after the Commencement Date by Tenant or any Affiliate or Agent of
Tenant.

     18.3 Landlord’s Environmental Indemnity.

     Landlord shall indemnify, defend, protect and hold Tenant harmless from and against any and
all Claims arising during or after the Term of this Lease as a result of any breach of any of
Landlord’s covenants in Section 18.2 and Section 18.4 hereof.

     18.4 Tenant’s Covenants.

     Tenant shall not cause, or knowingly permit any of its Agents, Affiliates or Invitees to
cause, any Hazardous Material to be brought upon, kept, used, stored, generated or disposed of in,
on or about the Premises, or transported to or from the Premises, in violation of any Environmental
Laws, provided that Tenant and Tenant’s Agents, Affiliates and Invitees may use such substances in
such limited amounts as are customarily used in residential rental projects so long as such use is
in compliance with all applicable Environmental Laws.

     If Tenant reasonably and in good faith determines that there is a condition at the Premises
that is not in compliance with Environmental Laws that was not in existence as of the Commencement
Date, other than conditions caused by Tenant or any Affiliate or Agent of Tenant after the
Commencement Date, Tenant shall provide Landlord with a written notice so advising Landlord of such
condition and any corrective work Tenant believes is necessary to correct such condition. To the
extent such condition exists as of the Commencement Date, and

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Landlord is aware of same, Tenant
need not provide notice to Landlord of such condition. In the event that corrective work is
necessary with respect to any such condition not caused by Tenant or any Affiliate or Agent of
Tenant after the Commencement Date, Landlord shall cause such work to be performed at its cost and
expense within a reasonable time following receipt of such notice from Tenant or after Landlord
becomes aware of such condition whether or not Tenant notified Landlord thereof, taking into
account the nature of the condition, any requirement to obtain governmental or regulatory approvals
in connection with remedying such condition, and whether such condition poses any risk of damage or
injury to property or persons.

     18.5 Tenant’s Environmental Indemnity.

     Tenant shall indemnify, defend, protect and hold Landlord harmless from and against any and
all Claims arising during or after the Term of this Lease as a result of any breach of any of
Tenant’s covenants in Section 18.2 and Section 18.4.

19. TERMINATION OR EXPIRATION OF LEASE; Retained Corporate Units.

     19.1 Procedure for Termination or Expiration of Lease.

     If Tenant desires to terminate this Lease prior to the Expiration Date, Tenant shall provide
Landlord with a written notice (a “Termination Notice”) specifying, in addition to the information
required in the following paragraph, the date (the “Early Termination Date”), which shall be no
earlier than ninety (90) days after the date such notice is delivered to Landlord, upon which
Tenant desires to terminate this Lease [delete the following in Oakwood Chicago:]; provided,
however, in no event shall the Early Termination Date be earlier than the than first
(1st) anniversary date of the Commencement Date. The term “Termination Date” shall mean
the first to occur of (i) the Early Termination Date, or (ii) the Expiration Date. The term
“Termination Notice Date” shall mean the date a Termination Notice is delivered to Landlord.

     Tenant shall specify in the Termination Notice: (A) the number of Corporate Units in effect as
of the Termination Notice Date; and (B) a listing of all Conventional Units in place as of the
Termination Notice Date, and the scheduled expiration date of any Residential Leases with
respect thereto, and Tenant shall make available for review at the Premises copies of all such
Residential Leases.

     If Tenant has not terminated this Lease prior to date that is ninety (90) days prior to the
Expiration Date, then on or before the date that is ninety (90) days prior to the Expiration Date
(the “Expiration Statement Date”), Landlord and Tenant shall meet and confer to discuss the
transfer of control of the Premises back to Landlord to be completed as of the Expiration Date. In
connection with such discussions, Tenant shall provide Landlord with a written statement (the
“Expiration Statement”) containing the information specified in the preceding paragraph, except
that for purposes of this paragraph, only, all references in such preceding paragraph to
“Termination Notice Date” shall be revised to mean the “Expiration Statement Date.”

     Notwithstanding anything to the contrary in the foregoing, Tenant may, by providing Landlord
with a written notice at any time prior to the date which is five (5) business days prior to the
Termination Date (the “Final Designation Date”), designate as Corporate Units any or all of the
Units previously identified in the Termination Notice (or Expiration Statement, as the case may be)
as Conventional Units and designate as Conventional Units any or all

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of the Units previously
identified in the Termination Notice (or Expiration Statement, as the case may be) as Corporate
Units. Tenant shall not, however, be entitled to decrease the number of Corporate Units from the
number of such Units in place on the Termination Notice Date (or Expiration Statement Date, as the
case may be) by an amount in excess of the Maximum Give-Back Amount.

     Subject to the foregoing, the Corporate Units in existence on the Termination Date (the
“Retained Corporate Units”) shall be leased from Landlord by OCH on the Termination Date pursuant
to Landlord’s then current form of Residential Lease for the ACI in effect as of the Termination
Notice Date (or Expiration Statement Date, as the case may be) and otherwise in accordance with the
provisions of Section 19.3 (the “Retained
Corporate Leases”) and the Master OCH Agreement.
By not later than the Final Designation Date (irrespective of whether Tenant has elected to
re-designate any previously identified Conventional Units as Corporate Units or any previously
identified Corporate Units as Conventional Units), Tenant shall deliver to Landlord a notice
identifying the specific Corporate Units that will continue to be leased by OCH as Retained
Corporate Units. Any Corporate Units that are to be surrendered to Landlord on the Termination
Date are referred to herein as “Surrendered Corporate
Units”.

     In connection with the termination or expiration of the Lease as provided for in this
Section 19.1, Landlord shall have the right, upon reasonable prior notice and during normal
business hours, to audit Tenant’s books and records for the Premises, and, subject to the rights of
tenants under leases, make reasonable inspections of the Units in the Premises, in order to verify
the number of Conventional Units and Corporate Units then in existence and the rental rates and
terms of the leases for the Conventional Units, provided, however, that any such audits and
inspections shall be performed in a manner that does not materially interfere with the use and
enjoyment of the Units by its occupants or the business operations of Tenant at the Premises.

     In addition, on or before thirty (30) days prior to the Termination Date, Landlord and Tenant
shall endeavor in good faith to agree upon the monthly rental rate for the Retained Corporate Units
that will be in effect on the commencement date of the Retained Corporate
Leases (the “Initial Monthly Rent”) which is intended to be an effective fair market monthly
rental rate (taking into account free rent, abated rent, rent discounts and all other monetary
concessions and inducements, and rent loss items). If the parties do so agree, the agreed upon
rate shall be the Initial Monthly Rent for the period commencing on the commencement date of the
Retained Corporate Leases and expiring on December 31 of the year in which the Termination Date
occurs (the “Initial Retained Corporate Lease Period”). In the event Tenant and Landlord have not
so agreed by the Termination Date, then the Initial Monthly Rent for each Retained Corporate Unit
shall be equal to the Initial Default Market Rental Rate determined as of January 1 of the calendar
year in which the Termination Date occurs. The “Initial Default Market Rental Rate” shall mean the
market unfurnished rental rate for such unit type at the inception of the Master Lease as set forth
in Schedule 19.4, adjusted on an annual basis as of January 1 of each year during the term
of the Master Lease by ASOT’s Revenue Growth (positive or negative) during the preceding year in
the ACI.

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     On the Termination Date, or if such date is not a Business Day, then on the next Business Day
(the “Transfer Closing Date”), Landlord and Tenant shall conduct a closing (the “Closing”) of the
transfer of control of the Premises to Landlord, and the leasing of the Retained Corporate Units to
OCH, and shall make the deliveries and the prorations required to be made under the procedures set
forth in Schedule 19.1 (the “Transfer Closing Procedures”). The agreements to be executed
by Landlord, Tenant, OCH and/or R&B under the Transfer Closing Procedures, are herein collectively
referred to as the “Closing Agreements.”

     The failure of Landlord or Tenant to execute and deliver, or cause to be executed and
delivered, the Closing Agreements that such party is obligated to execute and deliver, or is
obligated to cause to be executed and delivered, under the terms of the Transfer Closing Procedures
shall be deemed a material default by such party under this Lease which shall survive the
termination of this Lease. In the event Landlord is the defaulting party, Landlord shall
nonetheless be liable for all obligations that would have otherwise been Landlord’s responsibility
under the Master OCH Agreement and each Retained Corporate Lease until each such agreement is
signed by Landlord, and Tenant and OCH shall be entitled to all other remedies available at law or
in equity on account of such default by Landlord, including, without limitation, the remedy of
specific performance. In the event Tenant is the defaulting party, Tenant shall be liable, as
additional Rent hereunder, for the rent that would otherwise have been due under each Retained
Corporate Lease until it is signed by OCH, and Landlord shall be entitled to all other remedies
available at law or in equity on account of such default by Tenant, including, without limitation
the remedy of specific performance. The provisions of this Article 19 and the provisions
of Article 21 shall survive the termination of this Lease under the provisions of this
Section 19.1, until such time as all Closing Agreements have been executed and delivered
and the Transfer Closing Procedures consummated.

     Upon the Termination Date and consummation of the Transfer Closing Procedures, Tenant shall
vacate and surrender possession of the Premises, subject to OCH’s rights under the Retained
Corporate Leases, the Master OCH Agreement and the other Closing Agreements, and this Lease shall
terminate, except for any provision which by its terms survives any termination of this Lease.

     19.2 Payment to Landlord for Below Market Residential Leases.

     On the Transfer Closing Date, Tenant shall make a payment to Landlord intended to afford
Landlord reasonable compensation for any below-market Residential Leases for Conventional Units
that Tenant is assigning and Landlord is assuming as of the Termination Date. The parties have
agreed that the amount, if any, due to Landlord will be equal to the product of (i) the difference
between (A) the Market Monthly Effective Gross Income (as defined in Schedule 19.2 attached
hereto), less (B) the Actual Monthly Effective Gross Income (as defined in Schedule 19.2
attached hereto) multiplied by (ii) five (5) (the “Conventional Unit Below Market Deficiency”),
provided if such calculation gives rise to a negative number, no payment will be due to Landlord.
An example of the determination of Conventional Unit Below Market Deficiency is set forth in
Schedule 19.2 attached hereto. Landlord shall make an initial determination of the amount
of the Conventional Unit Below Market Rental Deficiency not later than twenty-five (25) days prior
to the Termination Date and shall deliver a notice to Tenant specifying the amount so determined by
Landlord. Such initial determination shall be adjusted

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as necessary based upon any changes in the
number and composition of the Conventional Units reflected in any Final Designation Notice
delivered by Tenant, and Landlord shall provide such adjusted calculation to Tenant on or before
the Transfer Closing Date. Landlord’s failure, however, to timely deliver such notice to Tenant
will not relieve Tenant of its obligation to pay any Conventional Unit Below Market Deficiency to
Landlord, but rather, if such amount has not been determined and paid by the Transfer Closing Date,
such amount shall be due to Landlord within fifteen (15) Business Days after Tenant’s receipt of
any such late notice, and this obligation of Tenant shall survive the expiration or termination of
this Lease until such payment has been received by Landlord.

     19.3 Retained Corporate Leases.

     R&B shall guaranty the obligations of OCH under the Master OCH Agreement and each of the
Retained Corporate Leases pursuant to the OCH Guaranty. [If ASOT is not the Landlord: ASOT shall
guaranty the obligations of Landlord under the Retained Corporate Leases and Master OCH Agreement
pursuant to the form of guaranty set forth as an exhibit to the Master OCH Agreement.] Each
Retained Corporate Lease shall be for a lease term of one (1) year, which lease term shall be
automatically renewed for four (4) successive one (1) year periods thereafter. The rent to be paid
under the Retained Corporate Leases following the Initial Retained Corporate Lease Period, OCH’s
right to terminate the Retained Corporate Leases from time to time and the other provisions
relating to the rights and obligations of OCH and Landlord in connection with the Retained
Corporate Leases are set forth in the Master OCH Agreement.

20. SURRENDER

     Upon expiration or earlier termination of this Lease, except as provided below, Tenant shall
surrender the Premises to Landlord in the “Normal Surrender Condition,” which for purposes hereof
shall mean (i) in good order, condition and repair, reasonable wear and tear and casualty damage
excepted, (ii) with all Alterations and FF&E (including any upgrades made to the FF&E) in place and
surrendered in good condition, subject, however, to the provisions of Section 6.1 and
Section 6.2 with respect to the Removable Alterations that must be replaced or
restored, and (iii) with all Units (Conventional Units and Surrendered Corporate Units) free
of occupancy, wiped down and cleaned (but not repainted), with the floors of such Units
broom-cleaned and vacuumed, and with all of Tenant’s Personal Property and trash and debris in such
Units removed therefrom (and with all damage from such removal repaired), with the following
exceptions:

     (A) Tenant shall not surrender possession of any Retained Corporate Units that are being
leased by OCH as provided for in Article 19;

     (B) All Conventional Units which are subject to a Residential Lease with a third party
Subtenant as of the Termination Date (collectively, the “Leased Conventional Units”), shall not be
required to be vacated by such third party Subtenants, but shall be delivered to Landlord subject
to the Residential Leases for the Leased Conventional Units, which leases, and the unapplied
security deposits thereunder, will be assigned to Landlord pursuant to the Transfer Closing
Procedures. Any such Leased Conventional Units shall be delivered to Landlord in their

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then “AS
IS” condition (and not the Normal Surrender Condition) as of the Termination Date, subject, however
to Tenant’s obligations to pay Landlord for its obligations to remove and restore or replace under
Sections 6.1 and 6.2, and without waiving any liability or responsibility on
Tenant’s part for repair or maintenance of such Units that was the responsibility of Tenant to
perform (i.e., Tenant shall not be responsible for damage caused by the third party
Subtenants); and

     (C) With respect to any Conventional Unit which is vacant at least five (5) days prior to the
Termination Date, Tenant shall, in addition to the placing such Conventional Unit in the Normal
Surrender Condition, deliver such Conventional Unit to Landlord in “Rent Ready Condition,” which
for purposes hereof shall mean the Normal Surrender Condition, plus the painted walls of such
Conventional Unit shall be repainted (if necessary) and the existing carpets steam cleaned and/or
shampooed (or, if necessary due to extraordinary wear and tear, replaced).

     Landlord and Tenant agree that, upon the expiration or earlier termination of this Lease for
whatever reason, any then existing Subtenants under the Leased Conventional Units will
automatically become direct tenants of the Landlord (but without liability on Landlord’s part for
pre-termination liabilities on the part of the landlord thereunder), and Tenant will transfer to
Landlord any security deposits received by the Tenant from, and returnable to, any such Subtenants.

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21. MARKETING RIGHTS

     21.1 Right of First Refusal.

     Subject to the terms of this Section 21.1, Landlord hereby grants to Tenant a right of
first refusal (the “ROFR”) in connection with any bona fide offers which Landlord, ASOT and/or
their Affiliates (individually, an “ASOT Party” and collectively, the “ASOT Parties”) receive at
any time during the Exclusivity Period to supply Extended Stay Services at any of the other
apartment projects now or hereafter owned by any of the ASOT Parties in the geographic area
described in Schedule 21.1 attached hereto and made a part hereof (individually an
"Exclusive ROFR Property” and collectively, the “Exclusive ROFR Properties”). The ROFR shall also
apply if at any time an ASOT Party desires to self-provide any such Extended Stay Services at
an Exclusive ROFR Property (in which case, for purposes of this Section 21.1, the ASOT
Party is deemed to have received a bona fide offer from such ASOT Party for such Extended Stay
Services). Notwithstanding anything to the contrary in the foregoing, the ROFR shall not apply as
to any Exclusive ROFR Property unless and until Extended Stay Services are already provided (or if
the bona fide offer were accepted by an ASOT Party, would result in Extended Stay Services being
provided) in ten percent (10%) [CONFIRM PERCENTAGE FOR EACH PROJECT] of the total number of
residential apartment units in such Exclusive ROFR Property (the “Permitted Floor Amount”)
(i.e., Extended Stay Services may be provided by an ASOT Party or a third party provider
other than Tenant for up to ten percent (10%) [CONFIRM PERCENTAGE FOR EACH PROJECT] of the total
residential apartment units in such Exclusive ROFR Property before the ROFR granted in this
Section 21.1 shall apply to such Exclusive ROFR Property, and such ROFR shall only be with
respect to residential apartment units in excess of such 10% floor).

     Landlord shall cause the owner of each Exclusive ROFR Property to be bound by the terms of
this Section 21.1 by executing concurrently herewith an acknowledgement to such effect.

     The ROFR shall continue only so long as (i) Landlord or its Affiliate continues to own the
Premises, and (ii) with respect to each Exclusive ROFR Property, only for so long as an ASOT Party
continues to own such property.

     If all of the foregoing conditions described in this Section 21.1 are satisfied, and
an ASOT Party receives a bona fide offer from an ASOT Party or another provider of Extended Stay
Services to lease residential apartment units at an Exclusive ROFR Property which would result in
Extended Stay Services being provided at such Exclusive ROFR Property in excess of the Permitted
Floor Amount, the applicable ASOT Party shall provide Tenant with a notice setting forth the terms
upon which the offeror is willing to lease the subject units from such ASOT Party and a copy of the
form of lease to be used in connection with such transaction. Tenant shall have the right to lease
such residential apartment units in excess of such Permitted Floor Amount under the same terms as
set forth in such notice, exercisable by providing the ASOT Party with written notice within ten
(10) days after receipt of such notice from such ASOT Party. If Tenant fails to provide such
notice of exercise within such ten (10) day period, such ASOT Party shall be free to enter into the
a lease with the offeror on the terms offered to Tenant. If Tenant timely exercises its ROFR in
accordance with the foregoing provision but fails

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to actually execute and deliver such leases
within thirty (30) days after such election, the ASOT Party shall be entitled to lease such
residential apartment units which are the subject of such offer under such terms as it determines
to be appropriate to the offeror or to anyone else, and in such event the ROFR granted to Tenant
hereunder shall terminate with respect to the Exclusive ROFR Property for which Tenant exercised
its ROFR. If Tenant fails on more than two (2) occasions to execute and deliver such leases with
respect to any Exclusive ROFR Property within such applicable thirty (30) day period, the ROFR
granted to Tenant hereunder shall terminate in its entirety.

     21.2 Marketing and Promotion; Signage.

     During the Term, Tenant shall have the right, at its expense, to provide for the marketing and
promotion of the Units and to install signage and/or provide marketing and advertising materials
in, on or about the Premises to the extent Tenant deems necessary, reasonable or desirable, and
provided that the same is in compliance with all applicable Laws and signage regulations, and
provided that any signage visible from outside of the Building shall be subject to the Landlord’s
prior approval, such approval not to be unreasonably withheld or delayed. Landlord shall also have
the right to reasonably approve any marketing materials naming Landlord or its Affiliates.

     At no expense to Landlord, Landlord shall coordinate with the appropriate government entities
Tenant’s requests for signage and shall reasonably cooperate with Tenant’s efforts in obtaining
approval from such agencies of Tenant’s proposed signage for the Premises. Upon the Termination
Date, Tenant shall, at its expense, remove all of Tenant’s marketing and advertising materials and
signage from the Premises and repair any damage resulting therefrom.

     21.3 Landlord’s Web Page.

     Landlord shall provide a click pass-through button to the Landlord’s and ASOT’s web page for
the Premises designating Tenant (the specific trademark to be designated by Tenant for the purpose
of this clause) as the exclusive furnished apartment provider and corporate housing provider for
the Premises, and providing a direct link therein to Tenant’s main web site (currently,
Oakwood.com).

22. GENERAL PROVISIONS

     22.1 Notices.

     Except as otherwise specifically provided in this Lease, any notice given under this Lease
shall be in writing and given by delivering the notice in person or by commercial hand delivery
courier, or by sending it by first-class mail, postage prepaid, certified mail, return receipt
requested, or nationally recognized overnight delivery service, to: (i) Tenant at Tenant’s address
set forth in the Basic Lease Information; or (ii) Landlord at Landlord’s address set forth in the
Basic Lease Information; or (iii) such other address as either Landlord or Tenant may designate as
its new address for such purpose by notice given to the other in accordance with this Section. Any
notice hereunder shall be deemed to have been given and received three (3) days after the date when
it is mailed if sent by first-class, certified mail, one (1) business day after the date when it is
mailed if sent by overnight delivery service, or upon the date personal delivery is

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made. For
convenience of the parties, copies of notices may also be given by facsimile to the facsimile
number set forth in the Basic Lease Information or such other number as may be provided from time
to time; however, neither party may give official or binding notice by facsimile.

     22.2 No Implied Waiver.

     No failure by either party to insist upon the strict performance of any obligation of the
other party under this Lease or to exercise any right, power or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or of such term, covenant or condition.
No acceptance of full or partial Rent by Landlord while Tenant is in default hereunder shall
constitute a waiver of such default by Landlord. No express written waiver of any default or the
performance of any provision hereof shall affect any other default or performance, or cover any
other period of time, other than the default, performance or period of time specified in such
express waiver. One or more written waivers of a default or the performance of any provision
hereof shall not be deemed to be a waiver of a subsequent default or performance. The consent of
Landlord or Tenant given in one instance under the terms of this Lease shall not relieve the other
party of any obligation to secure the consent to any other or future instance under the terms of
the Lease.

     22.3 Amendments.

     Neither this Lease nor any terms or provisions hereof may be changed, waived, discharged or
terminated, except by a written instrument signed by the party against which the enforcement of the
change, waiver, discharge or termination is sought. No waiver of any breach shall affect or alter
this Lease, but each and every term, covenant and condition of this Lease shall continue in full
force and effect with respect to any other then-existing or subsequent breach thereof. Any
amendments or modifications to this Lease, including, without limitation, amendments to or
modifications to the exhibits to this Lease, shall be subject to the mutual written agreement of
Landlord and Tenant.

     22.4 Authority.

     Landlord represents and warrants to Tenant that the execution and delivery of this Lease by
Landlord has been duly authorized and does not violate any provision of any agreement, law or
regulation to which Landlord or the Premises is subject. Tenant represents and warrants to
Landlord that the execution and delivery of this Lease by Tenant has been duly authorized and does
not violate any provision of any agreement, law or regulation to which Tenant or the Premises is
subject.

     22.5 Interpretation of Lease.

     The captions preceding the articles and sections of this Lease and in the table of contents
have been inserted for convenience of reference only and such captions shall in no way define or
limit the scope or intent of any provision of this Lease. This Lease has been negotiated at arm’s
length and between persons sophisticated and knowledgeable in the matters dealt with herein and
shall be interpreted to achieve the intent and purposes of the parties, without any presumption
against the party responsible for drafting any part of this Lease. Except as otherwise
specifically

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provided herein, wherever in this Lease Landlord or Tenant is required or requested to
give its consent or approval to any matter or action by the other, such consent or approval shall
not be unreasonably withheld or delayed and the reasons for disapproval of consent shall be stated
in reasonable detail in writing. Provisions in this Lease relating to number of days shall be
calendar days, unless otherwise specified, provided that if the last day of any period to give
notice, reply to a notice or to undertake any other action occurs on a day other than a Business
Day, then the last day for undertaking the action or giving or replying to the notice shall be the
next succeeding Business Day. Use of the word “including” or similar words shall not be construed
to limit any
general term, statement or other matter in this Lease, whether or not language of
non-limitation, such as “without limitation” or similar words, are used.

     22.6 Successors and Assigns.

     Subject to the provisions of Section 13 (Assignment and Subletting) relating to
assignment and subletting, the terms, covenants and conditions contained in this Lease shall bind
and inure to the benefit of Landlord and Tenant and, except as otherwise provided herein, their
personal representatives and permitted successors and assigns. There are no third-party
beneficiaries of this Lease, including but not limited to any management agent with which the
Tenant may contract for management of the Premises.

     22.7 Archstone-Smith Trust.

     Tenant shall cooperate with Landlord, at no cost to Tenant, to permit Archstone-Smith Trust,
the trustee of the Landlord, to continue to qualify as a real estate investment trust for federal
income tax purposes, including, without limitation, by providing Landlord with all relevant
information regarding the Residential Leases and the Retail Services.

     22.8 Brokers.

     Neither party has had any contact or dealings regarding the leasing of the Premises, or any
communication in connection therewith, through any licensed real estate broker or other person who
could claim a right to a commission or finder’s fee in connection with the lease contemplated
herein. In the event that any other broker or finder perfects a claim for a commission or finder’s
fee based upon any such contact, dealings or communication, the party through whom the broker or
finder makes his claim shall be responsible for such commission or fee and shall indemnify the
other party from any and all claims incurred by the indemnified party in defending against the
same. The provisions of this Section shall survive any termination of this Lease.

     22.9 Severability.

     If any provision of this Lease or the application thereof to any person, entity or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons, entities or circumstances other than those as to which it
is invalid or unenforceable, shall not be affected thereby, and each other provision of this Lease
shall be valid and be enforceable to the full extent permitted by law.

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     22.10 Governing Law.

     This Lease shall be construed and enforced in accordance with the laws of the State in which
the Premises are located.

     22.11 Entire Agreement.

     The parties intend that this Lease (including all of the attached exhibits, which are made a
part of this Lease) shall be the final expression of their agreement with respect to the subject
matter hereof and may not be contradicted by evidence of any prior or contemporaneous written
or oral agreements or understandings. The parties further intend that this Lease shall constitute
the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever
(including prior drafts hereof and changes therefrom) may be introduced in any judicial,
administrative or other legal proceeding involving this Lease.

     22.12 Attorneys’ Fees.

     In the event that either Landlord or Tenant fails to perform any of its obligations under this
Lease or in the event a dispute arises concerning the meaning or interpretation of any provision of
this Lease, the defaulting party or the party not prevailing in such dispute, as the case may be,
shall pay any and all costs and expenses incurred by the other party in enforcing or establishing
its rights hereunder (whether or not such action is prosecuted to judgment), including, without
limitation, court costs and reasonable attorneys’ fees.

     22.13 Holding Over.

     Should Tenant hold over in possession of the Premises after the expiration or sooner
termination of this Lease, such holding over shall not be deemed to extend the Term or renew this
Lease, but such tenancy thereafter shall continue as a month-to-month tenancy at sufferance, at a
base rent equal to 150% of the Base Rent, and subject to all additional Rent provided for under
this Lease.

     22.14 Cumulative Remedies.

     All rights and remedies of either party hereto set forth in this Lease shall be cumulative,
except as may otherwise be provided herein.

     22.15 Time of Essence.

     Time is of the essence with respect to all provisions of this Lease.

     22.16 Survival of Indemnities.

     Termination of this Lease shall not affect the right of either party to enforce any and all
indemnities and representations and warranties given or made to the other party under this Lease,
nor shall it affect any provision of this Lease that expressly states it shall survive termination
hereof. Each party hereto specifically acknowledges and agrees that, with respect to each of the
indemnities contained in this Lease, the indemnitor has an immediate and independent obligation

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to defend the indemnitees from any claim which actually or potentially falls within the indemnity
provision even if such allegation is or may be groundless, fraudulent or false, which obligation
arises at the time such claim is tendered to the indemnitor by the indemnitee and continues at all
times thereafter.

     22.17 Quiet Enjoyment and Title.

     Landlord covenants that Tenant, upon paying the Rent hereunder and performing the covenants
hereof, and for so long as Tenant is not in default under this Lease, and subject to the
express terms of this Lease, including Sections 1 (Basic Lease Information and Certain
Defined Terms) and 12 (Eminent Domain), Tenant shall peaceably and quietly have, hold and
enjoy the Premises during the Term of this Lease as against all persons or entities claiming by and
through Landlord.

     22.18 Transfer of Landlord’s Interest.

     During the Term, Landlord shall not sell, convey or otherwise transfer all or any portion of
its interest in the Premises or this Lease to any person or entity (except to an Affiliate) without
the prior consent of Tenant, which consent shall not be unreasonably withheld, conditioned or
delayed. For purposes of the foregoing, it shall be “reasonable” for Tenant to withhold its
consent for any of the following reasons (which are not exclusive, and Tenant may withhold its
consent on other reasonable grounds): (i) Tenant reasonably and good faith determines that the
financial wherewithal of the proposed transferee (as evidenced by current audited financial
statements of the transferee delivered by Landlord to Tenant) is inadequate for Landlord’s ongoing
financial obligations under this Lease; (ii) the transferee requires that this Lease be modified in
any manner that Tenant reasonably and in good faith determines would adversely affect Tenant in any
material respect; (iii) the proposed transferee is a person or entity with whom Tenant, in good
faith, has a reasonable objection to having an ongoing business relationship; and/or (iv) Tenant
desires to keep the ROFR in effect. The foregoing prohibitions on transfers shall not, however,
apply to mortgage financing (which is governed by the following sentence) or to transfers of direct
or indirect ownership interests in Landlord which are not a subterfuge by Landlord to avoid its
obligations under this Section 22.18. During the Term, Landlord shall not cause or permit
the Premises to be encumbered with mortgage financing where the principal indebtedness exceeds
eighty percent (80%) of the fair market value of the Premises at the time of recordation of the
mortgage.

     22.19 Guaranty.

     As a condition to the effectiveness of this Lease, the Tenant Guarantor shall execute and
deliver to Landlord a guaranty in the form attached hereto as Exhibit F [and ASOT shall execute and
deliver to Tenant a guaranty in the form attached hereto as Exhibit I].

     22.20 Non-Liability of Trustees, Directors, Officers, Employees and Agents.

     Notwithstanding anything to the contrary in this Lease, no director, officer, employee or
Agent of Tenant, or of any Affiliate of Tenant, shall be personally liable to Landlord, its
successors and assigns, in the event of any default or breach by Tenant or for any amount which may
become due to Landlord, its successors and assigns, or for any obligation of Tenant under

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this Lease. Notwithstanding anything to the contrary in this Lease, no director, trustee, officer,
employee or Agent of Landlord, or of any Affiliate of Landlord, shall be personally liable to
Tenant, its successors and assigns, in the event of any default or breach by Landlord or for any
amount which may become due to Tenant, its successors and assigns, or for any obligation of
Landlord under this Lease.

     22.21 Confidentiality

          22.21.1 Confidential Information. From time to time, from and after the date hereof,
the parties may disclose to each other proprietary and other confidential information for the
purposes referenced in this Lease (together hereinafter referred to as “Information”). The parties
agree that, except to the extent strictly required by applicable Laws, none of the Information is
to be disseminated or published in writing, orally or through any other means, whatsoever, to any
entity or individual other than those specifically permitted by this Lease. The term “Information”
includes but is not limited to any and all written information bearing the words “CONFIDENTIAL,”
and concerning or relative to certain products; processes; programs; employee information; trade
secrets; research and development; pricing; the terms of this Lease; client information;
commercial, technical, business affairs, financial or other written and/or oral Information,
whether of a technical or commercial nature, including but not limited to forms, documents,
methods, processes, data, specialized training methods, sales presentation methods, real estate
agent or appraisal lists, client lists and agreements, which are non-public, confidential, trade
secrets or proprietary in nature. Landlord understands and agrees that Information includes any
such Information of Tenant’s clients and customers, and Tenant understands and agrees that the
Information includes Landlord’s market and other financial data, projections, budgets, accounts,
procedures and analyses.

          22.21.2 Non-Disclosure. The parties shall not, without the prior written consent of
the party whose Information is being disclosed, reveal to any person or entity, use for any purpose
other than the purpose specified herein, or reproduce in any media, any Information received
pursuant to this Lease. The foregoing shall not be deemed to preclude the disclosing party from
providing such Information to its directors, trustees, officers, employees, lenders, accountants
and attorneys who need access to such Information, provided such parties are advised of this
confidentiality provision and that they are bound by its terms and conditions. In the event that
it is necessary to share any of the Information with any independent contractor or employees of
such independent contractors they shall be told such Information only upon their signing
confidentiality agreements with language similar to that set forth in this Section and only upon
approval of the party whose Information is to be disclosed. Each party agrees that it shall
maintain and protect the Information with the same degree of care as it exercises to protect its
own confidential information and to prevent unauthorized, negligent or inadvertent use or
disclosure thereof. Written information and all copies thereof shall be returned to the party who
has disclosed same at the completion of the use as permitted hereby, or at the request of such
party. The returning party shall certify that no copies exist in its possession. While not
implying that copies may be retained, any Information remaining in the returning party’s possession
shall remain subject to this Section 22. Each party agrees that any Information disclosed
to it shall not be used to compete with the other party and/or used to compete with products or
services marketed by the other party. The parties acknowledge that this obligation is
non-exclusive and additional products and services may exist that are either confidential or
proprietary in nature

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that are subject to non-disclosure and non-competition. Each party further
agrees that it shall not use any Information of the other party in any commercial manner for
pecuniary gain; or in a manner that is not reasonably necessary in order to perform its obligations
hereunder.

          22.21.3 Permitted Disclosure. Information may be disclosed pursuant to any
requirement of law or the order of any court or administrative agency, provided that the party
required to disclose Information shall advise the party that provided the Information of the
request for disclosure in a reasonable time for such party to apply for such legal protection as
may be available with respect to the confidentiality of the Information.

          22.21.4 Effect of Use. Each party acknowledges that any breach of the covenants set
forth in this Section 22.21 will result in irreparable damage to the party whose
Information has been disclosed in violation hereof, that such party will have no adequate remedy at
law, and that such party shall be entitled to seek injunctive relief from any court of competent
jurisdiction enjoining any breach of such covenants, without prejudice to any other right or remedy
to which such party may otherwise be entitled. Such injunctive relief shall not be deemed to be an
exclusive remedy.

     22.22 Memorandum of Lease.

     Concurrently with the mutual execution of this Lease, Landlord and Tenant shall execute and
acknowledge a Memorandum of Lease in the form attached hereto as Exhibit G (the “Memorandum of
Lease”), which Memorandum of Lease Tenant may record against the Premises in the Official Records
of the county in which the Premises are located, at Tenant’s expense, concurrently with the
execution of this Lease. If Tenant elects to record a Memorandum of Lease, Tenant shall,
concurrent with recordation of the Memorandum of Lease, deposit with Landlord a release of such
Memorandum of Lease in the form attached hereto as Exhibit H, signed by Tenant and in recordable
form that Landlord may record at the expiration of the Term.

     22.23 Counterparts.

     This Lease may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same instrument.

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     Landlord and Tenant have executed this Lease as of the date first written above.

	 	 	 	 	 
	LANDLORD:	 	ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate

investment trust [or other fee title owner]
	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Its:	 	 
	

	 	 	 	

	TENANT:	 	

, a[n]        corporation
	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Its:	 	 
	

	 	 	 	

	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Its:	 	 
	

	 	 	 	

-53-

 

Sched. 21.1

-1-

 

[MASTER FORM]

RESIDENTIAL MASTER LEASE

between

[ARCHSTONE-SMITH OPERATING TRUST],

[a Maryland real estate investment trust,]

as Landlord

and

____________________________________,

a Delaware limited liability company,

as Tenant

for

property located at

______________________,

_______________, _____________ ____

Dated as of _________, __ 2005

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.
	 	BASIC LEASE INFORMATION AND CERTAIN DEFINED TERMS	 	 	1	 
	2.
	 	TERM	 	 	6	 
	3.
	 	PREMISES	 	 	6	 
	 
	 	3.1   Premises	 	 	6	 
	 
	 	3.2   [Delete if N/A]Excluded Premises	 	 	7	 
	 
	 	3.3   [San Jose And Toluca Properties	 	 	7	 
	4.
	 	RENT	 	 	8	 
	 
	 	4.1   Base Rent	 	 	8	 
	 
	 	4.2   Adjustments in Base Rent	 	 	8	 
	 
	 	4.3   Payment of Real Estate Taxes	 	 	9	 
	 
	 	4.4   Payment of Personal Property Taxes	 	 	10	 
	 
	 	4.5   Ground Lease Payments	 	 	10	 
	 
	 	4.6   Records	 	 	10	 
	5.
	 	USE	 	 	11	 
	 
	 	5.1   Permitted Use	 	 	11	 
	 
	 	5.2   Condition of the Premises	 	 	11	 
	6.
	 	ALTERATIONS	 	 	11	 
	 
	 	6.1   Alterations By Tenant	 	 	11	 
	 
	 	6.2   Title to Improvements	 	 	12	 
	 
	 	6.3   Tenant’s Personal Property	 	 	13	 
	 
	 	6.4   Alterations by Landlord	 	 	13	 
	7.
	 	REPAIRS AND MAINTENANCE; LANDLORD COST ITEMS	 	 	14	 
	 
	 	7.1   Repairs and Maintenance	 	 	14	 
	 
	 	7.2   Landlord Cost Items	 	 	14	 
	 
	 	7.3   Performance of Alterations, Landlord Cost Items and Tenant Repair Items	 	 	16	 
	 
	 	7.4   Liens	 	 	17	 
	8.
	 	UTILITIES AND SERVICES	 	 	17	 
	 
	 	8.1   Utilities	 	 	17	 
	 
	 	8.2   Services	 	 	17	 
	9.
	 	COMPLIANCE WITH LAWS; PREMISES CONDITION	 	 	18	 
	10.
	 	SUBORDINATION	 	 	19	 

(i)

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	11.
	 	DAMAGE AND DESTRUCTION	 	 	19	 
	12.
	 	EMINENT DOMAIN	 	 	21	 
	 
	 	12.1  Definitions	 	 	21	 
	 
	 	12.2  General	 	 	21	 
	 
	 	12.3  Total Taking; Automatic Termination	 	 	21	 
	 
	 	12.4  Partial Taking; Election to Terminate	 	 	21	 
	 
	 	12.5  Partial Taking; Continuation of Lease	 	 	22	 
	 
	 	12.6  Temporary Taking	 	 	22	 
	 
	 	12.7  Rent; Award	 	 	22	 
	13.
	 	ASSIGNMENT AND SUBLETTING	 	 	22	 
	 
	 	13.1  General	 	 	22	 
	 
	 	13.2  Subleasing	 	 	23	 
	14.
	 	DEFAULT; REMEDIES; INDEMNIFICATION	 	 	23	 
	 
	 	14.1  Events of Default by Tenant	 	 	23	 
	 
	 	14.2  Landlord’s Remedies	 	 	24	 
	 
	 	14.3  Landlord’s Default	 	 	25	 
	 
	 	14.4  Attorneys' Fees	 	 	26	 
	 
	 	14.5  Indemnification	 	 	26	 
	15.
	 	INSURANCE	 	 	26	 
	 
	 	15.1  Landlord’s Insurance	 	 	26	 
	 
	 	15.2  Tenant's Insurance	 	 	27	 
	 
	 	15.3  Waiver of Claims/Subrogation	 	 	28	 
	16.
	 	ACCESS BY LANDLORD	 	 	29	 
	17.
	 	ESTOPPEL CERTIFICATES	 	 	29	 
	18.
	 	HAZARDOUS MATERIALS	 	 	29	 
	 
	 	18.1  Definitions	 	 	29	 
	 
	 	18.2  Landlord’s Covenants	 	 	30	 
	 
	 	18.3  Landlord’s Environmental Indemnity	 	 	31	 
	 
	 	18.4  Tenant’s Covenants	 	 	31	 
	 
	 	18.5  Tenant’s Environmental Indemnity	 	 	31	 
	19.
	 	RETAINED CORPORATE UNITS	 	 	31	 

(ii)

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	19.1  Retained Corporate Units:  Master OCH Agreement	 	 	31	 
	 
	 	19.2  Payment to Landlord for Below Market Residential Leases	 	 	33	 
	 
	 	19.3  Retained Corporate Leases	 	 	33	 
	 
	 	19.4  Fair Market Rental Rate	 	 	36	 
	20.
	 	SURRENDER	 	 	37	 
	 
	 	20.1  Surrender of Premises	 	 	37	 
	21.
	 	MARKETING RIGHTS	 	 	39	 
	 
	 	21.1  Exclusivity and Referrals	 	 	39	 
	 
	 	21.2  Marketing and Promotion; Signage	 	 	41	 
	22.
	 	GENERAL PROVISIONS	 	 	42	 
	 
	 	22.1  Notices	 	 	42	 
	 
	 	22.2  No Implied Waiver	 	 	42	 
	 
	 	22.3  Amendments	 	 	42	 
	 
	 	22.4  Authority	 	 	43	 
	 
	 	22.5  Interpretation of Lease	 	 	43	 
	 
	 	22.6  Successors and Assigns	 	 	43	 
	 
	 	22.7  Archstone-Smith Trust	 	 	43	 
	 
	 	22.8  Brokers	 	 	43	 
	 
	 	22.9  Severability	 	 	44	 
	 
	 	22.10 Governing Law	 	 	44	 
	 
	 	22.11 Entire Agreement	 	 	44	 
	 
	 	22.12 Attorneys’ Fees	 	 	44	 
	 
	 	22.13 Holding Over	 	 	44	 
	 
	 	22.14 Cumulative Remedies	 	 	45	 
	 
	 	22.15 Time of Essence	 	 	45	 
	 
	 	22.16 Survival of Indemnities	 	 	45	 
	 
	 	22.17 Quiet Enjoyment and Title	 	 	45	 
	 
	 	22.18 Transfer of Landlord’s Interest	 	 	45	 
	 
	 	22.19 Guaranty	 	 	46	 
	 
	 	22.20 Non-Liability of Directors, Officers, Employees and Agents	 	 	46	 
	 
	 	22.21 Confidentiality	 	 	46	 

(iii)

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	22.22
	 	Memorandum of Lease	 	 	47	 
	22.23
	 	Counterparts	 	 	47	 

(iv)

 

Table of
Contents
(continued)

	 	 	 
	EXHIBITS	 	Page
	EXHIBIT A-1
	 	Legal Description of the Land
	EXHIBIT A-2
	 	Site Plan of Premises
	EXHIBIT B-1
	 	Current FF&E Inventory List
	EXHIBIT B-2
	 	Current Tenant’s Personal Property Inventory List
	EXHIBIT C
	 	Landlord Cost Items
	EXHIBIT D
	 	Landlord Cost Item Budget
	EXHIBIT E
	 	Master OCH Agreement
	EXHIBIT F
	 	Tenant Guaranty
	EXHIBIT G
	 	Memorandum of Lease
	EXHIBIT H
	 	Release of Memorandum of Lease
	 
	[EXHIBIT I
	 	Landlord Guaranty]
	 
	SCHEDULE 1
	 	Initial Archstone Comparable Index and First and Second Default ACI
	SCHEDULE 19.2.
	 	Definitions and Examples of Market Monthly Effective Gross Income, Actual Monthly
	 
	 	Effective Gross Income and Conventional Unit Below Market Deficiency
	SCHEDULE 19.4
	 	Default Market Rental Rate
	SCHEDULE 21.1
	 	Exclusive ROFO Market Area

(v)

 

TABLE OF CONTENTS

(continued)

	 	 	 
	 	 	Page
	Abatement Amount, 3

	 	Landlord, 1
	Abatement Event, 3

	 	Landlord Cost Item Budget, 21
	ACI, 4

	 	Laws, 25
	Affiliate, 4

	 	Lease, 1
	Agents, 5

	 	Lease Year, 7
	Alterations, 16

	 	Major Systems, 20
	ASOT, 5

	 	Master Agreement, 8
	ASOT Standard, 5

	 	Maximum Give-Back Amount, 8
	Award, 28

	 	Memorandum of Lease, 53
	Base Rent, 13

	 	NOI, 8
	Base Rent Adjustment Date, 2

	 	OCH, 8
	Basic Lease Information, 1

	 	Permitted Aggregate Budget Overage,
22
	Building, 11

	 	Permitted Line Item Overage, 22
	CERCLA, 39

	 	Premises, 11
	Claims, 33

	 	R&B, 1
	Commencement Date, 5

	 	Real Estate Taxes, 14
	Conventional Unit Below Market Deficiency, 44

	 	Release, 39
	Conventional Units, 6

	 	Residential Lease, 9, 30
	Corporate Units, 6

	 	Retail Service Areas, 2
	Date of Taking, 28

	 	Retail Services, 2
	Default Rate, 6

	 	Retained Corporate Leases, 9
	Environmental Laws, 39

	 	Retained Corporate Units, 9
	Event of Default, 31

	 	Revised ACI, 4
	Excluded Premises, 11

	 	Subleases, 30
	Exclusivity Period, 6

	 	Subtenants, 10, 30
	Expiration Date, 6

	 	Taking, 28
	Future Mortgage, 26

	 	Tenant, 1
	Hazardous Material, 39

	 	Tenant Repair Items, 20
	Information, 52

	 	Term, 11
	Invitees, 7

	 	Unit(s), 10
	Land, 11

	 	WCH, 4

(vi)exv4w1

 

Exhibit 4.1

Kagoor Networks, Inc.

2003 General Stock Option Plan

     1. Adoption and Purpose of the Plan. This stock option plan, to be known as the
“Kagoor Networks, Inc. 2003 General Stock Option Plan” (but referred to herein as the “Plan”) has
been adopted by the Board of Directors (the “Board”) of Kagoor Networks, Inc., a Delaware
corporation (the “Company”), and is subject to the approval of its shareholders pursuant to section
7 below. The purpose of this Plan is to advance the interests of the Company and its shareholders
by enabling the Company to attract and retain qualified directors, officers, employees and certain
independent contractors, consultants and advisors by providing them with an opportunity for
investment in the Company. The options that may be granted hereunder (“Options”) represent the
right by the grantee thereof (each, including any permitted transferee pursuant to section 6.7
below, an “Optionee”) to acquire shares of the Company’s common stock (“Shares” which if acquired
pursuant to the exercise of an Option will be referred to as “Option Shares”) subject to the terms
and conditions of this Plan and a written agreement between the Company and the Optionee to
evidence each such Option (an “Option Agreement”).

     2. Certain Definitions. The defined terms set forth in Exhibit A attached
hereto and incorporated herein (together with other capitalized terms defined elsewhere in this
Plan) will govern the interpretation of this Plan.

     3. Eligibility. The Company may grant Options under this Plan only to (i) persons
who, at the time of such grant, are directors, officers or employees of the Company and/or any of
its Subsidiaries, and (ii) persons who are natural persons who, at the time of such grant, are
independent contractors, consultants or advisors to the Company and/or any of its Subsidiaries and
who perform bona fide services on its behalf other than in connection with capital raising
transactions (collectively, “Eligible Participants”). No person will be an Eligible Participant
following his or her Termination of Eligibility Status and no Option may be granted to any person
other than an Eligible Participant. There is no limitation on the number of Options that may be
granted to an Eligible Participant.

     4. Option Pool; Shares Reserved for Options. In no event (except as provided in
Section 8) will the Company issue, in the aggregate, more than three million three hundred sixty
thousand four hundred and forty-three (3,360,443) Shares (the “Option Pool”) pursuant to the
exercise of all Options granted under this Plan, inclusive of those Option Shares that have been
reacquired by the Company by repurchase or otherwise; provided that in order to comply with the
requirements of Section 260.140.45 of Title 10 of the California Code of Regulations (the “30%
Rule”), at no time will the total number of Shares that are issuable upon the exercise of all
outstanding Options granted under this Plan or under any other outstanding options or warrants
issued by the Company and the total number of Shares provided for under any stock bonus or similar
plan of the Company in the aggregate exceed 30% of the total number of then issued and outstanding
Shares (counting convertible preferred stock on an as if converted basis) of the Company (or such
higher percentage as has been approved by the holders of at least two-thirds

 

 

of the outstanding
Shares (counting convertible preferred stock on an as if converted basis) of the
Company entitled to vote), as calculated in accordance with the conditions and exclusions of
the 30% Rule. At all times while Options granted under this Plan are outstanding, the Company will
reserve for issuance for the purposes hereof a sufficient number of authorized and unissued Shares
to fully satisfy the Company’s obligations under all such outstanding Options.

     5. Administration. This Plan will be administered and interpreted by the Board, or
by a committee consisting of two or more members of the Board, appointed by the Board for such
purpose (the Board, or such committee, referred to herein as the “Administrator”). Subject to the
express terms and conditions hereof, the Administrator is authorized to prescribe, amend and
rescind rules and regulations relating to this Plan, and to make all other determinations necessary
or advisable for its administration and interpretation. Specifically, the Administrator will have
full and final authority in its discretion, subject to the specific limitations on that discretion
as are set forth herein and in the Certificate of Incorporation and Bylaws of the Company, at any
time:

          (a) to select and approve the Eligible Participants to whom Options will be granted from time
to time hereunder;

          (b) to determine the Fair Market Value of the Shares as of the Grant Date for any Option that
is granted hereunder;

          (c) with respect to each Option it decides to grant, to determine the terms and conditions of
that Option, to be set forth in the Option Agreement evidencing that Option (the form of which also
being subject to approval by the Administrator) and in any amendment thereto, which may vary from
the “default” terms and conditions set forth in section 6 below, except to the extent otherwise
provided in this Plan, including, without limitation, as follows:

               (i) the total number of Option Shares that may be acquired by the Optionee pursuant to the
Option;

               (ii) if the Option satisfies the conditions under Section 422(b) of the Code, whether the
Option will be treated as an ISO to the maximum extent permissible under the Code;

               (iii) the per share purchase price to be paid to the Company by the Optionee to acquire the
Option Shares issuable upon exercise of the Option (the “Option Price”), provided that the Option
Price will not be less than 85% of the Fair Market Value of the Shares as of the Grant Date (not
less than 100% of the Fair Market Value of the Shares as of the Grant Date in the case of ISO’s),
unless the Optionee is a 10% Shareholder, in which case the Option Price will not be less than 110%
of such Fair Market Value;

               (iv) the maximum period or term during which the Option will be exercisable (the “Option
Term”), provided that in no event may the Option Term be longer than 10 years from the Grant Date;

               (v) the maximum period following any Termination of Eligibility Status, whether resulting
from an Optionee’s death, Disability or any other reason, during which period (the “Grace Period”)
the Option will be exercisable, subject to Vesting and to the expiration of

2

 

the Option Term,
provided that in no event may the Administrator designate a Grace Period that
is shorter than six (6) months after such Termination of Eligibility Status by reason of the
Optionee’s death or Disability, or thirty (30) days after such Termination of Eligibility for any
other reason, except in the event of a Termination for Cause, in which case no Grace Period will be
required (i.e., the Option would terminate immediately);

               (vi) whether to accept a promissory note or other form of legal consideration in addition to
cash as payment of all or a portion of the Option Price and/or Tax Withholding Liability to be paid
by the Optionee upon the exercise of an Option granted hereunder;

               (vii) the conditions (e.g., the passage of time or the occurrence of events), if any, that
must be satisfied prior to the vesting of the right to exercise all or specified portions of an
Option (such portions being described as the number of Option Shares, or the percentage of the
total number of Option Shares that may be acquired by the Optionee pursuant to the Option; the
vested portion being referred to as a “Vested Option” and the unvested portion being referred to as
an “Unvested Option”), provided that no such conditions (except an Optionee’s Termination of
Eligibility Status, after which no Unvested Option will become a Vested Option) may be imposed
which prevents an Optionee who is an employee, but who is neither an officer or director, of the
Company or any of its Subsidiaries, from purchasing at least 20% of the Option Shares initially
subject to the Option as of the first anniversary of the Grant Date, and as of each anniversary
thereafter, such that by the fifth anniversary of the Grant Date (assuming no such Termination of
Eligibility Status) the entire Option would be deemed a Vested Option; and

               (viii) in addition, or as an alternative, to imposing conditions on the right to exercise an
Option as provided in section 5(c)(vii) above, whether any portion of the Option Shares acquired by
an Optionee upon exercise of an Option will be subject to repurchase by the Company or its assigns
pursuant to section 6.8(c) below at the Option Price paid for such Shares or at some other price
that may be less than the Fair Market Value of such Shares (such Shares, if subject to repurchase
at less than Fair Market Value, being referred to as “Unvested Shares”) following a Termination of
Eligibility Status or other designated event, and the conditions (e.g., the passage of time or the
occurrence of events), if any, that must be satisfied for such Shares to be no longer subject to
such right of repurchase at less than Fair Market Value (such Shares being referred to as “Vested
Shares”); provided that no such conditions (except an Optionee’s Termination of Eligibility
Status, after which no Unvested Shares will become Vested Shares) may be imposed which prevent
Unvested Shares held by an employee, who is neither an officer or director, of the Company and/or
any of its Subsidiaries, from becoming Vested Shares at the rate of at least twenty percent (20%)
per year following the Grant Date, such that by the fifth anniversary of the Grant Date (assuming
no earlier Termination of Eligibility Status) all of the Shares would be deemed Vested Shares; and

          (d) to delegate all or a portion of the Administrator’s authority under sections 5(a), (b)
and (c) above to one or more members of the Board who also are executive officers of the Company,
subject to such restrictions and limitations as the Administrator may decide to impose on such
delegation.

     6. Default Terms and Conditions of Option Agreements. Unless otherwise expressly

3

 

provided in an Option Agreement based on the Administrator’s determination pursuant to section
5(c) above, the following terms and conditions will be deemed to apply to each Option as if
expressly set forth in the Option Agreement:

          6.1 ISO. No portion of an Option will be treated as an ISO unless treatment as an
ISO is expressly provided for in an Option Agreement and such portion of the Option satisfies the
conditions of Section 422(b) of the Code.

          6.2 Option Term. The Option Term will be for a period of ten (10) years beginning on
the Grant Date, except that in the case of an ISO granted to a 10% Shareholder, the Option Term
will be for a period of five (5) years beginning on the Grant Date.

          6.3 Grace Periods. Following a Termination of Eligibility Status:

               (a) the Grace Period will be ninety (90) days, unless the Termination of Eligibility Status
is a result of a Termination for Cause or the death or Disability of the Optionee;

               (b) the Grace Period will be one year if the Termination of Eligibility Status is a result of
the death or Disability of the Optionee; and

               (c) the Grace Period will be ten (10) days if the Termination of Eligibility Status is the
result of a Termination for Cause of the Optionee.

The Company will have no obligation to inform an Optionee as to when a relevant Grace Period will
terminate; it will be the responsibility of the Optionee to determine the dates of the relevant
Grace Period.

          6.4 Vesting. The Option initially will be deemed an entirely Unvested Option, but
portions of the Option will become a Vested Option on the following schedule: Twenty-five percent
(25%) of the Option will become a Vested Option as of the first anniversary of the “Vesting Start
Date” specified in the Option Agreement (which may be earlier but may not be later than the Grant
Date specified therein) and the balance of the Option will become a Vested Option pro rata monthly
(based on monthly anniversary dates of the day of the month of the Vesting Start Date) over the
three year period immediately following such first anniversary; provided that there will be no
further vesting once the Optionee suffers a Termination of Eligibility Status and provided further
that additional vesting will be suspended during any period while the Optionee is on a leave of
absence from the Company or its Subsidiaries, as determined by the Administrator.

          6.5 Exercise of the Option; Issuance of Share Certificate.

               (a) The portion of the Option that is a Vested Option may be exercised by giving written
notice thereof to the Company, on such form as may be specified by the Administrator, but in any
event stating: the Optionee’s intention to exercise the Option; the date of exercise; the number
of full Option Shares to be purchased (which number will be no less than 100 Shares, without regard
to adjustments to the number of Shares subject to the Option pursuant to section 8 below, or, if
less, all of the remaining Shares subject to the Option); the amount and form of payment of the
Option Price; and such assurances of the Optionee’s investment intent as

4

 

the Company may require to
ensure that the transaction complies in all respects with the
requirements of the 1933 Act and other applicable securities laws. The notice of exercise
will be signed by the person or persons exercising the Option. In the event that the Option is
being exercised by the representative of the Optionee, the notice will be accompanied by proof
satisfactory to the Company of the representative’s right to exercise the Option. The notice of
exercise will be accompanied by full payment of the Option Price for the number of Option Shares to
be purchased, in United States dollars, in cash, by check made payable to the Company, or by
delivery of such other form of payment (if any) as may be approved by the Administrator in the
particular case. The portion of the Option that is an Unvested Option may not be exercised until
after the one year anniversary of the Vesting Start Date unless otherwise set forth in the Option
Agreement. To the extent that any portion of the Option that is an Unvested Option is exercised,
the Option Shares so purchased will be Unvested Shares as provided in Section 5(c)(viii), and will
be subject to repurchase per Section 5(c)(viii), so long as continuing to be Unvested Options, at
the Option Price paid for such Shares. Any such Unvested Shares will become Vested Shares at the
same rate and on the same time schedule as the Option underlying such Unvested Shares would have
become a Vested Option (allocating vesting to Unvested Shares as opposed to unexercised Unvested
Options to the maximum extent available).

               (b) To the extent required by applicable federal, state, local or foreign law, and as a
condition to the Company’s obligation to issue any Shares upon the exercise of the Option in full
or in part, the Optionee will make arrangements satisfactory to the Company for the payment of any
applicable Tax Withholding Liability that may arise by reason of or in connection with such
exercise. Such arrangements may include, in the Company’s sole discretion, that the Optionee
tender to the Company the amount of such Tax Withholding Liability, in cash, by check made payable
to the Company, or by delivery of such other form of payment (if any) as may be approved by the
Administrator in the particular case.

               (c) After receiving a proper notice of exercise and payment of the applicable Option Price
and Tax Withholding Liability, the Company will cause to be issued a certificate or certificates
for the Option Shares as to which the Option has been exercised, registered in the name of the
person rightfully exercising the Option and the Company will cause such certificate or certificates
to be delivered to such person or into escrow as provided in section 6.8(d), below.

          6.6 Compliance with Law. Notwithstanding any other provision of this Plan, Options
may be granted pursuant to this Plan, and Option Shares may be issued pursuant to the exercise
thereof by an Optionee, only after and on the condition that there has been compliance with all
applicable securities laws. The Company will not be required to list, register or qualify any
Option Shares upon any securities exchange, under any applicable state, federal or foreign law or
regulation, or with the Securities and Exchange Commission or any state agency, or secure the
consent or approval of any governmental regulatory authority, except that if at any time the Board
determines, in its discretion, that such listing, registration or qualification of the Option
Shares, or any such consent or approval, is necessary or desirable as a condition of or in
connection with the exercise of an Option and the purchase of Option Shares thereunder, that Option
may not be exercised, in whole or in part, unless and until such listing, registration,
qualification, consent or approval is effected or obtained free of any conditions that are not
acceptable to the Board, in its discretion. However, the Company will seek to register or qualify

5

 

with, or as may be provided by applicable local law, file for and secure an exemption from such
registration or qualification requirements from, the applicable securities administrator and
other officials of each jurisdiction in which an Eligible Participant would be granted an Option
hereunder prior to such grant.

          6.7 Restrictions on Transfer.

               (a) Options Nontransferable. No Option will be transferable by an Optionee other
than by will, or by the laws of descent and distribution. During the lifetime of a natural person
who is granted an Option under this Plan, the Option will be exercisable only by him or her.
Notwithstanding anything else in this Plan to the contrary, no Option Agreement will contain any
provision which is contrary to, or which modifies, the provisions of this section 6.7(a).

               (b) Prohibited Transfers. Prior to the Initial Public Offering, a Holder of Option
Shares may Transfer such Shares, or any interest therein only: (i) after compliance with Sections
6.8 and 6.10 hereof to the extent applicable; and (ii) after full compliance with all applicable
securities laws and any applicable restrictions on Transfer provided in the Company’s Certificate
of Incorporation and/or Bylaws, which will be deemed incorporated by reference into this Plan. All
Transfers of Option Shares not complying with the specific limitations and conditions set forth in
this section 6.7 and section 6.8 below are expressly prohibited. Any prohibited Transfer is void
and of no effect, and no purported transferee in connection therewith will be recognized as a
Holder of Option Shares for any purpose whatsoever. Should such a Transfer purport to occur, the
Company may refuse to carry out the Transfer on its books, attempt to set aside the Transfer,
enforce any undertakings or rights under this Plan, or exercise any other legal or equitable
remedy.

               (c) Permitted Transfers. In the case of a Permitted Transfer, the rights of first
refusal and purchase of the Company set forth in sections 6.8(a) and 6.8(b) below will not apply.
For such purposes, a “Permitted Transfer” means any of the following: (i) a Transfer by will or
under the laws of descent and distribution; or (ii) a Transfer by a Holder of Option Shares to his
or her ancestors, descendants or spouse (other than pursuant to a decree of divorce, dissolution or
separate maintenance, a property settlement, or a separation agreement or any similar agreement or
arrangement with a spouse, except for bona fide estate planning purposes), or to a trust,
partnership, limited liability company, custodianship or other fiduciary account for the benefit of
the Holder and/or such ancestors, descendants or spouse, including any Transfer in the form of a
distribution from any such trust, partnership, limited liability company, custodianship or other
fiduciary account to any of the foregoing permitted beneficial owners or beneficiaries thereof.

               (d) Conditions to Transfer. It will be a condition to any Transfer of any Option
Shares that:

                    (i) the transferee of the Shares will execute such documents as the Company may reasonably
require to ensure that the Company’s rights under this Plan, and any applicable Option Agreement,
are adequately protected with respect to such Shares, including,

6

 

without limitation, the
transferee’s agreement to be bound by all of the terms and conditions of this Plan and such
Agreement, as if he or she were the original Holder of such Shares; and

                    (ii) the Company is satisfied that such Transfer complies in all respects with the
requirements imposed by applicable securities laws and regulations.

               (e) Market Standoff. If in connection with any public offering of securities of the
Company (or any Successor Entity), the underwriter or underwriters managing such offering so
requests, then each Optionee and each Holder of Option Shares will agree to not sell or otherwise
Transfer any such Shares (other than Shares if and to the extent included in such underwriting)
without the prior written consent of such underwriter, for such period of time as may be requested
by the underwriter commencing on the effective date of the registration statement filed with the
Securities and Exchange Commission in connection with such offering. By accepting an Option and/or
Option Shares under this Plan, the Optionee will be deemed to agree to execute such documents to
further evidence such market standoff agreement as may be requested by such underwriter.

          6.8 Rights of Purchase and First Refusal. The Company will have the following rights
of purchase and first refusal with respect to Option Shares:

               (a) Right of First Refusal. If any Holder proposes to Transfer any Option Shares
prior to the Initial Public Offering, other than in the case of a Permitted Transfer pursuant to
section 6.7(c) above or an Involuntary or Donative Transfer subject to section 6.8(b) below, the
Company will have an assignable right of first refusal to purchase such Shares on the terms and
conditions set out in this section 6.8(a). If the Company (or its assignee) elects to exercise all
or part of such right, it will do so with respect to any particular Transfer of Shares in the
following manner:

                    (i) Before any such Transfer, the Holder proposing to Transfer such Shares will deliver a
notice of proposed Transfer (a “Proposed Transfer Notice”) to the Company stating: the number of
Option Shares that the Holder proposes to Transfer and the Holder’s bona fide intention to Transfer
such Shares; the names and addresses of the Holder, the proposed transferee and subsequently such
other information regarding such transferee as the Company reasonably requests; the manner and date
of such proposed Transfer; and the bona fide cash price and/or other consideration (and the fair
market value thereof) per share, if any, that such Transferee has offered to pay Holder for such
Shares (the “Offered Price”) as well as such other terms, including payment terms, and conditions,
if any, as were included in such offer (the “Offered Terms”).

                    (ii) The Company (or its assignee) may exercise its right of first refusal under this section
6.8(a) at any time not more than twenty (20) days after the Company has received the Proposed
Transfer Notice with respect to such Shares. If the Company (or its assignee) elects to exercise
such purchase rights it will do so by delivering to the Holder of such Shares a notice of such
election, specifying the number of Shares to be purchased and a closing date that is no more than
thirty (30) days after receipt of the Proposed Transfer Notice (or such later date as the
transferee may have offered or on which the Transfer is otherwise scheduled to occur).

7

 

                    (iii) At the closing of the sale of the Shares to the Company (or its assignee), to be held
at its principal executive offices, the Company (or its assignee) will pay the
Holder of the Shares, in cash, the purchase price equal to the Offered Price (provided,
however, that if the Shares being transferred are Unvested Shares, the purchase price will equal
the Option Price per Share paid upon the exercise of the Option to purchase such Unvested Shares),
subject to an appropriate adjustment as determined in good faith by the Company to take into
account any deferred payment terms that were included in the Offered Terms, except in the case of a
Transfer of Option Shares without consideration; provided that if the Offered Price includes any
non-cash consideration, the value thereof for purposes of this section 6.8(a) will be determined in
good faith by the Board.

                    (iv) If the Company (including its assignees) fails or refuses to exercise its rights under
this section 6.8(a) with respect to any Shares that are the subject of any Proposed Transfer
Notice, then the Holder will have the right to Transfer such Shares to the transferee named in such
Notice at the Offered Price and upon such Offered Terms as were set forth in such Notice; provided
that such Transfer must be completed within ninety (90) days after the Company has received the
Proposed Transfer Notice with respect to such Shares.

               (b) Following an Involuntary or Donative Transfer. Following any Involuntary
Transfer or Donative Transfer (other than a Permitted Transfer) of Option Shares (the “Transferred
Shares”) prior to the Initial Public Offering, the Company will have the assignable right to
purchase from the transferee of the Transferred Shares (“Transferee”) all or a portion of such
Shares for a purchase price that is equal to the Fair Market Value of those Shares as of the date
of such Transfer (provided, however, that if the Shares being transferred are Unvested Shares, the
purchase price will equal the Option Price per Share paid upon the exercise of the Option to
purchase such Unvested Shares). If the Company (or its assignee) elects to exercise such right, it
will do so in the following manner:

                    (i) Promptly after such Transfer, the transferor of the Transferred Shares will deliver, or
will cause the Transferee to deliver, a notice (a “Completed Transfer Notice”) to the Company
stating: the number of Transferred Shares; the names and addresses of the transferor and the
Transferee, and subsequently such other information regarding the Transferee as the Company
reasonably requests; and the manner, circumstances and date of such Transfer.

                    (ii) The Company (or its assignee) may exercise its purchase rights under this section 6.8(b)
at any time not more than ninety (90) days after the Company has received the Completed Transfer
Notice with respect to the Transferred Shares. If the Company (or its assignee) elects to exercise
such purchase rights it will do so by delivering to the Transferee a notice of such election,
specifying the number of Transferred Shares to be purchased and a closing date that is no more than
sixty (60) days after the giving of such notice.

                    (iii) At such closing, to be held at the Company’s principal executive offices, the Company
(or its assignee) will pay the Transferee the purchase price specified in this section 6.8(b).

               (c) Following a Termination of Eligibility Status. Following any

8

 

Termination of
Eligibility Status of the original Holder of any Option Shares, the Company will have the
assignable right (but not the obligation) to purchase from the current Holder of those
Option Shares (except to the extent that such Shares previously were transferred in a
transaction as to which section 6.8(a) or (b) applied), all or a portion of such Shares, if any,
that are Unvested Shares as of the date of Termination of Eligibility Status for a purchase price
that is equal to the Option Price per Share paid for those Shares upon the exercise of the Option.
Such right will be exercisable in the following manner:

                    (i) The Company (or its assignee) may exercise its right of repurchase under this section
6.8(c) at any time not more than ninety (90) days after the effective date of such Termination of
Eligibility Status (or in the case of Shares issued upon the exercise of Options after such
Termination of Eligibility Status, a period of ninety (90) days after the date of the exercise).
If the Company (or its assignee) elects to exercise such purchase rights it will do so by
delivering to the Holder of such Shares a notice of such election, specifying the number of Shares
to be purchased and a closing date that is within such ninety (90) day period, provided that if the
Holder of the Shares is not an employee of the Company or any of its Subsidiaries, or is an
officer, director or affiliate thereof, the Option Agreement may provide that the period during
which such purchase of the Shares must take place may be longer than ninety (90) days.

                    (ii) At such closing, the Company (or its assignee) will pay the Holder of the Shares, the
purchase price, as specified in this section 6.8(c), in cash, or by cancellation of indebtedness to
the Company, if any, incurred by the original Holder of the Option Shares to purchase such Shares,
or both, at a closing to be held at the Company’s principal executive offices on the date specified
in such notice, provided that if the Holder of the Shares is not an employee of the Company or any
of its Subsidiaries, or is an officer, director or affiliate thereof, the Option Agreement may
provide that the purchase price may be paid, in whole or in part, with a promissory note from the
Company (or its assignee).

               (d) Escrow. For purposes of facilitating the enforcement of the restrictions on
Transfer set forth in this Plan or in any Option Agreement, the Administrator may, at its
discretion, require the Holder of Option Shares to deliver the certificate(s) for such Shares with
a stock power executed by him or her and by his or her spouse (if required for Transfer), in blank,
to the Secretary of the Company or his or her designee, to hold said certificate(s) and stock
power(s) in escrow and to take all such actions and to effectuate all such Transfers and/or
releases as are in accordance with the terms of this Plan. The certificates may be held in escrow
so long as the Option Shares whose ownership they evidence are subject to any right of repurchase
or first refusal under this Plan or under an Option Agreement, and will be released by the escrow
holder to an Optionee (or to any permitted transferee of the Optionee) when they are no longer
subject to any right of repurchase or first refusal under this Plan or under the Option Agreement.
Each Optionee, by exercising an Option, thereby acknowledges that the Secretary of the Company (or
his or her designee) is so appointed as the escrow holder with the foregoing authorities as a
material inducement to the grant of an Option under this Plan, that the appointment is coupled with
an interest, and that it accordingly will be irrevocable. The escrow holder will not be liable to
any party to an Option Agreement (or to any other party) for any actions or omissions unless the
escrow holder is grossly negligent relative thereto. The escrow holder may rely upon any letter,
notice or other document executed by any signature purported to be genuine.

9

 

               (e) Resolution of Disputes. If there is a dispute concerning the fair
market value of the consideration offered or accepted for the Option Shares or the Fair Market
Value of the Option Shares, in connection with the exercise by the Company of its rights under this
section 6.8, the dispute will be resolved by the independent certified public accounting firm that
audited or prepared without audit the Company’s last regular annual financial statement and the
determination of that firm will be binding on the parties in the absence of fraud.

          6.9 Change of Control Transactions. In the event of a Change of Control Transaction,
the Company shall endeavor to cause the Successor Entity in such transaction either to assume all
of the Options which have been granted hereunder and which are outstanding as of the consummation
of such transaction (“Closing”), or to issue (or cause to be issued) in substitution thereof
comparable options of such Successor Entity (or of its parent or its Subsidiary); in each case
each Option Agreement automatically will be deemed amended to conform to any such assumption or
substitution. If the Successor Entity is unwilling to either assume such Options or grant
comparable options in substitution for such Options, on terms that are acceptable to the Company as
determined by the Board in the exercise of its discretion, then the Board may cancel all
outstanding Options, and terminate this Plan, effective as of the Closing, provided that it will
notify all Optionees of the proposed Change of Control Transaction a reasonable amount of time
prior to the Closing so that each Optionee will be given the opportunity to exercise the Vested
portion of his or her Option prior to the Closing; in such event, the Company or the Successor
Entity will have the right to repurchase all Unvested Shares as of the Closing per the terms of
Section 6.8(c) as if a Termination of Eligibility Status. For purposes of this section 6.9, the
term “Change of Control Transaction” means a Business Combination in which less than fifty percent
(50%) of the outstanding voting securities of the Successor Entity immediately following the
Closing of the Business Combination transaction are beneficially held by those persons and entities
who beneficially held the voting securities of the Company immediately prior to such transaction as
a result of or in exchange for such voting securities of the Company held immediately prior to such
transaction; the term “Business Combination” means a transaction or series of related transactions
consummated within any period of ninety (90) days resulting in (A) the sale of all or substantially
all of the assets of the Company, or (B) a merger or consolidation or other reorganization in which
the Company or a Subsidiary is a party.

          6.10 Additional Restrictions on Transfer; Investment Intent. By accepting an Option
and/or Option Shares under this Plan, the Optionee will be deemed to represent, warrant and agree
that, unless a registration statement is in effect with respect to the offer and sale of Option
Shares: (i) neither the Option nor any such Shares will be freely tradable and must be held
indefinitely unless such Option and such Shares are either registered under the 1933 Act or an
exemption from such registration is available; (ii) the Company is under no obligation to register
the Option or any such Shares; (iii) upon exercise of the Option, the Optionee will purchase the
Option Shares for his or her own account and not with a view to distribution within the meaning of
the 1933 Act, other than as may be effected in compliance with the 1933 Act and the rules and
regulations promulgated thereunder; (iv) no one else will have any beneficial interest in the
Option Shares; (v) the Optionee has no present intention of disposing of the Option Shares at any
particular time; and (vi) neither the Option nor the Shares have been qualified under applicable
securities laws of any state or other governmental authority and may only be

10

 

offered and sold
pursuant to an exception from qualification under applicable state and other governmental authority
securities laws.

          6.11 Stock Certificates; Legends. Certificates representing Option Shares will bear
all legends required by law and necessary or appropriate in the Administrator’s discretion to
effectuate the provisions of this Plan and of the applicable Option Agreement. The Company may
place a “stop transfer” order against Option Shares until full compliance with all restrictions and
conditions set forth in this Plan, in any applicable Option Agreement and in the legends referred
to in this section 6.11.

          6.12 Notices. Any notice to be given to the Company under the terms of an Option
Agreement will be addressed to the Company at its principal executive office, Attention: Corporate
Secretary, or at such other address as the Company may designate in writing. Any notice to be
given to an Optionee will be addressed to him or her at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, deposited, postage prepaid, in a post office or
branch post office regularly maintained by the local postal authority.

          6.13 Other Provisions. Each Option Agreement and any amendment thereto may contain
such other terms, provisions and conditions, including restrictions on the Transfer of Option
Shares, and rights of the Company to repurchase such Shares, not inconsistent with this Plan and
applicable law, as may be determined by the Administrator in its sole discretion.

          6.14 Specific Performance. Under those circumstances in which the Company chooses to
timely exercise its rights to repurchase Option Shares as provided herein or in any Option
Agreement, the Company will be entitled to receive such Shares in specie in order to have the same
available for future issuance without dilution of the holdings of other shareholders of the
Company. By accepting Option Shares, the Holder thereof therefore acknowledges and agrees that
money damages will be inadequate to compensate the Company and its shareholders if such a
repurchase is not completed as contemplated hereunder and that the Company will, in such case, be
entitled to a decree of specific performance of the terms hereof or to an injunction restraining
such holder (or such Holder’s personal representative) from violating this Plan or the relevant
Option Agreement, in addition to any other remedies that may be available to the Company at law or
in equity.

     7. Term of the Plan. This Plan will become effective on the date of its adoption by
the Board, provided that this Plan is approved by the shareholders of the Company (excluding Option
Shares issued by the Company pursuant to the exercise of Options granted under this Plan) within 12
months before or after that date. If this Plan is not so approved by the shareholders of the
Company within that 12-month period of time, any Options granted under this Plan will be rescinded
and will be void. This Plan will expire on the tenth (10th) anniversary of the date of its
adoption by the Board or its approval by the shareholders of the Company, whichever is earlier,
unless it is terminated earlier pursuant to section 11 of this Plan, after which no more Options
may be granted under this Plan, although all outstanding Options granted prior to such expiration
or termination will remain subject to the provisions of this Plan, and no such expiration or
termination of this Plan will result in the expiration or termination of any such Option prior to
the expiration or early termination of the applicable Option Term.

11

 

     8. Adjustments Upon Changes in Stock. In the event of any change in the outstanding
Shares of the Company as a result of a stock split, reverse stock split, stock bonus or
distribution, recapitalization, combination or reclassification, appropriate proportionate adjustments will
be made in: (i) the aggregate number of Shares that are reserved for issuance in the Option Pool
pursuant to section 4 above, under outstanding Options or future Options granted hereunder; (ii)
the Option Price and the number of Option Shares that may be acquired under each outstanding Option
granted hereunder; and (iii) other rights and matters determined on a per share basis under this
Plan or any Option Agreement evidencing an outstanding Option granted hereunder. Any such
adjustments will be made only by the Board, and when so made will be effective, conclusive and
binding for all purposes with respect to this Plan and all Options then outstanding. No such
adjustments will be required by reason of the issuance or sale by the Company for cash or other
consideration of additional Shares or securities convertible into or exchangeable for Shares.

     9. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of this Plan, the Administrator may modify, extend or renew
outstanding Options granted under this Plan, or accept the surrender of outstanding Options (to the
extent not theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, however, no
modification of any Option will, without the consent of the Optionee, alter or impair any rights or
obligations under any outstanding Option.

     10. Governing Law; Venue. The internal laws of the State of California
(irrespective of its or any other jurisdiction’s choice of law principles) will govern the validity
of this Plan, the construction of its terms and the interpretation of the rights and duties of the
parties hereunder and under any Option Agreement. Any party may seek to enforce its rights under
this Plan or any Option Agreement entered into under this Plan in any court of competent
jurisdiction located within the judicial district in which the Company has its principal place of
business.

     11. Amendment and Discontinuance. The Board may amend, suspend or discontinue this
Plan at any time or from time to time; provided that no action of the Board will, without the
approval of the shareholders of the Company, materially increase (other than by reason of an
adjustment pursuant to section 8 hereof) the maximum aggregate number of Option Shares in the
Option Pool, materially increase the benefits accruing to Eligible Participants, or materially
modify the category of, or eligibility requirements for persons who are Eligible Participants.
However, no such action may alter or impair any Option previously granted under this Plan without
the consent of the Optionee, nor may the number of Option Shares in the Option Pool be reduced to a
number that is less than the aggregate number of Option Shares (i) that may be issued pursuant to
the exercise of all outstanding and unexpired Options granted hereunder, and (ii) that have been
issued and are outstanding pursuant to the exercise of Options granted hereunder.

     12. Information Provided by Company. Prior to the date on which the Company is
required to file its annual financial statements with the Securities and Exchange Commission under
the Securities Exchange Act of 1934, the Company annually will provide the Company’s financial
statements (which statements need not be audited) to each Optionee who is an employee of the
Company or any of its Subsidiaries, and each Optionee will, by virtue of

12

 

entering into an Option
Agreement, be deemed to have agreed (and to cause any investment advisors to whom the Optionee
proposes to make such information available to agree) to keep
such information confidential and not to use, disclose or copy such information for any
purpose whatsoever other than determining whether to exercise an Option. The Company deems such
financial statements to be the valuable trade secrets of the Company, and in the event of any
wrongful use, disclosure or other breach of the obligation to maintain the confidentiality of such
financial information, the Company may seek to enforce all of its available legal and equitable
rights and remedies, and may notify local law enforcement officials that a criminal
misappropriation of the Company’s trade secrets has taken place.

     13. No Shareholder Rights. No rights or privileges of a shareholder in the Company
are conferred by reason of the granting of an Option. No Optionee will become a shareholder in the
Company with respect to any Option Shares unless and until the Option has been properly exercised
and the Option Price fully paid as to the portion of the Option exercised.

     14. Copies of Plan. A copy of this Plan will be delivered to each Optionee at or
before the time he, she or it executes an Option Agreement.

13

 

Kagoor Networks, Inc.

2003 General Stock Option Plan

Exhibit A

Definitions

     1. “10% Shareholder” means a person who owns, either directly or indirectly by virtue of the
ownership attribution provisions set forth in Section 424(d) of the Code at the time he or she is
granted an Option, stock possessing more than 10% of the total combined voting power or value of
all classes of stock of the Company and/or of its Subsidiaries.

     2. “1933 Act” means the Securities Act of 1933, as amended.

     3. “Administrator” has the meaning set forth in section 5 of the Plan.

     4. “Board” has the meaning set forth in section 1 of the Plan.

     5. “Business Combination” has the meaning set forth in section 6.9 of the Plan.

     6. “Change of Control Transaction” has the meaning set forth in section 6.9 of the Plan.

     7. “Closing” has the meaning set forth in section 6.9 of the Plan.

     8. “Code” means the Internal Revenue Code of 1986, as amended (references herein to Sections
of the Code are intended to refer to Sections of the Code as enacted at the time of the Plan’s
adoption by the Board and as subsequently amended, or to any substantially similar successor
provisions of the Code resulting from recodification, renumbering or otherwise).

     9. “Company” has the meaning set forth in section 1 of the Plan.

     10. “Completed Transfer Notice” has the meaning set forth in section 6.8(b) of the Plan.

     11. “Disability” means any physical or mental disability which prevents or likely would
prevent (with or without reasonable accommodation), as determined in good faith by the Company, a
relevant person from continuing to provide the essential functions of their position to the Company
for a period of at least six consecutive months.

     12. “Donative Transfer” with respect to Option Shares means any voluntary Transfer with
donative or charitable intent by a transferor other than for value or the payment of consideration
to the transferor.

     13. “Eligible Participants” has the meaning set forth in section 3 of the Plan.

     14. “Fair Market Value” means, with respect to the Shares and as of the date that is relevant
to such a determination (e.g., on the Grant Date), the market price per share of such Shares
determined by the Administrator, consistent with the requirements of Section 422 of the Code and to
the extent consistent therewith, as follows: (a) if the Shares are traded on a stock
exchange on the date in question, then the Fair Market Value will be equal to the closing
price

14

 

reported by the applicable composite-transactions report for such date; (b) if the Shares are
traded over-the-counter on the date in question and are classified as a national market issue, then
the Fair Market Value will be equal to the last-transaction price quoted by the NASDAQ system for
such date; (c) if the Shares are traded over-the-counter on the date in question but are not
classified as a national market issue, then the Fair Market Value will be equal to the mean between
the last reported representative bid and asked prices quoted by the NASDAQ system for such date;
and (d) if none of the foregoing provisions is applicable, then the Fair Market Value will be
determined by the Administrator in good faith on such basis as it deems appropriate, taking into
consideration the provisions of Section 260.140.50 of Title 10 of the California Code of
Regulations.

     15. “Grace Period” has the meaning set forth in section 5(c)(v) of the Plan.

     16. “Grant Date” means, with respect to an Option, the date on which the Option Agreement
evidencing that Option is entered into between the Company and the Optionee, or such other date as
may be set forth in that Option Agreement as the “Grant Date” which will be the effective date of
that Option Agreement.

     17. “Holder” means the holder of any Option Shares.

     18. “Initial Public Offering” means the closing of the first sale of securities of the
Company, or of any Successor Entity, to the public, through a firm commitment underwriting, for an
aggregate price (exclusive of underwriters’ discounts and commissions and expenses of the offering)
of at least fifteen million dollars ($15,000,000), pursuant to an effective registration statement
filed with the Securities and Exchange Commission under the 1933 Act.

     19. “Involuntary Transfer” with respect to Option Shares means any of the following: (A) an
assignment of the Shares for the benefit of creditors of the transferor; (B) a Transfer by
operation of law; (C) an execution of judgment against the Shares or the acquisition of record or
beneficial ownership of Shares by a lender or creditor; (D) a Transfer pursuant to any decree of
divorce, dissolution or separate maintenance, any property settlement, any separation agreement or
any other agreement with a spouse (except for bona fide estate planning purposes) under which any
Shares are Transferred or awarded to the spouse of the transferor or are required to be sold; (E) a
Transfer resulting from the filing by the transferor of a petition for relief, or the filing of an
involuntary petition against the transferor, under the bankruptcy laws of the United States or of
any other nation; or (F) a Transfer (even if volitional) constituting a pledge or the imposition of
an encumbrance.

     20. “ISO” means an “incentive stock option” as defined in Section 422 of the Code.

     21. “Offered Price” has the meaning set forth in section 6.8(a) of the Plan.

     22. “Offered Terms” has the meaning set forth in section 6.8(a) of the Plan.

     23. “Option Agreement” has the meaning set forth in section 1 of the Plan.

     24. “Option Pool” has the meaning set forth in section 4 of the Plan.

15

 

     25. “Option Price” has the meaning set forth in section 5(c)(iii) of the Plan.

     26. “Option Shares” has the meaning set forth in section 1 of the Plan, provided that for
purposes of section 6.7 and section 6.8 of the Plan, the term “Option Shares” includes all Shares
issued by the Company to a Holder (or his, her or its predecessor) by reason of such holdings,
including any securities which may be acquired as a result of a stock split, stock dividend, and
other distributions of Shares in the Company made upon, or in exchange for, other securities of the
Company.

     27. “Option Term” has the meaning set forth in section 5(c)(iv) of the Plan.

     28. “Optionee” has the meaning set forth in section 1 of the Plan.

     29. “Options” has the meaning set forth in section 1 of the Plan.

     30. “Permitted Transfer” has the meaning set forth in section 6.7(c) of the Plan.

     31. “Plan” has the meaning set forth in section 1 of the Plan.

     32. “Proposed Transfer Notice” has the meaning set forth in section 6.8(a) of the Plan.

     33. “Shares” has the meaning set forth in section 1 of the Plan.

     34. “Subsidiary” has the same meaning as “subsidiary corporation” as defined in Section
424(f) of the Code.

     35. “Successor Entity” means a corporation or other entity that acquires all or substantially
all of the assets of the Company, or which is the surviving or parent entity resulting from a
Business Combination, as that term is defined in section 6.9 of the Plan.

     36. “Tax Withholding Liability” in connection with the exercise of any Option means all
federal and state income taxes, social security tax, and any other taxes applicable to the
compensation income arising from such exercise required by applicable law to be withheld by the
Company.

     37. “Termination for Cause” means (i) in the case of an Optionee who is an employee of the
Company and/or any of its Subsidiaries, a termination by the employer of the Optionee’s employment
for “cause” as defined by any contract of employment with the Optionee or in the Option Agreement,
or if not defined therein, pursuant to the “For Cause Standard” set forth below, (ii) in the case
of an Optionee who is an advisor, consultant or independent contractor to the Company and/or any of
its Subsidiaries, a termination of the services relationship by the hiring party for “cause” or
breach of contract, as defined by any contract between the parties or the Option Agreement, or if
not defined therein, pursuant to the “For Cause Standard” set forth below, and (iii) in the case of
an Optionee who is a director of the Company and/or any of its Subsidiaries, removal of him or her
from the board of directors by action of the shareholders or, if permitted by applicable law and
the certificate, bylaws or other organic documents of the Company or the Subsidiary, as the case
may be, or pursuant to applicable law, by the other directors), in connection with the good faith
determination of the board of directors (or of the

16

 

Company’s or Subsidiary’s shareholders if so required, but in either case excluding the vote
of the subject individual if he or she is a director or a shareholder) that the Optionee has (all
of the following defined as the “For Cause Standard”): engaged in any acts which breach any
fiduciary duty, employment or service obligation (including to provide services to the Company in a
high quality and professional manner) or contractual obligation to the Company, any of its
Subsidiaries or their shareholders, or in any acts involving dishonesty or moral turpitude or in
any acts that materially and adversely affect the business, affairs or reputation of the Company or
any of its Subsidiaries.

     38. “Termination of Eligibility Status” means (i) in the case of any employee of the Company
and/or any of its Subsidiaries, a termination of his or her employment, whether by the employee or
employer, and whether voluntary or involuntary, including without limitation as a result of the
death or Disability of the employee, (ii) in the case of any advisor, consultant, or independent
contractor to the Company and/or any of its Subsidiaries, the termination of the services
relationship pursuant to any agreement between the parties or otherwise, and (iii) in the case of
any director of the Company and/or any of its Subsidiaries, the death of or resignation by the
director or his or her removal from or ceasing to serve on the Board in the manner provided by the
certificate of incorporation, bylaws or other organic instruments of the Company or Subsidiary or
otherwise in accordance with applicable law.

     39. “Transfer” with respect to Option Shares means a voluntary or involuntary sale,
assignment, transfer, conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment or levy of those Shares, including any Involuntary Transfer, Donative Transfer or
transfer by will or under the laws of descent and distribution.

     40. “Transferee” has the meaning set forth in section 6.8(b) of the Plan.

     41. “Transferred Shares” has the meaning set forth in section 6.8(b) of the Plan.

     42. “Unvested Option” has the meaning set forth in section 5(c)(vii) of the Plan.

     43. “Unvested Shares” has the meaning set forth in section 5(c)(viii) of the Plan.

     44. “Vested Option” has the meaning set forth in section 5(c)(vii) of the Plan.

     45. “Vested Shares” has the meaning set forth in section 5(c)(viii) of the Plan.

17

 

Stock Option Agreement

Under the Kagoor Networks, Inc.

2003 General Stock Option Plan

[For U.S. New Hire Employees]

     This Agreement is made effective as of                                                              , 200                     (the “Grant Date”), by
and between Kagoor Networks, Inc., a Delaware corporation (the “Company”), and                                         
(“Optionee”).

Now therefore, the parties agree as follows:

1. Option Grant. Subject to all of the terms and conditions of this Agreement and of the
Kagoor Networks, Inc. 2003 General Stock Option Plan (the “Option Plan”), Optionee will have an
option (the “Option”) to purchase shares of the Company’s common stock (the “Option Shares”) on the
following terms:

	 	 	 	 	 
	

	 	Number of Option Shares:
	 	                                                            
	 
	 	 	 	 
	

	 	Option Price:
	 	$                    /share
	 
	 	 	 	 
	

	 	Expiration Date:
	 	Ten years from the Grant Date
	 
	 	 	 	 
	

	 	Vesting Start Date:
	 	                                                             , 200                    

The Option will be subject to vesting as set forth in Section 6.4 of the Option Plan. Section 6.4
of the Option Plan provides that the Option initially will be deemed an entirely Unvested Option,
but portions of the Option will become a Vested Option on the following schedule: Twenty-five
percent (25%) of the Option will become a Vested Option as of the first anniversary of the “Vesting
Start Date” specified above and the balance of the Option will become a Vested Option pro rata
monthly (based on monthly anniversary dates of the day of the month of the Vesting Start Date) over
the three year period immediately following such first anniversary; provided that there will be no
further vesting once the Optionee suffers a Termination of Eligibility Status and provided further
that additional vesting will be suspended during any period while the Optionee is on a leave of
absence from the Company or its Subsidiaries, as determined by the Administrator. The status of
whether the Option will be treated as an ISO as defined in the Option Plan (in all events
non-employees are not eligible to receive ISO’s) is as follows (check one):

		
	      ̈ 	The Option will be an ISO to the maximum extent permitted under the
Code.

		
	      ̈ 	The Option will NOT be an ISO.

2. Representations and Warranties of Optionee. Optionee represents and warrants that
Optionee

18

 

is acquiring the Option, and will acquire any Option Shares obtained upon exercise of the Option,
for investment purposes only, for Optionee’s own account, and with no view to the distribution
thereof.

3. No Employment or Independent Contractor Rights. This Agreement gives Optionee no right
to be retained as an employee of or independent contractor to the Company and/or its Subsidiaries.

4. Terms of the Option Plan. Optionee understands that the Option Plan includes important
terms and conditions that apply to the Option. Those terms include: important conditions to the
right of Optionee to exercise the Option; important restrictions on the ability of Optionee to
transfer the Option or to Transfer any of the Option Shares received upon exercise of the Option;
and early termination of the Option following the occurrence of certain events. Optionee has
read the Option Plan, agrees to be bound by its terms, and makes each of the representations
required to be made by Optionee under it. Optionee further acknowledges that the Company has given
no legal or tax advice concerning the Option and has advised Optionee to consult with Optionee’s
own tax or financial advisor about the tax treatment of the Option and its exercise.

5. Arbitration. In the event of any dispute concerning the enforcement of this Agreement,
the dispute will be submitted to binding arbitration before a single arbitrator in accordance with
the Commercial Arbitration Rules of the American Arbitration Association provided that: (i) the
arbitrator will be instructed and empowered to take whatever steps to expedite the arbitration as
he or she deems reasonable; (ii) each party will bear its own costs in connection with the
arbitration, provided that the costs of the arbitrator will be borne by the party who the
arbitrator determines not to have prevailed in the matter (unless applicable law requires the
Company, as a condition to enforcement of this arbitration clause or otherwise to bear such costs,
in which case the Company will bear such costs); (iii) the arbitrator’s judgment will be final and
binding upon the parties, except that it may be challenged on the grounds of fraud or gross
misconduct; and (iv) the arbitration will be held in San Francisco, California. Judgment upon any
verdict in arbitration may be entered in any court of competent jurisdiction.

	6.  	Miscellaneous.

       (a) Governing Law; Interpretation. This Agreement will be governed by the substantive
laws of the State of California applicable to contracts entered into and fully performed in
California. The headings and captions of the Sections of this Agreement are for convenience only
and in no way define, limit or extend the scope or intent of this Agreement or any provision
hereof. This Agreement will be construed as a whole, according to its fair meaning, and not in
favor of or against any party, regardless of which party may have initially drafted certain
provisions set forth herein. Capitalized terms and phrases that are not otherwise defined herein
will have the meanings given them in the Option Plan. The terms and conditions of this Agreement
will prevail over any expressly conflicting terms and conditions in the Option Plan except to the
extent expressly set forth in the Option Plan.

       (b) Assignment. This Agreement is personal to Optionee and Optionee may not assign
any of Optionee’s rights or delegate any of Optionee’s obligations hereunder without first

19

 

obtaining the prior written consent of the Company, except as expressly set forth in the
Option Plan.

     (c) Severability. In the event any provision of this Agreement or the application of
any such provision to either of the parties is held by a court of competent jurisdiction to be
contrary to law, such provision will be deemed amended to the extent necessary to comply with such
law, and the remaining provisions of this Agreement will remain in full force and effect.

     (d) Entire Agreement; Amendments. This Agreement constitutes the final and complete
expression of all of the terms of the understanding and agreement between the parties hereto with
respect to the subject matter hereof, and this Agreement replaces and supersedes any and all prior
or contemporaneous negotiations, communications, understandings, obligations, commitments,
agreements or contracts, whether written or oral, between the parties respecting the subject matter
hereof, including, without limitation, any negotiations, understandings or agreements with respect
to participating in the equity (including options thereon) in the Company except to the extent
reflected in a share certificate heretofore issued in the name of Optionee or in a fully executed
written option agreement under an established option plan with the Company. This Agreement may not
be modified, amended, altered or supplemented except by means of the execution and delivery of a
written instrument mutually executed by both parties.

The parties hereby have entered into this Agreement as of the Grant Date.

	 	 	 	 	 	 	 
	 	 	 	 	KAGOOR NETWORKS, INC.
	 	 	 	 	 
	Optionee Signature	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	 
	 	 	 	 	 
	Optionee Name	 	 	 	 
	 
	 	 	 	 	 	 
	Address:

	 	 	 	Address:	 	 
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 

	 	 	 	 	 
	Attachments:

	 	(1) Spousal Consent	 	 
	  
	

	 	(2) 2003 General Stock Option Plan
	 	 

20

 

CONSENT OF SPOUSE

          I am the spouse of                                         , who, together with Kagoor Networks, Inc. (the
“Company”), has entered into the Stock Option Agreement to which this Consent is attached.
Capitalized terms not defined herein will have the meaning set forth in such agreement.

          I have read and understand the Stock Option Agreement and the Kagoor Networks, Inc. 2003
General Stock Option Plan (the “Option Plan”). I acknowledge that, by execution hereof, I am
bound by the Stock Option Agreement and the Option Plan, as to any and all interests I may have
in the Option and the Option Shares. In particular, I understand and agree that the Option and
the Option Shares (including any interest that I may have therein) are subject to certain
repurchase rights in the Company and certain restrictions on transfer.

          I also agree with my spouse and the Company that if my spouse and I ever get divorced or
enter into any marital property settlement agreement, or if my spouse or I ever seek a decree
of separate maintenance, to the extent my spouse has or can obtain assets other than the Option
and the Option Shares in amounts and of value sufficient to settle or satisfy any marital
property claims I may have in the value of the Option and the Option Shares, I will accept such
other assets in settlement of those claims.

          I agree that I will not do anything to try to prevent the operation of any part of the
Stock Option Agreement or the Option Plan. I acknowledge that I have had an opportunity to
obtain independent counsel to advise me concerning the matters contained herein.

	 	 	 	 	 
	 	 	 
	

	 	Signature	 	 
	 
	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Date:	 	 
	

	 	 	 	 

21

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