POS AM

As filed with the Securities and Exchange Commission on October 6, 2010

Registration No. 333-146341

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 10 TO

FORM S-11

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

KBS Real Estate Investment Trust II, Inc.

(Exact name of registrant as specified in its charter)

620 Newport Center Drive, Suite 1300

Newport Beach, California 92660

(949) 417-6500

(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)

Charles J. Schreiber, Jr.

Chief Executive Officer

KBS Real Estate Investment Trust II, Inc.

620 Newport Center Drive, Suite 1300

Newport Beach, California 92660

(949) 417-6500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Robert H. Bergdolt, Esq.

Carrie J. Hartley, Esq.

DLA Piper LLP (US)

4141 Parklake Avenue, Suite 300

Raleigh, North Carolina 27612-2350

(919) 786-2000

Approximate date of commencement of proposed sale to public: As soon as practicable after the effectiveness of the registration statement.

If any of the securities on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller Reporting Company	x
(Do not check if smaller reporting company)

The registrant hereby amends this post-effective amendment to the above-referenced registration statement (file no. 333-146341) on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this post-effective amendment shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the post-effective amendment shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

This Post-Effective Amendment No. 10 consists of the following:

1. The Registrant’s final form of prospectus dated April 22, 2010, which supersedes the Registrant’s previous prospectus dated April 30, 2009 and all supplements to that prospectus.

2. Supplement No. 10 dated October 6, 2010 to the Registrant’s Prospectus dated April 22, 2010, included herewith. Supplement No. 10 supersedes and replaces all prior supplements to the Prospectus.

3. Part II, included herewith.

4. Signature, included herewith.

KBS REAL ESTATE INVESTMENT TRUST II, INC. Maximum Offering of 280,000,000 Shares of Common Stock

KBS Real Estate Investment Trust II, Inc. is a Maryland corporation that elected to be taxed as a real estate investment trust beginning with the taxable year that ended December 31, 2008. We expect to use substantially all of the net proceeds from this offering to invest in and manage a diverse portfolio of real estate properties and real estate-related assets, including the acquisition of commercial properties and investment in and origination of real estate-related assets. The real estate-related assets in which we may invest include mortgage, mezzanine, bridge and other loans; debt securities, including securities issued by other real estate companies and mortgage-backed securities; equity securities such as common stocks, preferred stocks and convertible preferred securities of real estate companies; and certain types of illiquid securities. We expect our real property investments to be located in large metropolitan areas in the United States. We may make our investments through the acquisition of individual assets and loan originations or by acquiring portfolios of assets, other REITs or real estate companies. As of April 16, 2010, we owned nine real estate properties, consisting of six office properties, one office/flex property and two industrial properties, and five real estate loans receivable.

We are offering up to 200,000,000 shares of common stock in our primary offering for $10 per share, with volume discounts available to investors who purchase more than $1,000,000 of shares through the same participating broker-dealer. Discounts are also available for other categories of investors. We are also offering up to 80,000,000 shares pursuant to our dividend reinvestment plan at a purchase price initially equal to $9.50 per share. Our offering is ongoing, and we expect to offer shares of common stock in our primary offering until August  31, 2010.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 25 to read about risks you should consider before buying shares of our common stock. These risks include the following:

• Our charter does not require our directors to seek stockholder approval to liquidate our assets by a specified date, nor does our charter require our directors to list our shares for trading by a specified date. No public market currently exists for our shares, and we have no plans to list our shares on an exchange. Until our shares are listed, if ever, you may not sell your shares unless the buyer meets the applicable suitability and minimum purchase standards. If you are able to sell your shares, you would likely have to sell them at a substantial loss.

• No one may own more than 9.8% of our stock unless exempted by our board.

• We set the offering price of our shares arbitrarily. This price is unrelated to the book or net value of our assets or to our expected operating income.

• We depend on our advisor to conduct our operations. Our advisor has a limited operating history.

• We commenced real estate operations in July 2008 and have a limited operating history.

• All of our executive officers, some of our directors and other key real estate and debt finance professionals are also officers, managers, directors, key professionals and/or holders of a controlling interest in our advisor, our dealer manager and other KBS-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other KBS-advised programs and investors. Fees paid to our advisor in connection with transactions involving the acquisition or origination and management of our investments are based on the cost of the investment, not on the quality of the investment or services rendered to us. This arrangement could influence our advisor to recommend riskier transactions to us.

• If we raise substantially less than the maximum offering, we may not be able to invest in a diverse portfolio of real estate properties and real estate-related assets and the value of your investment may vary more widely with the performance of specific assets.

• We pay substantial fees and expenses to our advisor, its affiliates and participating broker-dealers. These fees increase your risk of loss.

• Although our distribution policy is not to use the proceeds of this offering to make distributions, our organizational documents permit us to pay distributions from any source, including offering proceeds. We have used and expect to continue to use proceeds from financings to fund a portion of our distributions until the proceeds from this offering are fully invested and from time to time during our operational stage in anticipation of cash flow to be received in later periods. We may also fund such distributions from advances from our advisor or sponsors, from our advisor’s deferral of its asset management fee, from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments.

• We may incur debt exceeding 75% of the cost of our tangible assets with the approval of the conflicts committee. To the extent financing in excess of this limit is available on attractive terms, our conflicts committee may approve debt in excess of this limit. Higher debt levels increase the risk of your investment.

• Ongoing credit market disruptions have caused the spreads on prospective debt financing to increase. This could cause the costs and terms of new financings to be less attractive than the terms of our current indebtedness and increase the cost of our variable rate debt. We may not be able to refinance our existing indebtedness on attractive terms. As such, we may be forced to use a greater proportion of our offering proceeds to finance our acquisitions, reducing the number of acquisitions we would otherwise make, and/or dispose of some of our assets.

• Continued disruptions in the financial markets and uncertain economic conditions could adversely affect the value of our investments.

Neither the SEC, the Attorney General of the State of New York nor any other state securities regulator has approved or disapproved of our common stock, determined if this prospectus is truthful or complete or passed on or endorsed the merits of this offering. Any representation to the contrary is a criminal offense.

This investment involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment. The use of projections or forecasts in this offering is prohibited. No one is permitted to make any oral or written predictions about the cash benefits or tax consequences you will receive from your investment.

	Price to Public			Selling Commissions and Dealer Manager  Fees			Net Proceeds (Before Expenses)
Primary Offering
Per Share	$	10.00	*	$	0.95	*	$	9.05
Total Maximum	$	2,000,000,000.00	*	$	190,000,000.00	*	$	1,810,000,000.00
Dividend Reinvestment Plan
Per Share	$	9.50		$	0.00		$	9.50
Total Maximum	$	760,000,000.00		$	0.00		$	760,000,000.00

* Discounts are available for some categories of investors. Reductions in commissions and fees will result in corresponding reductions in the purchase price.

The dealer manager, KBS Capital Markets Group LLC, our affiliate, is not required to sell any specific number or dollar amount of shares but will use its best efforts to sell the shares offered. The minimum permitted purchase is $4,000.

We expect to offer the 200,000,000 shares registered in our primary offering until August 31, 2010. If we decide to continue our primary offering beyond August 31, 2010, we will provide that information in a prospectus supplement. We may continue to offer shares under our dividend reinvestment plan beyond August 31, 2010 until we have sold 80,000,000 shares through the reinvestment of distributions. In many states, we will need to renew the registration statement or file a new registration statement annually to continue the offering. We may terminate this offering at any time.

The date of this prospectus is April 22, 2010.

SUITABILITY STANDARDS

The shares we are offering through this prospectus are suitable only as a long-term investment for persons of adequate financial means and who have no need for liquidity in this investment. Because there is no public market for our shares, you will have difficulty selling your shares.

In consideration of these factors, we have established suitability standards for investors in this offering and subsequent purchasers of our shares. These suitability standards require that a purchaser of shares have either:

• a net worth of at least $250,000; or

• gross annual income of at least $70,000 and a net worth of at least $70,000.

In addition, the states listed below have established suitability requirements that are more stringent than ours and investors in these states are directed to the following special suitability standards:

• Kansas – It is recommended by the office of the Kansas Securities Commissioner that Kansas investors not invest, in the aggregate, more than 10% of their liquid net worth in this and similar direct participation investments. Liquid net worth is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities.

• Alabama, Iowa, Kentucky, Massachusetts, Oregon, Pennsylvania and Tennessee – Investors must have a liquid net worth of at least 10 times their investment in us.

• Michigan and Ohio – Investors must have a liquid net worth of at least 10 times their investment in us and our affiliates.

• California – Investors must have either (a) a net worth of at least $350,000 or (b) a gross annual income of at least $70,000 and a net worth of at least $150,000. In addition, shares will only be sold to California residents that have a liquid net worth of at least ten times their investment in us.

For purposes of determining the suitability of an investor, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles. In the case of sales to fiduciary accounts, these suitability standards must be met by the fiduciary account, by the person who directly or indirectly supplied the funds for the purchase of the shares if such person is the fiduciary or by the beneficiary of the account.

Our sponsor, those selling shares on our behalf and participating broker-dealers and registered investment advisors recommending the purchase of shares in this offering must make every reasonable effort to determine that the purchase of shares in this offering is a suitable and appropriate investment for each stockholder based on information provided by the stockholder regarding the stockholder’s financial situation and investment objectives. See “Plan of Distribution—Suitability Standards” for a detailed discussion of the determinations regarding suitability that we require.

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TABLE OF CONTENTS

SUITABILITY STANDARDS	i
PROSPECTUS SUMMARY	1
RISK FACTORS	25
Risks Related to an Investment in Us	25
Risks Related to Conflicts of Interest	30
Risks Related to This Offering and Our Corporate Structure	34
General Risks Related to Investments in Real Estate	40
Risks Related to Real Estate-Related Investments	44
Risks Associated with Debt Financing	50
Federal Income Tax Risks	52
Retirement Plan Risks	55
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	56
ESTIMATED USE OF PROCEEDS	57
MANAGEMENT	60
Board of Directors	60
Committees of the Board of Directors	61
Executive Officers and Directors	61
Compensation of Directors	66
Limited Liability and Indemnification of Directors, Officers, Employees and Other Agents	67
The Advisor	67
The Advisory Agreement	69
Initial Investment by Our Advisor	70
Other Affiliates	70
Management Decisions	73
MANAGEMENT COMPENSATION	74
STOCK OWNERSHIP	79
CONFLICTS OF INTEREST	79
Our Affiliates’ Interests in Other KBS Real Estate Programs	79
Receipt of Fees and Other Compensation by KBS Capital Advisors and its Affiliates	81
Our Board’s Loyalties to KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and Possibly to Future KBS-Sponsored Programs	81
Fiduciary Duties Owed by Some of Our Affiliates to Our Advisor and Our Advisor’s Affiliates	82
Affiliated Dealer Manager	83
Certain Conflict Resolution Measures	83
INVESTMENT OBJECTIVES AND CRITERIA	89
General	89
Acquisition and Investment Policies	90
Joint Venture Investments	99
Borrowing Policies	100
Operating Policies	101
Disposition Policies	102
Charter-imposed Investment Limitations	103
Investment Limitations under the Investment Company Act of 1940	104
PRIOR PERFORMANCE SUMMARY	107
KBS REIT I	107
KBS Strategic Opportunity REIT	111
KBS Legacy Partners Apartment REIT	112
KBS REIT III	112
Private Programs	113
FEDERAL INCOME TAX CONSIDERATIONS	117
Taxation of KBS REIT II	118
Taxation of Stockholders	130
Backup Withholding and Information Reporting	135
Other Tax Considerations	135
ERISA CONSIDERATIONS	136
Prohibited Transactions	137

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Plan Asset Considerations	137
Other Prohibited Transactions	139
Annual Valuation	139
DESCRIPTION OF SHARES	141
Common Stock	141
Preferred Stock	141
Meetings and Special Voting Requirements	142
Advance Notice for Stockholder Nominations for Directors and Proposals of New Business	142
Restriction on Ownership of Shares	143
Distributions	144
Inspection of Books and Records	145
Business Combinations	145
Control Share Acquisitions	146
Subtitle 8	147
Dividend Reinvestment Plan	147
Share Redemption Program	150
Registrar and Transfer Agent	152
Restrictions on Roll-Up Transactions	152
THE OPERATING PARTNERSHIP AGREEMENT	154
General	154
Capital Contributions	154
Operations	154
Distributions and Allocations of Profits and Losses	155
Rights, Obligations and Powers of the General Partner	155
Exchange Rights	156
Change in General Partner	156
Transferability of Interests	156
Amendment of Limited Partnership Agreement	156
PLAN OF DISTRIBUTION	157
General	157
Compensation of Dealer Manager and Participating Broker-Dealers	157
Subscription Procedures	162
Suitability Standards	163
Minimum Purchase Requirements	163
Investments by Qualified Accounts	164
Investments through IRA Accounts	164
SUPPLEMENTAL SALES MATERIAL	165
LEGAL MATTERS	165
WHERE YOU CAN FIND MORE INFORMATION	165
Appendix A – Form of Subscription Agreement with Instructions	A-1
Appendix B – Amended and Restated Dividend Reinvestment Plan	B-1

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PROSPECTUS SUMMARY

As used herein and unless otherwise required by context, the term “prospectus” refers to this prospectus as amended and supplemented. This prospectus summary highlights material information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. To understand this offering fully, you should read the entire prospectus carefully, including the “Risk Factors” section and the financial statements (including the financial statements incorporated by reference in this prospectus), before making a decision to invest in our common stock.

What is KBS Real Estate Investment Trust II, Inc.?

KBS Real Estate Investment Trust II, Inc. is a recently organized Maryland corporation that elected to be taxed as a real estate investment trust, or REIT, beginning with the taxable year that ended December 31, 2008. We expect to use substantially all of the net proceeds from this offering to invest in and manage a diverse portfolio of real estate properties and real estate-related assets, including the acquisition of commercial properties and investment in real estate-related assets such as mortgage, mezzanine, bridge and other loans; debt securities such as mortgage-backed securities and debt securities issued by other real estate companies; equity securities of real estate companies; and certain types of illiquid securities. We may make our investments through the acquisition of individual assets and loan originations or by acquiring portfolios of assets, other REITs or real estate companies. We plan to diversify our portfolio by investment type, investment size and investment risk with the goal of attaining a portfolio of income-producing assets that provide attractive and stable returns to our investors. We expect our real estate property investments to be located in large metropolitan areas in the United States.

We were incorporated in the State of Maryland on July 12, 2007. From commencement of this offering through April 16, 2010, we had sold 108,964,552 shares of common stock in this offering for gross offering proceeds of $1.1 billion, which includes 3,652,223 shares issued through our dividend reinvestment plan for gross proceeds of $34.7 million.

As of April 16, 2010, we owned nine real estate properties, consisting of six office properties, one office/flex property and two industrial properties encompassing 3.4 million rentable square feet. In addition, as of April 16, 2010, we owned five real estate loans receivable. Because we have a limited portfolio of real estate investments and, except as described in a supplement to this prospectus, we have not yet identified any additional assets to acquire, we are considered a blind pool.

Our external advisor, KBS Capital Advisors LLC, conducts our operations and manages our portfolio of real estate investments. We have no paid employees.

Our office is located at 620 Newport Center Drive, Suite 1300, Newport Beach, California 92660. Our telephone number is (949) 417-6500. Our fax number is (949) 417-6520, and our web site address is www.kbsreitii.com.

What is a REIT?

In general, a REIT is an entity that:

• combines the capital of many investors to acquire or provide financing for real estate investments;

• allows individual investors to invest in a professionally managed, large-scale, diversified portfolio of real estate assets;

• pays distributions to investors of at least 90% of its annual REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain); and

• avoids the “double taxation” treatment of income that normally results from investments in a corporation because a REIT is not generally subject to federal corporate income taxes on that portion of its income distributed to its stockholders, provided certain income tax requirements are satisfied.

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However, under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), REITs are subject to numerous organizational and operational requirements. If we fail to qualify for taxation as a REIT in any year after electing REIT status, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify. Even if we qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and property and to federal income and excise taxes on our undistributed income.

What are your investment objectives?

Our primary investment objectives are:

• to provide you with attractive and stable cash distributions; and

• to preserve and return your capital contribution.

We will also seek to realize growth in the value of our investments by timing asset sales to maximize asset value.

We may return all or a portion of your capital contribution in connection with the sale of the company or the assets we acquire or upon maturity or payoff of our debt investments. Alternatively, you may be able to obtain a return of all or a portion of your capital contribution in connection with the sale of your shares.

Though we intend to authorize and declare distributions based on daily record dates that will be paid on a monthly basis, we may be unable or limited in our ability to make distributions to our stockholders. Further, no public trading market for our shares currently exists and, until our shares are listed, if ever, it may be difficult for you to sell your shares. Until our shares are listed, you may not sell your shares unless the buyer meets the applicable suitability and minimum purchase standards.

Are there any risks involved in an investment in your shares?

Investing in our common stock involves a high degree of risk. You should carefully review the “Risk Factors” section of this prospectus beginning on page 25, which contains a detailed discussion of the material risks that you should consider before you invest in our common stock. Some of the more significant risks relating to an investment in our shares include:

• Our charter does not require our directors to seek stockholder approval to liquidate our assets by a specified date, nor does our charter require our directors to list our shares for trading by a specified date. No public market currently exists for our shares of common stock, and we currently have no plans to list our shares on a national securities exchange. Until our shares are listed, if ever, you may not sell your shares unless the buyer meets the applicable suitability and minimum purchase standards. In addition, our charter prohibits the ownership of more than 9.8% of our stock, unless exempted by our board of directors, which may inhibit large investors from purchasing your shares. Our shares cannot be readily sold and, if you are able to sell your shares, you would likely have to sell them at a substantial discount from their public offering price.

• We established the offering price of our shares on an arbitrary basis. This price may not be indicative of the price at which our shares would trade if they were listed on an exchange or actively traded, and this price bears no relationship to the book or net value of our assets or to our expected operating income.

• We are dependent on our advisor to select investments and conduct our operations. Our advisor has a limited operating history. This inexperience makes our future performance difficult to predict.

• We commenced real estate operations in July 2008 and have a limited operating history. Because we have a limited portfolio of real estate investments and, except as described in a supplement to this prospectus, we have not identified any additional assets to acquire or originate with proceeds from this offering, you will not have an opportunity to evaluate our investments before we make them, making an investment in us more speculative.

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• All of our executive officers, some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other KBS-affiliated entities. As a result, our executive officers, some of our directors, some of our key real estate and debt finance professionals, our advisor and its affiliates face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other programs and investors advised by KBS affiliates and conflicts in allocating time among us and these other programs and investors. Furthermore, these individuals may become employees of another KBS-sponsored program in an internalization transaction or, if we internalize our advisor, may not become our employees as a result of their relationship with other KBS-sponsored programs. These conflicts could result in action or inaction that is not in the best interests of our stockholders.

• Because investment opportunities that are suitable for us may also be suitable for other KBS-advised programs or investors, our advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to you.

• Our advisor and its affiliates receive fees in connection with transactions involving the purchase or origination and management of our investments. These fees are based on the cost of the investment, and not based on the quality of the investment or the quality of the services rendered to us. This may influence our advisor to recommend riskier transactions to us.

• We may also pay significant fees during our listing/liquidation stage. Although most of the fees payable during our listing/liquidation stage are contingent on our investors first enjoying agreed-upon investment returns, affiliates of KBS Capital Advisors could also receive significant payments even without our reaching the investment-return thresholds should we seek to become self-managed. Due to the apparent preference of the public markets for self-managed companies, a decision to list our shares on a national securities exchange might well be preceded by a decision to become self-managed. And given our advisor’s familiarity with our assets and operations, we might prefer to become self-managed by acquiring entities affiliated with our advisor. Such an internalization transaction could result in significant payments to affiliates of our advisor irrespective of whether you enjoyed the returns on which we have conditioned other incentive compensation.

• If we raise substantially less than the maximum offering, we may not be able to invest in a diverse portfolio of real estate properties and real estate-related assets and the value of your investment may vary more widely with the performance of specific assets.

• We pay substantial fees to and expenses of our advisor, its affiliates and participating broker-dealers, which payments increase the risk that you will not earn a profit on your investment.

• Although our distribution policy is not to use the proceeds of this offering to make distributions, our organizational documents permit us to pay distributions from any source, including offering proceeds. We have used and expect to continue to use proceeds from financings to fund a portion of our distributions until the proceeds from this offering are fully invested and from time to time during our operational stage in anticipation of cash flow to be received in later periods. We may also fund such distributions from advances from our advisor or sponsors, or from our advisor’s deferral of its asset management fee, from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments.

• Our policies do not limit us from incurring debt until our borrowings would exceed 75% of the cost (before deducting depreciation or other non-cash reserves) of our tangible assets, and we may exceed this limit with the approval of the conflicts committee of our board of directors. To the extent financing in excess of this limit is available on attractive terms, our conflicts committee may approve debt in excess of this limit. High debt levels could limit the amount of cash we have available to distribute and could result in a decline in the value of your investment.

• If we are unable to locate investments with attractive yields while we are investing the proceeds of this offering, our distributions and the long-term returns of our investors may be lower than they otherwise would.

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• We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our debt service obligations and limiting our ability to pay distributions to our stockholders.

• Our current and future investments in real estate properties, mortgage loans, mezzanine loans, bridge loans, mortgage-backed securities, collateralized debt obligations and other real estate-related investments may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to you. Revenues from the properties and other assets directly securing our loan investments could decrease, making it more difficult for the borrower to meet its payment obligations to us, which could in turn make it more difficult for us to meet our debt service obligations and limit our ability to pay distributions to our stockholders.

• Ongoing credit market disruptions have caused the spreads on prospective debt financing to increase. This could cause the costs and terms of new financings to be less attractive than the terms of our current indebtedness and increase the cost of our variable rate debt. In addition, we may not be able to refinance our existing indebtedness on attractive terms. As such, we may be forced to use a greater proportion of our offering proceeds to finance our acquisitions, reducing the number of acquisitions we would otherwise make, and/or dispose of some of our assets.

• Current disruptions in the financial markets and current adverse economic conditions could adversely affect the value of our investments.

• Certain of our debt obligations have variable interest rates with interest and related payments that vary with the movement of LIBOR or other indexes. Increases in the indexes could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

• We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes, including, but not limited to, the redemption of shares under our share redemption program, the funding of capital expenditures on our real estate investments, or the repayment of debt. If such funds are not available from the dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.

What is the role of the board of directors?

We operate under the direction of our board of directors, the members of which are accountable to us and our stockholders as fiduciaries. We have five members of our board of directors, three of which are independent of KBS Capital Advisors and its affiliates. Our charter requires that a majority of our directors be independent of KBS Capital Advisors and creates a committee of our board consisting solely of all of our independent directors. This committee, which we call the conflicts committee, is responsible for reviewing the performance of KBS Capital Advisors and must approve other matters set forth in our charter. Our directors are elected annually by the stockholders.

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Who is your advisor and what does the advisor do?

KBS Capital Advisors LLC is our advisor. As our advisor, KBS Capital Advisors manages our day-to-day operations and our portfolio of real estate properties and real estate-related assets. Our sponsors, Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr., and their team of real estate and debt finance professionals, acting through KBS Capital Advisors, make most of the decisions regarding the selection and the negotiation of real estate investments. KBS Capital Advisors then makes recommendations on all investments to our board of directors and our board of directors, or a majority of the conflicts committee that constitutes a majority of our board of directors, approves all proposed investments. The conflicts committee has approved an investment grade securities purchase program pursuant to which the conflicts committee authorized an investment committee of our advisor to approve and settle acquisitions of investment grade securities (rated AAA to A) up to an aggregate amount of $50 million. KBS Capital Advisors also provides asset-management, marketing, investor-relations and other administrative services on our behalf with the goal of maximizing our operating cash flow.

What is the experience of your advisor?

KBS Capital Advisors is a limited liability company that was formed in the State of Delaware on October 18, 2004. Our advisor has a limited operating history. As of the date of this prospectus, its operations have consisted solely of serving as the external advisor to us, KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc. and KBS Legacy Partners Apartment REIT, Inc., which we refer to, respectively, in this prospectus as KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT. KBS REIT I launched its initial public offering and commenced real estate operations in 2006. KBS Strategic Opportunity REIT launched its initial public offering in November of 2009. KBS Legacy Partners Apartment REIT launched its initial public offering in March of 2010. As of the date of this prospectus, the public offering of shares of KBS REIT III is in registration with the Securities and Exchange Commission (“SEC”) and has not yet commenced.

What is the experience of your sponsors?

Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. control and indirectly own our advisor and the dealer manager of this offering. We refer to these individuals as our “sponsors.” All four of our sponsors actively participate in the management and operations of our advisor, and our advisor has three managers: an entity owned and controlled by Mr. Bren; an entity owned and controlled by Messrs. Hall and McMillan; and an entity owned and controlled by Mr. Schreiber.

Our sponsors work together at KBS Capital Advisors with their team of key real estate and debt finance professionals. The key real estate professionals at our advisor include James Chiboucas, William Milligan, Kenneth L. McKay, Charles B. Lindwall, Lori A. Lewis and David E. Snyder and each has over 16 years of real estate experience. The key real estate and debt finance professionals at our advisor have been through multiple real estate cycles in their careers and have the expertise gained through hands-on experience in acquisitions, asset management, dispositions, development, leasing and property and portfolio management. Together with Messrs. Bren and Schreiber, these individuals comprise the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

On January 27, 2006, our four sponsors launched the initial public offering of KBS REIT I. As of December 31, 2009, KBS REIT I had accepted aggregate gross offering proceeds of approximately $1.8 billion, including $129.5 million from shares issued pursuant to its dividend reinvestment plan. Of the amount raised pursuant to its dividend reinvestment plan, as of December 31, 2009, $51.3 million has been used to fund share redemptions pursuant to its share redemption program. KBS REIT I ceased offering shares in its primary initial public offering on May 30, 2008. Our sponsors are also sponsoring KBS Strategic Opportunity REIT, which commenced its initial public offering on November 20, 2009, and KBS REIT III, which, as of the date of this prospectus, is currently in registration with the SEC to register its initial public offering. Together with Legacy Partners Residential Realty LLC and certain of its affiliates, our sponsors are also sponsoring another public real estate investment trust, KBS Legacy Partners Apartment REIT. KBS Legacy Partners Apartment REIT commenced its initial public offering on March 12, 2010.

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Our advisor, KBS Capital Advisors, is the external advisor of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, and some or all of our sponsors are directors and/or executive officers of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT. Through their affiliations with us, KBS REIT I and KBS Capital Advisors, as of December 31, 2009, our sponsors have overseen the investment in and management of approximately $3.8 billion of real estate and real estate-related investments on behalf of the investors in us and KBS REIT I.

Since 1992, Messrs. Bren and Schreiber have teamed to invest in, manage and sell real estate and real estate-related investments on behalf of institutional investors. Together, Messrs. Bren and Schreiber founded KBS Realty Advisors, a registered investment advisor with the SEC and a nationally recognized real estate investment advisor. When we refer to a KBS-sponsored fund or program, we are referring to the private entities sponsored by an investment advisor affiliated with Messrs. Bren and Schreiber and KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, the public, non-traded REITs that are currently being sponsored by Messrs. Bren, Hall, McMillan and Schreiber. When we refer to a KBS-advised investor, we are referring to institutional investors that have engaged an investment advisor affiliated with Messrs. Bren and Schreiber to provide real estate-related investment advice.

Messrs. Bren and Schreiber each have been involved in real estate development, management, acquisition, disposition and financing for more than 30 years. Over that time, Messrs. Bren and Schreiber have developed extensive experience investing in and managing a broad range of real estate assets classes. Since 1992, the experience of the investment advisors affiliated with Messrs. Bren and Schreiber includes (as of December 31, 2009) sponsoring 14 private real estate funds that have invested approximately $3.3 billion (including equity, debt and investment of income and sales proceeds) in 288 real estate assets. In addition to their experience with these 14 funds, investment advisors affiliated with Messrs. Bren and Schreiber have also been engaged by four institutional investors to recommend real estate acquisitions and manage some of their investments. The investment proceeds of these investors were not commingled. The investments were made pursuant to management agreements or partnership agreements that permitted the institutional investors to reject acquisitions recommended by the investment advisor. Because the investors were not as passive as those in the 14 funds described above or as those who invest in this offering, we have not described the performance of the real estate assets acquired or managed for these investors. The amounts paid for the assets acquired and/or managed pursuant to these arrangements and for subsequent capital expenditures totaled over $3.9 billion.

With respect to the experience of Messrs. Hall and McMillan, each has over 25 years of experience in real estate-related investments. Prior to founding KBS Capital Advisors with Messrs. Bren and Schreiber in 2004, Messrs. Hall and McMillan founded Willowbrook Capital Group, LLC, an asset-management company, in 2000. Before forming Willowbrook, Mr. McMillan served as the Executive Vice President and Chief Investment Officer of SunAmerica Investments, Inc., which was later acquired by AIG. As Chief Investment Officer, he was responsible for over $75 billion in assets, including residential and commercial mortgage-backed securities, public and private investment grade and non-investment grade corporate bonds and commercial mortgage loans and real estate investments.

Prior to forming Willowbrook, Mr. Hall was a Managing Director at CS First Boston, where he managed CSFB’s distribution strategy and business development for the Principal Transaction Group’s $18 billion real estate securities portfolio. Before joining CSFB in 1996, he served as a Director in the Real Estate Products Group at Nomura Securities, with responsibility for the company’s $6 billion annual pipeline of fixed-income securities. Mr. Hall spent the 1980s as a Senior Vice President in the High Yield Department of Drexel Burnham Lambert’s Beverly Hills office, where he was responsible for distribution of the group’s high-yield real estate securities.

Do you expect any of the institutions that invested in the private KBS-sponsored funds or that have been advised by your affiliates to invest in this offering?

We believe such institutional investors are more likely to invest in offerings that can be conducted with lower offering expenses than those found in a public offering, such as this one, in which the securities are sold by participating broker-dealers on a best-efforts basis. If institutional investors do participate in this offering, they would likely invest in amounts entitling them to volume discounts such that their returns, if any, would likely be greater than those who purchase shares in this offering at $10 per share.

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How do you expect your portfolio to be allocated between real estate properties and real estate-related assets?

We intend to acquire and manage a diverse portfolio of real estate properties and real estate-related assets. We plan to diversify our portfolio by investment type, investment size and investment risk with the goal of attaining a portfolio of income-producing real estate and real estate-related assets that provide attractive and stable returns to our investors. We intend to allocate between 60% and 70% of our portfolio to investments in core properties and between 30% and 40% of our portfolio to other real estate-related investments such as mortgage, mezzanine, bridge and other loans, debt and derivative securities related to real estate assets, including mortgage-backed securities, and the equity securities of other REITs and real estate companies. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time. Although this is our current target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego a good investment because it does not precisely fit our expected portfolio composition. We believe that we are most likely to meet our investment objectives through the careful selection and underwriting of assets. When making an acquisition, we will emphasize the performance and risk characteristics of that investment, how that investment will fit with our portfolio-level performance objectives, the other assets in our portfolio and how the returns and risks of that investment compare to the returns and risks of available investment alternatives. Thus, to the extent that our advisor presents us with good investment opportunities that allow us to meet the REIT requirements under the Internal Revenue Code, our portfolio composition may vary from what we initially expect. However, we will attempt to construct a portfolio that produces stable and attractive returns by spreading risk across different real estate investments.

How will KBS Capital Advisors select potential properties for acquisition?

To find properties that best meet our criteria for investment, our advisor has developed a disciplined investment approach that combines the experience of its team of real estate professionals with a structure that emphasizes thorough market research, stringent underwriting standards and an extensive down-side analysis of the risks of each investment. The types of properties that we may invest in include office, industrial and retail properties located throughout the United States. Although we may invest in any of these types of properties, we expect to invest primarily in office and industrial properties. Our advisor intends to diversify our portfolio by geographic region and investment size with the goal of attaining a portfolio of income-producing properties that will provide attractive and stable returns to our investors. We expect to allocate between 60% and 70% of our portfolio to investments in core properties, which are generally existing properties with at least 80% occupancy and minimal near-term lease rollover. As of April 16, 2010, we owned nine real estate properties consisting of six office properties, one office/flex property and two industrial properties.

What types of debt-related investments do you expect to make?

The debt-related investments in which we may invest include mortgage, mezzanine, bridge and other loans; debt and derivative securities related to real estate assets, including mortgage-backed securities; collateralized debt obligations; and debt securities issued by real estate companies. We intend to structure, underwrite and originate some of the debt products in which we invest. Our underwriting process will involve comprehensive financial, structural, operational and legal due diligence to assess the risks of investments so that we can optimize pricing and structuring. By originating loans directly, we will be able to efficiently structure a diverse range of products. For instance, we may sell some components of the debt we originate while retaining attractive, risk-adjusted strips of the debt for ourselves. Our advisor or a wholly owned subsidiary of our advisor will source our debt investments. We will pay our advisor or its subsidiary origination fees for loans that we make or acquire and asset management fees for the loans that we hold for investment.

We may sell some of the loans that we originate to third parties for a profit. We expect to hold other loans for investment. We will fund the loans we originate with proceeds from this offering and, to the extent available, we may fund our debt-related investments with proceeds from warehouse lines of credit, repurchase agreements or other borrowings. As of April 16, 2010, we owned five real estate loans receivable.

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What types of investments will you make in the equity securities of other companies?

We may make equity investments in REITs and other real estate companies. We may purchase the common or preferred stock of these entities or options to acquire their stock. We will target a public company that owns commercial real estate or real estate-related assets when we believe its stock is trading at a discount to that company’s net asset value. We may eventually seek to acquire or gain a controlling interest in the companies that we target. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time.

We will make investments in other entities when we consider it more efficient to acquire an entity that already owns assets meeting our investment objectives than to acquire such assets directly. We may also participate with other entities (including non-affiliated entities) in property ownership through joint ventures, limited liability companies, partnerships and other types of common ownership.

Will you use leverage?

Yes. We expect that once we have fully invested the proceeds of this offering, our debt financing will be between 50% and 65% of the cost of our tangible assets (before deducting depreciation or other non-cash reserves). There is no limitation on the amount we may borrow for the purchase of any single asset. Our charter limits our borrowings to 75% of the cost (before deducting depreciation or other non-cash reserves) of our tangible assets; however, we may exceed that limit if a majority of the conflicts committee approves each borrowing in excess of our charter limitation and we disclose such borrowing to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing.

To the extent financing in excess of this limit is available at attractive terms, the conflicts committee may approve debt in excess of our charter limitation. From time to time, our debt financing may be below 50% of the cost of our tangible assets due to the lack of availability of debt financing. Careful use of debt will help us to achieve our diversification goals because we will have more funds available for investment. However, high levels of debt could cause us to incur higher interest charges and higher debt service payments, which would decrease the amount of cash available for distribution to our investors.

Except with respect to the borrowing limits contained in our charter, we may reevaluate and change our debt policy in the future without a stockholder vote. Factors that we would consider when reevaluating or changing our debt policy include: then-current economic conditions, the relative cost of debt and equity capital, any acquisition opportunities, the ability of our properties and other investments to generate sufficient cash flow to cover debt service requirements and other similar factors.

As of April 16, 2010, our borrowings were approximately 13% of both the cost (before depreciation and other non-cash reserves) and book value (before depreciation) of our tangible assets.

How will you structure the ownership and operation of your assets?

We plan to own substantially all of our assets and conduct our operations through KBS Limited Partnership II, which we refer to as our Operating Partnership in this prospectus. We are the sole general partner of the Operating Partnership and, as of the date of this prospectus, our wholly owned subsidiary, KBS REIT Holdings II LLC, is the sole limited partner of the Operating Partnership. Because we plan to conduct substantially all of our operations through the Operating Partnership, we are considered an UPREIT.

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What is an “UPREIT”?

UPREIT stands for “Umbrella Partnership Real Estate Investment Trust.” The UPREIT structure is used because a sale of property directly to the REIT is generally a taxable transaction to the selling property owner. In an UPREIT structure, a seller of a property who desires to defer taxable gain on the sale of his property may transfer the property to the UPREIT in exchange for limited partnership units in the UPREIT and defer taxation of gain until the seller later sells or exchanges his UPREIT units. Using an UPREIT structure may give us an advantage in acquiring desired properties from persons who may not otherwise sell their properties because of unfavorable tax results.

What conflicts of interest does your advisor face?

KBS Capital Advisors and its affiliates experience conflicts of interest in connection with the management of our business. Messrs. Bren, Hall, McMillan and Schreiber, our sponsors and four of our executive officers, indirectly own and control KBS Capital Advisors. KBS Capital Advisors is also the external advisor to KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT. Messrs. Bren, Hall, McMillan and Schreiber are executive officers of KBS REIT I and KBS REIT III, and Messrs. McMillan and Schreiber are also directors of KBS REIT I and KBS REIT III. Messrs. Bren and McMillan are also executive officers of KBS Legacy Partners Apartment REIT. Mr. Bren is a director of KBS Legacy Partners Apartment REIT. Messrs. Hall and McMillan are also executive officers and directors of KBS Strategic Opportunity REIT. In addition, Messrs. Bren and Schreiber and their team of real estate professionals are also key real estate professionals at KBS Realty Advisors and its affiliates, the advisors to the private KBS-sponsored programs and the investment advisors to institutional investors in real estate properties and real estate-related assets. Some of the material conflicts that KBS Capital Advisors and its affiliates will face include the following:

• Our sponsors and their team of real estate and debt finance professionals must determine which investment opportunities to recommend to us and other KBS-sponsored programs that are raising funds for investment as of the date of this prospectus or for whom KBS serves as an advisor as well as any programs KBS affiliates may sponsor in the future;

• Our sponsors and their team of professionals at KBS Capital Advisors and its affiliates (including our dealer manager, KBS Capital Markets Group) have to allocate their time between us and other programs and activities in which they are involved;

• KBS Capital Advisors and its affiliates receive fees in connection with transactions involving the purchase, origination, management and sale of our assets regardless of the quality of the asset acquired or the services provided to us;

• KBS Capital Advisors and its affiliates, including our dealer manager, KBS Capital Markets Group, receive fees in connection with our public offerings of equity securities;

• The negotiations of the advisory agreement and the dealer manager agreement (including the substantial fees KBS Capital Advisors and its affiliates receive thereunder) were not at arm’s length;

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• KBS Capital Advisors may terminate the advisory agreement without penalty upon 60 days’ written notice. Upon termination of the advisory agreement by either party, KBS Capital Advisors may be entitled to receive a termination fee in the form of a promissory note that becomes due only upon the sale, maturity or payoff of one or more assets, and the fee is payable solely from the proceeds from the sale, maturity or payoff of an asset and future asset sales, maturities or payoffs. The amount of the fee would be 15% of the amount, if any, by which (i) the hypothetical liquidation proceeds plus distributions paid exceed (ii) the amount necessary to provide investors with a return of their net capital contributions and an 8% per year cumulative, non-compounded return through the termination date; however, the agreement does not require that the investors actually have received such return prior to issuance of the promissory note or payments under it. The amount due under the promissory note would not be adjusted upwards or downwards to reflect any difference in the appraised value of our portfolio at termination and the amount ultimately realized by us. Therefore, if the ultimate liquidation value of our assets were to decline relative to the appraised value of our assets as of the termination date of the advisory agreement, we may be obligated to pay a termination fee even if our stockholders do not ultimately receive an 8% per year cumulative, non-compounded return on their investment in us. The termination fee would be reduced by the amount of any prior payment to the advisor of a subordinated participation in net cash flows;

• We may seek stockholder approval to internalize our management by acquiring assets and the key real estate and debt finance professionals at our advisor and its affiliates for consideration that would be negotiated at that time. The payment of such consideration could result in dilution to your interest in us and could reduce the net income per share and funds from operations per share attributable to your investment. Additionally, in an internalization transaction, the real estate and debt finance professionals at our advisor that become our employees may receive more compensation than they receive from our advisor or its affiliates. These possibilities may provide incentives to our advisor or these individuals to pursue an internalization transaction rather than an alternative strategy, even if such alternative strategy might otherwise be in our stockholders’ best interests; and

• The key real estate and debt finance professionals at our advisor may become employees of another KBS-sponsored program in an internalization transaction or, if we internalize our advisor, may not become our employees as a result of their relationship with other KBS-sponsored programs.

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Who owns and controls the advisor?

The following chart shows the ownership structure of KBS Capital Advisors and entities affiliated with KBS Capital Advisors that perform services for us:

⁽¹⁾ Peter McMillan III is our Executive Vice President, Treasurer, Secretary and one of our directors.

⁽²⁾ Keith D. Hall is our Executive Vice President.

⁽³⁾ Peter M. Bren is our President. Other than de minimis amounts owned by family members or family trusts, Mr. Bren indirectly owns and controls PBren Investments, L.P.

⁽⁴⁾ Charles J. Schreiber, Jr. is the Chairman of our Board, our Chief Executive Officer and one of our directors. Other than de minimis amounts owned by family members or trusts, Mr. Schreiber indirectly owns and controls Schreiber Real Estate Investments, L.P.

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As of the date of this prospectus, Messrs. Bren, Hall, McMillan and Schreiber have not received any compensation from us for services provided in their capacity as principals of KBS Capital Advisors or its affiliates. In connection with this offering, we pay or reimburse our advisor and its affiliates for the services described below.

What are the fees that you pay to the advisor, its affiliates and your directors?

KBS Capital Advisors and its affiliates receive compensation and reimbursement for services related to this offering and the investment and management of our assets. We also compensate our independent directors for their service to us. The most significant items of compensation are included in the table below. Selling commissions and dealer manager fees may vary for different categories of purchasers. This table assumes that we sell all shares at the highest possible selling commissions and dealer manager fees (with no discounts to any categories of purchasers) and assumes a $9.50 price for each share sold through our dividend reinvestment plan. No selling commissions or dealer manager fees are payable on shares sold through our dividend reinvestment plan. For purposes of this table, we have also assumed 70% of our investments will be core properties to which acquisition fees apply and 30% of our investments will be loans to which origination fees apply.

Type of Compensation	Determination of Amount	Estimated Amount for Maximum Offering (280,000,000 shares)
	Organization and Offering Stage
Selling Commissions & Dealer Manager Fees	Effective April 30, 2010, we will pay KBS Capital Markets Group LLC, our dealer manager, up to 6.5% of gross offering proceeds as a selling commission, before reallowance of commissions earned by participating broker-dealers. We will not pay selling commissions with respect to shares sold under the dividend reinvestment plan. KBS Capital Markets Group reallows 100% of commissions earned to participating broker-dealers. Prior to April 30, 2010, we paid up to 6.0% of gross offering proceeds to our dealer manager as selling commissions. All or a portion of the selling commissions will not be charged with regard to shares sold to certain categories of purchasers.	Aggregate of $190,000,000 for selling commissions and dealer manager fees
	Effective April 30, 2010, we will pay KBS Capital Markets Group up to 3.0% of gross offering proceeds as a dealer manager fee. We will not pay a dealer manager fee with respect to shares sold under the dividend reinvestment plan. KBS Capital Markets Group may reallow to any participating broker-dealer up to 1.0% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee and in special cases the dealer manager may increase the reallowance. Prior to April 30, 2010, we paid up to 3.5% of gross offering proceeds to our dealer manager as a dealer manager fee. A reduced dealer manager fee is payable with respect to certain volume discount sales.

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Type of Compensation	Determination of Amount	Estimated Amount for Maximum Offering (280,000,000 shares)
Other Organization and Offering Expenses	Our advisor or its affiliates have paid certain organization and offering expenses on our behalf. We have also directly incurred some organization and offering expenses. We reimburse our advisor and its affiliates for the expenses they pay and will reimburse our advisor and its affiliates for future organization and offering costs they may incur on our behalf but only to the extent that the reimbursement would not cause the selling commissions, the dealer manager fee and the other organization and offering expenses borne by us to exceed 15.0% of gross offering proceeds as of the date of the reimbursement. If we raise the maximum offering amount in the primary offering and under the dividend reinvestment plan, we expect organization and offering expenses (other than selling commissions and the dealer manager fee) to be $18,858,000 or 0.68% of gross offering proceeds. These organization and offering expenses include all expenses (other than selling commissions and the dealer manager fee) to be paid by us in connection with the offering, including our legal, accounting, printing, mailing and filing fees, charges of our escrow holder and transfer agent, charges of our advisor for administrative services related to the issuance of shares in the offering, reimbursement of bona fide due diligence expenses of broker-dealers, reimbursement of our advisor for costs in connection with preparing supplemental sales materials, the cost of bona fide training and education meetings held by us (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and travel, meal and lodging costs for registered persons associated with our dealer manager and officers and employees of our affiliates to attend retail seminars conducted by broker-dealers and, in special cases, reimbursement to participating broker-dealers for technology costs associated with the offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of our shares by such broker-dealers and the ownership of our shares by such broker-dealers’ customers.	$18,858,000
	Acquisition and Development Stage
Acquisition Fees	0.75% of the cost of investments acquired by us, including any acquisition expenses and any debt attributable to such investments. With respect to investments in and originations of loans, we pay an origination fee to the advisor or its subsidiary in lieu of an acquisition fee.	$9,279,818 (maximum offering and no debt)/ $26,513,766 (maximum offering and target leverage of 65% of the cost of our real estate investments)

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Type of Compensation	Determination of Amount	Estimated Amount for Maximum Offering (280,000,000 shares)
Origination Fees	1.0% of the amount funded by us to acquire or originate mortgage, mezzanine, bridge or other loans, including any expenses related to such investment and any debt we use to fund the acquisition or origination of the loan. We will not pay an acquisition fee with respect to such loans.	$5,302,753 (maximum offering and no debt)/ $15,150,724 (maximum offering and target leverage of 65% of the cost of our real estate investments)
	Operational Stage
Asset Management Fee	With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, inclusive of acquisition fees and expenses related thereto and the amount of any debt associated with or used to acquire such investment. In the case of investments made through joint ventures, the asset management fee is determined based on our proportionate share of the underlying investment. With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment, inclusive of acquisition or origination fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment and (ii) the outstanding principal amount of such loan or other investment, plus the acquisition or origination fees and expenses related to the acquisition or funding of such investment, as of the time of calculation.	The actual amounts are dependent upon the total equity and debt capital we raise and the results of our operations; we cannot determine these amounts at the present time.
Other Operating Expenses	We reimburse the expenses incurred by our advisor in connection with its provision of services to us, including our allocable share of the advisor’s overhead, such as rent, employee costs, utilities and IT costs. Our advisor may seek reimbursement for employee costs under the advisory agreement, but has not done so as of the date of this prospectus. If our advisor seeks reimbursement for employee costs, such costs may include our proportionate share of the salaries of persons involved in the preparation of documents to meet SEC reporting requirements. We will not reimburse the advisor or its affiliates for employee costs in connection with services for which our advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits our advisor or its affiliates may pay to our executive officers.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.

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Type of Compensation	Determination of Amount	Estimated Amount for Maximum Offering (280,000,000 shares)
Independent Director Compensation	We pay each of our independent directors an annual retainer of $40,000. We also pay our independent directors for attending meetings as follows: (i) $2,500 for each board meeting attended, (ii) $2,500 for each committee meeting attended (except that the committee chairman is paid $3,000 for each meeting attended), (iii) $2,000 for each teleconference board meeting attended, and (iv) $2,000 for each teleconference committee meeting attended (except that the committee chairman is paid $3,000 for each teleconference committee meeting attended). All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.	Actual amounts are dependent upon the total number of board and committee meetings that each independent director attends; we cannot determine these amounts at the present time.
	Operational and Liquidation/Listing Stage
Subordinated Participation in Net Cash Flows (payable only if we are not listed on a national exchange)	After investors in our offering have received a return of their net capital contributions and an 8.0% per year cumulative, noncompounded return, KBS Capital Advisors is entitled to receive 15.0% of our net cash flows, whether from continuing operations, net sale proceeds or otherwise. The 8.0% per year cumulative, noncompounded return is calculated based on the amount of capital invested in the offering. In making this calculation, an investor’s net capital contribution is reduced to the extent distributions in excess of a cumulative, noncompounded, annual return of 8.0% are paid (from whatever source), except to the extent such distributions would be required to supplement prior distributions paid in order to achieve a cumulative, noncompounded, annual return of 8.0%. This fee is payable only if we are not listed on an exchange.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.

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Type of Compensation	Determination of Amount	Estimated Amount for Maximum Offering (280,000,000 shares)
	Liquidation/Listing Stage
Disposition Fees	For substantial assistance in connection with the sale of properties or other investments, we will pay our advisor or its affiliates 1.0% of the contract sales price of each property or other investment sold; provided, however, in no event may the disposition fees paid to our advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price. The conflicts committee will determine whether the advisor or its affiliate has provided substantial assistance to us in connection with the sale of an asset. Substantial assistance in connection with the sale of a property includes the advisor’s preparation of an investment package for the property (including a new investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or such other substantial services performed by the advisor in connection with a sale. We do not intend to sell properties or other assets to affiliates. However, if we do sell an asset to an affiliate, our organizational documents would not prohibit us from paying our advisor a disposition fee. Before we sold an asset to an affiliate, the charter would require that our conflicts committee conclude, by a majority vote, that the transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties. Although we are most likely to pay disposition fees to our advisor or an affiliate during our liquidation stage, these fees may also be incurred during our operational stage.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.
Subordinated Incentive Listing Fee (payable only if we are listed on a national exchange)	15.0% of the amount by which (i) our adjusted market value plus distributions exceeds (ii) the aggregate capital contributed by investors plus an amount equal to an 8.0% cumulative, noncompounded return to investors.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.

How many real estate investments do you currently own?

As of April 16, 2010, we owned nine real estate properties, consisting of six office properties, one office/flex property and two industrial properties encompassing 3.4 million rentable square feet. In addition, as of April 16, 2010, we owned five real estate loans receivable. Because we have a limited portfolio of real estate investments and, except as described in a supplement to this prospectus, we have not yet identified any additional assets to acquire, we are considered a blind pool. As significant investments become probable, we will supplement this prospectus to provide information regarding the likely investment. We will also describe material changes to our portfolio, including the closing of significant acquisitions, by means of a supplement to this prospectus.

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Will you acquire properties or other assets in joint ventures?

Probably. Among other reasons, joint venture investments permit us to own interests in large assets without unduly restricting the diversity of our portfolio. We may also want to acquire properties and other investments through joint ventures in order to diversify our portfolio by investment size, investment type or investment risk. In determining whether to invest in a particular joint venture, KBS Capital Advisors will evaluate the real estate assets that such joint venture owns or is being formed to own under the same criteria as our other investments.

What steps will you take to make sure you purchase environmentally compliant properties?

We will obtain a Phase I environmental assessment of each property purchased and, in our discretion, may obtain additional environmental assessments. We will not close the purchase of any property unless we are generally satisfied with the environmental status of the property.

If I buy shares, will I receive distributions and how often?

In order that investors may generally begin earning distributions immediately upon our acceptance of their subscription, we expect to authorize and declare distributions based on daily record dates and to pay distributions on a monthly basis. Since we commenced real estate operations in July 2008, we have authorized and declared distributions based on daily record dates for each day during the period commencing July 16, 2008 through February 28, 2010, and we paid these distributions on a monthly basis.

Generally, our policy is to pay distributions from cash flow from operations. Because we may receive income from interest or rents at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund capital expenditures and other expenses, we expect that at least during the early stages of our development and from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we have funded our distributions in part with third party borrowings and expect to utilize third party borrowings in the future, if necessary, to help fund distributions. We may also fund such distributions from advances from our advisor or sponsors, from our advisor’s deferral of its asset management fee, from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments.

A portion of our distributions to date have been funded with debt financing. Over the long term, we expect that a greater percentage of our distributions will be paid from cash flow from operations and funds from operations (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under any investments we make in mortgage, mezzanine and other loans). However, operating performance cannot be accurately predicted due to numerous factors, including our ability to raise and invest capital at favorable yields, the future operating performance of our investments in the existing real estate and financial environment; the success and economic viability of our tenants; the ability of our borrowers and their sponsors to continue to make their debt service payments and/or to repay their loans upon maturity; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on our variable rate debt obligations; and the level of participation in our dividend reinvestment plan. As a result, future distributions declared and paid may exceed cash flow from operations.

Our distribution policy is not to use the proceeds of this offering to pay distributions. However, our board has the authority under our organizational documents, to the extent permitted by Maryland law, to pay distributions from any source, including proceeds from this offering or the proceeds from the issuance of securities in the future.

To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). If we meet the REIT qualification requirements, we generally will not be subject to federal income tax on the income that we distribute to our stockholders each year. See “Federal Income Tax Considerations—Taxation of KBS REIT II—Annual Distribution Requirements.” Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

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We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

May I reinvest my distributions in shares of KBS Real Estate Investment Trust II?

Yes. You may participate in our dividend reinvestment plan by checking the appropriate box on the subscription agreement or by filling out an enrollment form we will provide to you at your request. The purchase price for shares purchased under the dividend reinvestment plan will initially be $9.50. Once we establish an estimated value per share that is not based on the price to acquire a share in the primary offering or a follow-on public offering, shares issued pursuant to our dividend reinvestment plan will be priced at the estimated value per share of our common stock, as determined by our advisor or another firm chosen for that purpose. We expect to establish an estimated value per share not based on the price to acquire a share in the primary offering or a follow-on public offering after the completion of our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We currently expect to update the estimated value per share every 12 to 18 months thereafter. No selling commissions or dealer manager fees are payable on shares sold under our dividend reinvestment plan. We may amend or terminate the dividend reinvestment plan at our discretion at any time, upon 10 days’ notice to you.

Our board of directors adopted an amended and restated dividend reinvestment plan on March 19, 2010, which will be effective upon 10 days’ notice to participants. The amended and restated plan clarifies (i) that the purchase price of shares under the dividend reinvestment plan will be $9.50 until we establish an estimated value per share that is not based on the price to acquire a share in the primary offering or a follow-on public offering and (ii) that we expect to establish an estimated value per share upon the completion of our offering stage. The amended and restated dividend reinvestment plan states that we will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We currently expect to update the estimated value per share every 12 to 18 months thereafter. In addition, the amended and restated dividend reinvestment plan permits participants to terminate participation in the plan by providing us with written notice within two business days following the public announcement of a new estimated value per share. The amended and restated dividend reinvestment plan also allows us to notify participants of amendments to or termination of the plan by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or by sending a separate mailing to participants. The plan as amended and restated is described in this prospectus and included as Appendix B hereto.

Will the distributions I receive be taxable as ordinary income?

Yes and No. Generally, distributions that you receive, including distributions that are reinvested pursuant to our dividend reinvestment plan, will be taxed as ordinary income to the extent they are from current or accumulated earnings and profits. Participants in our dividend reinvestment plan will also be treated for tax purposes as having received an additional distribution to the extent that they purchase shares under the dividend reinvestment plan at a discount to fair market value. As a result, participants in our dividend reinvestment plan may have tax liability with respect to their share of our taxable income, but they will not receive cash distributions to pay such liability.

To the extent any portion of your distribution is not from current or accumulated earnings and profits, it will not be subject to tax immediately; it will be considered a return of capital for tax purposes and will reduce the tax basis of your investment (and potentially result in taxable gain upon your sale of the stock). Distributions that constitute a return of capital, in effect, defer a portion of your tax until your investment is sold or we are liquidated, at which time you will be taxed at capital gains rates. However, because each investor’s tax considerations are different, we suggest that you consult with your tax advisor.

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How will you use the proceeds raised in this offering?

We expect to use substantially all of the net proceeds from our primary offering of 200,000,000 shares to invest in and manage a diverse portfolio of real estate assets, including the acquisition of commercial properties and investment in and origination of real estate-related investments. Depending primarily upon the number of shares we sell in this offering and assuming a $10.00 purchase price for shares sold in the primary offering, we estimate that we will use 84.30% to 88.38% of the gross proceeds from the primary offering, or between $8.43 and $8.84 per share, for investments, assuming the minimum offering amount of $2.5 million and the maximum offering amount, respectively. We will use the remainder to pay offering expenses, including selling commissions and the dealer manager fee, to maintain a working capital reserve and to pay a fee to our advisor for its services in connection with the selection and acquisition or origination of our real estate properties and real estate-related investments. Until we invest the proceeds of this offering in real estate properties and real estate-related investments, we may invest in short-term, highly liquid or other authorized investments. Such short-term investments will not earn as high of a return as we expect to earn on our real estate investments, and we may be not be able to invest the proceeds in real estate promptly.

We expect to use substantially all of the net proceeds from the sale of shares under our dividend reinvestment plan for general corporate purposes, including, but not limited to, the repurchase of shares under our share redemption program; capital expenditures, tenant improvement costs and leasing costs related to our investments in real estate properties; reserves required by any financings of our investments in real estate properties; funding obligations under any of our real estate loans receivable; investments in real estate properties and real estate-related assets, which would include payment of acquisition fees or origination fees to our advisor; and the repayment of debt.

	280,000,000 Shares
	Primary Offering (200,000,000 shares) ($10.00/share)			Div. Reinv. Plan (80,000,000 shares) ($9.50/share)
	$		%	$	%
Gross Offering Proceeds	2,000,000,000		100.00%	760,000,000	100.00%
Selling Commissions and Dealer Manager Fee	190,000,000		9.50%	0	0.00%
Additional Underwriting Compensation	7.713.000		0.39%	0	0.00%
Other Organization and Offering Expenses	10,120,000		0.50%	1,025,000	0.13%
Acquisition Fees (1)	9,279,818	(2)	0.46%	0	0.00%
Origination Fees (1)	5,302,753	(2)	0.27%	0	0.00%
Initial Working Capital Reserve	10,000,000		0.50%	0	0.00%
Amount Available for Investment	1,767,584,428		88.38%	758,975,000	99.87%

⁽¹⁾ For purposes of this table, we have assumed 70% of our investments are core properties and 30% of our investments are loans.

⁽²⁾ If we raise the maximum offering amount and our debt financing is equal to 65% of the cost of our real estate investments, then acquisition fees would be $26,513,766 and origination fees would be $15,150,724.

What kind of offering is this?

We are offering up to 280,000,000 shares of common stock on a “best efforts” basis. We are offering 200,000,000 of these shares in our primary offering at $10 per share, with volume discounts available to investors who purchase more than $1,000,000 in shares through the same participating broker-dealer. Discounts are also available for investors who purchase shares through certain distribution channels. We are offering up to 80,000,000 shares pursuant to our dividend reinvestment plan at a purchase price initially equal to $9.50 per share.

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When shares are offered on a “best efforts” basis, the dealer manager is required to use only its best efforts to sell the shares and it has no firm commitment or obligation to purchase any of the shares. Therefore, we may sell substantially less than the maximum number shares that we are offering.

From commencement of the offering through April 16, 2010, we had sold 108,964,552 shares of common stock in this offering for gross offering proceeds of $1.1 billion, which includes 3,652,223 shares issued through our dividend reinvestment plan for gross proceeds of $34.7 million.

How long will this offering last?

We expect to offer the 200,000,000 shares registered in our primary offering until August 31, 2010. If we have not sold all of the shares registered in our primary offering by August 31, 2010, we may continue this offering until April 22, 2011. Under rules promulgated by the SEC, in some circumstances we could continue our primary offering until as late as October 19, 2011. If we decide to continue our primary offering beyond August 31, 2010, we will provide that information in a prospectus supplement. We may continue to offer shares under our dividend reinvestment plan beyond these dates until we have sold 80,000,000 shares through the reinvestment of distributions. In many states, we will need to renew the registration statement or file a new registration statement annually to continue the offering. We may terminate this offering at any time.

If our board of directors determines that it is in our best interest, we may conduct follow-on public offerings upon the termination of this offering. Our charter does not restrict our ability to conduct offerings in the future.

Who can buy shares?

An investment in our shares is only suitable for persons who have adequate financial means and who will not need immediate liquidity from their investment. Residents of most states can buy shares in this offering provided that they have either (1) a net worth of at least $70,000 and an annual gross income of at least $70,000 or (2) a net worth of at least $250,000. For the purpose of determining suitability, net worth does not include an investor’s home, home furnishings or personal automobiles. The minimum suitability standards are more stringent for investors in Alabama, Iowa, Kansas, Kentucky, Massachusetts, Michigan, Ohio, Oregon, Pennsylvania and Tennessee.

Who might benefit from an investment in our shares?

An investment in our shares may be beneficial for you if you meet the minimum suitability standards described in this prospectus, seek to diversify your personal portfolio with a real estate-based investment, seek to receive current income, seek to preserve capital, seek to obtain the benefits of potential long-term capital appreciation and are able to hold your investment for a time period consistent with our liquidity strategy. On the other hand, we caution persons who require immediate liquidity or guaranteed income, or who seek a short-term investment, that an investment in our shares will not meet those needs.

Is there any minimum investment required?

Yes. We require a minimum investment of $4,000. If you own the minimum investment in shares in any KBS-sponsored public program, you may invest less than the minimum amount set forth above, but in no event less than $100. After you have satisfied the minimum investment requirement, any additional purchases must be in increments of at least $100. The investment minimum for subsequent purchases does not apply to shares purchased pursuant to our dividend reinvestment plan.

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Are there any special restrictions on the ownership or transfer of shares?

Yes. Our charter contains restrictions on the ownership of our shares that prevent any one person from owning more than 9.8% of our aggregate outstanding shares unless exempted by our board of directors. These restrictions are designed to enable us to comply with ownership restrictions imposed on REITs by the Internal Revenue Code. Subsequent purchasers, i.e., potential purchasers of your shares, must also meet the net worth or income standards, and unless you are transferring all of your shares, you may not transfer your shares in a manner that causes you or your transferee to own fewer than the number of shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law.

Are there any special considerations that apply to employee benefit plans subject to ERISA or other retirement plans that are investing in shares?

Yes. The section of this prospectus entitled “ERISA Considerations” describes the effect the purchase of shares will have on individual retirement accounts and retirement plans subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), and/or the Internal Revenue Code. ERISA is a federal law that regulates the operation of certain tax-advantaged retirement plans. Any retirement plan trustee or individual considering purchasing shares for a retirement plan or an individual retirement account should carefully read this section of the prospectus.

We may make some investments that generate “excess inclusion income” which, when passed through to our tax-exempt stockholders, can be taxed as unrelated business taxable income (UBTI) or, in certain circumstances, can result in a tax being imposed on us. Although we do not expect the amount of such income to be significant, there can be no assurance in this regard.

May I make an investment through my IRA, SEP or other tax-deferred account?

Yes. You may make an investment through your individual retirement account (IRA), a simplified employee pension (SEP) plan or other tax-deferred account. In making these investment decisions, you should consider, at a minimum, (1) whether the investment is in accordance with the documents and instruments governing your IRA, plan or other account, (2) whether the investment satisfies the fiduciary and other requirements associated with your IRA, plan or other account, (3) whether the investment will generate UBTI to your IRA, plan or other account, (4) whether the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of your IRA, plan or other account, (5) whether you will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the IRA, plan or other account annually, and (6) whether the investment would constitute a prohibited transaction under applicable law.

How do I subscribe for shares?

If you choose to purchase shares in this offering, you will need to complete and sign a subscription agreement (in the form attached to this prospectus as Appendix A) for a specific number of shares and pay for the shares at the time of your subscription.

If I buy shares in this offering, how may I later sell them?

At the time you purchase the shares, they will not be listed for trading on any securities exchange or over-the-counter market. In fact, we expect that there will not be any public market for the shares when you purchase them, and we cannot be sure if one will ever develop. In addition, our charter imposes restrictions on the ownership of our common stock that will apply to potential purchasers of your shares. As a result, if you wish to sell your shares, you may not be able to do so promptly or at all, or you may only be able to sell them at a substantial discount from the price you paid.

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After you have held your shares for at least one year, you may be able to have your shares repurchased by us pursuant to our share redemption program. The prices at which we will initially redeem shares are as follows:

• The lower of $9.25 or 92.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least one year;

• The lower of $9.50 or 95.0% of the price paid to acquire the shares from us for stockholders who have held their shares for at least two years;

• The lower of $9.75 or 97.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least three years; and

• The lower of $10.00 or 100% of the price paid to acquire the shares from us for stockholders who have held their shares for at least four years.

Notwithstanding the above, once we establish an estimated value per share of our common stock that is not based on the price to acquire a share in our primary offering or a follow-on public offering, the redemption price per share for all stockholders would be equal to the estimated value per share, as determined by our advisor or another firm chosen for that purpose. The share redemption program document states that we expect to establish an estimated value per share no later than three years after the completion of our offering stage; however, to assist broker-dealers who sell shares in this offering meet their regulatory obligations, we currently expect to establish an estimated value per share after the completion of our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

The terms of our share redemption program are more generous with respect to redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence:

• There is no one-year holding requirement;

• Until we establish an estimated value per share, which we currently expect to be after the completion of our offering stage (as described above), the redemption price is the amount paid to acquire the shares from us; and

• Once we have established an estimated value per share, the redemption price will be the estimated value of the shares, as determined by our advisor or another firm chosen for that purpose.

In order for a determination of disability or incompetence to entitle a stockholder to these special redemption terms, the determination of disability or incompetence must be made by the government entities specified in the share redemption program.

The share redemption program also contains numerous restrictions on your ability to sell your shares to us. During each calendar year, redemptions are limited to the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. Further, during any calendar year, we may redeem no more than 5% of the weighted average number of shares outstanding during the prior calendar year. We also have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. We may amend, suspend or terminate the program at any time upon 30 days’ notice.

When will the company seek to list its shares of common stock or liquidate its assets?

We may seek to list our shares of common stock if our independent directors believe listing would be in the best interests of our stockholders. If we do not list our shares of common stock on a national securities exchange by March 31, 2018, our charter requires that we either:

• seek stockholder approval of the liquidation of the company; or

• if a majority of the conflicts committee determines that liquidation is not then in the best interests of our stockholders, postpone the decision of whether to liquidate the company.

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If a majority of the conflicts committee does determine that liquidation is not then in the best interests of our stockholders, our charter requires that the conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of our stockholders. If we sought and failed to obtain stockholder approval of our liquidation, our charter would not require us to list or liquidate, and we could continue to operate as before. If we sought and obtained stockholder approval of our liquidation, we would begin an orderly sale of our properties and other assets. The precise timing of such sales would take account of the prevailing real estate and financial markets, the economic conditions in the submarkets where our properties are located and the federal income tax consequences to our stockholders. In making the decision to apply for listing of our shares, our directors will try to determine whether listing our shares or liquidating our assets will result in greater value for stockholders.

One of the factors our board of directors will consider when making this determination is the liquidity needs of our stockholders. In assessing whether to list or liquidate, our board of directors would likely solicit input from financial advisors as to the likely demand for our shares upon listing. If, after listing, the board believed that it would be difficult for stockholders to dispose of their shares, then that factor would weigh against listing. However, this would not be the only factor considered by the board. If listing still appeared to be in the best long-term interest of our stockholders, despite the prospects of a relatively small market for our shares upon the initial listing, the board may still opt to list our shares of common stock in keeping with its obligations under Maryland law. The board would also likely consider whether there was a large demand to sell our shares when making decisions regarding listing or liquidation. The degree of participation in our dividend reinvestment plan and the number of requests for redemptions under the share redemption program at this time could be an indicator of stockholder demand to liquidate their investment.

Will I be notified of how my investment is doing?

Yes, we will provide you with periodic updates on the performance of your investment in us, including:

• detailed quarterly dividend reports;

• an annual report;

• supplements to the prospectus, provided quarterly during the primary offering; and

• three quarterly financial reports.

We will provide this information to you via one or more of the following methods, in our discretion and with your consent, if necessary:

• U.S. mail or other courier;

• facsimile;

• electronic delivery; or

• posting on our web site at www.kbsreitii.com.

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To assist the Financial Industry Regulatory Authority (“FINRA”) members and their associated persons that participate in this offering, pursuant to FINRA Conduct Rule 5110, we disclose in each annual report distributed to stockholders a per share estimated value of our shares, the method by which it was developed, and the date of the data used to develop the estimated value. In addition, KBS Capital Advisors, our advisor, prepares annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in our shares. For these purposes, KBS Capital Advisors estimated the value of our common shares as $10.00 per share as of December 31, 2009. The basis for this valuation is the fact that the offering price of our shares of common stock in this primary offering is $10.00 per share (ignoring purchase price discounts for certain categories of purchasers). Our advisor has indicated that it intends to use the most recent price paid to acquire a share in this offering (ignoring purchase price discounts for certain categories of purchasers) or follow-on public offerings as its estimated per share value of our shares until we have completed our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We currently expect to update the estimated value per share every 12 to 18 months thereafter. If our board of directors determines that it is in our best interest, we may conduct follow-on public offerings upon the termination of this offering. Our charter does not restrict our ability to conduct offerings in the future. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership.

Although this initial estimated value represents the most recent price at which most investors are willing to purchase shares in this primary offering, this reported value is likely to differ from the price at which a stockholder could resell his or her shares because (i) there is no public trading market for the shares at this time; (ii) the estimated value does not reflect, and is not derived from, the fair market value of our properties and other assets, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from our primary public offering is net of selling commissions, dealer manager fees, other organization and offering costs and acquisition and origination fees and expenses; (iii) the estimated value does not take into account how market fluctuations affect the value of our investments, including how the current disruptions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio.

When will I get my detailed tax information?

Your Form 1099-DIV tax information, if required, will be mailed by January 31 of each year.

Who can help answer my questions about the offering?

If you have more questions about the offering, or if you would like additional copies of this prospectus, you should contact your registered representative or contact:

KBS Capital Markets Group LLC

660 Newport Center Drive, Suite 1200

Newport Beach, California 92660

Telephone: (866) KBS-4CMG or (866) 527-4264

Fax: (949) 717-6201

www.kbs-cmg.com

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RISK FACTORS

An investment in our common stock involves various risks and uncertainties. You should carefully consider the following risk factors in conjunction with the other information contained in this prospectus before purchasing our common stock. The risks discussed in this prospectus could adversely affect our business, operating results, prospects and financial condition. This could cause the value of our common stock to decline and could cause you to lose all or part of your investment. The risks and uncertainties described below are not the only ones we face but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.

Risks Related to an Investment in Us

Because no public trading market for our shares currently exists, it will be difficult for our stockholders to sell their shares and, if they are able to sell their shares, it will likely be at a substantial discount to the public offering price.

Our charter does not require our directors to seek stockholder approval to liquidate our assets by a specified date, nor does our charter require our directors to list our shares for trading on a national securities exchange by a specified date. There is no public market for our shares and we currently have no plans to list our shares on a national securities exchange. Until our shares are listed, if ever, stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase standards. In addition, our charter prohibits the ownership of more than 9.8% of our stock, unless exempted by our board of directors, which may inhibit large investors from purchasing our shares. In its sole discretion, our board of directors could amend, suspend or terminate our share redemption program upon 30 days’ notice. Further, the share redemption program includes numerous restrictions that would limit a stockholder’s ability to sell his or her shares. We describe these restrictions in more detail under “Description of Shares—Share Redemption Program.” Therefore, it will be difficult for our stockholders to sell their shares promptly or at all. If a stockholder is able to sell his or her shares, it would likely be at a substantial discount to the public offering price. It is also likely that our shares would not be accepted as the primary collateral for a loan. Because of the illiquid nature of our shares, investors should purchase them only as a long-term investment and be prepared to hold them for an indefinite period of time.

If we are unable to find suitable investments, we may not be able to achieve our investment objectives or pay distributions.

Our ability to achieve our investment objectives and to pay distributions depends upon the performance of KBS Capital Advisors, our advisor, in the acquisition of our investments, including the determination of any financing arrangements, and the ability of our advisor to source loan origination opportunities for us. Competition from competing entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners seeking to sell. Additionally, disruptions and dislocations in the credit markets have materially impacted the cost and availability of debt to finance real estate acquisitions, which is a key component of our acquisition strategy. This lack of available debt could result in a further reduction of suitable investment opportunities and create a competitive advantage to other entities that have greater financial resources than we do. We will also depend upon the performance of our property managers in the selection of tenants and negotiation of leasing arrangements. Rising vacancies across commercial real estate have resulted in increased pressure on real estate investors and their property managers to find new tenants and keep existing tenants. In order to do so, we may have to offer inducements, such as free rent and tenant improvements, to compete for attractive tenants. We are also subject to competition in seeking to acquire real estate-related investments. The more shares we sell in this offering, the greater our challenge will be to invest all of the net offering proceeds on attractive terms. Our investors must rely entirely on the management abilities of KBS Capital Advisors, the property managers KBS Capital Advisors selects and the oversight of our board of directors. We can give no assurance that KBS Capital Advisors will be successful in obtaining suitable investments on financially attractive terms or that, if KBS Capital Advisors makes investments on our behalf, our objectives will be achieved. If we, through KBS Capital Advisors, are unable to find suitable investments promptly, we will hold the proceeds from this offering in an interest-bearing account or invest the proceeds in short-term assets. If we would continue to be unsuccessful in locating suitable investments, we may ultimately decide to liquidate. In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions and we may not be able to meet our investment objectives.

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Continued disruptions in the financial markets and uncertain economic conditions could adversely impact the commercial mortgage market as well as the market for real estate-related debt investments generally, which could hinder our ability to implement our business strategy and generate returns to our stockholders.

We intend to allocate approximately 30% to 40% of our portfolio to real estate-related investments such as mortgage, mezzanine, bridge and other loans; debt and derivative securities related to real estate assets, including mortgage-backed securities; and the equity securities of other REITs and real estate companies. The returns available to investors in these investments are determined by: (i) the supply and demand for such investments, (ii) the performance of the assets underlying the investments and (iii) the existence of a market for such investments, which includes the ability to sell or finance such investments.

During periods of volatility, the number of investors participating in the market may change at an accelerated pace. As liquidity or “demand” increases the returns available to investors on new investments will decrease. Conversely, a lack of liquidity will cause the returns available to investors on new investments to increase.

During 2008 and 2009, concerns pertaining to the deterioration of credit in the residential mortgage market have expanded to almost all areas of the debt capital markets including corporate bonds, asset-backed securities and commercial real estate bonds and loans. We cannot foresee when these markets will stabilize. This instability may interfere with the successful implementation of our business strategy.

Continued disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to service our existing indebtedness, our ability to refinance or secure additional debt financing on attractive terms and the values of our investments.

Despite certain recent positive economic indicators such as an improved stock market performance and improved access to capital for some companies, the capital and credit markets continue to be affected by the extreme volatility and disruption during 2008 and 2009. Liquidity in the global credit market is severely contracted by these market disruptions, making it costly to obtain new lines of credit or refinance existing debt. We rely on debt financing to finance our properties and we expect to continue to use debt to acquire properties and possibly other real estate-related investments. As a result of the ongoing credit market turmoil, we may not be able to refinance our existing indebtedness or to obtain additional debt financing on attractive terms. As such, we may be forced to use a greater proportion of our offering proceeds to finance our acquisitions, reducing the number of acquisitions we would otherwise make, and/or to dispose of some of our assets. If the current debt market environment persists we may modify our investment strategy in order to optimize our portfolio performance. Our options would include limiting or eliminating the use of debt and focusing on those higher yielding investments that do not require the use of leverage to meet our portfolio goals.

The continued disruptions in the financial markets and uncertain economic conditions could adversely affect the values of our investments. Turmoil in the capital markets has constrained equity and debt capital available for investment in commercial real estate, resulting in fewer buyers seeking to acquire commercial properties and possible increases in capitalization rates and lower property values. Furthermore, declining economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio and in the collateral securing our loan investments. These could have the following negative effects on us:

• the values of our investments in commercial properties could decrease below the amounts paid for such investments;

• the value of collateral securing our loan investments could decrease below the outstanding principal amounts of such loans;

• revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to pay dividends or meet our debt service obligations on debt financing; and/or

• revenues on the properties and other assets underlying our loan investments could decrease, making it more difficult for the borrower to meet its payment obligations to us, which could in turn make it more difficult for us to pay dividends or meet our debt service obligations on debt financing.

All of these factors could impair our ability to make distributions to our investors and decrease the value of an investment in us.

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We may suffer from delays in locating suitable investments, which could limit our ability to make distributions and lower the overall return on our stockholders’ investment.

We rely upon our sponsors and the other real estate professionals at our advisor, including Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr., to identify suitable investments. The private KBS-sponsored programs, especially those that are currently raising offering proceeds, as well as the institutional investors for whom KBS affiliates serve as investment advisors, also rely upon Messrs. Bren and Schreiber for investment opportunities. In addition, KBS REIT I, which is managed by our advisor, relies upon Messrs. Bren, Hall, McMillan and Schreiber to actively manage its assets , and the other public KBS programs—KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS REIT III—rely or will rely on Messrs. Bren, Hall, McMillan and Schreiber to identify potential investment opportunities and to actively management their assets. To the extent that our sponsors and the other real estate professionals at our advisor face competing demands upon their time at times when we have capital ready for investment, we may face delays in locating suitable investments. Further, the more money we raise in this offering, the more difficult it will be to invest the net offering proceeds promptly and on attractive terms. Therefore, the large size of this offering and the competition from other entities that may be better positioned to acquire the types of properties and other investments we desire to purchase increase the risk of delays in investing our net offering proceeds. Delays we encounter in the selection and acquisition or origination of income-producing assets would likely limit our ability to pay distributions to our stockholders and lower their overall returns. Further, if we acquire properties prior to the start of construction or during the early stages of construction, it will typically take several months to complete construction and rent available space. Therefore, our stockholders could suffer delays in the distribution of cash distributions attributable to those particular properties. Our stockholders should expect to wait at least several months after the closing of a property acquisition before receiving cash distributions attributable to that property.

Our stockholders will not have the opportunity to evaluate our investments before we make them, which makes our stockholders’ investment more speculative.

We will seek to invest substantially all of the net proceeds from the primary offering, after the payment of fees and expenses, in the acquisition of or investment in interests in real estate and real estate-related assets. However, because our stockholders will be unable to evaluate the economic merit of specific real estate projects before we invest in them, they will have to rely entirely on the ability of our advisor to select suitable and successful investment opportunities. Furthermore, our board of directors will have broad discretion in implementing policies regarding tenant or mortgagor creditworthiness and our stockholders will not have the opportunity to evaluate potential tenants, managers or borrowers. These factors increase the risk that our stockholders’ investment may not generate returns consistent with their expectations.

If we are unable to raise substantial funds, we will be limited in the number and type of investments we make and the value of our stockholders’ investment in us will fluctuate with the performance of the specific assets we acquire.

This offering is being made on a “best efforts” basis, meaning that our dealer manager is only required to use its best efforts to sell our shares and has no firm commitment or obligation to purchase any of the shares. As a result, the amount of proceeds we raise in this offering may be substantially less than the amount we would need to achieve a diversified portfolio of investments. If we are unable to raise substantial funds, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments that we make. In that case, the likelihood that any single asset’s performance would adversely affect our profitability will increase. Additionally, we are not limited in the number or size of our investments or the percentage of net proceeds we may dedicate to a single investment. Our stockholders’ investment in our shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. Further, we will have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds in this offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and cash flow and limiting our ability to make distributions.

We are a recently formed company; we and our advisor have limited operating histories, which makes our future performance difficult to predict.

We are a recently formed company and have a limited operating history. We were incorporated in the State of Maryland on July 12, 2007. Our stockholders should not assume that our performance will be similar to the past performance of other real estate investment programs sponsored by affiliates of our advisor, including KBS REIT I.

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Our advisor was formed on October 18, 2004. KBS REIT I, which launched its initial public offering and commenced real estate operations in 2006, was the first publicly offered investment program sponsored by Messrs. Bren, Hall, McMillan and Schreiber and advised by KBS Capital Advisors. The private KBS-sponsored programs were not subject to the up-front commissions, fees and expenses associated with a public offering nor all of the laws and regulations that will apply to us. For all of these reasons, our stockholders should be especially cautious when drawing conclusions about our future performance and they should not assume that it will be similar to the prior performance of other KBS-sponsored programs. Our limited operating history, our advisor’s limited operating history and the differences between us and the private KBS-sponsored programs significantly increase the risk and uncertainty our stockholders face in making an investment in our shares.

Because we are dependent upon our advisor and its affiliates to conduct our operations, any adverse changes in the financial health of our advisor or its affiliates or our relationship with them could hinder our operating performance and the return on our stockholders’ investment.

We are dependent on KBS Capital Advisors to manage our operations and our portfolio of real estate and real estate-related assets. Our advisor has a limited operating history and it will depend upon the fees and other compensation that it will receive from us and the other public KBS-sponsored programs in connection with the purchase, management and sale of assets to conduct its operations. Any adverse changes in the financial condition of KBS Capital Advisors or our relationship with KBS Capital Advisors could hinder its ability to successfully manage our operations and our portfolio of investments.

Our dealer manager, KBS Capital Markets Group, has a limited operating history and our ability to implement our investment strategy is dependent, in part, upon the ability of KBS Capital Markets Group to successfully conduct this offering, which makes an investment in us more speculative.

We have retained KBS Capital Markets Group, an affiliate of our advisor, to conduct this offering. KBS Capital Markets Group has a limited operating history. The initial public offering of KBS REIT I, which commenced its initial public offering in January 2006 and ceased offering shares in its primary initial public offering on May 30, 2008, was the first offering conducted by our dealer manager. This offering, which commenced in 2008, is the second public offering conducted by our dealer manager. KBS Capital Markets Group is also acting as dealer manager for KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT and will act as dealer manager for KBS REIT III. The success of our offering, and our ability to implement our business strategy, is dependent upon the ability of KBS Capital Markets Group to build and maintain a network of broker-dealers to sell our shares to their clients. If KBS Capital Markets Group is not successful in establishing, operating and managing this network of broker-dealers, our ability to raise proceeds through this offering will be limited and we may not have adequate capital to implement our investment strategy. If we are unsuccessful in implementing our investment strategy, our stockholders could lose all or a part of their investment.

If we pay distributions from sources other than our cash flow from operations, we will have less funds available for investment in properties and other assets and the overall return to our stockholders may be reduced.

Our organizational documents permit us, to the extent permitted by Maryland law, to pay distributions from any source. If we fund distributions from financings, the net proceeds from this offering or other sources, we will have less funds available for investment in properties and other real estate-related assets and the overall return to our stockholders may be reduced. Because we may receive income from interest or rents at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund capital expenditures and other expenses, we expect that at least during the early stages of our development and from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we have funded our distributions in part with third-party borrowings and expect to utilize third party borrowings in the future, if necessary, to help fund distributions. We may also fund such distributions from advances from our advisor or sponsors, from our advisor’s deferral of its asset management fee, from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments. To the extent distributions exceed cash flow from operations, a stockholder’s basis in our stock will be reduced and, to the extent distributions exceed a stockholder’s basis, the stockholder may recognize capital gain.

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The loss of or the inability to obtain key real estate and debt finance professionals at our advisor and key employees at our dealer manager could delay or hinder implementation of our investment strategies, which could limit our ability to make distributions and decrease the value of an investment in our shares.

Our success depends to a significant degree upon the contributions of Peter M. Bren, Keith D. Hall, Peter McMillan III, Charles J. Schreiber , Jr. and, through our dealer manager, Mike Crimmins, each of whom would be difficult to replace. Neither we nor our affiliates have employment agreements with Messrs. Bren, Hall, McMillan, Schreiber, or Crimmins. Messrs. Bren, Hall, McMillan, Schreiber and Crimmins may not remain associated with us. If any of these persons were to cease their association with us, our operating results could suffer. We do not intend to maintain key person life insurance on any person. We believe that our future success depends, in large part, upon our advisor’s and its affiliates’ ability to attract and retain highly skilled managerial, operational and marketing professionals. Competition for such professionals is intense, and our advisor and its affiliates may be unsuccessful in attracting and retaining such skilled individuals. Further, we intend to establish strategic relationships with firms that have special expertise in certain services or detailed knowledge regarding real properties in certain geographic regions. Maintaining such relationships will be important for us to effectively compete with other investors for properties and tenants in such regions. We may be unsuccessful in establishing and retaining such relationships. If we lose or are unable to obtain the services of highly skilled professionals or do not establish or maintain appropriate strategic relationships, our ability to implement our investment strategies could be delayed or hindered, and the value of our stockholders’ investment may decline.

Our rights and the rights of our stockholders to recover claims against our independent directors are limited, which could reduce our stockholders’ and our recovery against them if they negligently cause us to incur losses.

Maryland law provides that a director has no liability in that capacity if he performs his duties in good faith, in a manner he reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter provides that no independent director shall be liable to us or our stockholders for monetary damages and that we will generally indemnify them for losses unless they are grossly negligent or engage in willful misconduct. As a result, our stockholders and we may have more limited rights against our independent directors than might otherwise exist under common law, which could reduce our stockholders’ and our recovery from these persons if they act in a negligent manner. In addition, we may be obligated to fund the defense costs incurred by our independent directors (as well as by our other directors, officers, employees (if we ever have employees) and agents) in some cases, which would decrease the cash otherwise available for distribution to our stockholders.

We may change our targeted investments without stockholder consent.

We expect to allocate approximately 60% to 70% of our portfolio to investments in core properties and approximately 30% to 40% of our portfolio to real estate-related investments such as mortgage, mezzanine, bridge and other loans; debt and derivative securities related to real estate assets, including mortgage-backed securities; and the equity securities of other REITs and real estate companies. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time. Though this is our current target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments described in this prospectus. A change in our targeted investments or investment guidelines may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of our common stock and our ability to make distributions to our stockholders.

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Risks Related to Conflicts of Interest

KBS Capital Advisors and its affiliates, including all of our executive officers, some of our directors and other key real estate and debt finance professionals, face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders.

All of our executive officers, some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other affiliated KBS entities. KBS Capital Advisors and its affiliates receive substantial fees from us. These fees could influence our advisor’s advice to us as well as the judgment of affiliates of KBS Capital Advisors. Among other matters, these compensation arrangements could affect their judgment with respect to:

• the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement and the dealer-manager agreement;

• public offerings of equity by us, which entitle KBS Capital Markets Group to dealer-manager fees and will likely entitle KBS Capital Advisors to increased acquisition, origination and asset-management fees;

• sales of properties and other investments, which entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees;

• acquisitions of properties and other investments and originations of loans, which entitle KBS Capital Advisors to acquisition or origination fees and asset-management fees, and, in the case of acquisitions of investments from other KBS-sponsored programs, might entitle affiliates of KBS Capital Advisors to disposition fees and possible subordinated incentive fees in connection with its services for the seller;

• borrowings to acquire properties and other investments and to originate loans, which borrowings will increase the acquisition, origination and asset-management fees payable to KBS Capital Advisors;

• whether and when we seek to list our common stock on a national securities exchange, which listing could entitle KBS Capital Advisors to a subordinated incentive listing fee;

• whether we seek stockholder approval to internalize our management, which may entail acquiring assets (such as office space, furnishings and technology costs) and negotiating compensation for real estate, debt finance, management and accounting professionals at our advisor and its affiliates that may result in such individuals receiving more compensation from us than they currently receive from our advisor; and

• whether and when we seek to sell the company or its assets, which sale could entitle KBS Capital Advisors to a subordinated incentive fee.

The fees our advisor receives in connection with the acquisition, origination and management of assets are based on the cost of the investment, and not based on the quality of the investment or the quality of the services rendered to us. This may influence our advisor to recommend riskier transactions to us.

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KBS Capital Advisors faces conflicts of interest relating to the acquisition and origination of assets and leasing of properties and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets and obtain less creditworthy tenants, which could limit our ability to make distributions and reduce our stockholders’ overall investment return.

We rely on our sponsors and other key real estate professionals at our advisor, including Peter M. Bren, Keith Hall, Peter McMillan III and Charles J. Schreiber, Jr., to identify suitable investment opportunities for us. KBS REIT I, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS REIT III are also advised by KBS Capital Advisors and rely or will rely on our sponsors and many of the same real estate, debt finance, management and accounting professionals as will future public KBS-sponsored programs. Messrs. Bren and Schreiber and several of the other key real estate professionals at KBS Capital Advisors are also the key real estate professionals at KBS Realty Advisors and its affiliates, the advisors to the private KBS-sponsored programs and the investment advisors to institutional investors in real estate and real estate-related assets. As such, the other KBS-sponsored programs that are currently raising funds for investment and future programs all rely on many of the same group of real estate and debt finance professionals. Many investment opportunities that are suitable for us may also be suitable for other KBS programs and investors. When these real estate and debt finance professionals direct an investment opportunity to any KBS-sponsored program or KBS-advised investor, they, in their sole discretion, will offer the opportunity to the program or investor for which the investment opportunity is most suitable based on the investment objectives, portfolio and criteria of each program or investor. For so long as we are externally advised, our charter provides that it shall not be a proper purpose of the corporation for us to purchase real estate or any significant asset related to real estate unless our advisor has recommended the investment to us. Thus, the real estate and debt finance professionals of KBS Capital Advisors could direct attractive investment opportunities to other entities or investors. Such events could result in us investing in properties that provide less attractive returns, which may reduce our ability to make distributions to our stockholders.

We and other KBS-sponsored programs and KBS-advised investors also rely on these real estate professionals to supervise the property management and leasing of properties. If the KBS team of real estate professionals direct creditworthy prospective tenants to properties owned by another KBS-sponsored program or KBS-advised investor when they could direct such tenants to our properties, our tenant base may have more inherent risk and our properties’ occupancy may be lower than might otherwise be the case.

Further, Messrs. Bren, Hall, McMillan and Schreiber and existing and future KBS-sponsored programs and KBS-advised investors are generally not prohibited from engaging, directly or indirectly, in any business or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments. Messrs. Bren, Hall, McMillan and Schreiber have agreed to restrictions with respect to sponsoring another multi-family REIT while the KBS Legacy Partners Apartment REIT offering is ongoing.

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KBS Capital Advisors, the real estate and debt finance professionals assembled by our advisor, their affiliates and our officers will face competing demands relating to their time and this may cause our operations and our stockholders’ investment to suffer.

We rely on KBS Capital Advisors and the real estate and debt finance professionals our advisor has assembled, including Messrs. Bren, Hall, McMillan, Schreiber and Snyder and Ms. Yamane for the day-to-day operation of our business. KBS REIT I, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS REIT III are also advised by KBS Capital Advisors and rely or will rely on our sponsors and many of the same real estate, debt finance, management and accounting professionals as will future public KBS-sponsored programs. Further, our officers and directors are also officers and/or directors of some or all of the other public KBS-sponsored programs. In addition, Messrs. Bren and Schreiber are executive officers of KBS Realty Advisors and its affiliates, the advisors of the private KBS-sponsored programs and the investment advisors to institutional investors in real estate and real estate-related assets. As a result of their interests in other KBS programs, their obligations to other investors and the fact that they engage in and they will continue to engage in other business activities, on behalf of themselves and others, Messrs. Bren, Hall, McMillan, Schreiber and Snyder and Ms. Yamane will face conflicts of interest in allocating their time among us, KBS REIT I, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III, KBS Capital Advisors and other KBS-sponsored programs and other business activities in which they are involved. In addition, KBS Capital Advisors and KBS Realty Advisors and its affiliates share many of the same real estate, management and accounting professionals. During times of intense activity in other programs and ventures, these individuals may devote less time and fewer resources to our business than are necessary or appropriate to manage our business. Furthermore, some or all of these individuals may become employees of another KBS-sponsored program in an internalization transaction or, if we internalize our advisor, may not become our employees as a result of their relationship with other KBS-sponsored programs. If this occurs, the returns on our investments, and the value of our stockholders’ investment, may decline.

All of our executive officers, some of our directors and the key real estate and debt finance professionals assembled by our advisor face conflicts of interest related to their positions and/or interests in KBS Capital Advisors and its affiliates, including our dealer manager, which could hinder our ability to implement our business strategy and to generate returns to our stockholders.

All of our executive officers, some of our directors and the key real estate and debt finance professionals assembled by our advisor are also executive officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other affiliated KBS entities. Through KBS-affiliated entities, some of these persons also serve as the investment advisors to institutional investors in real estate and real estate-related assets and through KBS Capital Advisors and KBS Realty Advisors these persons serve as the advisor to KBS REIT I, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III and other KBS-sponsored programs. As a result, they owe fiduciary duties to each of these entities, their members and limited partners and these investors, which fiduciary duties may from time to time conflict with the fiduciary duties that they owe to us and our stockholders. Their loyalties to these other entities and investors could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our investment and leasing opportunities. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to make distributions to our stockholders and to maintain or increase the value of our assets.

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Because other real estate programs offered through our dealer manager are conducting offerings concurrently with our offering, our dealer manager may face potential conflicts of interest arising from competition among us and these other programs for investors and investment capital, and such conflicts may not be resolved in our favor.

Our dealer manager, KBS Capital Markets Group, also acts as the dealer manager for the initial public offerings of KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT. Both KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT are raising capital in their respective public offerings concurrently with our offering. In addition, KBS REIT III and future KBS-sponsored programs may seek to raise capital through public offerings conducted concurrently with our offering. As a result, our dealer manager may face conflicts of interest arising from potential competition with these other programs for investors and investment capital. Our sponsors generally seek to avoid simultaneous public offerings by programs that have a substantially similar mix of investment characteristics, including targeted investment types and key investment objectives. Nevertheless, there may be periods during which one or more programs sponsored by our sponsors will be raising capital and may compete with us for investment capital. Such conflicts may not be resolved in our favor and you will not have the opportunity to evaluate the manner in which these conflicts of interest are resolved before or after making your investment.

Our board’s loyalties to KBS REIT I and possibly to future KBS-sponsored programs could influence its judgment, resulting in actions that may not be in our stockholders’ best interest or that result in a disproportionate benefit to another KBS-sponsored program at our expense.

All of our directors are also directors of KBS REIT I. The loyalties of our directors serving on the board of KBS REIT I or possibly on the board of future KBS-sponsored programs may influence the judgment of our board when considering issues for us that also may affect other KBS-sponsored programs, such as the following:

• The conflicts committee of our board of directors must evaluate the performance of KBS Capital Advisors with respect to whether KBS Capital Advisors is presenting to us our fair share of investment opportunities. If our advisor is not presenting a sufficient number of investment opportunities to us because it is presenting many opportunities to another KBS-sponsored program or if our advisor is giving preferential treatment to another KBS-sponsored program in this regard, our conflicts committee may not be well suited to enforce our rights under the terms of the advisory agreement or to seek a new advisor.

• We could enter into transactions with other KBS-sponsored programs, such as property sales, acquisitions or financing arrangements. Decisions of the board or the conflicts committee regarding the terms of those transactions may be influenced by the board’s or committee’s loyalties to such other KBS-sponsored programs.

• A decision of the board or the conflicts committee regarding the timing of a debt or equity offering could be influenced by concerns that the offering would compete with an offering of other KBS-sponsored programs.

• A decision of the board or the conflicts committee regarding the timing of property sales could be influenced by concerns that the sales would compete with those of other KBS-sponsored programs.

Because our independent directors are also independent directors of KBS REIT I, they receive compensation for service on the board of KBS REIT I. Like us, KBS REIT I pays each independent director an annual retainer of $40,000 as well as compensation for attending meetings as follows: (i) $2,500 for each board meeting attended, (ii) $2,500 for each committee meeting attended (except that the committee chairman is paid $3,000 for each meeting attended), (iii) $2,000 for each teleconference board meeting attended, and (iv) $2,000 for each teleconference committee meeting attended (except that the committee chairman is paid $3,000 for each teleconference committee meeting attended). In addition, KBS REIT I reimburses directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.

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For the year ended December 31, 2009, the independent directors of KBS REIT I earned compensation as follows:

Independent Director	Compensation Earned in 2009(1)	Compensation Paid in 2009(1)
Hank Adler	$115,500(2)	$118,496
Barbara Cambon	$111,500(3)	$116,496
Stuart A. Gabriel, Ph.D	$112,000(4)	$110,996

⁽¹⁾ Compensation Paid in 2009 includes meeting fees earned during 2008 but paid or reimbursed in 2009 as follows: Mr. Adler $10,333; Ms. Cambon $13,333; and Mr. Gabriel $6,333.

⁽²⁾ This amount includes (i) fees earned for attendance at 12 board meetings, 12 conflicts committee meetings and six audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

⁽³⁾ This amount includes (i) fees earned for attendance at 11 board meetings, 11 conflicts committee meetings and five audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

⁽⁴⁾ This amount includes (i) fees earned for attendance at 12 board meetings, 12 conflicts committee meetings and six audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

Risks Related to This Offering and Our Corporate Structure

Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. To help us comply with the REIT ownership requirements of the Internal Revenue Code, our charter prohibits a person from directly or constructively owning more than 9.8% of our outstanding shares, unless exempted by our board of directors. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms or conditions of redemption of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

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Our stockholders’ investment return may be reduced if we are required to register as an investment company under the Investment Company Act; if we or our subsidiaries become an unregistered investment company, we could not continue our business.

Neither we nor any of our subsidiaries intend to register as investment companies under the Investment Company Act. If we or our subsidiaries were obligated to register as investment companies, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

• limitations on capital structure;

• restrictions on specified investments;

• prohibitions on transactions with affiliates; and

• compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, we will not be deemed to be an “investment company” if:

• we are not engaged primarily, nor hold ourselves out as being engaged primarily, nor propose to engage primarily, in the business of investing, reinvesting or trading in securities (the “Primarily Engaged Test”); and

• we are not engaged and do not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities and do not own or propose to acquire “investment securities” having a value exceeding 40% of the value of our total assets on an unconsolidated basis (the “40% Test”). “Investment securities” excludes U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

We believe that we and our Operating Partnership satisfy both tests above. With respect to the 40% Test, most of the entities through which we and our Operating Partnership own our assets are majority-owned subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7).

With respect to the Primarily Engaged Test, we and our Operating Partnership are holding companies. Through the majority-owned subsidiaries of our Operating Partnership, we and our Operating Partnership are primarily engaged in the non-investment company businesses of these subsidiaries.

We believe that most of the subsidiaries of our Operating Partnership may rely on Section 3(c)(5)(C) of the Investment Company Act for an exception from the definition of an investment company. (Any other subsidiaries of our Operating Partnership should be able to rely on the exceptions for private investment companies pursuant to Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act.) The SEC staff’s position on Section 3(c)(5)(C) generally requires that an issuer maintain at least 55% of its assets in “mortgages and other liens on and interests in real estate” (“Qualifying Assets”); at least 80% of its assets in Qualifying Assets plus real estate-related assets (“Real Estate-Related Assets”); and no more than 20% of the value of its assets in other than Qualifying Assets and Real Estate-Related Assets (“Miscellaneous Assets”). To constitute a Qualifying Asset under this 55% requirement, a real estate interest must meet various criteria; therefore, certain of our subsidiaries are limited with respect to the value and nature of the assets that they may own at any given time.

If, however, the value of the subsidiaries of our Operating Partnership that must rely on Section 3(c)(1) or Section 3(c)(7) is greater than 40% of the value of the assets of our Operating Partnership, then we and our Operating Partnership may seek to rely on the exception from registration under Section 3(c)(6) if we and our Operating Partnership are “primarily engaged,” through majority-owned subsidiaries, in the business of purchasing or otherwise acquiring mortgages and other interests in real estate. Although the SEC staff has issued little interpretive guidance with respect to Section 3(c)(6), we believe that we and our Operating Partnership may rely on Section 3(c)(6) if 55% of the assets of our Operating Partnership consist of, and at least 55% of the income of our Operating Partnership is derived from, majority-owned subsidiaries that rely on Section 3(c)(5)(C).

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To maintain compliance with the Investment Company Act, our subsidiaries may be unable to sell assets we would otherwise want them to sell and may need to sell assets we would otherwise wish them to retain. In addition, our subsidiaries may have to acquire additional assets that they might not otherwise have acquired or may have to forego opportunities to make investments that we would otherwise want them to make and would be important to our investment strategy. Moreover, SEC staff interpretations with respect to various types of assets are subject to change, which increases the risk of non-compliance and the risk that we may be forced to make adverse changes to our portfolio.

If we were required to register as an investment company but failed to do so, we would be prohibited from engaging in our business and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement and a court could appoint a receiver to take control of us and liquidate our business.

Rapid changes in the values of our assets may make it more difficult for us to maintain our qualification as a REIT or our exception from the definition of an investment company under the Investment Company Act.

If the market value or income potential of our qualifying real estate assets changes as compared to the market value or income potential of our non-qualifying assets, or if the market value or income potential of our assets that are considered “real estate-related assets” under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of our assets that are not considered “real estate-related assets” under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, we may need to modify our investment portfolio in order to maintain our REIT qualification or exception from the definition of an investment company. If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish. This difficulty may be exacerbated by the illiquid nature of many of the assets that we may own. We may have to make investment decisions that we otherwise would not make absent REIT and Investment Company Act considerations.

Our stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks our stockholders face.

Our board of directors determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. Our board’s broad discretion in setting policies and our stockholders’ inability to exert control over those policies increases the uncertainty and risks our stockholders face.

Our stockholders may not be able to sell their shares under our share redemption program and, if our stockholders are able to sell their shares under the program, they may not be able to recover the amount of their investment in our shares.

Our share redemption program includes numerous restrictions that limit our stockholders’ ability to sell their shares. Our stockholders must hold their shares for at least one year in order to participate in the share redemption program, except for redemptions sought upon a stockholder’s death, qualifying disability (as defined in the plan) or determination of incompetence (as defined in the plan). We limit the number of shares redeemed pursuant to the share redemption program as follows: (1) during any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year and (2) during each calendar year, redemptions will be limited to the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. Further, we have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. These limits may prevent us from accommodating all redemption requests made in any year. Our board may amend, suspend or terminate the share redemption program upon 30 days’ notice.

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The prices at which we will initially redeem shares under the program are as follows:

• The lower of $9.25 or 92.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least one year;

• The lower of $9.50 or 95.0% of the price paid to acquire the shares from us for stockholders who have held their shares for at least two years;

• The lower of $9.75 or 97.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least three years; and

• The lower of $10.00 or 100% of the price paid to acquire the shares from us for stockholders who have held their shares for at least four years.

Notwithstanding the above, once we establish an estimated value per share of common stock that is not based on the price to acquire a share in our primary offering or a follow-on public offering, the redemption price per share for all stockholders will be equal to the estimated value per share, as determined by our advisor or another firm chosen for that purpose. The share redemption program document states that we expect to establish an estimated value per share no later than three years after the completion of our offering stage; however, to assist broker-dealers who sell shares in this offering meet their regulatory obligations, we currently expect to establish an estimated value per share no later than the expiration of the first 18-month period in which we do not sell shares in a public equity offering. “Public equity offering” for this purpose does not include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in the Operating Partnership. The restrictions of our share redemption program severely limit our stockholders’ ability to sell their shares should they require liquidity and limit their ability to recover the value they invested.

If funds are not available from the dividend reinvestment plan offering for general corporate purposes, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under the share redemption program.

We depend on the proceeds from our dividend reinvestment plan for general corporate purposes, including capital expenditures on our real estate investments, tenant improvement costs and leasing costs related to our investments in real estate properties; reserves required by financings of our investments in real estate properties; the repayment of debt; and the repurchase of shares under our share redemption program. We cannot predict with any certainty how much, if any, dividend reinvestment plan proceeds will be available for general corporate purposes. If such funds are not available from the dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under the share redemption program.

The offering price of our shares was not established on an independent basis; the actual value of our stockholders’ investment may be substantially less than what they pay. We may use the most recent price paid to acquire a share in our offering or a follow-on public offering as the estimated value of our shares until we have completed our offering stage. Even when our advisor begins to use other valuation methods to estimate the value of our shares, the value of our shares will be based upon a number of assumptions that may not be accurate or complete.

We established the offering price of our shares on an arbitrary basis. The selling price of our shares bears no relationship to our book or asset values or to any other established criteria for valuing shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that our stockholders would receive upon liquidation. Further, the offering price may be significantly more than the price at which the shares would trade if they were to be listed on an exchange or actively traded by broker-dealers.

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To assist FINRA members and their associated persons that participate in this public offering of common stock, pursuant to FINRA Conduct Rule 5110, we disclose in each annual report distributed to stockholders a per share estimated value of the shares, the method by which it was developed, and the date of the data used to develop the estimated value. In addition, KBS Capital Advisors, our advisor, prepares annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in our shares. For these purposes, KBS Capital Advisors estimated the value of our common shares as $10.00 per share as of December 31, 2009. The basis for this valuation is the fact that the offering price of our shares of common stock in this primary offering is $10.00 per share (ignoring purchase price discounts for certain categories of purchasers). Our advisor has indicated that it intends to use the most recent price paid to acquire a share in this offering (ignoring purchase price discounts for certain categories of purchasers) or a follow-on public offering as its estimated per share value of our shares until we have completed our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. (For purposes of this definition, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership.) We currently expect to update the estimated value per share every 12 to 18 months thereafter. Our charter does not restrict our ability to conduct offerings in the future, and if our board of directors determines that it is in our best interest, we may conduct follow-on offerings upon the termination of this offering.

Although this initial estimated value represents the most recent price at which most investors are willing to purchase shares in this primary offering, this reported value is likely to differ from the price at which a stockholder could resell his or her shares because (i) there is no public trading market for the shares at this time; (ii) the estimated value does not reflect, and is not derived from, the fair market value of our properties and other assets, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from the primary offering is net of selling commissions, dealer manager fees, other organization and offering costs and acquisition and origination fees and expenses; (iii) the estimated value does not take into account how market fluctuations affect the value of our investments, including how the current disruptions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio.

When determining the estimated value of our shares by methods other than the last price paid to acquire a share in this primary offering, our advisor, or another firm we choose for that purpose, will estimate the value of our shares based upon a number of assumptions that may not be accurate or complete. Accordingly, these estimates may not be an accurate reflection of the fair market value of our investments and will not likely represent the amount of net proceeds that would result from an immediate sale of our assets.

Because the dealer manager is one of our affiliates, our stockholders will not have the benefit of an independent due diligence review of us, which is customarily performed in underwritten offerings; the absence of an independent due diligence review increases the risks and uncertainty our stockholders face.

Our dealer manager, KBS Capital Markets Group, is one of our affiliates. Because KBS Capital Markets Group is an affiliate, its due diligence review and investigation of us and our prospectus cannot be considered to be an independent review. Therefore, our stockholders do not have the benefit of an independent review and investigation of this offering of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.

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Our investors’ interest in us will be diluted if we issue additional shares, which could reduce the overall value of their investment.

Our common stockholders do not have preemptive rights to any shares we issue in the future. Our charter authorizes us to issue 1,010,000,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock. Our board of directors may increase the number of authorized shares of capital stock without stockholder approval. After our investors purchase shares in this offering, our board may elect to (1) sell additional shares in future public offerings (including through the dividend reinvestment plan), (2) issue equity interests in private offerings, (3) issue shares to our advisor, or its successors or assigns, in payment of an outstanding obligation or (4) issue shares of our common stock to sellers of properties or assets we acquire in connection with an exchange of limited partnership interests of the Operating Partnership. To the extent we issue additional equity interests after our investors purchase shares in this offering, their percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings, the use of the proceeds and the value of our real estate investments, our investors may also experience dilution in the book value and fair value of their shares.

Payment of fees to KBS Capital Advisors and its affiliates reduces cash available for investment and distribution and increases the risk that our stockholders will not be able to recover the amount of their investment in our shares.

KBS Capital Advisors and its affiliates perform services for us in connection with the selection and acquisition or origination of our investments, the management and leasing of our properties and the administration of our other investments. We pay them substantial fees for these services, which results in immediate dilution to the value of our stockholders’ investment and reduces the amount of cash available for investment or distribution to stockholders.

We may also pay significant fees during our listing/liquidation stage. Although most of the fees payable during our listing/liquidation stage are contingent on our investors first receiving agreed-upon investment returns, affiliates of KBS Capital Advisors could also receive significant payments even without our reaching the investment-return thresholds should we seek to become self-managed. Due to the apparent preference of the public markets for self-managed companies, a decision to list our shares on a national securities exchange might be preceded by a decision to become self-managed. Given our advisor’s familiarity with our assets and operations, we might prefer to become self-managed by acquiring entities affiliated with our advisor. Such an internalization transaction could result in significant payments to affiliates of our advisor irrespective of whether our stockholders enjoyed the returns on which we have conditioned other incentive compensation.

Therefore, these fees increase the risk that the amount available for distribution to common stockholders upon a liquidation of our portfolio would be less than stockholders paid for our shares. These substantial fees and other payments also increase the risk that our stockholders will not be able to resell their shares at a profit, even if our shares are listed on a national securities exchange.

If we are unable to obtain funding for future capital needs, cash distributions to our stockholders and the value of our investments could decline.

When tenants do not renew their leases or otherwise vacate their space, we will often need to expend substantial funds for improvements to the vacated space in order to attract replacement tenants. Even when tenants do renew their leases we may agree to make improvements to their space as part of our negotiation. If we need additional capital in the future to improve or maintain our properties or for any other reason, we may have to obtain funding from sources other than our cash flow from operations, such as borrowings or future equity offerings. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to our stockholders and could reduce the value of our stockholders’ investment.

Our stockholders may be more likely to sustain a loss on their investment because our sponsors do not have as strong an economic incentive to avoid losses as do sponsors who have made significant equity investments in their companies.

Our sponsors have only invested $200,000 in us through the purchase of 20,000 shares of our common stock at $10 per share. With this limited exposure, our investors may be at a greater risk of loss because our sponsors do not have as much to lose from a decrease in the value of our shares as do those sponsors who make more significant equity investments in their companies.

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Although we will not currently be afforded the protection of the Maryland General Corporation Law relating to deterring or defending hostile takeovers, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, “business combinations” between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Should our board opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law could provide similar anti-takeover protection. For more information about the business combination, control share acquisition and Subtitle 8 provisions of Maryland law, see “Description of Shares—Business Combinations,” “Description of Shares—Control Share Acquisitions” and “Description of Shares—Subtitle 8.”

General Risks Related to Investments in Real Estate

Economic and regulatory changes that impact the real estate market generally may decrease the value of our investments and weaken our operating results.

Our properties and their performance are subject to the risks typically associated with real estate, including:

• downturns in national, regional and local economic conditions;

• competition from other office and industrial buildings;

• adverse local conditions, such as oversupply or reduction in demand for office and industrial buildings and changes in real estate zoning laws that may reduce the desirability of real estate in an area;

• vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space;

• changes in the supply of or the demand for similar or competing properties in an area;

• changes in interest rates and the availability of permanent mortgage financing, which may render the sale of a property or loan difficult or unattractive;

• changes in tax (including real and personal property tax law), real estate, environmental and zoning laws; and

• periods of high interest rates and tight money supply.

Any of the above factors, or a combination thereof, could result in a decrease in our cash flows from operations and a decrease in the value of our investments, which would have an adverse effect on our operations, on our ability to pay distributions to our stockholders and on the value of our stockholders’ investment.

If our acquisitions fail to perform as expected, cash distributions to our stockholders may decline.

Since breaking escrow in June 2008, we have made acquisitions of properties and other real estate-related assets. If these assets do not perform as expected we may have less cash flow from operations available to fund distributions and investor returns may be reduced.

Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties.

A property may incur vacancies either by the expiration of tenant leases or the continued default of tenants under their leases. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash available to distribute to stockholders. In addition, the resale value of the property could be diminished because the market value of a particular property depends principally upon the value of the cash flow generated by the leases associated with that property. Such a reduction on the resale value of a property could also reduce the value of our stockholders’ investment.

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We depend on tenants for our revenue, and, accordingly, our revenue and our ability to make distributions to our stockholders is dependent upon the success and economic viability of our tenants.

The success of our investments materially depends upon the financial stability of the tenants leasing the properties we own. The inability of a single major tenant or a number of smaller tenants to meet their rental obligations would lower our net income. A default by a tenant on its lease payments would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord of a property and may incur substantial costs in protecting our investment and re-letting the property. Tenants may have the right to terminate their leases upon the occurrence of certain customary events of default and, in other circumstances, may not renew their leases or, because of market conditions, may be able to renew their leases on terms that are less favorable to us than the terms of their initial leases. Further, some of the properties in which we invest may be outfitted to suit the particular needs of the tenants. We may have difficulty replacing the tenants of these properties if the outfitted space limits the types of businesses that could lease that space without major renovation. Because the market value of a property depends principally upon the value of the leases associated with such property, we may incur a loss upon the sale of a property with significant vacant space. These events could cause us to reduce the amount of distributions to stockholders.

Our inability to sell a property when we want could limit our ability to pay cash distributions to our stockholders.

Many factors that are beyond our control affect the real estate market and could affect our ability to sell properties for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, we have a limited ability to vary our portfolio in response to changes in economic or other conditions. Further, before we can sell a property on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. However, we can give no assurance that we will have the funds available to correct such defects or to make such improvements. We may be unable to sell our properties at a profit. Our inability to sell properties at the time and on the terms we want could reduce our cash flow and limit our ability to make distributions to our stockholders and could reduce the value of our stockholders’ investment.

If we sell a property by providing financing to the purchaser, we will bear the risk of default by the purchaser, which could delay or reduce the distributions available to our stockholders.

If we decide to sell any of our properties, we intend to use our best efforts to sell them for cash; however, in some instances, we may sell our properties by providing financing to purchasers. When we provide financing to a purchaser, we will bear the risk that the purchaser may default, which could reduce our cash distributions to stockholders. Even in the absence of a purchaser default, the distribution of the proceeds of the sale to our stockholders, or the reinvestment of the proceeds in other assets, will be delayed until the promissory notes or other property we may accept upon a sale are actually paid, sold, refinanced or otherwise disposed.

Potential development and construction delays and resultant increased costs and risks may hinder our operating results and decrease our net income.

Although we expect that we will invest primarily in properties that have operating histories or whose construction is complete, from time to time we may acquire unimproved real property or properties that are under development or construction. Investments in such properties will be subject to the uncertainties associated with the development and construction of real property, including those related to re-zoning land for development, environmental concerns of governmental entities and/or community groups and our builders’ ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completing construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. These and other factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and the return on our investment could suffer.

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Competition with third parties in acquiring properties and other investments may reduce our profitability and the return on our stockholders’ investment.

We face competition from various entities for investment opportunities in commercial and office properties, including other REITs, pension funds, insurance companies, investment funds and companies, partnerships, and developers. Many of these entities have substantially greater financial resources than we do and may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of a tenant or the geographic location of its investments. Competition from these entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners seeking to sell. Additionally, disruptions and dislocations in the credit markets have materially impacted the cost and availability of debt to finance real estate acquisitions, which is a key component of our acquisition strategy. This lack of available debt could result in a further reduction of suitable investment opportunities and create a competitive advantage for other entities that have greater financial resources than we do. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we acquire properties and other investments at higher prices and/or by using less-than-ideal capital structures, our returns will be lower and the value of our assets may not appreciate or may decrease significantly below the amount we paid for such assets. If such events occur, our stockholders may experience a lower return on their investment.

Our joint venture partners could take actions that decrease the value of an investment to us and lower our stockholders’ overall return.

We may enter into joint ventures with third parties to acquire properties and other assets. We may also purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

• that our co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt;

• that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; or

• that such co-venturer, co-tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of our stockholders’ investment.

Costs imposed pursuant to governmental laws and regulations may reduce our net income and the cash available for distributions to our stockholders.

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the remediation of contamination associated with the release or disposal of solid and hazardous materials, the presence of toxic building materials, and other health and safety-related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Our tenants’ operations, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties, or damages we must pay will reduce our ability to make distributions and may reduce the value of our stockholders’ investment.

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The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury or other damage claims could reduce the amounts available for distribution to our stockholders.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damages. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage, or natural resource damage claims could reduce the amounts available for distribution to our stockholders.

All of our properties have been subject to Phase I environmental assessments at the time they were acquired; however, such assessments may not provide complete environmental histories due to limited available information about prior operations at the properties or other gaps in information at the time we acquire the property. If any of our properties were found to contain hazardous or toxic substances after our acquisition, the value of our investment could decrease below the amount paid for such investment. In addition, real estate-related investments in which we invest or originate may be secured by properties with recognized environmental conditions. Where we are secured creditors, we will attempt to acquire contractual agreements, including environmental indemnities, that protect us from losses arising out of environmental problems in the event the property is transferred by foreclosure or bankruptcy; however, no assurances can be given that such indemnities would fully protect us from responsibility for costs associated with addressing any environmental problems related to such properties.

Costs associated with complying with the Americans with Disabilities Act may decrease cash available for distributions.

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended. Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any funds used for Disabilities Act compliance will reduce our net income and the amount of cash available for distributions to our stockholders.

Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce our cash flows and the return on our stockholders’ investment.

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans. Such insurance policies may not be available at reasonable costs, if at all, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any of our properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss, which may reduce the value of our stockholders’ investment. In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to stockholders.

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Terrorist attacks and other acts of violence or war may affect the markets in which we plan to operate, which could delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.

Terrorist attacks or armed conflicts may directly impact the value of our properties through damage, destruction, loss or increased security costs. KBS-sponsored programs and KBS-advised investors have historically owned properties in major metropolitan areas. We expect that we will also invest in such markets. We may not be able to obtain insurance against the risk of terrorism because it may not be available or may not be available on terms that are economically feasible. The terrorism insurance that we obtain may not be sufficient to cover loss for damages to our properties as a result of terrorist attacks. The inability to obtain sufficient terrorism insurance or any terrorism insurance at all could limit our investment options as some mortgage lenders have begun to insist that specific coverage against terrorism be purchased by commercial owners as a condition of providing loans.

Risks Related to Real Estate-Related Investments

Our investments in real estate-related investments are subject to the risks typically associated with real estate.

Our investments in mortgage, mezzanine or other real estate loans will generally be directly or indirectly secured by a lien on real property (or the equity interests in an entity that owns real property) that, upon the occurrence of a default on the loan, could result in our taking ownership of the property. We will not know whether the values of the properties ultimately securing our loans will remain at the levels existing on the dates of origination of those loans. If the values of the underlying properties drop, our risk will increase because of the lower value of the security associated with such loans. In this manner, real estate values could impact the values of our loan investments. Our investments in mortgage-backed securities and other real estate-related investments may be similarly affected by real estate property values. Therefore, our real estate-related investments will be subject to the risks typically associated with real estate, which are described above under the heading “—General Risks Related to Investments in Real Estate.”

If we make or invest in mortgage, mezzanine, bridge or other real estate loans, our loans will be subject to interest rate fluctuations that will affect our returns as compared to market interest rates; accordingly, the value of our stockholders’ investment would be subject to fluctuations in interest rates.

If we make or invest in fixed rate, long-term loans and interest rates rise, the loans could yield a return that is lower than then-current market rates. If interest rates decrease, we will be adversely affected to the extent that loans are prepaid because we may not be able to reinvest the proceeds at as high of an interest rate. If we invest in variable-rate loans and interest rates decrease, our revenues will also decrease. For these reasons, if we invest in mortgage, mezzanine, bridge or other real estate loans, our returns on those loans and the value of our stockholders’ investment will be subject to fluctuations in interest rates.

The mortgage loans we invest in and the mortgage loans underlying the mortgage securities we invest in are subject to delinquency, foreclosure and loss, which could result in losses to us.

Commercial real estate loans are secured by multifamily or commercial property and are subject to risks of delinquency and foreclosure. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, regulations and fiscal policies, including environmental legislation, natural disasters, terrorism, social unrest and civil disturbances.

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In the event of any default under a mortgage loan held directly by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations. Foreclosure of a mortgage loan can be an expensive and lengthy process that could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.

Delays in liquidating defaulted mortgage loans could reduce our investment returns.

If we make or invest in mortgage loans and there are defaults under those mortgage loans, we may not be able to repossess and sell the underlying properties quickly. The resulting time delay could reduce the value of our investment in the defaulted mortgage loans. An action to foreclose on a property securing a mortgage loan is regulated by state statutes and regulations and is subject to many of the delays and expenses of other lawsuits if the defendant raises defenses or counterclaims. In the event of default by a mortgagor, these restrictions, among other things, may impede our ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all amounts due to us on the mortgage loan.

The mezzanine loans in which we may invest would involve greater risks of loss than senior loans secured by the same properties.

We expect to invest in mezzanine loans that take the form of subordinated loans secured by a pledge of the ownership interests of either the entity owning (directly or indirectly) the real property or the entity that owns the interest in the entity owning the real property. These types of investments may involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the real property and increasing the risk of loss of principal.

The B-Notes in which we may invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us.

We may invest in B-Notes. A B-Note is a mortgage loan typically (i) secured by a first mortgage on a single large commercial property or group of related properties and (ii) subordinated to an A-Note secured by the same first mortgage on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for B-Note holders after payment to the A-Note holders. Since each transaction is privately negotiated, B-Notes can vary in their structural characteristics and risks. For example, the rights of holders of B-Notes to control the process following a borrower default may be limited in certain investments. We cannot predict the terms of each B-Note investment. Further, B-Notes typically are secured by a single property, and so reflect the increased risks associated with a single property compared to a pool of properties.

Bridge loans may involve a greater risk of loss than conventional mortgage loans.

We may provide bridge loans secured by first-lien mortgages on properties to borrowers who are typically seeking short-term capital to be used in an acquisition, development or refinancing of real estate. The borrower may have identified an undervalued asset that has been undermanaged or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we may not recover some or all of our investment.

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In addition, owners usually borrow funds under a conventional mortgage loan to repay a bridge loan. We may, therefore, be dependent on a borrower’s ability to obtain permanent financing to repay our bridge loan, which could depend on market conditions and other factors. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and nonpayment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the bridge loan. To the extent we suffer such losses with respect to our investments in bridge loans, the value of our company and of our common stock may be adversely affected.

Investment in non-conforming and non-investment grade loans may involve increased risk of loss.

Loans we may acquire or originate may not conform to conventional loan criteria applied by traditional lenders and may not be rated or may be rated as non-investment grade. Non-investment grade ratings for these loans typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers’ credit history, the properties’ underlying cash flow or other factors. As a result, loans we acquire or originate may have a higher risk of default and loss than conventional loans. Any loss we incur may reduce distributions to stockholders and adversely affect the value of our common stock.

Our investments in subordinated loans and subordinated mortgage-backed securities may be subject to losses.

We may acquire or originate subordinated loans and invest in subordinated mortgage-backed securities. In the event a borrower defaults on a subordinated loan and lacks sufficient assets to satisfy our loan, we may suffer a loss of principal or interest. In the event a borrower declares bankruptcy, we may not have full recourse to the assets of the borrower, or the assets of the borrower may not be sufficient to satisfy the loan. If a borrower defaults on our loan or on debt senior to our loan, or in the event of a borrower bankruptcy, our loan will be satisfied only after the senior debt is paid in full. Where debt senior to our loan exists, the presence of intercreditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our remedies (through “standstill periods”), and control decisions made in bankruptcy proceedings relating to borrowers.

In general, losses on a mortgage loan included in a securitization will be borne first by the equity holder of the property, then by a cash reserve fund or letter of credit, if any, and then by the “first loss” subordinated security holder. In the event of default and the exhaustion of any equity support, reserve fund, letter of credit and any classes of securities junior to those in which we invest, we may not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage-backed securities, the securities in which we invest may effectively become the “first loss” position behind the more senior securities, which may result in significant losses to us.

Risks of cost overruns and non-completion of the construction or renovation of the properties underlying loans we make or acquire may materially adversely affect our investment.

The renovation, refurbishment or expansion by a borrower under a mortgaged or leveraged property involves risks of cost overruns and non-completion. Costs of construction or improvements to bring a property up to standards established for the market position intended for that property may exceed original estimates, possibly making a project uneconomical. Other risks may include: environmental risks and construction, rehabilitation and subsequent leasing of the property not being completed on schedule. If such construction or renovation is not completed in a timely manner, or if it costs more than expected, the borrower may experience a prolonged impairment of net operating income and may not be able to make payments on our investment and we may not recover some or all of our investment.

To close transactions within a time frame that meets the needs of borrowers of loans we may originate, we may perform underwriting analyses in a very short period of time, which may result in credit decisions based on limited information.

We may gain a competitive advantage by, from time to time, being able to analyze and close transactions within a very short period of time. Our underwriting guidelines require a thorough analysis of many factors, including the underlying property’s financial performance and condition, geographic market assessment, experience and financial strength of the borrower and future prospects of the property within the market. If we make the decision to extend credit to a borrower prior to the completion of one or more of these analyses, we may fail to identify certain credit risks that we would otherwise have identified.

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The CMBS in which we may invest are subject to all of the risks of the underlying mortgage loans and the risks of the securitization process.

CMBS, or commercial mortgage-backed securities, are securities that evidence interests in, or are secured by, a single commercial mortgage loan or a pool of commercial mortgage loans. Accordingly, these securities are subject to all of the risks of the underlying mortgage loans.

In a rising interest rate environment, the value of CMBS may be adversely affected when payments on underlying mortgages do not occur as anticipated, resulting in the extension of the security’s effective maturity and the related increase in interest rate sensitivity of a longer-term instrument. The value of CMBS may also change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. In addition, CMBS are subject to the credit risk associated with the performance of the underlying mortgage properties. In certain instances, third-party guarantees or other forms of credit support can reduce the credit risk.

CMBS are also subject to several risks created through the securitization process. Subordinate CMBS are paid interest only to the extent that there are funds available to make payments. To the extent the collateral pool includes delinquent loans, there is a risk that interest payments on subordinate CMBS will not be fully paid. Subordinate CMBS are also subject to greater credit risk than those CMBS that are more highly rated.

To the extent that we make investments in real estate-related securities, a portion of those investments may be illiquid and we may not be able to adjust our portfolio in response to changes in economic and other conditions.

Certain of the real estate-related securities that we may purchase in connection with privately negotiated transactions will not be registered under the relevant securities laws, resulting in a prohibition against their transfer, sale, pledge or other disposition except in a transaction that is exempt from the registration requirements of, or is otherwise in accordance with, those laws. As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited. The mezzanine and bridge loans we may purchase will be particularly illiquid investments due to their short life, their unsuitability for securitization and the greater difficulty of recoupment in the event of a borrower’s default.

Delays in restructuring or liquidating non-performing real estate securities could reduce the return on our stockholders’ investment.

Real estate securities may become non-performing after acquisition for a wide variety of reasons. Such non-performing real estate investments may require a substantial amount of workout negotiations and/or restructuring, which may entail, among other things, a substantial reduction in the interest rate and a substantial write-down of such loan or asset. However, even if a restructuring is successfully accomplished, upon maturity of such real estate security, replacement “takeout” financing may not be available. We may find it necessary or desirable to foreclose on some of the collateral securing one or more of our investments. Intercreditor provisions may substantially interfere with our ability to do so. Even if foreclosure is an option, the foreclosure process can be lengthy and expensive. Borrowers often resist foreclosure actions by asserting numerous claims, counterclaims and defenses, including, without limitation, lender liability claims and defenses, in an effort to prolong the foreclosure action. In some states, foreclosure actions can take up to several years or more to litigate. At any time during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure action and further delaying the foreclosure process. Foreclosure litigation tends to create a negative public image of the collateral property and may result in disrupting ongoing leasing and management of the property. Foreclosure actions by senior lenders may substantially affect the amount that we may earn or recover from an investment.

We will depend on debtors for our revenue, and, accordingly, our revenue and our ability to make distributions to our stockholders will be dependent upon the success and economic viability of such debtors.

The success of our real estate-related investments such as loans and debt and derivative securities will materially depend on the financial stability of the debtors underlying such investments. The inability of a single major debtor or a number of smaller debtors to meet their payment obligations could result in reduced revenue or losses. In the event of a debtor default or bankruptcy, we may experience delays in enforcing our rights as a creditor, and such rights may be subordinated to the rights of other creditors. These events could negatively affect the cash available for distribution to our stockholders and the value of our stockholders’ investment.

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Prepayments can adversely affect the yields on our investments.

The yields on our debt investments may be affected by the rate of prepayments differing from our projections. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. If we are unable to invest the proceeds of such prepayments received, the yield on our portfolio will decline. In addition, we may acquire assets at a discount or premium and if the asset does not repay when expected, our anticipated yield may be impacted. Under certain interest rate and prepayment scenarios we may fail to recoup fully our cost of acquisition of certain investments.

If credit spreads widen before we obtain long-term financing for our assets, the value of our assets may suffer.

We will price our assets based on our assumptions about future credit spreads for financing of those assets. We expect to obtain longer-term financing for our assets using structured financing techniques in the future. In such financings, interest rates are typically set at a spread over a certain benchmark, such as the yield on United States Treasury obligations, swaps, or LIBOR. If the spread that borrowers will pay over the benchmark widens and the rates we charge on our assets to be securitized are not increased accordingly, this may reduce our income or cause losses.

Hedging against interest rate exposure may adversely affect our earnings, limit our gains or result in losses, which could adversely affect cash available for distribution to our stockholders.

We may enter into interest rate swap agreements or pursue other interest rate hedging strategies. Our hedging activity will vary in scope based on the level of interest rates, the type of portfolio investments held, and other changing market conditions. Interest rate hedging may fail to protect or could adversely affect us because, among other things:

• interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates;

• available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought;

• the duration of the hedge may not match the duration of the related liability or asset;

• the amount of income that a REIT may earn from hedging transactions to offset interest rate losses is limited by federal tax provisions governing REITs;

• the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction;

• the party owing money in the hedging transaction may default on its obligation to pay; and

• we may purchase a hedge that turns out not to be necessary, i.e., a hedge that is out of the money.

Any hedging activity we engage in may adversely affect our earnings, which could adversely affect cash available for distribution to our stockholders. Therefore, while we may enter into such transactions to seek to reduce interest rate risks, unanticipated changes in interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged or liabilities being hedged may vary materially. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended accounting treatment and may expose us to risk of loss.

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Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks and costs.

The cost of using hedging instruments increases as the period covered by the instrument increases and during periods of rising and volatile interest rates. We may increase our hedging activity and thus increase our hedging costs during periods when interest rates are volatile or rising and hedging costs have increased. In addition, hedging instruments involve risk since they often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities. Consequently, there are no requirements with respect to record keeping, financial responsibility or segregation of customer funds and positions. Furthermore, the enforceability of agreements underlying derivative transactions may depend on compliance with applicable statutory, commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business failure of a hedging counterparty with whom we enter into a hedging transaction will most likely result in a default. Default by a party with whom we enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then-current market price. Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty, and we may not be able to enter into an offsetting contract in order to cover our risk. We cannot be certain that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.

Our investments in real estate-related debt securities and preferred and common equity securities will be subject to the specific risks relating to the particular issuer of the securities and may involve greater risk of loss than secured debt financings.

We may make equity investments in REITs and other real estate companies. We may target a public company that owns commercial real estate or real estate-related assets when we believe its stock is trading at a discount to that company’s net asset value. We may eventually seek to acquire or gain a controlling interest in the companies that we target. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time. We may also invest in debt securities and preferred equity securities issued by REITs and other real estate companies. Our investments in debt securities and preferred and common equity securities will involve special risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer. Issuers that are REITs and other real estate companies are subject to the inherent risks associated with real estate and real estate-related investments. Furthermore, debt securities and preferred and common equity securities may involve greater risk of loss than secured debt financings due to a variety of factors, including that such investments are generally unsecured and may also be subordinated to other obligations of the issuer. As a result, investments in debt securities and preferred and common equity securities are subject to risks of (i) limited liquidity in the secondary trading market, (ii) substantial market price volatility resulting from changes in prevailing interest rates, (iii) subordination to the prior claims of banks and other senior lenders to the issuer, (iv) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest redemption proceeds in lower yielding assets, (v) the possibility that earnings of the issuer may be insufficient to meet its debt service and distribution obligations and (vi) the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic downturn. These risks may adversely affect the value of outstanding debt securities and preferred and common equity securities and the ability of the issuers thereof to make principal, interest and/or distribution payments to us.

Declines in the market values of our investments may adversely affect periodic reported results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our stockholders.

A portion of our assets may be classified for accounting purposes as “available-for-sale.” These investments are carried at estimated fair value and temporary changes in the market values of those assets will be directly charged or credited to stockholders’ equity without impacting net income on the income statement. Moreover, if we determine that a decline in the estimated fair value of an available-for-sale security below its amortized value is other-than-temporary, we will recognize a loss on that security on the income statement, which will reduce our earnings in the period recognized.

A decline in the market value of our assets may adversely affect us particularly in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we were unable to post the additional collateral, we may have to sell assets at a time when we might not otherwise choose to do so. A reduction in credit available may reduce our earnings and, in turn, cash available for distribution to stockholders.

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Further, credit facility providers may require us to maintain a certain amount of cash reserves or to set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on equity. In the event that we are unable to meet these contractual obligations, our financial condition could deteriorate rapidly.

Market values of our investments may decline for a number of reasons, such as changes in prevailing market rates, increases in defaults, increases in voluntary prepayments for those investments that we have that are subject to prepayment risk, widening of credit spreads and downgrades of ratings of the securities by ratings agencies.

Some of our portfolio investments will be carried at estimated fair value as determined by us and, as a result, there may be uncertainty as to the value of these investments.

Some of our portfolio investments will be in the form of securities that are recorded at fair value but that have limited liquidity or are not publicly traded. The fair value of securities and other investments that have limited liquidity or are not publicly traded may not be readily determinable. We estimate the fair value of these investments on a quarterly basis. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on numerous estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. The value of our common stock could be adversely affected if our determinations regarding the fair value of these investments are materially higher than the values that we ultimately realize upon their disposal.

Risks Associated with Debt Financing

We obtain lines of credit, mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosure.

We may obtain lines of credit and long-term financing that may be secured by our properties and other assets. In some instances, we may acquire real properties by financing a portion of the price of the properties and mortgaging or pledging some or all of the properties purchased as security for that debt. We may also incur mortgage debt on properties that we already own in order to obtain funds to acquire additional properties, to fund property improvements and other capital expenditures, to pay distributions and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to the dividends-paid deduction and excluding net capital gain). We, however, can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms.

If we do mortgage a property and there is a shortfall between the cash flow from that property and the cash flow needed to service mortgage debt on that property, then the amount of cash available for distributions to stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, reducing the value of our stockholders’ investment. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds. We may give full or partial guaranties to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.

We may utilize repurchase agreements as a component of our financing strategy. Repurchase agreements economically resemble short-term, variable rate financing and usually require the maintenance of specific loan-to-collateral value ratios. If the market value of the assets subject to a repurchase agreement decline, we may be required to provide additional collateral or make cash payments to maintain the loan-to-collateral value ratios.

We may also obtain recourse debt to finance our acquisitions and meet our REIT distribution requirements. If we have insufficient income to service our recourse debt obligations, our lenders could institute proceedings against us to foreclose upon our assets. If a lender successfully forecloses upon any of our assets, our ability to pay cash distributions to our stockholders will be limited and our stockholders could lose all or part of their investment.

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High mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flows from operations and the amount of cash distributions we can make.

If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on a property, we run the risk of being unable to refinance part or all of the property when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance properties, our income could be reduced. We may be unable to refinance or may only be able to partly refinance properties if underwriting standards, including loan to value ratios and yield requirements, among other requirements, are more strict than when we originally financed the properties. If any of these events occurs, our cash flow could be reduced and/or we might have to pay down existing mortgages. This, in turn, would reduce cash available for distribution to our stockholders, could cause us to require additional capital and may hinder our ability to raise capital by issuing more stock or by borrowing more money.

We expect to use leverage in connection with our investments in real estate-related assets, which increases the risk of loss associated with this type of investment.

We may finance the acquisition and origination of certain real estate-related investments with warehouse lines of credit and repurchase agreements. In addition, we may engage in various types of securitizations in order to finance our loan originations. Although the use of leverage may enhance returns and increase the number of investments that we can make, it may also substantially increase the risk of loss. There can be no assurance that leveraged financing will be available to us on favorable terms or that, among other factors, the terms of such financing will parallel the maturities of the underlying assets acquired. If alternative financing is not available, we may have to liquidate assets at unfavorable prices to pay off such financing. The return on our investments and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions cause the cost of our financing to increase relative to the income that we can derive from the assets we acquire.

Our debt service payments will reduce our cash flow available for distributions. We may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or sale to satisfy our debt obligations. We may utilize repurchase agreements as a component of our financing strategy. Repurchase agreements economically resemble short-term, variable-rate financing and usually require the maintenance of specific loan-to-collateral value ratios. If the market value of the assets subject to a repurchase agreement decline, we may be required to provide additional collateral or make cash payments to maintain the loan-to-collateral value ratio. If we are unable to provide such collateral or cash repayments, we may lose our economic interest in the underlying assets. Further, credit facility providers and warehouse facility providers may require us to maintain a certain amount of cash reserves or to set aside unleveraged assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets. In the event that we are unable to meet these collateral obligations, our financial condition could deteriorate rapidly.

We may not be able to access financing sources on attractive terms, which could adversely affect our ability to execute our business plan.

We may finance our assets over the long-term through a variety of means, including repurchase agreements, credit facilities, issuance of commercial mortgage-backed securities, collateralized debt obligations and other structured financings. Our ability to execute this strategy will depend on various conditions in the markets for financing in this manner that are beyond our control, including lack of liquidity and greater credit spreads. We cannot be certain that these markets will remain an efficient source of long-term financing for our assets. If our strategy is not viable, we will have to find alternative forms of long-term financing for our assets, as secured revolving credit facilities and repurchase facilities may not accommodate long-term financing. This could subject us to more recourse indebtedness and the risk that debt service on less efficient forms of financing would require a larger portion of our cash flows, thereby reducing cash available for distribution to our stockholders and funds available for operations as well as for future business opportunities.

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Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan agreements we enter may contain covenants that limit our ability to further mortgage a property or that prohibit us from discontinuing insurance coverage or replacing KBS Capital Advisors as our advisor. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives.

Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

We expect that we will incur additional debt in the future and increases in interest rates will increase the cost of that debt, which could reduce the cash we have available for distributions. Additionally, if we incur variable rate debt, increases in interest rates would increase our interest costs, which would reduce our cash flows and our ability to pay distributions to our stockholders. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments.

We have broad authority to incur debt and high debt levels could hinder our ability to make distributions and decrease the value of our stockholders’ investment.

Our policies do not limit us from incurring debt until our borrowings would exceed 75% of the cost of our tangible assets (before deducting depreciation or other noncash reserves) and we may exceed this limit with the approval of the conflicts committee of our board of directors. See “Investment Objectives and Criteria—Borrowing Policies.” As of April 16, 2010, our borrowings were 13% of both the cost (before depreciation or other noncash reserves) and book value (before depreciation) of our tangible assets. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our stockholders’ investment.

Federal Income Tax Risks

Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Code. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax. For a discussion of the REIT qualification tests and other considerations relating to our election to be taxed as REIT, see “Federal Income Tax Considerations.”

Our stockholders may have current tax liability on distributions they elect to reinvest in our common stock.

If our stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. In addition, our stockholders will be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value. As a result, unless our stockholders are a tax-exempt entity, they may have to use funds from other sources to pay their tax liability on the value of the shares of common stock received. See “Description of Shares—Dividend Reinvestment Plan—Tax Consequences of Participation.”

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Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. For example:

• In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income.

• We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

• If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.

• If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our taxable REIT subsidiaries.

We intend to make distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

REIT distribution requirements could adversely affect our ability to execute our business plan.

From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders (for example, where a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise). If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

To maintain our REIT status, we may be forced to forego otherwise attractive opportunities, which may delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.

To qualify as a REIT, we must satisfy certain tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and the value of our stockholders’ investment.

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The “taxable mortgage pool” rules may increase the taxes that we or our stockholders incur and may limit the manner in which we conduct securitizations.

We may be deemed to be, or make investments in entities that own or are themselves deemed to be taxable mortgage pools. Similarly, certain of our securitizations or other borrowings could be considered to result in the creation of a taxable mortgage pool for federal income tax purposes. As a REIT, provided that we own 100% of the equity interests in a taxable mortgage pool, we generally would not be adversely affected by the characterization of the securitization as a taxable mortgage pool. Certain categories of stockholders, however, such as foreign stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax-exempt stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is attributable to the taxable mortgage pool. In addition, to the extent that our stock is owned by tax-exempt “disqualified organizations,” such as certain government-related entities that are not subject to tax on unrelated business income, we will incur a corporate-level tax on a portion of our income from the taxable mortgage pool. In that case, we are authorized to reduce and intend to reduce the amount of our distributions to any disqualified organization whose stock ownership gave rise to the tax by the amount of such tax paid by us that is attributable to such stockholder’s ownership. Moreover, we would be precluded from selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for federal income tax purposes. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions.

The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, that would be treated as sales for federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of assets, other than foreclosure property, deemed held primarily for sale to customers in the ordinary course of business. We might be subject to this tax if we were to dispose of or securitize loans in a manner that was treated as a sale of the loans for federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans at the REIT level, and may limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us.

It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through taxable REIT subsidiaries. However, to the extent that we engage in such activities through taxable REIT subsidiaries, the income associated with such activities may be subject to full corporate income tax.

The IRS may challenge our characterization of certain income from offshore taxable REIT subsidiaries.

We may form offshore corporate entities treated as taxable REIT subsidiaries. If we form such subsidiaries, we may receive certain “income inclusions” with respect to our equity investments in these entities. We intend to treat such income inclusions, to the extent matched by repatriations of cash in the same taxable year, as qualifying income for purposes of the 95% gross income test but not the 75% gross income test. See “Federal Income Tax Considerations—Taxation of KBS REIT II—Income Tests.” Because there is no clear precedent with respect to the qualification of such income inclusions for purposes of the REIT gross income tests, no assurance can be given that the IRS will not assert a contrary position. If such income does not qualify for the 95% gross income test, we could be subject to a penalty tax or we could fail to qualify as a REIT, in both events only if such inclusions (along with certain other non-qualifying income) exceed 5% of our gross income.

We may be subject to adverse legislative or regulatory tax changes.

At any time, the federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended. We cannot predict when or if any new federal income tax law, regulation or administrative interpretation, or any amendment to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in, or any new, federal income tax law, regulation or administrative interpretation.

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Retirement Plan Risks

If the fiduciary of an employee pension benefit plan subject to ERISA (such as profit sharing, Section 401(k) or pension plan) or any other retirement plan or account fails to meet the fiduciary and other standards under ERISA or the Internal Revenue Code as a result of an investment in our stock, the fiduciary could be subject to criminal and civil penalties.

There are special considerations that apply to employee benefit plans subject to the ERISA (such as profit sharing, Section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code (such as an IRA) that are investing in our shares. Fiduciaries investing the assets of such a plan or account in our common stock should satisfy themselves that:

• the investment is consistent with their fiduciary and other obligations under ERISA and the Internal Revenue Code;

• the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan’s or account’s investment policy;

• the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code;

• the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of the plan or IRA;

• the investment will not produce “unrelated business taxable income” for the plan or IRA;

• our stockholders will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and

• the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

With respect to the annual valuation requirements described above, we will provide an estimated value for our shares annually. We can give no assurances that such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common shares. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Internal Revenue Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to claims for damages or for equitable remedies. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Internal Revenue Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA custodians should consult with counsel before making an investment in our common shares.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements about our business, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. You should not rely on these forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements.

You should carefully review the “Risk Factors” section of this prospectus for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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ESTIMATED USE OF PROCEEDS

The following table sets forth information about how we intend to use the proceeds raised in this offering assuming that we sell the maximum of 280,000,000 shares of common stock. Many of the amounts set forth below represent management’s best estimate since they cannot be precisely calculated at this time. Depending primarily upon the number of shares we sell in this offering and assuming a $10.00 purchase price for shares sold in the primary offering, we estimate that we will use 84.30% to 88.38% of the gross proceeds from the primary offering, or between $8.43 and $8.84 per share, for investments, assuming the minimum offering amount of $2.5 million and the maximum offering amount, respectively. We will use the remainder of the gross proceeds from the primary offering to pay offering expenses, including selling commissions and the dealer manager fee, to maintain a working capital reserve and, upon investment in properties and other assets, to pay a fee to our advisor for its services in connection with the selection and acquisition or origination of our investments in real estate properties and real estate-related assets. Our distribution policy is not to use the proceeds of this offering to pay distributions, though our board can authorize such distributions under our organizational documents.

We expect to use substantially all of the net proceeds from the sale of shares under our dividend reinvestment plan for general corporate purposes, including, but not limited to, the repurchase of shares under our share redemption program; capital expenditures, tenant improvement costs and leasing costs related to our investments in real estate properties; reserves required by any financings of our investments in real estate properties; funding obligations under any of our real estate loans receivable; investments in real estate properties and real estate-related assets, which would include payment of acquisition fees or origination fees to our advisor; and the repayment of debt. We cannot predict with any certainty how much, if any, dividend reinvestment plan proceeds will be available for specific purposes. To the extent proceeds from our dividend reinvestment plan are used for investments in real estate properties and for real estate-related assets, sales under our dividend reinvestment plan will result in greater fee income for our advisor because of acquisition and origination fees as well as other fees.

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	280,000,000 Shares
	Primary Offering (200,000,000 shares) ($10.00/share)		Div. Reinv. Plan (80,000,000 shares) ($9.50/share)
	$	%	$	%
Gross Offering Proceeds	2,000,000,000	100.00%	760,000,000	100.00%
Selling Commissions and Dealer Manager Fee (1)	190,000,000	9.50%	0	0.00%
Additional Underwriting Compensation (2)	7,713,000	0.39%	0	0.00%
Other Organization and Offering Expenses (3)	10,120,000	0.50%	1,025,000	0.13%
Acquisition Fees (4)	9,279,818	0.46%	0	0.00%
Origination Fees (4)	5,302,753	0.27%	0	0.00%
Initial Working Capital Reserve (5)	10,000,000	0.50%	0	0.00%
Amount Available for Investment (6)	1,767,584,428	88.38%	758,975,000	99.87%

⁽¹⁾ This table and the following discussion assume that we sell all shares at the highest possible selling commissions and dealer manager fees (with no discounts to any categories of purchasers). Effective April 30, 2010, the maximum selling commissions and dealer manager fees we will pay upon the sale of shares in our primary offering will change from 6.0% and 3.5% of gross offering proceeds, respectively, to 6.5% and 3.0% of gross offering proceeds, respectively. This change will not affect the aggregate maximum amount of selling commissions and dealer manager fees payable in connection with the offering. Both before and after this change, the aggregate maximum amount of dealer manager fees and selling commissions payable in the offering is 9.5% of gross proceeds from the primary offering. To simplify the presentation in this table, we present selling commissions and dealer manager fees in the aggregate.

⁽²⁾ Includes all underwriting expenses (other than selling commissions and the dealer manager fee) to be paid by us in connection with this offering, including costs incurred in connection with holding educational conferences and attending retail seminars conducted by broker-dealers. If we raise the maximum offering amount, the total estimated amount of underwriting compensation that may be paid in connection with this offering equals approximately 9.89% of the gross proceeds from our primary offering. KBS Capital Advisors has agreed to reimburse us to the extent selling commissions, the dealer manager fee, additional underwriting compensation and other organization and offering expenses incurred by us exceed 15% of aggregate gross offering proceeds. See “Plan of Distribution.”

⁽³⁾ Includes all issuer organization and offering expenses to be paid by us in connection with the offering, including our legal, accounting, printing, mailing and filing fees, charges of our escrow holder and transfer agent, charges of our advisor for administrative services related to the issuance of shares in the offering, reimbursement of the bona fide due diligence expenses of broker-dealers, and amounts to reimburse KBS Capital Advisors for costs in connection with preparing supplemental sales materials. KBS Capital Advisors has agreed to reimburse us to the extent selling commissions, the dealer manager fee, additional underwriting compensation and other organization and offering expenses incurred by us exceed 15% of aggregate gross offering proceeds. See “Plan of Distribution.”

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⁽⁴⁾ For purposes of this table, we assumed 70% of our investments would be core properties and 30% of our investments would be loans. For all investments other than loans, we pay our advisor an acquisition fee equal to 0.75% of the cost of the investment, including acquisition expenses and any debt attributable to such investment. We incur customary acquisition expenses in connection with the acquisition (or attempted acquisition) of a property. With respect to investments in and originations of loans, we pay an origination fee to the advisor or its subsidiary in lieu of an acquisition fee. Origination fees are 1.0% of the amount funded by us to acquire or originate mortgage, mezzanine, bridge or other loans, including any expenses related to such investment and any debt we use to fund the acquisition or origination of the loan. We incur customary expenses related to our originations and acquisitions (or attempted origination or acquisition) of loans. See note 5 below.

This table excludes debt proceeds. To the extent we fund our investments with debt, as we expect, the amount available for investment and the amount of acquisition fees and/or origination fees will be proportionately greater. If we raise the maximum offering amount and our debt financing is equal to 65% of the cost of our real estate investments, then acquisition fees would be $26,513,766 and origination fees would be $15,150,724, assuming 70% of our investments are core properties and 30% of our investments are loans.

This table assumes that we will not use the net proceeds from the sale of shares under our dividend reinvestment plan to invest in real estate properties and real estate-related assets. To the extent we use the net proceeds from the dividend reinvestment plan to invest in real estate properties and real estate-related assets, our advisor or its subsidiary would earn the related acquisition or origination fees.

⁽⁵⁾ We do not expect to use more than 0.5% of the gross proceeds from our primary offering for working capital reserves. We may also use debt proceeds, our cash flow from operations and proceeds from our dividend reinvestment plan to meet our needs for working capital and to build a moderate level of cash reserves.

⁽⁶⁾ Amount available for investment from the primary offering will include customary acquisition and origination expenses (including expenses related to potential investments that we do not close), such as legal fees and expenses, costs of due diligence, travel and communication expenses, appraisals, accounting fees and expenses, title insurance premiums and other closing costs and miscellaneous expenses relating to the acquisition or origination of real estate properties and real estate-related investments. Until required in connection with investment in real estate properties or real estate-related assets, substantially all of the net proceeds of the offering and, thereafter, our working capital reserves, may be invested in short-term, highly liquid investments, including government obligations, bank certificates of deposit, short-term debt obligations and interest-bearing accounts or other authorized investments as determined by our board of directors. Amount available for investment from the primary offering may also include anticipated capital improvement expenditures and tenant leasing costs.

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MANAGEMENT

Board of Directors

We operate under the direction of our board of directors, the members of which are accountable to us and our stockholders as fiduciaries. The board is responsible for the management and control of our affairs. The board has retained KBS Capital Advisors to manage our day-to-day operations and our portfolio of real estate properties and real estate-related assets, subject to the board’s supervision. Because of the conflicts of interest created by the relationships among us, KBS Capital Advisors and various affiliates, many of the responsibilities of the board have been delegated to a committee that consists solely of independent directors. This committee is the conflicts committee and is discussed below and under “Conflicts of Interest.”

We have three independent directors. An “independent director” is a person who is not one of our officers or employees or an officer or employee of KBS Capital Advisors or its affiliates, has not been so for the previous two years and meets the other requirements set forth in our charter. Serving as a director of, or having an ownership interest in, another KBS-sponsored program will not, by itself, preclude independent-director status. Our independent directors also meet the director independence standards of the New York Stock Exchange, Inc.

Each director serves until the next annual meeting of stockholders and until his successor has been duly elected and qualified. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at any stockholder meeting constitutes a quorum. With respect to the election of directors, each candidate nominated for election to the board of directors must receive a majority of the votes present, in person or by proxy, in order to be elected. Therefore, if a nominee receives fewer “for” votes than “withhold” votes in an election, then the nominee will not be elected.

Although our board of directors may increase or decrease the number of directors, a decrease may not have the effect of shortening the term of any incumbent director. Any director may resign at any time or may be removed with or without cause by the stockholders upon the affirmative vote of at least a majority of all the votes entitled to be cast at a meeting called for the purpose of the proposed removal. The notice of the meeting will indicate that the purpose, or one of the purposes, of the meeting is to determine if the director shall be removed.

Unless otherwise provided by Maryland law, the board of directors is responsible for selecting its own nominees and recommending them for election by the stockholders, provided that the conflicts committee nominates replacements for any vacancies among the independent director positions. Unless filled by a vote of the stockholders as permitted by Maryland General Corporation Law, a vacancy that results from the removal of a director will be filled by a vote of a majority of the remaining directors. Any vacancy on the board of directors for any other cause will be filled by a majority of the remaining directors, even if such majority is less than a quorum.

Our directors are accountable to us and our stockholders as fiduciaries. This means that our directors must perform their duties in good faith and in a manner each director believes to be in our and our stockholders’ best interests. Further, our directors must act with such care as a prudent person in a similar position would use under similar circumstances, including exercising reasonable inquiry when taking actions. However, our directors and executive officers are not required to devote all of their time to our business and must only devote such time to our affairs as their duties may require. We do not expect that our directors will be required to devote a substantial portion of their time to us in discharging their duties.

In addition to meetings of the various committees of the board, which committees we describe below, we expect our directors to hold at least four regular board meetings each year. Our board has the authority to fix the compensation of all officers that it selects and may pay compensation to directors for services rendered to us in any other capacity, although we expect our conflicts committee would act on these matters.

Our general investment and borrowing policies are set forth in this prospectus. Our directors may establish further written policies on investments and borrowings and monitor our administrative procedures, investment operations and performance to ensure that our executive officers and advisor follow these policies and that these policies continue to be in the best interests of our stockholders. Unless modified by our directors, we will follow the policies on investments and borrowings set forth in this prospectus.

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Committees of the Board of Directors

Our board of directors may delegate many of its powers to one or more committees. Our charter requires that each committee consist of at least a majority of independent directors, and our board has two committees, the audit committee and the conflicts committee, that consist solely of independent directors.

Audit Committee

Our board of directors has established an audit committee that consists solely of independent directors. The audit committee assists the board in overseeing:

• our accounting and financial reporting processes;

• the integrity and audits of our financial statements;

• our compliance with legal and regulatory requirements;

• the qualifications and independence of our independent auditors; and

• the performance of our internal and independent auditors.

The audit committee selects the independent public accountants to audit our annual financial statements, reviews with the independent public accountants the plans and results of the audit engagement and considers and approves the audit and non-audit services and fees provided by the independent public accountants. The members of the audit committee are Hank Adler, Barbara R. Cambon and Stuart A. Gabriel, Ph.D.

Conflicts Committee

In order to reduce or eliminate certain potential conflicts of interest, our charter creates a conflicts committee of our board of directors consisting solely of all of our independent directors, that is, all of our directors who are not affiliated with our advisor. Our charter authorizes the conflicts committee to act on any matter permitted under Maryland law. Both the board of directors and the conflicts committee must act upon those conflict-of-interest matters that cannot be delegated to a committee under Maryland law. Our charter also empowers the conflicts committee to retain its own legal and financial advisors. See “Conflicts of Interest—Certain Conflict Resolution Measures.”

Our charter requires that the conflicts committee discharge the board’s responsibilities relating to the nomination of independent directors and the compensation of our independent directors. Our conflicts committee also discharges the board’s responsibilities relating to the compensation of our executives. Subject to the limitations in our charter and with stockholder approval, the conflicts committee may also create stock-award plans.

Executive Officers and Directors

We have provided below certain information about our executive officers and directors.

Name*	Age**	Positions
Peter M. Bren	76	President
Charles J. Schreiber, Jr.	58	Chairman of the Board, Chief Executive Officer and Director
Peter McMillan III	52	Executive Vice President, Treasurer, Secretary and Director
Keith D. Hall	51	Executive Vice President
David E. Snyder	39	Chief Financial Officer
Stacie K. Yamane	45	Chief Accounting Officer
Hank Adler	63	Independent Director
Barbara R. Cambon	56	Independent Director
Stuart A. Gabriel, Ph.D.	56	Independent Director

* The address of each executive officer and director listed is 620 Newport Center Drive, Suite 1300, Newport Beach, California 92660.

** As of April 16, 2010

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Peter M. Bren is our President, a position he has held since our inception in 2007. He is also the President of our advisor, KBS Capital Advisors, the President of KBS REIT I, KBS REIT III, and KBS Legacy Partners Apartment REIT. Mr. Bren has served as President of these entities since 2004, 2005, 2010 and 2009, respectively. Mr. Bren is also a sponsor of KBS Strategic Opportunity REIT. Other than de minimis amounts owned by family members or family trusts, Mr. Bren indirectly owns and controls a 33 ¹/3% interest in KBS Holdings LLC, which entity is the sole owner of our advisor and the dealer manager of this offering. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor.

Mr. Bren is also a principal of KBS Realty Advisors LLC and Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities were first registered as investment advisors with the SEC in 2002 and 1999, respectively. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. KBS Realty Advisors, together with KBS affiliates, including KBS Capital Advisors, has been involved in the investment in or management of over $10.9 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, and the investors in us and KBS REIT I.

Peter Bren oversees all aspects of KBS Capital Advisors’ and KBS Realty Advisors’ business activities, including the acquisition, management and disposition of assets. He is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. Mr. Bren is also responsible for investor relationships. Through KBS-affiliated entities, Mr. Bren has teamed with Mr. Schreiber since 1992 to acquire, manage, develop and sell high-quality U.S. commercial real estate assets for institutional investors.

Mr. Bren has been involved in real estate development, management, acquisition, disposition and financing for 40 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 16 years as the President of The Bren Company; a former Senior Partner of Lincoln Property Company; President of Lincoln Property Company, Europe; and Chairman of the Board and President of KBS Realty Advisors and KBS Capital Advisors. Mr. Bren is also a founding member of The Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management.

Charles J. Schreiber, Jr. is the Chairman of our board of directors and our Chief Executive Officer, positions he has held since our inception in 2007. He is also the Chief Executive Officer of our advisor and the Chairman of the Board and Chief Executive Officer of KBS REIT I and KBS REIT III. Mr. Schreiber has served in these positions for these entities since 2004, 2005 and 2010, respectively. He is also a sponsor of KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, which were formed in 2008 and 2009, respectively. Other than de minimis amounts owned by family members or family trusts, Mr. Schreiber indirectly owns and controls a 33 ¹ /3% interest in KBS Holdings LLC, which entity is the sole owner of our advisor and the dealer manager of this offering. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor.

Mr. Schreiber is also a principal of KBS Realty Advisors LLC and Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities were first registered as investment advisors with the SEC in 2002 and 1999, respectively. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. KBS Realty Advisors, together with KBS affiliates, including KBS Capital Advisors, has been involved in the investment in or management of over $10.9 billion of real estate investments on behalf of institutional investors and the investors in us and KBS REIT I.

As Chief Executive Officer of KBS Capital Advisors and KBS Realty Advisors, Mr. Schreiber oversees all operations of the companies, including the acquisition and management of individual investments for KBS-advised investors and their portfolios of income-producing real estate assets. He directs all facets of the company’s business activities. He is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. Mr. Schreiber is also responsible for investor relationships.

Mr. Schreiber has been involved in real estate development, management, acquisition, disposition and financing for more than 35 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 16 years. Prior to teaming with Mr. Bren in 1992, he served as the Executive Vice President of Koll Investment Management Services and Executive Vice President of Acquisitions/Dispositions for The Koll Company. During the mid-1970s through the 1980s, he was Founder and President of Pacific Development Company and was previously Senior Vice President/Southern California Regional Manager of Ashwill-Burke Commercial Brokerage.

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Mr. Schreiber graduated from the University of Southern California with a Bachelor’s Degree in Finance with an emphasis in Real Estate. During his four years at USC, he did graduate work in the then newly-formed Real Estate Department in the USC Graduate School of Business. He is currently an Executive Board Member for the USC Lusk Center for Real Estate at the University of Southern California Marshall School of Business/School of Policy, Planning and Development.

Our board of directors has concluded that Mr. Schreiber is qualified to serve as one of our directors and the Chairman of the Board for reasons including his extensive industry and leadership experience. With 35 years of real estate experience and 16 years of experience with debt-related investments, Mr. Schreiber has the depth and breadth of experience to implement our business strategy. He gained his understanding of the real estate and real estate-finance markets through hands-on experience with acquisitions, asset and portfolio management, asset repositioning, and dispositions. As our Chief Executive Officer and a principal of our external advisor, Mr. Schreiber is best-positioned to provide the board of directors with insights and perspectives on the execution of our business strategy, our operations and other internal matters. Further, as a principal of KBS-affiliated investment advisors and as Chief Executive Officer, Chairman of the Board and a director of KBS REIT I, Mr. Schreiber brings to the board demonstrated management and leadership ability.

Peter McMillan III is our Executive Vice President, Treasurer, Secretary and one of our directors, positions he has held since our inception in 2007. He is Executive Vice President, Treasurer, Secretary and a director of KBS REIT I and KBS REIT III, positions he has held since 2005 and 2010, respectively. In addition, Mr. McMillan is President and Chairman of the Board of KBS Strategic Opportunity REIT and Executive Vice President of KBS Legacy Partners Apartment REIT, positions he has held since the respective formations of these entities in 2008 and 2009. Mr. McMillan also owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 ¹/3% interest in KBS Holdings LLC, which entity is the sole owner of our advisor and the dealer manager of this offering. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor.

Mr. McMillan is a co-founder and the Managing Partner of Willowbrook Capital Group, LLC. Prior to forming Willowbrook in 2000, Mr. McMillan served as the Executive Vice President and Chief Investment Officer of SunAmerica Investments, Inc., which was later acquired by AIG. As Chief Investment Officer, he was responsible for over $75 billion in assets, including residential and commercial mortgage-backed securities, public and private investment grade and non-investment grade corporate bonds and commercial mortgage loans and real estate investments. Before joining SunAmerica in 1989, he served as Assistant Vice President for Aetna Life Insurance and Annuity Company with responsibility for the company’s $6 billion fixed income portfolios. Mr. McMillan received his Master of Business Administration in Finance from the Wharton Graduate School of Business at the University of Pennsylvania and his Bachelor of Arts Degree with honors in Economics from Clark University. Mr. McMillan is a director of Steinway Musical Instruments, Inc. and Metropolitan West Funds.

Our board of directors has concluded that Mr. McMillan is qualified to serve as one of our directors for reasons including his expertise in real estate finance and with real estate-related investments. With over 25 years of experience investing in and managing real estate-related debt investments, Mr. McMillan offers insights and perspective with respect to our real estate-related investment portfolio as well as our real estate portfolio. As one of our executive officers and a principal of our advisor, Mr. McMillan is also able to direct the board of directors to the critical issues facing our company. Further, his experiences as a director of KBS REIT I, Steinway Musical Instruments, Inc., Metropolitan West Funds and us provide him with an understanding of the requirements of serving on a public company board.

Keith D. Hall is our Executive Vice President, a position he has held since our inception in 2007. He is also the Executive Vice President of KBS REIT I and KBS REIT III and Chief Executive Officer and a director of KBS Strategic Opportunity REIT, positions he has held since 2005, 2010 and 2008. Mr. Hall is also a sponsor of KBS Legacy Partners Apartment REIT, which was formed in 2009. Mr. Hall also owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 ¹/3% interest in KBS Holdings LLC, which entity is the sole owner of our advisor and the dealer manager of this offering. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor.

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Mr. Hall is a co-founder of Willowbrook Capital Group, LLC, an asset management company. Prior to forming Willowbrook in 2000, Mr. Hall was a Managing Director at CS First Boston, where he managed CSFB’s distribution strategy and business development for the Principal Transaction Group’s $18 billion real estate securities portfolio. Mr. Hall’s two primary business unit responsibilities were Mezzanine Lending and Commercial Real Estate Development. Before joining CSFB in 1996, he served as a Director in the Real Estate Products Group at Nomura Securities, with responsibility for the company’s $6 billion annual pipeline of fixed-income, commercial mortgage-backed securities. Mr. Hall spent the 1980s as a Senior Vice President in the High Yield Department of Drexel Burnham Lambert’s Beverly Hills office, where he was responsible for distribution of the group’s high yield real estate securities. Mr. Hall received a Bachelor of Arts Degree with honors in Finance from California State University.

David E. Snyder is our Chief Financial Officer, a position he has held since December 2008. He is also the Chief Financial Officer of KBS REIT I and KBS REIT III, positions he has held since December 2008 and January 2010, respectively. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, which were formed in 2008 and 2009, respectively. In addition, in late November 2008, Mr. Snyder was appointed Chief Financial Officer of KBS Capital Advisors. He is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

From January 1998 to May 2008, Mr. Snyder was at Nationwide Health Properties, Inc. (“NHP”), a real estate investment trust specializing in healthcare related property. He served as the Vice President and Controller from July 2005 to February 2008 and Controller from January 1998 to July 2005. At NHP, Mr. Snyder was responsible for internal and external financial reporting, Sarbanes-Oxley compliance, budgeting, debt compliance, negotiation and documentation of debt and equity financing and the negotiation of acquisition and leasing documentation. In addition, Mr. Snyder was part of the senior management team that approved investments, determined appropriate financing and developed strategic goals and plans. As part of his investment and financing responsibilities, Mr. Snyder participated in the origination, modification and refinancing of mortgage loans made to customers, mortgages obtained on real estate and unsecured credit facilities.

Mr. Snyder was an adjunct accounting professor at Biola University from 1998 to 2005, teaching courses in auditing and accounting. He was the director of financial reporting at Regency Health Services, Inc., a skilled nursing provider, from November 1996 to December 1997. From October 1993 to October 1996, Mr. Snyder worked for Arthur Andersen LLP. Mr. Snyder received a Bachelor of Arts Degree in Business Administration with an emphasis in Accounting from Biola University in La Mirada, California. Mr. Snyder is a Certified Public Accountant.

Stacie K. Yamane is our Chief Accounting Officer and has served in that capacity since October 2008. From our inception in 2007 until December 2008, Ms. Yamane served as our Chief Financial Officer. She also held the position of Controller from 2007 until October 2008. Ms. Yamane is also the Fund Controller of our advisor and Chief Accounting Officer of KBS REIT I, KBS REIT III and KBS Legacy Partners Apartment REIT. She has been an officer of these entities since 2004, 2005, 2010 and 2009, respectively. In August 2009, she was also appointed Chief Accounting Officer of KBS Strategic Opportunity REIT.

In addition, Ms. Yamane serves as Senior Vice President/Controller, Portfolio Accounting for KBS Realty Advisors LLC, a position she has held since 2004. She served as a Vice President/ Portfolio Accounting with KBS-affiliated investment advisors from 1995 to 2004. At KBS Realty Advisors, Ms. Yamane is responsible for client accounting/ reporting for four real estate portfolios. These portfolios consist of industrial, office and retail properties as well as land parcels. Ms. Yamane works closely with portfolio managers, asset managers, property managers and clients to ensure the completion of timely and accurate accounting, budgeting and financial reporting. In addition, she assists in the supervision and management of KBS Realty Advisors’ accounting department.

Prior to joining an affiliate of KBS Realty Advisors in February of 1995, Ms. Yamane was an audit manager at Kenneth Leventhal & Company, a CPA firm specializing in real estate. During her eight years at Kenneth Leventhal & Company, Ms. Yamane performed or supervised a variety of auditing, accounting and consulting engagements including the audit of financial statements presented under the U.S. generally accepted accounting principles (“GAAP”) basis, as well as financial statements presented on a cash and tax basis, the valuation of asset portfolios and the review and analysis of internal control systems. Her experiences at KBS and Kenneth Leventhal & Company give her 20 years of real estate experience.

Ms. Yamane received a Bachelor of Arts Degree in Business Administration with a dual concentration in Accounting and Management Information Systems from California State University, Fullerton. She is a Certified Public Accountant (inactive California).

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Hank Adler is one of our independent directors. Professor Adler is also an independent director of KBS REIT I. He is currently an Assistant Professor of Accounting at Chapman University. Prior to his retirement from Deloitte & Touche, LLP in 2003, Professor Adler was a partner with that firm where he had been employed for over 30 years. He specialized in tax accounting and served as client service and tax partner for a variety of public and private companies. He received a Bachelor of Science in Accounting and a Master of Business Administration from the University of California, Los Angeles. Professor Adler currently serves on the board of directors, compliance committee and as chairman of the audit committee of Corinthian Colleges, Inc. From 1998 to 2007, he also chaired the Toshiba Senior Classic charity event, a PGA Senior Tour championship event. In the 1990s, he served on the board of trustees and as President of the Irvine Unified School District. From 1994 to 2006, he served on the board of directors of Hoag Hospital Memorial Presbyterian.

Our board of directors has concluded that Professor Adler is qualified to serve as one of our independent directors and as the chair of our audit committee for reasons including his extensive experience in public accounting. With over 30 years at one of the big four accounting firms, Professor Adler brings to our board critical insights to and an understanding of the accounting principles and financial reporting rules and regulations affecting our company. His expertise in evaluating the financial and operational results of public companies and overseeing the financial reporting process makes him a critical member of our board of directors and our audit committee. In addition, as a director of KBS REIT I, Corinthian Colleges, Inc. and us, Professor Adler is well aware of the corporate governance and regulatory issues facing public companies.

Barbara R. Cambon is one of our independent directors. Ms. Cambon is also an independent director of KBS REIT I. Since April 2009, she has served as Chief Operating Officer of Premium One Asset Management LLC, a company whose business focuses on providing investment management services to investors. Since October 2003, she has also served as a Managing Member of Snowcreek Management LLC, a real estate asset-management company whose business activities focus on residential development projects for institutional investors. As Managing Member, Ms. Cambon provides asset management services to an institutional partnership investment in residential real estate development. She has been in the real estate investment business for 25 years, principally working with institutional capital sources and investment programs. From November 1999 until October 2002, she served as a Principal of Los Angeles-based Colony Capital, LLC, a private real estate investment firm, and from April 2000 until October 2002 she also served as Chief Operating Officer of Colony. Prior to joining Colony in 1999, Ms. Cambon was President and Founder of Institutional Property Consultants, Inc., a real estate consulting company. She is a past Director and Chairman of the Board of the Pension Real Estate Association and past Director of the National Council of Real Estate Investment Fiduciaries. Ms. Cambon serves on the board of directors and on the audit and compensation committees of BioMed Realty Trust, Inc., on the board of Neighborhood National Bancorp and on the University of San Diego Burnham-Moores Real Estate Institute Policy Advisory Board. Ms. Cambon received a Master of Business Administration from Southern Methodist University and a Bachelor of Science Degree in Education from the University of Delaware.

Our board of directors has concluded that Ms. Cambon is qualified to serve as one of our independent directors and as the chair of our conflicts committee for reasons including her expertise in real estate investment and management. Ms. Cambon’s 25 years of experience investing in, managing and disposing of real estate on behalf of investors give her a wealth of knowledge and experiences from which to draw in advising our company. As a managing member of her own real estate asset-management company, Ms. Cambon is acutely aware of the operational challenges facing companies such as ours. Further, her service on the boards of KBS REIT I and BioMed Realty Trust, Inc., both public REITs, gives her additional perspective and insight into large public real estate companies such ours.

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Stuart A. Gabriel, Ph.D. is one of our independent directors. Professor Gabriel is also an independent director of KBS REIT I. Since June 2007, Professor Gabriel has served as Director and Arden Realty Chair at the Richard S. Ziman Center for Real Estate and Professor of Finance in the Anderson School of Management at the University of California, Los Angeles. Prior to joining UCLA he was Director and Lusk Chair in Real Estate at the USC Lusk Center for Real Estate, a position he held from 1999 to 2007. Professor Gabriel also served as Professor of Finance and Business Economics in the Marshall School of Business at the University of Southern California, a position he held from 1990 to 2007. In 2004, he was elected President of the American Real Estate and Urban Economics Association. Professor Gabriel serves on the editorial boards of Journal of Real Estate Finance and Economics, Journal of Housing Economics, Journal of Real Estate Research, Journal of Urban Economics, and Regional Science and Urban Economics. He is also a Fellow of the Homer Hoyt Institute for Advanced Real Estate Studies. Professor Gabriel has published extensively on topics of real estate finance and urban and regional economics. His teaching and academic research experience include analysis of real estate and real estate capital markets performance as well as structured finance products, including credit default swaps, commercial mortgage-backed securities and collateralized debt obligations. Also, he has received a number of awards at USC for outstanding graduate teaching. Professor Gabriel serves as a consultant to numerous corporate and governmental entities. Prior to joining the USC faculty in 1990, Professor Gabriel served on the economics staff of the Federal Reserve Board in Washington, D.C. He also has been a Visiting Scholar at the Federal Reserve Bank of San Francisco. Professor Gabriel holds a Ph.D. in Economics from the University of California, Berkeley.

Our board of directors has concluded that Professor Gabriel is qualified to serve as one of our independent directors for reasons including his extensive knowledge and understanding of the real estate and finance markets and real estate finance products. As a professor of real estate finance and economics, Professor Gabriel brings unique perspective to our board. His years of research and analysis of the real estate and finance markets make Professor Gabriel well-positioned to advise us with respect to our investment and financing strategy. This expertise also makes him an invaluable resource for assessing and managing risks facing our company. Through his experience as a director of us and KBS REIT I, he also has an understanding of the requirements of serving on a public company board.

Compensation of Directors

We compensate each of our independent directors with an annual retainer of $40,000. In addition, we pay independent directors for attending board and committee meetings as follows:

• $2,500 in cash for each board meeting attended.

• $2,500 in cash for each committee meeting attended, except that the chairman of the committee is paid $3,000 for each meeting attended.

• $2,000 in cash for each teleconference meeting of the board.

• $2,000 in cash for each teleconference meeting of any committee, except that the chairman of the committee is paid $3,000 for each teleconference meeting of the committee.

All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors. If a director is also one of our officers, we do not pay any compensation for services rendered as a director.

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Limited Liability and Indemnification of Directors, Officers, Employees and Other Agents

To the extent permitted by Maryland law, our charter limits the liability of our directors and officers to us and our stockholders for monetary damages and requires us to indemnify our directors, officers, KBS Capital Advisors and its affiliates for losses they may incur by reason of their service in that capacity if all of the following conditions are met:

• the party seeking exculpation or indemnification has determined, in good faith, that the course of conduct that caused the loss or liability was in our best interests;

• the party seeking exculpation or indemnification was acting on our behalf or performing services for us;

• in the case of an independent director, the liability or loss was not the result of gross negligence or willful misconduct by the independent director;

• in the case of a non-independent director, KBS Capital Advisors or one of its affiliates, the liability or loss was not the result of negligence or misconduct by the party seeking exculpation or indemnification; and

• the indemnification is recoverable only out of our net assets and not from the stockholders.

The SEC takes the position that indemnification against liabilities arising under the Securities Act of 1933 is against public policy and unenforceable. Furthermore, our charter prohibits the indemnification of our directors, KBS Capital Advisors, its affiliates or any person acting as a broker-dealer for liabilities arising from or out of a violation of state or federal securities laws, unless one or more of the following conditions are met:

• there has been a successful adjudication on the merits of each count involving alleged securities law violations;

• such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or

• a court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws.

Our charter further provides that the advancement of funds to our directors and to KBS Capital Advisors and its affiliates for reasonable legal expenses and other costs incurred in advance of the final disposition of a proceeding for which indemnification is being sought is permissible only if (in addition to the procedures required by Maryland law) all of the following conditions are satisfied: the proceeding relates to acts or omissions with respect to the performance of duties or services on our behalf; the legal proceeding was initiated by a third party who is not a stockholder or, if by a stockholder acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and the person seeking the advancement undertakes to repay the amount paid or reimbursed by us, together with the applicable legal rate of interest thereon, if it is ultimately determined that such person is not entitled to indemnification.

We have also purchased and will maintain insurance on behalf of all of our directors and officers against liability asserted against or incurred by them in their official capacities with us, whether or not we are required or have the power to indemnify them against the same liability.

The Advisor

Our advisor is KBS Capital Advisors. KBS Capital Advisors is a limited liability company that was formed in the State of Delaware on October 18, 2004. Our advisor has a limited operating history. As our advisor, KBS Capital Advisors has contractual and fiduciary responsibilities to us and our stockholders.

Peter M. Bren and Charles J. Schreiber, Jr. indirectly own a controlling interest in and are two of the managers of KBS Capital Advisors. Keith D. Hall and Peter McMillan III also indirectly own an ownership interest in KBS Capital Advisors and together act as the third manager of KBS Capital Advisors. Messrs. Bren, Hall, McMillan and Schreiber all actively participate in the management and operations of the advisor. For more information regarding the background and experience of Messrs. Bren, Hall, McMillan and Schreiber, see “Management—Executive Officers and Directors” and “—Other Affiliates—Our Sponsors.”

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Below is a brief description of the background and experience of the key real estate professionals at KBS Capital Advisors who are not also one of our executive officers.

James Chiboucas is Vice Chairman and Chief Legal Officer of KBS Capital Advisors. Mr. Chiboucas has served as the Chief Legal Officer of KBS Realty Advisors since its formation and the Chief Legal Officer of the other KBS-affiliated investment advisors since 1996. He became Vice Chairman of KBS Realty Advisors in 2006. He has represented KBS since the first investment advisor was formed in 1992. As Vice Chairman and Chief Legal Officer, Mr. Chiboucas is responsible for the negotiation and documentation of the company’s real estate investments across the United States, including management of local counsel in each of the jurisdictions involved with acquisitions and dispositions. He is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. He also manages legal counsel retained to provide services for KBS Capital Advisors and KBS Realty Advisors.

Mr. Chiboucas has over 30 years of legal experience in the real estate industry, including real estate investment, finance, acquisitions, dispositions, development and management. Before joining KBS, Mr. Chiboucas was a partner of Paone, Callahan, McHolm & Winton, L.L.P. and Vice-President of Signal Landmark, a national real estate development company, where he was responsible for all of Signal Landmark’s legal real estate transactional matters across the United States. Mr. Chiboucas received a Bachelor’s Degree in Business and a Juris Doctorate degree from the University of Southern California.

William Milligan is Regional President, Western United States of KBS Capital Advisors. He has also served as Regional President, Western United States of KBS Realty Advisors since March 2002. As Regional President, Mr. Milligan oversees asset management and directs acquisition and disposition operations within the Western United States. Mr. Milligan is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. Milligan first joined an investment advisor affiliated with KBS in 1996 as Senior Vice President of Dispositions. In early 2000, he was promoted to Executive Vice President of KBS Realty Advisors. The following year, Mr. Milligan also became Director of Asset and Portfolio Management for the company on a national basis, overseeing the entire KBS portfolio of properties. Prior to joining KBS, Mr. Milligan worked at CB Richard Ellis as Sr. Vice President for 16 years. Mr. Milligan graduated from the University of Southern California with a Bachelor’s Degree from the School of Business Administration.

Kenneth L. McKay is Regional President, Central United States of KBS Capital Advisors. He has also served as Regional President, Central United States of KBS Realty Advisors since March 2002. As Regional President, he is responsible for acquisition, asset management and disposition activities within the Central United States. Mr. McKay is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. Mr. McKay first joined an investment advisor affiliated with KBS in 1994 as Vice President where he was responsible for portfolio management activities on equity real estate and non-performing mortgages.

Mr. McKay has been involved in the commercial real estate industry for over 30 years with professional experience in portfolio management, asset management, non-performing loans, sales and marketing, leasing and development. Mr. McKay has also previously held positions as Vice President of Western Federal Savings & Loan, Director of Sales and Marketing for The Irvine Company, and Associate Director of Commercial Property for the Mission Viejo Company.

Mr. McKay is a member of the State Bar of California and holds a California real estate broker’s license. Mr. McKay graduated from Oregon State University with a Bachelor’s Degree in Business Administration and received a Juris Doctorate in Law from California Western School of Law.

Charles B. Lindwall is Regional President, Eastern United States of KBS Capital Advisors. He has also served as Regional President, Eastern United States of KBS Realty Advisors since March 2002. As Regional President for the Eastern United States, Mr. Lindwall is responsible for all acquisitions, dispositions and asset management activities in the Northeast, Mid-Atlantic, Southeast and Ohio. Mr. Lindwall is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. Mr. Lindwall first joined an investment advisor affiliated with KBS in 1994 as Senior Vice President, Acquisitions and opened the Boston office of the company.

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Prior to joining KBS, Mr. Lindwall was a Senior Vice President of Koll Management Services, managing the company’s property management operations in Los Angeles and then in New England. Mr. Lindwall has been involved in the commercial real estate industry for over 32 years with professional experience in acquisitions, asset management, dispositions and development management as well as corporate real estate.

Mr. Lindwall graduated from the University of California, Santa Barbara with a Bachelor’s Degree in Political Science and earned a Master of Business Administration from the University of California, Los Angeles.

Lori A. Lewis is Executive Vice President, Director of Portfolio Operations of KBS Capital Advisors. She has also served as Executive Vice President, Director of Portfolio Operations for KBS Realty Advisors since April 2007. As Executive Vice President, Director of Portfolio Operations, Ms. Lewis oversees all acquisition underwriting/transaction management, financing and portfolio operations. Ms. Lewis directs a team of underwriting and financing professionals dedicated to managing, underwriting, closing and financing acquisitions for KBS-advised programs and investors. She is also directly responsible for on-going Portfolio Operation activities and investor correspondence for KBS-advised programs and investors. Ms. Lewis is also a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Prior to becoming Director of Portfolio Operations in 2002, Ms. Lewis was Vice President of Acquisitions and Director of Underwriting for KBS. Ms. Lewis first joined KBS in 1996. Before joining KBS, Ms. Lewis valued commercial real estate as a consultant for several Orange County based consulting and appraisal firms. During her 10 years as a consultant, Ms. Lewis performed asset valuations on a multitude of institutional grade commercial, industrial, residential and special purpose real estate. Ms. Lewis graduated from Biola University with a Bachelor’s Degree in Business Administration.

The Advisory Agreement

Under the terms of the advisory agreement, KBS Capital Advisors must use its best efforts to present to us investment opportunities that provide a continuing and suitable investment program for us consistent with our investment policies and objectives as adopted by our board of directors. Pursuant to the advisory agreement, KBS Capital Advisors manages our day-to-day operations, retains the property managers for our property investments (subject to the authority of our board of directors and officers) and performs other duties, including, but not limited to, the following:

• finding, presenting and recommending to us real estate property and real estate-related investment opportunities consistent with our investment policies and objectives;

• structuring the terms and conditions of our investments, sales and joint ventures;

• acquiring properties and other investments on our behalf in compliance with our investment objectives and policies;

• sourcing and structuring our loan originations;

• arranging for financing and refinancing of properties and our other investments;

• entering into leases and service contracts for our properties;

• supervising and evaluating each property manager’s performance;

• reviewing and analyzing the properties’ operating and capital budgets;

• assisting us in obtaining insurance;

• generating an annual budget for us;

• reviewing and analyzing financial information for each of our assets and the overall portfolio;

• formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of our properties and other investments;

• performing investor-relations services;

• maintaining our accounting and other records and assisting us in filing all reports required to be filed with the SEC, the IRS and other regulatory agencies;

• engaging and supervising the performance of our agents, including our registrar and transfer agent; and

• performing any other services reasonably requested by us.

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See “Management Compensation” for a detailed discussion of the fees payable to KBS Capital Advisors under the advisory agreement. We also describe in that section our obligation to reimburse KBS Capital Advisors for organization and offering expenses, the costs of providing services to us (other than for the employee costs in connection with services for which it earns acquisition, origination or disposition fees, though we may reimburse the advisor for travel and communication expenses) and payments made by KBS Capital Advisors in connection with potential investments, whether or not we ultimately acquire or originate the investment.

The advisory agreement has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of KBS Capital Advisors and us. Additionally, either party may terminate the advisory agreement without penalty upon 60 days’ written notice and, in such event, KBS Capital Advisors must cooperate with us and our directors in making an orderly transition of the advisory function. Upon termination of the advisory agreement, KBS Capital Advisors may be entitled to a termination fee if (based upon an independent appraised value of the portfolio) KBS Capital Advisors would have been entitled to a subordinated participation in net cash flows had the portfolio been liquidated on the termination date. The termination fee would be payable in the form of a promissory note that becomes due only upon the sale, maturity or payoff of one or more assets. The fee is payable solely from the proceeds from the sale, maturity or payoff of an asset and future asset sales, maturities or payoffs, and all of such proceeds must be used to repay the promissory note until it is fully paid. The amount of the termination fee would be 15% of the amount by which (i) the hypothetical liquidation proceeds exceed (ii) the amount necessary to provide investors with a return of their net capital contributions and an 8.0% per year cumulative, noncompounded return through the termination date; however, the agreement does not require that the investors actually have received such return prior to issuance of the promissory note or payments under it. The amount due under the promissory note would not be adjusted upwards or downwards to reflect any difference in the appraised value of our portfolio at termination and the amount ultimately realized by us. For more information regarding the terms of the advisory agreement, see “Management Compensation.”

KBS Capital Advisors and its affiliates engage in other business ventures, and, as a result, they will not dedicate their resources exclusively to our business. However, pursuant to the advisory agreement, KBS Capital Advisors must devote sufficient resources to our business to discharge its obligations to us. KBS Capital Advisors may assign the advisory agreement to an affiliate upon our approval. We may assign or transfer the advisory agreement to a successor entity.

Initial Investment by Our Advisor

Our sponsors have invested $200,000 in us through the purchase of 20,000 shares of our common stock at $10 per share. KBS Capital Advisors is the owner of these 20,000 shares. KBS Capital Advisors may not sell any of these shares during the period it serves as our advisor. Although nothing prohibits KBS Capital Advisors or its affiliates from acquiring additional shares of our common stock, KBS Capital Advisors currently has no options or warrants to acquire any shares. KBS Capital Advisors has agreed to abstain from voting any shares it acquires in any vote for the election of directors or any vote regarding the approval or termination of any contract with KBS Capital Advisors or any of its affiliates. KBS Capital Advisors is indirectly owned and controlled by Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr., who are our sponsors.

Other Affiliates

Our Sponsors

Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. control and indirectly own our advisor and the dealer manager of this offering. We refer to these individuals as our “sponsors.” They are also our executive officers. All four of our sponsors actively participate in the management and operations of our advisor, and our advisor has three managers: an entity owned and controlled by Mr. Bren; an entity owned and controlled by Messrs. Hall and McMillan; and an entity owned and controlled by Mr. Schreiber.

Messrs. Bren and Schreiber each have been involved in real estate development, management, acquisition, disposition and financing for more than 35 years. Since 1992, Messrs. Bren and Schreiber have teamed to invest in, manage, develop and sell high-quality U.S. commercial real estate assets for institutional investors. Together, they founded KBS Realty Advisors, an investment advisor registered with the SEC and a nationally recognized real estate investment advisor.

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When we refer to a “KBS-sponsored” fund or program, we are referring to the private entities sponsored by an investment advisor affiliated with Messrs. Bren and Schreiber and to the public, non-traded REITs, KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT that are currently being sponsored by Messrs. Bren, Hall, McMillan and Schreiber. Our sponsors are sponsoring KBS Legacy Partners Apartment REIT together with Legacy Partners Residential Realty LLC and certain of its affiliates. When we refer to a “KBS-advised” investor, we are referring to institutional investors that have engaged an investment advisor affiliated with Messrs. Bren and Schreiber to provide real estate-related investment advice.

Our sponsors work together at KBS Capital Advisors with their team of real estate and debt finance professionals. The key real estate professionals at our advisor include James Chiboucas, William Milligan, Kenneth L. McKay, Charles B. Lindwall, Lori A. Lewis and David E. Snyder, and each has over 16 years of real estate experience. The key real estate and debt finance professionals at our advisor have been through multiple real estate cycles in their careers and have the expertise gained through hands-on experience in acquisitions, asset management, dispositions, development, leasing and property and portfolio management. Together with Messrs. Bren and Schreiber, these individuals comprise the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us. Our advisor is also the external advisor of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, and some or all of our sponsors are directors and/or executive officers of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT. Through their affiliations with us, KBS REIT I and KBS Capital Advisors, as of December 31, 2009, our sponsors have overseen the investment in and management of approximately $3.8 billion of real estate and real estate-related investments on behalf of the investors in us and KBS REIT I.

On January 27, 2006, our sponsors launched the initial public offering of KBS REIT I. As of December 31, 2009, KBS REIT I had accepted aggregate gross offering proceeds of approximately $1.8 billion, including $129.5 million from shares issued pursuant to its dividend reinvestment plan. Of the amount raised pursuant to its dividend reinvestment plan, as of December 31, 2009, $51.3 million has been used to fund share redemptions pursuant to its share redemption program. KBS REIT I ceased offering shares in its primary initial public offering on May 30, 2008. KBS Strategic Opportunity REIT commenced its initial public offering on November 20, 2009 but has not broken escrow in its offering. KBS Legacy Partners Apartment REIT commenced its initial public offering on March 12, 2010, but has not broken escrow in its offering. KBS REIT III is in registration with the SEC as of the date of this prospectus.

Since 1992, the experience of the investment advisors affiliated with Messrs. Bren and Schreiber includes (as of December 31, 2009):

• Sponsoring 14 private real estate funds that have investment objectives similar to ours and that have invested approximately $3.3 billion (including equity, debt and investment of income and sales proceeds) in 288 real estate assets;

• Through these 14 private real estate funds, raising over $2.1 billion of equity from 38 institutional investors; and

• Selling 251 of the 288 real estate assets acquired by these 14 private real estate funds.

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Below is a list of some of the largest investors in the 14 private real estate funds. All are among the 20 largest investors (based on dollar amount invested) in these funds.

• BASF Corporation Pension
Master Trust

• International Bank for
Reconstruction &
Development - Staff
Retirement Plan

• State of Wisconsin Investment
Board

• Blue Cross and Blue Shield
Association National
Retirement Trust

• International Monetary Fund
Staff Retirement Plan

• The Rockefeller Foundation

• Deseret Mutual Employee
Pension Plan Trust

• Kodak Retirement Income
Plan

• U.S. Steel Retirement Plan
Trust

• DRM Associates

• Omaha School Employees’
Retirement System

• UMWA Health & Retirement
Funds 1974 Pension Trust

• Howard Hughes Medical
Institute

• Pew Memorial Trust

• Virginia Retirement System

• IBM Retirement Trust

• Public Employees’ Retirement Association of Colorado

• Illinois State Board of
Investment

• School Employees’ Retirement
Board of Ohio

In addition to their experience with the 14 funds described above, investment advisors affiliated with Messrs. Bren and Schreiber have also been engaged by four institutional investors to recommend real estate acquisitions and manage some of their investments. The two largest of these investors (based on dollar amount invested) are the State Treasurer of the State of Michigan and the Teachers’ Retirement System of the State of Illinois. The investment proceeds of these investors were not commingled. The investments were made pursuant to management agreements or partnership agreements that permitted the institutional investors to reject acquisitions recommended by the investment advisor. Because the investors were not as passive as those in the 14 funds described above or as those who invest in this offering, we have not described the performance of the real estate assets acquired or managed for these four investors. The amounts paid for the assets acquired and/or managed pursuant to these arrangements and for subsequent capital expenditures totaled over $3.9 billion. On behalf of these institutional investors, investment advisors affiliated with Messrs. Bren and Schreiber have sold 188 real estate assets.

You should note that we believe that the institutional investors named above and that invested in private KBS-sponsored funds or that have been advised by KBS affiliates are more likely to invest in offerings that can be conducted with lower offering expenses than those found in a public offering, such as this one, in which the securities are sold by participating broker-dealers on a best-efforts basis. If institutional investors do participate in this offering, they would likely invest in amounts entitling them to volume discounts such that their returns, if any, would likely be greater than those who purchase shares in this offering at $10 per share.

None of the institutional investors named above have endorsed this offering. By including their names, we do not suggest that any of these investors approved of the services provided by any affiliate of our advisor. We included their names only for purposes of your evaluation of the experience and reputation of our sponsors and their team of real estate and debt finance professionals.

See “Management—Executive Officers and Directors” for more information regarding the background and experience of our sponsors.

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Dealer Manager

We have retained KBS Capital Markets Group LLC, an affiliate of our advisor, to conduct this offering. KBS Capital Markets Group has a limited operating history. KBS Capital Markets Group provides wholesaling, sales, promotional and marketing assistance services to us in connection with the distribution of the shares offered pursuant to this prospectus. It may also sell shares at the retail level. The principal business of KBS Capital Markets Group is participating in and facilitating the distribution of securities of KBS-sponsored programs. KBS Capital Markets Group served as dealer manager for KBS REIT I’s initial public offering and continues to serve as the dealer manager for KBS REIT I’s offering under its dividend reinvestment plan. KBS Capital Markets Group also currently serves as the dealer manager for KBS Strategic Opportunity REIT’s and KBS Legacy Partners Apartment REIT’s initial public offerings and will serve as the dealer manager for KBS REIT III.

Our sponsors, Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr., indirectly own a controlling interest in KBS Capital Markets Group. See “Management—Executive Officers and Directors” for a discussion of the background and experience of Messrs. Bren, Hall, McMillan and Schreiber.

Below is a brief description of the background and experience of the Managing Director and Chief Executive Officer of KBS Capital Markets Group:

Mike Crimmins was appointed Managing Director and Chief Executive Officer of KBS Capital Markets Group on June 2, 2009. As Managing Director, Mr. Crimmins is responsible for overseeing the day-to-day operations of the company and for oversight of both internal and external wholesaling operations and activities. Mr. Crimmins has been employed by KBS Capital Markets Group since February 2006. From February 2006 to April 2009, he was a Divisional Sales Manager, and on April 2009, Mr. Crimmins was named National Sales Manager. From October 2000 to October 2005, Mr. Crimmins was Western Division Sales Manager for AXA Distributors, LLC. Prior to AXA, Mr. Crimmins served from April 1991 to October 2000 as an Executive Sales Consultant for The Guardian Life Insurance Company. Mr. Crimmins holds a Bachelor of Science in Business Administration and Finance from the University of Missouri.

Management Decisions

The primary responsibility for the management decisions of KBS Capital Advisors and its affiliates, including the selection of real estate properties and real estate-related investments to be recommended to our board of directors, the negotiation for these investments and asset-management decisions, resides in Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. Our board of directors, or a majority of the conflicts committee that constitutes a majority of our board of directors, approves all proposed investments. The conflicts committee has approved an investment grade securities purchase program pursuant to which the conflicts committee authorized an investment committee of our advisor to approve and settle acquisitions of investment grade securities (rated AAA to A) up to an aggregate amount of $50 million.

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MANAGEMENT COMPENSATION

Although we have executive officers who manage our operations, we have no paid employees. Our advisor, KBS Capital Advisors, and the real estate and debt finance professionals at our advisor manage our day-to-day affairs and our portfolio of real estate properties and real estate-related investments, subject to the board’s supervision. The following table summarizes all of the compensation and fees that we pay to KBS Capital Advisors and its affiliates, including amounts to reimburse their costs in providing services, and amounts that we pay to our independent directors. Selling commissions and dealer manager fees may vary for different categories of purchasers as described under “Plan of Distribution.” This table assumes that we sell all shares at the highest possible selling commissions and dealer manager fees (with no discounts to any categories of purchasers) and assumes a $9.50 price for each share sold through our dividend reinvestment plan. No selling commissions or dealer manager fees are payable on shares sold through our dividend reinvestment plan.

Form of Compensation and Recipient	Determination of Amount	Estimated Amount for Maximum Offering (1)
	Organization and Offering Stage
Selling Commissions & Dealer Manager Fees – KBS Capital Markets Group (2)	Effective April 30, 2010, we will pay KBS Capital Markets Group LLC, our dealer manager, up to 6.5% of gross offering proceeds as a selling commission, before reallowance of commissions earned by participating broker-dealers. We will not pay selling commissions with respect to shares sold under the dividend reinvestment plan. KBS Capital Markets Group reallows 100% of commissions earned to participating broker-dealers. Prior to April 30, 2010, we paid up to 6.0% of gross offering proceeds to our dealer manager as selling commissions. All or a portion of the selling commissions will not be charged with regard to shares sold to certain categories of purchasers.	Aggregate of $190,000,000 for selling commissions and dealer manager fees
	Effective April 30, 2010, we will pay KBS Capital Markets Group up to 3.0% of gross offering proceeds as a dealer manager fee. We will not pay a dealer manager fee with respect to shares sold under the dividend reinvestment plan. KBS Capital Markets Group may reallow to any participating broker-dealer up to 1.0% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee and in special cases the dealer manager may increase the reallowance. Prior to April 30, 2010, we paid up to 3.5% of gross offering proceeds to our dealer manager as a dealer manager fee. A reduced dealer manager fee is payable with respect to certain volume discount sales.

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Form of Compensation and Recipient	Determination of Amount	Estimated Amount for Maximum Offering (1)
Other Organization and Offering Expenses – KBS Capital Advisors and KBS Capital Markets Group (3)	KBS Capital Advisors and its affiliates have paid certain organization and offering expenses on our behalf. We have also directly incurred some organization and offering expenses. We reimburse our advisor and its affiliates for the expenses they pay and will reimburse our advisor and its affiliates for future organization and offering costs they may incur on our behalf but only to the extent that the reimbursement would not cause the selling commissions, the dealer manager fee and the other organization and offering expenses borne by us to exceed 15.0% of gross offering proceeds as of the date of the reimbursement. If we raise the maximum offering amount in the primary offering and under the dividend reinvestment plan, we expect organization and offering expenses (other than selling commissions and the dealer manager fee) to be $18,858,000 or 0.68% of gross offering proceeds. These organization and offering expenses include all expenses (other than selling commissions and the dealer manager fee) to be paid by us in connection with the offering, including our legal, accounting, printing, mailing and filing fees, charges of our escrow holder and transfer agent, charges of our advisor for administrative services related to the issuance of shares in the offering, reimbursement of bona fide due diligence expenses of broker-dealers, reimbursement of our advisor for costs in connection with preparing supplemental sales materials, the cost of bona fide training and education meetings held by us (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and travel, meal and lodging costs for registered persons associated with our dealer manager and officers and employees of our affiliates to attend retail seminars conducted by broker-dealers and, in special cases, reimbursement to participating broker-dealers for technology costs associated with the offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of our shares by such broker-dealers and the ownership of our shares by such broker-dealers’ customers.	$18,858,000
	Acquisition and Development Stage
Acquisition Fees – KBS Capital Advisors (4)	0.75% of the cost of investments acquired by us, including any acquisition expenses and any debt attributable to such investments. This fee relates to services provided in connection with the selection and purchase of real estate investments. With respect to investments in and originations of loans, we pay an origination fee to the advisor or its subsidiary in lieu of an acquisition fee.	$9,279,818 (maximum offering and no debt)/ $26,513,766 (maximum offering and target leverage of 65% of the cost of our real estate investments)
Origination Fees – KBS Capital Advisors or its wholly owned subsidiary (4)	1.0% of the amount funded by us to acquire or originate mortgage, mezzanine, bridge or other loans, including any expenses related to such investment and any debt we use to fund the acquisition or origination of the loan. We will not pay an acquisition fee with respect to such loans. This fee relates to services provided to us in connection with sourcing and structuring our investments in and originations of loans.	$5,302,753 (maximum offering and no debt)/ $15,150,724 (maximum offering and target leverage of 65% of the cost of our real estate investments)

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Form of Compensation and Recipient	Determination of Amount	Estimated Amount for Maximum Offering (1)
	Operational Stage
Asset Management Fee – KBS Capital Advisors (5)	With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, inclusive of acquisition fees and expenses related thereto and the amount of any debt associated with or used to acquire such investment. In the case of investments made through joint ventures, the asset management fee is determined based on our proportionate share of the underlying investment. With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment, inclusive of acquisition or origination fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment and (ii) the outstanding principal amount of such loan or other investment, plus the acquisition or origination fees and expenses related to the acquisition or funding of such investment, as of the time of calculation.	The actual amounts are dependent upon the total equity and debt capital we raise and the results of our operations; we cannot determine these amounts at the present time.
Other Operating Expenses – KBS Capital Advisors (5)	We reimburse the expenses incurred by KBS Capital Advisors in connection with its provision of services to us, including our allocable share of the advisor’s overhead, such as rent, employee costs, utilities and IT costs. Our advisor may seek reimbursement for employee costs under the advisory agreement, but has not done so as of the date of this prospectus. If our advisor seeks reimbursement for employee costs, such costs may include our proportionate share of the salaries of persons involved in the preparation of documents to meet SEC reporting requirements. We will not reimburse the advisor or its affiliates for employee costs in connection with services for which KBS Capital Advisors earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries and benefits our advisor or its affiliates may pay to our executive officers.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.
Independent Director Compensation	We pay each of our independent directors an annual retainer of $40,000. We also pay our independent directors for attending meetings as follows: (i) $2,500 for each board meeting attended, (ii) $2,500 for each committee meeting attended (except that the committee chairman is paid $3,000 for each meeting attended), (iii) $2,000 for each teleconference board meeting attended, and (iv) $2,000 for each teleconference committee meeting attended (except that the committee chairman is paid $3,000 for each teleconference committee meeting attended). All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.	Actual amounts are dependent upon the total number of board and committee meetings that each independent director attends; we cannot determine these amounts at the present time.

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Form of Compensation and Recipient	Determination of Amount	Estimated Amount for Maximum Offering (1)
	Operational and Liquidation/Listing Stage
Subordinated Participation in Net Cash Flows – KBS Capital Advisors (6)	After investors in our offering have received a return of their net capital contributions and an 8.0% per year cumulative, noncompounded return, KBS Capital Advisors is entitled to receive 15.0% of our net cash flows, whether from continuing operations, net sale proceeds or otherwise. The 8.0% per year cumulative, noncompounded return is calculated based on the amount of capital invested in the offering. In making this calculation, an investor’s net capital contribution is reduced to the extent distributions in excess of a cumulative, noncompounded, annual return of 8.0% are paid (from whatever source), except to the extent such distributions would be required to supplement prior distributions paid in order to achieve a cumulative, noncompounded, annual return of 8.0%. This fee is payable only if we are not listed on an exchange.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.
	Liquidation/Listing Stage
Disposition Fees – KBS Capital Advisors or its affiliates (7)	For substantial assistance in connection with the sale of properties or other investments, we will pay KBS Capital Advisors or its affiliates 1.0% of the contract sales price of each property or other investment sold; provided, however, in no event may the disposition fees paid to KBS Capital Advisors, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price. The conflicts committee will determine whether the advisor or its affiliate has provided substantial assistance to us in connection with the sale of an asset. Substantial assistance in connection with the sale of a property includes the advisor’s preparation of an investment package for the property (including a new investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or such other substantial services performed by the advisor in connection with a sale. We do not intend to sell properties or other assets to affiliates. However, if we do sell an asset to an affiliate, our organizational documents would not prohibit us from paying our advisor a disposition fee. Before we sold an asset to an affiliate, the charter would require that our conflicts committee conclude, by a majority vote, that the transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.
Subordinated Incentive Listing Fee – KBS Capital Advisors (6)(8)	Upon listing our common stock on a national securities exchange, a fee equal to 15.0% of the amount by which (i) the market value of our outstanding stock plus distributions paid by us prior to listing exceeds (ii) the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate an 8.0% per year cumulative, noncompounded return to investors.	Actual amounts are dependent upon the results of our operations; we cannot determine these amounts at the present time.

⁽¹⁾ The estimated maximum dollar amounts are based on the sale of the maximum of 280,000,000 shares to the public, including 80,000,000 shares through our dividend reinvestment plan.

⁽²⁾ All or a portion of the selling commissions will not be charged with regard to shares sold to certain categories of purchasers. A reduced dealer manager fee is payable with respect to certain volume discount sales. See “Plan of Distribution.”

⁽³⁾ After the termination of the primary offering, KBS Capital Advisors has agreed to reimburse us to the extent total organization and offering expenses borne by us exceed 15% of the gross proceeds raised in the primary offering. KBS Capital Advisors will do the same after termination of the offering pursuant to our dividend reinvestment plan.

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⁽⁴⁾ Because the acquisition fees we pay our advisor are a percentage of the purchase price of an investment and loan origination fees are a percentage of the amount funded by us to acquire or originate a loan, these fees will be greater to the extent we fund acquisitions and originations through (i) the incurrence of debt (which we expect to represent between 50% and 65% of the purchase price of our investments if we sell the maximum number of shares offered hereby), (ii) retained cash flow from operations, (iii) issuances of equity in exchange for properties and other assets and (iv) proceeds from the sale of shares under our dividend reinvestment plan.

For purposes of this table, we have assumed 70% of our investments will be core properties to which acquisition fees apply and 30% of our investments will be loans to which origination fees apply.

In addition to acquisition and origination fees, we reimburse KBS Capital Advisors for amounts it pays in connection with the selection, acquisition or development of a property or acquisition or origination of a loan, whether or not we ultimately acquire the property or originate the loan. Under our charter, a majority of the independent directors would have to approve any increase in the acquisition fees or origination fees payable to our advisor. Our charter also limits our ability to make or purchase property or other investments if the total of all acquisition or origination fees and expenses relating to the investment exceeds 6% of the contract purchase price or 6% of the total funds advanced.

⁽⁵⁾ KBS Capital Advisors must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. “Average invested assets” means the average monthly book value of our assets during the 12-month period before deducting depreciation, bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain in the sale of our assets; and (f) acquisition fees, origination fees, acquisition and origination expenses (including expenses relating to potential investments that we do not close), disposition fees on the resale of property and other expenses connected with the acquisition, origination, disposition and ownership of real estate interests, loans or other property (other than disposition fees on the sale of assets other than real property), such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property.

⁽⁶⁾ To the extent this incentive fee is derived from cash flows other than net sales proceeds, the incentive fee will count against the limit on “total operating expenses” described in note 5 above. Furthermore, upon termination of the advisory agreement, KBS Capital Advisors may be entitled to a similar fee if KBS Capital Advisors would have been entitled to a subordinated participation in net cash flows had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. The termination fee would be payable in the form of a promissory note that becomes due only upon the sale, maturity or payoff of one or more assets, and the fee is payable solely from the proceeds from the sale, maturity or payoff of an asset and future asset sales, maturities or payoffs. See “Management – The Advisory Agreement.”

Our charter requires that any gain from the sale of assets that we may pay KBS Capital Advisors be reasonable. Under our charter, an interest in gain from the sale of assets is “presumptively reasonable” if it does not exceed 15% of the balance of net sale proceeds remaining after investors have received a return of their net capital contributions and a 6% per year cumulative, noncompounded return. Our advisory agreement sets a higher threshold for the payment of a subordinated incentive fee than that required by our charter. Any lowering of the threshold set forth in the advisory agreement would require the approval of a majority of the members of the conflicts committee.

An investor’s net capital contribution is calculated by multiplying the issue price of the shares by the total number of shares purchased by the investor.

KBS Capital Advisors cannot earn both the subordinated participation in net cash flows and the subordinated incentive listing fee. Any portion of the subordinated participation in net cash flows that KBS Capital Advisors receives prior to our listing will offset the amount otherwise due pursuant to the subordinated incentive listing fee.

⁽⁷⁾ Although we are most likely to pay disposition fees to KBS Capital Advisors or an affiliate in the event of our liquidation, these fees may also be incurred during our operational stage. Under our charter, a majority of the independent directors would have to approve any increase in the disposition fees payable to our advisor and its affiliates above 1% of the contract sales price. Our charter also limits the maximum amount of the disposition fees payable to the advisor and its affiliates to 3% of the contract sales price.

To the extent this disposition fee is paid upon the sale of any assets other than real property, it will count against the limit on “total operating expenses” described in note 5 above.

⁽⁸⁾ The market value of our outstanding stock will be calculated based on the average market value of the shares issued and outstanding at listing over the 30 trading days beginning 180 days after the shares are first listed on a stock exchange. In the event the subordinated incentive listing fee is earned by KBS Capital Advisors as a result of the listing of the shares, any previous payments of the subordinated participation in net cash flows will offset the amounts due pursuant to the subordinated incentive listing fee, and we will not be required to pay KBS Capital Advisors any further subordinated participation in net cash flows. The subordinated incentive listing fee will count against the limit on “total operating expenses” described in note 5 above.

Due to the public market’s preference for self-managed companies, a decision to list our shares on a national securities exchange might well be preceded by a decision to become self-managed. Given our advisor’s familiarity with our assets and operations, we might prefer to become self-managed by acquiring entities affiliated with our advisor. Such an internalization transaction could result in significant payments to affiliates of our advisor irrespective of whether you enjoyed the returns on which we have conditioned other incentive compensation. We cannot predict whether, and on what terms, an internalization transaction would occur in the future. If we internalize the advisor before listing the subordinated incentive listing fee would not be payable; however, when negotiating the purchase price of the advisor or an affiliate of the advisor pursuant to an internalization transaction, the amount of any foregone incentive fee would likely be a consideration. Our charter would require that the conflicts committee conclude, by a majority vote, that an internalization transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties.

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STOCK OWNERSHIP

The following table sets forth the beneficial ownership of our common stock as of the date of this prospectus for each person or group that holds more than 5% of our common stock, for each director and executive officer and for our directors and executive officers as a group.

Name of Beneficial Owner (1)	Number of Shares Beneficially Owned  (2)	Percent of All Shares
KBS Capital Advisors LLC	20,000	100.0%
Peter M. Bren, President	20,000	100.0
Keith D. Hall, Executive Vice President	20,000	100.0
Peter McMillan III, Executive Vice President, Treasurer, Secretary and Director	20,000	100.0
Charles J. Schreiber, Jr., Chairman of the Board, Chief Executive Officer and Director	20,000	100.0
David E. Snyder, Chief Financial Officer	-	-
Stacie K. Yamane, Chief Accounting Officer	-	-
Hank Adler, Independent Director	-	-
Barbara R. Cambon, Independent Director	-	-
Stuart A. Gabriel, Ph.D., Independent Director	-	-
All directors and executive officers as a group	20,000	100.0%

⁽¹⁾ The address of each beneficial owner listed is 620 Newport Center Drive, Suite 1300, Newport Beach, California 92660.

⁽²⁾ KBS Capital Advisors is indirectly owned and controlled by Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr.

CONFLICTS OF INTEREST

We are subject to various conflicts of interest arising out of our relationship with our advisor, KBS Capital Advisors, and its affiliates, some of whom serve as our executive officers and directors. We discuss these conflicts below and conclude this section with a discussion of the corporate governance measures we have adopted to ameliorate some of the risks posed by these conflicts.

Our Affiliates’ Interests in Other KBS Real Estate Programs

General

All of our executive officers, some of our directors and other key real estate and debt finance professionals at our advisor are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other KBS investment advisors that are the sponsors of other real estate programs as well as executive officers, directors and/or key professionals of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, which are also public, non-traded REITs advised by KBS Capital Advisors. Through affiliates of our advisor, key real estate and debt finance professionals at our advisor also serve as investment advisors to institutional investors in real estate properties and real estate-related assets. These individuals have legal and financial obligations with respect to those programs, entities and investors that are similar to their obligations to us. In the future, these individuals and other affiliates of our advisor may organize other real estate programs, serve as the investment advisor to other investors and acquire for their own account real estate properties and real estate-related investments that may be suitable for us.

Since 1992, investment advisors affiliated with Peter M. Bren and Charles J. Schreiber, Jr. have sponsored 14 privately offered real estate programs. Nine of these programs are still operating. Our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, are also the sponsors of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and, together with Legacy Partners Residential Realty LLC and certain of its affiliates, our sponsors are also sponsoring another public real estate investment trust, KBS Legacy Partners Apartment REIT. All of these programs have investment objectives that are similar to ours. Conflicts of interest may arise between us and the programs that have not yet been liquidated, between us and future programs and between us and the investors for which a KBS entity serves as an investment advisor.

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Allocation of Investment Opportunities

We rely on our sponsors, Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr., and the real estate and debt finance professionals of our advisor to identify suitable investments. KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT are also advised by KBS Capital Advisors and rely on many of these same professionals. Messrs. Bren and Schreiber and other real estate and debt finance professionals at KBS Capital Advisors are also the key real estate and debt finance professionals at KBS Realty Advisors and its affiliates, the advisors to the private KBS-sponsored programs and the investment advisors to institutional investors in real estate and real estate-related assets. As such, other KBS-sponsored programs and KBS-advised investors that are seeking investment opportunities as of the date of this prospectus all rely on many of the same professionals as will future programs. Many investment opportunities that are suitable for us may also be suitable for other KBS programs and investors. When these real estate and debt finance professionals direct an investment opportunity to any KBS-sponsored program or KBS-advised investor, they, in their sole discretion, will offer the opportunity to the program or investor for which the investment opportunity is most suitable based on the investment objectives, portfolio and criteria of each program or investor. As a result, these KBS real estate and debt finance professionals could direct attractive investment opportunities to other entities or investors. For so long as we are externally advised, our charter provides that it shall not be a proper purpose of the corporation for us to purchase real estate or any significant asset related to real estate unless the advisor has recommended the investment to us. See “— Certain Conflict Resolution Measures.”

Competition for Tenants and Others

Conflicts of interest may exist to the extent that we acquire properties in the same geographic areas where other KBS programs or affiliated entities own properties. In such a case, a conflict could arise in the leasing of properties in the event that we and another KBS program or affiliated entity were to compete for the same tenants in negotiating leases, or a conflict could arise in connection with the resale of properties in the event that we and another KBS program or affiliated entity were to attempt to sell similar properties at the same time. See “Risk Factors—Risks Related to Conflicts of Interest.” Conflicts of interest may also exist at such time as we or KBS Capital Advisors seek to employ developers, contractors, building managers or other third parties. Our advisor and the advisors of other KBS programs and affiliated entities will seek to reduce conflicts that may arise with respect to properties available for sale or rent by making prospective purchasers or tenants aware of all such properties. Our advisor and the advisors of other KBS programs and affiliated entities will also seek to reduce conflicts relating to the employment of developers, contractors or building managers by making prospective service providers aware of all properties in need of their services. However, KBS Capital Advisors and the advisors of other KBS programs and affiliated entities cannot fully avoid these conflicts because they may establish differing terms for resales or leasing of the various properties or differing compensation arrangements for service providers at different properties.

Allocation of Our Affiliates’ Time

We rely on KBS Capital Advisors and the key real estate and debt finance professionals our advisor has assembled, including Messrs. Bren, Hall, McMillan and Schreiber, for the day-to-day operation of our business. Messrs. Bren, Hall, McMillan and Schreiber are also executive officers of KBS REIT I and KBS REIT III. Messrs. Hall and McMillan are executive officers of KBS Strategic Opportunity REIT, and Messrs. Bren and McMillan are executive officers of KBS Legacy Partners Apartment REIT. In addition, Messrs. Bren and Schreiber are the executive officers of KBS Realty Advisors and its affiliates, the advisors of the private KBS-sponsored programs and the investment advisors to institutional investors in real estate and real estate-related assets. As a result of their interests in other KBS programs, their obligations to other investors and the fact that they engage in and they will continue to engage in other business activities on behalf of themselves and others, Messrs. Bren, Hall, McMillan and Schreiber face conflicts of interest in allocating their time among us, KBS Capital Advisors and other KBS-sponsored programs and other business activities in which they are involved. In addition, KBS Capital Advisors and KBS Realty Advisors and its affiliates share many of the same key real estate and debt finance professionals. However, our sponsors believe that KBS Capital Advisors and KBS Realty Advisors and its affiliates have sufficient real estate and debt finance professionals to fully discharge their responsibilities to the KBS programs and other business in which they are involved.

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Receipt of Fees and Other Compensation by KBS Capital Advisors and its Affiliates

KBS Capital Advisors and its affiliates receive substantial fees from us, which fees have not been negotiated at arm’s length. These fees could influence our advisor’s advice to us as well as the judgment of affiliates of KBS Capital Advisors, some of whom also serve as our executive officers and directors and the key real estate and debt finance professionals at our advisor. Among other matters, these compensation arrangements could affect their judgment with respect to:

• the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement and the dealer-manager agreement;

• public offerings of equity by us, which entitle KBS Capital Markets Group to dealer-manager fees and will likely entitle KBS Capital Advisors to increased acquisition, origination and asset-management fees;

• sales of properties and other investments, which entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees;

• acquisitions of properties and other investments, which entitle KBS Capital Advisors to acquisition or origination fees and asset management fees and, in the case of acquisitions of investments from other KBS-sponsored programs, might entitle affiliates of KBS Capital Advisors to disposition fees and possible subordinated incentive fees in connection with its services for the seller;

• borrowings to acquire properties and other investments and to originate loans, which borrowings will increase the acquisition, origination and asset-management fees payable to KBS Capital Advisors;

• whether and when we seek to list our common stock on a national securities exchange, which listing could entitle KBS Capital Advisors to a subordinated incentive listing fee;

• whether we seek stockholder approval to internalize our management, which may entail acquiring assets (such as office space, furnishings and technology costs) and negotiating compensation for real estate and debt finance professionals at our advisor and its affiliates that may result in these individuals receiving more compensation from us than they currently receive from our advisor and its affiliates; and

• whether and when we seek to sell the company or its assets, which sale could entitle KBS Capital Advisors to a subordinated incentive fee.

Our Board’s Loyalties to KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and Possibly to Future KBS-Sponsored Programs

All of our directors are also directors of KBS REIT I, two of our directors are also directors of KBS REIT III, one of our directors is also a director of KBS Strategic Opportunity REIT and one director is also a director of KBS Legacy Partners Apartment REIT. The loyalties of our directors serving on the boards of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT or possibly on the boards of future KBS-sponsored programs may influence the judgment of our board when considering issues for us that also may affect other KBS-sponsored programs, such as the following:

• The conflicts committee of our board of directors must evaluate the performance of KBS Capital Advisors with respect to whether KBS Capital Advisors is presenting to us our fair share of investment opportunities. If our advisor is not presenting a sufficient number of investment opportunities to us because it is presenting many opportunities to another KBS-sponsored program or if our advisor is giving preferential treatment to another KBS-sponsored program in this regard, our conflicts committee may not be well suited to enforce our rights under the terms of the advisory agreement or to seek a new advisor.

• We could enter into transactions with other KBS-sponsored programs, such as property sales, acquisitions or financing arrangements. Decisions of the board or the conflicts committee regarding the terms of those transactions may be influenced by the board’s or committee’s loyalties to such other KBS-sponsored programs.

• A decision of the board or the conflicts committee regarding the timing of a debt or equity offering could be influenced by concerns that the offering would compete with an offering of other KBS-sponsored programs.

• A decision of the board or the conflicts committee regarding the timing of property sales could be influenced by concerns that the sales would compete with those of other KBS-sponsored programs.

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Because our independent directors are also independent directors of KBS REIT I, they receive compensation for service on the board of KBS REIT I. Like us, KBS REIT I pays each independent director an annual retainer of $40,000 as well as compensation for attending meetings as follows: (i) $2,500 for each board meeting attended, (ii) $2,500 for each committee meeting attended (except that the committee chairman is paid $3,000 for each meeting attended), (iii) $2,000 for each teleconference board meeting attended, and (iv) $2,000 for each teleconference committee meeting attended (except that the committee chairman is paid $3,000 for each teleconference committee meeting attended). In addition, KBS REIT I reimburses directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.

For the year ended December 31, 2009, the independent directors of KBS REIT I earned compensation as follows:

Independent Director	Compensation Earned in  2009 (1)		Compensation Paid in  2009 (1)
Hank Adler	$115,500	(2)	$118,496
Barbara Cambon	$111,500	(3)	$116,496
Stuart A. Gabriel, Ph.D	$112,000	(4)	$110,996

⁽¹⁾ Compensation Paid in 2009 includes meeting fees earned during 2008 but paid or reimbursed in 2009 as follows: Mr. Adler $10,333; Ms. Cambon $13,333; and Mr. Gabriel $6,333.

⁽²⁾ This amount includes (i) fees earned for attendance at 12 board meetings, 12 conflicts committee meetings and six audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

⁽³⁾ This amount includes (i) fees earned for attendance at 11 board meetings, 11 conflicts committee meetings and five audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

⁽⁴⁾ This amount includes (i) fees earned for attendance at 12 board meetings, 12 conflicts committee meetings and six audit committee meetings, (ii) the annual retainer and (iii) costs reimbursements for reasonable out-of-pocket expenses incurred in connection with attendance at meetings.

Fiduciary Duties Owed by Some of Our Affiliates to Our Advisor and Our Advisor’s Affiliates

All of our executive officers, some of our directors and the key real estate and debt finance professionals at our advisor are also officers, directors, managers, key professionals and/ or holders of a direct or indirect controlling interest in or for:

• KBS Capital Advisors, our advisor;

• KBS Capital Markets Group, our dealer manager; and

• other KBS-sponsored programs (see the “Prior Performance Summary” section of this prospectus).

Through KBS-affiliated entities, these persons also serve as the investment advisors to institutional investors in real estate properties and real estate-related assets. As a result, they owe fiduciary duties to each of these programs, their stockholders, members and limited partners and the institutional investors advised by KBS-affiliated entities. These fiduciary duties may from time to time conflict with the fiduciary duties that they owe to us.

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Affiliated Dealer Manager

Since KBS Capital Markets Group, our dealer manager, is an affiliate of KBS Capital Advisors, you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with the offering of securities. See “Plan of Distribution.” KBS Capital Markets Group also currently serves as the dealer manager for KBS Strategic Opportunity REIT’s and KBS Legacy Partners Apartment REIT’s initial public offerings and will serve as the dealer manager for KBS REIT III. Both KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT will be raising capital in their respective public offerings concurrently with our offering. In addition, KBS REIT III and other future KBS-sponsored programs may seek to raise capital through public offerings conducted concurrently with our offering. As a result, our sponsors and our dealer manager may face conflicts of interest arising from potential competition with these other programs for investors and investment capital. Our sponsors generally seek to avoid simultaneous public offerings by programs that have a substantially similar mix of investment characteristics, including targeted investment types and key investment objectives. Nevertheless, there may be periods during which one or more programs sponsored by our sponsors will be raising capital and may compete with us for investment capital.

Certain Conflict Resolution Measures

Conflicts Committee

In order to ameliorate the risks created by conflicts of interest, our charter creates a conflicts committee of our board of directors composed of all of our independent directors. An “independent director” is a person who is not one of our officers or employees or an officer or employee of KBS Capital Advisors or its affiliates, has not been so for the previous two years and meets the other requirements set forth in our charter. Serving as a director of, or having an ownership interest in, another KBS-sponsored program will not, by itself, preclude independent-director status. Our charter authorizes the conflicts committee to act on any matter permitted under Maryland law. Both the board of directors and the conflicts committee must act upon those conflict-of-interest matters that cannot be delegated to a committee under Maryland law. Our charter also empowers the conflicts committee to retain its own legal and financial advisors. Among the matters we expect the conflicts committee to act upon are:

• the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement and the dealer-manager agreement;

• public offerings of securities;

• sales of properties and other investments;

• investments in properties and other assets;

• originations of loans;

• borrowings;

• transactions with affiliates;

• compensation of our officers and directors who are affiliated with our advisor;

• whether and when we seek to list our shares of common stock on a national securities exchange;

• whether and when we seek to become self-managed, which decision could lead to our acquisition of entities affiliated with KBS Capital Advisors at a substantial price; and

• whether and when we seek to sell the company or its assets.

Our board of directors, or a majority of the conflicts committee that constitutes a majority of our board of directors, approves all proposed investments. The conflicts committee has approved an investment grade securities purchase program pursuant to which the conflicts committee authorized an investment committee of our advisor to approve and settle acquisitions of investment grade securities (rated AAA to A) up to an aggregate amount of $50 million.

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Other Charter Provisions Relating to Conflicts of Interest

In addition to the creation of the conflicts committee, our charter contains many other restrictions relating to conflicts of interest including the following:

Advisor Compensation. The conflicts committee evaluates at least annually whether the compensation that we contract to pay to KBS Capital Advisors and its affiliates is reasonable in relation to the nature and quality of services performed and whether such compensation is within the limits prescribed by the charter. The conflicts committee supervises the performance of KBS Capital Advisors and its affiliates and the compensation we pay to them to determine whether the provisions of our compensation arrangements are being carried out. This evaluation is based on the following factors as well as any other factors deemed relevant by the conflicts committee:

• the amount of the fees and any other compensation, including stock-based compensation, paid to KBS Capital Advisors and its affiliates in relation to the size, composition and performance of our investments;

• whether the expenses incurred by us are reasonable in light of our investment performance, net assets, net income and the fees and expenses of other comparable unaffiliated REITs;

• the success of KBS Capital Advisors in generating appropriate investment opportunities;

• the rates charged to other companies, including other REITs, by advisors performing similar services;

• additional revenues realized by KBS Capital Advisors and its affiliates through their relationship with us, including whether we pay them or they are paid by others with whom we do business;

• the quality and extent of service and advice furnished by KBS Capital Advisors and its affiliates;

• the performance of our investment portfolio; and

• the quality of our portfolio relative to the investments generated by KBS Capital Advisors and its affiliates for their own account and for their other clients.

Under our charter, we can only pay KBS Capital Advisors a disposition fee in connection with the sale of a property or other asset if it provides a substantial amount of the services in the effort to sell the property or asset and the commission does not exceed 3% of the sales price of the property or other asset. Although our charter limits this commission to 3% of the sales price, our advisory agreement provides for a 1% fee. Any increase in this fee would require the approval of a majority of the members of our conflicts committee. Moreover, our charter also provides that the commission, when added to all other disposition fees paid to unaffiliated parties in connection with the sale, may not exceed the lesser of a competitive real estate commission or 6% of the sales price of the property or other asset. To the extent this disposition fee is paid upon the sale of any assets other than real property, it will count against the limit on “total operating expenses” described below. We do not intend to sell properties or other assets to affiliates. However, if we do sell an asset to an affiliate, our organizational documents would not prohibit us from paying our advisor a disposition fee. Before we sold an asset to an affiliate, our charter would require that the conflicts committee conclude, by a majority vote, that the transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties.

Our charter also requires that any gain from the sale of assets that we may pay our advisor or an entity affiliated with our advisor be reasonable. Such an interest in gain from the sale of assets is presumed reasonable if it does not exceed 15% of the balance of the net sale proceeds remaining after payment to common stockholders, in the aggregate, of an amount equal to 100% of the original issue price of the common stock, plus an amount equal to 6% of the original issue price of the common stock per year cumulative. Our advisory agreement sets a higher threshold for the payment of a subordinated incentive fee than that required by our charter. Under the advisory agreement, an incentive fee may be paid only if the stockholders first enjoy an 8% per year cumulative, noncompounded return. Any lowering of the threshold set forth in the advisory agreement would require the approval of a majority of the members of the conflicts committee. The subordinated incentive fee payable under the advisory agreement is a subordinated participation in net cash flows, whether from continuing operations, net sale proceeds or otherwise; however, to the extent that this incentive fee is derived from cash flows other than net sales proceeds, the incentive fee will count against the limit on “total operating expenses” described below.

If we ever decided to become self-managed by acquiring entities affiliated with our advisor, our charter would require that the conflicts committee conclude, by a majority vote, that such internalization transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties.

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Our charter also limits the amount of acquisition fees and acquisition expenses we can incur to a total of 6% of the contract purchase price for the property or, in the case of a loan, our charter limits origination fees and expenses we can incur to 6% of the funds advanced. This limit may only be exceeded if the conflicts committee approves (by majority vote) the fees and expenses and finds the transaction to be commercially competitive, fair and reasonable to us. Although our charter permits combined acquisition fees and expenses to equal 6% of the purchase price, our advisory agreement limits the acquisition fee to 0.75% of the purchase price (including any acquisition expenses and any debt attributable to such investments). Similarly, the advisory agreement limits the origination fee to 1.0% of the amount funded by us to acquire or originate loans (including any expenses related to such investment and any debt we use to fund the acquisition or origination of the loan). Any increase in the acquisition fee or origination fee stipulated in the advisory agreement would require the approval of a majority of the members of the conflicts committee.

Term of Advisory Agreement. Each contract for the services of our advisor may not exceed one year, although there is no limit on the number of times that we may retain a particular advisor. The conflicts committee or our advisor may terminate our advisory agreement with KBS Capital Advisors without cause or penalty on 60 days’ written notice. In such event, KBS Capital Advisors must cooperate with us and our directors in making an orderly transition of the advisory function.

Upon termination of the advisory agreement, KBS Capital Advisors may be entitled to a termination fee if (based upon an independent appraised value of the portfolio) KBS Capital Advisors would have been entitled to a subordinated participation in net cash flows had the portfolio been liquidated on the termination date. The termination fee would be payable in the form of a promissory note that becomes due only upon the sale, maturity or payoff of one or more assets. The fee is payable solely from the proceeds from the sale, maturity or payoff of an asset and future asset sales, maturities or payoffs, and all of such proceeds must be used to repay the promissory note until it is fully paid. The amount of the termination fee would be 15% of the amount by which (i) the hypothetical liquidation proceeds exceed (ii) the amount necessary to provide investors with a return of their net capital contributions and an 8.0% per year cumulative, noncompounded return through the termination date; however, the agreement does not require that the investors actually have received such return prior to issuance of the promissory note or payments under it. The amount due under the promissory note would not be adjusted upwards or downwards to reflect any difference in the appraised value of our portfolio at termination and the amount ultimately realized by us.

Our Acquisitions. We will not purchase or lease properties in which KBS Capital Advisors, any of our directors or officers or any of their affiliates has an interest without a determination by a majority of the conflicts committee that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the property to the affiliated seller or lessor, unless there is substantial justification for the excess amount. In no event will we acquire any such property at an amount in excess of its current appraised value as determined by an independent expert selected by our independent directors not otherwise interested in the transaction. An appraisal is “current” if obtained within the prior year. If a property with a current appraisal is acquired indirectly from an affiliated seller through the acquisition of securities in an entity that directly or indirectly owns the property, a second appraisal on the value of the securities of the entity shall not be required if (i) the conflicts committee determines that such transaction is fair and reasonable, (ii) the transaction is at a price to us no greater than the cost of the securities to the affiliated seller, (iii) the entity has conducted no business other than the financing, acquisition and ownership of the property and (iv) the price paid by the entity to acquire the property did not exceed the current appraised value.

Mortgage Loans Involving Affiliates. Our charter prohibits us from investing in or making mortgage loans in which the transaction is with KBS Capital Advisors, our directors or officers or any of their affiliates, unless an independent expert appraises the underlying property. We must keep the appraisal for at least five years and make it available for inspection and duplication by any of our stockholders. In addition, a mortgagee’s or owner’s title insurance policy or commitment as to the priority of the mortgage or the condition of the title must be obtained. Our charter prohibits us from making or investing in any mortgage loans that are subordinate to any mortgage or equity interest of KBS Capital Advisors, our directors or officers or any of their affiliates.

Other Transactions Involving Affiliates. A majority of the conflicts committee must conclude that all other transactions between us and KBS Capital Advisors, any of our officers or directors or any of their affiliates are fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties.

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Limitation on Operating Expenses. KBS Capital Advisors must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. “Average invested assets” means the average monthly book value of our assets during the 12-month period before deducting depreciation, bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain from the sale of our assets; and (f) acquisition fees, origination fees, acquisition and origination expenses (including expenses relating to potential investments that we do not close), disposition fees on the resale of property and other expenses connected with the acquisition, origination, disposition and ownership of real estate interests, loans or other property (other than disposition fees on the sale of assets other than real property), including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property.

Issuance of Options and Warrants to Certain Affiliates. Until our shares of common stock are listed on a national securities exchange, we will not issue options or warrants to purchase our capital stock to KBS Capital Advisors, our directors, the sponsors or any of their affiliates, except on the same terms as such options or warrants are sold to the general public. We may issue options or warrants to persons other than KBS Capital Advisors, our directors, the sponsors and their affiliates prior to listing our common stock on a national securities exchange, but not at exercise prices less than the fair market value of the underlying securities on the date of grant and not for consideration (which may include services) that in the judgment of the conflicts committee has a market value less than the value of such option or warrant on the date of grant. Any options or warrants we issue to KBS Capital Advisors, our directors, the sponsors or any of their affiliates shall not exceed an amount equal to 10% of the outstanding shares of our capital stock on the date of grant.

Repurchase of Our Shares. Our charter prohibits us from paying a fee to KBS Capital Advisors or our directors or officers or any of their affiliates in connection with our repurchase of our capital stock.

Loans. We will not make any loans to KBS Capital Advisors or to our directors or officers or any of their affiliates. In addition, we will not borrow from these affiliates unless a majority of the conflicts committee approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by the board of directors. By way of example only, the prohibition on loans would not restrict advances of cash for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought nor would the prohibition limit our ability to advance reimbursable expenses incurred by directors or officers or KBS Capital Advisors or its affiliates.

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Reports to Stockholders. Our charter requires that we prepare an annual report and deliver it to our stockholders within 120 days after the end of each fiscal year. Our directors are required to take reasonable steps to ensure that the annual report complies with our charter provisions. Among the matters that must be included in the annual report or included in a proxy statement delivered with the annual report are:

• financial statements prepared in accordance with GAAP that are audited and reported on by independent certified public accountants;

• the ratio of the costs of raising capital during the year to the capital raised;

• the aggregate amount of advisory fees and the aggregate amount of other fees paid to KBS Capital Advisors and any affiliates of KBS Capital Advisors by us or third parties doing business with us during the year;

• our total operating expenses for the year stated as a percentage of our average invested assets and as a percentage of our net income;

• a report from the conflicts committee that our policies are in the best interests of our common stockholders and the basis for such determination; and

• a separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and our advisor, a director or any affiliate thereof during the year, which disclosure has been examined and commented upon in the report by the conflicts committee with regard to the fairness of such transactions.

Voting of Shares Owned by Affiliates. Before becoming a stockholder, KBS Capital Advisors, our directors and officers and their affiliates must agree not to vote their shares regarding (i) the removal of any of these affiliates or (ii) any transaction between them and us.

Ratification of Charter Provisions. Our board of directors and the conflicts committee have reviewed and ratified our charter by the vote of a majority of their respective members, as required by our charter.

Allocation of Investment Opportunities

Many investment opportunities that are suitable for us may also be suitable for other KBS-sponsored programs, as well as for the institutional investors for whom KBS Realty Advisors and its affiliates serve as investment advisors. KBS Capital Advisors, our advisor and the advisor to KBS REIT I, KBS REIT III, KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT, and KBS Realty Advisors and its affiliates share many of the same key real estate and debt finance professionals. When these KBS real estate and debt finance professionals direct an investment opportunity to any KBS-sponsored program or one of the institutional investors, they, in their sole discretion, will have to determine the program or investor for which the investment opportunity is most suitable based on the investment objectives, portfolio and criteria of each program or investor. Our advisory agreement with KBS Capital Advisors requires that this determination be made in a manner that is fair without favoring any other KBS-sponsored program or investor. The factors that the KBS real estate and debt finance professionals will consider when determining the KBS-sponsored program or investor for which an investment opportunity would be the most suitable are the following:

• the investment objectives and criteria of each program or investor;

• the cash requirements of each program or investor;

• the effect of the investment on the diversification of each program’s or investor’s portfolio by type of investment, risk of investment, type of commercial property, geographic location of properties, and tenants of properties;

• the policy of each program or investor relating to leverage;

• the anticipated cash flow of the property or asset to be acquired;

• the income tax effects of the purchase on each program or investor;

• the size of the investment; and

• the amount of funds available to each program or investor and the length of time such funds have been available for investment.

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If a subsequent event or development, such as a delay in the closing of a property or investment or a delay in the construction of a property, causes any investment, in the opinion of the KBS real estate or debt finance professionals, to be more appropriate for another KBS program or investor, they may offer the investment to another KBS program or investor.

Our advisory agreement with KBS Capital Advisors requires that KBS Capital Advisors inform the conflicts committee each quarter of the investments that have been purchased by other KBS programs and investors for whom KBS Capital Advisors, KBS Realty Advisors or one of their affiliates serves as an investment advisor so that the conflicts committee can evaluate whether we are receiving our fair share of opportunities. KBS Capital Advisors’ success in generating investment opportunities for us and the fair allocation of opportunities among KBS programs and investors are important factors in the conflicts committee’s determination to continue or renew our arrangements with KBS Capital Advisors and its affiliates. The conflicts committee has a duty to ensure that favorable investment opportunities are not disproportionately allocated to other KBS-sponsored programs and investors. For so long as we are externally advised, our charter provides that it shall not be a proper purpose of the corporation for us to purchase real estate or any significant asset related to real estate unless the advisor has recommended the investment to us.

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INVESTMENT OBJECTIVES AND CRITERIA

General

We intend to invest in and manage a diverse portfolio of real estate properties and real estate-related assets, including the acquisition of commercial properties and investment in and origination of real estate-related investments such as mortgage, mezzanine, bridge and other loans; debt securities such as mortgage-backed securities and debt securities issued by other real estate companies; equity securities of real estate companies; and certain types of illiquid securities. We may make our investments through the acquisition of individual assets and loan originations or by acquiring portfolios of assets, other REITs or real estate companies. We plan to diversify our portfolio by investment type, investment size and investment risk with the goal of attaining a portfolio of income-producing assets that provide attractive and stable returns to our investors. We expect our real property investments to be located in large metropolitan areas in the United States. Our primary investment objectives are:

• to provide you with attractive and stable cash distributions; and

• to preserve and return your capital contribution.

We will also seek to realize growth in the value of our investments by timing asset sales to maximize their value.

We may return all or a portion of your capital contribution in connection with the sale of the company or the assets we acquire or upon maturity or payoff of our debt investments. Alternatively, you may be able to obtain a return of all or a portion of your capital contribution in connection with the sale of your shares.

We may seek to list our shares of common stock if our independent directors believe listing would be in the best interests of our stockholders. If we do not list our shares of common stock on a national securities exchange by March 31, 2018, our charter requires that we either:

• seek stockholder approval of the liquidation of the company; or

• if a majority of the conflicts committee determines that liquidation is not then in the best interests of our stockholders, postpone the decision of whether to liquidate the company.

If a majority of the conflicts committee does determine that liquidation is not then in the best interests of our stockholders, our charter requires that the conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of our stockholders. If we sought and failed to obtain stockholder approval of our liquidation, our charter would not require us to list or liquidate, and we could continue to operate as before. If we sought and obtained stockholder approval of our liquidation, we would begin an orderly sale of our properties and other assets. The precise timing of such sales would take account of the prevailing real estate and financial markets, the economic conditions in the submarkets where our properties are located and the federal income tax consequences to our stockholders. In making the decision to apply for listing of our shares, our directors will try to determine whether listing our shares or liquidating our assets will result in greater value for stockholders.

One of the factors our board of directors will consider when making this determination is the liquidity needs of our stockholders. In assessing whether to list or liquidate, our board of directors would likely solicit input from financial advisors as to the likely demand for our shares upon listing. If, after listing, the board believed that it would be difficult for stockholders to dispose of their shares, then that factor would weigh against listing. However, this would not be the only factor considered by the board. If listing still appeared to be in the best long-term interest of our stockholders, despite the prospects of a relatively small market for our shares upon the initial listing, the board may still opt to list our shares of common stock in keeping with its obligations under Maryland law. The board would also likely consider whether there was a large demand to sell our shares when making decisions regarding listing or liquidation. The degree of participation in our dividend reinvestment plan and the number of requests for redemptions under the share redemption program at this time could be an indicator of stockholder demand to liquidate their investment.

Our board may revise our investment policies, which we describe in more detail below, without the approval of our stockholders. Our conflicts committee reviews our investment policies at least annually to determine whether our policies are in the best interests of our stockholders. Our charter requires that the conflicts committee include the basis for its determination in its minutes and in an annual report delivered to our stockholders.

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Acquisition and Investment Policies

Primary Investment Focus

We intend to focus our investment activities on, and use the proceeds of this offering principally for, investment in and management of a diverse portfolio of real estate properties and real estate-related assets. We plan to diversify our portfolio by property type, geographic region, investment size and investment risk with the goal of attaining a portfolio of income-producing real estate properties and real estate-related assets that provide attractive and stable returns to our investors. We intend to allocate between 60% and 70% of our portfolio to investments in core properties, which are generally existing properties with at least 80% occupancy and minimal near-term rollover, and allocate between 30% and 40% of our portfolio to other real estate-related investments. These real estate-related assets may include mortgage, mezzanine, bridge and other loans; debt securities such as mortgage-backed securities and debt securities issued by other real estate companies; equity securities of real estate companies; and certain types of illiquid securities. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time.

Although this is our target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego a good investment because it does not precisely fit our expected portfolio composition. We believe that we are most likely to meet our investment objectives through the careful selection and underwriting of assets. When making an acquisition, we focus on the performance and risk characteristics of that investment, how that investment will fit with our portfolio-level performance objectives, the other assets in our portfolio and how the returns and risks of that investment compare to the returns and risks of available investment alternatives. Thus, to the extent that our advisor presents us with good investment opportunities that allow us to meet the REIT requirements under the Internal Revenue Code, our portfolio may consist of a greater percentage of real estate-related investments.

Investments in Real Properties

We expect to invest in core properties, which are generally lower risk, existing properties with at least 80% occupancy and minimal near-term lease rollover. The types of properties that we may invest in include office, industrial, and retail properties located throughout the United States. Although we may invest in any of these types of properties, the primary property types in which we intend to invest are as follows (in no order of priority):

• office properties—including low-rise, mid-rise and high-rise office buildings and office parks in urban and suburban locations, especially those that are in or near central business districts or have access to transportation; and

• industrial properties—including warehouse and distribution facilities, office/warehouse flex properties, research and development properties and light industrial properties.

We will generally hold fee title or a long-term leasehold estate in the properties we acquire. We may also invest in or acquire operating companies or other entities that own and operate assets that meet our investment objectives. We will make investments in other entities when we consider it more efficient to acquire an entity that already owns assets meeting our investment objectives than to acquire such assets directly. We may also participate with other entities (including non-affiliated entities) in property ownership through joint ventures, limited liability companies, partnerships and other types of common ownership.

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Our advisor intends to diversify our real estate property investments by geographic region and investment size. Though we are not limited as to the specific geographic areas where we may conduct our operations, we expect to purchase properties in large metropolitan areas located in the United States. We will focus on markets where KBS affiliates have an established market presence, market knowledge and access to potential investments, as well as an ability to direct property management and leasing operations efficiently. We will review and change our target markets periodically in response to changing market opportunities and to maintain a diverse portfolio. Our initial target markets are:

Western Region	Central Region	Eastern Region
Denver Los Angeles/ Orange County Phoenix Riverside/ San Bernardino Sacramento San Diego San Francisco Bay Area Seattle	Austin Chicago Dallas Houston Minneapolis	Atlanta Boston Greater New York Area Greater Philadelphia Area Northern New Jersey Northern Virginia Washington, D.C.

Economic and real estate market conditions vary widely both region to region and among different property types within each region and submarket, and we intend to spread our investments both across these regions and among the submarkets within these regions.

We also intend to diversify by investment size. We expect that our real property investments will typically range in size from $10 million to $100 million; however, we may make investments outside of this range. For example, we may make investments for less than $10 million if the acquired property will complement our existing portfolio. Further, we may invest more than $100 million in a single property if we believe that property will help us meet our investment objectives. We do not expect that we will invest more than $300 million in any single property.

We generally intend to hold our core properties for four to seven years, which we believe is the optimal period to enable us to capitalize on the potential for increased income and capital appreciation of properties. However, economic and market conditions may influence us to hold our investments for different periods of time.

Conditions to Closing Real Property Investments. Our advisor will perform a diligence review on each property that we purchase. As part of this review, our advisor will obtain an environmental site assessment for each proposed acquisition (which at a minimum includes a Phase I assessment). We will not close the purchase of any property unless we are generally satisfied with the environmental status of the property. All of our property acquisitions will also be supported by an appraisal prepared by a competent, independent appraiser who is a member-in-good standing of the Appraisal Institute. Our investment policy currently provides that the purchase price of each property will not exceed its appraised value at the time of our acquisition of the property. Appraisals, however, are estimates of value and should not be relied upon as measures of true worth or realizable value. We will also generally seek to condition our obligation to close the purchase of any investment on the delivery of certain documents from the seller or developer. Such documents include, where available:

• plans and specifications;

• surveys;

• evidence of marketable title, subject to such liens and encumbrances as are acceptable to KBS Capital Advisors;

• title insurance policies; and

• financial statements covering recent operations of properties that have operating histories.

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Tenant Improvements. We anticipate that tenant improvements required at the time of our acquisition of a property will be funded from our offering proceeds. However, at such time as a tenant of one of our properties does not renew its lease or otherwise vacates its space in one of our buildings, it is likely that, in order to attract new tenants, we will be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated space.

Terms of Leases. We expect that the vast majority of the leases we enter will provide for tenant reimbursement of operating expenses. Operating expenses typically include real estate taxes, special assessments, insurance, utilities, common area maintenance and some building repairs. We also intend to include provisions in our leases that increase the amount of base rent payable at various points during the lease term and/or provide for the payment of additional rent calculated as a percentage of a tenant’s gross sales above predetermined thresholds. However, the terms and conditions of any leases we enter with respect to the properties we acquire may vary substantially from those described. To the extent material to a decision to purchase shares in this offering, we will describe the terms of leases on properties we acquire by means of a supplement to this prospectus.

Tenant Creditworthiness. We will execute new tenant leases and tenant lease renewals, expansions and extensions with terms dictated by the current submarket conditions and the verifiable creditworthiness of each particular tenant. We will use a number of industry credit rating services to determine the creditworthiness of potential tenants and any personal guarantor or corporate guarantor of each potential tenant. The reports produced by these services will be compared to the relevant financial data collected from these parties before consummating a lease transaction. Relevant financial data from potential tenants and guarantors include income statements and balance sheets for the current year and for prior periods, net worth or cash flow statements of guarantors and other information we deem relevant. Third-party brokers will handle the lease-up of our properties with the supervision, support and assistance of the KBS Capital Advisors asset manager that is responsible for managing the lease-up and operation of the property through its sale.

Investments in and Originating Loans

We also expect to make substantial investments in real estate-related loans, including first and second mortgage loans, mezzanine loans, B-Notes, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans and participations in such loans. We intend to structure, underwrite and originate some of the debt products in which we invest. Our underwriting process will involve comprehensive financial, structural, operational and legal due diligence to assess the risks of investments so that we can optimize pricing and structuring. By originating loans directly, we will be able to efficiently structure a diverse range of products. For instance, we may sell some components of the debt we originate while retaining attractive, risk-adjusted strips of the debt for ourselves. Our advisor or a wholly owned subsidiary of our advisor will source our debt investments. We will pay our advisor or its subsidiary origination fees for loans that we make or acquire and asset management fees for the loans that we hold for investment.

We may sell some of the loans (or portions of the loans after separating them into tranches) that we originate to third parties for a profit. We expect to hold other loans (or portions of loans) for investment.

We will fund the loans we originate with proceeds from this offering and, to the extent available, we may fund our investments in loans with proceeds from warehouse lines of credit, repurchase agreements or other borrowings.

Described below are some of the types of loans we may originate or acquire:

Mortgage Loans. We may originate or acquire mortgage loans structured to permit us (i) to retain the entire loan or (ii) to sell the lower yielding senior portions of the loan and retain the higher yielding subordinate investment (or vice-versa). We expect these loans to be secured by commercial properties and range in size from $5 million to $50 million, generally, with exceptions, such as high-quality loans with low loan-to-value ratios. We may also acquire seasoned mortgage loans in the secondary market secured by single assets as well as portfolios of performing and sub-performing loans that were originated by third-party lenders such as banks, life insurance companies and other owners.

Second Mortgages. We may invest in second mortgages, which are loans secured by second deeds of trust on real property that is already subject to prior mortgage indebtedness, in an amount which, when added to the existing indebtedness, does not generally exceed 75% of the appraised value of the mortgage property.

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B-Notes. B-Notes are junior participations in a first mortgage loan on a single property or group of related properties. The senior participation is known as an A-Note. Although a B-Note may be evidenced by its own promissory note, it shares a single borrower and mortgage with the A-Note and is secured by the same collateral. B-Note lenders have the same obligations, collateral and borrower as the A-Note lender, but in most instances B-Note lenders are contractually limited in rights and remedies in the event of a default. The B-Note is subordinate to the A-Note by virtue of a contractual or intercreditor arrangement between the A-Note lender and the B-Note lender. For the B-Note lender to actively pursue its available remedies (if any), it must, in most instances, purchase the A-Note or maintain its performing status in the event of a default on the B-Note. The B-Note lender may in some instances require a security interest in the stock or partnership interests of the borrower as part of the transaction. If the B-Note holder can obtain a security interest, it may be able to accelerate gaining control of the underlying property, subject to the rights of the A-Note holder. These debt instruments are senior to the mezzanine debt tranches described below, though they may be junior to another junior participation in the first mortgage loan. B-Notes may or may not be rated by a recognized rating agency.

B-Notes typically are secured by a single property, and the associated credit risk is concentrated in that single property. B-Notes share certain credit characteristics with second mortgages in that both are subject to more credit risk with respect to the underlying mortgage collateral than the corresponding first mortgage or the A-Note. Our management believes that B-Notes are one of the safest subordinated debt instruments because B-Notes share a single mortgage with the A-Note and, as a result, its position survives an event of foreclosure. After the A-Note is satisfied, any remaining recoveries go next to the B-Note holder.

Mezzanine Loans. The mezzanine loans we may originate or acquire will generally take the form of subordinated loans secured by a pledge of the ownership interests of an entity that directly or indirectly owns real property. We may hold senior or junior positions in mezzanine loans, such senior or junior position denoting the particular leverage strip that may apply.

We may require other collateral to provide additional security for mezzanine loans, including letters of credit, personal guarantees or collateral unrelated to the property. We may structure our mezzanine loans so that we receive a stated fixed or variable interest rate on the loan as well as a percentage of gross revenues and a percentage of the increase in the fair market value of the property securing the loan, payable upon maturity, refinancing or sale of the property. Our mezzanine loans may also have prepayment lockouts, penalties, minimum profit hurdles and other mechanisms to protect and enhance returns in the event of premature repayment.

These investments typically range in size from $10 to $50 million, have terms from two to ten years and bear interest at a rate of 275 to 800 basis points over the applicable interest rate index. Mezzanine loans may have maturities that match the maturity of the related mortgage loan but may have shorter terms. Mezzanine loans usually have loan-to-value ratios between 66% and 90%.

These types of investments generally involve a lower degree of risk than an equity investment in an entity that owns real property because the mezzanine investment is generally secured by the ownership interests in the property-owning entity and, as a result, is senior to the equity. Upon a default by the borrower under the mezzanine loan, the mezzanine lender generally can take immediate control and ownership of the property-owning entity, subject to the senior mortgage on the property that stays in place in the event of a mezzanine default and change of control of the borrower.

These types of investments involve a higher degree of risk relative to the long-term senior mortgage secured by the underlying real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy the mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt.

Bridge Loans. We may offer bridge financing products to borrowers who are typically seeking short-term capital to be used in an acquisition, development or refinancing of a given property. From the borrower’s perspective, shorter term bridge financing is advantageous because it allows time to improve the property value through repositioning without encumbering it with restrictive long-term debt. The terms of these loans generally do not exceed three years.

Convertible Mortgages. Convertible mortgages are similar to equity participations. We may invest in and/or originate convertible mortgages if our directors conclude that we may benefit from the cash flow or any appreciation in the value of the subject property.

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Wraparound Mortgages. A wraparound mortgage loan is secured by a wraparound deed of trust on a real property that is already subject to prior mortgage indebtedness, in an amount which, when added to the existing indebtedness, does not generally exceed 75% of the appraised value of the mortgage property. A wraparound loan is one or more junior mortgage loans having a principal amount equal to the outstanding balance under the existing mortgage loan, plus the amount actually to be advanced under the wraparound mortgage loan. Under a wraparound loan, we would generally make principal and interest payments on behalf of the borrower to the holders of the prior mortgage loans.

Construction Loans. Construction loans are loans made for either original development or renovation of property. Construction loans in which we would generally consider an investment would be secured by first deeds of trust on real property for terms of six months to two years.

Loans on Leasehold Interests. Loans on leasehold interests are secured by an assignment of the borrower’s leasehold interest in the particular real property. These loans are generally for terms of six months to 15 years. Leasehold interest loans are either amortized over a period that is shorter than the lease term or have a maturity date prior to the date the lease terminates. These loans would generally permit us to cure any default under the lease.

Participations. Participation investments are investments in partial interests of loans of the type described above that are made and administered by third-party lenders.

Underwriting Loans. We will not make or invest in mortgage loans unless we obtain an appraisal concerning the underlying property, except for mortgage loans insured or guaranteed by a government or government agency. We will maintain each appraisal in our records for at least five years and will make it available during normal business hours for inspection and duplication by any stockholder at such stockholder’s expense. In addition to the appraisal, we will seek to obtain a customary lender’s title insurance policy or commitment as to the priority of the mortgage or condition of the title.

We will not make or invest in mortgage loans on any one property if the aggregate amount of all mortgage loans outstanding on the property, including our borrowings, would exceed an amount equal to 85% of the appraised value of the property, unless we find substantial justification due to the presence of other underwriting criteria. We may find such justification in connection with the purchase of mortgage loans in cases in which we believe there is a high probability of our foreclosure upon the property in order to acquire the underlying assets and in which the cost of the mortgage loan investment does not exceed the appraised value of the underlying property. Such mortgages may or may not be insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs or another third party.

In evaluating prospective investments in and originations of loans, our management and our advisor will consider factors such as the following:

• the ratio of the amount of the investment to the value of the property by which it is secured;

• the amount of existing debt on the property and the priority thereof relative to our prospective investment;

• the property’s potential for capital appreciation;

• expected levels of rental and occupancy rates;

• current and projected cash flow of the property;

• potential for rental increases;

• the degree of liquidity of the investment;

• the geographic location of the property;

• the condition and use of the property;

• the property’s income-producing capacity;

• the quality, experience and creditworthiness of the borrower; and

• general economic conditions in the area where the property is located.

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Our advisor will evaluate all potential loan investments to determine if the security for the loan and the loan-to-value ratio meets our investment criteria and objectives. One of the real estate or debt finance professionals at our advisor or its subsidiary or their agent may inspect material properties during the loan approval process, if such an inspection is deemed necessary. Inspection of a property may be deemed necessary if that property is considered material to the transaction (such as a property representing a significant portion of the collateral underlying a pool of loans) or if there are unique circumstances related to such property such as recent capital improvements or possible functional obsolescence. We also may engage trusted third-party professionals to inspect properties on our behalf. Most loans that we will consider for investment would provide for monthly payments of interest and some may also provide for principal amortization, although we expect that most of the loans in which we will invest will provide for payments of interest only during the loan term and a payment of principal in full at the end of the loan term. We do not expect to make or invest in loans with a maturity of more than ten years from the date of our investment and anticipate that most loans will have a term of five years. We may hold some of our investments in loans for four to seven years, though we expect to hold some for two to three years. As discussed above, some of the loans we make will be sold shortly after origination.

Our loan investments may be subject to regulation by federal, state and local authorities and subject to laws and judicial and administrative decisions imposing various requirements and restrictions, including, among other things, regulating credit granting activities, establishing maximum interest rates and finance charges, requiring disclosure to customers, governing secured transactions and setting collection, repossession and claims handling procedures and other trade practices. In addition, certain states have enacted legislation requiring the licensing of mortgage bankers or other lenders, and these requirements may affect our ability to effectuate our proposed investments in loans. Commencement of operations in these or other jurisdictions may be dependent upon a finding of our financial responsibility, character and fitness. We may determine not to make loans in any jurisdiction in which the regulatory authority believes that we have not complied in all material respects with applicable requirements.

As discussed above, once we have fully invested the proceeds of this offering, we expect between 30% and 40% of our portfolio to consist of real estate-related assets, including mortgage, mezzanine, bridge and other loans. Although this is our current target portfolio, we will not forego a good investment because it does not precisely fit our expected portfolio composition. Further, we may make adjustments to our target portfolio based on real estate market conditions. Our charter does not limit the amount of gross offering proceeds that we may apply to loan investments. Our charter also does not place any limit or restriction on:

• the percentage of our assets that may be invested in any type of loan or in any single loan; or

• the types of properties subject to mortgages or other loans in which we may invest.

When determining whether to make investments in mortgage and other loans, we will consider such factors as: positioning the overall portfolio to achieve an optimal mix of real estate properties and real estate-related investments; the diversification benefits of the loans relative to the rest of the portfolio; the potential for the investment to deliver high current income and attractive risk-adjusted total returns; and other factors considered important to meeting our investment objectives.

Investments in Real Estate-Related Debt Securities

In addition to investments in properties, loans and equity securities (discussed below), we may also invest in real estate-related debt securities such as mortgage-backed securities, collateralized debt obligations and debt securities issued by other real estate companies. While we may invest in any of these debt-related securities, we expect that the majority of these investments would be commercial mortgage-backed securities. A brief description of commercial mortgage-backed securities and collateralized debt obligations follows.

Commercial Mortgage-Backed Securities. Commercial mortgage-backed securities, or CMBS, are securities that evidence interests in, or are secured by, a single commercial mortgage loan or a pool of commercial mortgage loans. Accordingly, these securities are subject to all of the risks of the underlying mortgage loans.

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CMBS are generally pass-through certificates that represent beneficial ownership interests in common law trusts whose assets consist of defined portfolios of one or more commercial mortgage loans. They are typically issued in multiple tranches whereby the more senior classes are entitled to priority distributions from the trust’s income. Losses and other shortfalls from expected amounts to be received on the mortgage pool are borne by the most subordinate classes, which receive payments only after the more senior classes have received all principal and/or interest to which they are entitled. The equity tranche, which is the “first loss” position, bears most of the risk associated with the collateral pool. It is possible for a relatively few number of defaults in the collateral pool to cause large losses for the equity tranche. However, if the collateral pool performs well, the equity tranche has a greater potential return than the more senior tranches, which typically have returns capped at the coupon rates of the notes created in the structure.

In addition to tranche seniority, the credit quality of mortgage-backed securities depends on the credit quality of the underlying mortgage loans, the real estate finance market and the parties directly involved in the transaction, which is a function of factors such as:

• the principal amount of the loans relative to the value of the related properties;

• the mortgage loan terms (e.g. amortization);

• market assessment and geographic location;

• construction quality of the property;

• the creditworthiness of the borrowers;

• macroeconomic variables that affect the supply and demand for commercial real estate;

• structural features of the transaction, such as subordination levels, advancing terms and other credit enhancements;

• the originator of the loan and its motivation to sell it;

• the underwriter and issuer of the transaction and their ability to trade and support it in the secondary markets; and

• the servicers and trustees responsible for running and maintaining the transaction on a daily basis.

Collateralized Debt Obligations. CDOs are multiple class debt securities, or bonds, secured by pools of assets, such as mortgage-backed securities, B-Notes, mezzanine loans, REIT debt and credit default swaps. Like typical securitization structures, in a collateralized debt obligation the assets are pledged to a trustee for the benefit of the holders of the bonds. We may invest in investment grade and non-investment grade CDO classes.

Ratings of Real Estate-Related Debt Securities. For mortgage-backed securities and CDOs, the securitization process is governed by one or more of the rating agencies, including Fitch, Moody’s and Standard & Poor’s, who determine the respective bond class sizes, generally based on a sequential payment structure. Bonds that are rated from AAA to BBB by the rating agencies are considered “investment grade.” Bond classes that are subordinate to the BBB class are considered “non-investment” grade. The respective bond class sizes are determined based on the review of the underlying collateral by the rating agencies. The payments received from the underlying loans are used to make the payments on the securities. Based on the sequential payment priority, the risk of nonpayment for the AAA securities is lower than the risk of nonpayment for the non-investment grade bonds. Accordingly, the AAA class is typically sold at a lower yield compared to the non-investment grade classes that are sold at higher yields. We may invest in investment grade and non-investment grade classes.

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We evaluate the risk of investment grade and non-investment grade mortgage-backed securities and CDOs based on the credit risk of the underlying collateral and the risk of the transactional structure. The credit risk of the underlying collateral is crucial in evaluating the expected performance of an investment. Key variables in this assessment include rent levels, vacancy rates, supply and demand forecasts and tenant incentives (build-out incentives or other rent concessions) related to the underlying properties. We utilize third party data providers to review loan level performance such as delinquencies and threats to credit performance. We also review monthly servicing reports of the master and special servicers as well as reports from rating agencies. We perform specific asset-level underwriting on all significant loans in the securities structure. We utilize sensitivity analysis and other statistical underwriting when evaluating the cash flows generated by a transaction. With respect to transactional structure, we assess the structure of a particular securities transaction as well as utilize third party data providers for a structural sensitivity analysis. After assessing loan-level data and structural data, we combine this information to forecast expected cash flows, probability of default and loss given a default.

Investments in Equity Securities

We may make equity investments in REITs and other real estate companies with investment objectives similar to ours. We may purchase the common or preferred stock of these entities or options to acquire their stock. We may target a public company that owns commercial real estate or real estate-related assets when we believe its stock is trading at a discount to that company’s net asset value. We may eventually seek to acquire or gain a controlling interest in the companies that we target. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time.

We will make investments in other entities when we consider it more efficient to acquire an entity that already owns assets meeting our investment objectives than to acquire such assets directly. We may also participate with other entities in property ownership through joint ventures, limited liability companies, partnerships and other types of common ownership.

Other Possible Investments

Although we expect that most of our property acquisitions will be of the type described above, we may make other investments. We may invest in enhanced-return properties, which are higher-yield and higher-risk investments than core properties. Examples of enhanced-return properties that we may acquire and reposition include: properties with moderate vacancies or near-term lease rollovers; poorly managed and positioned properties; properties owned by distressed sellers; and built-to-suit properties. We may also acquire properties that are mixed-use properties, properties that are under development or construction, undeveloped land, options to purchase properties and other real estate-related assets. We may enter into arrangements with the seller or developer of a property whereby the seller or developer agrees that if, during a stated period, the property does not generate a specified cash flow, the seller or developer will pay in cash to us a sum necessary to reach the specified cash flow level, subject in some cases to negotiated dollar limitations. In fact, we may invest in whatever types of interests in real estate that we believe are in our best interests.

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Although we can purchase any type of interest in real estate, our charter does limit certain types of investments. Unless our charter is amended, we will not:

• invest more than 10% of our total assets in unimproved property or mortgage loans on unimproved property, which we define as property not acquired for the purpose of producing rental or other operating income or on which there is no development or construction in progress or planned to commence within one year;

• make or invest in mortgage loans unless an appraisal is available concerning the underlying property, except for those mortgage loans insured or guaranteed by a government or government agency;

• make or invest in mortgage loans, including construction loans, on any one property if the aggregate amount of all mortgage loans on such property would exceed an amount equal to 85% of the appraised value of such property as determined by appraisal, unless substantial justification exists for exceeding such limit because of the presence of other underwriting criteria;

• acquire equity securities unless a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction approves such investment as being fair, competitive and commercially reasonable, provided that investments in equity securities in “publicly traded entities” that are otherwise approved by a majority of our directors (including a majority of our independent directors) shall be deemed fair, competitive and commercially reasonable if we acquire the equity securities through a trade that is effected in a recognized securities market (a “publicly traded entity” shall mean any entity having securities listed on a national securities exchange or included for quotation on an inter-dealer quotation system), and provided further that this limitation does not apply to (i) real estate acquisitions effected through the purchase of all of the equity securities of an existing entity, (ii) the investment in wholly owned subsidiaries of ours or (iii) investments in mortgage-backed securities;

• invest in real estate contracts of sale, otherwise known as land sale contracts, unless the contract is in recordable form and is appropriately recorded in the chain of title; or

• invest in commodities or commodity futures contracts, except for futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in real estate assets and mortgages.

We do not expect to invest in properties located outside of the United States or in single-purpose properties, such as golf courses or specialized manufacturing buildings. We also do not intend to make loans to other persons (other than the loans described above), to underwrite securities of other issuers or to engage in the purchase and sale of any types of investments other than interests in real estate properties and real estate-related assets.

Investment Decisions and Asset Management: The KBS Approach

Within our investment policies and objectives, our advisor, KBS Capital Advisors, has substantial discretion with respect to the selection of specific investments and the purchase and sale of our assets, subject to the approval of our conflicts committee. Our conflicts committee reviews our investment policies at least annually to determine whether our investment policies continue to be in the best interests of our stockholders.

KBS Capital Advisors believes that successful real estate investment requires the implementation of strategies that permit favorable purchases and originations, effective asset management and timely disposition of those assets. As such, KBS Capital Advisors has developed a disciplined investment approach that combines the experience of its team of real estate and debt finance professionals with a structure that emphasizes thorough market research, stringent underwriting standards and an extensive down-side analysis of the risks of each investment. The KBS approach also includes active and aggressive management of each asset acquired. KBS Capital Advisors believes that active management is critical to creating value. Our advisor will also develop a well-defined exit strategy for each investment we make. Specifically, our advisor will assign a sale date to each asset we acquire prior to its purchase as part of the original business plan for the asset. KBS Capital Advisors will then continually re-evaluate the exit strategy of each asset in response to the performance of the individual asset, market conditions and our overall portfolio objectives to determine the optimal time to sell the asset.

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Messrs. Bren and Schreiber each average over 30 years of real estate experience, and each of our sponsors – Messrs. Bren, Hall, McMillan and Schreiber – has over 16 years of experience in real estate-related debt investments. Messrs. Bren, Hall, McMillan and Schreiber work together with their team of real estate and debt finance professionals in the identification, acquisition and management of our investments. In addition, the key real estate professionals at our advisor – James Chiboucas, William Milligan, Kenneth L. McKay, Charles B. Lindwall, Lori A. Lewis and David E. Snyder – each has over 16 years of real estate experience. Each of them has been through multiple real estate cycles in their careers. These seasoned professionals have the expertise gained through hands-on experience in acquisitions, asset management, dispositions, development, leasing, property management and portfolio management.

In an effort to both find better investment opportunities and enhance the performance of those investments, KBS Capital Advisors utilizes a market-focused structure. KBS Capital Advisors has divided the country into three regions: the Eastern, Central and Western United States. Each region has a regional president who is responsible for executing our investment strategy and actively managing the asset managers in that region. Asset managers are typically responsible for investments in only a few markets, which allows them to have in-depth knowledge of each market for which they are responsible. This focus also allows the asset managers to establish networks of relationships with each market’s leasing and investment brokers and owners. We believe this regionally aligned organization that emphasizes local market knowledge provides better investment selection at acquisition, quicker lease-up of vacant space, better investment operating performance and more timely execution of a sale.

To execute KBS Capital Advisors’ disciplined investment approach, a team of our advisor’s real estate and debt finance professionals takes responsibility for the business plan of each investment. The following practices summarize KBS Capital Advisors’ investment approach:

• National Market Research—The investment team extensively researches the acquisition and/or origination and underwriting of each transaction, utilizing both “real time” market data and the transactional knowledge and experience of KBS Capital Advisors’ network of professionals.

• Underwriting Discipline—KBS Capital Advisors follows a tightly controlled and managed process to examine all elements of a potential investment, including, with respect to real property, its location, income-producing capacity, prospects for long-range appreciation, income tax considerations and liquidity. Only those assets meeting our investment criteria will be accepted for inclusion in our portfolio. In an effort to keep an asset in compliance with those standards, the underwriting team remains involved through the investment life cycle of the asset and consults with the other KBS professionals responsible for the asset. This team of experts reviews and develops comprehensive reports for each asset throughout the holding period.

• Risk Management—Risk management is a fundamental principle in our advisor’s construction of portfolios and in the management of each investment. Diversification of portfolios by investment type, investment size and investment risk is critical to controlling portfolio-level risk. Operating or performance risks arise at the investment level and often require real estate operating experience to cure. KBS Capital Advisors’ real estate and debt finance professionals continuously review the operating performance of investments against projections and provides the oversight necessary to detect and resolve issues as they arise.

• Asset Management—Prior to the purchase of an individual asset or portfolio, the asset managers work closely with the regional president and the acquisition and underwriting teams to develop an asset business strategy. This is a forecast of the action items to be taken and the capital needed to achieve the anticipated returns. KBS Capital Advisors reviews asset business strategies quarterly to anticipate changes or opportunities in the market during a given phase of a real estate cycle. KBS Capital Advisors designed this process to allow for realistic yet aggressive enhancement of value throughout the investment period.

Joint Venture Investments

We may enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) or participations for the purpose of obtaining interests in real estate properties and other real estate investments. We may also enter into joint ventures for the development or improvement of properties. Joint venture investments permit us to own interests in large properties and other investments without unduly restricting the diversity of our portfolio. In determining whether to invest in a particular joint venture, KBS Capital Advisors will evaluate the real estate properties and/or real estate-related assets that such joint venture owns or is being formed to own under the same criteria described elsewhere in this prospectus for the selection of our investments.

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KBS Capital Advisors will also evaluate the potential joint venture partner as to its financial condition, operating capabilities and integrity. We will only enter into joint ventures with non-affiliated third parties. At such time during the term of this offering that KBS Capital Advisors believes that there is a reasonable probability that we will enter into a joint venture for the acquisition or origination of a significant investment, we will supplement this prospectus to disclose the terms of such investment transaction. You should not rely upon such initial disclosure of any proposed transaction as an assurance that we will ultimately consummate the proposed transaction or that the information we provide in any supplement to this prospectus concerning any proposed transaction will not change after the date of the supplement.

We have not established the specific terms we will require in the joint venture agreements we may enter. Instead, we will establish the terms with respect to any particular joint venture agreement on a case-by-case basis after our board of directors considers all of the facts that are relevant, such as the nature and attributes of our other potential joint venture partners, the proposed structure of the joint venture, the nature of the operations, the liabilities and assets associated with the proposed joint venture and the size of our interest when compared to the interests owned by other partners in the venture. With respect to any joint venture we enter, we expect to consider the following types of concerns and safeguards:

• Our ability to manage and control the joint venture.—We will consider whether we should obtain certain approval rights in joint ventures we do not control. For proposed joint ventures in which we are to share control with another entity, we will consider the procedures to address decisions in the event of an impasse.

• Our ability to exit a joint venture.—We consider requiring buy/sell rights, redemption rights or forced liquidation rights.

• Our ability to control transfers of interests held by other partners to the venture. — We will consider requiring consent provisions, a right of first refusal and/or forced redemption rights in connection with transfers.

Borrowing Policies

We may use borrowing proceeds to finance acquisitions of new properties or assets or for originations of new loans; to pay for capital improvements, repairs or tenant build-outs to properties; to refinance existing indebtedness; to pay distributions; or to provide working capital. Careful use of debt will help us to achieve our diversification goals because we will have more funds available for investment. Our investment strategy is to utilize primarily secured and possibly unsecured debt to finance our investment portfolio; however, given the current debt market environment, we may elect to forego the use of debt on some or all of our future real estate acquisitions. We may elect to secure financing subsequent to the acquisition date on future real estate properties and initially acquire investments without debt financing. To the extent that we do not finance our properties and other investments, our ability to acquire additional properties and real estate-related investments will be restricted.

Once we have fully invested the proceeds of this offering, we expect our debt financing to be between 50% and 65% of the cost of our tangible assets (before deducting depreciation or other noncash reserves). There is no limitation on the amount we may borrow for the purchase of any single asset. Our charter limits our borrowings to 75% of the cost (before deducting depreciation or other noncash reserves) of our tangible assets; however, we may exceed that limit if the majority of the conflicts committee approves each borrowing in excess of our charter limitation and we disclose such borrowings to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. To the extent financing in excess of our charter limit is available at attractive terms, the conflicts committee may approve debt in excess of this limit. From time to time, our debt financing may be below 50% of the cost of our tangible assets due to the lack of availability of debt financing. We did not exceed our charter limitation on borrowings during any quarter of 2008 or 2009.

We may incur indebtedness in the form of bank borrowings, purchase money obligations to the sellers of properties we purchase, publicly and privately-placed debt instruments and/ or financings from institutional investors or other lenders. This indebtedness may be unsecured or secured by mortgages or other interests in our assets, or may be limited to the particular property to which the indebtedness relates.

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We may finance the acquisition or origination of certain real estate-related investments with repurchase agreements and warehouse lines of credit. With repurchase agreements, we may borrow against the loans, mortgage-backed securities and other investments we own. Under these agreements, we may sell loans and other investments to a counterparty and agree to repurchase the same assets from the counterparty at a price equal to the original sales price plus an interest factor. Repurchase agreements economically resemble short-term, variable-rate financings and usually require the maintenance of specific loan-to-collateral value ratios. If the market value of the assets subject to a repurchase agreement decline, we may be required to provide additional collateral or make cash payments to maintain the loan to collateral value ratio. If we are unable to provide such collateral or cash repayments, we may lose our economic interest in the underlying assets. We may also rely on warehouse credit facilities for capital needed to fund our investments. These facilities are typically lines of credit from commercial and investment banks that we can draw from to fund our investments. Warehouse facilities are typically collateralized loans made to investors who invest in securities and loans and, in return for financing, pledge their securities and loans to the warehouse lender. Third-party custodians, usually banks, typically hold the securities and loans funded with the warehouse facility borrowings, including the securities, loans, notes, mortgages and other important loan documentation, for the benefit of the investor who is deemed to own the securities and loans and, if there is a default under the warehouse credit facility, for the benefit of the warehouse lender. Warehouse facilities, bank credit facilities and repurchase agreements generally include a recourse component, meaning that lenders retain a general claim against us as an entity. Further, such borrowings may also provide the lender with the ability to make margin calls and may limit the length of time which any given asset may be used as eligible collateral.

The form of our indebtedness may be long-term or short-term, fixed or floating rate or in the form of a revolving credit facility. KBS Capital Advisors will seek to obtain financing on our behalf on the most favorable terms available. For a discussion of the risks associated with the use of debt, see “Risk Factors—Risks Associated with Debt Financing.”

Except with respect to the borrowing limits contained in our charter, we may reevaluate and change our debt policy in the future without a stockholder vote. Factors that we would consider when reevaluating or changing our debt policy include: then-current economic conditions, the relative cost and availability of debt and equity capital, any investment opportunities, the ability of our properties and other investments to generate sufficient cash flow to cover debt service requirements and other similar factors. Further, we may increase or decrease our ratio of debt to book value in connection with any change of our borrowing policies.

We will not borrow from our advisor or its affiliates to purchase properties or make other investments unless a majority of the conflicts committee approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties.

Operating Policies

Credit Risk Management. We may be exposed to various levels of credit and special hazard risk depending on the nature of our underlying assets and the nature and level of credit enhancements supporting our assets. Our advisor and our executive officers will review and monitor credit risk and other risks of loss associated with each investment. In addition, we will seek to diversify our portfolio of assets to avoid undue geographic, industry and certain other types of concentrations. Our board of directors will monitor the overall portfolio risk and levels of provision for loss.

Interest Rate Risk Management. To the extent consistent with maintaining our qualification as a REIT, we will follow an interest rate risk management policy intended to mitigate the negative effects of major interest rate changes. We intend to minimize our interest rate risk from borrowings by attempting to structure the key terms of our borrowings to generally correspond to the interest rate term of our assets and through hedging activities.

Hedging Activities. We may engage in hedging transactions to protect our investment portfolio from interest rate fluctuations and other changes in market conditions. These transactions may include interest rate swaps, the purchase or sale of interest rate collars, caps or floors, options, mortgage derivatives and other hedging instruments. These instruments may be used to hedge as much of the interest rate risk as we determine is in the best interest of our stockholders, given the cost of such hedges and the need to maintain our qualification as a REIT. We may from time to time enter into interest rate swap agreements to offset the potential adverse effects of rising interest rates under certain short-term repurchase agreements. We may elect to bear a level of interest rate risk that could otherwise be hedged when we believe, based on all relevant facts, that bearing such risk is advisable.

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Equity Capital Policies. Our board of directors may increase the number of authorized shares of capital stock without stockholder approval. After your purchase in this offering, our board may elect to (1) sell additional shares in this or future public offerings, (2) issue equity interests in private offerings, (3) issue shares to our advisor, or its successors or assigns, in payment of an outstanding fee obligation or (4) issue shares of our common stock to sellers of assets we acquire in connection with an exchange of limited partnership interests of the Operating Partnership. To the extent we issue additional equity interests after your purchase in this offering, your percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, you may also experience dilution in the book value and fair value of your shares.

Disposition Policies

We intend to hold our properties for an extended period, typically four to seven years, which we believe is the optimal period to enable us to capitalize on the potential for increased income and capital appreciation. The period that we will hold our investments in real estate-related assets will vary depending on the type of asset, interest rates and other factors. We may hold some of our investments in mortgage and mezzanine loans for four to seven years, though we expect to hold some of our loan investments for two to three years. Our advisor will develop a well-defined exit strategy for each investment we make. Specifically, our advisor will assign a sell date to each asset we acquire prior to its purchase as part of the original business plan for the asset. KBS Capital Advisors will continually perform a hold-sell analysis on each asset in order to determine the optimal time to sell the asset and generate a strong return for you. Periodic reviews of each asset will focus on the remaining available value enhancement opportunities for the asset and the demand for the asset in the marketplace. Economic and market conditions may influence us to hold our investments for different periods of time. We may sell an asset before the end of the expected holding period if we believe that market conditions and asset positioning have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.

If we do not list our shares of common stock on a national securities exchange by March 31, 2018, our charter requires that we seek stockholder approval of the liquidation of the company, unless a majority of the conflicts committee determines that liquidation is not then in the best interests of our stockholders. If a majority of the conflicts committee does determine that liquidation is not then in the best interests of our stockholders, our charter requires that the conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of our stockholders. If we sought and failed to obtain stockholder approval of our liquidation, our charter would not require us to list or liquidate, and we could continue to operate as before. If we sought and obtained stockholder approval of our liquidation, we would begin an orderly sale of our properties and other assets. The precise timing of such sales would take account of the prevailing real estate and financial markets, the economic conditions in the submarkets where our properties are located and the federal income tax consequences to our stockholders. In making the decision to apply for listing of our shares, our directors will try to determine whether listing our shares or liquidating our assets will result in greater value for our stockholders. One of the factors our board of directors will consider when making this determination is the liquidity needs of our stockholders. See the discussion above under “Investment Objectives and Criteria—General.”

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Charter-imposed Investment Limitations

Our charter places numerous limitations on us with respect to the manner in which we may invest our funds or issue securities. These limitations cannot be changed unless our charter is amended, which requires approval of our stockholders. Unless our charter is amended, we will not:

• borrow in excess of 75% of the aggregate cost (before deducting depreciation or other non-cash reserves) of tangible assets owned by us, unless approved by a majority of the conflicts committee;

• invest more than 10% of our total assets in unimproved property or mortgage loans on unimproved property, which we define as property not acquired for the purpose of producing rental or other operating income or on which there is no development or construction in progress or planned to commence within one year;

• make or invest in mortgage loans unless an appraisal is available concerning the underlying property, except for those mortgage loans insured or guaranteed by a government or government agency;

• make or invest in mortgage loans, including construction loans, on any one property if the aggregate amount of all mortgage loans on such property would exceed an amount equal to 85% of the appraised value of such property as determined by appraisal, unless substantial justification exists for exceeding such limit because of the presence of other underwriting criteria;

• make an investment in a property if the related acquisition fees and acquisition expenses are not reasonable or exceed 6% of the purchase price of the property or, in the case of a loan, acquire or originate a loan if the related origination fees and expenses are not reasonable or exceed 6% of the funds advanced, provided that in the case of a property or loan, the investment may be made if a majority of the conflicts committee determines that the transaction is commercially competitive, fair and reasonable to us;

• acquire equity securities unless a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction approves such investment as being fair, competitive and commercially reasonable, provided that investments in equity securities in “publicly traded entities” that are otherwise approved by a majority of our directors (including a majority of our independent directors) shall be deemed fair, competitive and commercially reasonable if we acquire the equity securities through a trade that is effected in a recognized securities market (a “publicly traded entity” shall mean any entity having securities listed on a national securities exchange or included for quotation on an inter-dealer quotation system), and provided further that this limitation does not apply to (i) real estate acquisitions effected through the purchase of all of the equity securities of an existing entity, (ii) the investment in wholly owned subsidiaries of ours or (iii) investments in mortgage-backed securities;

• invest in real estate contracts of sale, otherwise known as land sale contracts, unless the contract is in recordable form and is appropriately recorded in the chain of title;

• invest in commodities or commodity futures contracts, except for futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in real estate assets and mortgages;

• issue equity securities on a deferred payment basis or other similar arrangement;

• issue debt securities in the absence of adequate cash flow to cover debt service unless the historical debt service coverage (in the most recently completed fiscal year), as adjusted for known changes, is sufficient to service that higher level of debt as determined by the board of directors or a duly authorized executive officer;

• issue equity securities that are assessable after we have received the consideration for which our board of directors authorized their issuance; or

• issue equity securities redeemable solely at the option of the holder, which restriction has no effect on our share redemption program or the ability of our Operating Partnership to issue redeemable partnership interests.

In addition, our charter includes many other investment limitations in connection with conflict-of-interest transactions, which limitations are described above under “Conflicts of Interest.” Our charter also includes restrictions on roll-up transactions, which are described under “Description of Shares” below.

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Investment Limitations under the Investment Company Act of 1940

General

We conduct our operations so that neither we nor any of our subsidiaries will be required to register as an investment company under the Investment Company Act. Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, we will not be deemed to be an “investment company” if:

• we are not engaged primarily, nor hold ourselves out as being engaged primarily, nor propose to engage primarily, in the business of investing, reinvesting or trading in securities, which criteria we refer to as the primarily engaged test; and

• we are not engaged and do not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities and do not own or propose to acquire “investment securities” having a value exceeding 40% of the value of our total assets on an unconsolidated basis, which criteria we refer to as the 40% test. “Investment securities” excludes U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

Depending on the nature of our portfolio, we believe that we and our Operating Partnership may satisfy both tests above. With respect to the 40% test, most of the entities through which we and our Operating Partnership own our assets are majority-owned subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

With respect to the primarily engaged test, we and our Operating Partnership are holding companies and do not intend to invest or trade in securities ourselves. Rather, through the majority-owned subsidiaries of our Operating Partnership, we and our Operating Partnership are primarily engaged in the non-investment company businesses of these subsidiaries. Although the SEC staff has issued little guidance with respect to the primarily engaged test, we are not aware of any court decisions or SEC staff interpretations finding a holding company that satisfies the 40% test to nevertheless be an investment company under the primarily engaged test.

We expect that most of the subsidiaries of our Operating Partnership will be able to rely on Section 3(c)(5)(C) of the Investment Company Act for an exception from the definition of an investment company. (Any other subsidiaries of our Operating Partnership should be able to rely on the exceptions for private investment companies pursuant to Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act.) The SEC staff’s position on Section 3(c)(5)(C) generally requires that an issuer maintain at least 55% of its assets in “mortgages and other liens on and interests in real estate,” or qualifying assets; at least 80% of its assets in qualifying assets plus real estate-related assets; and no more than 20% of the value of its assets in other than qualifying assets and real estate-related assets, which we refer to as miscellaneous assets. To constitute a qualifying asset under this 55% requirement, a real estate interest must meet various criteria; therefore, certain of our subsidiaries will be limited by current SEC staff positions on the Investment Company Act with respect to the value of the assets that they may own at any given time.

If, however, the value of the subsidiaries of our Operating Partnership that must rely on Section 3(c)(1) or Section 3(c)(7) is greater than 40% of the value of the assets of our Operating Partnership, then we and our Operating Partnership may seek to rely on the exception from registration under Section 3(c)(6) if we and our Operating Partnership are “primarily engaged,” through majority-owned subsidiaries, in the business of purchasing or otherwise acquiring mortgages and other interests in real estate. Although the SEC staff has issued little interpretive guidance with respect to Section 3(c)(6), we believe that we and our Operating Partnership may rely on Section 3(c)(6) if 55% of the assets of our Operating Partnership consist of, and at least 55% of the income of our Operating Partnership is derived from, majority-owned subsidiaries that rely on Section 3(c)(5)(C).

Regardless of whether we and our Operating Partnership must rely on Section 3(c)(6) to avoid registration as an investment company, we limit the investments that we make, directly or indirectly, in assets that are not qualifying assets and in assets that are not real estate-related assets. We discuss below how we treat our investments and our interests in the subsidiaries of our Operating Partnership that own them under the Investment Company Act.

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Real Property

We treat an investment in real property as a qualifying asset.

Mortgage Loans

We treat a first mortgage loan as a qualifying asset provided that the loan is fully secured, i.e., the value of the real estate securing the loan is greater than the value of the note evidencing the loan. If the loan is not fully secured, the entire value of the loan is classified as a real estate-related asset if 55% of the fair market value of the loan is secured by real estate. We treat mortgage loans that are junior to a mortgage owned by another lender, or second mortgages, as qualifying assets if the real property fully secures the second mortgage.

Participations

A participation interest in a loan is treated as a qualifying asset only if the interest is a participation in a mortgage loan, such as an A-Note or a B-Note, that meets the criteria recently set forth in an SEC no-action letter, that is:

• the note is a participation interest in a mortgage loan that is fully secured by real property;

• our subsidiary as note holder has the right to receive its proportionate share of the interest and the principal payments made on the mortgage loan by the borrower, and our subsidiary’s returns on the note are based on such payments;

• our subsidiary invests in the note only after performing the same type of due diligence and credit underwriting procedures that it would perform if it were underwriting the underlying mortgage loan;

• our subsidiary as note holder has approval rights in connection with any material decisions pertaining to the administration and servicing of the mortgage loan and with respect to any material modification to the mortgage loan agreements; and

• in the event that the mortgage loan becomes non-performing, our subsidiary as note holder has effective control over the remedies relating to the enforcement of the mortgage loan, including ultimate control of the foreclosure process, by having the right to: (a) appoint the special servicer to manage the resolution of the loan; (b) advise, direct or approve the actions of the special servicer; (c) terminate the special servicer at any time without cause; (d) cure the default so that the mortgage loan is no longer non-performing; and (e) with respect to a junior note, purchase the senior note at par plus accrued interest, thereby acquiring the entire mortgage loan.

If these conditions are not met, we treat the note as a real estate-related asset.

Mezzanine Loans

We intend for a portion of our investments to consist of real estate loans secured by 100% of the equity securities of a special purpose entity that owns real estate, or tier one mezzanine loans. We treat our tier one mezzanine loans as qualifying assets when our subsidiary’s investment in the loan meets the criteria set forth in an SEC no-action letter, that is:

• the loan is made specifically and exclusively for the financing of real estate;

• the loan is underwritten based on the same considerations as a second mortgage and after our subsidiary performs a hands-on analysis of the property being financed;

• our subsidiary as lender exercises ongoing control rights over the management of the underlying property;

• our subsidiary as lender has the right to readily cure defaults or purchase the mortgage loan in the event of a default on the mortgage loan;

• the true measure of the collateral securing the loan is the property being financed and any incidental assets related to the ownership of the property; and

• our subsidiary as lender has the right to foreclose on the collateral and through its ownership of the property-owning entity become the owner of the underlying property.

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Convertible Mortgages

A convertible mortgage is a mortgage loan coupled with an option to purchase the underlying real estate. Although the SEC staff has not taken a position with respect to convertible mortgages, we treat a convertible mortgage as two assets: a mortgage and an option. We value the mortgage as though the option did not exist and treat it as either a qualifying asset or a real estate-related asset according to the positions set forth above. We assign the option an independent value and treat the option as a real estate-related asset.

Other Real Estate-Related Loans

We treat the other real estate-related loans described in this prospectus, i.e., bridge loans, wraparound mortgage loans, construction loans and loans on leasehold interests, as qualifying assets if such loans are fully secured by real estate. With respect to construction loans, we treat only the amount outstanding at any given time as a qualifying asset if the value of the property securing the loan at that time exceeds the outstanding loan amount plus any amounts owed on loans senior or equal in priority to our construction loan.

Residential and Commercial Mortgage-Backed Securities

We treat a residential or commercial mortgage-backed security as a qualifying asset if the certificate represents all of the beneficial interests in a pool of mortgages, referred to as a “whole pool” certificate. However, we expect to treat a partial pool certificate as a real estate-related asset unless counsel advises us that the SEC’s Division of Investment Management has provided guidance (whether formal or informal) that a partial pool certificate may be treated as a qualifying asset and that our partial pool certificate meets the criteria stipulated by the SEC.

Joint Venture Interests

When measuring Section 3(c)(6) and Section 3(c)(5)(C) compliance, we calculate asset values on an unconsolidated basis, which means that when assets are held through another entity, we treat the value of our interest in the entity as follows:

• If we own less than a majority of the voting securities of the entity, then we treat the value of our interest in the entity as real estate-related assets if the entity engages in the real estate business, such as a REIT relying on Section 3(c)(5)(C), and otherwise as miscellaneous assets.

• If we own a majority of the voting securities of the entity, then we allocate the value of our interest in the entity among qualifying assets, real estate-related assets and miscellaneous assets in proportion to the entity’s ownership of qualifying assets, real estate-related assets and miscellaneous assets.

• If we are the general partner or managing member of a entity, then (i) we treat the value of our interest in the entity as in item 2 above if we are actively involved in the management and operation of the venture and our consent is required for all major decisions affecting the venture and (ii) we treat the value of our interest in the entity as in item 1 above if we are not actively involved in the management and operation of the venture or our consent is not required for all major decisions affecting the venture.

Absence of No-Action Relief

If certain of our subsidiaries fail to own a sufficient amount of qualifying assets or real estate-related assets, we could be characterized as an investment company. We have not sought a no-action letter from the SEC staff regarding how our investment strategy fits within the exceptions from registration under the Investment Company Act on which we and our subsidiaries intend to rely. To the extent that the SEC’s Division of Investment Management provides more specific or different guidance regarding the treatment of assets as qualifying assets or real estate-related assets, we may be required to adjust our investment strategy accordingly. Any additional guidance from the SEC’s Division of Investment Management could provide additional flexibility to us, or it could further inhibit our ability to pursue the investment strategy we have chosen.

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PRIOR PERFORMANCE SUMMARY

In January 2006, our sponsors teamed to launch the initial public offering of their first public non-traded REIT, KBS REIT I. In addition to our offering, they are currently sponsoring the initial public offerings of KBS REIT III and KBS Strategic Opportunity REIT and, together with Legacy Partners Residential Realty LLC and certain of its affiliates, they are sponsoring KBS Legacy Partners Apartment REIT. As described below, KBS REIT I acquired, and KBS REIT III is targeting to acquire, a portfolio of commercial properties and real estate-related investments. KBS Strategic Opportunity REIT is targeting to acquire a diverse portfolio of real estate-related loans, real estate-related debt securities and other real estate-related investments, including some direct investments in opportunistic real estate. KBS Legacy Partners Apartment REIT is targeting to acquire a diverse portfolio of equity investments in high quality apartment communities. Our advisor, KBS Capital Advisors, is the external advisor to KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT.

Since 1992, two of our sponsors, Peter M. Bren and Charles J. Schreiber, Jr., have partnered to acquire, manage, develop and sell high-quality U.S. commercial real estate assets as well as real estate-related investments on behalf of institutional investors. Since the formation of the first investment advisor affiliated with Messrs. Bren and Schreiber in 1992, investment advisors affiliated with Messrs. Bren and Schreiber have sponsored 14 private real estate funds that have raised over $2.1 billion of equity from institutional investors. Together, Messrs. Bren and Schreiber founded KBS Realty Advisors LLC, a registered investment advisor with the SEC and a nationally recognized real estate investment advisor. We refer to the investment advisors affiliated with Messrs. Bren and Schreiber as KBS investment advisors.

Unless otherwise indicated, the information presented below represents the historical experience of KBS REIT I and the private real estate funds sponsored by KBS investment advisors as of the 10 years ending December 31, 2009. By purchasing shares in this offering, you will not acquire any ownership interest in any funds to which the information in this section relates and you should not assume that you will experience returns, if any, comparable to those experienced by the investors in the real estate funds discussed. Further, the private funds discussed in this section were conducted through privately held entities that were subject neither to the up-front commissions, fees and expenses associated with this offering nor all of the laws and regulations that will apply to us as a publicly offered REIT. We have omitted from this discussion information regarding the prior performance of entities for which an institutional investor engaged a KBS investment advisor if the investor had the power to reject the real estate acquisitions proposed by the KBS investment advisor. Such entities are not considered “funds” or “programs” as those terms are used in this prospectus. As of the date of this prospectus, KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT have not broken escrow in their respective offerings, acquired any investments or commenced significant operations, and KBS REIT III is in registration with the SEC and has not yet commenced its initial public offering.

On March 25, 2010, we filed a Current Report on Form 8-K that provides additional information about the funds discussed in this section. The Form 8-K includes six tables that present information with respect to (i) the experience of our sponsors in raising and investing funds, (ii) the compensation paid by prior funds to the sponsor and its affiliates, (iii) the operating results of prior funds, (iv) results of completed funds, (v) sales or disposals of properties by prior funds, and (vi) acquisitions of properties by prior funds. We will provide a copy of these tables to you upon written request and without charge.

KBS REIT I

On January 27, 2006, our sponsors launched the initial public offering of KBS REIT I, a publicly registered, non-traded REIT. Its initial public offering was for a maximum of 200,000,000 shares of common stock at a price of $10.00 per share, plus an additional 80,000,000 shares of common stock at $9.50 per share pursuant to its dividend reinvestment plan. As of December 31, 2009, KBS REIT I had accepted gross offering proceeds of $1.8 billion, including $129.5 million from shares issued pursuant to its dividend reinvestment plan. As of December 31, 2009, KBS REIT I had 42,316 stockholders. Of the amount raised pursuant to its dividend reinvestment plan, $51.3 million has been used to fund share redemptions pursuant to its share redemption program. KBS REIT I ceased offering shares in its primary public offering on May 30, 2008 and KBS REIT I continues to offer shares under its dividend reinvestment plan.

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As of December 31, 2009, KBS REIT I owned 23 office buildings, one light industrial property, three corporate research properties, two distribution facilities, one industrial portfolio consisting of nine distribution and office/warehouse properties, one office/ flex portfolio consisting of four properties and an 80% membership interest in a joint venture that owns a portfolio of 23 institutional quality industrial properties and holds a master lease with a remaining term of 13.25 years with respect to another industrial property (by “institutional quality” we mean properties with certain features (tenancy, location, construction quality, management, functionality, etc.) and benefits that help distinguish them as desirable investments to relatively risk adverse high net worth entities). At December 31, 2009, the portfolio was approximately 90% leased. In addition, as of December 31, 2009, KBS REIT I owned seven mezzanine real estate loans, two B-notes, a partial ownership interest in a mezzanine real estate loan, a partial ownership interest in a senior mortgage loan, two loans representing senior subordinated debt of a private REIT and four mortgage loans. KBS REIT I also holds two investments in securities directly or indirectly backed by commercial mortgage loans and a preferred membership in a real estate joint venture. KBS REIT I used the net proceeds from its initial public offering and debt financing to purchase or fund $3.1 billion of real estate and real estate-related investments as of December 31, 2009, including $34.5 million in acquisition fees and closing costs. As of December 31, 2009, KBS REIT I had used the net proceeds from its initial public offering for real estate properties and real estate-related assets in the amounts of $0.8 billion and $0.8 billion, respectively, and had debt financing on its real estate properties and real estate-related assets in the amounts of $1.2 billion and $0.3 billion, respectively.

KBS REIT I has investment objectives that are similar to ours. Like ours, its primary investment objectives are to provide investors with attractive and stable returns and to preserve and return their capital contributions and, like us, it will seek to realize growth in the value of its investments by timing asset sales to maximize asset value. In addition, investments in real estate and real estate-related assets involve similar assessments of the risks and rewards of the operation of the underlying real estate and financing thereof as well as an understanding of the real estate and real estate-finance markets.

KBS REIT I has acquired and manages a diverse portfolio of real estate and real estate-related assets. It has diversified the portfolio by property type, geographic region, investment size and investment risk with the goal of attaining a portfolio of income-producing real estate and real estate-related assets that provide attractive and stable returns to its investors. In constructing its portfolio, KBS REIT I targeted approximately 70% core investments (which are generally existing properties with at least 80% occupancy and minimal near-term lease rollover) and approximately 30% enhanced-return properties (which are higher-yield and higher-risk investments than core properties, such as properties with moderate vacancies or near-term lease rollovers, poorly managed and positioned properties, properties owned by distressed sellers and built-to-suit properties) and real estate-related investments, including mortgage loans, mezzanine debt, commercial mortgage backed securities and other similar structured finance investments. With proceeds from its initial public offering and debt financing (as a percentage of its total investments), the purchase price of KBS REIT I’s real estate properties represented 65% of its portfolio and the purchase price of its real estate-related investments represented 35% of its portfolio.

With proceeds from its initial public offering and debt financing, as a percentage of the amount invested (based on purchase price), KBS REIT I invested in the following types of assets (including its investments through a consolidated joint venture): 35% in 22 office properties, 29% in 42 industrial properties and a master lease in another industrial property, 26% in interests in 12 mezzanine loans, 5% in interests in six mortgage loans, 2% in interests in two loans representing subordinated debt of a private REIT, 2% in two investments in securities directly or indirectly backed by commercial mortgage loans and 1% in interests in two B-notes. All of KBS REIT I’s real property investments were made within the United States. As a percentage of amount invested (based on purchase price), the geographic locations of KBS REIT I’s investments in real properties were as follows (including its investments through a consolidated joint venture): 40% in 26 properties and a master lease in another property in the East; 30% in 22 properties in the South; 15% in nine properties in the West; and 15% in seven properties in the Midwest. All of the real properties purchased by KBS REIT I had prior owners and operators.

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During the three years ending December 31, 2009, KBS REIT I invested in the following types of assets (including its investments through a consolidated joint venture): 20 office properties, 39 industrial properties and a master lease in another industrial property, 11 mezzanine loans, six mortgage loans, two loans representing subordinated debt of a private REIT, two investments in securities directly or indirectly backed by commercial mortgage loans and two B-notes. The geographic locations of properties acquired by KBS REIT I during the three years ending December 31, 2009 were as follows (including its investments through a consolidated joint venture): 25 properties and a master lease in another property in the East; 19 properties in the South; nine properties in the West; and six properties in the Midwest. KBS REIT I funded these investments with a combination of proceeds from its initial public offering and debt financing. For more detailed information regarding acquisitions by KBS REIT I as of December 31, 2009, see Table VI in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus.

As described in more detail below, subsequent to KBS REIT I’s acquisition of these properties, loans and other investments, KBS REIT I’s portfolio composition changed as a result of the restructuring of certain investments and KBS REIT I taking title to properties underlying investments in loans that became impaired.

KBS REIT I had not sold any properties or other investments as of December 31, 2009. KBS REIT I intends to hold real estate investments for an extended period, typically four to seven years for real properties, and intends to hold its real estate-related investments to maturity. In November 2007, the borrowers under a mezzanine loan in which KBS REIT I held a $21 million interest paid off the loan in full, including a spread maintenance premium.

KBS REIT I’s primary public offering was subject to the up-front commissions, fees and expenses associated with this offering and KBS REIT I has fee arrangements with KBS affiliates structured similar to ours. For more information regarding the fees paid to KBS affiliates by KBS REIT I and the operating results of KBS REIT I, see Tables II and III under Prior Performance Tables contained in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus.

The KBS REIT I prospectus disclosed that KBS REIT I may seek to publicly list its shares of common stock if its independent directors believe a public listing would be in the best interests of its stockholders. To date, the independent directors have not made such a determination. If KBS REIT I does not list its shares of common stock on a national securities exchange by November 2012, its charter requires that KBS REIT I either (i) seek stockholder approval of the liquidation of the company or (ii) if a majority of its conflicts committee determines that liquidation is not then in the best interests of the stockholders, postpone the decision of whether to liquidate the company. As we have not reached November 2012, none of the actions described in (i) or (ii) above have occurred.

However, KBS REIT I has disclosed that due to the continuing impact of the disruptions in the financial markets on the values of KBS REIT I’s investments, it is increasingly likely that KBS REIT I will postpone such a liquidity event in order to improve the prospects for investors to have their capital returned and to realize a profit on their investment, likely through sales of individual or pooled assets.

If a majority of its conflicts committee does determine that liquidation is not then in the best interests of KBS REIT I’s stockholders, its charter requires that the conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of the stockholders. If KBS REIT I sought and failed to obtain stockholder approval of its liquidation, the KBS REIT I charter would not require KBS REIT I to list or liquidate and would not require the conflicts committee to revisit the issue of liquidation, and KBS REIT I could continue to operate as before. If KBS REIT I sought and obtained stockholder approval of its liquidation, KBS REIT I would begin an orderly sale of its properties and other assets. The precise timing of such sales would take account of the prevailing real estate and financial markets, the economic conditions in the submarkets where its properties are located and the federal income tax consequences to the stockholders. In making the decision to apply for listing of its shares, KBS REIT I’s directors will try to determine whether listing its shares or liquidating its assets will result in greater value for stockholders.

The continued disruptions in the financial markets and deteriorating economic conditions have adversely affected the fair values and recoverability of certain of KBS REIT I’s investments. KBS REIT I disclosed fair values below its book values for certain assets in its financial statements and recognized impairments related to a limited number of assets.

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On a quarterly basis, KBS REIT I evaluates its real estate securities for impairment. KBS REIT I reviews the projected future cash flows under these securities for changes in assumptions due to prepayments, credit loss experience and other factors. If, based on KBS REIT I’s quarterly estimate of cash flows, there has been an adverse change in the estimated cash flows from the cash flows previously estimated and the present value of the revised cash flows is less than the present value previously estimated, an other-than-temporary impairment is deemed to have occurred. KBS REIT I recognized an other-than-temporary impairment related to its real estate securities of $5.1 million for the year ended December 31, 2009 and a $50.1 million impairment related to its real estate securities for the year ended December 31, 2008. Of the $50.1 million impairment recognized in 2008, $18.2 million related to the full impairment of its floating rate securities and $31.9 million related to its fixed rate securities. The impairment recognized in 2009 related solely to its fixed rate securities, which were acquired in June 2008. Continued stress in the economy in general and the CMBS market in particular could result in additional other-than-temporary impairments on the fixed rate securities in the future.

With respect to its loan portfolio, KBS REIT I considers a loan held for investment to be impaired when it becomes probable, based on current information, that it will be unable to collect all amounts estimated to be collected at the time of acquisition. The amount of impairment, if any, will be measured by comparing the recorded amount of the loan to (i) the present value of the expected cash flows discounted at the loan’s effective interest rate, (ii) the loan’s observable market price or (iii) the fair value of the collateral. During the year ended December 31, 2008, KBS REIT I recorded an impairment charge for the full amount of its $50 million subordinated debt investment in Petra Fund REIT Corp. In addition, KBS REIT I recorded a provision for portfolio-based loan losses of $54.0 million related to its investment in the remaining real estate loans receivable. As of December 31, 2009, the total reserve for loan losses was $110.5 million and consisted of $86.5 million of asset-specific reserves on impaired real estate loans receivable with an amortized cost basis of $125.3 million and $24.0 million of portfolio-based reserves on non-impaired real estate loans receivable with an amortized cost basis of $651.0 million. As of December 31, 2009, impaired real estate loans receivable with an amortized cost basis of $152.3 million are on nonaccrual status. The asset-specific reserves relate to the following impaired loans: the Tribeca Mezzanine Loans, the 200 Professional Drive Mortgage, the 2600 Michelson Mezzanine Loan, the Sandmar Mezzanine Loan, and the subordinated debt investment in Petra Fund REIT Corp. KBS REIT I increased its loan loss reserve by $178.8 million during the year ended December 31, 2009. The portfolio-based loan loss reserve provides for probable losses estimated to have occurred on the pool of loans that do not have asset-specific reserves. Although KBS REIT I does not know which specific loans within the pool will ultimately result in losses, KBS REIT I believes it is probable that it will realize losses on the pool. For the year ended December 31, 2009, the change in loan loss reserves was comprised of $208.8 million, calculated on an asset-specific basis, partially offset by a reduction of $30.0 million to the portfolio-based reserve. During the year ended December 31, 2009, KBS REIT I also charged-off $172.2 million of reserves for loan losses related to the Arden Mezzanine Loans and the 18301 Von Karman Loans. With respect to the Arden Portfolio Mezzanine Loans, on July 8, 2009, KBS REIT I released the borrowers under the mezzanine loans from liability and received preferred membership interests in a joint venture that indirectly owns the properties that had served as collateral for the loans. Because the borrower under the Von Karman Loans did not have sufficient debt service reserves to meet its future debt service obligations, KBS REIT I received a deed-in-lieu of foreclosure and gained control of the property underlying the loans on October 6, 2009.

In the future, especially given the current market instability, KBS REIT I may recognize material charges for impairment with respect to investments other than those described above or a different impairment charge for investments described above. Moreover, even if KBS REIT I does not recognize any material charge for impairment with respect to an asset, the fair value of the asset may have declined based on general economic conditions or other factors.

As a result of the above factors, reductions in benchmark interest rates and their resulting impact on interest income on KBS REIT I’s variable-rate loans receivable and the general impact of current economic conditions on rental rates, occupancy rates and property cash flows, on June 4, 2009, the KBS REIT I board of directors declared a July 2009 distribution at an annualized rate of 5.25% (based on a purchase price of $10.00 per share in its initial public offering) with the expectation that projected operating cash flows would be sufficient to cover the new dividend rate. The prior annualized distribution rate was 7% (based on a purchase price of $10.00 per share in its initial public offering). These and other factors could result in further decreases in the distribution rate in future periods.

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In February 2009, the Financial Industry Regulatory Authority (“FINRA”) issued FINRA Regulatory Notice 09-09 to broker-dealers that sell the shares of non-traded REITs. This notice confirms that the National Association of Securities Dealers (“NASD”) Conduct Rule 2340(c)(2) prohibits these broker-dealers from using an estimated value per share developed from data that is more than 18 months old, which in effect requires non-traded REITs to provide broker-dealers with an estimated value per share of their common stock within 18 months of the completion of their offering stage.

In response to FINRA Regulatory Notice 09-09, on November 20, 2009, the Board of Directors of KBS REIT I approved an estimated value per share of the common stock of KBS REIT I of $7.17 based on the estimated value of KBS REIT I’s assets less the estimated value of its liabilities divided by the number of shares outstanding, all as of September 30, 2009. KBS REIT I provided this estimated value per share (i) to assist broker-dealers that participated in its initial public offering in meeting their customer account statement reporting obligations under NASD Conduct Rule 2340(c)(2) as required by FINRA and (ii) to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports. The estimated value per share was based upon the recommendation and valuation of KBS Capital Advisors. As with any valuation methodology, KBS Capital Advisors’ methodology was based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could have derived a different estimated value per share, and such differences could be significant. The estimated value per share did not represent the fair value according to generally accepted accounting principles of KBS REIT I’s assets less its liabilities, nor did it represent a liquidation value of KBS REIT I’s assets and liabilities or the price at which KBS REIT I’s shares of common stock would trade on a national securities exchange as of September 30, 2009. Markets for real estate and real estate-related investments can fluctuate and values are expected to change in the future.

Due to the level of share redemption requests already received in 2009 and the amounts KBS REIT I had budgeted from net proceeds from the dividend reinvestment plan for capital expenditures, tenant improvement costs and other funding obligations, on March 25, 2009, KBS REIT I amended and restated its share redemption program. Pursuant to the amended and restated share redemption program, and in addition to the other limitations in the plan, KBS REIT I will limit ordinary redemptions to the net proceeds from the sale of shares under its dividend reinvestment plan during the prior calendar year less amounts it deems necessary from such proceeds to fund current and future capital expenditures, tenant improvements and other costs and obligations related to its investments. Based on its budgeted expenditures, and except with respect to redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence, KBS REIT I disclosed it would not have funds available for redemption for the remainder of 2009. On December 28, 2009, based on its 2010 budgeted expenditures, KBS REIT I disclosed it does not expect to have funds available for redemption in 2010, except with respect to redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence. The KBS REIT I board of directors will revisit its determination if circumstances change during the year.

Upon request, prospective investors may obtain from us without charge copies of offering materials and any public reports prepared in connection with KBS REIT I, including a copy of the most recent Annual Report on Form 10-K filed with the SEC. For a reasonable fee, we also will furnish upon request copies of the exhibits to the Form 10-K. Many of the offering materials and reports prepared in connection with KBS REIT I are also available on its web site at www.kbsreit.com. Neither the contents of that web site nor any of the materials or reports relating to KBS REIT I are incorporated by reference in or otherwise a part of this prospectus. In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and other information that KBS REIT I files electronically as KBS Real Estate Investment Trust, Inc. with the SEC.

KBS Strategic Opportunity REIT

KBS Strategic Opportunity REIT commenced its public offering on November 20, 2009. As of the date of this prospectus, KBS Strategic Opportunity REIT has not broken escrow in its offering or acquired any assets. The KBS Strategic Opportunity REIT prospectus discloses that the program may seek to list its shares of common stock if its independent directors believe listing would be in the best interests of its stockholders. To date, such a determination has not been made. If KBS Strategic Opportunity REIT does not list its shares of common stock on a national securities exchange by July 31, 2019, its charter requires that KBS Strategic Opportunity REIT either (i) seek stockholder approval of the liquidation of the company or (ii) if a majority of its conflicts committee determines that liquidation is not then in the best interests of the stockholders, postpone the decision of whether to liquidate the company. As we have not reached July 31, 2019, none of the actions described in (i) or (ii) above have occurred.

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If a majority of the conflicts committee of KBS Strategic Opportunity REIT were to determine that liquidation is not then in the best interests of its stockholders, KBS Strategic Opportunity REIT’s charter requires that its conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of the stockholders. If KBS Strategic Opportunity REIT sought and failed to obtain stockholder approval of its liquidation, the KBS Strategic Opportunity REIT charter would not require KBS Strategic Opportunity REIT to list or liquidate, and the company could continue to operate as before. If KBS Strategic Opportunity REIT sought and obtained stockholder approval of its liquidation, it would begin an orderly sale of its assets. The precise timing of such sales would take account of the prevailing real estate finance markets and the debt markets generally as well as the federal income tax consequences to its stockholders. In making the decision to apply for listing of its shares, KBS Strategic Opportunity REIT’s directors will try to determine whether listing its shares or liquidating its assets will result in greater value for stockholders.

KBS Legacy Partners Apartment REIT

KBS Legacy Partners Apartment REIT commenced its public offering on March 12, 2010. As of the date of this prospectus, KBS Legacy Partners Apartment REIT has not broken escrow in its offering or acquired any assets. The KBS Legacy Partners Apartment REIT prospectus discloses that the program may seek to publicly list its shares of common stock if its independent directors believe a public listing would be in the best interests of its stockholders. To date, such a determination has not been made. If KBS Legacy Partners Apartment REIT does not list its shares of common stock on a national securities exchange by January 31, 2020, its charter requires that KBS Legacy Partners Apartment REIT either (i) seek stockholder approval of the liquidation of the company or (ii) if a majority of its conflicts committee determines that liquidation is not then in the best interests of the stockholders, postpone the decision of whether to liquidate the company. As we have not reached January 31, 2020, none of the actions described in (i) or (ii) above have occurred.

If a majority of the conflicts committee of KBS Legacy Partners Apartment REIT were to determine that liquidation is not then in the best interests of its stockholders, KBS Legacy Partners Apartment REIT’s charter requires that its conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of the stockholders. If KBS Legacy Partners Apartment REIT sought and failed to obtain stockholder approval of its liquidation, the KBS Legacy Partners Apartment REIT charter would not require KBS Legacy Partners Apartment REIT to list or liquidate, and the company could continue to operate as before. If KBS Legacy Partners Apartment REIT sought and obtained stockholder approval of its liquidation, it would begin an orderly sale of its assets. The precise timing of such sales would take account of the prevailing real estate finance markets and the debt markets generally as well as the federal income tax consequences to its stockholders. In making the decision to apply for listing of its shares, KBS Legacy Partners Apartment REIT’s directors will try to determine whether listing its shares or liquidating its assets will result in greater value for stockholders.

KBS REIT III

KBS REIT III is currently in registration with the SEC and has not yet commenced its public offering. The KBS REIT III prospectus discloses that the program may seek to publicly list its shares of common stock if its independent directors believe a public listing would be in the best interests of its stockholders. To date, such a determination has not been made. If KBS REIT III does not list its shares of common stock on a national securities exchange by a date that will be specified in its amended and restated charter (and which will be determined prior to commencement of its offering), its charter will require that KBS REIT III either (i) seek stockholder approval of the liquidation of the company or (ii) if a majority of its conflicts committee determines that liquidation is not then in the best interests of the stockholders, postpone the decision of whether to liquidate the company. None of the actions described in (i) or (ii) above have occurred.

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If a majority of the conflicts committee of KBS REIT III were to determine that liquidation is not then in the best interests of its stockholders, KBS REIT III’s charter will require that its conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of the stockholders. If KBS REIT III sought and failed to obtain stockholder approval of its liquidation, the KBS REIT III charter would not require KBS REIT III to list or liquidate, and the company could continue to operate as before. If KBS REIT III sought and obtained stockholder approval of its liquidation, it would begin an orderly sale of its assets. The precise timing of such sales would take account of the prevailing real estate finance markets and the debt markets generally as well as the federal income tax consequences to its stockholders. In making the decision to apply for listing of its shares, KBS REIT III’s directors will try to determine whether listing its shares or liquidating its assets will result in greater value for stockholders.

Private Programs

During the 10-year period ending December 31, 2009, KBS investment advisors managed 14 private real estate funds, six of which were multi-investor, commingled funds and eight of which were single-client, separate accounts. All of these private funds were limited partnerships for which affiliates of Messrs. Bren and Schreiber act or acted as a general partner. In all cases, affiliates of Messrs. Bren and Schreiber had responsibility for acquiring, investing, managing, developing and selling the real estate and real estate-related assets of each of the funds. Six of the 14 private funds managed by KBS investment advisors during the 10-year period ending December 31, 2009 used private REITs to structure the ownership of some of their investments.

Nine of the 14 private real estate funds managed by KBS investment advisors raised approximately $390.5 million of equity capital from 16 institutional investors during the 10-year period ending December 31, 2009. The institutional investors investing in the private funds include public and corporate pension funds, endowments and foundations. For more information regarding the experience of our sponsors in raising funds from investors, see Table I and Table II of the Prior Performance Tables contained in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus. During this 10-year period, five of the 14 private funds managed by KBS investment advisors did not raise any capital as they had completed their respective offering stages and two other private funds did not buy any new assets but raised capital only for on-going capital expenditure requirements.

During the 10-year period ending December 31, 2009, KBS investment advisors acquired 29 real estate investments and invested over $717 million in these assets (including equity, debt and reinvestment of income and sales proceeds) on behalf of the seven private funds raising capital for new investments during this period. Debt financing was used in acquiring the properties in all of these seven private funds.

Each of the private funds managed by KBS investment advisors during the 10-year period ending December 31, 2009 have or had (five of the funds have been fully liquidated) investment objectives that are similar to ours. Like ours, their primary investment objectives are to provide investors with attractive and stable returns and to preserve and return their capital contributions and, like us, they seek to realize growth in the value of their investments by timing asset sales to maximize asset value. In addition, investments in real estate and real estate-related assets involve similar assessments of the risks and rewards of the operation of the underlying real estate and financing thereof as well as an understanding of the real estate and real estate-finance markets. For each of the private funds, the KBS investment advisor has focused on acquiring a diverse portfolio of real estate investments. The KBS investment advisor typically diversified the portfolios of the private funds by property type and geographic region as well as investment size and investment risk. In constructing the portfolios for 12 of the 14 private funds, the KBS investment advisor specialized in acquiring a mix of value-added, enhanced-return and core real estate assets, focusing primarily on value-added and enhanced-return properties. Value-added and enhanced-return assets are assets that are undervalued or that could be repositioned to enhance their value. For two of the 14 private funds, the KBS investment advisor is focusing on the acquisition of core real estate assets.

Substantially all of the assets acquired by the private funds have involved commercial properties. The chart below shows amount invested (based on purchase price) by property type, during the ten-year period ending December 31, 2009, by KBS investment advisors on behalf of the private funds.

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KBS INVESTMENT ADVISORS – PRIVATE PROGRAMS

CAPITAL INVESTED BY PROPERTY TYPE

The KBS investment advisors for the private funds also sought to diversify the investments of the funds by geographic region as illustrated by the chart below. This chart shows investments in different geographic regions by amount invested (based on purchase price) during the 10-year period ending December 31, 2009. KBS investment advisors have emphasized their investment activity within those regions that have exhibited the potential for strong or sustainable growth. All investments by the private funds were within the United States.

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KBS INVESTMENT ADVISORS – PRIVATE PROGRAMS

CAPITAL INVESTED BY REGION

In seeking to diversify the portfolios of the private funds by investment risk, KBS investment advisors have purchased both low risk, high-quality properties and high-quality but under-performing properties in need of repositioning. Substantially all of the properties purchased by the private funds had prior owners and operators.

During the three years ending December 31, 2009, KBS investment advisors have invested in the following assets on behalf of the private funds: five office properties and one industrial property. The geographic locations of the properties acquired by these private funds during the three years ending December 31, 2009 were as follows: three properties in the South, one property in the West and two properties in the East. Debt financing was used in acquiring four of these properties. For more detailed information regarding acquisitions by the private funds in the three years ending December 31, 2009, see Table VI in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus.

As stated above, during the 10-year period ending December 31, 2009, KBS investment advisors have invested over $717 million (including equity, debt and reinvestment of income and sales proceeds) for its clients through seven private funds. Of the properties acquired during the 10-year period ending December 31, 2009, KBS investment advisors had sold 7 properties on behalf of these seven private funds, which represents 24% of all properties these seven private funds had acquired during this period. These seven funds also sold 24 properties during the 10-year period ending December 31, 2009 that had been acquired before January 1, 2000. During the 10-year period ending December 31, 2009, KBS investment advisors sold another 220 properties on behalf of the seven funds that had acquired properties prior to January 1, 2000. KBS investment advisors continue to actively manage the unsold properties of these private funds.

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Though the private funds were not subject to the up-front commissions, fees and expenses associated with this offering, the private funds have fee arrangements with KBS affiliates structured similar to ours. The percentage of the fees varied based on the market factors at the time the particular fund was formed. Historically a majority of the private funds paid (i) asset management fees, (ii) acquisition fees and (iii) real estate commissions, disposition fees and/or incentive fees based on participation interests in the net cash flows of the funds’ assets after achieving a stipulated return for the investors or based on gains from the sale of assets.

For more information regarding the fees paid to KBS affiliates by these private funds and the operating results of these private funds, please see Tables II and III of the Prior Performance Tables contained in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus. Only one of the private funds represented in Table II, which we refer to as Commingled Account 6/99, paid incentive fees during the three years ended December 31, 2009. Two of the 10 private funds in Table II, Commingled Account 6/98 and Commingled Account 6/99, pay incentive fees based on gains from the sale of assets, and both of these funds are in their liquidation stage. The incentive fees for the remaining eight private funds represented in Table II, which we refer to as Commingled Account 12/96, Separate Account 10/97, Separate Account 12/98, Separate Account 6/05, Separate Account 8/05, Separate Account 5/06, Separate Account 10/06 and Separate Account 01/07, are back-end fees based on participation interests in the net cash flows of the funds’ assets after achieving a stipulated return for the investors. These back-end incentive fees will be paid during the final liquidation stage of the private funds. Two of the private funds with back-end fees based on participation interests (Commingled Account 12/96 and Separate Account 10/97) are in their liquidation stage.

Adverse changes in general economic conditions have occasionally affected the performance of the private funds. For example, in the mid-1990s, in an effort to take advantage of what the KBS investment advisors believed was attractive, discounted portfolio pricing, five of the private funds invested in real estate portfolios in the Southwest, primarily in Arizona and Texas. These portfolios were composed principally of smaller Class B buildings. The recession, beginning around 1999, resulted in more business failures among smaller tenants typical to Class B buildings. This resulted in higher vacancy rates for these buildings and in the funds investing additional capital to cover the costs of re letting the properties. The private funds also retained the buildings for a longer period of time so that the buildings would be sufficiently leased for disposition. The five private funds that made such investments were Commingled Account 12/96, Commingled Account 6/98, Commingled Account 6/99, Separate Account 10/97 and Separate Account 12/98. Also in the late 1990s, three private funds, Commingled Account 6/98, Commingled Account 6/99 and Separate Account 12/98, made investments in real estate located in the Northeast, primarily in Massachusetts. At that time, this area had a high concentration of tenants that were technology companies. While the private funds did not have a significant number of technology companies as their tenants, the collapse of the dot-com market did result in a significant amount of office-building space being returned to the marketplace, increasing vacancy rates and substantially lowering market rents. As a result, rental rates on newly leased space and renewals in the buildings owned by these funds decreased. The area’s higher vacancy rates also increased the period of time it took the KBS investment advisors to get the properties to the planned stabilized occupancy level for disposition. These adverse market conditions reduced the distributions made by these private funds and may cause the total returns to investors to be lower than they otherwise would. Separate Account 12/98 is still in its operating stage. The other four funds (Commingled Account 12/96, Separate Account 10/97, Commingled Account 6/98 and Commingled Account 6/99) are currently in their liquidation stage. However, the reduction in availability of financing and the recent deterioration of general economic conditions has led to a more difficult environment for selling properties and other real estate assets. As a result, over the past 12 months, our prior programs that are liquidating their assets have needed more time to sell their assets than they have historically required.

For more information regarding the operating results of the private funds sponsored by KBS investment advisors, information regarding the results of the completed funds and information regarding the sales or disposals of properties by these private funds, please see Tables III, IV and V of the Prior Performance Tables contained in our Form 8-K filed with the SEC on March 25, 2010 and incorporated by reference into this prospectus.

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FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material U.S. federal income tax consequences of an investment in our common stock. The law firm of DLA Piper LLP (US) has acted as our tax counsel and reviewed this summary. For purposes of this section under the heading “Federal Income Tax Considerations,” references to “KBS REIT II,” “we,” “our” and “us” mean only KBS Real Estate Investment Trust II, Inc. and not its subsidiaries or other lower-tier entities, except as otherwise indicated. This summary is based upon the Internal Revenue Code, the regulations promulgated by the U.S. Treasury Department, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. We have not sought and do not currently expect to seek an advance ruling from the IRS regarding any matter discussed in this prospectus. The summary is also based upon the assumption that we will operate KBS Real Estate Investment Trust II, Inc. and its subsidiaries and affiliated entities in accordance with their applicable organizational documents. This summary is for general information only and does not purport to discuss all aspects of U.S. federal income taxation that may be important to a particular investor in light of its investment or tax circumstances or to investors subject to special tax rules, such as:

• financial institutions;

• insurance companies;

• broker-dealers;

• regulated investment companies;

• partnerships and trusts;

• persons who hold our stock on behalf of other persons as nominees;

• persons who receive our stock through the exercise of employee stock options (if we ever have employees) or otherwise as compensation;

• persons holding our stock as part of a “straddle,” “hedge,” “conversion transaction,” “constructive ownership transaction,” “synthetic security” or other integrated investment;

• “S” corporations;

and, except to the extent discussed below:

• tax-exempt organizations; and

• foreign investors.

This summary assumes that investors will hold their common stock as a capital asset, which generally means as property held for investment.

The federal income tax treatment of holders of our common stock depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. In addition, the tax consequences to any particular stockholder of holding our common stock will depend on the stockholder’s particular tax circumstances. For example, a stockholder that is a partnership or trust that has issued an equity interest to certain types of tax-exempt organizations may be subject to a special entity-level tax if we make distributions attributable to “excess inclusion income.” See “—Taxation of KBS REIT II—Taxable Mortgage Pools and Excess Inclusion Income.” A similar tax may be payable by persons who hold our stock as nominees on behalf of tax-exempt organizations. You are urged to consult your tax advisor regarding the federal, state, local and foreign income and other tax consequences to you in light of your particular investment or tax circumstances of acquiring, holding, exchanging, or otherwise disposing of our common stock.

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Taxation of KBS REIT II

We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2008. We believe that we are organized and operate in such a manner as to qualify for taxation as a REIT.

The law firm of DLA Piper LLP (US) is acting as our tax counsel in connection with this offering. In April 2008, DLA Piper LLP (US) rendered an opinion that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and that our proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT for our taxable year ended December 31, 2008. It must be emphasized that the opinion of DLA Piper LLP (US) was based on various assumptions relating to our organization and operation and conditioned upon fact-based representations and covenants made by our management regarding our organization, assets, and income, and the past, present and future conduct of our business operations. While we intend to operate so that we qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given by DLA Piper LLP (US) or by us that we will qualify as a REIT for any particular year. The opinion was expressed as of the date issued and does not cover subsequent periods. Counsel has no obligation to advise us or our stockholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. You should be aware that opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS will not challenge the conclusions set forth in such opinions.

Qualification and taxation as a REIT depends on our ability to meet on a continuing basis, through actual operating results, distribution levels, and diversity of stock and asset ownership, various qualification requirements imposed upon REITs by the Internal Revenue Code, the compliance with which will not be reviewed by DLA Piper LLP (US). Our ability to qualify as a REIT also requires that we satisfy certain asset tests, some of which depend upon the fair market values of assets that we own directly or indirectly. Such values may not be susceptible to a precise determination. Accordingly, no assurance can be given that the actual results of our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT.

Taxation of REITs in General

As indicated above, our qualification and taxation as a REIT depends upon our ability to meet, on a continuing basis, various qualification requirements imposed upon REITs by the Internal Revenue Code. The material qualification requirements are summarized below under “—Requirements for Qualification—General.” While we intend to operate so that we qualify as a REIT, no assurance can be given that the IRS will not challenge our qualification, or that we will be able to operate in accordance with the REIT requirements in the future. See “—Failure to Qualify.”

Provided that we qualify as a REIT, generally we will be entitled to a deduction for distributions that we pay to our stockholders and therefore will not be subject to federal corporate income tax on our taxable income that is currently distributed to our stockholders. This treatment substantially eliminates the “double taxation” at the corporate and stockholder levels that generally results from investment in a corporation. In general, the income that we generate is taxed only at the stockholder level upon distribution to our stockholders.

For tax years through 2010, most domestic stockholders that are individuals, trusts or estates are taxed on corporate distributions at a maximum rate of 15% (the same as long-term capital gains). With limited exceptions, however, distributions from us or from other entities that are taxed as REITs are generally not eligible for this rate and will continue to be taxed at rates applicable to ordinary income, which will be as high as 35% through 2010. See “—Taxation of Stockholders—Taxation of Taxable Domestic Stockholders—Distributions.”

Any net operating losses and other tax attributes generally do not pass through to our stockholders, subject to special rules for certain items such as the capital gains that we recognize. See “—Taxation of Stockholders.”

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If we qualify as a REIT, we will nonetheless be subject to federal tax in the following circumstances:

• We will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains.

• We may be subject to the “alternative minimum tax” on our items of tax preference, including any deductions of net operating losses.

• If we have net income from prohibited transactions, which are, in general, sales or other dispositions of inventory or property held primarily for sale to customers in the ordinary course of business, other than foreclosure property, such income will be subject to a 100% tax. See “—Prohibited Transactions” and “—Foreclosure Property” below.

• If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate (currently 35%).

• If we derive “excess inclusion income” from an interest in certain mortgage loan securitization structures (i.e., a “taxable mortgage pool” or a residual interest in a real estate mortgage investment conduit, or “REMIC”), we could be subject to corporate level federal income tax at a 35% rate to the extent that such income is allocable to specified types of tax-exempt stockholders known as “disqualified organizations” that are not subject to unrelated business income tax. See “—Taxable Mortgage Pools and Excess Inclusion Income” below.

• If we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below, but nonetheless maintain our qualification as a REIT because we satisfy other requirements, we will be subject to a 100% tax on an amount based on the magnitude of the failure, as adjusted to reflect the profit margin associated with our gross income.

• If we should violate the asset tests (other than certain de minimis violations) or other requirements applicable to REITs, as described below, and yet maintain our qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, we may be subject to an excise tax. In that case, the amount of the excise tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as the amount of net income generated by the assets in question multiplied by the highest corporate tax rate (currently 35%) if that amount exceeds $50,000 per failure.

• If we should fail to distribute during each calendar year at least the sum of (a) 85% of our REIT ordinary income for such year, (b) 95% of our REIT capital gain net income for such year, and (c) any undistributed taxable income from prior periods, we would be subject to a nondeductible 4% excise tax on the excess of the required distribution over the sum of (i) the amounts that we actually distributed and (ii) the amounts we retained and upon which we paid income tax at the corporate level.

• We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “—Requirements for Qualification—General.”

• A 100% tax may be imposed on transactions between us and a TRS (as described below) that do not reflect arms’-length terms.

• If we acquire appreciated assets from a corporation that is not a REIT (i.e., a corporation taxable under subchapter C of the Internal Revenue Code) in a transaction in which the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the subchapter C corporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gain on a disposition of any such assets during the ten-year period following their acquisition from the subchapter C corporation.

• The earnings of our subsidiaries, including any subsidiary we may elect to treat as a TRS, are subject to federal corporate income tax to the extent that such subsidiaries are subchapter C corporations.

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In addition, we and our subsidiaries may be subject to a variety of taxes, including payroll taxes and state and local and foreign income, property and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated.

Requirements for Qualification—General

The Internal Revenue Code defines a REIT as a corporation, trust or association:

(1) that is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

(3) that would be taxable as a domestic corporation but for its election to be subject to tax as a REIT;

(4) that is neither a financial institution nor an insurance company subject to specific provisions of the Internal Revenue Code;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) in which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer “individuals” (as defined in the Internal Revenue Code to include specified tax-exempt entities); and

(7) which meets other tests described below, including with respect to the nature of its income and assets.

The Internal Revenue Code provides that conditions (1) through (4) must be met during the entire taxable year, and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a shorter taxable year. Conditions (5) and (6) need not be met during a corporation’s initial tax year as a REIT. (In our case, we elected to be taxed as a REIT commencing with our taxable year ended December 31, 2008.)

We believe that we will issue in this offering common stock with sufficient diversity of ownership to satisfy conditions (5) and (6). In addition, our charter restricts the ownership and transfer of our stock so that we should continue to satisfy these requirements. The provisions of our charter restricting the ownership and transfer of our common stock are described in “Description of Shares—Restriction on Ownership of Shares.”

To monitor compliance with the share ownership requirements, we generally are required to maintain records regarding the actual ownership of our shares. To do so, we must demand written statements each year from the record holders of significant percentages of our stock pursuant to which the record holders must disclose the actual owners of the shares (i.e., the persons required to include our distributions in their gross income). We must maintain a list of those persons failing or refusing to comply with this demand as part of our records. We could be subject to monetary penalties if we fail to comply with these record-keeping requirements. If you fail or refuse to comply with the demands, you will be required by Treasury regulations to submit a statement with your tax return disclosing your actual ownership of our shares and other information.

In addition, a corporation generally may not elect to become a REIT unless its taxable year is the calendar year. We have adopted December 31 as our year-end, and thereby satisfy this requirement.

The Internal Revenue Code provides relief from violations of the REIT gross income requirements, as described below under “—Income Tests,” in cases where a violation is due to reasonable cause and not to willful neglect, and other requirements are met, including the payment of a penalty tax that is based upon the magnitude of the violation. In addition, certain provisions of the Internal Revenue Code extend similar relief in the case of certain violations of the REIT asset requirements (see “—Asset Tests” below) and other REIT requirements, again provided that the violation is due to reasonable cause and not willful neglect, and other conditions are met, including the payment of a penalty tax. If we fail to satisfy any of the various REIT requirements, there can be no assurance that these relief provisions would be available to enable us to maintain our qualification as a REIT, and, if such relief provisions are available, the amount of any resultant penalty tax could be substantial.

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Effect of Subsidiary Entities

Ownership of Partnership Interests. If we are a partner in an entity that is treated as a partnership for federal income tax purposes, Treasury regulations provide that we are deemed to own our proportionate share of the partnership’s assets, and to earn our proportionate share of the partnership’s income, for purposes of the asset and gross income tests applicable to REITs. Our proportionate share of a partnership’s assets and income is based on our capital interest in the partnership (except that for purposes of the 10% value test, our proportionate share of the partnership’s assets is based on our proportionate interest in the equity and certain debt securities issued by the partnership). In addition, the assets and gross income of the partnership are deemed to retain the same character in our hands. Thus, our proportionate share of the assets and items of income of any of our subsidiary partnerships will be treated as our assets and items of income for purposes of applying the REIT requirements. For any period of time that we own 100% of our Operating Partnership, all of the Operating Partnership’s assets and income will be deemed to be ours for federal income tax purposes.

Disregarded Subsidiaries. If we own a corporate subsidiary that is a “qualified REIT subsidiary,” that subsidiary is generally disregarded for federal income tax purposes, and all of the subsidiary’s assets, liabilities and items of income, deduction and credit are treated as our assets, liabilities and items of income, deduction and credit, including for purposes of the gross income and asset tests applicable to REITs. A qualified REIT subsidiary is any corporation, other than a TRS (as described below), that is directly or indirectly wholly owned by a REIT. Other entities that are wholly owned by us, including single member limited liability companies that have not elected to be taxed as corporations for federal income tax purposes, are also generally disregarded as separate entities for federal income tax purposes, including for purposes of the REIT income and asset tests. Disregarded subsidiaries, along with any partnerships in which we hold an equity interest, are sometimes referred to herein as “pass-through subsidiaries.”

In the event that a disregarded subsidiary of ours ceases to be wholly owned—for example, if any equity interest in the subsidiary is acquired by a person other than us or another disregarded subsidiary of ours—the subsidiary’s separate existence would no longer be disregarded for federal income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the securities of another corporation. See “—Asset Tests” and “—Income Tests.”

Taxable Corporate Subsidiaries. In the future we may jointly elect with any of our subsidiary corporations, whether or not wholly owned, to treat such subsidiary corporations as taxable REIT subsidiaries, or TRSs. A REIT is permitted to own up to 100% of the stock of one or more TRSs. A domestic TRS is a fully taxable corporation that may earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation with respect to which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. We generally may not own more than 10% of the securities of a taxable corporation, as measured by voting power or value, unless we and such corporation elect to treat such corporation as a TRS. Overall, no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.

The separate existence of a TRS or other taxable corporation is not ignored for federal income tax purposes. Accordingly, a TRS or other taxable corporation generally would be subject to corporate income tax on its earnings, which may reduce the cash flow that we and our subsidiaries generate in the aggregate, and may reduce our ability to make distributions to our stockholders.

We are not treated as holding the assets of a TRS or other taxable subsidiary corporation or as receiving any income that the subsidiary earns. Rather, the stock issued by a taxable subsidiary to us is an asset in our hands, and we treat the distributions paid to us from such taxable subsidiary, if any, as income. This treatment can affect our income and asset test calculations, as described below. Because we do not include the assets and income of TRSs or other taxable subsidiary corporations in determining our compliance with the REIT requirements, we may use such entities to undertake indirectly activities that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. For example, we may use TRSs or other taxable subsidiary corporations to conduct activities that give rise to certain categories of income such as management fees or activities that would be treated in our hands as prohibited transactions.

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Certain restrictions imposed on TRSs are intended to ensure that such entities will be subject to appropriate levels of U.S. federal income taxation. First, a TRS with a debt-equity ratio in excess of 1.5 to 1 may not deduct interest payments made in any year to an affiliated REIT to the extent that such payments exceed, generally, 50% of the TRS’s adjusted taxable income for that year (although the TRS may carry forward to, and deduct in, a succeeding year the disallowed interest amount if the 50% test is satisfied in that year). In addition, if amounts are paid to a REIT or deducted by a TRS due to transactions between the REIT and a TRS that exceed the amount that would be paid to or deducted by a party in an arm’s-length transaction, the REIT generally will be subject to an excise tax equal to 100% of such excess. We intend to scrutinize all of our transactions with any of our subsidiaries that are treated as a TRS in an effort to ensure that we do not become subject to this excise tax; however, we cannot assure you that we will be successful in avoiding this excise tax.

We may own TRSs that are organized outside of the United States. For example, we may hold certain investments and instruments through TRSs to the extent that direct ownership by us could jeopardize our compliance with the REIT qualification requirements, and we may make TRS elections with respect to certain offshore issuers of certain instruments to the extent that we do not own 100% of the offshore issuer’s equity. Special rules apply in the case of income earned by a taxable subsidiary corporation that is organized outside of the United States. Depending upon the nature of the subsidiary’s income, the parent REIT may be required to include in its taxable income an amount equal to its share of the subsidiary’s income, without regard to whether, or when, such income is distributed by the subsidiary. See “—Income Tests” below. A TRS that is organized outside of the United States may, depending upon the nature of its operations, be subject to little or no federal income tax. There is a specific exemption from federal income tax for non-U.S. corporations that restrict their activities in the United States to trading stock and securities (or any activity closely related thereto) for their own account, whether such trading (or such other activity) is conducted by the corporation or its employees through a resident broker, commission agent, custodian or other agent. We currently expect that any offshore TRSs will rely on that exemption or otherwise operate in a manner so that they will generally not be subject to federal income tax on their net income at the entity level.

Income Tests

In order to qualify as a REIT, we must satisfy two gross income requirements on an annual basis. First, at least 75% of our gross income for each taxable year, excluding gross income from sales of inventory or dealer property in “prohibited transactions,” generally must be derived from investments relating to real property or mortgages on real property, including interest income derived from mortgage loans secured by real property (including certain types of mortgage-backed securities), “rents from real property,” distributions received from other REITs, and gains from the sale of real estate assets, as well as specified income from temporary investments. Second, at least 95% of our gross income in each taxable year, excluding gross income from prohibited transactions and certain hedging transactions, must be derived from some combination of such income from investments in real property (i.e., income that qualifies under the 75% income test described above), as well as other distributions, interest, and gain from the sale or disposition of stock or securities, which need not have any relation to real property.

Interest income constitutes qualifying mortgage interest for purposes of the 75% income test (as described above) to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If we receive interest income with respect to a mortgage loan that is secured by both real property and other property, and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property on the date that we acquired or originated the mortgage loan, the interest income will be apportioned between the real property and the other collateral, and our income from the arrangement will qualify for purposes of the 75% income test only to the extent that the interest is allocable to the real property. Even if a loan is not secured by real property, or is undersecured, the income that it generates may nonetheless qualify for purposes of the 95% income test.

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To the extent that the terms of a loan provide for contingent interest that is based on the cash proceeds realized upon the sale of the property securing the loan (which we refer to as a “shared appreciation provision”), income attributable to the participation feature will be treated as gain from sale of the underlying property, which generally will be qualifying income for purposes of both the 75% and 95% gross income tests provided that the real property is not held as inventory or dealer property or primarily for sale to customers in the ordinary course of business. To the extent that we derive interest income from a mortgage loan or income from the rental of real property (discussed below) where all or a portion of the amount of interest or rental income payable is contingent, such income generally will qualify for purposes of the gross income tests only if it is based upon the gross receipts or sales and not on the net income or profits of the borrower or lessee. This limitation does not apply, however, where the borrower or lessee leases substantially all of its interest in the property to tenants or subtenants to the extent that the rental income derived by the borrower or lessee, as the case may be, would qualify as rents from real property had we earned the income directly.

We and our subsidiaries may invest in mezzanine loans, which are loans secured by equity interests in an entity that directly or indirectly owns real property, rather than by a direct mortgage of the real property. The IRS has issued Revenue Procedure 2003-65, which provides a safe harbor applicable to mezzanine loans. Under the Revenue Procedure, if a mezzanine loan meets each of the requirements contained in the Revenue Procedure, (1) the mezzanine loan will be treated by the IRS as a real estate asset for purposes of the asset tests described below, and (2) interest derived from the mezzanine loan will be treated as qualifying mortgage interest for purposes of the 75% income test. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. We intend to structure any investments in mezzanine loans in a manner that generally complies with the various requirements applicable to our qualification as a REIT. However, the extent that any of our mezzanine loans do not meet all of the requirements for reliance on the safe harbor set forth in the Revenue Procedure, there can be no assurance that the IRS will not challenge the tax treatment of these loans.

We and our subsidiaries may also invest in real estate mortgage investment conduits, or REMICs, and we may invest in other types of commercial mortgage-backed securities, or CMBS. See below under “—Asset Tests” for a discussion of the effect of such investments on our qualification as a REIT.

We may also hold certain participation interests, including B-Notes, in mortgage loans and mezzanine loans originated by other lenders. B-Notes are interests in underlying loans created by virtue of participations or similar agreements to which the originator of the loans is a party, along with one or more participants. The borrower on the underlying loans is typically not a party to the participation agreement. The performance of this investment depends upon the performance of the underlying loans and, if the underlying borrower defaults, the participant typically has no recourse against the originator of the loans. The originator often retains a senior position in the underlying loans and grants junior participations which absorb losses first in the event of a default by the borrower. We generally expect to treat our participation interests as qualifying real estate assets for purposes of the REIT asset tests described below and interest that we derive from such investments as qualifying mortgage interest for purposes of the 75% income test. The appropriate treatment of participation interests for federal income tax purposes is not entirely certain, however, and no assurance can be given that the IRS will not challenge our treatment of our participation interests. In the event of a determination that such participation interests do not qualify as real estate assets, or that the income that we derive from such participation interests does not qualify as mortgage interest for purposes of the REIT asset and income tests, we could be subject to a penalty tax, or could fail to qualify as a REIT. See “—Taxation of REITs in General,” “—Requirements for Qualification—General,” “—Asset Tests” and “—Failure to Qualify.”

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Rents received by us will qualify as “rents from real property” in satisfying the gross income requirements described above only if several conditions are met. If rent is partly attributable to personal property leased in connection with a lease of real property, the portion of the rent that is attributable to the personal property will not qualify as “rents from real property” unless it constitutes 15% or less of the total rent received under the lease. In addition, the amount of rent must not be based in whole or in part on the income or profits of any person. Amounts received as rent, however, generally will not be excluded from rents from real property solely by reason of being based on fixed percentages of gross receipts or sales. Moreover, for rents received to qualify as “rents from real property,” we generally must not operate or manage the property or furnish or render services to the tenants of such property, other than through an “independent contractor” from which we derive no revenue. We are permitted, however, to perform services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and which are not otherwise considered rendered to the occupant of the property. In addition, we may directly or indirectly provide noncustomary services to tenants of our properties without disqualifying all of the rent from the property if the payments for such services do not exceed 1% of the total gross income from the properties. For purposes of this test, we are deemed to have received income from such non-customary services in an amount at least 150% of the direct cost of providing the services. Moreover, we are generally permitted to provide services to tenants or others through a TRS without disqualifying the rental income received from tenants for purposes of the income tests. Also, rental income will qualify as rents from real property only to the extent that we do not directly or constructively hold a 10% or greater interest, as measured by vote or value, in the lessee’s equity.

We may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally are treated as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not for purposes of the 75% gross income test. Any distributions that we receive from a REIT, however, will be qualifying income for purposes of both the 95% and 75% income tests.

We may receive various fees in connection with our operations relating to the origination or purchase of whole loans secured by first mortgages and other loans secured by real property. The fees will generally be qualifying income for purposes of both the 75% and 95% gross income tests if they are received in consideration for entering into an agreement to make a loan secured by real property and the fees are not determined by income and profits. Other fees generally are not qualifying income for purposes of either gross income test and will not be favorably counted for purposes of either gross income test. Any fees earned by any TRS will not be included for purposes of the gross income tests. We and our subsidiaries may enter into hedging transactions with respect to one or more of our assets or liabilities. Hedging transactions could take a variety of forms, including interest rate swap agreements, interest rate cap agreements, options, futures contracts, forward rate agreements or similar financial instruments. Except to the extent provided by Treasury regulations, any income from a hedging transaction we entered into (1) in the normal course of our business primarily to manage risk of interest rate, inflation and/or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, which is clearly identified as specified in Treasury regulations before the closing of the day on which it was acquired, originated, or entered into, including gain from the sale or disposition of such a transaction, and (2) primarily to manage risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% income tests which is clearly identified as such before the closing of the day on which it was acquired, originated, or entered to, will not constitute gross income for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of the 75% or 95% gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may still qualify as a REIT for such year if we are entitled to relief under applicable provisions of the Internal Revenue Code. These relief provisions will be generally available if (1) our failure to meet these tests was due to reasonable cause and not due to willful neglect and (2) following our identification of the failure to meet the 75% or 95% gross income test for any taxable year, we file a schedule with the IRS setting forth each item of our gross income for purposes of the 75% or 95% gross income test for such taxable year in accordance with Treasury regulations yet to be issued. It is not possible to state whether we would be entitled to the benefit of these relief provisions in all circumstances. If these relief provisions are inapplicable to a particular set of circumstances, we will not qualify as a REIT. As discussed above under “—Taxation of REITs in General,” even where these relief provisions apply, the Internal Revenue Code imposes a tax based upon the amount by which we fail to satisfy the particular gross income test.

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Asset Tests

At the close of each calendar quarter, we must also satisfy four tests relating to the nature of our assets. First, at least 75% of the value of our total assets must be represented by some combination of “real estate assets,” cash, cash items, U.S. government securities, and, under some circumstances, stock or debt instruments purchased with new capital. For this purpose, real estate assets include interests in real property, such as land, buildings, leasehold interests in real property, stock of other corporations that qualify as REITs, and some kinds of mortgage-backed securities and mortgage loans. Assets that do not qualify for purposes of the 75% test are subject to the additional asset tests described below.

Second, the value of any one issuer’s securities that we own may not exceed 5% of the value of our total assets.

Third, we may not own more than 10% of any one issuer’s outstanding securities, as measured by either voting power or value. The 5% and 10% asset tests do not apply to securities of TRSs and qualified REIT subsidiaries and the 10% asset test does not apply to “straight debt” having specified characteristics and to certain other securities described below. Solely for purposes of the 10% asset test, the determination of our interest in the assets of a partnership or limited liability company in which we own an interest will be based on our proportionate interest in any securities issued by the partnership or limited liability company, excluding for this purpose certain securities described in the Internal Revenue Code. Fourth, the aggregate value of all securities of taxable REIT subsidiaries that we hold may not exceed 25% of the value of our total assets.

Notwithstanding the general rule, as noted above, that for purposes of the REIT income and asset tests we are treated as owning our proportionate share of the underlying assets of a subsidiary partnership, if we hold indebtedness issued by a partnership, the indebtedness will be subject to, and may cause a violation of, the asset tests unless the indebtedness is a qualifying mortgage asset or other conditions are met. Similarly, although stock of another REIT is a qualifying asset for purposes of the REIT asset tests, any non-mortgage debt that is issued by another REIT may not so qualify (such debt, however, will not be treated as “securities” for purposes of the 10% asset test, as explained below).

Certain relief provisions are available to REITs to satisfy the asset requirements or to maintain REIT qualification notwithstanding certain violations of the asset and other requirements. One such provision allows a REIT which fails one or more of the asset requirements to nevertheless maintain its REIT qualification if (1) the REIT provides the IRS with a description of each asset causing the failure, (2) the failure is due to reasonable cause and not willful neglect, (3) the REIT pays a tax equal to the greater of (a) $50,000 per failure, and (b) the product of the net income generated by the assets that caused the failure multiplied by the highest applicable corporate tax rate (currently 35%), and (4) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or otherwise satisfies the relevant asset tests within that time frame.

In the case of de minimis violations of the 10% and 5% asset tests, a REIT may maintain its qualification despite a violation of such requirements if (1) the value of the assets causing the violation does not exceed the lesser of 1% of the REIT’s total assets and $10,000,000, and (2) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that time frame.

Certain securities will not cause a violation of the 10% asset test described above. Such securities include instruments that constitute “straight debt,” which includes, among other things, securities having certain contingency features. A security does not qualify as “straight debt” where a REIT (or a controlled TRS of the REIT) owns other securities of the same issuer which do not qualify as straight debt, unless the value of those other securities constitute, in the aggregate, 1% or less of the total value of that issuer’s outstanding securities. In addition to straight debt, the Internal Revenue Code provides that certain other securities will not violate the 10% asset test. Such securities include (1) any loan made to an individual or an estate, (2) certain rental agreements pursuant to which one or more payments are to be made in subsequent years (other than agreements between a REIT and certain persons related to the REIT under attribution rules), (3) any obligation to pay rents from real property, (4) securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity, (5) any security (including debt securities) issued by another REIT, and (6) any debt instrument issued by a partnership if the partnership’s income is of a nature that it would satisfy the 75% gross income test described above under “—Income Tests.” In applying the 10% asset test, a debt security issued by a partnership is not taken into account to the extent, if any, of the REIT’s proportionate interest in the equity and certain debt securities issued by that partnership.

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Any interests that we hold in a REMIC will generally qualify as real estate assets and income derived from REMIC interests will generally be treated as qualifying income for purposes of the REIT income tests described above. If less than 95% of the assets of a REMIC are real estate assets, however, then only a proportionate part of our interest in the REMIC and income derived from the interest qualifies for purposes of the REIT asset and income tests. If we hold a “residual interest” in a REMIC from which we derive “excess inclusion income,” we will be required to either distribute the excess inclusion income or pay tax on it (or a combination of the two), even though we may not receive the income in cash. To the extent that distributed excess inclusion income is allocable to a particular stockholder, the income (1) would not be allowed to be offset by any net operating losses otherwise available to the stockholder, (2) would be subject to tax as unrelated business taxable income in the hands of most types of stockholders that are otherwise generally exempt from federal income tax, and (3) would result in the application of U.S. federal income tax withholding at the maximum rate (30%), without reduction of any otherwise applicable income tax treaty, to the extent allocable to most types of foreign stockholders. Moreover, any excess inclusion income that we receive that is allocable to specified categories of tax-exempt investors which are not subject to unrelated business income tax, such as government entities, may be subject to corporate-level income tax in our hands, whether or not it is distributed. See “—Taxable Mortgage Pools and Excess Inclusion Income.”

To the extent that we hold mortgage participations or CMBS that do not represent REMIC interests, such assets may not qualify as real estate assets, and the income generated from them might not qualify for purposes of either or both of the REIT income tests, depending upon the circumstances and the specific structure of the investment.

We believe that our holdings of securities and other assets will comply with the foregoing REIT asset requirements, and we intend to monitor compliance on an ongoing basis. Certain mezzanine loans we make or acquire may qualify for the safe harbor in Revenue Procedure 2003-65 pursuant to which certain loans secured by a first priority security interest in ownership interests in a partnership or limited liability company will be treated as qualifying assets for purposes of the 75% real estate asset test and the 10% vote or value test. See “—Income Tests.” We may make some mezzanine loans that do not qualify for that safe harbor and that do not qualify as “straight debt” securities or for one of the other exclusions from the definition of “securities” for purposes of the 10% value test. We intend to make such investments in such a manner as not to fail the asset tests described above.

No independent appraisals will be obtained to support our conclusions as to the value of our total assets or the value of any particular security or securities. Moreover, values of some assets, including instruments issued in securitization transactions, may not be susceptible to a precise determination, and values are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements. Accordingly, there can be no assurance that the IRS will not contend that our interests in our subsidiaries or in the securities of other issuers will not cause a violation of the REIT asset tests.

If we should fail to satisfy the asset tests at the end of a calendar quarter, such a failure would not cause us to lose our REIT qualification if we (1) satisfied the asset tests at the close of the preceding calendar quarter and (2) the discrepancy between the value of our assets and the asset requirements was not wholly or partly caused by an acquisition of non-qualifying assets, but instead arose from changes in the market value of our assets. If the condition described in (2) were not satisfied, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose or by making use of relief provisions described below.

Annual Distribution Requirements

In order to qualify as a REIT, we are required to make distributions, other than capital gain distributions, to our stockholders in an amount at least equal to:

(a) the sum of

(1) 90% of our “REIT taxable income,” computed without regard to our net capital gains and the dividends paid deduction, and

(2) 90% of our net income, if any, (after tax) from foreclosure property (as described below), minus

(b) the sum of specified items of non-cash income.

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We generally must make these distributions in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for the year and if paid with or before the first regular distribution payment after such declaration. In order for distributions to be counted for this purpose, and to provide a tax deduction for us, the distributions must not be “preferential dividends.” A distribution is not a preferential dividend if the distribution is (1) pro rata among all outstanding shares of stock within a particular class, and (2) in accordance with the preferences among different classes of stock as set forth in our organizational documents.

To the extent that we distribute at least 90%, but less than 100%, of our “REIT taxable income,” as adjusted, we will be subject to tax at ordinary corporate tax rates on the retained portion. We may elect to retain, rather than distribute, our net long-term capital gains and pay tax on such gains. In this case, we could elect for our stockholders to include their proportionate shares of such undistributed long-term capital gains in income, and to receive a corresponding credit for their share of the tax that we paid. Our stockholders would then increase their adjusted basis of their stock by the difference between (a) the amounts of capital gain distributions that we designated and that they include in their taxable income, minus (b) the tax that we paid on their behalf with respect to that income.

To the extent that we have available net operating losses carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. Such losses, however, will generally not affect the character, in the hands of our stockholders, of any distributions that are actually made as ordinary dividends or capital gains. See “—Taxation of Stockholders—Taxation of Taxable Domestic Stockholders—Distributions.”

If we should fail to distribute during each calendar year at least the sum of (a) 85% of our REIT ordinary income for such year, (b) 95% of our REIT capital gain net income for such year, and (c) any undistributed taxable income from prior periods, we would be subject to a non-deductible 4% excise tax on the excess of such required distribution over the sum of (x) the amounts actually distributed, plus (y) the amounts of income we retained and on which we have paid corporate income tax.

It is possible that, from time to time, we may not have sufficient cash to meet the distribution requirements due to timing differences between (a) our actual receipt of cash, including receipt of distributions from our subsidiaries, and (b) our inclusion of items in income for federal income tax purposes. Other potential sources of non-cash taxable income include:

• “residual interests” in REMICs or taxable mortgage pools;

• loans or mortgage-backed securities held as assets that are issued at a discount and require the accrual of taxable economic interest in advance of receipt in cash; and

• loans on which the borrower is permitted to defer cash payments of interest, and distressed loans on which we may be required to accrue taxable interest income even though the borrower is unable to make current servicing payments in cash.

In the event that such timing differences occur, in order to meet the distribution requirements, it might be necessary for us to arrange for short-term, or possibly long-term, borrowings, or to pay distributions in the form of taxable in-kind distributions of property.

We may be able to rectify a failure to meet the distribution requirements for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in our deduction for distributions paid for the earlier year. In this case, we may be able to avoid losing REIT qualification or being taxed on amounts distributed as deficiency dividends. We will be required to pay interest and a penalty based on the amount of any deduction taken for deficiency dividends.

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Failure to Qualify

If we fail to satisfy one or more requirements for REIT qualification other than the gross income or asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. Relief provisions are available for failures of the gross income tests and asset tests, as described above in “—Income Tests” and “—Asset Tests.”

If we fail to qualify for taxation as a REIT in any taxable year, and the relief provisions described above do not apply, we would be subject to tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. We cannot deduct distributions to stockholders in any year in which we are not a REIT, nor would we be required to make distributions in such a year. In this situation, to the extent of current and accumulated earnings and profits, distributions to domestic stockholders that are individuals, trusts and estates will generally be taxable at capital gains rates (through 2010). In addition, subject to the limitations of the Internal Revenue Code, corporate distributees may be eligible for the dividends received deduction. Unless we are entitled to relief under specific statutory provisions, we would also be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which we lost qualification. It is not possible to state whether, in all circumstances, we would be entitled to this statutory relief.

Prohibited Transactions

Net income that we derive from a prohibited transaction is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property (other than foreclosure property, as discussed below) that is held primarily for sale to customers in the ordinary course of a trade or business. We intend to conduct our operations so that no asset that we own (or are treated as owning) will be treated as, or as having been, held for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our business. Whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that we sell will not be treated as property held for sale to customers, or that we can comply with certain safe-harbor provisions of the Internal Revenue Code that would prevent such treatment. The 100% tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will potentially be subject to tax in the hands of the corporation at regular corporate rates, nor does the 100% tax apply to sales that qualify for a safe harbor as described in Section 857(b)(6) of the Internal Revenue Code.

Foreclosure Property

Foreclosure property is real property and any personal property incident to such real property (1) that we acquire as the result of having bid on the property at foreclosure, or having otherwise reduced the property to ownership or possession by agreement or process of law, after a default (or upon imminent default) on a lease of the property or a mortgage loan held by us and secured by the property, (2) for which we acquired the related loan or lease at a time when default was not imminent or anticipated, and (3) with respect to which we made a proper election to treat the property as foreclosure property. We generally will be subject to tax at the maximum corporate rate (currently 35%) on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that would otherwise be qualifying income for purposes of the 75% gross income test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property. To the extent that we receive any income from foreclosure property that does not qualify for purposes of the 75% gross income test, we intend to make an election to treat the related property as foreclosure property.

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Derivatives and Hedging Transactions

We and our subsidiaries may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities. Hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap agreements, interest rate cap agreements, options, futures contracts, forward rate agreements or similar financial instruments. Except to the extent provided by Treasury regulations, any income from a hedging transaction we entered into (1) in the normal course of our business primarily to manage risk of interest rate, inflation and/or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, which is clearly identified as specified in Treasury regulations before the closing of the day on which it was acquired, originated, or entered into, including gain from the sale or disposition of such a transaction, and (2) primarily to manage risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% income tests which is clearly identified as such before the closing of the day on which it was acquired, originated, or entered into, will not constitute gross income for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of the 75% or 95% gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT. We may conduct some or all of our hedging activities through our TRS or other corporate entity, the income from which may be subject to federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries. No assurance can be given, however, that our hedging activities will not give rise to income that does not qualify for purposes of either or both of the REIT gross income tests, or that our hedging activities will not adversely affect our ability to satisfy the REIT qualification requirements.

Taxable Mortgage Pools and Excess Inclusion Income

An entity, or a portion of an entity, may be classified as a taxable mortgage pool, or TMP, under the Internal Revenue Code if:

• substantially all of its assets consist of debt obligations or interests in debt obligations;

• more than 50% of those debt obligations are real estate mortgages or interests in real estate mortgages as of specified testing dates;

• the entity has issued debt obligations (liabilities) that have two or more maturities; and

• the payments required to be made by the entity on its debt obligations (liabilities) “bear a relationship” to the payments to be received by the entity on the debt obligations that it holds as assets.

Under regulations issued by the U.S. Treasury Department, if less than 80% of the assets of an entity (or a portion of an entity) consist of debt obligations, these debt obligations are considered not to comprise “substantially all” of its assets, and therefore the entity would not be treated as a TMP. Our financing and securitization arrangements may give rise to TMPs with the consequences as described below.

Where an entity, or a portion of an entity, is classified as a TMP, it is generally treated as a taxable corporation for federal income tax purposes. In the case of a REIT, or a portion of a REIT, or a disregarded subsidiary of a REIT, that is a TMP, however, special rules apply. The TMP is not treated as a corporation that is subject to corporate income tax, and the TMP classification does not directly affect the tax qualification of the REIT. Rather, the consequences of the TMP classification would, in general, except as described below, be limited to the stockholders of the REIT.

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A portion of the REIT’s income from the TMP, which might be noncash accrued income, could be treated as excess inclusion income. Under recently issued IRS guidance, the REIT’s excess inclusion income, including any excess inclusion income from a residual interest in a REMIC, must be allocated among its stockholders in proportion to distributions paid. We are required to notify our stockholders of the amount of “excess inclusion income” allocated to them. A stockholder’s share of our excess inclusion income:

• cannot be offset by any net operating losses otherwise available to the stockholder;

• is subject to tax as unrelated business taxable income in the hands of most types of stockholders that are otherwise generally exempt from federal income tax; and

• results in the application of U.S. federal income tax withholding at the maximum rate (30%), without reduction for any otherwise applicable income tax treaty or other exemption, to the extent allocable to most types of foreign stockholders.

See “—Taxation of Stockholders.” To the extent that excess inclusion income is allocated from a TMP to a tax-exempt stockholder of a REIT that is not subject to unrelated business income tax (such as a government entity), the REIT will be subject to tax on this income at the highest applicable corporate tax rate (currently 35%). In this case, we are authorized to reduce and intend to reduce distributions to such stockholders by the amount of such tax paid by the REIT that is attributable to such stockholder’s ownership. Treasury regulations provide that such a reduction in distributions does not give rise to a preferential dividend that could adversely affect the REIT’s compliance with its distribution requirements. See “—Annual Distribution Requirements.” The manner in which excess inclusion income is calculated, or would be allocated to stockholders, including allocations among shares of different classes of stock, remains unclear under current law. As required by IRS guidance, we intend to make such determinations using a reasonable method. Tax-exempt investors, foreign investors and taxpayers with net operating losses should carefully consider the tax consequences described above, and are urged to consult their tax advisors.

If a subsidiary partnership of ours that we do not wholly own, directly or through one or more disregarded entities, were a TMP, the foregoing rules would not apply. Rather, the partnership that is a TMP would be treated as a corporation for federal income tax purposes and potentially could be subject to corporate income tax or withholding tax. In addition, this characterization would alter our income and asset test calculations and could adversely affect our compliance with those requirements. We intend to monitor the structure of any TMPs (including whether a TRS election might be made in respect of any such TMP) in which we have an interest to ensure that they will not adversely affect our qualification as a REIT.

Taxation of Stockholders

Taxation of Taxable Domestic Stockholders

Distributions. So long as we qualify as a REIT, the distributions that we make to our taxable domestic stockholders out of current or accumulated earnings and profits that we do not designate as capital gain distributions will generally be taken into account by stockholders as ordinary income and will not be eligible for the dividends received deduction for corporations. With limited exceptions, our distributions are not eligible for taxation at the preferential income tax rates (i.e., the 15% maximum federal rate through 2010) for qualified distributions received by domestic stockholders that are individuals, trusts and estates from taxable C corporations. Such stockholders, however, are taxed at the preferential rates on distributions designated by and received from REITs to the extent that the distributions are attributable to:

• income retained by the REIT in the prior taxable year on which the REIT was subject to corporate level income tax (less the amount of tax);

• distributions received by the REIT from TRSs or other taxable C corporations; or

• income in the prior taxable year from the sales of “built-in gain” property acquired by the REIT from C corporations in carryover basis transactions (less the amount of corporate tax on such income).

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Distributions that we designate as capital gain dividends will generally be taxed to our stockholders as long-term capital gains, to the extent that such distributions do not exceed our actual net capital gain for the taxable year, without regard to the period for which the stockholder that receives such distribution has held its stock. We may elect to retain and pay taxes on some or all of our net long-term capital gains, in which case provisions of the Internal Revenue Code will treat our stockholders as having received, solely for tax purposes, our undistributed capital gains, and the stockholders will receive a corresponding credit for taxes that we paid on such undistributed capital gains. See “—Taxation of KBS REIT II—Annual Distribution Requirements.” Corporate stockholders may be required to treat up to 20% of some capital gain distributions as ordinary income. Long-term capital gains are generally taxable at maximum federal rates of 15% (through 2010) in the case of stockholders that are individuals, trusts and estates, and 35% in the case of stockholders that are corporations. Capital gains attributable to the sale of depreciable real property held for more than 12 months are subject to a 25% maximum federal income tax rate for taxpayers who are taxed as individuals, to the extent of previously claimed depreciation deductions.

Distributions in excess of our current and accumulated earnings and profits will generally represent a return of capital and will not be taxable to a stockholder to the extent that the amount of such distributions do not exceed the adjusted basis of the stockholder’s shares in respect of which the distributions were made. Rather, the distribution will reduce the adjusted basis of the stockholder’s shares. To the extent that such distributions exceed the adjusted basis of a stockholder’s shares, the stockholder generally must include such distributions in income as long-term capital gain, or short-term capital gain if the shares have been held for one year or less. In addition, any distribution that we declare in October, November or December of any year and that is payable to a stockholder of record on a specified date in any such month will be treated as both paid by us and received by the stockholder on December 31 of such year, provided that we actually pay the distribution before the end of January of the following calendar year.

To the extent that we have available net operating losses and capital losses carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. See “—Taxation of KBS REIT II—Annual Distribution Requirements.” Such losses, however, are not passed through to stockholders and do not offset income of stockholders from other sources, nor would such losses affect the character of any distributions that we make, which are generally subject to tax in the hands of stockholders to the extent that we have current or accumulated earnings and profits.

If excess inclusion income from a taxable mortgage pool or REMIC residual interest is allocated to any stockholder, that income will be taxable in the hands of the stockholder and would not be offset by any net operating losses of the stockholder that would otherwise be available. See “Taxation of KBS REIT II—Taxable Mortgage Pools and Excess Inclusion Income.” As required by IRS guidance, we intend to notify our stockholders if a portion of a distribution paid by us is attributable to excess inclusion income.

Dispositions of Our Stock. In general, capital gains recognized by individuals, trusts and estates upon the sale or disposition of our stock will be subject to a maximum federal income tax rate of 15% (through 2010) if the stock is held for more than one year, and will be taxed at ordinary income rates (of up to 35% through 2010) if the stock is held for one year or less. Gains recognized by stockholders that are corporations are subject to federal income tax at a maximum rate of 35%, whether or not such gains are classified as long-term capital gains. Capital losses recognized by a stockholder upon the disposition of our stock that was held for more than one year at the time of disposition will be considered long-term capital losses, and are generally available only to offset capital gain income of the stockholder but not ordinary income (except in the case of individuals, who may offset up to $3,000 of ordinary income each year). In addition, any loss upon a sale or exchange of shares of our stock by a stockholder who has held the shares for six months or less, after applying holding period rules, will be treated as a long-term capital loss to the extent of distributions that we make that are required to be treated by the stockholder as long-term capital gain.

If an investor recognizes a loss upon a subsequent disposition of our stock or other securities in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These regulations, though directed towards “tax shelters,” are broadly written and apply to transactions that would not typically be considered tax shelters. The Internal Revenue Code imposes significant penalties for failure to comply with these requirements. You should consult your tax advisor concerning any possible disclosure obligation with respect to the receipt or disposition of our stock or securities or transactions that we might undertake directly or indirectly. Moreover, you should be aware that we and other participants in the transactions in which we are involved (including their advisors) might be subject to disclosure or other requirements pursuant to these regulations.

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Passive Activity Losses and Investment Interest Limitations. Distributions that we make and gain arising from the sale or exchange by a domestic stockholder of our stock will not be treated as passive activity income. As a result, stockholders will not be able to apply any “passive losses” against income or gain relating to our stock. To the extent that distributions we make do not constitute a return of capital, they will be treated as investment income for purposes of computing the investment interest limitation.

Taxation of Foreign Stockholders

The following is a summary of certain U.S. federal income and estate tax consequences of the ownership and disposition of our stock applicable to non-U.S. holders. A “non-U.S. holder” is any person other than:

• a citizen or resident of the United States;

• a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, or of any state thereof, or the District of Columbia;

• an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or

• a trust if a United States court is able to exercise primary supervision over the administration of such trust and one or more United States fiduciaries have the authority to control all substantial decisions of the trust.

If a partnership, including for this purpose any entity that is treated as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. An investor that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock.

The following discussion is based on current law, and is for general information only. It addresses only selected, and not all, aspects of U.S. federal income and estate taxation.

Ordinary Dividends. The portion of distributions received by non-U.S. holders (1) that is payable out of our earnings and profits, (2) which is not attributable to our capital gains and (3) which is not effectively connected with a U.S. trade or business of the non-U.S. holder, will be subject to U.S. withholding tax at the rate of 30%, unless reduced or eliminated by treaty. Reduced treaty rates and other exemptions are not available to the extent that income is attributable to excess inclusion income allocable to the foreign stockholder. Accordingly, we will withhold at a rate of 30% on any portion of a distribution that is paid to a non-U.S. holder and attributable to that holder’s share of our excess inclusion income. See “—Taxation of KBS REIT II—Taxable Mortgage Pools and Excess Inclusion Income.” As required by IRS guidance, we intend to notify our stockholders if a portion of a distribution paid by us is attributable to excess inclusion income.

In general, non-U.S. holders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of our stock. In cases where the dividend income from a non-U.S. holder’s investment in our stock is, or is treated as, effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business, the non-U.S. holder generally will be subject to U.S. federal income tax at graduated rates, in the same manner as domestic stockholders are taxed with respect to such distributions. Such income must generally be reported on a U.S. income tax return filed by or on behalf of the non-U.S. holder. The income may also be subject to the 30% branch profits tax in the case of a non-U.S. holder that is a corporation.

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Non-Dividend Distributions. Unless our stock constitutes a U.S. real property interest (a “USRPI”), distributions that we make that are not out of our earnings and profits will not be subject to U.S. income tax. If we cannot determine at the time a distribution is made whether or not the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to ordinary dividends. The non-U.S. holder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the distribution was, in fact, in excess of our current and accumulated earnings and profits. If our stock constitutes a USRPI, as described below, distributions that we make in excess of the sum of (a) the stockholder’s proportionate share of our earnings and profits, plus (b) the stockholder’s basis in its stock, will be taxed under the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, at the rate of tax, including any applicable capital gains rates, that would apply to a domestic stockholder of the same type (e.g., an individual or a corporation, as the case may be), and the collection of the tax will be enforced by a refundable withholding at a rate of 10% of the amount by which the distribution exceeds the stockholder’s share of our earnings and profits.

Capital Gain Distributions. Under FIRPTA, a distribution that we make to a non-U.S. holder, to the extent attributable to gains from dispositions of USRPIs that we held directly or through pass-through subsidiaries, or USRPI capital gains, will, except as described below, be considered effectively connected with a U.S. trade or business of the non-U.S. holder and will be subject to U.S. income tax at the rates applicable to U.S. individuals or corporations, without regard to whether we designate the distribution as a capital gain distribution. See above under “—Taxation of Foreign Stockholders—Ordinary Dividends,” for a discussion of the consequences of income that is effectively connected with a U.S. trade or business. In addition, we will be required to withhold tax equal to 35% of the amount of distributions to the extent the distributions constitute USRPI capital gains. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation. A distribution is not a USRPI capital gain if we held an interest in the underlying asset solely as a creditor. Capital gain distributions received by a non-U.S. holder that are attributable to dispositions of our assets other than USRPIs are not subject to U.S. federal income or withholding tax, unless (1) the gain is effectively connected with the non-U.S. holder’s U.S. trade or business, in which case the non-U.S. holder would be subject to the same treatment as U.S. holders with respect to such gain, or (2) the non- U.S. holder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. holder will incur a 30% tax on his or her capital gains.

A capital gain distribution that would otherwise have been treated as a USRPI capital gain will not be so treated or be subject to FIRPTA, and generally will not be treated as income that is effectively connected with a U.S. trade or business, and instead will be treated in the same manner as an ordinary dividend (see “—Taxation of Foreign Stockholders—Ordinary Dividends”), if (1) the capital gain distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States, and (2) the recipient non-U.S. holder does not own more than 5% of that class of stock at any time during the year ending on the date on which the capital gain distribution is received. At the time you purchase shares in this offering, our shares will not be publicly traded and we can give you no assurance that our shares will ever be publicly traded on an established securities market. Therefore, these rules will not apply to our capital gain distributions.

Dispositions of Our Stock. Unless our stock constitutes a USRPI, a sale of our stock by a non-U.S. holder generally will not be subject to U.S. taxation under FIRPTA. Our stock will not be treated as a USRPI if less than 50% of our assets throughout a prescribed testing period consist of interests in real property located within the United States, excluding, for this purpose, interests in real property solely in a capacity as a creditor.

Even if the foregoing 50% test is not met, our stock nonetheless will not constitute a USRPI if we are a “domestically-controlled qualified investment entity.” A domestically-controlled qualified investment entity includes a REIT, less than 50% of value of which is held directly or indirectly by non-U.S. holders at all times during a specified testing period. We believe that we will be a domestically-controlled qualified investment entity, and that a sale of our stock should not be subject to taxation under FIRPTA. However, as mentioned above, we can give you no assurance that our shares will ever be publicly traded on an established securities market.

If our stock constitutes a USRPI and we do not constitute a domestically-controlled qualified investment entity, but our stock becomes “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, a non-U.S. holder’s sale of our common stock nonetheless would not be subject to tax under FIRPTA as a sale of a USRPI, provided that the selling non-U.S. holder held 5% or less of our outstanding common stock at all times during a specified testing period. However, as mentioned above, we can give you no assurance that our common stock will ever be publicly traded on an established securities market.

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If gain on the sale of our stock were subject to taxation under FIRPTA, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to the same treatment as a U.S. stockholder with respect to such gain, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals, and the purchaser of the stock could be required to withhold 10% of the purchase price and remit such amount to the IRS.

Gain from the sale of our stock that would not otherwise be subject to FIRPTA will nonetheless be taxable in the United States to a non-U.S. holder in two cases: (1) if the non-U.S. holder’s investment in our stock is effectively connected with a U.S. trade or business conducted by such non-U.S. holder, the non-U.S. holder will be subject to the same treatment as a U.S. stockholder with respect to such gain, or (2) if the non-U.S. holder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain. In addition, even if we are a domestically controlled qualified investment entity, upon disposition of our stock, a non-U.S. holder may be treated as having gain from the sale or exchange of a USRPI if the non-U.S. holder (1) disposes of our common stock within a 30-day period preceding the ex-dividend date of a distribution, any portion of which, but for the disposition, would have been treated as gain from the sale or exchange of a USRPI and (2) acquires, or enters into a contract or option to acquire, other shares of our common stock within 30 days after such ex-dividend date.

Estate Tax. If our stock is owned or treated as owned by an individual who is not a citizen or resident (as specially defined for U.S. federal estate tax purposes) of the United States at the time of such individual’s death, the stock will be includable in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise, and may therefore be subject to U.S. federal estate tax.

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from federal income taxation. However, they may be subject to taxation on their unrelated business taxable income, or UBTI. While some investments in real estate may generate UBTI, the IRS has ruled that dividend distributions from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, and provided that (1) a tax-exempt stockholder has not held our stock as “debt financed property” within the meaning of the Internal Revenue Code (i.e., where the acquisition or holding of the property is financed through a borrowing by the tax-exempt stockholder), and (2) our stock is not otherwise used in an unrelated trade or business, distributions that we make and income from the sale of our stock generally should not give rise to UBTI to a tax-exempt stockholder.

To the extent, however, that we are (or a part of us, or a disregarded subsidiary of ours is) deemed to be a TMP, or if we hold residual interests in a REMIC, a portion of the distributions paid to a tax-exempt stockholder that is allocable to excess inclusion income may be treated as UBTI. We anticipate that our investments may generate excess inclusion income. If excess inclusion income is allocable to some categories of tax-exempt stockholders that are not subject to UBTI, such as governmental investors, we will be subject to corporate level tax on such income, and, in that case, we are authorized to reduce and intend to reduce the amount of distributions to those stockholders whose ownership gave rise to the tax. See “—Taxation of KBS REIT II—Taxable Mortgage Pools and Excess Inclusion Income.” As required by IRS guidance, we intend to notify our stockholders if a portion of a distribution paid by us is attributable to excess inclusion income.

Tax-exempt stockholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from federal income taxation under Sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the Internal Revenue Code are subject to different UBTI rules, which generally require such stockholders to characterize distributions that we make as UBTI.

In certain circumstances, a pension trust that owns more than 10% of our stock could be required to treat a percentage of its distributions as UBTI, if we are a “pension-held REIT.” We will not be a pension-held REIT unless either (1) one pension trust owns more than 25% of the value of our stock, or (2) a group of pension trusts, each individually holding more than 10% of the value of our stock, collectively owns more than 50% of our stock. Certain restrictions on ownership and transfer of our stock should generally prevent a tax-exempt entity from owning more than 10% of the value of our stock and should generally prevent us from becoming a pension-held REIT.

Tax-exempt stockholders are urged to consult their tax advisors regarding the federal, state, local and foreign income and other tax consequences of owning our stock.

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Backup Withholding and Information Reporting

We will report to our domestic stockholders and the IRS the amount of dividends paid during each calendar year and the amount of any tax withheld. Under the backup withholding rules, a domestic stockholder may be subject to backup withholding with respect to dividends paid unless the holder is a corporation or comes within other exempt categories and, when required, demonstrates this fact or provides a taxpayer identification number or social security number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A domestic stockholder that does not provide his or her correct taxpayer identification number or social security number may also be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. In addition, we may be required to withhold a portion of a capital gain distribution to any domestic stockholder who fails to certify its non-foreign status.

We must report annually to the IRS and to each non-U.S. stockholder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. stockholder resides under the provisions of an applicable income tax treaty. A non-U.S. stockholder may be subject to backup withholding unless applicable certification requirements are met.

Payment of the proceeds of a sale of our common stock within the U.S. is subject to both backup withholding and information reporting unless the beneficial owner certifies under penalties of perjury that it is a non-U.S. stockholder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person) or the holder otherwise establishes an exemption. Payment of the proceeds of a sale of our common stock conducted through certain U.S. related financial intermediaries is subject to information reporting (but not backup withholding) unless the financial intermediary has documentary evidence in its records that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s U.S. federal income tax liability provided the required information is furnished to the IRS.

Other Tax Considerations

Legislative or Other Actions Affecting REITs

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to the federal tax laws and interpretations thereof could adversely affect an investment in our stock.

State, Local and Foreign Taxes

We and our subsidiaries and stockholders may be subject to state, local or foreign taxation in various jurisdictions including those in which we or they transact business, own property or reside. We may own real property assets located in numerous jurisdictions, and may be required to file tax returns in some or all of those jurisdictions. Our state, local or foreign tax treatment and that of our stockholders may not conform to the federal income tax treatment discussed above. We may own foreign real estate assets and pay foreign property taxes, and dispositions of foreign property or operations involving, or investments in, foreign real estate assets may give rise to foreign income or other tax liability in amounts that could be substantial. Any foreign taxes that we incur do not pass through to stockholders as a credit against their U.S. federal income tax liability. Prospective investors should consult their tax advisors regarding the application and effect of state, local and foreign income and other tax laws on an investment in our stock.

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ERISA CONSIDERATIONS

The following is a summary of some considerations associated with an investment in our shares by a qualified employee pension benefit plan or an individual retirement account (IRA). This summary is based on provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code, each as amended through the date of this prospectus, and the relevant regulations, opinions and other authority issued by the Department of Labor and the IRS. We cannot assure you that there will not be adverse tax or labor decisions or legislative, regulatory or administrative changes that would significantly modify the statements expressed herein. Any such changes may apply to transactions entered into prior to the date of their enactment.

Each fiduciary of an employee pension benefit plan subject to ERISA (such as a profit sharing, Section 401(k) or pension plan) or any other retirement plan or account subject to Section 4975 of the Internal Revenue Code, such as an IRA, seeking to invest plan assets in our shares must, taking into account the facts and circumstances of each such plan or IRA (Benefit Plan), consider, among other matters:

• whether the investment is consistent with the applicable provisions of ERISA and the Internal Revenue Code;

• whether, under the facts and circumstances pertaining to the Benefit Plan in question, the fiduciary’s responsibility to the plan has been satisfied;

• whether the investment will produce an unacceptable amount of “unrelated business taxable income” (“UBTI”) to the Benefit Plan (see “Federal Income Tax Considerations—Taxation of Stockholders—Taxation of Tax-Exempt Stockholders”); and

• the need to value the assets of the Benefit Plan annually.

Under ERISA, a plan fiduciary’s responsibilities include the following duties:

• to act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits to them, as well as defraying reasonable expenses of plan administration;

• to invest plan assets prudently;

• to diversify the investments of the plan, unless it is clearly prudent not to do so;

• to ensure sufficient liquidity for the plan;

• to ensure that plan investments are made in accordance with plan documents; and

• to consider whether an investment would constitute or give rise to a prohibited transaction under ERISA or the Internal Revenue Code.

ERISA also requires that, with certain exceptions, the assets of an employee benefit plan be held in trust and that the trustee, or a duly authorized named fiduciary or investment manager, have exclusive authority and discretion to manage and control the assets of the plan.

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Prohibited Transactions

Generally, both ERISA and the Internal Revenue Code prohibit Benefit Plans from engaging in certain transactions involving plan assets with specified parties, such as sales or exchanges or leasing of property, loans or other extensions of credit, furnishing goods or services, or transfers to, or use of, plan assets. The specified parties are referred to as “parties-in-interest” under ERISA and as “disqualified persons” under the Internal Revenue Code. These definitions generally include both parties owning threshold percentage interests in an investment entity and “persons providing services” to the Benefit Plan, as well as employer sponsors of the Benefit Plan, fiduciaries and other individuals or entities affiliated with the foregoing. For this purpose, a person generally is a fiduciary with respect to a Benefit Plan if, among other things, the person has discretionary authority or control with respect to plan assets or provides investment advice for a fee with respect to plan assets. Under Department of Labor regulations, a person shall be deemed to be providing investment advice if that person renders advice as to the advisability of investing in our shares, and that person regularly provides investment advice to the Benefit Plan pursuant to a mutual agreement or understanding that such advice will serve as the primary basis for investment decisions, and that the advice will be individualized for the Benefit Plan based on its particular needs. Thus, if we are deemed to hold plan assets, our management could be characterized as fiduciaries with respect to such assets, and each would be deemed to be a party-in-interest under ERISA and a disqualified person under the Internal Revenue Code with respect to investing Benefit Plans. Whether or not we are deemed to hold plan assets, if we or our affiliates are affiliated with a Benefit Plan investor, we might be a disqualified person or party-in-interest with respect to such Benefit Plan investor, resulting in a prohibited transaction merely upon investment by such Benefit Plan in our shares.

Plan Asset Considerations

In order to determine whether an investment in our shares by a Benefit Plan creates or gives rise to the potential for either prohibited transactions or a commingling of assets as referred to above, a fiduciary must consider whether an investment in our shares will cause our assets to be treated as assets of the investing Benefit Plan. Neither ERISA nor the Internal Revenue Code defines the term “plan assets”; however, regulations promulgated by the Department of Labor provide guidelines as to whether, and under what circumstances, the underlying assets of an entity will be deemed to constitute assets of a Benefit Plan when the plan invests in that entity (Plan Assets Regulation). Under the Plan Assets Regulation, the assets of an entity in which a Benefit Plan makes an equity investment will generally be deemed to be assets of the Benefit Plan, unless one of the exceptions to this general rule applies.

In the event that our underlying assets were treated as the assets of investing Benefit Plans, our management would be treated as fiduciaries with respect to each Benefit Plan stockholder and an investment in our shares might constitute an ineffective delegation of fiduciary responsibility to KBS Capital Advisors, our advisor, and expose the fiduciary of the Benefit Plan to co-fiduciary liability under ERISA for any breach by KBS Capital Advisors of the fiduciary duties mandated under ERISA. Further, if our assets are deemed to be “plan assets,” an investment by an IRA in our shares might be deemed to result in an impermissible commingling of IRA assets with other property.

If KBS Capital Advisors or its affiliates were treated as fiduciaries with respect to Benefit Plan stockholders, the prohibited transaction restrictions of ERISA and the Internal Revenue Code would apply to any transaction involving our assets. These restrictions could, for example, require that we avoid transactions with persons that are affiliated with or related to us or our affiliates or require that we restructure our activities in order to obtain an administrative exemption from the prohibited transaction restrictions. Alternatively, we might have to provide Benefit Plan stockholders with the opportunity to sell their shares to us or we might dissolve.

If a prohibited transaction were to occur, the Internal Revenue Code imposes an excise tax equal to 15% of the amount involved and authorizes the IRS to impose an additional 100% excise tax if the prohibited transaction is not “corrected” in a timely manner. These taxes would be imposed on any disqualified person who participates in the prohibited transaction. In addition, KBS Capital Advisors and possibly other fiduciaries of Benefit Plan stockholders subject to ERISA who permitted the prohibited transaction to occur or who otherwise breached their fiduciary responsibilities (or a non-fiduciary participating in a prohibited transaction) could be required to restore to the Benefit Plan any profits they realized as a result of the transaction or breach and make good to the Benefit Plan any losses incurred by the Benefit Plan as a result of the transaction or breach. With respect to an IRA that invests in our shares, the occurrence of a prohibited transaction involving the individual who established the IRA, or his or her beneficiary, would cause the IRA to lose its tax-exempt status under Section 408(e)(2) of the Internal Revenue Code.

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The Plan Assets Regulation provides that the underlying assets of an entity such as a REIT will be treated as assets of a Benefit Plan investing therein unless the entity satisfies one of the exceptions to the general rule. We believe that we will satisfy one or more of the exceptions.

Exception for “Publicly-Offered Securities.” If a Benefit Plan acquires “publicly-offered securities,” the assets of the issuer of the securities will not be deemed to be “plan assets” under the Plan Assets Regulation. A publicly-offered security must be:

• sold as part of a public offering registered under the Securities Act of 1933, as amended, and be part of a class of securities registered under the Securities Exchange Act of 1934, as amended, within a specified time period;

• part of a class of securities that is owned by 100 or more persons who are independent of the issuer and one another; and

• “freely transferable.”

Our shares are being sold as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act of 1933 and are part of a class that will be registered under the Securities Exchange Act of 1934 within the specified period. In addition, we have in excess of 100 independent stockholders.

Whether a security is “freely transferable” depends upon the particular facts and circumstances. The Plan Assets Regulation provides several examples of restrictions on transferability that, absent unusual circumstances, will not prevent the rights of ownership in question from being considered “freely transferable” if the minimum investment is $10,000 or less. Where the minimum investment in a public offering of securities is $10,000 or less, the presence of the following restrictions on transfer will not ordinarily affect a determination that such securities are “freely transferable”:

• any restriction on, or prohibition against, any transfer or assignment that would either result in a termination or reclassification of the entity for federal or state tax purposes or that would violate any state or federal statute, regulation, court order, judicial decree or rule of law;

• any requirement that not less than a minimum number of shares or units of such security be transferred or assigned by any investor, provided that such requirement does not prevent transfer of all of the then remaining shares or units held by an investor;

• any prohibition against transfer or assignment of such security or rights in respect thereof to an ineligible or unsuitable investor; and

• any requirement that reasonable transfer or administrative fees be paid in connection with a transfer or assignment.

We have been structured with the intent to satisfy the “freely transferable” requirement set forth in the Plan Assets Regulation with respect to our shares, although there is no assurance that our shares will meet such requirement. Our shares are subject to certain restrictions on transfer intended to ensure that we continue to qualify for federal income tax treatment as a REIT and to comply with state securities laws and regulations with respect to investor suitability. The minimum investment in our shares is less than $10,000; thus, these restrictions should not cause the shares to be deemed not “freely transferable.”

Assuming that no other facts and circumstances other than those referred to in the preceding paragraphs exist that restrict transferability of shares of our common stock and the offering takes place as described in this prospectus, shares of our common stock should constitute “publicly-offered securities” and, accordingly, we believe that our underlying assets should not be considered “plan assets” under the Plan Assets Regulation.

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Exception for Insignificant Participation by Benefit Plan Investors. The Plan Assets Regulation provides that the assets of an entity will not be deemed to be the assets of a Benefit Plan if equity participation in the entity by employee benefit plans, including Benefit Plans, is not significant. The Plan Assets Regulation provides that equity participation in an entity by Benefit Plan investors is “significant” if at any time 25% or more of the value of any class of equity interest is held by Benefit Plan investors. The term “Benefit Plan investors” is defined for this purpose under ERISA Section 3(42) and includes any employee benefit plan subject to Part 4 of ERISA, any plan subject Section 4975 of the Internal Revenue Code, and any entity whose underlying assets include plan assets by reasons of a plan’s investment in such entity. In calculating the value of a class of equity interests, the value of any equity interests held by us or any of our affiliates must be excluded. It is not clear whether we will qualify for this exception since we do expect to have equity participation by “Benefit Plan investors” that may be in excess of 25%, which would be deemed to be significant, as defined above.

Exception for Operating Companies. The Plan Assets Regulation provides an exception with respect to securities issued by an operating company, which includes a “real estate operating company” or a “venture capital operating company.” Generally, we will be deemed to be a real estate operating company if during the relevant valuation periods at least 50% of our assets are invested in real estate that is managed or developed and with respect to which we have the right to participate substantially in management or development activities. To constitute a venture capital operating company, 50% or more of our assets must be invested in “venture capital investments” during the relevant valuation periods. A venture capital investment is an investment in an operating company, including a “real estate operating company,” as to which the investing entity has or obtains direct management rights. If an entity satisfies these requirements on the date it first makes a long-term investment, or the initial investment date, or at any time during the entity’s first annual valuation period, it will be considered a real estate operating company for the entire period beginning on the initial investment date and ending on the last day of the first annual valuation period. Because this is a blind pool offering, we cannot assure you that we will be a real estate or venture capital operating company within the meaning of the Plan Asset Regulations.

Other Prohibited Transactions

Regardless of whether the shares qualify for the “publicly-offered securities” exception of the Plan Assets Regulation, a prohibited transaction could occur if we, KBS Capital Advisors, any selected broker-dealer or any of their affiliates is a fiduciary (within the meaning of Section 3(21) of ERISA) with respect to any Benefit Plan purchasing our shares. Accordingly, unless an administrative or statutory exemption applies, shares should not be purchased by a Benefit Plan with respect to which any of the above persons is a fiduciary. A person is a fiduciary with respect to a Benefit Plan under Section 3(21) of ERISA if, among other things, the person has discretionary authority or control with respect to the Benefit Plan or “plan assets” or provides investment advice for a fee with respect to “plan assets.” Under a regulation issued by the Department of Labor, a person shall be deemed to be providing investment advice if that person renders advice as to the advisability of investing in our shares and that person regularly provides investment advice to the Benefit Plan pursuant to a mutual agreement or understanding (written or otherwise) (1) that the advice will serve as the primary basis for investment decisions and (2) that the advice will be individualized for the Benefit Plan based on its particular needs.

Annual Valuation

A fiduciary of an employee benefit plan subject to ERISA is required to determine annually the fair market value of each asset of the plan as of the end of the plan’s fiscal year and to file a report reflecting that value with the Department of Labor. When the fair market value of any particular asset is not available, the fiduciary is required to make a good faith determination of that asset’s fair market value, assuming an orderly liquidation at the time the determination is made. In addition, a trustee or custodian of an IRA must provide an IRA participant with a statement of the value of the IRA each year. Failure to satisfy these requirements may result in penalties, damages or other sanctions.

Unless and until our shares are listed on a national securities exchange, we do not expect that a public market for our shares will develop. To date, neither the IRS nor the Department of Labor has promulgated regulations specifying how a plan fiduciary or IRA custodian should determine the fair market value of shares when the fair market value of such shares is not determined in the marketplace. Therefore, to assist fiduciaries and IRA custodians in fulfilling their valuation and annual reporting responsibilities, our advisor prepares annual reports of the estimated value of our shares.

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We have engaged our advisor to value our shares, though in the future we may hire a third-party valuation firm for that purpose. Until we have completed our offering stage, our advisor has indicated that it intends to use the most recent price paid to acquire a share in the primary offering (ignoring purchase price discounts for certain categories of purchasers) or follow-on public offerings as the estimated per share value of our shares. Although this approach to valuing our shares represents the most recent price at which most investors will have purchased shares in this offering, this reported value is likely to differ from the price at which a stockholder could resell his or her shares because (i) there is no public trading market for the shares at this time; (ii) the estimated value does not reflect, and is not derived from, the fair market value of our properties and other assets, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from this primary offering is net of selling commissions, dealer manager fees, other organization and offering costs and acquisition and origination fees and expenses; (iii) the estimated value does not take into account how market fluctuations affect the value of our investments, including how the current disruptions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

Following our offering stage, our advisor, or another firm we choose for that purpose, will estimate the value of our shares based upon a number of assumptions that may not be accurate or complete. We do not currently anticipate obtaining appraisals for our investments and, accordingly, the estimates should not be viewed as an accurate reflection of the fair market value of our investments nor will they represent the amount of net proceeds that would result from an immediate sale of our assets. Even after our advisor no longer uses the most recent offering price as the estimated value of our shares, you should be aware of the following:

• the estimated values may not be realized by us or by you upon liquidation (in part because estimated values do not necessarily indicate the price at which assets could be sold and because the estimates may not take into account the expenses of selling our assets);

• you may not realize these values if you were to attempt to sell your shares, because there is not expected to be an active trading market for the shares; and

• the estimated values, or the method used to establish values, may not be sufficient to enable an ERISA fiduciary or an IRA custodian to comply with the ERISA or IRA requirements described above. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our shares.

The foregoing requirements of ERISA and the Internal Revenue Code are complex and subject to change. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding an investment in our shares.

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DESCRIPTION OF SHARES

Our charter authorizes the issuance of 1,010,000,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock with a par value of $0.01 per share and 10,000,000 shares are designated as preferred stock with a par value of $0.01 per share. In addition, our board of directors may amend our charter to increase or decrease the amount of our authorized shares. As of April 16, 2010, approximately 108,171,286 million shares of our common stock are issued and outstanding, and no shares of preferred stock are issued and outstanding.

Common Stock

The holders of our common stock are entitled to one vote per share on all matters submitted to a stockholder vote, including the election of our directors. Our charter does not provide for cumulative voting in the election of our directors. Therefore, the holders of a majority of our outstanding common shares can elect our entire board of directors. Unless applicable law requires otherwise, and except as our charter may provide with respect to any series of preferred stock that we may issue in the future, the holders of our common stock will possess exclusive voting power.

Holders of our common stock will be entitled to receive such distributions as declared from time to time by our board of directors out of legally available funds, subject to any preferential rights of any preferred stock that we issue in the future. In any liquidation, each outstanding share of common stock entitles its holder to share (based on the percentage of shares held) in the assets that remain after we pay our liabilities and any preferential distributions owed to preferred stockholders. Holders of shares of our common stock do not have preemptive rights, which means that you will not have an automatic option to purchase any new shares that we issue, nor do holders of our shares have any preference, conversion, exchange, sinking fund, redemption or appraisal rights. Our common stock shall be non-assessable by us upon our receipt of the consideration for which our board of directors authorized its issuance.

Our board of directors has authorized the issuance of shares of our capital stock without certificates. We expect that, until our shares are listed on a national securities exchange, we will not issue shares in certificated form. Information regarding restrictions on the transferability of our shares that, under Maryland law, would otherwise have been required to appear on our share certificates will instead be furnished to stockholders upon request and without charge.

We maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. With respect to uncertificated stock, we will continue to treat the stockholder registered on our stock ledger as the owner of the shares until the new owner delivers a properly executed form to us, which form we will provide to any registered holder upon request.

Preferred Stock

Our charter authorizes our board of directors to designate and issue one or more classes or series of preferred stock without stockholder approval. Our board of directors may determine the relative rights, preferences and privileges of each class or series of preferred stock so issued, which may be more beneficial than the rights, preferences and privileges attributable to our common stock. The issuance of preferred stock could have the effect of delaying or preventing a change in control. Our board of directors has no present plans to issue preferred stock but may do so at any time in the future without stockholder approval.

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Meetings and Special Voting Requirements

An annual meeting of our stockholders will be held each year, at least 30 days after delivery of our annual report. Special meetings of stockholders may be called only upon the request of a majority of our directors, a majority of our independent directors, our chief executive officer, our president or upon the written request of stockholders holding at least 10% of the shares entitled to be cast on any issue proposed to be considered at the special meeting. Upon receipt of a written request of stockholders holding at least 10% of the shares entitled to be cast stating the purpose of the special meeting, our secretary will provide all of our stockholders written notice of the meeting and the purpose of such meeting. The meeting must be held not less than 15 days or more than 60 days after the distribution of the notice of the meeting. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at any stockholder meeting constitutes a quorum. Unless otherwise provided by the Maryland General Corporation Law or our charter, the affirmative vote of a majority of all votes cast is necessary to take stockholder action. With respect to the election of directors, each candidate nominated for election to the board of directors must receive a majority of the votes present, in person or by proxy, in order to be elected. Therefore, if a nominee receives fewer “for” votes than “withhold” votes in an election, then the nominee will not be elected.

Our charter provides that the concurrence of the board is not required in order for the stockholders to amend the charter, dissolve the corporation or remove directors. However, we have been advised that Section 2-604 of the Maryland General Corporation Law does require board approval in order to amend our charter or dissolve. Without the approval of a majority of the shares entitled to vote on the matter, the board of directors may not:

• amend the charter to adversely affect the rights, preferences and privileges of the stockholders;

• amend charter provisions relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions;

• cause our liquidation or dissolution after our initial investment in property;

• sell all or substantially all of our assets other than in the ordinary course of business; or

• cause our merger or reorganization.

Our advisory agreement with KBS Capital Advisors has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of KBS Capital Advisors and us. Our independent directors annually review our advisory agreement with KBS Capital Advisors. While the stockholders do not have the ability to vote to replace KBS Capital Advisors or to select a new advisor, stockholders do have the ability, by the affirmative vote of a majority of the shares entitled to vote on such matter, to remove a director from our board.

Advance Notice for Stockholder Nominations for Directors and Proposals of New Business

In order for a stockholder to nominate a director or propose new business at the annual stockholders’ meeting, our bylaws generally require that the stockholder give notice of the nomination or proposal not less than 90 days prior to the first anniversary of the date of the mailing of the notice for the preceding year’s annual stockholders’ meeting, unless such nomination or proposal is made pursuant to the company’s notice of the meeting or by or at the direction of our board of directors. Our bylaws contain a similar notice requirement in connection with nominations for directors at a special meeting of stockholders called for the purpose of electing one or more directors. Failure to comply with the notice provisions will make stockholders unable to nominate directors or propose new business.

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Restriction on Ownership of Shares

Ownership Limit

To maintain our REIT qualification, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (including certain entities treated as individuals under the Internal Revenue Code) during the last half of each taxable year. In addition, at least 100 persons who are independent of us and each other must beneficially own our outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. Each of the two requirements specified in the two preceding sentences shall not apply to any period prior to the second year for which we elected to be taxed as a REIT. We may prohibit certain acquisitions and transfers of shares so as to ensure our continued qualification as a REIT under the Internal Revenue Code. However, we cannot assure you that this prohibition will be effective.

To help ensure that we meet these tests, our charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% of our aggregate outstanding shares unless exempted by our board of directors. Our board of directors may waive this ownership limit with respect to a particular person if the board receives evidence that ownership in excess of the limit will not jeopardize our REIT status. For purposes of this provision, we treat corporations, partnerships and other entities as single persons.

Any attempted transfer of our shares that, if effective, would result in a violation of our ownership limit or would result in our shares being owned by fewer than 100 persons will be null and void and will cause the number of shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries. The prohibited transferee will not acquire any rights in the shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. We will designate a trustee of the trust that will not be affiliated with us or the prohibited transferee. We will also name one or more charitable organizations as a beneficiary of the share trust.

Shares held in trust will remain issued and outstanding shares and will be entitled to the same rights and privileges as all other shares of the same class or series. The prohibited transferee will not benefit economically from any of the shares held in trust, will not have any rights to dividends or distributions and will not have the right to vote or any other rights attributable to the shares held in the trust. The trustee will receive all dividends and distributions on the shares held in trust and will hold such dividends or distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any shares held in trust.

Within 20 days of receiving notice from us that any of our shares have been transferred to the trust for the charitable beneficiary, the trustee will sell those shares to a person designated by the trustee whose ownership of the shares will not violate the above restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive the lesser of (i) the price paid by the prohibited transferee for the shares or, if the prohibited transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price received by the trustee from the sale or other disposition of the shares. Any net sale proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares have been transferred to the trust, the shares are sold by the prohibited transferee, then (i) the shares shall be deemed to have been sold on behalf of the trust and (ii) to the extent that the prohibited transferee received an amount for the shares that exceeds the amount he was entitled to receive, the excess shall be paid to the trustee upon demand.

In addition, shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift) and (ii) the market price on the date we, or our designee, accept the offer. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee.

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Any person who acquires or attempts to acquire shares in violation of the foregoing restrictions or who would have owned the shares that were transferred to any such trust must give us immediate written notice of such event, and any person who proposes or attempts to acquire or receive shares in violation of the foregoing restrictions must give us at least 15 days’ written notice prior to such transaction. In both cases, such persons shall provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT.

The foregoing restrictions will continue to apply until our board of directors determines it is no longer in our best interest to continue to qualify as a REIT. The ownership limit does not apply to any underwriter in an offering of our shares or to a person or persons exempted from the ownership limit by our board of directors based upon appropriate assurances that our qualification as a REIT would not be jeopardized.

Within 30 days after the end of each taxable year, every owner of 5% or more of our outstanding capital stock will be asked to deliver to us a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner shall also provide us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with our ownership limit.

These restrictions could delay, defer or prevent a transaction or change in control of our company that might involve a premium price for our shares of common stock or otherwise be in the best interests of our stockholders.

Suitability Standards and Minimum Purchase Requirements

State securities laws and our charter require that purchasers of our stock meet standards regarding (i) net worth or income and (ii) minimum purchase amounts. These standards are described above at “Suitability Standards” immediately following the cover page of this prospectus and below at “Plan of Distribution—Minimum Purchase Requirements.” Subsequent purchasers, i.e., potential purchasers of your shares, must also meet the net worth or income standards, and unless you are transferring all of your shares, you may not transfer your shares in a manner that causes you or your transferee to own fewer than the number of shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law. These suitability and minimum purchase requirements are applicable until our shares of common stock are listed on a national securities exchange, and these requirements may make it more difficult for you to sell your shares.

Distributions

We expect to authorize and declare distributions based on daily record dates and expect to pay distributions on a monthly basis. In order that investors may generally begin earning distributions immediately upon our acceptance of their subscription, we expect to use daily record dates for the determination of who is entitled to a distribution.

Generally, our policy is to pay distributions from cash flow from operations. Because we may receive income from interest or rents at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund capital expenditures and other expenses, we expect that at least during the early stages of our development and from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we have funded our distributions in part with third party borrowings and expect to utilize third party borrowings in the future, if necessary, to help fund distributions. We may also fund such distributions from advances from our advisor or sponsors, from our advisor’s deferral of its asset management fee, from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments.

Our distribution policy is not to use the proceeds of this offering to pay distributions. However, our board has the authority under our organizational documents, to the extent permitted by Maryland law, to pay distributions from any source, including proceeds from this offering or the proceeds from the issuance of securities in the future.

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To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). If we meet the REIT qualification requirements, we generally will not be subject to federal income tax on the income that we distribute to our stockholders each year. See “Federal Income Tax Considerations—Taxation of KBS REIT II—Annual Distribution Requirements.” Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

Inspection of Books and Records

As a part of our books and records, we maintain at our principal office an alphabetical list of the names of our stockholders, along with their addresses and telephone numbers and the number of shares held by each of them. We update this stockholder list at least quarterly and it is available for inspection at our principal office by a stockholder or his or her designated agent upon request of the stockholder. We will also mail this list to any stockholder within 10 days of receipt of his or her request. We may impose a reasonable charge for expenses incurred in reproducing such list. Stockholders, however, may not sell or use this list for commercial purposes. The purposes for which stockholders may request this list include matters relating to their voting rights. Each stockholder who receives a copy of the stockholder list shall keep such list confidential and shall sign a confidentiality agreement to the effect that such stockholder will keep the stockholder list confidential and share such list only with its employees, representatives or agents who agree in writing to maintain the confidentiality of the stockholder list.

If our advisor or our board of directors neglects or refuses to exhibit, produce or mail a copy of the stockholder list as requested, our advisor and/ or board, as the case may be, shall be liable to the stockholder requesting the list for the costs, including attorneys’ fees, incurred by that stockholder for compelling the production of the stockholder list and any actual damages suffered by the stockholder for the neglect or refusal to produce the list. It shall be a defense that the actual purpose and reason for the requests for inspection or for a copy of the stockholder list is not for a proper purpose but is instead for the purpose of securing such list of stockholders or other information for the purpose of selling such list or copies thereof, or of using the same for a commercial purpose (such as to solicit the purchase of our shares) other than in the interest of the applicant as a stockholder relative to the affairs of our company. We may require that the stockholder requesting the stockholder list represent that the request is not for a commercial purpose unrelated to the stockholder’s interest in our company. The remedies provided by our charter to stockholders requesting copies of the stockholder list are in addition to, and do not in any way limit, other remedies available to stockholders under federal law, or the law of any state.

Business Combinations

Under the Maryland General Corporation Law, business combinations between a Maryland corporation and an interested stockholder or the interested stockholder’s affiliate are prohibited for five years after the most recent date on which the stockholder becomes an interested stockholder. For this purpose, the term “business combination” includes mergers, consolidations, share exchanges, asset transfers and issuances or reclassifications of equity securities. An “interested stockholder” is defined for this purpose as: (1) any person who beneficially owns ten percent or more of the voting power of the corporation’s shares; or (2) an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding voting shares of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of the corporation; and (2) two-thirds of the votes entitled to be cast by holders of voting shares of the corporation other than shares held by the interested stockholder or its affiliate with whom the business combination is to be effected, or held by an affiliate or associate of the interested stockholder.

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These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under the Maryland General Corporation Law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

None of these provisions of the Maryland General Corporation Law will apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the interested stockholder becomes an interested stockholder. We have opted out of these provisions by resolution of our board of directors. However, our board of directors may, by resolution, opt in to the business combination statute in the future.

Control Share Acquisitions

The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. “Control shares” are voting shares that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of, other than solely by virtue of revocable proxy, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

• one-tenth or more but less than one-third;

• one-third or more but less than a majority; or

• a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. Except as otherwise specified in the statute, a “control share acquisition” means the acquisition of control shares.

Once a person who has made or proposes to make a control share acquisition has undertaken to pay expenses and has satisfied other required conditions, the person may compel the board of directors to call a special meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved for the control shares at the meeting or if the acquiring person does not deliver an “acquiring person statement” for the control shares as required by the statute, the corporation may redeem any or all of the control shares for their fair value, except for control shares for which voting rights have previously been approved. Fair value is to be determined for this purpose without regard to the absence of voting rights for the control shares, and is to be determined as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights for control shares are considered and not approved.

If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid in the control share acquisition. Some of the limitations and restrictions otherwise applicable to the exercise of dissenters’ rights do not apply in the context of a control share acquisition.

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

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Subtitle 8

Subtitle 8 of Title 3 of the Maryland General Corporation Law permits a Maryland corporation with a class of equity securities registered under the Securities Exchange Act of 1934, as amended, and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions:

• a classified board,

• a two-thirds vote requirement for removing a director,

• a requirement that the number of directors be fixed only by vote of the directors,

• a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred, and

• a majority requirement for the calling of a special meeting of stockholders.

We have added provisions to our charter that prohibit us, until such time that our shares of common stock are listed on a national securities exchange, from electing to be subject to the provisions under Subtitle 8. Through provisions in our bylaws unrelated to Subtitle 8, we already vest in our board of directors the exclusive power to fix the number of directorships. Our bylaws may be amended by our stockholders or the board of directors.

Dividend Reinvestment Plan

We have adopted a dividend reinvestment plan pursuant to which you may elect to have your dividends and other distributions reinvested in additional shares of our common stock. On March 19, 2010, our board of directors adopted an amended and restated dividend reinvestment plan, which will be effective upon 10 days’ notice to participants. The following discussion summarizes the principal terms of the amended and restated plan. Appendix B to this prospectus contains the full text of our amended and restated dividend reinvestment plan. The amended and restated plan clarifies (i) that the purchase of price of shares under the dividend reinvestment plan will be $9.50 until we establish an estimated value per share that is not based on the price to acquire a share in the primary offering or a follow-on public offering and (ii) that we expect to establish an estimated value per share upon the completion of our offering stage. The amended and restated dividend reinvestment plan states that we will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We currently expect to update the estimated value per share every 12 to 18 months thereafter. The amended and restated dividend reinvestment plan also allows us to notify participants of amendments to or termination of the plan by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or by sending a separate mailing to participants.

Eligibility

All of our stockholders are eligible to participate in our dividend reinvestment plan; however, we may elect to deny your participation in the dividend reinvestment plan if you reside in a jurisdiction or foreign country where, in our judgment, the burden or expense of compliance with applicable securities laws makes your participation impracticable or inadvisable.

At any time prior to the listing of our shares on a national stock exchange, you must cease participation in our dividend reinvestment plan if you no longer meet the suitability standards or cannot make the other investor representations set forth in the then-current prospectus or in the subscription agreement. Participants must agree to notify us promptly when they no longer meet these standards. See the “Suitability Standards” section of this prospectus (immediately following the cover page) and the form of subscription agreement attached hereto as Appendix A.

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Election to Participate

You may elect to participate in the dividend reinvestment plan by completing the subscription agreement or other approved enrollment form available from us, the dealer manager or a participating broker-dealer. Your participation in the dividend reinvestment plan will begin with the next distribution made after receipt of your enrollment form. You can choose to have all or a portion of your distributions reinvested through the dividend reinvestment plan. You may also change the percentage of your distributions that will be reinvested at any time by completing a new enrollment form or other form provided for that purpose. To the extent required by state securities laws, you must make any election to increase your level of participation through your participating broker-dealer or the dealer manager, as applicable.

Stock Purchases

Shares will be purchased under the dividend reinvestment plan on the monthly distribution payment dates. The purchase of fractional shares is a permissible and likely result of the reinvestment of distributions under the dividend reinvestment plan.

The purchase price for shares purchased under the dividend reinvestment plan will initially be $9.50 per share. Once we establish an estimated value per share that is not based on the price to acquire a share in the primary offering or follow-on public offerings, shares issued pursuant to our dividend reinvestment plan will be priced at the estimated value per share of our common stock, as updated from time to time and as determined by our advisor or another firm chosen for that purpose. We expect to establish an estimated value per share not based on the price to acquire a share in the primary offering or a follow-on public offering after the completion of our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to any dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

Account Statements

You or your designee will receive a confirmation of your purchases under the dividend reinvestment plan no less than quarterly. Your confirmation will disclose the following information:

• each distribution reinvested for your account during the period;

• the date of the reinvestment;

• the number and price of the shares purchased by you; and

• the total number of shares in your account.

In addition, within 90 days after the end of each calendar year, we will provide you with an individualized report on your investment, including the purchase dates, purchase price, number of shares owned and the amount of distributions made in the prior year. We will also provide to all participants in the plan, without charge, all supplements to and updated versions of this prospectus, as required under applicable securities laws.

Fees and Commissions and Use of Proceeds

No selling commissions or dealer manager fees are payable on shares sold under the dividend reinvestment plan. We expect to use the net proceeds from the sale of shares under our dividend reinvestment plan for general corporate purposes, including, but not limited to, the following:

• the repurchase of shares under our share redemption program;

• capital expenditures, tenant improvement costs and leasing costs related to our investments in real estate properties;

• reserves required by any financings of our investments in real estate properties;

• funding obligations under any of our real estate loans receivable;

• investments in real estate properties and real estate-related assets, which would include payment of acquisition fees or origination fees to our advisor (see “Management Compensation”); and

• the repayment of debt.

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We cannot predict with any certainty how much, if any, dividend reinvestment plan proceeds will be available for specific purposes.

Voting

You may vote all shares, including fractional shares, that you acquire through the dividend reinvestment plan.

Tax Consequences of Participation

If you elect to participate in the dividend reinvestment plan and are subject to federal income taxation, you will incur a tax liability for distributions allocated to you even though you have elected not to receive the distributions in cash but rather to have the distributions withheld and reinvested pursuant to the dividend reinvestment plan. Specifically, you will be treated as if you have received the distribution from us in cash and then applied such distribution to the purchase of additional shares. In addition, to the extent you purchase shares through our dividend reinvestment plan at a discount to their fair market value, you will be treated for tax purposes as receiving an additional distribution equal to the amount of the discount.

At least until we establish an estimated value per share not based on the last price paid to acquire a share in this offering or a follow-on public offering, we expect that (i) we will sell shares under the dividend reinvestment plan at $9.50 per share, (ii) no secondary trading market for our shares will develop and (iii) our advisor will estimate the fair market value of a share to be $10.00. Therefore, at least until we establish an estimated value per share not based on the last price paid to acquire a share in this offering or a follow-on public offering, participants in our dividend reinvestment plan will be treated as having received a distribution of $10.00 for each $9.50 reinvested by them under our dividend reinvestment plan. You will be taxed on the amount of such distribution as a dividend to the extent such distribution is from current or accumulated earnings and profits, unless we have designated all or a portion of the distribution as a capital gain distribution. See “Federal Income Tax Considerations—Taxation of Stockholders.” We will withhold 28% of the amount of dividends or distributions paid if you fail to furnish a valid taxpayer identification number, fail to properly report interest or distributions or fail to certify that you are not subject to withholding.

Termination of Participation

Once enrolled, you may continue to purchase shares under our dividend reinvestment plan until we have sold all of the shares registered in this offering, have terminated this offering or have terminated the dividend reinvestment plan. You may terminate your participation in the dividend reinvestment plan at any time by providing us with written notice. Unless you are terminating your participation in connection with a public announcement of a new estimated value per share of our common stock, for your termination to be effective for a particular distribution, we must have received your notice of termination at least 10 business days prior to the last day of the month to which the distribution relates. If we publicly announce a new estimated value per share in a filing with the SEC, then you have no less than two business days after the date of such announcement to notify us in writing of your termination of participation in the dividend reinvestment plan, and your termination will be effective for the next date shares are purchased under the dividend reinvestment plan. Any transfer of your shares will effect a termination of the participation of those shares in the dividend reinvestment plan. We will terminate your participation in the dividend reinvestment plan to the extent that a reinvestment of your distributions would cause you to violate the ownership limit contained in our charter, unless you have obtained an exemption from the ownership limit from our board of directors.

Amendment or Termination of Plan

We may amend or terminate the dividend reinvestment plan for any reason at any time upon 10 days’ notice to the participants. We may provide notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to the participants.

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Share Redemption Program

Our board of directors has adopted a share redemption program that may enable you to sell your shares to us in limited circumstances. In its sole discretion, our board of directors could choose to terminate the program or to amend its provisions without stockholder approval. Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” (as defined below) or “determination of incompetence” (as defined below), the prices at which we will redeem shares are as follows:

• The lower of $9.25 or 92.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least one year;

• The lower of $9.50 or 95.0% of the price paid to acquire the shares from us for stockholders who have held their shares for at least two years;

• The lower of $9.75 or 97.5% of the price paid to acquire the shares from us for stockholders who have held their shares for at least three years; and

• The lower of $10.00 or 100% of the price paid to acquire the shares from us for stockholders who have held their shares for at least four years.

Notwithstanding the above, once we establish an estimated value per share of our common stock that is not based on the price to acquire a share in our primary offering or a follow-on public offering, the redemption price per share for all stockholders would be equal to the estimated value per share, as determined by our advisor or another firm chosen for that purpose. The share redemption program document states that we expect to establish an estimated value per share no later than three years after the completion of our offering stage; however, to assist broker-dealers who sell shares in this offering meet their regulatory obligations, we currently expect to establish an estimated value per share after the completion of our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. We would report this redemption price to you in our annual report and the three quarterly reports that we publicly file with the SEC. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in the Operating Partnership. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

There are several limitations on our ability to redeem shares under the program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence,” we may not redeem shares unless the stockholder has held the shares for one year.

• During any calendar year, our share redemption program limits the number of shares we may redeem to those that we could purchase with the amount of the net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year.

• During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

• We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

We redeem shares on the last business day of each month. The program administrator must receive your written request for redemption at least five business days before that date in order for us to repurchase your shares that month. If we could not repurchase all shares presented for redemption in any month, we would attempt to honor redemption requests on a pro rata basis. We will deviate from pro rata purchases in two minor ways: (i) if a pro rata redemption would result in you owning less than half of the minimum purchase amount described below under “Plan of Distribution—Minimum Purchase Requirements,” then we will redeem all of your shares; and (ii) if a pro rata redemption would result in you owning more than half but less than all of the minimum purchase amount, then we will not redeem any shares that would reduce your holdings below the minimum purchase amount. In the event that you were redeeming all of your shares, there would be no holding period requirement for shares purchased pursuant to our dividend reinvestment plan.

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If we did not completely satisfy a stockholder’s redemption request at month-end because the program administrator did not receive the request in time or because of the restrictions on the number of shares we could redeem under the program, we would treat the unsatisfied portion of the redemption request as a request for redemption at the next redemption date funds are available for redemption unless the stockholder withdrew his or her request before the next date for redemptions. Any stockholder could withdraw a redemption request upon written notice to the program administrator if such notice were received by us at least five business days before the date for redemptions.

In several respects we would treat redemptions sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence” differently from other redemptions:

• there is no one-year holding requirement;

• until we establish an estimated value per share, which we currently expect to be after the completion of our offering stage (as described above), the redemption price is the amount paid to acquire the shares from us; and

• once we have established an estimated value per share, the redemption price will be the estimated value of the shares, as determined by our advisor or another firm chosen for that purpose.

In order for a disability to entitle a stockholder to the special redemption terms described above, (a “qualifying disability”), (i) the stockholder would have to receive a determination of disability based upon a physical or mental condition or impairment arising after the date the stockholder acquired the shares to be redeemed, and (ii) such determination of disability would have to be made by the governmental agency responsible for reviewing the disability retirement benefits that the stockholder could be eligible to receive (the “applicable governmental agency”). The “applicable governmental agencies” would be limited to the following: (i) if the stockholder paid Social Security taxes and, therefore, could be eligible to receive Social Security disability benefits, then the applicable governmental agency would be the Social Security Administration or the agency charged with responsibility for administering Social Security disability benefits at that time if other than the Social Security Administration; (ii) if the stockholder did not pay Social Security benefits and, therefore, could not be eligible to receive Social Security disability benefits, but the stockholder could be eligible to receive disability benefits under the Civil Service Retirement System (“CSRS”), then the applicable governmental agency would be the U.S. Office of Personnel Management or the agency charged with responsibility for administering CSRS benefits at that time if other than the Office of Personnel Management; or (iii) if the stockholder did not pay Social Security taxes and therefore could not be eligible to receive Social Security benefits but suffered a disability that resulted in the stockholder’s discharge from military service under conditions that were other than dishonorable and, therefore, could be eligible to receive military disability benefits, then the applicable governmental agency would be the Department of Veterans Affairs or the agency charged with the responsibility for administering military disability benefits at that time if other than the Department of Veterans Affairs.

Disability determinations by governmental agencies for purposes other than those listed above, including but not limited to worker’s compensation insurance, administration or enforcement of the Rehabilitation Act or Americans with Disabilities Act, or waiver of insurance premiums would not entitle a stockholder to the special redemption terms described above. Redemption requests following an award by the applicable governmental agency of disability benefits would have to be accompanied by: (i) the investor’s initial application for disability benefits and (ii) a Social Security Administration Notice of Award, a U.S. Office of Personnel Management determination of disability under CSRS, a Department of Veterans Affairs record of disability-related discharge or such other documentation issued by the applicable governmental agency that we would deem acceptable and would demonstrate an award of the disability benefits.

We understand that the following disabilities do not entitle a worker to Social Security disability benefits:

• disabilities occurring after the legal retirement age; and

• disabilities that do not render a worker incapable of performing substantial gainful activity.

Therefore, such disabilities would not qualify for the special redemption terms, except in the limited circumstances when the investor would be awarded disability benefits by the other “applicable governmental agencies” described above.

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In order for a determination of incompetence or incapacitation, a “determination of incompetence”, to entitle a stockholder to the special redemption terms, a state or federal court located in the United States must declare, determine or find the stockholder to be (i) mentally incompetent to enter into a contract, to prepare a will or to make medical decisions or (ii) mentally incapacitated. In both cases such determination must be made by the court after the date the stockholder acquired the shares to be redeemed. A determination of incompetence by any other person or entity, or for any purpose other than those listed above, will not entitle a stockholder to the special redemption terms. Redemption requests following a determination of incompetence must be accompanied by the court order, determination or certificate declaring the stockholder incompetent or incapacitated.

Our board of directors may amend, suspend or terminate the program upon 30 days’ notice. We may provide notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to the stockholders. During this offering, we would also include this information in a prospectus supplement or post-effective amendment to the registration statement, as required under federal securities laws.

Our share redemption program provides stockholders only a limited ability to redeem shares for cash until a secondary market develops for our shares, at which time the program would terminate. No such market presently exists, and we cannot assure you that any market for your shares will ever develop.

Registrar and Transfer Agent

DST Systems, Inc. serves as our registrar and transfer agent. Stockholder requests should be delivered or mailed to:

Regular Mail   KBS Real Estate Investment Trust II, Inc. c/o DST Systems, Inc. PO Box 219015 Kansas City, MO 64121-9015 Overnight Address   KBS Real Estate Investment Trust II, Inc. c/o DST Systems, Inc. 430 W. 7th Street Kansas City, MO 64105

Telephone:

(866) 584-1381

To ensure that any account changes or updates are made promptly and accurately, all changes and updates should be directed to the transfer agent, including any change to a stockholder’s address, ownership type, distribution mailing address, or dividend reinvestment plan election, as well as stockholder redemption requests under our share redemption program.

Restrictions on Roll-Up Transactions

A Roll-up Transaction is a transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of us and the issuance of securities of an entity that is created or would survive after the successful completion of a Roll-up Transaction, which we refer to as a Roll-up Entity. This term does not include:

• a transaction involving our securities that have been for at least 12 months listed on a national securities exchange; or

• a transaction involving only our conversion into a trust or association if, as a consequence of the transaction, there will be no significant adverse change in the voting rights of our stockholders, the term of our existence, the compensation to our advisor or our investment objectives.

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In connection with any proposed Roll-up Transaction, an appraisal of all our assets will be obtained from a competent independent appraiser. Our assets will be appraised on a consistent basis, and the appraisal will be based on an evaluation of all relevant information and will indicate the value of our assets as of a date immediately preceding the announcement of the proposed Roll-up Transaction. If the appraisal will be included in a prospectus used to offer the securities of a Roll-Up Entity, the appraisal will be filed with the SEC and, if applicable, the states in which registration of such securities is sought, as an exhibit to the registration statement for the offering. The appraisal will assume an orderly liquidation of assets over a 12-month period. The terms of the engagement of the independent appraiser will clearly state that the engagement is for our benefit and the benefit of our stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, will be included in a report to our stockholders in connection with any proposed Roll-up Transaction.

In connection with a proposed Roll-up Transaction, the person sponsoring the Roll-up Transaction must offer to our stockholders who vote “no” on the proposal the choice of:

(1) accepting the securities of the Roll-up Entity offered in the proposed Roll-up Transaction; or

(2) one of the following:

(A) remaining as stockholders of us and preserving their interests in us on the same terms and conditions as existed previously; or

(B) receiving cash in an amount equal to the stockholders’ pro rata share of the appraised value of our net assets.

We are prohibited from participating in any proposed Roll-up Transaction:

• that would result in our stockholders having democracy rights in a Roll-up Entity that are less than those provided in our charter and bylaws, including rights with respect to the election and removal of directors and the other voting rights of our stockholders, annual reports, annual and special meetings of stockholders, the amendment of our charter and our dissolution;

• that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-up Entity, or that would limit the ability of an investor to exercise the voting rights of its securities of the Roll-up Entity on the basis of the number of shares held by that investor;

• in which investors’ rights of access to the records of the Roll-up Entity would be less than those provided in our charter and described in the section of this prospectus entitled “Description of Shares—Meetings and Special Voting Requirements;” or

• in which any of the costs of the Roll-up Transaction would be borne by us if the Roll-up Transaction would not be approved by our stockholders.

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THE OPERATING PARTNERSHIP AGREEMENT

General

We expect to own substantially all of our assets and conduct our operations through KBS Limited Partnership II, which we refer to as the Operating Partnership. We are the sole general partner of the Operating Partnership and, as of the date of this prospectus, our wholly owned subsidiary, KBS REIT Holdings II LLC, is the sole limited partner of the Operating Partnership. As the sole general partner, we have the exclusive power to manage and conduct the business of the Operating Partnership.

As we accept subscriptions for shares in this offering, we transfer substantially all of the net proceeds of the offering to our Operating Partnership as a capital contribution in exchange for units of limited partnership interest that are held by our wholly owned subsidiary, KBS REIT Holdings II; however, we are deemed to have made capital contributions in the amount of the gross offering proceeds received from investors. The Operating Partnership is deemed to have simultaneously paid the selling commissions and other costs associated with the offering.

As a result of this structure, we are considered an UPREIT, or an umbrella partnership real estate investment trust. An UPREIT is a structure that REITs often use to acquire real property from sellers on a tax-deferred basis because the sellers can generally accept partnership units and defer taxable gain otherwise required to be recognized by them upon the disposition of their properties. Such sellers may also desire to achieve diversity in their investment and other benefits afforded to stockholders in a REIT. For purposes of satisfying the asset and income tests for qualification as a REIT, the REIT’s proportionate share of the assets and income of the Operating Partnership will be deemed to be assets and income of the REIT.

If we ever decide to acquire properties in exchange for units of limited partnership interest in the Operating Partnership, we expect to amend and restate the partnership agreement to provide substantially as set forth below.

Capital Contributions

We would expect the partnership agreement to require us to contribute the proceeds of any offering of our shares of stock to the Operating Partnership as an additional capital contribution. If we did contribute additional capital to the Operating Partnership, we would receive additional partnership units and our percentage interest in the Operating Partnership would be increased on a proportionate basis based upon the amount of such additional capital contributions and the value of the Operating Partnership at the time of such contributions. We also expect that the partnership agreement would allow us to cause the Operating Partnership to issue partnership interests for less than their fair market value if we conclude in good faith that such issuance is in the best interest of the Operating Partnership and us. The Operating Partnership would also be able to issue preferred partnership interests in connection with acquisitions of property or otherwise. These preferred partnership interests could have priority over common partnership interests with respect to distributions from the Operating Partnership, including priority over the partnership interests that we would own as a limited partner. If the Operating Partnership would require additional funds at any time in excess of capital contributions made by us or from borrowing, we could borrow funds from a financial institution or other lender and lend such funds to the Operating Partnership on the same terms and conditions as are applicable to our borrowing of such funds.

Operations

We would expect the partnership agreement to provide that, so long as we remain qualified as a REIT, the Operating Partnership would be operated in a manner that would enable us to satisfy the requirements for being classified as a REIT for tax purposes. We would also have the power to take actions to ensure that the Operating Partnership would not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code. Classification as a publicly traded partnership could result in the Operating Partnership being taxed as a corporation, rather than as a partnership.

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Distributions and Allocations of Profits and Losses

The partnership agreement would provide that the Operating Partnership would distribute cash flow from operations to its partners in accordance with their respective percentage interests on at least a monthly basis in amounts that we determine. The effect of these distributions would be that a holder of one unit of limited partnership interest in our Operating Partnership would receive the same amount of annual cash flow distributions as the amount of annual distributions paid to the holder of one of our shares of common stock.

Similarly, the partnership agreement would provide that the Operating Partnership would allocate taxable income to its partners in accordance with their respective percentage interests. Subject to compliance with the provisions of Sections 704(b) and 704(c) of the Internal Revenue Code and the corresponding Treasury regulations, the effect of these allocations would be that a holder of one unit of limited partnership interest in the Operating Partnership would be allocated taxable income for each taxable year in an amount equal to the amount of taxable income to be recognized by a holder of one of our shares of common stock. Losses, if any, would generally be allocated among the partners in accordance with their respective percentage interests in the Operating Partnership. Losses could not be passed through to our stockholders.

Upon liquidation of the Operating Partnership, after payment of, or adequate provision for, debts and obligations of the Operating Partnership, including partner loans, any remaining assets of the Operating Partnership would be distributed to its partners in accordance with their respective positive capital account balances.

Rights, Obligations and Powers of the General Partner

We would expect to be the sole general partner of the Operating Partnership. As sole general partner, we generally would have complete and exclusive discretion to manage and control the Operating Partnership’s business and to make all decisions affecting its assets. Under an amended and restated partnership agreement, we would also expect to have the authority to:

• acquire, purchase, own, operate, lease, manage and dispose of any real property and any other assets;

• construct buildings and make other improvements on owned or leased properties;

• authorize, issue, sell, redeem or otherwise purchase any debt or other securities;

• borrow or loan money;

• originate loans;

• make or revoke any tax election;

• maintain insurance coverage in amounts and types as we determine is necessary;

• retain employees or other service providers;

• form or acquire interests in joint ventures; and

• merge, consolidate or combine the Operating Partnership with another entity.

Under an amended and restated partnership agreement, we expect that the Operating Partnership would continue to pay all of the administrative and operating costs and expenses it incurs in acquiring or originating and operating and managing our investments. The Operating Partnership would also pay all of our administrative costs and expenses and such expenses would be treated as expenses of the Operating Partnership. Such expenses would include:

• all expenses relating to our organization and continuity of existence;

• all expenses relating to the public offering and registration of our securities;

• all expenses associated with the preparation and filing of our periodic reports under federal, state or local laws or regulations;

• all expenses associated with our compliance with applicable laws, rules and regulations; and

• all of our other operating or administrative costs incurred in the ordinary course of business.

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The only costs and expenses we could incur that the Operating Partnership would not reimburse would be costs and expenses relating to assets we may own outside of the Operating Partnership. We would pay the expenses relating to such assets directly.

Exchange Rights

We expect that an amended and restated partnership agreement would also provide for exchange rights. We expect the limited partners of the Operating Partnership would have the right to cause the Operating Partnership to redeem their units of limited partnership interest for cash equal to the value of an equivalent number of our shares, or, at our option, we could purchase their units of limited partnership interest for cash or by issuing one share of our common stock for each unit redeemed. Limited partners, however, would not be able to exercise this exchange right if and to the extent that the delivery of our shares upon such exercise would:

• result in any person owning shares in excess of the ownership limit in our charter (unless exempted by our board of directors);

• result in our shares being owned by fewer than 100 persons;

• result in our shares being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code; or

• cause us to own 10% or more of the ownership interests in a tenant within the meaning of Section 856(d)(2)(B) of the Internal Revenue Code.

Furthermore, limited partners could exercise their exchange rights only after their units of limited partnership interest had been outstanding for one year. A limited partner could not deliver more than two exchange notices each calendar year and would not be able to exercise an exchange right for less than 1,000 units of limited partnership interest, unless such limited partner held less than 1,000 units. In that case, he would be required to exercise his exchange right for all of his units.

Change in General Partner

We expect that we generally would not be able to withdraw as the general partner of the Operating Partnership or transfer our general partnership interest in the Operating Partnership (unless we transferred our interest to a wholly owned subsidiary). The principal exception to this would be if we merged with another entity and (1) the holders of a majority of partnership units (including those we held) approved the transaction; (2) the limited partners received or had the right to receive an amount of cash, securities or other property equal in value to the amount they would have received if they had exercised their exchange rights immediately before such transaction; (3) we were the surviving entity and our stockholders did not receive cash, securities or other property in the transaction; or (4) the successor entity contributed substantially all of its assets to the Operating Partnership in return for an interest in the Operating Partnership and agreed to assume all obligations of the general partner of the Operating Partnership. If we voluntarily sought protection under bankruptcy or state insolvency laws, or if we were involuntarily placed under such protection for more than 90 days, we would be deemed to be automatically removed as the general partner. Otherwise, the limited partners would not have the right to remove us as general partner.

Transferability of Interests

With certain exceptions, the limited partners would not be able to transfer their interests in the Operating Partnership, in whole or in part, without our written consent as the general partner.

Amendment of Limited Partnership Agreement

We expect amendments to the amended and restated partnership agreement would require the consent of the holders of a majority of the partnership units including the partnership units we and our affiliates held. Additionally, we, as general partner, would be required to approve any amendment. We expect that certain amendments would have to be approved by a majority of the units held by third-party limited partners.

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PLAN OF DISTRIBUTION

General

We are publicly offering a maximum of 280,000,000 shares of our common stock on a “best efforts” basis through KBS Capital Markets Group, our dealer manager. Because this is a “best efforts” offering, KBS Capital Markets Group must use only its best efforts to sell the shares and has no firm commitment or obligation to purchase any of our shares. We are offering up to 200,000,000 shares of common stock in our primary offering at $10 per share, with discounts available for certain categories of purchasers as described below.

We are also offering up to 80,000,000 shares pursuant to our dividend reinvestment plan at a purchase price initially equal to $9.50 per share. Once we establish an estimated value per share that is not based on the price to acquire a share in the primary offering or a follow-on public offering, shares issued pursuant to our dividend reinvestment plan will be priced at the estimated value per share of our common stock, as determined by our advisor or another firm chosen for that purpose. We expect to establish an estimated value per share not based on the price to acquire a share in the primary offering or a follow-on public offering after the completion of our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

We expect to offer the 200,000,000 shares registered in our primary offering until August 31, 2010. If we have not sold all of the primary offering shares by August 31, 2010, we may continue this offering until April 22, 2011. Under rules promulgated by the SEC, in some circumstances we could continue our primary offering until as late as October 19, 2011. If we decide to continue our primary offering beyond August 31, 2010, we will provide that information in a prospectus supplement. We may continue to offer shares under our dividend reinvestment plan beyond these dates until we have sold 80,000,000 shares through the reinvestment of distributions. In many states, we will need to renew the registration statement or file a new registration statement to continue the offering beyond the one year registration period permitted under many states securities laws. We may terminate this offering at any time.

Our dealer manager, KBS Capital Markets Group, has a limited operating history. KBS Capital Markets Group registered as a broker-dealer with the SEC in October 2004, and this offering is the second offering conducted by our dealer manager. Since this offering commenced in April 2008, our dealer manager has agreed to act as dealer manager for three other KBS-sponsored programs. The principal business of KBS Capital Markets Group is participating in and facilitating the distribution of securities of KBS-sponsored programs. KBS Capital Markets Group is indirectly owned and controlled by our sponsors. For additional information about our dealer manager, including information related to its affiliation with us and our advisor, see “Management—Other Affiliates—Dealer Manager,” and “Conflicts of Interest—Affiliated Dealer Manager” and “—Certain Conflict Resolution Measures.”

Compensation of Dealer Manager and Participating Broker-Dealers

Except as provided below, effective April 30, 2010, we will pay KBS Capital Markets Group selling commissions of 6.5% of the gross offering proceeds of the primary offering. Also effective April 30, 2010, we will pay KBS Capital Markets Group a fee of 3.0% of the gross offering proceeds of the primary offering as compensation for acting as the dealer manager, except that a reduced dealer manager fee is paid with respect to certain volume discount sales. Prior to April 30, 2010, KBS Capital Markets Group received selling commissions of up to 6.0% of the gross offering proceeds of the primary offering and a dealer manager fee of up to 3.5% of the gross offering proceeds of the primary offering. We do not pay any selling commissions or dealer manager fees for shares sold under our dividend reinvestment plan. We also reimburse the dealer manager for specified out-of-pocket offering-related costs as described below.

The dealer manager has authorized other broker-dealers that are members of FINRA, which we refer to as participating broker-dealers, to sell our shares. Except as provided below, our dealer manager reallows all of its selling commissions attributable to a participating broker-dealer.

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We also sell shares at a discount to the primary offering price of $10.00 per share through the following distribution channels in the event that the investor:

• pays a broker a single fee, e.g., a percentage of assets under management, for investment advisory and broker services, which is frequently referred to as a “wrap fee”;

• has engaged the services of a registered investment advisor with whom the investor has agreed to pay compensation for investment advisory services or other financial or investment advice (other than a registered investment advisor that is also registered as a broker-dealer who does not have a fixed or “wrap fee” feature or other asset fee arrangement with the investor); or

• is investing through a bank acting as trustee or fiduciary.

If an investor purchases shares through one of these channels in our primary offering, effective April 30, 2010, we will sell the shares at a 6.5% discount, or at $9.35 per share, reflecting that selling commissions are not being paid in connection with such purchases. Prior to April 30, 2010 we sold the shares at a 6.0% discount, or at $9.40 per share. We receive substantially the same net proceeds for sales of shares through these channels. Neither the dealer manager nor its affiliates will compensate any person engaged as an investment advisor by a potential investor as an inducement for such investment advisor to advise favorably for an investment in us.

If an investor purchases shares in the offering net of commissions through a registered investment advisor with whom the investor has agreed to pay compensation for investment advisory services or other financial or investment advice and if in connection with such purchase the investor must also pay a broker-dealer for custodial or other services relating to holding the shares in the investor’s account, we will reduce the aggregate purchase price of the investor’s shares by the amount of the annual custodial or other fees paid to the broker-dealer in an amount up to $250. Each investor will receive only one reduction in purchase price for such fees and this reduction in the purchase price of our shares is only available for the investor’s initial investment in our common stock. The investor must include the “Request for Broker-Dealer Custodial Fee Reimbursement Form” with his or her subscription agreement to have the purchase price of the investor’s initial investment in shares reduced by the amount of his or her annual custodial fee and the investor must include support for the amount of his or her annual custodial fee with the subscription agreement.

The dealer manager may reallow to any participating broker-dealer up to 1% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee. Our dealer manager may increase the amount of the reallowance in special cases up to a maximum of 2.0% of the gross offering proceeds attributable to that participating broker-dealer. Whether the reallowance to any participating broker-dealer will exceed 1%, and the extent of any excess, will not depend on the actual amount of gross proceeds raised by that broker-dealer. Rather, the dealer manager expects that any decision to reallow more than 1% of gross offering proceeds from the dealer manager fee would be based solely on projected sales volume of at least $200 million on an annualized basis by the participating broker-dealer at the time it enters into a selling agreement and marketing fee agreement with the dealer manager. For volume discount sales of $3,000,000 or more, the dealer manager fee is reduced as set forth below. The amount of the dealer manager fee reallowed to a participating broker-dealer in that instance will be negotiated on a transaction by transaction basis. The marketing fee paid to participating broker-dealers would be paid by the dealer manager out of its dealer manager fee. In addition to selling commissions and marketing fees, and subject to the limits described below, we may reimburse the dealer manager for reimbursements it may make to broker-dealers for bona fide due diligence expenses.

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In addition to the compensation described above, we also reimburse the dealer manager and its affiliates for some of their costs in connection with the offering as described in the table below. This table sets forth the nature and estimated amount of all items viewed as “underwriting compensation” by FINRA, assuming we sell all of the shares offered hereby. To show the maximum amount of dealer manager and participating broker-dealer compensation that we may pay in this offering, this table assumes that all shares are sold through distribution channels associated with the highest possible selling commissions and dealer manager fees.

Dealer Manager and
Participating Broker-Dealer Compensation

Selling commissions and dealer manager fee (maximum)	$	190,000,000
Expense reimbursements for retail conferences and industry conferences(1) (2)		3,497,000	(3)
Expense reimbursement for bona fide training and education meetings held by us(2) (4)		3,436,000	(3)
Expense reimbursement for technology and other costs(2) (5)		226,000	(3)
Legal fees allocable to the dealer manager(2)		100,000	(3)
Promotional items(2)		454,000	(3)
Total	$	197,713,000

⁽¹⁾ These fees consist of reimbursements for attendance and sponsorship fees payable to participating broker-dealers hosting a retail seminar and travel, meal and lodging costs incurred by registered persons associated with KBS Capital Markets Group and officers and employees of our affiliates to attend retail conferences sponsored by participating broker-dealers, other meetings with participating broker-dealers and industry conferences.

⁽²⁾ Subject to the cap on organization and offering expenses described below, we reimburse KBS Capital Markets Group or its affiliates for these expenses. In some cases, these payments serve to reimburse KBS Capital Markets Group for amounts it has paid to participating broker-dealers for the items noted.

⁽³⁾ Amounts shown are estimates.

⁽⁴⁾ These fees consist of expense reimbursements for actual costs incurred in connection with attending bona fide training and education meetings hosted by us. The expenses consist of (a) the travel, meals and lodging of (i) representatives of participating broker-dealers and (ii) registered persons associated with KBS Capital Markets Group and (b) reimbursement of the portion of a dual employee’s salary paid by KBS Capital Markets Group attributable to time spent planning and coordinating bona fide training and education meetings on our behalf.

⁽⁵⁾ These fees consist of expense reimbursements to participating broker-dealers in special cases for technology costs associated with the offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of our shares by such broker-dealers and the ownership of our shares by such broker-dealers’ customers.

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Subject to the cap on organization and offering expenses described below, we will also reimburse the dealer manager for reimbursements it may make to broker-dealers for bona fide invoiced due diligence expenses or, in certain circumstances, pay bona fide invoiced due diligence expenses directly, up to a maximum of 0.5% of our gross offering proceeds.

Under the rules of FINRA, total underwriting compensation in this offering, including selling commissions, the dealer manager fee and the dealer manager expense reimbursement (excluding reimbursement for bona fide invoiced due diligence expenses), may not exceed 10% of our gross offering proceeds. Our reimbursement of bona fide invoiced due diligence expenses will not exceed 0.5% of our gross offering proceeds. In addition to the limits on underwriting compensation, FINRA and many states also limit our total organization and offering expenses to 15% of gross offering proceeds. After the termination of the primary offering and again after termination of the offering under our dividend reinvestment plan, KBS Capital Advisors has agreed to reimburse us to the extent that organization and offering expenses incurred by us exceed 15% of our gross proceeds from the applicable offering. However, we expect our total organization and offering expenses to be approximately 7.57% of our gross offering proceeds (including gross offering proceeds from our dividend reinvestment plan) and approximately 10.39% of our gross offering proceeds from our primary offering, assuming we raise the maximum offering amount.

To the extent permitted by law and our charter, we will indemnify the participating broker-dealers and the dealer manager against some civil liabilities, including certain liabilities under the Securities Act and liabilities arising from breaches of our representations and warranties contained in the dealer manager agreement. See “Management—Limited Liability and Indemnification of Directors, Officers, Employees and Other Agents.”

The dealer manager has agreed to sell up to 5% of the shares offered hereby in our primary offering to persons to be identified by us at a discount from the public offering price. We intend to use this “friends and family” program to sell shares to our directors, officers, business associates and others to the extent consistent with applicable laws and regulations. We will require all such purchasers to represent that they are purchasing shares for investment only and to enter into one-year lock-up agreements with respect to the purchased shares. The purchase price for such shares will reflect that selling commissions will not be payable in connection with such sales. Effective April 30, 2010, the purchase price for such shares will be $9.35 per share, reflecting that selling commissions in the amount of $0.65 per share will not be payable in connection with such sales. Prior to April 30, 2010, the purchase price for such shares was $9.40. The net proceeds to us from such sales made net of commissions will be substantially the same as the net proceeds we receive from other sales of shares.

We may sell shares to participating broker-dealers, their retirement plans, their representatives and the family members, IRAs and the qualified plans of their representatives at a purchase price that reflects that selling commissions will not be payable in consideration of the services rendered by such broker-dealers and representatives in the offering. Effective April 30, 2010, such price will be $9.35 per share, reflecting that selling commissions in the amount of $0.65 per share will not be payable in connection with such sales. Prior to April 30, 2010, such price was $9.40. For purposes of this discount, we consider a family member to be a spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in law or brother- or sister-in-law. The net proceeds to us from the sales of these shares will be substantially the same as the net proceeds we receive from other sales of shares.

We are offering volume discounts to investors who purchase $1,000,000 or more of shares through the same participating broker-dealer in our primary offering. The net proceeds to us from a sale eligible for a volume discount are the same, but the selling commissions and, in some cases, the dealer manager fees we pay are reduced. Because the dealer manager reallows all selling commissions, the amount of commissions participating broker-dealers receive for such sales is reduced.

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The following table shows the discounted price per share and the reduced selling commissions and dealer manager fees payable for volume sales of our shares.

Dollar Volume Shares Purchased			Sales Commissions (Based on $10.00 Price Per Share)	Dealer Manager Fee (Based on $10.00 Price Per Share)	Price Per Share to Investor
$    0	to	$   999,999	6.5%	3.0%	$10.00
$1,000,000	to	$1,999,999	5.5%	3.0%	$  9.90
$2,000,000	to	$2,999,999	4.5%	3.0%	$  9.80
$3,000,000	to	$3,999,999	3.5%	2.5%	$  9.65
$4,000,000	to	$9,999,999	2.0%	2.5%	$  9.50
$10,000,000	and above		1.0%	2.0%	$  9.35

We apply the reduced selling price, selling commission and dealer manager fee to the entire purchase. All commission rates and dealer manager fees are calculated assuming a price per share of $10.00. For example, a purchase of 250,000 shares in a single transaction would result in a purchase price of $2,450,000 ($9.80 per share), selling commissions of $112,500 and dealer manager fees of $75,000.

To qualify for a volume discount as a result of multiple purchases of our shares you must use the same participating broker-dealer and you must mark the “Additional Investment” space on the subscription agreement. We are not responsible for failing to combine purchases if you fail to mark the “Additional Investment” space. Once you qualify for a volume discount, you will be eligible to receive the benefit of such discount for subsequent purchases of shares in our primary offering through the same participating broker-dealer. If a subsequent purchase entitles an investor to an increased reduction in sales commissions and/or the dealer manager fee, the volume discount will apply only to the current and future investments.

To the extent purchased through the same participating broker-dealer, the following persons may combine their purchases as a “single purchaser” for the purpose of qualifying for a volume discount:

• an individual, his or her spouse, their children under the age of 21 and all pension or trust funds established by each such individual;

• a corporation, partnership, association, joint-stock company, trust fund or any organized group of persons, whether incorporated or not;

• an employees’ trust, pension, profit-sharing or other employee benefit plan qualified under Section 401(a) of the Internal Revenue Code; and

• all commingled trust funds maintained by a given bank.

In the event a person wishes to have his or her order combined with others as a “single purchaser,” that person must request such treatment in writing at the time of subscription setting forth the basis for the discount and identifying the orders to be combined. Any request will be subject to our verification that the orders to be combined are made by a single purchaser. If the subscription agreements for the combined orders of a single purchaser are submitted at the same time, then the commissions payable and discounted share price will be allocated pro rata among the combined orders on the basis of the respective amounts being combined. Otherwise, the volume discount provisions will apply only to the order that qualifies the single purchaser for the volume discount and the subsequent orders of that single purchaser.

Only shares purchased in our primary offering are eligible for volume discounts. Shares purchased through our dividend reinvestment plan will not be eligible for a volume discount nor will such shares count toward the threshold limits listed above that qualify you for the different discount levels.

Volume discounts for California residents will be available in accordance with the foregoing table of uniform discount levels. However, with respect to California residents, no discounts will be allowed to any group of purchasers and no subscriptions may be aggregated as part of a combined order for purposes of determining the dollar amount of shares purchased.

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Subscription Procedures

To purchase shares in this offering, you must complete and sign a subscription agreement (in the form attached to this prospectus as Appendix A) for a specific number of shares and pay for the shares at the time of your subscription. You should make your check payable to “KBS Real Estate Investment Trust II, Inc.” Subscriptions will be effective only upon our acceptance, and we reserve the right to reject any subscription in whole or in part. Subscription payments will be deposited into a special account in our name until such time as we have accepted or rejected the subscriptions. We will accept or reject subscriptions within 30 days of our receipt of such subscriptions and, if rejected, we will return all funds to the rejected subscribers within 10 business days. If accepted, the funds will be transferred into our general account. You will receive a confirmation of your purchase. We generally admit stockholders on a daily basis.

You are required to represent in the subscription agreement that you have received a copy of this prospectus. In order to ensure that you have had sufficient time to review this prospectus, we will not accept your subscription until at least five business days after your receipt of this prospectus.

Investors who desire to purchase shares in this offering at regular intervals may be able to do so by electing to participate in the automatic investment program by completing an enrollment form that we will provide upon request. Alabama and Ohio investors are not eligible to participate in the automatic investment program. Only investors who have already met the minimum purchase requirement may participate in the automatic investment program. The minimum periodic investment is $100 per month. We pay dealer manager fees and selling commissions in connection with sales under the automatic investment program to the same extent that we pay those fees and commissions on shares sold in the primary offering outside of the automatic investment program. If you elect to participate in both the automatic investment program and our dividend reinvestment plan, distributions earned from shares purchased pursuant to the automatic investment program will automatically be reinvested pursuant to the dividend reinvestment plan. For a discussion of the dividend reinvestment plan, see “Description of Shares—Dividend Reinvestment Plan.”

You will receive a confirmation of your purchases under the automatic investment program no less than quarterly. The confirmation will disclose the following information:

• the amount invested for your account during the period;

• the date of the investment;

• the number and price of the shares purchased by you; and

• the total number of shares in your account.

To qualify for a volume discount as a result of purchases under the automatic investment program, you must notify us in writing when you initially become eligible to receive a volume discount and at each time your purchase of shares through the program would qualify you for an additional reduction in the price of shares under the volume discount provisions described in this prospectus. For a discussion of volume discounts, see “—Compensation of Dealer Manager and Participating Broker-Dealers.”

You may terminate your participation in the automatic investment program at any time by providing us with written notice. If you elect to participate in the automatic investment program, you must agree that if at any time you fail to meet the applicable investor suitability standards or cannot make the other investor representations or warranties set forth in the then current prospectus or in the subscription agreement, you will promptly notify us in writing of that fact and your participation in the plan will terminate. See the “Suitability Standards” section of this prospectus (immediately following the cover page) and the form of subscription agreement attached hereto as Appendix A.

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Suitability Standards

Our sponsor, those selling shares on our behalf and participating broker-dealers and registered investment advisors recommending the purchase of shares in this offering have the responsibility to make every reasonable effort to determine that your purchase of shares in this offering is a suitable and appropriate investment for you based on information provided by you regarding your financial situation and investment objectives. In making this determination, these persons have the responsibility to ascertain that you:

• meet the minimum income and net worth standards set forth under “Suitability Standards” immediately following the cover page of this prospectus;

• can reasonably benefit from an investment in our shares based on your overall investment objectives and portfolio structure;

• are able to bear the economic risk of the investment based on your overall financial situation;

• are in a financial position appropriate to enable you to realize to a significant extent the benefits described in this prospectus of an investment in our shares; and

• have apparent understanding of:

• the fundamental risks of the investment;

• the risk that you may lose your entire investment;

• the lack of liquidity of our shares;

• the restrictions on transferability of our shares;

• the background and qualifications of our sponsors and their affiliates; and

• the tax consequences of your investment.

Relevant information for this purpose will include at least your age, investment objectives, investment experience, income, net worth, financial situation and other investments as well as any other pertinent factors. Our sponsor, those selling shares on our behalf and participating broker-dealers and registered investment advisors recommending the purchase of shares in this offering must maintain, for a six-year period, records of the information used to determine that an investment in shares is suitable and appropriate for you.

Until our shares of common stock are listed on a national securities exchange, subsequent purchasers, i.e., potential purchasers of your shares, must also meet the net worth or income standards.

Minimum Purchase Requirements

You must initially invest at least $4,000 in our shares to be eligible to participate in this offering. In order to satisfy this minimum purchase requirement, unless otherwise prohibited by state law, a husband and wife may jointly contribute funds from their separate IRAs, provided that each such contribution is made in increments of $100. You should note that an investment in our shares will not, in itself, create a retirement plan and that, in order to create a retirement plan, you must comply with all applicable provisions of the Internal Revenue Code. If you own the minimum investment in shares in KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, or any other KBS-sponsored public program, you may invest less than the minimum amount set forth above, but in no event less than $100.

If you have satisfied the applicable minimum purchase requirement, any additional purchase must be in amounts of at least $100. The investment minimum for subsequent purchases does not apply to shares purchased pursuant to our dividend reinvestment plan.

Unless you are transferring all of your shares, you may not transfer your shares in a manner that causes you or your transferee to own fewer than the number of shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law. These minimum purchase requirements are applicable until our shares of common stock are listed on a national securities exchange, and these requirements may make it more difficult for you to sell your shares.

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Investments by Qualified Accounts

Funds from qualified accounts will be accepted if received in installments that together meet the minimum or subsequent investment amount, as applicable, so long as the total subscription amount was indicated on the subscription agreement and all funds are received within a 90-day period.

Investments through IRA Accounts

If you would like to purchase shares through an IRA account, Sterling Trust Company and Community National Bank have agreed to act as IRA custodians for purchasers of our common stock as described below; however, we do not require that you use these IRA custodians.

If you would like to establish a new IRA account with Sterling Trust Company for an investment in our shares, we will pay the fees related to the establishment of the investor account with Sterling Trust Company. Investors will be responsible for the annual IRA maintenance fees charged by Sterling Trust Company, including the first year annual maintenance fees.

If you would like to establish a new IRA account with Community National Bank for an investment in our shares, we will pay the fees related to the establishment of the investor account with Community National Bank and the first calendar year base fee. After we pay the first calendar year base fee, investors will be responsible for the annual IRA maintenance fees charged by Community National Bank, charged at the beginning of each calendar year.

Further information about custodial services is available through your broker or through our dealer manager at www.kbs-cmg.com.

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SUPPLEMENTAL SALES MATERIAL

In addition to the prospectus, we are using supplemental sales material in connection with the offering of the shares, although only when accompanied by or preceded by the delivery of the prospectus. The supplemental sales material does not contain all of the information material to an investment decision and should only be reviewed after reading the prospectus. The sales material currently used in permitted jurisdictions includes:

• investor sales promotion brochures;

• cover letters transmitting the prospectus;

• brochures containing a summary description of the offering;

• fact sheets describing the general nature of KBS Real Estate Investment Trust II and our investment objectives;

• asset flyers describing our recent acquisitions;

• broker updates;

• online investor presentations;

• web site material;

• electronic media presentations; and

• client seminars and seminar advertisements and invitations.

All of the foregoing material is prepared by our advisor or its affiliates with the exception of the third-party article reprints. In certain jurisdictions, some or all of such sales material may not be available. In addition, the sales material may contain certain quotes from various publications without obtaining the consent of the author or the publication for use of the quoted material in the sales material.

We are offering shares only by means of the prospectus. Although the information contained in our supplemental sales materials will not conflict with any of the information contained in the prospectus, the supplemental materials do not purport to be complete and should not be considered a part of or as incorporated by reference in the prospectus, or the registration statement of which this prospectus is a part.

LEGAL MATTERS

The validity of the shares of our common stock being offered hereby has been passed upon for us by DLA Piper LLP (US), Raleigh, North Carolina. DLA Piper LLP (US) has also reviewed the statements relating to certain federal income tax matters that are likely to be material to U.S. holders of our common stock under the caption “Federal Income Tax Considerations” and has passed upon our qualification as a REIT for federal income tax purposes.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-11 with the SEC with respect to the shares of our common stock to be issued in this offering. This prospectus is a part of that registration statement and, as permitted by SEC rules, does not include all of the information you can find in the registration statement or the exhibits to the registration statement. For additional information relating to us, we refer you to the registration statement and the exhibits to the registration statement. Statements contained in this prospectus as to the contents of any contract or document are necessarily summaries of such contract or document and in each instance, if we have filed the contract or document as an exhibit to the registration statement, we refer you to the copy of the contract or document filed as an exhibit to the registration statement.

We file annual, quarterly and current reports, proxy statements and other information with the SEC. We furnish our stockholders with annual reports containing consolidated financial statements certified by an independent public accounting firm. The registration statement is, and any of these filings are, available to the public over the Internet at the SEC’s web site at http://www.sec.gov. You may read and copy any filed document at the SEC’s public reference room in Washington, D.C. at 100 F. Street, N.E., Room 1580, Washington, D.C. Please call the SEC at (800) SEC-0330 for further information about the public reference room.

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APPENDIX A

Form of

Please follow these instructions carefully. Failure to do so could result in the rejection of your subscription.

  1.         INVESTMENT

PLEASE NOTE: We do not accept money orders, traveler’s checks, starter checks, foreign checks, counter checks, third-party checks or cash.

A minimum initial investment of $4,000 is required. Investments in other public KBS REIT products apply to the $4,000 minimum in this offering. This does not affect the suitability standards applicable to investors in this offering. In no event shall any investment be less than $100. You should make your check payable to “KBS Real Estate Investment Trust II, Inc.”, as indicated in the prospectus of KBS Real Estate Investment Trust II, Inc., as amended and supplemented as of the date hereof (the “Prospectus”).

  2.         INVESTMENT TYPE

Please check the appropriate box to indicate the account type of the subscription.

  3.         INVESTOR INFORMATION

PLEASE NOTE: You must include a permanent street address even if your mailing address is a P.O. Box. If the investment is to be held by joint owners, you must provide the requested investor information for each joint owner.

Enter the name(s), mailing address and telephone numbers of the registered owner of the investment. Partnerships, corporations and other organizations should include the name of an individual to whom correspondence should be addressed. Non-resident aliens must also supply IRS Form W-8BEN.

  4.         INVESTMENT TITLE

PLEASE NOTE: All investors must complete the space provided for taxpayer identification number or social security number. By signing in Section 8, you are certifying that this number is correct.

Please print the exact name(s) in which shares are to be registered. Include the trust name, if applicable. If the account is an Individual Retirement Account (IRA) or qualified plan, include the names and taxpayer identification numbers of both the investor and the custodian or trustee.

  5.         CUSTODIAN/TRUSTEE INFORMATION

If you want to purchase shares through an IRA but need an IRA account, Sterling Trust Company and Community National Bank have agreed to serve as IRA custodians for such purpose. KBS Real Estate Investment Trust II will pay the fees related to the establishment of investors account with Sterling Trust Company and Community National Bank, and we will also pay the first calendar year base fee for Community National Bank accounts. Investors will be responsible for the annual IRA maintenance fee charged by Sterling Trust Company and Community National Bank (after we pay the first calendar year base fee). Further information about custodial services is available through your broker or our dealer manager at www.kbs-cmg.com.

  6.         DISTRIBUTION INFORMATION

PLEASE NOTE: If you elect to participate in the Dividend Reinvestment Plan, you must agree that if at any time you fail to meet the applicable investor suitability standards or cannot make the other investor representations or warranties set forth in the Prospectus or the Subscription Agreement relating to such investment, you will promptly notify KBS Real Estate Investment Trust II in writing of that fact.

Complete this section to enroll in the Dividend Reinvestment Plan, to elect to receive distributions by direct deposit and/or to elect to receive distributions by check. If you elect direct deposit, you must attach a voided check with this completed subscription agreement. You can choose to have all or a portion of your distributions reinvested through the Dividend Reinvestment Plan. You must indicate the percentage of your distribution to be applied to each option selected and the sum of the allocations must equal 100%. If you do not complete this section, distributions will be paid to the registered owner at the address in Section 3. IRA account distributions to a third party require custodian approval.

KBS Real Estate Investment Trust II, Inc.

A-1

  7.         BROKER-DEALER AND REGISTERED REPRESENTATIVE INFORMATION

PLEASE NOTE: The Broker-Dealer or Registered Investment Adviser must complete this section of the subscription. All fields are mandatory.

  8.         SUBSCRIBER SIGNATURES

Please separately initial each of the representations in paragraphs (a) through (e). Except in the case of fiduciary accounts, you may not grant any person a power of attorney to make such representations on your behalf.

Please refer to the Prospectus under “Suitability Standards” to verify that you meet the minimum suitability standards imposed by the state of your primary residence.

By signing this Subscription Agreement, you agree to provide the information in section eight of the agreement and confirm the information is true and correct. If we are unable to verify your identity or that of another person authorized to act on your behalf or if we believe we have identified potential criminal activity, we reserve the right to take action as we deem appropriate, including, but not limited to, closing your account or refusing to establish your account.

  9.         FINANCIAL REPRESENTATIVE SIGNATURES

Please Note: The Broker-Dealer or Registered Investment Advisor must sign this section to complete the subscription.

Required Representations: By signing Section 9, the registered representative of the Broker-Dealer or Registered Investment Advisor confirms on behalf of the Broker-Dealer that he or she:

• has reasonable grounds to believe the information and representations concerning the investor identified herein are true, correct and complete in all respects;

• has discussed the investor’s prospective purchase of shares with such investor;

• has advised such investor of all pertinent facts with regard to the lack of liquidity and marketability of the shares and other fundamental risks related to the investment in the shares, the restrictions on transfer of the shares and the risk that the investor could lose his or her entire investment in the shares;

• has delivered to the investor the Prospectus required to be delivered in connection with this subscription;

• has reasonable grounds to believe the investor is purchasing these shares as referenced in Section 4, and

• has reasonable grounds to believe the purchase of shares is a suitable investment for such investor, and such investor meets the suitability standards applicable to the investor set forth in the Prospectus and such investor is in a financial position to enable the investor to realize the benefits of such an investment and to suffer any loss that may occur with respect thereto.

In addition, the registered representative of the Broker-Dealer or Registered Investment Advisor represents that he or she and the Broker-Dealer, (1) are duly licensed and may lawfully offer and sell the shares in the state where the investment was made and in the state designated as the investor’s legal residence in Section 3; and (2) agree to maintain records of the information used to determine that an investment in shares is suitable and appropriate for the investor for a period of six years.

PLEASE NOTE: Only original, completed copies of the Subscription Agreement can be accepted. We cannot accept photocopied or otherwise duplicated Subscription Agreements.

The Subscription Agreement, together with a check for the full purchase price, should be delivered or mailed to:

Regular Mail	Overnight Delivery
KBS Real Estate Investment Trust II, Inc.	KBS Real Estate Investment Trust II, Inc.
c/o DST Systems, Inc.	c/o DST Systems, Inc.
PO Box 219015	430 W. 7th Street
Kansas City, MO 64121-9015	Kansas City, MO 64105

(866) 584-1381

Payments may be wired to:

UMB Bank, N.A.

1010 Grand, 4th Floor

Mail Stop: 1020409

Kansas City, MO 64106

ABA# 101000695

KBS Capital Advisors LLC, as Trustee for

KBS Real Estate Investment Trust II, Inc. Account#: 9871737705

KBS Real Estate Investment Trust II, Inc.

03/10 A- 2 2002-I

Form of

  1.         INVESTMENT

State of Sale:   Amount of Subscription: $

•Minimum investment is $4,000.   •Money Orders, Traveler’s Checks, Starter Checks, Foreign Checks, Counter Checks, Third-Party Checks or Cash cannot be accepted. ¨      Shares are being purchased net of commissions

  2.         INVESTMENT TYPE                                    (CHECK ONE BOX ONLY)

Non-Qualified	Qualified
¨ Individual (If applicable, attach TOD form)	¨ Traditional (Individual) IRA
¨ Joint Tenant1 (If applicable, attach TOD form)	¨ Simple IRA
¨ Tenants in Common1	¨ SEP IRA
¨ Community Property1	¨ ROTH
¨ Trust2 ,3	¨ Beneficial
¨ UGMA: State of	as Beneficiary for
¨ UTMA: State of	¨ Profit Sharing  Plan2
¨ Corporation or Partnership2	¨ Pension Plan2
¨ Non-Profit Organization2	¨ KEOGH Plan2

¨ Other (Specify):  

⁽¹⁾ All parties must sign

⁽²⁾ Please attach pages of trust/plan document (or corporate resolution) which lists the name of trust/plan, trustees, signatures and date.

⁽³⁾ The Certification of Investment Powers for Trust Accounts form may be completed in lieu of providing trust documents.

  3.         INVESTOR INFORMATION                                    (DOB & SSN OR TIN REQUIRED)

Investor 1 Name   SSN/Tax ID   DOB

Investor 2 Name   SSN/Tax ID   DOB

Street Address City   State   Zip Code  

Optional Mailing Address   City   State   Zip Code  

Phone (day)   Phone (evening)  

E-mail

  ¨ US Citizen    ¨ US Citizen residing outside the US

  ¨ Foreign citizen, country  

  ¨ Check here if you are subject to backup withholding

  4.         INVESTMENT TITLE                                    (SSN OR TIN REQUIRED)

Please print names in which shares of common stock are to be registered. Include trust name if applicable. If IRA or qualified plan, include both custodian and investor names and Tax ID Numbers. If same as above, write same.

Title Line 1

Title Line 2

Social Security No. or

Tax Identification No. Secondary Tax Identification Number  

KBS Real Estate Investment Trust II, Inc.

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  5.        CUSTODIAN/TRUSTEEINFORMATION

Trustee Name

Trustee Address 1

Trustee Address 2

Trustee City State   Zip Code  

Trustee Telephone No.  

Trustee Tax Identification Number  

Investor’s Account Number with Trustee  

  6.        DISTRIBUTIONINFORMATION (CHOOSE ONE OR MORE OF THE FOLLOWING OPTIONS)

If you select more than one option you must indicate the percentage of your distribution to be applied to each option and the sum of the allocations must equal 100%.		% of distribution
¨	I prefer to participate in the Dividend Reinvestment Plan, as described in the Prospectus.
¨	Send distributions via check to investor’s home address (or for Qualified Plans to the address listed in Section 5).
¨	Send distributions via check to alternate payee listed here (not available for qualified plans without custodial approval).

Name

Address

City State   Zip Code  

Account No.

¨ Direct Deposit (Attach Voided Check) I authorize KBS Real Estate Investment Trust II, Inc. or its agent (collectively, KBS) to deposit my distributions in the checking or savings account identified below. This authority will remain in force until I notify KBS in writing to cancel it. In the event KBS deposits funds erroneously into my account, KBS is authorized to debit my account for an amount not to exceed the amount of the erroneous deposit

% of distribution

Financial Institution Name ¨  Checking ¨  Savings

ABA/Routing Number

Account Number

  7.        BROKER-DEALERAND REGISTERED REPRESENTATIVE INFORMATION

Broker-Dealer Name  

Representative Name   Rep No.  

Representative’s Company Name   Branch ID  

Representative’s Address  

Rep’s City State   Zip Code  

Rep’s Phone No.     Fax No.  

Rep’s Email Address  

REGISTERED INVESTMENT ADVISER (RIA): All sales of shares of common stock must be made through a Broker-Dealer. If a RIA has introduced a sale, the sale must be conducted through (i) the RIA in its capacity as a Registered Representative, if applicable; (ii) a Registered Representative of a Broker-Dealer that is affiliated with the RIA, if applicable; or (iii) if neither (i) or (ii) is applicable, an unaffiliated Broker-Dealer.

KBS Real Estate Investment Trust II, Inc.

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  8.        SUBSCRIBER SIGNATURES

TAXPAYER IDENTIFICATION NUMBER CONFIRMATION (REQUIRED): The investor signing below, under penalties of perjury, certifies that (i) the number shown on this Subscription Agreement is his or her correct Taxpayer Identification Number (or he or she is waiting for a number to be issued to him or her ), (ii) he or she is not subject to backup withholding either because he or she has not been notified by the Internal Revenue Service (“IRS”) that he or she is subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified him or her that he or she is no longer subject to backup withholding and (iii) he or she is a U.S. Citizen unless otherwise indicated in Section 3.

NOTE:    CLAUSE (ii) IN THIS CERTIFICATION SHOULD BE CROSSED OUT IF THE WITHHOLDING BOX HAS BEEN CHECKED IN THE INVESTOR INFORMATION SECTION.

Please separately initial each of the representations below. Except in the case of fiduciary accounts, you may not grant any person a power of attorney to make such representations on your behalf. In order to induce KBS Real Estate Investment Trust II, Inc. to accept this subscription, I hereby represent and warrant to you as follows:

		OWNER	JOINT OWNER
(a)	I have received the Prospectus of KBS Real Estate Investment Trust II, Inc. at least five business days before signing the Subscription Agreement.	¢ Initials	¢ Initials
(b)	I have (i) a minimum net worth (exclusive of home, home furnishings and personal automobiles) of at least $250,000 or (ii) a minimum net worth (as previously described) of at least $70,000 and a minimum annual gross income of at least $70,000, and, if applicable, I meet the higher net worth and gross income requirements imposed by my state of primary residence as set forth in the Prospectus under “Suitability Standards.” I will not purchase additional shares unless I meet the applicable suitability requirements set forth in the Prospectus at the time of purchase.	¢ Initials	¢ Initials
(c)	I acknowledge there is no public market for the shares and, thus, my investment in shares is not liquid.	¢ Initials	¢ Initials
(d)	I am purchasing the shares for the account referenced in Section 4.	¢ Initials	¢ Initials
(e)	I understand I will not be admitted as a stockholder until my investment has been accepted. The acceptance process includes, but is not limited to, reviewing the Subscription Agreement for completeness and signatures, conducting an Anti-Money Laundering check as required by the USA Patriot Act and payment of the full purchase price of the shares.	¢ Initials	¢ Initials
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.

              Signature of Investor Date    Signature of Joint Investor or,    for Qualified Plans, of Trustee/Custodian Date

KBS Real Estate Investment Trust II, Inc.

A-5

  9.        FINANCIAL REPRESENTATIVE SIGNATURES

The investor’s Financial Advisor must sign below to complete the order. The Financial Advisor hereby warrants that he is duly licensed and may lawfully sell shares of common stock in the state designated as the investor’s legal residence. The Financial Advisor agrees to maintain records of the information used to determine that an investment in shares is suitable and appropriate for the investor for a period of six years. The undersigned confirms by their signatures that they (i) have reasonable grounds to believe the information and representations concerning the investor identified herein are true, correct and complete in all respects; (ii) have discussed such investor’s prospective purchase of shares with such investor; (iii) have advised such investor of all pertinent facts with regard to the liquidity and marketability of the shares and other fundamental risks related to the investment in the shares; (iv) have delivered the Prospectus to such investor; (v) have reasonable grounds to believe the investor is purchasing these shares for his or her own account; and (vi) have reasonable grounds to believe the purchase of shares is a suitable investment for such investor, such investor meets the suitability standards applicable to such investor set forth in the Prospectus, and such investor is in a financial position to enable such investor to realize the benefits of such an investment and to suffer any loss that may occur with respect thereto.

I understand this subscription agreement is for KBS Real Estate Investment Trust II, Inc.

              Signature of Financial Representative Date    Branch Manager Signature    (If required by Broker/Dealer) Date

PLEASE NOTE: Only original, completed copies of the Subscription Agreement can be accepted. We cannot accept photocopied or otherwise duplicated Subscription Agreements. Please make checks payable to “KBS Real Estate Investment Trust II, Inc.”

The Subscription Agreement, together with a check for the full purchase price, should be delivered or mailed to:

Regular Mail	Overnight Delivery
KBS Real Estate Investment Trust II, Inc. c/o DST Systems, Inc. PO Box 219015 Kansas City, MO 64121-9015	KBS Real Estate Investment Trust II, Inc. c/o DST Systems, Inc. 430 W. 7th Street Kansas City, MO 64105

(866) 584-1381

Payments may be wired to:

(send the original subscription agreement to the address above)

UMB Bank, N.A.

1010 Grand, 4th Floor

Mail Stop: 1020409

Kansas City, MO 64106

ABA# 101000695

Account name:

KBS Capital Advisors LLC, as Trustee for

KBS Real Estate Investment Trust II, Inc. Account #: 9871737705

***** FOR OFFICE USE ONLY *****

Check # Complied by W/S

Batch # Input by Region

Subscription # Proofed by Territory

KBS Real Estate Investment Trust II, Inc.

02/10 A-6 2001-L

Appendix B

AMENDED AND RESTATED

DIVIDEND REINVESTMENT PLAN

KBS Real Estate Investment Trust II, Inc., a Maryland corporation (the “Company”), has adopted an Amended and Restated Dividend Reinvestment Plan (the “DRP”), the terms and conditions of which are set forth below. Capitalized terms shall have the same meaning as set forth in the Company’s charter unless otherwise defined herein.

1.        Number of Shares Issuable. The number of shares of Common Stock authorized for issuance under the DRP is 80,000,000.

2.        Participants. “Participants” are holders of the Company’s shares of Common Stock who elect to participate in the DRP.

3.        Dividend Reinvestment. The Company will apply that portion (as designated by a Participant) of the dividends and other distributions (“Distributions”) declared and paid in respect of a Participant’s shares of Common Stock to the purchase of additional shares of Common Stock for such Participant. To the extent required by state securities laws, such shares will be sold through the broker-dealer and/or dealer manager through whom the Company sold the underlying shares to which the Distributions relate unless the Participant makes a new election through a different distribution channel. The Company will not pay selling commissions on shares of Common Stock purchased in the DRP.

4.        Procedures for Participation. Qualifying stockholders may elect to become Participants by completing and executing the Subscription Agreement, an enrollment form or any other Company-approved authorization form as may be available from the Company, the dealer manager or participating broker-dealers. To increase their participation, Participants must complete a new enrollment form and, to the extent required by state securities laws, make the election through the dealer manager or the Participant’s broker-dealer, as applicable. Participation in the DRP will begin with the next Distribution payable after receipt of a Participant’s subscription, enrollment or authorization. Shares will be purchased under the DRP on the date that the Company makes a Distribution. Distributions will be paid monthly as authorized and declared by the Company’s board of directors.

5.        Purchase of Shares. Until the Company establishes an estimated value per share of Common Stock that is not based on the price to acquire a share of Common Stock in the Company’s primary offering or a follow-on public offering, Participants will acquire Common Stock at a price of $9.50 per share. Upon the Company’s announcement in a public filing with the Securities and Exchange Commission that the Company has established an estimated value per share of Common Stock that is not based on the price to acquire a share of Common Stock in the Company’s primary offering or a follow-on public offering, Participants will acquire Common Stock at a price equal to the estimated value of the Company’s Common Stock as updated from time to time. The Company expects to establish an estimated value per share of Common Stock that is not based on the price to acquire a share of Common Stock in the Company’s primary offering or a follow-on public offering after the completion of its offering stage and to provide updated estimates of the per share value of its Common Stock from time to time thereafter. The Company’s offering stage will be complete when the Company is no longer publicly offering equity securities – whether through its initial public offering or follow-on public offerings – and has not done so for 18 months. For the purpose of determining when the Company’s offering stage is complete, public equity offerings do not include offerings on behalf of selling stockholders or offerings related to any dividend reinvestment plan, employee benefit plan, or the redemption of interests in KBS Limited Partnership II, the Company’s operating partnership. Participants in the DRP may purchase fractional shares so that 100% of the Distributions will be used to acquire shares. However, a Participant will not be able to acquire shares under the DRP to the extent such purchase would cause it to exceed limits set forth in the Company’s charter, as amended.

6.        Taxation of Distributions. The reinvestment of Distributions in the DRP does not relieve Participants of any taxes that may be payable as a result of those Distributions and their reinvestment pursuant to the terms of this DRP.

7.        Share Certificates. The shares issuable under the DRP shall be uncertificated until the board of directors determines otherwise.

8.        Voting of DRP Shares. In connection with any matter requiring the vote of the Company’s stockholders, each Participant will be entitled to vote all shares acquired by the Participant through the DRP.

B-1

9.        Reports. Within 90 days after the end of the calendar year, the Company shall provide each Participant with (i) an individualized report on the Participant’s investment, including the purchase date(s), purchase price and number of shares owned, as well as the amount of Distributions received during the prior year; and (ii) all material information regarding the DRP and the effect of reinvesting dividends, including the tax consequences thereof. The Company shall provide such information reasonably requested by the dealer manager or a participating broker-dealer, in order for the dealer manager or participating broker-dealer to meet its obligations to deliver written notification to Participants of the information required by Rule 10b-10(b) promulgated under the Securities Exchange Act of 1934.

10.      Termination by Participant. A Participant may terminate participation in the DRP at any time by delivering to the Company a written notice. To be effective for any Distribution, such notice must be received by the Company at least ten business days prior to the last day of the month to which the Distribution relates. Notwithstanding the preceding sentence, if the Company publicly announces in a filing with the Securities and Exchange Commission a new estimated value per share of its Common Stock, then a Participant shall have no less than two business days after the date of such announcement to notify the Company in writing of Participant’s termination of participation in the DRP and Participant’s termination will be effective for the next date shares are purchased under the DRP. Any transfer of shares by a Participant will terminate participation in the DRP with respect to the transferred shares. Upon termination of DRP participation, Distributions will be distributed to the stockholder in cash.

11.      Amendment or Termination of DRP by the Company. The Company may amend or terminate the DRP for any reason upon ten days’ notice to the Participants. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Securities and Exchange Commission or (b) in a separate mailing to Participants.

12.      Liability of the Company. The Company shall not be liable for any act done in good faith, or for any good faith omission to act.

13.      Governing Law. The DRP shall be governed by the laws of the State of Maryland.

B-2

We have not authorized any dealer, salesperson or other individual to give any information or to make any representations that are not contained in this prospectus. If any such information or statements are given or made, you should not rely upon such information or representation. This prospectus does not constitute an offer to sell any securities other than those to which this prospectus relates, or an offer to sell, or a solicitation of an offer to buy, to any person in any jurisdiction where such an offer or solicitation would be unlawful. This prospectus speaks as of the date set forth below. You should not assume that the delivery of this prospectus or that any sale made pursuant to this prospectus implies that the information contained in this prospectus will remain fully accurate and correct as of any time subsequent to the date of this prospectus.

TABLE OF CONTENTS

	Page
Suitability Standards	i
Prospectus Summary	1
Risk Factors	25
Cautionary Note Regarding Forward-Looking Statements	56
Estimated Use of Proceeds	57
Management	60
Management Compensation	74
Stock Ownership	79
Conflicts of Interest	79
Investment Objectives and Criteria	89
Prior Performance Summary	107
Federal Income Tax Considerations	117
ERISA Considerations	136
Description of Shares	141
The Operating Partnership Agreement	154
Plan of Distribution	157
Supplemental Sales Material	165
Legal Matters	165
Where You Can Find More Information	165
Appendix A — Form of Subscription Agreement with Instructions	A-1
Appendix B — Amended and Restated Dividend Reinvestment Plan	B-1

Our shares are not FDIC insured, may lose value and are not bank guaranteed. See “Risk Factors” beginning on page 25, to read about risks you should consider before buying shares of our common stock.

KBS REAL ESTATE

INVESTMENT TRUST II, INC.

Maximum Offering of

280,000,000 Shares

of Common Stock

PROSPECTUS

KBS CAPITAL MARKETS

GROUP LLC

April 22, 2010

05/10 2143-B

KBS REAL ESTATE INVESTMENT TRUST II, INC.

SUPPLEMENT NO. 10 DATED OCTOBER 6, 2010

TO THE PROSPECTUS DATED APRIL 22, 2010

This document supplements, and should be read in conjunction with, the prospectus of KBS Real Estate Investment Trust II, Inc. dated April 22, 2010. This supplement no. 10 supersedes and replaces all prior supplements to the prospectus. As used herein, the terms “we,” “our” and “us” refer to KBS Real Estate Investment Trust II, Inc. and, as required by context, KBS Limited Partnership II, which we refer to as our “Operating Partnership,” and to their subsidiaries. Capitalized terms used in this supplement have the same meanings as set forth in the prospectus. The purpose of this supplement is to disclose:

• the status of the offering;

• information with respect to our real estate and real estate-related investments;

• selected financial data;

• information with respect to the historical operating performance of our real estate and real estate-related investments;

• funds from operations for the six months ended June 30, 2010 and 2009 and the years ended December 31, 2009 and 2008;

• distributions declared and paid for the four quarters ending June 30, 2010;

• distributions declared for July through October 2010;

• fees earned by and expenses reimbursable to our advisor and the dealer manager;

• information regarding our share redemption program;

• information regarding our indebtedness;

• updated risks related to an investment in us;

• updates to the prior performance information in the prospectus;

• updated disclosure with respect to some of the considerations associated with an investment in our shares by a qualified employee pension plan or an individual retirement account;

• quantitative and qualitative disclosures about market risk as of and for the six months ended June 30, 2010; and

• information incorporated by reference.

Status of the Offering

We commenced our initial public offering of 280,000,000 shares of common stock on April 22, 2008. As of October 4, 2010, we had accepted aggregate gross offering proceeds of $1.5 billion related to the sale of 147,318,000 shares of common stock, including 5,582,776 shares of common stock sold under the dividend reinvestment plan. Accordingly, as of October 4, 2010, there are 132,682,000 shares of common stock available for sale in this offering, including 74,417,224 shares under the dividend reinvestment plan.

Our board of directors has approved a final extension of our primary offering of 200,000,000 shares until the earlier of the sale of all 200,000,000 shares or December 31, 2010. Subscriptions from non-custodial held accounts must be postmarked on or before December 31, 2010 and received by the close of business on January 14, 2011. For investments by custodial held accounts, subscription agreements must be dated on or before December 31, 2010 with all documents and funds received by the close of business on March 1, 2011. Funds from custodial held accounts will be accepted if received in installments that together meet the minimum or subsequent investment amount, as applicable, so long as the total subscription amount was indicated on the subscription agreement dated on or before December 31, 2010.

We plan to continue to offer shares under our dividend reinvestment plan beyond December 31, 2010 until we have sold 80,000,000 shares through the reinvestment of distributions. In many states, we will need to renew the registration statement or file a new registration statement to continue the offering for these periods. We may terminate this offering at any time.

1

Real Estate and Real Estate-Related Investments Summary

Real Estate Investments

As of June 30, 2010, we owned eight office properties, one office/flex property and two industrial properties encompassing approximately 3.7 million rentable square feet. We acquired all of our properties from third parties unaffiliated with us or our advisor. The following is a summary of our real estate investment portfolio as of June 30, 2010:

Property	Location	Rentable Square Feet	Date Acquired	Property Type	Purchase Price (1) (in thousands)		Annualized Base  Rent(2) (in thousands)		Average Annualized Base Rent per Sq. Ft.(3)		Average Remaining Lease Term in Years	Occupancy
Mountain View Corporate Center	Basking Ridge, NJ	134,991	07/30/2008	Office	$	30,736	$	4,077	$	30.20	4.2	100.0%
100 & 200 Campus Drive Buildings	Florham Park, NJ	563,609	09/09/2008	Office		184,682		16,422		30.21	3.4	96.5%
300 - 600 Campus Drive Buildings	Florham Park, NJ	564,304	10/10/2008	Office		185,905		14,241		25.79	4.1	97.8%
350 E. Plumeria Building	San Jose, CA	142,700	12/18/2008	Office/Flex		36,111		2,973		20.83	7.8	100.0%
Willow Oaks Corporate Center	Fairfax, VA	570,038	08/26/2009	Office		113,689		15,659		30.13	4.4	91.2%
Pierre Laclede Center	Clayton, MO	583,563	02/04/2010	Office		74,901		12,318		22.30	4.4	94.7%
One Main Place	Portland, OR	315,133	02/05/2010	Office		55,018		7,296		25.76	4.7	89.9%
Plano Business Park	Plano, TX	283,559	03/15/2010	Industrial		16,876		1,694		5.97	4.4	100.0%
Hartman II	Austell, GA	261,799	04/07/2010	Industrial		11,113		888		3.39	5.0	100.0%
Crescent VIII	Greenwood Village, CO	82,265	05/26/2010	Office		12,708		1,934		24.10	3.7	97.6%
Horizon Tech Center	San Diego, CA	157,884	06/17/2010	Office		40,915		4,190		26.54	4.0	100.0%
		3,659,845			$	762,654	$	81,692	$	23.26	4.4	96.0%

⁽¹⁾ Purchase price includes acquisition fees and closing costs.

⁽²⁾ Annualized base rent represents annualized contractual base rental income as of June 30, 2010, adjusted to straight-line any contractual rent increases or decreases from the lease’s inception through the balance of the lease term.

⁽³⁾ Average annualized base rent per square foot is calculated as the annualized base rent divided by the leased rentable square feet.

We do not intend to make significant renovations or improvements to our real estate investments listed above in the near term. We believe that our real estate investments are adequately insured.

2

Significant Tenants and Lease Expirations

As of June 30, 2010, we owned approximately 3.7 million square feet of net rentable space. None of our tenants represented over 10% of our annualized base rent and our highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent  (1) (in thousands)		Percentage of Annualized Base Rent
Manufacturing	12	$	15,521	19%
Legal Services	27		12,446	15%
Finance	29		11,449	14%
Other Professional Services	22		11,162	14%
Computer Systems Design & Programming	6		8,186	10%
		$	58,764	72%

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of June 30, 2010, adjusted to straight-line any contractual rent increases or decreases from the lease’s inception through the balance of the lease term.

No material tenant credit issues have been identified at this time. As of June 30, 2010, we had no tenants with rent balances outstanding over 90 days.

The following table sets forth a schedule of expiring leases for our real estate portfolio by square footage and by average annualized base rent as of June 30, 2010:

Year of Expiration	Number of Leases Expiring	Annualized Base Rent  (1) (in thousands)		% of Portfolio Annualized Base Rent	Leased Rentable Square Feet Expiring	% of Portfolio Rentable Square Feet Expiring
Month to Month	12	$	20	0.1%	35,118	1.0%
2010	20		6,498	7.9%	249,093	7.1%
2011	27		6,021	7.4%	254,865	7.3%
2012	30		9,043	11.1%	347,999	9.9%
2013	23		5,488	6.7%	233,572	6.6%
2014	26		17,242	21.1%	665,392	18.9%
2015	16		15,230	18.6%	789,975	22.5%
2016	13		9,879	12.1%	441,496	12.6%
2017	7		3,708	4.5%	177,490	5.0%
2018	6		4,411	5.4%	185,274	5.3%
2019	4		2,777	3.4%	82,622	2.4%
Thereafter	1		1,375	1.7%	49,593	1.4%
Total	185	$	81,692	100.0%	3,512,489	100.0%

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of June 30, 2010, adjusted to straight-line any contractual rent increases or decreases from the lease’s inception through the balance of the lease term.

3

Real Estate Investments Subsequent to June 30, 2010

Dallas Cowboys Distribution Center

On July 8, 2010, we, through an indirect wholly owned subsidiary, acquired the rights to a ground lease related to a distribution facility containing 400,123 rentable square feet located on approximately 21.2 acres of land in Irving, Texas (“Dallas Cowboys Distribution Center”). Fee simple title to the land upon which the Dallas Cowboys Distribution Center is located is held by the Dallas/Fort Worth International Airport Board. The ground lease expires in February 2050. The seller is not affiliated with us or our advisor. The purchase price of the ground lease to the Dallas Cowboys Distribution Center was $19.0 million plus closing costs. We funded the purchase of the Dallas Cowboys Distribution Center with proceeds from this offering but may later place mortgage debt on this property.

Dallas Cowboys Distribution Center is located at 2500 Regent Boulevard in Irving, Texas and consists of a two-story distribution facility that was built in 2010. Currently, Dallas Cowboys Distribution Center is 100% leased to one tenant. The annualized base rent is $1.5 million and the average annualized base rent per square foot is $3.86. The remaining lease term is 9.8 years. The tenant in this property does not represent more than 10% of our portfolio’s annualized base rent.

300 N. LaSalle Building

On July 29, 2010, we, through an indirect wholly owned subsidiary, acquired a 60-story office building containing 1,302,901 rentable square feet located on approximately 1.2 acres of land in Chicago, Illinois (the “300 N. LaSalle Building”). The seller is not affiliated with us or our advisor. The purchase price (net of closing credits) of the 300 N. LaSalle Building was approximately $648.3 million plus closing costs. We funded the purchase of the 300 N. LaSalle Building with proceeds from a mortgage loan from an unaffiliated lender, proceeds from existing credit facilities from unaffiliated lenders and proceeds from this offering.

The 300 N. LaSalle Building is located at 300 N. LaSalle Street in Chicago, Illinois and consists of a 60-story office building that was completed in 2009. Currently, the 300 N. LaSalle Building is 93% leased to 24 tenants. The annualized base rent is $43.7 million and the average annualized base rent per square foot is $35.97. The weighted-average remaining lease term is 15.7 years. The largest tenant of the 300 N. LaSalle Building, Kirkland and Ellis LLP (“Kirkland and Ellis”), occupies 53% of the total rentable square feet, or 687,857 rentable square feet. Kirkland and Ellis is an international full-service law firm, with approximately 1,500 attorneys practicing worldwide in 10 cities, with approximately 650 attorneys practicing in Chicago. The 300 N. LaSalle Building serves as the global headquarters for Kirkland and Ellis. The Kirkland and Ellis lease expires on February 28, 2029 and the average rental rate per square foot over the lease term is $36.95. Kirkland and Ellis has four options to extend the term of its lease by five or ten years. In addition, Kirkland and Ellis has nine full-floor expansion options between 2015 and 2025, various rights of first offer and four full-floor contraction options between 2016 and 2026. Kirkland and Ellis also has a one-time option to terminate its entire lease as of February 28, 2025, subject to a termination fee. The Kirkland and Ellis lease is for 687,857 net rentable square feet and the annualized base rent is $25.4 million. At the time of acquisition, the Kirkland and Ellis lease represents approximately 13% of our portfolio net rentable square feet and 20% of our portfolio’s annualized base rent. None of the other tenants in this property represent more than 10% of our portfolio’s annualized base rent.

Torrey Reserve West

On September 9, 2010, we, through an indirect wholly owned subsidiary, acquired three office buildings containing 118,030 rentable square feet located on approximately 7.1 acres of land in San Diego, California (“Torrey Reserve West”). The seller is not affiliated with us or our advisor. The purchase price of Torrey Reserve West was approximately $27.3 million plus closing costs. We funded the purchase of Torrey Reserve West through the assumption of an existing mortgage loan from an unaffiliated lender with an outstanding principal balance of $17.0 million and with proceeds from this offering.

Torrey Reserve West is located at 3390, 3394 and 3398 Carmel Mountain Road in San Diego, California and consists of three two-story office buildings that were built in 2000. Currently, Torrey Reserve West is 95% leased to six tenants. The annualized base rent is $3.8 million and the average annualized base rent per square foot is $34.02. The weighted-average remaining lease term is 4.0 years. None of the tenants in this property represent more than 10% of our portfolio’s annualized base rent.

4

Union Bank Plaza

On September 15, 2010, we, through an indirect wholly owned subsidiary, purchased a 40-story office building containing 627,334 rentable square feet located on approximately 3.7 acres of land in Los Angeles, California (the “Union Bank Plaza”). The seller is not affiliated with us or our advisor. The purchase price of the Union Bank Plaza was approximately $208.0 million plus closing costs. We funded the acquisition of the Union Bank Plaza with proceeds from a mortgage loan from an unaffiliated lender, proceeds from existing credit facilities from unaffiliated lenders and proceeds from this offering.

The Union Bank Plaza is located at 445 South Figueroa Street in Los Angeles, California. It was built in 1967 and renovated in 1994. Currently, the Union Bank Plaza is 96% leased to 36 tenants. The annualized base rent is approximately $16.2 million and the average annualized base rent per square foot is $33.39. The weighted-average remaining lease term is approximately 7.8 years. The largest tenant of the Union Bank Plaza, Union Bank, N.A. (“Union Bank”), currently occupies 55% of the total rentable square feet of the Union Bank Plaza and upon commencement of a 16,801 square foot lease in December 2010, Union Bank will occupy 58% of the total rentable square feet of the Union Bank Plaza. Union Bank is a commercial bank and is the primary subsidiary of UnionBanCal, the second largest commercial bank holding company headquartered in California. Union Bank has several leases which expire on December 13, 2013 (16,801 square feet), August 16, 2015 (1,361 square feet) and January 31, 2022 (344,578 square feet) and the average rental rate over the lease terms is $36.88 per square foot, $40.09 per square foot and $42.25 per square foot, respectively. With respect to the lease that expires on January 31, 2022, Union Bank has two options to extend the terms of this lease for three, four, five, six or seven years per option term, provided that the combined renewal option terms do not exceed 10 years. If Union Bank elects to exercise its extension options, it must extend the lease on (i) the entire office premise (317,509 square feet) or (ii) no less than 200,000 rentable square feet consisting of full floors only plus either the entire or none of both the retail and vault space. Union Bank has an ongoing option to terminate its lease with respect to one or two full floors between February 1, 2012 and July 31, 2017, subject to a termination fee. Union Bank also has one additional full-floor expansion option between December 1, 2012 and November 30, 2013. None of the tenants in this property represent more than 10% of our portfolio’s annualized base rent. We intend to make approximately $16.2 million of renovations and improvements to the Union Bank Plaza. We expect to fund these renovations and improvements with proceeds from shares of common stock sold under our dividend reinvestment plan.

Yield on Real Estate Investments

The weighted-average year one yield of real estate properties we have acquired during the 12 months ending October 4, 2010, including the Pierre Laclede Center, One Main Place, Plano Business Park, Hartman II, Crescent VIII, Horizon Tech Center, Dallas Cowboys Distribution Center, the 300 N. LaSalle Building, Torrey Reserve West and the Union Bank Plaza, is approximately 7.0%. The year one yield of a property is equal to the estimated first year net operating income of the property divided by the purchase price of the property, excluding closing costs and acquisition fees. Estimated first year net operating income on our real estate investments is total estimated gross income (rental income, tenant reimbursements, parking income and other property-related income) derived primarily from the terms of in-place leases at the time we acquire the property, less property and related expenses (property operating and maintenance expenses, management fees, property insurance and real estate taxes) based on the operating history of the property, contracts in place or under negotiation and our plans for operation of the property for a one-year period of time after acquisition of the property. Estimated first year net operating income excludes other non-property income and expenses, interest expense from financings, depreciation and amortization and our company-level general and administrative expenses. Historical operating income for these properties is not necessarily indicative of future operating results.

5

Real Estate–Related Investments

As of June 30, 2010, we owned five real estate loans receivable that we acquired from third parties unaffiliated with us or our advisor (dollars in thousands):

Loan Name     Location of Related Property or Collateral	Date Acquired / Originated	Property Type	Loan Type	Payment Type	Outstanding Principal Balance (1)		Purchase / Origination Price (2)		Loan-to- Value (3)	Contractual Interest Rate (4)	Annualized Effective Interest Rate (4)	Maturity Date (5)
Northern Trust Building A-Note
San Diego, California	12/31/2008	Office	A-Note	Interest Only	$	94,500	$	57,428	56%	5.6%	13.0%	10/01/2017
One Liberty Plaza Notes
New York, New York	02/11/2009	Office	Mortgage	(6)		115,000		66,700	43%	6.1%	15.0%	08/06/2017
Tuscan Inn First Mortgage Origination
San Francisco, California	01/21/2010	Hotel	Mortgage	Interest Only		20,200		20,200	55%	8.3%	8.6%	01/21/2015
Chase Tower First Mortgage Origination
Austin, Texas	01/25/2010	Office	Mortgage	(7)		59,200		59,200	75%	8.4%	8.5%	02/01/2015
Pappas Commerce First Mortgage Origination
Boston, Massachusetts (8)	04/05/2010	Industrial	Mortgage	Interest Only		29,000		29,000	40%	9.5%	9.6%	07/01/2014
					$	317,900	$	232,528

⁽¹⁾ Outstanding principal balance represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns.

⁽²⁾ Purchase/origination price represents the amount funded by us to acquire or originate the loan and does not include closing costs and direct acquisition and origination fees.

⁽³⁾ Loan-to-value is the ratio of the amount funded by us to acquire or originate the loan to the appraised value of the real estate that secures the loan based on appraisals obtained in connection with our acquisition or origination of the loan. The value of the real estate will change over time.

⁽⁴⁾ Contractual interest rates are the stated interest rates on the face of the loans. Annualized effective interest rates are calculated as the actual interest income recognized in 2010, using the interest method, divided by the average amortized cost basis of the investment. The annualized effective interest rates and contractual interest rates presented are for the six months ended June 30, 2010.

⁽⁵⁾ Maturity dates are as of June 30, 2010.

⁽⁶⁾ Monthly installments on the One Liberty Plaza Notes are interest-only until August 2011. For the final six years of the notes, principal on the loan amortizes on a 30-year amortization schedule, with the remaining principal balance due at maturity.

⁽⁷⁾ Monthly installments on the Chase Tower First Mortgage are interest-only for the first three years, followed by principal and interest payments with principal calculated using an amortization of 30 years for the balance of the loan, with the remaining principal balance due at maturity.

⁽⁸⁾ We originated the mortgage loan, as amended, for an amount of up to $49.9 million. As of September 15, 2010, $31.9 million had been disbursed to the borrower and another $18.0 million remains available for future funding, subject to certain conditions set forth in the loan agreement.

6

Outstanding Debt Obligations

As of June 30, 2010, our borrowings were approximately 17% and 16% of the cost (before depreciation or other noncash reserves) and book value (before depreciation) of our tangible assets, respectively. The following table details our outstanding debt as of June 30, 2010 (dollars in thousands):

	Outstanding Principal Balance		Contractual Interest Rate (1)	Interest Rate (1)	Maturity Date (2)	% of Total Indebtedness
100 & 200 Campus Drive Mortgage Loan (3)		20,000	One-month LIBOR + 3.25%	5.6%	02/26/2014	12%
300-600 Campus Drive Mortgage Loan		93,850	5.90%	5.9%	04/10/2014	55%
Portfolio Revolving Loan Facility (4)		55,000	One-month LIBOR + 3.00% (5)	5.2%	04/30/2014	33%
	$	168,850				100%

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of June 30, 2010. Interest rate is calculated as the actual interest rate in effect at June 30, 2010 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices at June 30, 2010, where applicable.

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of June 30, 2010; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

⁽³⁾ We may borrow up to $64.6 million under the 100 & 200 Campus Drive Mortgage Loan, subject to certain conditions set forth in the loan agreement.

⁽⁴⁾ On April 30, 2010, we entered into a four-year revolving loan facility for an amount up to $100.0 million. As of June 30, 2010, $55.0 million had been disbursed to us and $45.0 million remains available for future disbursements subject to certain conditions set forth in the loan agreement. As of September 24, 2010, the outstanding principal balance was $74.0 million. During the term of the loan, we generally may not reduce the outstanding principal balance below a minimum outstanding amount, which is currently $55.0 million, without payment of prepayment fees. The Portfolio Revolving Loan Facility is secured by Mountain View Corporate Center, 350 E. Plumeria Building, Pierre Laclede Center and One Main Place.

⁽⁵⁾ The interest rate under this loan is calculated at a variable rate of 300 basis points over one-month LIBOR, but at no point shall the interest rate be less than 4.25%; however, there shall be no minimum floor rate for any portion of the loan that is subject to a swap contract with a minimum initial term of two years. We entered into an interest rate swap agreement which effectively fixes the interest rate on the initial $55.0 million drawn under the loan at approximately 5.17% for the first three years of the loan and fixes the interest rate on $45.0 million of this amount at approximately 5.17% for the last year of the initial loan term.

Debt Financing Subsequent to June 30, 2010

Willow Oaks Revolving Loan

On July 26, 2010, we, through an indirect wholly owned subsidiary, entered into a three-year revolving loan facility dated as of July 20, 2010 with U.S. Bank N.A and TD Bank, N.A. (collectively, the “Lenders”) for an amount of up to $65.0 million (the “Willow Oaks Revolving Loan”) secured by the Willow Oaks Corporate Center. As of September 24, 2010, the outstanding principal balance was $33.0 million. The Willow Oaks Revolving Loan matures on August 1, 2013, subject to two one-year extension options. At our election, the Willow Oaks Revolving Loan bears interest at a variable rate of 300 basis points over one-month, three-month or six-month LIBOR, but at no point may the interest rate be less than 4.5% for portions of the loan that are not subject to a swap contract. Monthly payments on the Willow Oaks Revolving Loan are interest-only, with the entire principal amount, plus any outstanding interest and fees, due at maturity, assuming no prior prepayment or extension of the facility. We have the right to prepay the Willow Oaks Revolving Loan in whole or in part, subject to a possible breakage fee, but at no point during the term of the loan may the outstanding balance be less than $13.0 million. In connection with the Willow Oaks Revolving Loan, we entered into two interest rate swap agreements with the Lenders that effectively fix the interest rate on $13.0 million drawn under the loan at approximately 4.33% during the loan term.

KBS REIT Properties II, LLC (“REIT Properties II”) has provided a limited guaranty of the repayment of the Willow Oaks Revolving Loan. REIT Properties II is one of our wholly owned subsidiaries and indirectly wholly owns all of our properties.

7

300 N. LaSalle Building Mortgage Loan

On July 29, 2010, in connection with the acquisition of the 300 N. LaSalle Building, we, through an indirect wholly owned subsidiary, KBSII 300 North LaSalle LLC (the “300 North LaSalle Borrower”), entered into a five-year mortgage loan with MetLife, Inc. for $350.0 million secured by the 300 N. LaSalle Building (the “300 N. LaSalle Building Mortgage Loan”). The 300 N. LaSalle Building Mortgage Loan matures on August 1, 2015 and bears interest at a fixed rate of 4.25% per annum. Monthly payments under the 300 N. LaSalle Building Mortgage Loan are interest-only for the first three years, followed by principal and interest payments with principal payments calculated using an amortization schedule of 30 years for the balance of the term of the loan, with the remaining principal balance due at maturity. The 300 North LaSalle Borrower has the right to repay the loan on or after February 1, 2013 upon no less than 30 days written notice to the lender and subject to a prepayment fee unless prepayment occurs 90 days prior to maturity.

REIT Properties II has provided a limited guaranty of the 300 N. LaSalle Building Mortgage Loan with respect to certain potential costs, expenses, losses, damages and other sums that may result from certain actions or inactions by the 300 North LaSalle Borrower. REIT Properties II has also provided a guaranty of the principal balance outstanding under the 300 N. LaSalle Building Mortgage Loan in the event of (i) certain bankruptcy or insolvency proceedings commenced by, or at the request of and for the benefit of, the 300 North LaSalle Borrower and (ii) certain other intentional actions committed by the 300 North LaSalle Borrower in violation of the loan documents.

Torrey Reserve West Mortgage Loan

On September 9, 2010, in connection with the acquisition of Torrey Reserve West, we, through an indirect wholly owned subsidiary, KBSII Torrey Reserve West LLC (the “Torrey Reserve West Borrower”), assumed an existing mortgage loan from an unaffiliated lender with an outstanding principal balance of approximately $17.0 million secured by Torrey Reserve West (the “Torrey Reserve West Mortgage Loan”). The Torrey Reserve West Mortgage Loan matures on March 10, 2011 with a current effective interest rate of 7.535% per annum. Monthly payments under the loan include interest and principal payments with principal payments calculated using an amortization schedule of 30 years for the balance of the term of the loan, with the remaining principal balance due at maturity.

REIT Properties II has provided a limited guaranty of the Torrey Reserve West Mortgage Loan with respect to certain potential costs, expenses, losses, damages and other sums which may result from certain actions or inactions by the Torrey Reserve West Borrower. REIT Properties II has also provided a guaranty of the principal balance outstanding under the Torrey Reserve West Mortgage Loan in the event of (i) certain bankruptcy or insolvency proceedings commenced by, or at the request of and for the benefit of, the Torrey Reserve West Borrower and (ii) certain other intentional actions committed by the Torrey Reserve West Borrower in violation of the loan documents.

Union Bank Plaza Mortgage Loan

On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, we, through an indirect wholly owned subsidiary, KBSII 445 South Figueroa LLC (the “Union Bank Plaza Borrower”), entered into a five-year mortgage loan with Wells Fargo Bank, N.A. for borrowings of up to $119.3 million secured by the Union Bank Plaza (the “Union Bank Plaza Mortgage Loan”). As of September 15, 2010, $105.0 million had been disbursed to us with the remaining loan balance available for future disbursements, subject to certain conditions set forth in the loan agreement. The Union Bank Plaza Mortgage Loan matures on September 15, 2015, with an option to extend the maturity date to September 15, 2016, subject to certain conditions. The Union Bank Plaza Mortgage Loan bears interest at a floating rate of 175 basis points over one-month LIBOR during the initial term of the loan and monthly payments are interest only with the entire balance due at maturity, assuming no prior prepayment. The Union Bank Plaza Borrower has entered into an interest rate swap agreement with the lender on the initial $105.0 million funded, which effectively fixed the interest rate at 3.445% through the initial term of the loan. The Union Bank Plaza Borrower has the right to repay the loan subject to a prepayment fee unless prepayment occurs 90 days prior to maturity.

REIT Properties II has provided a limited guaranty of the Union Bank Plaza Mortgage Loan with respect to certain potential costs, expenses, losses, damages and other sums which may result from certain actions or inactions by the Union Bank Plaza Borrower. REIT Properties II has also provided a guaranty of the principal balance and any interest or other sums outstanding under the Union Bank Plaza Mortgage Loan in the event of (i) certain bankruptcy or insolvency proceedings involving the Union Bank Plaza Borrower and (ii) certain other intentional actions committed by the Union Bank Plaza Borrower, by us or any of our affiliates in violation of the loan documents.

8

Portfolio Bridge Loan

On September 30, 2010, we, through indirect wholly owned subsidiaries (the “Portfolio Bridge Loan Borrowers”), entered into a 12-month bridge loan agreement (the “Portfolio Bridge Loan”) with Wells Fargo Bank, N.A. for an amount of $50.0 million secured by Horizon Tech Center, Plano Business Park, Crescent VIII, Hartman II and Dallas Cowboys Distribution Center. As of September 30, 2010, $40.6 million had been disbursed and we expect the remaining loan balance of $9.4 million to be disbursed to us in the near future, subject to certain conditions set forth in the loan agreement. The Portfolio Bridge Loan matures on September 30, 2011 and bears interest at a variable rate of 225 basis points over one-month LIBOR. Monthly payments on the Portfolio Bridge Loan are interest-only, with the entire principal amount, plus any outstanding interest and fees, due at maturity, assuming no prior prepayment. The Portfolio Bridge Loan Borrowers have the right to prepay the Portfolio Bridge Loan in whole or in part, upon no less than three days written notice to the lender and subject to a possible breakage fee.

REIT Properties II has provided a limited guaranty of the Portfolio Bridge Loan with respect to (i) certain potential costs, expenses, losses, damages and other sums that may result from certain actions or inactions by any of the Portfolio Bridge Loan Borrowers or certain of their affiliates and (ii) certain other intentional actions committed by any of the Portfolio Bridge Loan Borrowers or certain of their affiliates in violation of the loan documents. REIT Properties II has also provided a guaranty of the principal balance outstanding, together with any interest or other sums payable, under the Portfolio Bridge Loan in the event of certain bankruptcy or insolvency proceedings commenced against, by, or at the request of and for the benefit of any of the Portfolio Bridge Loan Borrowers.

9

Selected Financial Data

The following selected financial data should be read in conjunction with our consolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the six months ended June 30, 2010, both incorporated by reference into this prospectus (dollars in thousands, except share and per share amounts):

	June 30, 2010			December 31, 2009			December 31, 2008
Balance sheet data
Total real estate and real estate-related investments, net	$	970,914		$	672,169		$	512,495
Total assets		1,246,723			953,868			572,862
Notes payable		168,850			126,660			271,446
Total liabilities		207,122			158,046			300,557
Redeemable common stock		27,216			21,260			1,921
Total stockholders’ equity		1,012,385			774,562			270,384
		For the Six Months Ended						For the Year Ended
		June 30, 2010			June 30, 2009			December 31, 2009			December 31, 2008
Operating data
Total revenues	$	58,806		$	33,844		$	75,387		$	14,087
Net income (loss)		9,238			5,068			12,419			(2,582	)
Net income (loss) per common share - basic and diluted	$	0.09		$	0.11		$	0.20		$	(0.33	)
Other data
Cash flows provided by operations	$	22,710		$	11,599		$	29,937		$	4,870
Cash flows used in investing activities		(319,524	)		(68,610	)		(181,717	)		(495,535	)
Cash flows provided by financing activities		277,340			226,491			368,992			547,074
Distributions declared	$	34,241		$	15,277		$	41,272		$	4,941
Distributions declared per common share (1)		0.322			0.322			0.650			0.263
Weighted-average number of common shares outstanding, basic and diluted		106,210,219			47,408,456			63,494,969			7,926,366
Reconciliation of funds from operations (2)
Net income (loss)	$	9,238		$	5,068		$	12,419		$	(2,582	)
Depreciation of real estate assets		6,402			4,609			9,919			2,315
Amortization of lease-related costs		16,934			7,743			18,186			4,659
Gain on sale of real estate securities		—			—			(119	)		—
FFO	$	32,574		$	17,420		$	40,405		$	4,392
FFO per common share, basic and diluted	$	0.31		$	0.37		$	0.64		$	0.55

⁽¹⁾ Distributions declared per common share assumes each share was issued and outstanding each day from July 16, 2008 through the last day of the period presented. Distributions for the period from July 16, 2008 through August 15, 2008 are based on daily record dates and calculated at a rate of $0.00054795 per share per day. Distributions for the period from August 16, 2008 through June 30, 2010 are based on daily record dates and calculated at a rate of $0.00178082 per share per day.

⁽²⁾ We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity real estate investment trust (“REIT”). Because FFO calculations exclude such items as depreciation and amortization of real estate assets and gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and among other REITs. Our management believes that historical cost accounting for real estate assets in accordance with U.S. generally accepted accounting principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts’ (“NAREIT”) definition. Our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

FFO is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO includes adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization. Investors should exercise caution when using non-GAAP performance measures, such as FFO and FFO per common share, to make investment decisions. Accordingly, FFO and FFO per common share should not be considered as an alternative to net income and net income per common share as an indicator of our operating performance.

10

Information with Respect to the Historical Operating Performance of Our Real Estate and Real Estate-Related Investments

We presently operate in two business segments based on our investment types: real estate and real estate-related. As of June 30, 2010, under the real estate segment, we have invested in office, office/flex and industrial properties. As of June 30, 2010, under the real estate-related segment, we have invested in mortgage loans and an A-Note. During the year ended December 31, 2009, we purchased and subsequently sold our investment in commercial mortgage-backed securities. All revenues earned from our two operating segments were from external customers and there were no intersegment sales or transfers. We do not allocate corporate-level accounts to our operating segments. Corporate-level accounts include corporate general and administrative expenses, non-operating interest income, non-operating interest expense and other corporate-level expenses.

We evaluate the performance of our segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. We define NOI for our real estate segment as operating revenues (rental income, tenant reimbursements, and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees and provision for bad debt) less interest expense. We define NOI for our real estate-related segment as interest income less loan servicing costs and asset management fees. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, and corporate general and administrative expenses. We use NOI to evaluate the operating performance of our real estate and real estate-related investments and to make decisions about resource allocations. We believe that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes the items described above. Additionally, NOI as defined above may not be comparable to other REITs or companies as their definitions of NOI may differ from our definition.

The following table presents summary information related to our reportable segments (in thousands):

	For the Six Months Ended June 30, 2010		For the Year Ended December 31, 2009
	(unaudited)
Revenues:
Real estate segment	$	45,961	$	58,374
Real estate-related segment		12,845		17,013
Total segment revenues	$	58,806	$	75,387
NOI:
Real estate segment	$	25,665	$	28,258
Real estate-related segment		12,043		16,095
Total NOI	$	37,708	$	44,353

The following table reconciles our net income to our NOI from reportable segments (in thousands):

	For the Six Months Ended June 30, 2010			For the Year Ended December 31, 2009
	(unaudited)
Net income	$	9,238		$	12,419
Other interest income		(172	)		(646	)
Gain on sale of real estate securities		—			(119	)
Real estate acquisition fees and expenses		2,514			1,524
General and administrative expenses		2,168			2,678
Depreciation and amortization		23,336			28,105
Corporate-level interest expense		624			392
NOI	$	37,708		$	44,353

11

Funds from Operations for the Six Months Ended June 30, 2010 and 2009 and the Years Ended December 31, 2009 and 2008

We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. Because FFO calculations exclude such items as depreciation and amortization of real estate assets and gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and among other REITs. Our management believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. We compute FFO in accordance with the current NAREIT definition. Our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do.

FFO is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO includes adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization. Investors should exercise caution when using non-GAAP performance measures, such as FFO and FFO per common share, to make investment decisions. Accordingly, FFO and FFO per common share should not be considered as an alternative to net income and net income per common share as an indicator of our operating performance.

Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table for the six months ended June 30, 2010 and 2009 and the years ended December 31, 2009 and 2008 (dollars in thousands, except share and per share amounts):

	For the Six Months Ended				For the Year Ended
	June 30, 2010		June 30, 2009		December 31, 2009			December 31, 2008
	(unaudited)		(unaudited)
Net income (loss)	$	9,238	$	5,068	$	12,419		$	(2,582	)
Add:
Depreciation of real estate assets		6,402		4,609		9,919			2,315
Amortization of lease-related costs		16,934		7,743		18,186			4,659
Less:
Gain on sale of real estate securities		—		—		(119	)		—
FFO	$	32,574	$	17,420	$	40,405		$	4,392
Net income (loss) per common share, basic and diluted	$	0.09	$	0.11	$	0.20		$	(0.33	)
FFO per common share, basic and diluted	$	0.31	$	0.37	$	0.64		$	0.55
Weighted-average number of common shares outstanding, basic and diluted		106,210,219		47,408,456		63,494,969			7,926,366

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Set forth below is additional information related to certain items included in net income (loss) above, which may be helpful in assessing our operating results. Please see the consolidated statements of cash flows incorporated by reference into the prospectus for details of our operating, investing, and financing cash activities.

Significant Items Included in Net Income (Loss):

• Revenues in excess of actual cash received as a result of straight-line rent of $1.7 million and $1.0 million for the six months ended June 30, 2010 and 2009, respectively, and $2.2 million and $0.6 million for the years ended December 31, 2009 and 2008, respectively;

• Revenues in excess of actual cash received as a result of amortization of above-market/below-market in-place leases of $3.2 million and $2.8 million for the six months ended June 30, 2010 and 2009, respectively, and $5.7 million and $1.7 million for the years ended December 31, 2009 and 2008, respectively;

• Interest income from the accretion of discounts on real estate loans receivable and real estate securities, net of amortization of closing costs, of $3.1 million and $2.3 million for the six months ended June 30, 2010 and 2009, respectively, and $5.3 million for the year ended December 31, 2009;

• Interest expense from the amortization of deferred financing costs related to notes payable of approximately $0.2 million and $0.7 million for the six months ended June 30, 2010 and 2009, respectively, and approximately $1.0 million and $0.5 million for the years ended December 31, 2009 and 2008, respectively; and

• Acquisition fees and expenses related to the purchase of real estate of approximately $2.5 million for the six months ended June 30, 2010 and $1.5 million for the year ended December 31, 2009. Prior to January 1, 2009, acquisition fees and expenses related to the purchase of real estate were capitalized.

Operating cash flow and FFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO, such as tenant improvements, building improvements and deferred leasing costs.

Information with Respect to Distributions for the Four Quarters Ending June 30, 2010

During 2009, we declared distributions based on daily record dates for each day during the period from January 1, 2009 through December 31, 2009. During 2010, we have declared distributions based on daily record dates for each day during the period from January 1, 2010 through October 31, 2010. Distributions declared, distributions paid and cash flows from operations were as follows for the four quarters ending June 30, 2010 (in thousands, except per share amounts):

			Distributions								Cash Flows
	Distributions		Declared Per		Distributions Paid (3)						From
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		Operations
Third Quarter 2009	$	11,877	$	0.164	$	4,935	$	6,193	$	11,128	$	6,616
Fourth Quarter 2009		14,118		0.164		5,886		7,329		13,215		11,722
First Quarter 2010		15,803		0.160		6,790		8,369		15,159		8,215
Second Quarter 2010		18,438		0.162		7,836		9,842		17,678		14,495
	$	60,236	$	0.650	$	25,447	$	31,733	$	57,180	$	41,048

⁽¹⁾ Distributions for the period from July 1, 2009 through June 30, 2010 are based on daily record dates and are calculated at a rate of $0.00178082 per share per day.

⁽²⁾ Assumes share was issued and outstanding each day during the periods presented.

⁽³⁾ Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 15 days following month end.

During our offering stage, when we may raise capital in this offering more quickly than we acquire income-producing assets, and for some period after our offering stage, we may not be able to pay distributions solely from our cash flows from operations, in which case distributions may be paid in part from debt financing. For the four quarters ending June 30, 2010, we paid aggregate distributions of $57.2 million, including $25.5 million of distributions paid in cash and $31.7 million of distributions reinvested through our dividend reinvestment plan. Based on the timing of cash flows as compared to the timing of monthly distribution payments, we funded our total distributions paid during the four quarters ending June 30, 2010, which includes net cash distributions and dividends reinvested by stockholders, with $41.0 million of current period operating cash flows and $16.2 million of proceeds from debt financings.

13

Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flow from operations and FFO (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under investments we make in mortgage, mezzanine and other loans). However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Risk Factors,” herein, and in the prospectus as supplemented. Those factors include: the future operating performance of our investments in the existing real estate and financial environment; our ability to identify investments that are suitable to execute our investment objectives; the success and economic viability of our tenants; the ability of our borrowers and their sponsors to continue to make their debt service payments and/or to repay their loans upon maturity; changes in interest rates on our variable rate debt obligations; and the level of participation in our dividend reinvestment plan. In the event our FFO and/or cash flow from operations decrease in the future, the level of our distributions may also decrease. In addition, future distributions declared and paid may exceed FFO and/or cash flow from operations.

Distributions Declared for July 2010 through October 2010

On May 7, 2010, our board of directors declared distributions based on daily record dates for the period from July 1, 2010 through July 31, 2010, which we paid on August 13, 2010. On July 7, 2010, our board of directors declared distributions based on daily record dates for the period from August 1, 2010 through August 31, 2010, which we paid on September 15, 2010. On August 9, 2010, our board of directors declared distributions based on daily record dates for the period from September 1, 2010 through September 30, 2010, which we expect to pay in October 2010, and distributions based on daily record dates for the period October 1, 2010 through October 31, 2010, which we expect to pay in November 2010. Investors may choose to receive cash distributions or purchase additional shares through our dividend reinvestment plan.

Distributions are calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and will equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on a purchase price of $10.00 per share.

Fees Earned by and Expenses Reimbursable to Our Advisor and the Dealer Manager

Summarized below are the fees earned by and expenses reimbursable to our advisor and the dealer manager for the six months ended June 30, 2010 and for the year ended December 31, 2009, and any related amounts payable as of June 30, 2010 and December 31, 2009 (in thousands):

	Incurred					Payable as of
Form of Compensation	Six Months Ended June 30, 2010			Year Ended December 31,  2009		June 30, 2010		December 31, 2009
	(unaudited)					(unaudited)
Selling commissions	$	17,556		$	34,108	$	—	$	—
Dealer manager fees		9,630			20,805		—		—
Reimbursable other offering costs		1,498			2,845		17		206
Acquisition fees		1,588			846		—		—
Origination fees		(184	)		697		—		—
Asset management fee		3,307			4,482		—		—
Reimbursement of insurance premiums and other operating expenses (1)		2			44		—		—
Disposition fee		—			—		—		—
Subordinated participation in net cash flows		—			—		—		—
Subordinated incentive listing fee		—			—		—		—
	$	33,397		$	63,827	$	17	$	206

⁽¹⁾ Our advisor may seek reimbursement for employee costs under the advisory agreement but had not done so as of June 30, 2010. Beginning July 2010, we will reimburse our advisor for our allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to us. We will not reimburse for employee costs in connection with services for which KBS Capital Advisors earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits our advisor or its affiliates may pay to our executive officers.

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Information Regarding Our Share Redemption Program

One of the limitations of our share redemption program is that during any calendar year we may only redeem the number of shares that we could purchase with the amount of the net proceeds from the issuance of shares under our dividend reinvestment plan during the prior calendar year. During the year ended December 31, 2009, we redeemed 199,883 shares for $1.9 million (average redemption price of $9.61 per share). As of the October 30, 2009 redemption date, we had redeemed the number of shares that we could purchase with the amount of the net proceeds from the issuance of shares under the dividend reinvestment plan in 2008 and we were unable to redeem all redemption requests submitted in 2009. Redemption requests submitted during November and December 2009 were placed on hold and processed along with the January 2010 redemption requests on January 29, 2010.

During the eight months ended August 31, 2010, we redeemed 1,713,880 shares of common stock for $16.1 million (average redemption price of $9.37 per share). As of August 31, 2010, we had honored all redemption requests that complied with the terms and requirements of our share redemption program. Based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2009 and redemptions through August 31, 2010, we may redeem up to $5.2 million of shares for the remainder of 2010.

All share redemptions were funded with the net proceeds from our dividend reinvestment plan. Our board of directors may amend, suspend or terminate the share redemption program upon 30 days’ notice.

Indebtedness

As of June 30, 2010, we had debt obligations in the aggregate principal amount of $168.9 million, all of which mature in 2014. Our debt consisted of a $93.9 million fixed rate mortgage loan related to the 300-600 Campus Drive Mortgage Loan and $75.0 million of variable rate debt related to the Portfolio Revolving Loan Facility and the 100 & 200 Campus Drive Mortgage Loan. As of June 30, 2010, our borrowings were approximately 17% and 16% of the cost (before depreciation or other noncash reserves) and book value (before depreciation) of our tangible assets, respectively.

On July 26, 2010, we, through an indirect wholly owned subsidiary, entered into a three-year revolving loan facility dated as of July 20, 2010 for an amount of up to $65.0 million secured by the Willow Oaks Corporate Center. At closing, we drew the entire $65.0 million under the facility and as of September 24, 2010, the outstanding principal balance was $33.0 million. On July 29, 2010, in connection with the acquisition of the 300 N. LaSalle Building, we, through an indirect wholly owned subsidiary, entered into a five-year mortgage loan for $350.0 million secured by the 300 N. LaSalle Building. The 300 N. LaSalle Building Mortgage Loan matures on August 1, 2015. On September 9, 2010, in connection with the acquisition of Torrey Reserve West, we, through an indirect wholly owned subsidiary, assumed an existing mortgage loan with an outstanding principal balance of approximately $17.0 million secured by Torrey Reserve West. The Torrey Reserve West Mortgage Loan matures on March 10, 2011. On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, we, through an indirect wholly owned subsidiary, entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of September 15, 2010, $105.0 million had been disbursed to us with the remaining loan balance available for future disbursements. The Union Bank Plaza Mortgage Loan matures on September 15, 2015, with an option to extend the maturity date to September 15, 2016. On September 30, 2010, we, through indirect wholly owned subsidiaries, entered into a 12-month bridge loan agreement dated as of September 30, 2010 for an amount of $50.0 million secured by Horizon Tech Center, Plano Business Park, Crescent VIII, Hartman II and Dallas Cowboys Distribution Center. As of September 30, 2010, $40.6 million had been disbursed to us. The Portfolio Bridge Loan matures on September 30, 2011. In addition, as of September 24, 2010, our outstanding principal balance under the Portfolio Revolving Loan Facility was $74.0 million.

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Risk Factors

The following risk factors supplement, update, supersede and/or replace, as appropriate, the risk factors appearing in the prospectus.

We acquired the 300 N. LaSalle Building on July 29, 2010. A significant percentage of our assets is invested in the 300 N. LaSalle Building and the value of our stockholders’ investment in us will fluctuate with the performance of this investment.

The 300 N. LaSalle Building represents approximately 38% of our total investments and represents approximately 34% of our total annualized base rent as of July 29, 2010. In addition, the largest tenant at the property, Kirkland and Ellis, leases approximately 53% of the 300 N. LaSalle Building and represents approximately 20% of our total annualized base rent as of July 29, 2010. Further, as a result of this acquisition, the geographic concentration of our portfolio makes us particularly susceptible to adverse economic developments in the Chicago real estate market. Any adverse economic or real estate developments in this market, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect our operating results and our ability to make distributions to our stockholders.

The offering price of our shares was not established on an independent basis; the actual value of our stockholders’ investment may be substantially less than what they pay. We may use the most recent price paid to acquire a share in our offering or a follow-on public offering as the estimated value of our shares until we have completed our offering stage. Even when our advisor begins to use other valuation methods to estimate the value of our shares, the value of our shares will be based upon a number of assumptions that may not be accurate or complete.

We established the offering price of our shares on an arbitrary basis. The selling price of our shares bears no relationship to our book or asset values or to any other established criteria for valuing shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that our stockholders would receive upon liquidation. Further, the offering price may be significantly more than the price at which the shares would trade if they were to be listed on an exchange or actively traded by broker-dealers.

To assist FINRA members and their associated persons that participate in this public offering of common stock, pursuant to FINRA Conduct Rule 5110, we disclose in each annual report distributed to stockholders a per share estimated value of the shares, the method by which it was developed, and the date of the data used to develop the estimated value. For this purpose, KBS Capital Advisors estimated the value of our common shares as $10.00 per share as of December 31, 2009. The basis for this valuation is the fact that the offering price of our shares of common stock in this primary offering is $10.00 per share (ignoring purchase price discounts for certain categories of purchasers). Our advisor has indicated that it intends to use the most recent price paid to acquire a share in this primary offering (ignoring purchase price discounts for certain categories of purchasers) or a follow-on public offering as its estimated per share value of our shares until we have completed our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. (For purposes of this definition, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership.) We currently expect to update the estimated value per share every 12 to 18 months thereafter. Our charter does not restrict our ability to conduct offerings in the future, and if our board of directors determines that it is in our best interest, we may conduct follow-on offerings upon the termination of this offering.

Although this initial estimated value represents the most recent price at which most investors are willing to purchase shares in this primary offering, this reported value is likely to differ from the price at which a stockholder could resell his or her shares because (i) there is no public trading market for the shares at this time; (ii) the estimated value does not reflect, and is not derived from, the fair market value of our properties and other assets, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from the primary offering is net of selling commissions, dealer manager fees, other organization and offering costs and acquisition and origination fees and expenses; (iii) the estimated value does not take into account how market fluctuations affect the value of our investments, including how the current disruptions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio.

When determining the estimated value of our shares by methods other than the last price paid to acquire a share in this primary offering, our advisor, or another firm we choose for that purpose, will estimate the value of our shares based upon a number of assumptions that may not be accurate or complete. Accordingly, these estimates may or may not be an accurate reflection of the fair market value of our investments and will not likely represent the amount of net proceeds that would result from an immediate sale of our assets.

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If the fiduciary of an employee pension benefit plan subject to ERISA (such as profit sharing, Section 401(k) or pension plan) or any other retirement plan or account fails to meet the fiduciary and other standards under ERISA or the Internal Revenue Code as a result of an investment in our stock, the fiduciary could be subject to criminal and civil penalties.

There are special considerations that apply to employee benefit plans subject to ERISA (such as profit sharing, Section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code (such as an IRA) that are investing in our shares. Fiduciaries investing the assets of such a plan or account in our common stock should satisfy themselves that:

• the investment is consistent with their fiduciary and other obligations under ERISA and the Internal Revenue Code;

• the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan’s or account’s investment policy;

• the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code;

• the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of the plan or IRA;

• the investment will not produce “unrelated business taxable income” for the plan or IRA;

• our stockholders will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and

• the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

With respect to the annual valuation requirements described above, we will provide an estimated value for our shares annually. We can make no claim whether such estimated value will or will not satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common shares. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Internal Revenue Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to claims for damages or for equitable remedies. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Internal Revenue Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA custodians should consult with counsel before making an investment in our common shares.

Updates to the Prior Performance Information in the Prospectus

KBS REIT I

The continued disruptions in the financial markets and deteriorating economic conditions have adversely affected the fair values and recoverability of certain of KBS REIT I’s investments. KBS REIT I disclosed fair values below its book values for certain assets in its financial statements and recognized impairments related to a limited number of assets.

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On February 19, 2010, the borrowers under the Tribeca Loans defaulted and KBS REIT I foreclosed on this project by exercising its right to accept 100% of the ownership interest of the borrower under the Second Tribeca Mezzanine Loan pursuant to the Second Tribeca Mezzanine Loan documents. Upon taking possession of the property, KBS REIT I recorded the Tribeca Building and the debt assumed at their respective fair values of $90.6 million and $39.2 million. The assumed debt consists of a 75% interest in the Tribeca Senior Mortgage Loan in the amount of $24.2 million and the Senior Tribeca Mezzanine Loan in the amount of $15.0 million. In addition, KBS REIT I recorded $13.3 million of other liabilities assumed in the foreclosure. In order to protect its investment in the Tribeca Building, on April 2, 2010, KBS REIT I purchased the Senior Tribeca Mezzanine Loan for $15.0 million. As a result of the foreclosure, KBS REIT I also charged-off $18.5 million of reserves for loan losses related to the Tribeca Loans during the six months ended June 30, 2010. As of June 30, 2010, KBS REIT I’s investment in the Tribeca Building consisted of condos, retail space and parking spaces with a carrying value of $72.5 million. In addition, KBS REIT I had $18.5 million of mortgage loans outstanding and recorded $10.0 million of other liabilities at June 30, 2010. During the six months ended June 30, 2010, KBS REIT I sold seven condominium units of the Tribeca Building and recognized a gain on sale of $1.5 million. During the six months ended June 30, 2010, KBS REIT I recorded expenses of $1.7 million related to foreclosed real estate held for sale comprised primarily of interest expense.

During the six months ended June 30, 2010, KBS REIT I recognized an impairment charge on real estate of $123.5 million with respect to 17 properties within the National Industrial Portfolio joint venture to reduce the carrying value of these properties to their estimated fair values. KBS REIT I holds an 80% membership interest in the joint venture and consolidates the joint venture in its financial statements. This joint venture, referred to as the National Industrial Portfolio, owns 23 industrial properties and holds a master lease with respect to another industrial property. KBS REIT I disclosed that it is unlikely that it will be able to refinance or extend the mortgage and mezzanine loans secured by the National Industrial Portfolio upon their fully-extended maturities in August 2012, and it may not meet the requirement to exercise the final loan extensions in August 2011. As a result, KBS REIT I may be forced to relinquish the assets to the lenders at some point prior to or concurrent with the final maturities in August 2012. In the event KBS REIT I relinquishes the assets to the lenders, KBS REIT I would record a gain on extinguishment of the debt equal to the difference between the carrying amount of the debt at that time ($439.2 million as of June 30, 2010) and the carrying value of the collateral at that time ($322.9 million as of June 30, 2010).

In the future, especially given the current market instability, KBS REIT I may recognize material charges for impairment with respect to investments other than those described in this supplement or the prospectus or a different impairment charge for investments described in this supplement or the prospectus. Moreover, even if KBS REIT I does not recognize any material charge for impairment with respect to an asset, the fair value of the asset may have declined based on general economic conditions or other factors.

KBS REIT III

KBS REIT III is currently in registration with the SEC and has not yet commenced its public offering. The KBS REIT III prospectus discloses that the program may seek to list its shares of common stock if its independent directors believe a listing would be in the best interests of its stockholders. To date, such a determination has not been made. If KBS REIT III does not list its shares of common stock on a national securities exchange by September 30, 2020, its charter requires that KBS REIT III either (i) seek stockholder approval of the liquidation of the company or (ii) if a majority of its conflicts committee determines that liquidation is not then in the best interests of the stockholders, postpone the decision of whether to liquidate the company. As we have not reached September 30, 2020, none of the actions described in (i) or (ii) above have occurred.

If a majority of the conflicts committee of KBS REIT III would determine that liquidation is not then in the best interests of its stockholders, KBS REIT III’s charter requires that its conflicts committee revisit the issue of liquidation at least annually. Further postponement of listing or stockholder action regarding liquidation would only be permitted if a majority of the conflicts committee again determined that liquidation would not be in the best interest of the stockholders. If KBS REIT III sought and failed to obtain stockholder approval of its liquidation, the KBS REIT III charter would not require KBS REIT III to list or liquidate, and the company could continue to operate as before. If KBS REIT III sought and obtained stockholder approval of its liquidation, it would begin an orderly sale of its assets. The precise timing of such sales would take account of the prevailing real estate finance markets and the debt markets generally as well as the federal income tax consequences to its stockholders. In making the decision to apply for listing of its shares, KBS REIT III’s directors will try to determine whether listing its shares or liquidating its assets will result in greater value for stockholders.

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ERISA Considerations

The paragraphs below update, supersede and replace the information in the prospectus under “ERISA Considerations – Annual Valuation.”

Annual Valuation

A fiduciary of an employee benefit plan subject to ERISA is required to determine annually the fair market value of each asset of the plan as of the end of the plan’s fiscal year and to file a report reflecting that value with the Department of Labor. When the fair market value of any particular asset is not available, the fiduciary is required to make a good faith determination of that asset’s fair market value, assuming an orderly liquidation at the time the determination is made. In addition, a trustee or custodian of an IRA must provide an IRA participant with a statement of the value of the IRA each year. Failure to satisfy these requirements may result in penalties, damages or other sanctions.

Unless and until our shares are listed on a national securities exchange, we do not expect that a public market for our shares will develop. To date, neither the IRS nor the Department of Labor has promulgated regulations specifying how a plan fiduciary or IRA custodian should determine the fair market value of shares when the fair market value of such shares is not determined in the marketplace.

To assist broker-dealers who participate in this offering, we expect to provide an estimated value for our shares annually. We have engaged our advisor to value our shares, though in the future we may hire a third-party valuation firm for that purpose. Until we have completed our offering stage, our advisor has indicated that it intends to use the most recent price paid to acquire a share in the primary offering (ignoring purchase price discounts for certain categories of purchasers) or follow-on public offerings as the estimated per share value of our shares. Although this approach to valuing our shares represents the most recent price at which most investors will have purchased shares in this offering, this reported value is likely to differ from the price at which a stockholder could resell his or her shares because (i) there is no public trading market for the shares at this time; (ii) the estimated value does not reflect, and is not derived from, the fair market value of our properties and other assets, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from this primary offering is net of selling commissions, dealer manager fees, other organization and offering costs and acquisition and origination fees and expenses; (iii) the estimated value does not take into account how market fluctuations affect the value of our investments, including how the current disruptions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio. We will consider our offering stage complete when we are no longer publicly offering equity securities—whether through this offering or follow-on public offerings—and have not done so for 18 months. For this purpose, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in our Operating Partnership. We currently expect to update the estimated value per share every 12 to 18 months thereafter.

Following our offering stage, our advisor, or another firm we choose for that purpose, will estimate the value of our shares based upon a number of assumptions that may not be accurate or complete. We do not currently anticipate obtaining appraisals for our investments and, accordingly, the estimates may or may not be an accurate reflection of the fair market value of our investments and may or may not represent the amount of net proceeds that would result from an immediate sale of our assets. Even after our advisor no longer uses the most recent offering price as the estimated value of our shares, you should be aware of the following:

• the estimated values may not be realized by us or by you upon liquidation (in part because estimated values do not necessarily indicate the price at which assets could be sold and because the estimates may not take into account the expenses of selling our assets);

• you may not realize these values if you were to attempt to sell your shares, because there is not expected to be an active trading market for the shares; and

• the estimated values, or the method used to establish values, may not be sufficient to enable an ERISA fiduciary or an IRA custodian to comply with the ERISA or IRA requirements described above. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our shares.

The foregoing requirements of ERISA and the Internal Revenue Code are complex and subject to change. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding an investment in our shares.

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Quantitative and Qualitative Disclosures about Market Risk as of and for the Six Months Ended June 30, 2010

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. We are also exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage, mezzanine, bridge and other loans. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We have managed and will continue to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and that the losses may exceed the amount we invested in the instruments.

We borrow funds and make investments at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt or fixed rate real estate loans receivable unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. At June 30, 2010, the fair value and carrying value of our fixed rate real estate loans receivable were $292.0 million and $242.1 million, respectively. The fair value estimate of our real estate loans receivable is estimated using an internal valuation model that considers the expected cash flows for the loans, underlying collateral values (for collateral-dependent loans) and the estimated yield requirements of institutional investors for loans with similar characteristics, including remaining loan term, loan-to-value, type of collateral and other credit enhancements. At June 30, 2010, the fair value of our fixed rate debt was $96.3 million and the carrying value of our fixed rate debt was $93.9 million. The fair value estimate of our fixed rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated at June 30, 2010. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

Conversely, movements in interest rates on variable rate debt and loans receivable would change our future earnings and cash flows, but not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of floating rate instruments. At June 30, 2010, we did not own any floating rate loans receivable and all of our variable rate debt was effectively fixed through interest rate swap agreements. An increase or decrease in interest rates would have no impact on our future earnings and cash flows.

The weighted-average annual effective interest rate of our fixed rate real estate loans receivable at June 30, 2010 was 11.7%. The weighted-average annual effective interest rate represents the effective interest rate at June 30, 2010, using the interest method, that we use to recognize interest income on our real estate loans receivable. The weighted-average interest rates of our fixed rate debt and variable rate debt at June 30, 2010 were 5.9% and 4.6%, respectively. The weighted-average interest rate represents the actual interest rate in effect at June 30, 2010 (consisting of the contractual interest rate and the effect of interest rate swaps and floors), using interest rate indices as of June 30, 2010 where applicable.

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Experts

The consolidated financial statements of KBS Real Estate Investment Trust II, Inc. appearing in KBS Real Estate Investment Trust II, Inc.’s Annual Report (Form 10-K) for the year ended December 31, 2009, (including the financial statement schedule therein) have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The (i) statement of Revenues Over Certain Operating Expenses of Mountain View Corporate Center for the year ended December 31, 2007, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K/A filed with the SEC on October 7, 2008, (ii) the statement of Revenues Over Certain Operating Expenses of the Campus Drive Buildings for the year ended December 31, 2007, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K/A filed with the SEC on October 17, 2008, (iii) the statement of Revenues Over Certain Operating Expenses of the Willow Oaks Corporate Center for the year ended December 31, 2008, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K/A filed with the SEC on October 16, 2009, (iv) the statement of Revenues Over Certain Operating Expenses of Pierre Laclede Center for the year ended December 31, 2009, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K filed with the SEC on March 25, 2010, (v) the statement of Revenues Over Certain Operating Expenses of One Main Place for the year ended December 31, 2009, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K filed with the SEC on March 25, 2010 and (vi) the statement of Revenues Over Certain Operating Expenses of the 300 N. LaSalle Building for the year ended December 31, 2009, incorporated by reference in this prospectus from KBS Real Estate Investment Trust II, Inc.’s Current Report on Form 8-K/A filed with the SEC on September 27, 2010, all have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such statements of Revenue Over Certain Operating Expenses are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Incorporation of Certain Information by Reference

We have elected to “incorporate by reference” certain information into this prospectus. By incorporating by reference, we are disclosing important information to you by referring you to documents we have filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for information incorporated by reference that is superseded by information contained in this prospectus. You can access documents that are incorporated by reference into this prospectus at the website we maintain at http://www.kbsreitii.com (URL for documents: https://www.kbs-cmg.com/REIT_II/kbs_reit_SecII.htm). There is additional information about us and our affiliates at our website, but unless specifically incorporated by reference herein as described in the paragraphs below, the contents of that site are not incorporated by reference in or otherwise a part of this prospectus.

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The following documents filed with the SEC are incorporated by reference in this prospectus (Commission File No. 333-146341), except for any document or portion thereof deemed to be “furnished” and not filed in accordance with SEC rules:

• Quarterly Report on Form 10-Q for the six months ended June 30, 2010 filed with the SEC on August 13, 2010;

• Quarterly Report on Form 10-Q for the three months ended March 31, 2010 filed with the SEC on May 17, 2010;

• Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the SEC on March 23, 2010;

• Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2010;

• Current Report on Form 8-K/A filed with the SEC on September 27, 2010

• Current Report on Form 8-K filed with the SEC on September 15, 2010

• Current Report on Form 8-K filed with the SEC on September 10, 2010

• Current Report on Form 8-K filed with the SEC on August 25, 2010

• Current Report on Form 8-K filed with the SEC on July 29, 2010

• Current Report on Form 8-K filed with the SEC on July 8, 2010;

• Current Report on Form 8-K filed with the SEC on June 22, 2010;

• Current Report on Form 8-K filed with the SEC on May 28, 2010;

• Current Report on Form 8-K filed with the SEC on May 21, 2010;

• Current Report on Form 8-K filed with the SEC on May 5, 2010;

• Current Report on Form 8-K filed with the SEC on April 9, 2010;

• Current Report on Form 8-K filed with the SEC on March 25, 2010;

• Current Report on Form 8-K filed with the SEC on March 25, 2010;

• Current Report on Form 8-K filed with the SEC on March 25, 2010;

• Current Report on Form 8-K filed with the SEC on March 4, 2010;

• Current Report on Form 8-K/A filed with the SEC on October 16, 2009;

• Current Report on Form 8-K/A filed with the SEC on October 17, 2008; and

• Current Report on Form 8-K/A filed with the SEC on October 7, 2008.

We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, upon request, a copy of any or all of the information that we have incorporated by reference into this prospectus but not delivered with this prospectus. To receive a free copy of any of the documents incorporated by reference in this prospectus, other than exhibits, unless they are specifically incorporated by reference in those documents, call or write us at:

KBS Capital Markets Group LLC

660 Newport Center Drive, Suite 1200

Newport Beach, California 92660

Telephone: (866) KBS-4CMG or (866) 527-4264

Fax: (949) 717-6201

www.kbs-cmg.com

The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

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SUPPLEMENTAL INFORMATION – The prospectus of KBS Real Estate Investment Trust II, Inc. consists of this sticker, the prospectus dated April 22, 2010, supplement no. 10 dated October 6, 2010 and any supplements filed subsequent thereto.

Supplement no. 10 includes:

• the status of the offering;

• information with respect to our real estate and real estate-related investments;

• selected financial data;

• information with respect to the historical operating performance of our real estate and real estate-related investments;

• funds from operations for the six months ended June 30, 2010 and 2009 and the years ended December 31, 2009 and 2008;

• distributions declared and paid for the four quarters ending June 30, 2010;

• distributions declared for July through October 2010;

• fees earned by and expenses reimbursable to our advisor and the dealer manager;

• information regarding our share redemption program;

• information regarding our indebtedness;

• updated risks related to an investment in us;

• updates to the prior performance information in the prospectus;

• updated disclosure with respect to some of the considerations associated with an investment in our shares by a qualified employee pension plan or an individual retirement account;

• quantitative and qualitative disclosures about market risk as of and for the six months ended June 30, 2010; and

• information incorporated by reference.

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.  Other Expenses of Issuance and Distribution

The following table sets forth the estimated costs and expenses payable by the Company in connection with the distribution of the securities being registered other than selling commissions and the dealer manager fee.

Item	Amount
SEC registration fee	$	85,000
FINRA filing fee		75,500
Legal fees and expenses		2,820,000
Expense reimbursements for retail conferences, industry conferences and bona fide training and education meetings		6,933,000
Blue sky fees and expenses		222,000
Accounting fees and expenses		920,000
Printing, sales and advertising expenses		3,660,000
Issuer costs regarding bona fide training and education meetings and retail seminars		125,000
Postage and delivery of materials		660,000
Transfer agent, escrow fees and administrative services related to the issuance of shares in the offering		1,824,000
Due diligence expenses (retailing)		427,500
Legal fees — underwriter portion		100,000
Telephone		45,000
Promotional items		454,000
Miscellaneous expenses		281,000
Expense reimbursement for broker-dealer technology and other costs		226,000
Total	$	18,858,000

Item 32.  Sales to Special Parties

The Company’s directors and officers and (to the extent consistent with applicable laws and regulations) the employees of KBS Capital Advisors LLC (“KBS Capital Advisors”) and affiliated entities, business associates and others purchasing pursuant to the Company’s “friends and family” program, participating broker-dealers, their retirement plans, their representatives and the family members, IRAs and the qualified plans of their representatives will be allowed to purchase shares in the Company’s primary offering at a discount from the public offering price. Effective April 30, 2010, the purchase price for such shares is $9.35 per share, reflecting the fact that selling commissions in the amount of $0.65 per share are not payable in connection with such sales. Prior to April 30, 2010, the purchase price for such shares was $9.40, reflecting the fact that selling commissions in the amount of $0.60 per share were not paid in connection with such sales. The net proceeds to the Company from such sales made net of commissions will be substantially the same as the net proceeds the Company receives from other sales of shares in the primary offering.

Item 33.  Recent Sales of Unregistered Securities

Not applicable.

Item 34.  Indemnification of Directors and Officers

Subject to the significant conditions set forth below, the Company has included in its charter a provision limiting the liability of its directors and officers to the Company and its stockholders for money damages. In addition to the limitations set forth below, under Maryland law such exculpation is not permitted for any liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action.

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Subject to the significant conditions set forth below, the charter also provides that the Company shall indemnify a director, officer or the advisor or any of its affiliates against any and all losses or liabilities reasonably incurred by them (other than when sued by or in right of the Company) in connection with or by reason of any act or omission performed or omitted to be performed on behalf of the Company in such capacity.

Under the Company’s charter, the Company shall not indemnify a director, the advisor or any of the advisor’s affiliates (each an “Indemnitee”) for any liability or loss suffered by an Indemnitee, nor shall it exculpate an Indemnitee, unless all of the following conditions are met: (i) an Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company; (ii) the Indemnitee was acting on behalf of or performing services for the Company; (iii) such liability or loss was not the result of (A) negligence or misconduct by the Indemnitee, excluding an Independent Director, or (B) gross negligence or willful misconduct by an Independent Director; and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from its stockholders. Notwithstanding the foregoing, an Indemnitee shall not be indemnified by the Company for any losses, liability or expenses arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular Indemnitee; and (iii) a court of competent jurisdiction approves a settlement of the claims against a particular Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission (the “SEC”) and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

The charter provides that the advancement of Company funds to an Indemnitee for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought is permissible only if (in addition to the procedures required by Maryland law) all of the following conditions are satisfied: (i) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (ii) the legal action is initiated by a third party who is not a stockholder or the legal action is initiated by a stockholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and (iii) the Indemnitee undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, if the Indemnitee is found not to be entitled to indemnification.

It is the position of the SEC that indemnification of directors and officers for liabilities arising under the Securities Act is against public policy and is unenforceable pursuant to Section 14 of the Securities Act.

The Company will also purchase and maintain insurance on behalf of all of its directors and executive officers against liability asserted against or incurred by them in their official capacities with the Company, whether or not the Company is required or has the power to indemnify them against the same liability.

Item 35.  Treatment of Proceeds from Stock Being Registered

Not applicable.

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Item 36.  Financial Statements and Exhibits

(a)  Financial Statements.

The following financial statements are incorporated into this registration statement by reference:

• The consolidated financial statements of the Company included in the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2010 filed with the SEC on August 13, 2010.

• The consolidated financial statements of the Company included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010 filed with the SEC on May 17, 2010.

• The consolidated financial statements and financial statement schedule of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March 23, 2010.

• The prior performance tables contained in the Company’s Current Report on Form 8-K filed with the SEC on March 25, 2010.

• The financial statements of the 300 N. LaSalle Building and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K/A filed with the SEC on September 27, 2010.

• The financial statements of the Pierre Laclede Corporate Center and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K filed with the SEC on March 25, 2010.

• The financial statements of One Main Place and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K filed with the SEC on March 25, 2010.

• The financial statements of the Willow Oaks Corporate Center and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K/A filed with the SEC on October 16, 2009.

• The financial statements of the Campus Drive Buildings and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K/A filed with the SEC on October 17, 2008.

• The financial statements of Mountain View Corporate Center and the related pro forma financial statements of the Company contained in the Company’s Current Report on Form 8-K/A filed with the SEC on October 7, 2008.

(b)  Exhibits.

The following exhibits are filed as part of this registration statement:

Ex.	Description
1.1	Amended and Restated Dealer Manager Agreement with Selected Dealer Agreement dated as of April 30, 2010, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2010
1.2	Selected Dealer Agreement, dated June 2, 2008, by and between KBS Real Estate Investment Trust II, Inc., KBS Capital Advisors LLC, KBS Capital Markets Group LLC, KBS Holdings LLC and Ameriprise Financial Services, Inc., incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed June 6, 2008
3.1	Second Amended and Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008
3.2	Second Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
4.1	Form of Subscription Agreement, incorporated by reference to Appendix A to the prospectus

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Ex.	Description
4.2	Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
4.3	Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Appendix B to the prospectus
4.4	Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009
4.5	Amended and Restated Escrow Agreement, dated June 2, 2008 by and between KBS Real Estate Investment Trust II, Inc., KBS Capital Markets Group LLC and First Republic Trust Company, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 6, 2008
5.1	Opinion of DLA Piper US LLP re legality, incorporated by reference to Exhibit 5.1 to the Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
8.1	Opinion of DLA Piper US LLP re tax matters, incorporated by reference to Exhibit 8.1 to the Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.1	Advisory Agreement between the Company and KBS Capital Advisors LLC, dated May 21, 2010, incorporated by reference to Exhibit 10.1 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.2	Contract of Sale (related to the acquisition of Mountain View Corporate Center in Basking Ridge, New Jersey) between Mountainview Realty Holding Company and KBSII Mountain View, LLC, dated as of July 11, 2008, incorporated by reference to Exhibit 10.2 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.3	Loan Agreement (related to the acquisition of Mountain View Corporate Center in Basking Ridge, New Jersey) between KBSII Mountain View, LLC and Wells Fargo Bank, National Association, dated as of July 30, 2008, incorporated by reference to Exhibit 10.3 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.4	Promissory Note (related to the acquisition of Mountain View Corporate Center in Basking Ridge, New Jersey) between KBSII Mountain View, LLC and Wells Fargo Bank, National Association, dated as of July 30, 2008, incorporated by reference to Exhibit 10.3 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.5	Contract of Sale (related to the acquisition of the 100 & 200 Campus Drive in Florham Park, New Jersey) between 100/200 Campus Drive, L.L.C. and KBS Capital Advisors LLC, dated as of July 17, 2008, incorporated by reference to Exhibit 10.5 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.6	Amendment to Contract of Sale (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between 100/200 Campus Drive, L.L.C. and KBS Capital Advisors LLC, dated as of July 25, 2008, incorporated by reference to Exhibit 10.6 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341

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Ex.	Description
10.7	Second Amendment to Contract of Sale (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between 100/200 Campus Drive, L.L.C. and KBS Capital Advisors LLC, dated as of July 30, 2008, incorporated by reference to Exhibit 10.7 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.8	Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC and KBSII 100-200 Campus Drive, LLC, dated as of August 8, 2008, incorporated by reference to Exhibit 10.8 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.9	Loan Agreement (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between KBSII 100-200 Campus Drive, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2008, incorporated by reference to Exhibit 10.9 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.10	Promissory Note (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between KBSII 100-200 Campus Drive, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2008, incorporated by reference to Exhibit 10.10 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.11	Mezzanine Loan Agreement (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between KBSII REIT Acquisition I, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2008, incorporated by reference to Exhibit 10.11 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.12	Promissory Note (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) between KBSII REIT Acquisition I, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2008, incorporated by reference to Exhibit 10.12 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.13	Contract of Sale (related to the acquisition of the 300-600 Campus Drive Buildings in Florham Park, New Jersey) between Park Avenue Realty Holding Company, Inc. and KBSII 300-600 Campus Drive, LLC, dated as of July 31, 2008, incorporated by reference to Exhibit 10.13 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.14	Purchase Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) between BRE/Plumeria L.L.C. and KBS Capital Advisors LLC, dated as of September 24, 2008, incorporated by reference to Exhibit 10.14 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.15	First Amendment to Purchase Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) between BRE/Plumeria L.L.C. and KBS Capital Advisors LLC, dated as of October 6, 2008, incorporated by reference to Exhibit 10.15 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341

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Ex.	Description
10.16	Assignment and Assumption of Purchase Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) between KBS Capital Advisors LLC and KBSII 350 Plumeria, LLC, dated as of October 6, 2008, incorporated by reference to Exhibit 10.16 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.17	Second Amendment to Purchase Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) between BRE/Plumeria L.L.C. and KBSII 350 Plumeria, LLC, dated as of October 7, 2008, incorporated by reference to Exhibit 10.17 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.18	Lease Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) by and between BRE/Plumeria LLC, as Landlord, and NetGear, Inc., as Tenant, dated as of September 25, 2007, incorporated by reference to Exhibit 10.18 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.19	First Amendment to Lease Agreement (related to the acquisition of the 350 E. Plumeria Building in San Jose, California) by and between BRE/Plumeria LLC, as Landlord, and NetGear, Inc., as Tenant, dated as of April 22, 2008, incorporated by reference to Exhibit 10.19 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.20	Mortgage, Assignment of Leases and Rents Security Agreement and Fixture Filing (related to the acquisition of the 300-600 Campus Drive Buildings in Florham Park, New Jersey) between KBSII 300-600 Campus Drive, LLC and New York Life Insurance Company, dated as of October 10, 2008, incorporated by reference to Exhibit 10.20 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.21	Promissory Note (related to the acquisition of the 300-600 Campus Drive Buildings in Florham Park, New Jersey) between KBSII 300-600 Campus Drive, LLC and New York Life Insurance Company, dated as of October 10, 2008, incorporated by reference to Exhibit 10.21 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.22	Mezzanine Loan Agreement (related to the acquisition of the 300-600 Campus Drive Buildings in Florham Park, New Jersey) between KBSII REIT Acquisition II, LLC and Park Avenue Realty Holding Company, Inc., dated as of October 10, 2008, incorporated by reference to Exhibit 10.22 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.23	Promissory Note (Mezzanine Loan) (related to the acquisition of the 300-600 Campus Drive Buildings in Florham Park, New Jersey) between KBSII REIT Acquisition II, LLC and Park Avenue Realty Holding Company, Inc., dated as of October 10, 2008, incorporated by reference to Exhibit 10.23 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.24	Memorandum of Sale (related to the acquisition of the Northern Trust A-Note) between Bank of America, National Association and KBS Debt Holdings II X, LLC, dated as of December 31, 2008, incorporated by reference to Exhibit 10.24 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.25	Assignment of Loan Documents (related to the acquisition of the Northern Trust A-Note) between Bank of America, National Association and KBS Debt Holdings II X, LLC, dated as of December 31, 2008, incorporated by reference to Exhibit 10.25 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341

II-6

Ex.	Description
10.26	Amended and Restated Promissory Note A Secured by Deed of Trust (related to the acquisition of the Northern Trust A-Note) between 4370 La Jolla Village, LLC and Bank of America, National Association, dated as of March 30, 2007, incorporated by reference to Exhibit 10.26 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.27	Amended and Restated Intercreditor Agreement (related to the acquisition of Northern Trust A-Note) between Bank of America, National Association and CBRE Realty Finance CDO 2007-1, Ltd, dated as of December 31, 2008, incorporated by reference to Exhibit 10.27 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.28	Servicing Agreement (related to the acquisition of the Northern Trust A-Note) between KBS Debt Holdings II X, LLC and CBRE Realty Finance CDO 2007-1, LTD and Bank of America, National Association dated as of December 31, 2008, incorporated by reference to Exhibit 10.28 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.29	Assignment of Amended and Restated Deed of Trust, Security Agreement, Fixture Filing, and Substitution of Trustee (related to the acquisition of the Northern Trust A-Note) between Bank of America, National Association and KBS Debt Holdings II X, LLC, dated as of December 29 2008, incorporated by reference to Exhibit 10.29 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.30	Amended and Restated Deed of Trust, Security Agreement and Fixture Filing, (related to the acquisition of the Northern Trust A-Note) for the benefit of Mortgage Electronic Registration Systems with 4370 LaJolla Village LLC as borrower and PRLAP, Inc. as trustee, dated as of March 30, 2007, incorporated by reference to Exhibit 10.30 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.31	Assignment and Assumption Agreement (related to the acquisition of the One Liberty Plaza Notes) by and between Goldman Sachs Mortgage Company and KBS Debt Holdings II X, LLC, dated as of February 11, 2009, incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.32	Amended, Restated and Consolidated Note A-2-B-2-B (related to the acquisition of the One Liberty Plaza Notes) between BROOKFIELD PROPERTIES OLP CO. LLC (f/k/a BFP ONE LIBERTY PLAZA CO. LLC)and Goldman Sachs Mortgage Company, dated as of August 8, 2007, incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.33	Amended, Restated and Consolidated Note A-2-B-2-C (related to the acquisition of the One Liberty Plaza Notes) between BROOKFIELD PROPERTIES OLP CO. LLC (f/k/a BFP ONE LIBERTY PLAZA CO. LLC) and Goldman Sachs Mortgage Company, dated as of August 8, 2007, incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.34	Intercreditor and Servicing Agreement (related to the acquisition of the One Liberty Plaza Notes) by and between Goldman Sachs Mortgage Company and itself as A-1 Lender and A-2 Lender, dated as of October 1, 2007, incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008

II-7

Ex.	Description
10.35	Loan Agreement (related to the acquisition of the One Liberty Plaza Notes) between GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P. and BFP ONE LIBERTY PLAZACO. LLC, dated as of August 8, 2007, incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.36	Amended and Restated Promissory Note Secured by Mortgage (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) by KBSII 100-200 CAMPUS DRIVE, LLC and WELLS FARGO BANK, NATIONAL ASSOCIATION, dated as of March 11, 2009, incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.37	Modification Agreement (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) by and between KBSII 100-200 CAMPUS DRIVE, LLC and WELLS FARGO BANK, NATIONAL ASSOCIATION, dated as of March 11, 2009, incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
10.38	Second Amended and Restated Promissory Note Secured by Mortgage (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) by KBSII 100-200 CAMPUS DRIVE, LLC and WELLS FARGO BANK, NATIONAL ASSOCIATION, dated June 12, 2009, incorporated by reference to Exhibit 10.38 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.39	Second Modification Agreement (related to the acquisition of the 100 & 200 Campus Drive Buildings in Florham Park, New Jersey) by and between KBSII 100-200 CAMPUS DRIVE, LLC and WELLS FARGO BANK, NATIONAL ASSOCIATION, dated as of June 12, 2009, incorporated by reference to Exhibit 10.39 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.40	Purchase and Sale Agreement (related to the acquisition of the Willow Oaks Corporate Center in Fairfax, Virginia) by and between COGNAC WILLOW OAKS, LLC, and KBS Capital Advisors LLC, effective as of August 5, 2009, incorporated by reference to Exhibit 10.40 to Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.41	First Amendment to Purchase and Sale Agreement (related to the acquisition of the Willow Oaks Corporate Center in Fairfax, Virginia) by and between COGNAC WILLOW OAKS, LLC, and KBS Capital Advisors LLC, dated August 12, 2009, incorporated by reference to Exhibit 10.41 to Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.42	Second Amendment to Purchase and Sale Agreement (related to the acquisition of the Willow Oaks Corporate Center in Fairfax, Virginia) by and between COGNAC WILLOW OAKS, LLC, and KBS Capital Advisors LLC, dated August 14, 2009, incorporated by reference to Exhibit 10.42 to Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.43	Third Amendment to Purchase and Sale Agreement (related to the acquisition of the Willow Oaks Corporate Center in Fairfax, Virginia) by and between COGNAC WILLOW OAKS, LLC, and KBSII WILLOW OAKS, LLC, dated August 19, 2009, incorporated by reference to Exhibit 10.43 to Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341

II-8

Ex.	Description
10.44	Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC, and KBSII Willow Oaks, LLC, dated as of August 18, 2009, incorporated by reference to Exhibit 10.44 to Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.45	Loan Agreement, (related to the Portfolio Revolving Loan Facility) between KBSII 350 PLUMERIA, LLC, KBSII MOUNTAIN VIEW, LLC, KBSII ONE MAIN PLACE, LLC, KBSII PIERRE LACLEDE CENTER, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.46	Mortgage Agreement, (related to the Portfolio Revolving Loan Facility) between KBSII MOUNTAIN VIEW, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.47	Deed of Trust, (related to the Portfolio Revolving Loan Facility) between KBSII PIERRE LACLEDE CENTER, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.48	Deed of Trust, (related to the Portfolio Revolving Loan Facility) between KBSII ONE MAIN PLACE, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.49	Deed of Trust, (related to the Portfolio Revolving Loan Facility) between KBSII 350 PLUMERIA, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.50	Limited Guaranty, (related to the Portfolio Revolving Loan Facility) between KBS REIT Properties II, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.51	Secured Promissory Note, (related to the Portfolio Revolving Loan Facility) between KBSII 350 PLUMERIA, LLC, KBSII MOUTAIN VIEW, LLC, KBSII ONE MAIN PLACE, LLC, KBSII PIERRE LACLEDE CENTER, LLC and WELLS FARGO BANK NATIONAL ASSOCIATION, dated as of April 30, 2010, incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010
10.52	Agreement of Sale and Purchase (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by and between 300 LaSalle LLC, and KBS Capital Advisors LLC, effective as of June 10, 2010, incorporated by reference to Exhibit 10.52 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.53	First Amendment to Agreement of Sale and Purchase (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by and between 300 LaSalle LLC and KBS Capital Advisors LLC, dated July 1, 2010, incorporated by reference to Exhibit 10.53 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341

II-9

Ex.	Description
10.54	Second Amendment to Agreement of Sale and Purchase (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by and between 300 LaSalle LLC and KBSII 300 North LaSalle, LLC, dated July 2, 2010, incorporated by reference to Exhibit 10.54 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.55	Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC and KBSII 300 North LaSalle, LLC, dated as of July 1, 2010, incorporated by reference to Exhibit 10.55 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.56	Metropolitan Life Insurance Company Mortgage Loan Application (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois), by and between Metropolitan Life Insurance Company, and KBSII 300 LaSalle, LLC, effective as of July 6, 2010, incorporated by reference to Exhibit 10.56 to Post-Effective Amendment No. 9 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
10.57	Promissory Note, (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by and between KBSII 300 North LaSalle, LLC and Metropolitan Life Insurance Company, dated as of July 29, 2010, incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010
10.58	Mortgage, Security Agreement and Fixture Filing, (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by KBSII 300 North LaSalle, LLC, to Metropolitan Life Insurance Company, dated as of July 29, 2010, incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010
10.59	Guaranty Agreement, (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) by KBS REIT Properties II, LLC and Metropolitan Life Insurance Company, dated as of July 29, 2010, incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010
10.60	Office Lease Agreement (related to the acquisition of 300 North LaSalle Street in Chicago, Illinois) between 300 LaSalle LLC and Kirkland & Ellis LLP, dated as of August 25, 2005, as amended
10.61	Agreement of Sale and Purchase (related to the acquisition of Union Bank Plaza in Los Angeles, California) by and between HINES VAF UB PLAZA, L.P., and KBS Capital Advisors LLC, effective as of August 16, 2010
10.62	First Amendment to Agreement of Sale and Purchase (related to the acquisition of Union Bank Plaza in Los Angeles, California) by and between HINES VAF UB PLAZA, L.P., and KBSII 445 South Figueroa, LLC, dated August 20, 2010
10.63	Second Amendment to Agreement of Sale and Purchase (related to the acquisition of Union Bank Plaza in Los Angeles, California) by and between HINES VAF UB PLAZA, L.P., and KBSII 445 South Figueroa, LLC, dated September 15, 2010
10.64	Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC and KBSII 445 South Figueroa, LLC, dated as of August 19, 2010

II-10

21.1	Subsidiaries of the Company
23.1	Consent of DLA Piper US LLP (included in Exhibit 5.1)
23.2	Consent of Ernst & Young LLP
24.1	Power of Attorney for Messrs. Schreiber and McMillan and Mmes. Yamane, incorporated by reference to the Signature Page to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341, filed on September 27, 2007
24.2	Power of Attorney for Messrs. Adler and Gabriel and Mmes. Cambon, incorporated by reference to the Signature Page to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341, filed on April 8, 2008
24.3	Power of Attorney for Mr. Snyder, incorporated by reference to Exhibit 24.2 to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341, filed on January 21, 2009

Item 37.  Undertakings

(a)    The Company undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the “Act”); (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

(b)    The Company undertakes (i) that, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof, (ii) that all post-effective amendments will comply with the applicable forms, rules and regulations of the SEC in effect at the time such post-effective amendments are filed, and (iii) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(c)    The Company undertakes that, for the purpose of determining liability under the Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(d)    For the purpose of determining liability of the Company under the Act to any purchaser in the initial distribution of the securities, the Company undertakes that in a primary offering of securities pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the Company will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the Company relating to the offering required to be filed pursuant to Rule 424, (ii) any free writing prospectus relating to the offering prepared by or on behalf of the Company or used or referred to by the Company, (iii) the portion of any other free writing prospectus relating to the offering containing material information about the Company or its securities provided by or on behalf of the Company, and (iv) any other communication that is an offer in the offering made by the Company to the purchaser.

II-11

(e)    The Company undertakes to send to each stockholder, at least on an annual basis, a detailed statement of any transaction with the Advisor or its affiliates, and of fees, commissions, compensation and other benefits paid or accrued to the Advisor or its affiliates for the fiscal year completed, showing the amount paid or accrued to each recipient and the services performed.

(f)    The Company undertakes to file a sticker supplement pursuant to Rule 424(c) under the Act during the distribution period describing each significant property not identified in the prospectus at such time as there arises a reasonable probability that such property will be acquired and to consolidate all such stickers into a post-effective amendment filed at least once every three months with the information contained in such amendment provided simultaneously to the existing stockholders. Each sticker supplement will disclose all compensation and fees received by the Advisor and its affiliates in connection with any such acquisition. The post-effective amendment shall include audited financial statements meeting the requirements of Rule 3-14 of Regulation S-X only for the significant properties acquired during the distribution period if such financial statements have been filed or would be due under Items 2.01 and 9.01 of Form 8-K.

(g)    The Company undertakes to file, after the end of the distribution period, a current report on Form 8-K containing the financial statements and any additional information required by Rule 3-14 of Regulation S-X, to reflect each commitment (i.e., the signing of a binding purchase agreement) made after the end of the distribution period involving the use of 10% or more (on a cumulative basis) of the net proceeds of the offering and to provide the information contained in such report to the stockholders at least once each quarter after the distribution period of the offering has ended.

(h)    The Company undertakes to provide to the stockholders the financial statements required by Form 10-K for the first full fiscal year of operations.

(i)    Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(j)    The Company undertakes to provide to the dealer manager at the closings specified in the dealer manager agreement the following: (i) if the securities are certificated, certificates in such denominations and registered in such names as required by the dealer manager to permit prompt delivery to each purchaser or (ii) if the securities are not certificated, a written statement of the information required on certificates that is required to be delivered to stockholders to permit prompt delivery to each purchaser.

II-12

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this post-effective amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newport Beach, State of California, on October 6, 2010.

	KBS REAL ESTATE INVESTMENT TRUST II, INC.
By:	/S/ Charles J. Schreiber, Jr.
	Charles J. Schreiber, Jr.
	Chairman of the Board, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

	Name	Title	Date
	/s/ Charles J. Schreiber, Jr.	Chairman of Board, Chief Executive Officer and Director	October 6, 2010
	Charles J. Schreiber, Jr.
	*	Chief Financial Officer	October 6, 2010
	David E. Snyder
	*	Executive Vice President, Treasurer, Secretary and Director	October 6, 2010
	Peter McMillan III
	*	Chief Accounting Officer	October 6, 2010
	Stacie K. Yamane
	*	Director	October 6, 2010
	Hank Adler
	*	Director	October 6, 2010
	Barbara R. Cambon
	*	Director	October 6, 2010
	Stuart A. Gabriel, Ph.D.
*By:	/s/ Charles J. Schreiber, Jr.		October 6, 2010
	Charles J. Schreiber, Jr. Attorney-In-Fact

EX-10.60

Exhibit 10.60

OFFICE LEASE

Between

300 LASALLE LLC

as Landlord

and

KIRKLAND & ELLIS LLP

as Tenant

300 North LaSalle Street, Chicago, Illinois

TABLE OF CONTENTS

ARTICLE		PAGE
Article 1	Premises, Rentable Area, Term, Construction Of Building	1
Article 2	Net Rent	7
Article 3	Additional Rent	8
Article 4	Possession; Occupancy Prior to Commencement Date	32
Article 5	Use and Rules	34
Article 6	Services and Utilities	40
Article 7	Alterations and Liens	62
Article 8	Maintenance and Repairs	68
Article 9	Casualty Damage	73
Article 10	Insurance, Subrogation, and Waiver of Claims	78
Article 11	Condemnation	82
Article 12	Return of Possession	84
Article 13	Holding Over	86
Article 14	No Waiver	88
Article 15	Attorneys’ Fees and Jury Trial	88
Article 16	Personal Property Taxes, Rent Taxes and Other Taxes	89
Article 17	Entry by Landlord	89
Article 18	Subordination, Nondisturbance and Attornment	90
Article 19	Estoppel Certificates; Financial Information	91
Article 20	Assignment and Subletting	92
Article 21	Certain Rights Reserved By Landlord	105
Article 22	Tenant Default and Landlord Remedies	108
Article 23	Landlord Default and Tenant Remedies; Untenantability; Tenant Offset	113
Article 24	Conveyance by Landlord; Liability of Landlord	120
Article 25	Waiver; Indemnification	123
Article 26	Emergency Generator	126
Article 27	Communications and Computer Lines	127
Article 28	Hazardous Materials	129
Article 29	Conditions to Tenant’s Obligations; Construction Schedule; Delays	131
Article 30	Notices	137

ii

DEFINED TERMS

(continued)

		Page
Article 31	Real Estate Brokers	139
Article 32	Covenant of Quiet Enjoyment	139
Article 33	Captions and Severability	140
Article 34	Expansion, Right of First Offer, Renewals and Contraction	140
Article 35	Determination by Arbitration	183
Article 36	Parking	185
Article 37	Roof Satellite Dish/Antennae/Supplemental Cooling	189
Article 38	Building Identification	190
Article 39	Signage	191
Article 40	Exculpation of Tenant’s Partners	196
Article 41	Representations and Warranties	198
Article 42	Miscellaneous	199

iii

DEFINED TERMS

(continued)

			Page
TABLE OF EXHIBITS
EXHIBIT	REFERENCE	DESCRIPTION
A-1	Article 1	Initial Low-Rise Floors Premises
A-2	Article 1	Initial Mid-Rise Floors Premises
A-3	Article 1	Legal Description of Land
A-4	Article 1	Stacking Diagram
A-5	Article 3	Unique Building Features
B	Article 1	Workletter
C	Article 2	Net Rent
D	Article 5	Rules
E	Article 6	HVAC Specifications
F-1	Article 6	Interior Cleaning and Trash Removal Specifications
F-2	Article 8	Exterior and Window Cleaning and Maintenance Specifications
G	Article 6	Security Specifications
H	-	Intentionally Omitted
I	Article 6	Fitness Center Services
J	Article 39	Intentionally Omitted
K	Article 7	List of Approved Contractors
L	-	Intentionally Omitted
M	-	Intentionally Omitted
N	Article 8	Base Building Conditions
O	Article 8	Noise Specifications
P	Article 9	SNDA
Q-1	Article 19	Tenant Estoppel Certificate
Q-2	Article 19	Landlord Estoppel Certificate
R-1	Article 20	Consent to Assignment
R-2	Article 20	Consent to Sublease
S	-	Intentionally Omitted
T	Article 29	Permitted Title Exceptions
U	Article 29	Construction Schedule
V	Article 34	Tenant Expansion Allowance / First Proposal Allowance Amortization Schedule
W	Article 34	Current Market Terms
X	-	Intentionally Omitted
Y	Article 29	Guaranty
Z	Article 34	Commissions Payable to Landlord’s Broker

iv

DEFINED TERMS

	Page
Abandonment Tenant Condition	133
Acceptance Notice	160
Accepted Offer Space	160
Accounting Principles	12
Additional Rent	30
Adverse Condition	71
Affiliate	101
After Hours HVAC Costs	45
Alteration Work	62
ATM Service	59
Available Space	156
Base Building Conditions	71
Bicycle Parking Area	62
Brokers	139
Building	1
Building Pedestrian Entrance	51
Building Services	48
Business Day	202
calendar year in question	29
capital improvements and other capital items	21
Class A Property Management Performance Standards	203
Client Funds	197
Commencement Date	3
Commencement Extension Period	4
Common Areas	2
Common Conference Center	60
Common Freight Elevator	44
Common Loading Docks	54
Comparable Building Environmental Actions	129
comparable Class A office buildings in downtown Chicago	12
comparable first class office buildings in downtown Chicago	12
comparable office buildings in downtown Chicago	12
Competitor Law Firm	39
Consensual Holdover Period	87
Consent Alteration Work	63
Construction Schedule	133
Contest	26
control	101
Controllable Operating Expenses	22
Costs of Re-Letting	112
Critical Construction Milestones	133
Current Market Terms	166
Default	108
Default Rate	112
Delivery Date	33

v

DEFINED TERMS

(continued)

	Page
Delivery Date Schedule	32
Early Termination Date	182
Early Termination Option	182
Effective Date	1
Eighth Expansion Notice	147
Eighth Expansion Notice Deadline	148
Eighth Expansion Option	147
Eighth Expansion Premises	147
Elevator Lobby Signage Area	193
Emergency Repairs	72
Emergency Situation	71
Environmental Laws	130
Estimates	183
Excess Untenantability Relocation Costs	118
Excluded Assets	197
Excluded Parties	197
Exempt Transfer	101
Expansion Allowance	155
Expansion Improvement Notice	153
Expansion Notice	155
Expansion Notice Deadline	155
Expansion Option	154
Expansion Option Rent Commencement Date	150
Expansion Premises	154
Expansion/ROFO Offer Space	159
Expiration Date	3
Exterior Tenant Sign	191
Extra Utilities and Services	47
Fifth Expansion Notice	145
Fifth Expansion Notice Deadline	145
Fifth Expansion Option	144
Fifth Expansion Premises	145
Final Deadline	136
Final Delivery Date	33
First Contraction Effective Date	173
First Contraction Notice	173
First Contraction Option	173
First Contraction Space	173
First Expansion Notice	141
First Expansion Notice Deadline	141
First Expansion Option	141
First Expansion Premises	141
First Possible Renewal Premises	166
First Proposal Allowance	158

vi

DEFINED TERMS

(continued)

	Page
First Proposal Rent Commencement Date	157
First Proposal Space	156
First Renewal Notice	167
First Renewal Option	166
First Renewal Premises	166
First Renewal Term	166
Fitness Center	57
Fixed/ROFO Expansion Rights	159
Fourth Contraction Effective Date	180
Fourth Contraction Notice	180
Fourth Contraction Option	180
Fourth Contraction Space	180
Fourth Expansion Notice	144
Fourth Expansion Notice Deadline	144
Fourth Expansion Option	143
Fourth Expansion Premises	143
Fourth Possible Renewal Premises	170
Fourth Renewal Notice	171
Fourth Renewal Option	170
Fourth Renewal Premises	170
Fourth Renewal Term	170
Garage	2
Garage Rules	188
Ground Lease	90
Ground Lessor	90
Guarantor	137
Guaranty	137
Handle,” “handle,” “Handled,” “handled,” “Handling,” or “handling	130
Hazardous Materials	130
Hines	18
Holdover Damages	87
Holdover Notice	87
Holidays	40
HVAC	40
Improvements	1
Initial Lease-Up Period	155
Initial Low-Rise Floors Premises	1
Initial Mid-Rise Floors Premises	1
Initial Premises	1
Initial Rent Credit	8
Initial Term Expiration Date	3
Land	1
Landlord	1, 120
Landlord Abandonment Notice	133

vii

DEFINED TERMS

(continued)

	Page
Landlord Acquisition Date	131
Landlord Default	113
Landlord Estoppel Certificate	91
Landlord Occupancy Requirements	134
Landlord Protected Parties	79
Landlord Repair Areas	70
Landlord Repairs	70, 71
Landlord’s Actual Cost	23
Landlord’s Agent	123
Landlord’s Basic Restoration Work	73
Landlord’s Estimate Notice	167
Landlord’s Hazardous Materials	130
Landlord’s Measurement Notice	4
Landlord’s Restoration Work	73
Landlord’s Telecommunication Infrastructure	52
Laws	22
Lease	1
Lease Obligations	196
Lease Termination Notice	182
Lease Year	24
Liability Cap	135
Lines	127
LLP	196
Loading Docks	54
Low-Rise Contiguous Floors Premises	173
Low-Rise Floors	1
Low-Rise Floors Premises	1
Main Lobby	2
Major Elevator Work	48
Major Transferee	104
Material Affected Space	114
Material Building Service Failure	117
Measurement Method	6
Mid-Rise Contiguous Floors Premises	173
Mid-Rise Floors	1
Mid-Rise Floors Premises	1
Minimum Electrical Capacity	49
Monthly Parking Spaces	186
Monument	191
Mortgage	90
Mortgagee	90
Necessary Self-Help Repairs	70
Net Re-Letting Proceeds	112
Net Rent	7, 30

viii

DEFINED TERMS

(continued)

	Page
NetPOP Rooms	52
New Final Expiration Date	185
Ninth Expansion Notice	148
Ninth Expansion Notice Deadline	148
Ninth Expansion Option	148
Ninth Expansion Premises	148
Noise Specifications	72
Offer Notice	159
Offer Space	159
Offer Space Improvement Notice	163
Offer Space Rent Commencement Date	161
Offset Dispute Notice	118
Offset Exercise Notice	118
On-Site Coffee Service	60
On-Site Food Service	58
On-Site Sit-Down Restaurant	61
Operating Expenses	11
Operating Statement	25
Other Additional Rent Paying Office Tenant	12
Other Tenant Fixed Expansion Rights	166
Other Tenant Renewal Rights	166
Other Tenant ROFO Rights	166
Outside Restoration Period	77
Partner	196
Partners	196
Permit Delays	49
Permitted Title Exceptions	131
Phase I Delivery Date	33
Phase I Segment	32
Phase II Delivery Date	33
Phase II Segment	33
Phase III Delivery Date	33
Phase III Segment	33
Plans	196
Plaza	2
Premises	1
Pre-Term Contraction Notice	172
Pre-Term Contraction Notice Deadline	172
Pre-Term Contraction Option	172
Pre-Term Contraction Space	172
Pre-Term Expansion Notice	140
Pre-Term Expansion Notice Deadline	140
Pre-Term Expansion Option	140
Pre-Term Expansion Premises	140

ix

DEFINED TERMS

(continued)

	Page
Prime Rate	112
profit	102
Prohibited Uses	38
Property	1
Qualified Arbitrator	184
Qualified Lobby Signs of Other Tenants	193
Qualified Subtenant	95
Recognition Agreement	95
Records	28
Records Examination Request	28
Regular Business Hours	40
Regular Elevator Hours	42
Regularly Scheduled Rent Payments	111
Regulatory Authority	131
Reimbursement Costs	136
Renewal Allowance	172
Renewal Option	171
Renewal Premises	172
Renewal Rescission Notice	185
Renewal Term	171
Rent	30
Rentable Area	6
Replacement Tenants	112
Restaurant Space	60
Retail Area	39
Right of First Proposal	155
Riser Closets	52
ROFO	159
ROFO Allowance	162
ROFO Area	159
ROFO Exceptions	165
ROFO Period	159
Rooftop Area	189
Rules	38
Scheduled Delivery Date	33
Scheduled Eighth Expansion Delivery Date	148
Scheduled Expansion Delivery Date	154
Scheduled Fifth Expansion Delivery Date	145
Scheduled First Expansion Delivery Date	141
Scheduled Fourth Expansion Delivery Date	144
Scheduled Ninth Expansion Delivery Date	149
Scheduled Offer Space Delivery Date	160
Scheduled Phase I Delivery Date	32
Scheduled Phase II Delivery Date	33

x

DEFINED TERMS

(continued)

	Page
Scheduled Phase III Delivery Date	33
Scheduled Second Expansion Delivery Date	142
Scheduled Seventh Expansion Delivery	147
Scheduled Sixth Expansion Delivery Date	146
Scheduled Tenth Expansion Delivery Date	150
Scheduled Third Expansion Delivery Date	143
Second Contraction Effective Date	176
Second Contraction Notice	176
Second Contraction Option	175
Second Contraction Space	175
Second Expansion Notice	142
Second Expansion Notice Deadline	142
Second Expansion Option	142
Second Expansion Premises	142
Second Possible Renewal Premises	168
Second Renewal Notice	168
Second Renewal Option	167
Second Renewal Premises	168
Second Renewal Term	167
Segment	33
Seventh Expansion Notice	147
Seventh Expansion Notice Deadline	147
Seventh Expansion Option	146
Short Term Extension Election	185
Short Term Extension Period	185
Signage Competition Restriction	103
Signage Competition Restriction Notice	103
Sixth Expansion Notice	146
Sixth Expansion Notice Deadline	146
Sixth Expansion Option	145
Sixth Expansion Premises	145
SNDA	90
Special Alteration	67
Statement	28
Subject Signage Rights	103
Subject Space	92
Sundries Shop Service	58
Tax Cap Savings	27
Tax Statement	26
Taxes	8
Tenant	1
Tenant Cleaning	41
Tenant Cleaning Commencement Date	41
Tenant Conditions	131

xi

DEFINED TERMS

(continued)

	Page
Tenant Estoppel Certificate	91
Tenant Freight Elevator	43
Tenant Generator	126
Tenant Insured Improvements	78
Tenant Lobby Desk	58
Tenant Protected Parties	80
Tenant Sign	191
Tenant Signs	191
Tenant Staging Area	54
Tenant’s Assets	196
Tenant’s Broker	139
Tenant’s Hazardous Materials	130
Tenant’s Measurement Notice	5
Tenant’s Occupancy Percentage	23
Tenant’s Pro Rata Share	24
Tenant’s Repairs	68
Tenant’s Statement	102
Tenth Expansion Notice	150
Tenth Expansion Notice Deadline	150
Tenth Expansion Option	149
Tenth Expansion Premises	149
Term	3
Third Contraction Effective Date	178
Third Contraction Notice	178
Third Contraction Option	178
Third Contraction Space	178
Third Expansion Notice	143
Third Expansion Notice Deadline	143
Third Expansion Option	142
Third Expansion Premises	143
Third Possible Renewal Premises	169
Third Renewal Notice	169
Third Renewal Option	169
Third Renewal Premises	169
Third Renewal Term	169
Transferee	92
Transfers	92
TTR’s	6
Unavoidable Delays	48
Unique Building Feature Square	6
Unique Building Feature Square Footage	32
Unique Building Features	31
Untenantability	115
Untenantable	115

xii

DEFINED TERMS

(continued)

	Page
Usable Area	6
Users	186
Workletter	4

xiii

OFFICE LEASE

THIS OFFICE LEASE (“Lease”) is made as of the 25th day of August, 2005 (the “Effective Date”), between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

WITNESSETH:

ARTICLE 1

Premises, Rentable Area, Term, Construction Of Building

(A) Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord a portion of the 4^th and 5^th floors (subject, however, to Paragraph 6(M) below with respect to such 5^th floor area) and the entire 6^th, 7^th and 9^th through 14^th floors (inclusive), as shown on Exhibit A-1 attached hereto (the “Initial Low-Rise Floors Premises”), and the entire 24^th through 39^th floors (inclusive), as shown on Exhibit A-2 attached hereto (the “Initial Mid-Rise Floors Premises”), (the Initial Low-Rise Floors Premises and Initial Mid-Rise Floors Premises are collectively referred to herein as the “Initial Premises”), all in the building to be known initially as 300 North LaSalle Street, Chicago, Illinois (the “Building”), to be constructed by Landlord on the land (“Land”) legally described on Exhibit A-3 attached hereto, as provided herein. A general diagram of the Building is attached hereto as Exhibit A-4. It is understood that, based on the initial configuration and ceiling heights for the 7^th floor, the initial layout of the Building will not have a floor designated as the 8^th floor at the Building, and the “9^th floor” portion of the Premises shall constitute the floor immediately contiguous to and above the “7^th floor” portion of the Premises, all as depicted on Exhibit A-4. The Initial Premises demised hereunder to Tenant, together with any other space from time to time leased to Tenant by Landlord in the Building (including, without limitation, any Expansion Premises, First Proposal Space and/or Accepted Offer Space), as the same may be expanded or contracted from time to time as hereinafter provided, is herein collectively referred to as the “Premises”. The term “Mid-Rise Floors Premises,” as used herein, shall mean the Initial Mid-Rise Floors Premises, or any space from time to time hereafter leased to Tenant in the Building on any of the 24^th through 40^th floors (inclusive) of the Building, and the term “Mid-Rise Floors” shall mean any space located on said 24^th through 40^th floors (inclusive) of the Building, whether or not leased by Tenant. The term “Low-Rise Floors Premises,” as used herein, shall mean the Initial Low-Rise Floors Premises, together with any space from time to time hereafter leased to Tenant in the Building on any of the Lobby Level through 23^rd floors (inclusive) of the Building, and the term “Low-Rise Floors” shall mean any space located on said Lobby Level through 23^rd floors (inclusive) of the Building, whether or not leased by Tenant. The term “Improvements,” as used herein, shall mean, collectively, the Building (including the Garage) and any other structures and improvements located on the Land, including, without limitation, the Plaza and the Monument. The term “Property,” as used herein, shall mean the Land and the Improvements.

THE PREMISES ARE LEASED TO TENANT TOGETHER WITH:

(i) The right to use, as provided in this Lease, in common with Landlord, other tenants and other occupants and users of the Building and any other parties permitted by Landlord, the Common Areas. As used in this Lease, “Common Areas” means those portions of the Property (x) not intended to be leased to, included in the premises demised to, or used exclusively by, individual tenants, and (y) designed or intended for common use by Building tenants or for general access. Common Areas shall include, without limitation, the primary ground floor lobby of the Building (the “Main Lobby”), pedestrian passageways and corridors (except any located within premises leased to a tenant), elevators, escalators, stairways (except any located within premises leased to a tenant), sidewalks, ramps, the Fitness Center, the exterior plaza to be located on the Land (the “Plaza”), landscaped, planted areas and the grounds of the Property, lavatories and bathrooms (except any located within premises leased to a tenant), and other similar areas, facilities and improvements, as the same may be modified, altered, reconfigured, repaired and replaced by Landlord, from time to time (subject to and in accordance with the provisions of this Lease). The term “Common Areas” shall not, however, include any Common Conference Center;

(ii) The right to use the portion of the Building in which garage parking facilities (and means of vehicular access thereto) are located (the “Garage”) as set forth in, and subject to the terms of, Article 36 below;

(iii) The right to install, use, maintain, repair and replace, at Tenant’s sole cost and expense, microwave dishes, satellite dishes, antennae and other communications, security and supplemental cooling equipment on the roof of the Building, as provided in, and subject to the terms of, Article 37, and for such purposes Tenant shall have the right to access the roof, risers and other parts of the Building, to the extent set forth in, and subject to the terms of, Article 37;

(iv) The right to install, use, maintain, repair, replace and gain access to, at Tenant’s sole cost and expense, an emergency and backup generator and related facilities and equipment, as provided in, and subject to the terms of, Article 26, such generator being completely separate and distinct from any life safety generator and related facilities and equipment required to be installed by Landlord, at Landlord’s sole cost and expense, hereunder;

(v) The right to install, use, maintain, replace and repair, at Tenant’s sole cost and expense, signage in and on the Property as provided in, and subject to the terms of, Article 39;

(vi) The right to use and access to all of the Loading Docks of the Building, as set forth in, and subject to the terms of, Article 6;

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(vii) The right to use the telecommunication risers and fiber optic equipment for Tenant’s telecommunications and data transmission facilities as set forth in, and subject to the terms of, Article 6 and Article 27;

(viii) The right to use the passenger and freight elevators of the Building as set forth in, and subject to the terms of, Article 6; and

(ix) All other rights of use specified in this Lease.

The rights set forth in clauses (i) through (ix) above shall be without additional cost to Tenant (except for Rent payable by Tenant for the Premises as provided in this Lease, the costs and expenses, if any, of installation, maintenance, operation, repair and replacement expressly described elsewhere in this Lease, and any other charges and costs, if any, for such rights expressly set forth in this Lease).

(B) Term. The term (“Term”) of this Lease shall commence on the date (the “Commencement Date”) that is the latest of:

(i) March 1, 2009;

(ii) The one (1) year anniversary of the Phase I Delivery Date (as defined in Paragraph 4(A) hereof);

(iii) The ten (10) month anniversary of the Phase II Delivery Date (as defined in Paragraph 4(A) hereof);

(iv) The nine (9) month anniversary of the Phase III Delivery Date (as defined in Paragraph 4(A) hereof); or

(v) The Building C of O Date (as defined in the Workletter),

subject to extension as set forth in Section 9.b of the Workletter and as provided below in this Paragraph 1(B). The Term of this Lease shall end on the last day of the calendar month in which the day immediately preceding the twentieth (20^th) anniversary of the Commencement Date occurs (the “Initial Term Expiration Date”), unless extended or sooner terminated as provided herein. The term “Expiration Date,” as used herein, shall mean the Initial Term Expiration Date, or the last day of the Term of this Lease if the Term is extended or sooner terminated as provided herein. Landlord and Tenant acknowledge and confirm that Tenant shall have the right to use and occupy the Premises prior to the Commencement Date as set forth in, and subject to the terms of, this Lease (including, without limitation, pursuant to Paragraph 4(D) hereof and the Workletter). Notwithstanding anything to the contrary, Landlord shall have the right, at its sole discretion, exercised by written notice thereof to Tenant delivered on or before September 1, 2007 (time being of the essence), to extend the date described in Paragraph 1(B)(i) above to any date designated by Landlord which is later than March 1, 2009 but which is not later, in any event, than May 1, 2009, and if Landlord so exercises such election, then (a) the date set forth in Paragraph 1(B)(i) above shall be automatically amended to be the date so designated by Landlord (with the number of days that such date is so extended beyond March 1, 2009 being

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referred to as the “Commencement Extension Period),” and (b) all specific dates set forth in the following provisions of this Lease shall be automatically extended by the Commencement Extension Period: Paragraph 4(A)(i); Paragraph 4(A)(ii); Paragraph 4(A)(iii); Paragraph 6(Q)(ii); Paragraph 6(Q)(iv); Paragraph 6(Q)(vii); Paragraph 6(Q)(viii); Paragraph 29(A)(iii); Paragraph 29(A)(c); Paragraph 29(A)(d); Paragraph 29(B); Paragraph 29(C); Paragraph 34(A)(i); Paragraph 34(M) (opening paragraph); Paragraph 34(M)(i); Paragraph 34(N)(ix)(2); Paragraph 34(T)(i); Paragraph 34(U)(i); Paragraph 34(V)(i); Paragraph 34(W)(i); Paragraph 34(X)(i); Paragraph 34(Y) (opening paragraph); Exhibit U; Workletter, Paragraph 3.e.i.; Workletter, Paragraph 3.e.ii.; Workletter, Paragraph 3.e.iii.; Workletter, Paragraph 3.e.iv.; Workletter, Paragraph 3.e.v.; Workletter, Paragraph 6.e.; Workletter, Paragraph 9.f.; and Workletter, Attachment 4. If Landlord so elects to exercise its extension rights as provided in the preceding sentence, then, at either party’s request, the parties shall promptly enter into a supplement to this Lease, confirming the change in various dates as described in the preceding sentence, once the Commencement Extension Period is so determined.

(C) Construction, Measurement of Building.

(i) Landlord covenants and agrees with Tenant that Landlord shall construct the Building and other Improvements in accordance with the terms and provisions of this Lease (including Paragraph 29 hereof), and the terms and provisions of the Workletter attached hereto as Exhibit B (the “Workletter”). Subject to the terms of Article 9 and Article 11 hereinbelow Landlord covenants and agrees that the Building shall always consist of not less than fifty-seven (57) floors (with the “7^th floor” portion of the Premises being deemed to consist of two floors for purposes of the foregoing requirement).

(ii) Within thirty (30) days after the approval by the parties of the Landlord Work Plans (as defined in the Workletter) pursuant to the Workletter, Landlord shall (at Landlord’s expense) cause the Rentable Area of the Building and the Premises to be measured by Landlord’s Architect (as defined in the Workletter) or by another architect reasonably acceptable by Tenant (it being agreed that the firm Eastlake Studio is acceptable to Tenant), based on such Landlord Work Plans, and shall deliver the written results thereof to Tenant (“Landlord’s Measurement Notice”). In the event that Tenant’s Architect (as defined in the Workletter) disagrees with the determination of the Rentable Area of the Building and/or the Premises as set forth in Landlord’s Measurement Notice, then Tenant may, within thirty (30) days after Tenant’s receipt of Landlord’s Measurement Notice, notify Landlord in writing that Tenant objects to such determination. In the event that Tenant so objects to the determination of the Rentable Area of the Premises and/or Building set forth in Landlord’s Measurement Notice, and the parties are unable to resolve such dispute within sixty (60) days after the delivery of Landlord’s Measurement Notice, then such dispute shall be resolved in accordance with the Workletter Dispute Procedures set forth in Section 15 of the Workletter. If Tenant fails to so object within said thirty (30) day period, then the determination of the Rentable Area of the Building and Premises set forth in Landlord’s Measurement Notice shall be considered as final (subject to any recalculation of the Rentable Area of the Building and Premises undertaken pursuant to Paragraph 1(C)(iii) below) and accepted by both parties.

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If Tenant timely objects within said thirty (30) day period, then until such time as any such dispute is resolved in accordance with the Workletter Dispute Procedures, the determination of the Rentable Area of the Building and Premises set forth in the Landlord’s Measurement Notice shall govern (it being agreed that, to the extent that such dispute is resolved in Tenant’s favor, Landlord shall, within thirty (30) days after such resolution, refund to Tenant (or, at Tenant’s option, credit against the next installment of Rent coming due under the Lease) any amounts that Tenant has overpaid during the period that the determination of the Rentable Area of the Building and Premises set forth in Landlord’s Measurement Notice governed). In the event that the Rentable Area of the Building and Premises is re-determined pursuant to Paragraph 1(C)(iii) below, then the Rentable Area of the Building and Premises, as determined pursuant to this Paragraph 1(C)(ii), shall apply only during the period that is prior to the determination of the Rentable Area of the Building and Premises pursuant to Paragraph 1(C)(iii) below.

(iii) Tenant shall have the right (but not the obligation), within sixty (60) days after the occurrence of the Final Delivery Date, to cause the Rentable Area of the Building and the Premises to be measured by Tenant’s Architect (or another consultant of Tenant reasonably acceptable to Landlord) at Tenant’s cost, based on an actual measurement of such space, and to deliver the written results thereof to Landlord (“Tenant’s Measurement Notice”). In the event that the architect retained by Landlord to measure the Rentable Area of the Building disagrees with the determination of the Rentable Area of the Building and/or the Premises by Tenant’s Architect (or such other consultant of Tenant) as set forth in Tenant’s Measurement Notice, then Landlord may, within thirty (30) days after Landlord’s receipt of Tenant’s Measurement Notice, notify Tenant in writing that Landlord objects to such determination. In the event that Landlord so objects to the determination of the Rentable Area of the Premises and/or Building set forth in Tenant’s Measurement Notice, and the parties are unable to resolve such dispute within sixty (60) days after the delivery of Tenant’s Measurement Notice, then such dispute shall be resolved in accordance with the Workletter Dispute Procedures set forth in Section 15 of the Workletter. If Landlord fails to so object within said thirty (30) day period, then the determination of the Rentable Area of the Building and Premises set forth in Tenant’s Measurement Notice shall be considered as final and accepted by both parties. If Landlord timely objects within said thirty (30) day period, then until such time as any such dispute is resolved in accordance with the Workletter Dispute Procedures, the measurement of the Building undertaken pursuant to Paragraph 1(C)(ii) above shall govern (it being agreed that, to the extent that such dispute is resolved in Tenant’s favor, Landlord shall, within thirty (30) days after such resolution, refund to Tenant (or, at Tenant’s option, credit against the next installment of Rent coming due under the Lease) any amounts that Tenant has overpaid during the period that the Rentable Area of the Building and Premises determined pursuant to Paragraph 1(C)(ii) above governed).

(iv) Within thirty (30) days after the determination of the Rentable Area of the Building and the Premises pursuant to Paragraph 1(C)(ii) and/or Paragraph 1(C)(iii) above (and the determination of Tenant’s Pro Rata Share (as provided in Paragraph 3(E) below)), Landlord and Tenant shall execute a mutually acceptable supplement to this Lease confirming the results of such determinations, which supplement shall include a

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revised stacking plan to be attached as Exhibit A-4 hereto, showing in detail a floor-by-floor listing of the gross, rentable and usable areas on each floor of the Building, and which floor-by-floor determinations, when aggregated, shall show the total gross, rentable and usable areas of the Building.

(v) For purposes of this Lease, (a) “Rentable Area” shall mean, in respect of any space, the rentable area of such space determined in accordance with the methods of measuring rentable area and usable area as described in The Standard Method for Measuring Floor Area in Office Buildings ANSI Z65.1-1996, as promulgated by The Building Owners and Managers Association (BOMA) International (as such standard exists as of the Effective Date) (the “Measurement Method”), and (b) “Usable Area” shall mean, with respect to any space, the usable area of such space determined in accordance with the Measurement Method; provided, however, that the Rentable Area of the Building shall not include the parking and vehicular access areas of the Garage or any storage space in the Building located in the storage areas of the Building in which Tenant’s storage space described in Paragraph 6(M) below is located (but shall include any Common Conference Center and shall include the “Unique Building Feature Square Footage,” described in Paragraph 3(M) below); and provided further that, with respect to any space located on single-tenant floors of the Building, the Rentable Area of such space shall be determined by applying a loss factor (between the rentable square feet and usable square feet in such space) thereto not to exceed 10% (even if the loss factor would otherwise exceed 10% under the Measurement Method), with full floor restrooms and elevator vestibules included in Usable Area calculation and with all tenant technical rooms (“TTR’s”) and mail conveyor system areas located on floors which are included in the Initial Premises being included in Usable Area calculation. The Measurement Method shall be used for purposes of measuring the rentable area of any space pursuant to this Lease during the Term, including (x) the determination of the Rentable Area of the Initial Premises and any portions of the Building included in the Premises pursuant to Article 34, and (y) determination of Net Rent and Tenant’s Pro Rata Share of Operating Expenses and Taxes with respect thereto. Once the Rentable Area of the Premises and Building have been determined pursuant to this Paragraph 1(C), neither Landlord nor Tenant shall thereafter have any right to re-measure or re-calculate the Rentable Area of the Premises or Building under this Lease, except that Landlord shall reasonably re-determine the Rentable Area of the Premises and/or the Building (and Tenant’s Pro Rata Share), from time to time to reflect reconfigurations, additions or modifications to the Building and/or Premises; provided that, subject to Article 9 and Article 11 hereof, Tenant’s Pro Rata Share shall not be increased as a result of any such subsequent re-determination by Landlord of the Rentable Area of the Building; and provided further, that Tenant shall have the reasonable right to confirm the accuracy of Landlord’s re-determination by written notice thereof to Landlord no later than sixty (60) days after Landlord provides notice to Tenant of such re-determination. Upon completion of the measurement of the Rentable Area of the Building in accordance herewith, a revised stacking plan shall be attached as Exhibit A-4 hereto, which revised stacking plan shall include a floor-by-floor listing of the gross, rentable and usable areas on each floor of the Building, and which floor-by-floor determinations, when aggregated, shall show the total gross, rentable and usable areas of the Building.

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(vi) Landlord and Tenant acknowledge and confirm that, as of the Effective Date, it is anticipated that the Building will consist of roughly 1,200,000 square feet of Rentable Area (but in no event less than 1,100,000 square feet of Rentable Area), and that the Initial Premises will consist of roughly 600,000 square feet of Rentable Area, but in no event shall either of the foregoing figures be binding upon the parties for any purpose whatsoever under this Lease (it being agreed that the Rentable Area of the Building and Premises shall, for all purposes under this Lease, be determined as set forth above in this Paragraph 1(C)).

(D) Confirmatory Amendment. Within a reasonable time after the occurrence of the Commencement Date, Landlord and Tenant shall execute and deliver a mutually acceptable amendment to this Lease, confirming the actual Commencement Date, Initial Term Expiration Date, Rentable Area of the Building, Rentable Area of the Premises, Tenant’s Pro Rata Share and other pertinent matters that are ascertainable at that time but are not ascertainable as of the Effective Date. The failure of either party to execute and deliver any such amendment shall not, however, affect the validity of the foregoing dates or other matters.

ARTICLE 2

Net Rent

(A) Payment of Net Rent. Commencing on the Commencement Date, Tenant shall pay to Landlord net rent (“Net Rent”) according to the Net Rent schedule on Exhibit C attached hereto based upon the then Rentable Area of the Premises and as otherwise provided herein. Net Rent shall be payable in monthly installments, with each installment being payable in advance promptly on the first day of each and every calendar month, except that if Tenant’s obligation to pay Net Rent first occurs on a date other than the first day of a month, Tenant shall pay the installment due for such initial fractional month on the Commencement Date, prorated as herein provided. If Tenant’s obligation to pay Net Rent or any component thereof commences on a day other than the first day of a calendar month, or ends on a day other than the last day of a calendar month, then the Net Rent or relevant component thereof for such month shall be prorated on the basis of the applicable percentage of the relevant monthly component of Net Rent represented by each day of such month. Monthly Net Rent shall be prorated for fractions of a month if the Rentable Area of the Premises shall change during a month. Net Rent shall be paid without any prior demand or notice therefor and without any deduction, set-off or counterclaim, or relief from any valuation or appraisement laws, except to the extent expressly provided to the contrary in this Lease (including, without limitation, the abatement or credit of Rent expressly provided in Article 9, Article 11, Article 23 and Article 34 hereof, and Sections 9.b and 9.f of the Workletter). Notwithstanding anything to the contrary contained herein, in no event shall Tenant have any duty or obligation to pay any Net Rent with respect to any period prior to the Commencement Date, notwithstanding the fact that any Delivery Date (including the Final Delivery Date) shall have occurred, or that Tenant may be in occupancy of the Premises (or any portion thereof) and using the same for any purpose (including the conduct of Tenant’s business) prior to the Commencement Date.

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(B) Credit. Notwithstanding anything to the contrary set forth in Paragraph 2(A) above, Tenant shall be entitled to a credit against the Net Rent payable under this Lease in an amount equal to the product of: (i) $28.50, multiplied by (ii) the sum of (a) the number of square feet of Rentable Area located within the Initial Premises, plus (b) the Unique Building Feature Square Footage (as defined in Paragraph 3(M) below) (the “Initial Rent Credit”), which credit shall be applied against the installments of Net Rent for such Initial Premises first coming due under this Lease (in order of payment) commencing on the Commencement Date (i.e., meaning a twelve (12) month abatement of Net Rent for such Initial Premises); provided, however, that in the event that Tenant exercises its Pre-Term Contraction Option as set forth in Paragraph 34(T) below, then the amount of the Initial Rent Credit shall be reduced by subtracting the number of square feet of Rentable Area located in the Pre-Term Contraction Space from the number of square feet of Rentable Area described in clause (ii) above; and provided further, that in the event that Tenant exercises its Pre-Term Expansion Option as set forth in Paragraph 34(A) below, then the amount of the Initial Rent Credit shall be increased by adding the number of square feet of Rentable Area located in the Pre-Term Expansion Premises to the number of square feet of Rentable Area described in clause (ii) above. Notwithstanding the foregoing, Tenant shall have the right, by written notice thereof delivered to Landlord on or before the Commencement Date hereof, to spread out the overall Initial Rent Credit in equal installments over two (2) years (i.e., in lieu of the 12-month abatement contemplated by this Paragraph 2(B)) in which case Tenant shall be entitled to a monthly abatement for each of the first twenty-four (24) full calendar months of the Term in a monthly amount equal to one twenty-fourth (1/24^th) of the overall Initial Rent Credit calculated under this Paragraph 2(B).

ARTICLE 3

Additional Rent

(A) Taxes. Subject to the terms and provisions set forth herein, Tenant shall pay Landlord an amount equal to Tenant’s Pro Rata Share of Taxes in the manner described below, commencing on the Commencement Date (but subject to the abatement set forth in Paragraph 3(L) below).

(i) “Taxes” mean all federal, state, county, local governmental or municipal taxes, fees, assessments, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary, including, without limitation, real estate taxes, general and special assessments (except that all assessments shall be treated as payable over the longest permitted period (not including any periods during which such assessments (or any installment thereof) would be delinquent), and in such event shall include any interest charged by or payable to the applicable governmental authority in connection therewith), transit taxes, water and sewer rents, taxes based upon the receipt of rent including gross receipts or sales taxes applicable to the receipt of rent (but rent and other income received from tenants or other occupants of the Building (including parking receipts, license fees and rentals) shall be treated as the only rent and other income received by Landlord), and service, lease or value added taxes (except that if such rent tax, sales tax, service tax, lease tax or value added tax is required by Article 16 to be paid directly by Tenant to the taxing authority, then any such tax with respect to Tenant

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and all other tenants of the Building shall be excluded), and personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, furniture and other personal property owned and used by Landlord solely in connection with the operation, maintenance, repair and/or management of the Property, all to the extent payable by Landlord during any calendar year (as reflected in the tax bills due and payable in such year), any portion of which calendar year occurs during the Term following the Commencement Date (without regard to any different fiscal year used by such government or municipal authority and notwithstanding that any of such items may be assessed, imposed or otherwise accrue in a different calendar year) because of or in connection with the Landlord’s ownership, leasing and/or operation of the Property (including, without limitation, the Garage and Retail Areas of the Property) or the personal property, fixtures, machinery, equipment, systems and apparatus located therein and used solely in connection therewith. In addition, “Taxes” shall include any component of the rent payable under any Ground Lease solely attributable to the reimbursement of Taxes. Notwithstanding the foregoing, there shall be excluded from Taxes all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, transfer taxes, mortgage or intangible taxes or fees, estate taxes, federal, state or local income taxes, fines, penalties and interest due to the delinquent payment by Landlord of any tax or assessment comprising Taxes (so long as Tenant timely (i.e., within any notice and cure periods applicable thereto) paid to Landlord Tenant’s Pro Rata Share of Taxes as hereinafter provided) and other taxes to the extent applicable to Landlord’s general or net income (as opposed to taxes specific to rents, receipts or income attributable to ownership of or operations solely at the Property). Should the State of Illinois, or any political subdivision of that state or any other governmental authority having jurisdiction over the Land or the Building, (a) impose a tax, assessment, charge, or fee, or increase a then-existing tax, assessment, charge, or fee, that Landlord shall be required to pay, either by way of substitution for real estate taxes and ad valorem personal property taxes or in addition to real estate taxes and ad valorem personal property taxes, because of or in connection with Landlord’s ownership, leasing and/or operation of the Property or the personal property, fixtures, machinery, equipment, systems and apparatus located therein and used solely in connection therewith, or (b) impose an income, franchise tax or other tax, assessment, fee or charge, whether on rents or otherwise (but only to the extent rent from tenants in the Building is treated as the only rent received by Landlord), in the case of both (a) and (b), in substitution for or as a supplement to a tax levied against the Property or the personal property used in connection therewith, then, in the case of both (a) and (b), all such taxes, assessments, fees or charges (but not including any fines, penalties or interest thereon payable as a result of Landlord’s delinquent payment of such taxes, assessments, fees or charges, so long as Tenant timely (i.e., within any notice and cure periods applicable thereto) paid to Landlord Tenant’s Pro Rata Share of Taxes as required herein), shall be deemed to constitute “Taxes” under this Lease. Any reasonable expenses (including, without limitation, all reasonable fees for consultants and attorneys, but not including any expenses incurred in connection with any legislative lobbying activities) paid by Landlord to third parties (or to Tenant under Paragraph 3(G) below) in planning or attempting to protest, reduce, limit any increase in or otherwise minimize Taxes, or in

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responding or planning responses to assessment or other notices in respect thereof, shall be included in Taxes in the calendar year such expenses are incurred. For purposes of this Lease, “Taxes” for any calendar year shall be deemed to be the Taxes which are due and payable within such calendar year, regardless of the period with respect to which such Taxes are assessed (i.e., determined on a “cash basis”) (for example, the general real estate Taxes for calendar year 2009 shall, for purposes of this Lease, mean the general real estate Taxes that are due and payable to the Cook County Treasurer during calendar year 2009, notwithstanding the fact that such general real estate Taxes (pursuant to the Cook County Assessor’s method of assessing for general real estate taxes, and the Cook County Treasurer’s method of billing for general real estate taxes, in effect as of the Effective Date) were assessed, and would have accrued, with respect to calendar year 2008).

(ii) If Taxes paid for any calendar year during the Term shall be increased after payment thereof by Landlord for any reason including, without limitation, error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord within thirty (30) days after receipt of invoice therefor Tenant’s Pro Rata Share (for the year to which such increase relates) of such increased Taxes. Tenant shall pay Tenant’s Pro Rata Share of such increased Taxes, whether Taxes are increased as a result of increases in the assessment or valuation of the Property, increases in the tax rates, scheduled reductions of any tax abatement, as a result of the elimination, invalidity or withdrawal of any tax abatement, or for any other cause whatsoever. If Taxes for any calendar year during the Term shall be decreased after payment thereof by Landlord for any reason including, without limitation, error or reassessment by the applicable governmental authorities, then Landlord shall refund to Tenant Tenant’s equitable share (for the year to which such decrease relates) of such decrease in Taxes (allocated in the case of special assessments to the applicable portion of the Term of this Lease) within thirty (30) days after Landlord receives payment of any refund on account thereof, or, if the Term of this Lease has not expired, at Tenant’s written direction, credit such reduction to Tenant against the next installments of Rent becoming due hereunder; provided, however, that, to the extent that a monetary Default exists at the time that Landlord is required to pay or credit any such amount to Tenant, Landlord shall have the right to offset the amount of such amount payable (or to be credited) to Tenant against the amount of such monetary Default (including any costs incurred by Landlord relative thereto which are chargeable to Tenant pursuant to Article 22 hereof). Each party’s obligation to pay amounts described in this Paragraph 3(A)(ii) to the other shall survive the expiration or sooner termination of this Lease. Notwithstanding anything herein to the contrary, Landlord agrees that at no time shall Landlord be entitled to collect from Tenant more than 100% of Tenant’s Pro Rata Share of the Taxes actually incurred by Landlord, and in no event shall there by any so-called “gross-up” of Taxes under Paragraph 3(C) below or otherwise.

(B) Operating Expenses.

(i) Subject to the terms and provisions set forth herein (including the cap on Controllable Operating Expenses described in Paragraph 3(B)(iv) below), Tenant shall

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pay Landlord, in the manner described below, an amount equal to Tenant’s Pro Rata Share of Operating Expenses, commencing upon the Commencement Date (but subject to the abatement set forth in Paragraph 3(L) below).

(ii) “Operating Expenses” shall mean all reasonable expenses, costs and amounts (other than Taxes) of every kind and nature (it being agreed that the foregoing use of the term “reasonable” shall not require Landlord to competitively bid every such item of expense, cost or amount) which shall be incurred by Landlord (properly chargeable in respect of any calendar year or portion of which occurs during the Term in a manner consistently applied in accordance with the Accounting Principles), because of or in connection with the management, repair, maintenance, replacement, alteration, ownership and operation of the Property during the Term (subject to the exclusions and other provisions of this Lease), including, without limitation, any amounts which are payable for: (a) utilities for the Property, including, but not limited to, electricity, power, gas, steam, oil or other fuel, water, sewer, lighting, heating, air conditioning and ventilating; (b) permits, licenses and certificates necessary to operate, manage and lease the Property, excluding any permits, licenses and certificates required to construct the Landlord Work; (c) insurance applicable to the Property, including but not limited to the amount of coverage Landlord is required or permitted to provide under this Lease, provided that such coverage is reasonable or required under this Lease (but subject, in all events, to the limitations set forth below) (and which may in any event include any insurance that Landlord elects to obtain covering costs of remediation of any leak, spill, release, discharge or other Handling of Hazardous Materials at the Property that Landlord is required to remediate under this Lease or by Environmental Laws), and provided further that Landlord agrees to use commercially reasonable efforts to minimize the cost of any terrorism insurance applicable to the Property (it being agreed that, to the extent that the terrorism insurance maintained by Landlord with respect to the Property is maintained by Landlord on a portfolio-wide basis (i.e., together with terrorism insurance maintained by Landlord and/or its Affiliates (or by Landlord’s managing agent and/or its Affiliates) with respect to other buildings and/or properties, wherever located), the amount of terrorism insurance that is allocated to the Property for purposes of Operating Expenses hereunder shall reflect an equitable apportionment of the total cost of such terrorism insurance among all of the properties with respect to which such terrorism insurance is maintained (which apportionment may, at Landlord’s option, be based on an overall rentable square footage basis of the buildings and properties included in such portfolio, so long as such portfolio does not include buildings or properties (e.g., as of the Effective Date, Sears Tower and Rockefeller Center) which are generally considered in the real estate industry to be subject to substantially greater risk of terrorist attack than are typical Class A office buildings, it being acknowledged that, because Landlord has determined that, as of the Effective Date, such portfolio of Landlord and its Affiliates (or of Landlord’s Agent and its Affiliates) does not include any such buildings or properties, Landlord currently apportions the cost of such terrorism insurance on an overall rentable square footage basis as provided above, and it being further agreed that, if such portfolio of Landlord and its Affiliates (or Landlord’s managing agent and its Affiliates, as applicable) at any time does include any such buildings or properties (whether as a result of the addition of a building or property to such portfolio, or any change in the character

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or reputation of any building or property already included in such portfolio), such apportionment shall take into consideration the varying risks attendant to any such buildings or properties), which cost shall, in all cases, be subject to the caps described in Paragraph 3(B)(iii)(13) below); (d) supplies, tools, equipment and materials used in the operation, repair and maintenance of the Property; (e) accounting, legal, inspection and consulting services, and similar services; (f) any equipment rental (or costs incurred under installment equipment purchase or equipment financing agreements) for equipment used in connection with the operation, maintenance and repair of the Property (including janitorial and similar equipment); (g) management fees and expenses and the fair rental value of any space devoted to management but excluding any space devoted primarily to leasing except that the amount of management expenses included in Operating Expenses shall be subject to the limitations of Paragraph 3(B)(iii)(38) below, the fair rental value of management office space shall be limited as described in Paragraph 3(B)(iii)(29) below, and management fees shall equal two and seventy-five hundredths percent (2.75%) of the annual gross rents (including the Net Rent and Additional Rent payable by Tenant) and all other amounts (but excluding parking fees and any fees paid for the Fitness Center and/or any Common Conference Center) payable by tenants and occupants of the Building (which percentage shall in no event be greater than the percentage charged by Landlord to any other tenant or occupant of office space in the Building who is paying additional rent on account of operating expense reimbursement provisions in its lease or occupancy agreement [i.e., as opposed to tenants or occupants under so-called “gross-rental” arrangements] [any such office tenant or occupant so paying additional rent being referred to as an “Other Additional Rent Paying Office Tenant”], and if Landlord charges a lesser percentage to any such Other Additional Rent Paying Office Tenant, then the foregoing percentage shall be reduced for Tenant to such lower percentage during the entire period that the Other Additional Rent Paying Office Tenant is paying such lower percentage); (h) wages, salaries and other compensation and benefits for all persons directly engaged in the operation, maintenance or security of the Property, and employer’s social security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits; (i) operation, repair, and maintenance of all Building systems and equipment and components thereof (including replacement of components, but subject to the limitations provided in Paragraph 3(B)(iii)(42) below); (j) janitorial service, alarm and security service, window cleaning, trash removal, elevator maintenance, cleaning of walks and building walls and removal of ice and snow; (k) replacement of wall and floor coverings and light bulbs in lobbies, corridors, restrooms and other common or public areas or facilities; and (l) maintenance and replacement of shrubs, trees, grass, sod and other landscaped items. Except as provided in Paragraph 3(B)(iii)(42) below, all Operating Expenses shall be determined in conformance with the general practice of comparable office buildings in downtown Chicago (the “Accounting Principles”). Costs incurred in one calendar year, but attributable to more than one calendar year, shall be equitably apportioned over such years on an accrual basis in accordance with the Accounting Principles. As used in this Lease, the phrase “comparable office buildings in downtown Chicago” or “comparable Class A office buildings in downtown Chicago” or “comparable first class office buildings in downtown Chicago”, or words of similar import shall refer to

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“Class A,” high rise office buildings occupied by more than one tenant (and not more than fifty percent (50%) occupied by the owner thereof or by Affiliates of such owner), and containing at least 900,000 square feet of rentable area, now or at any time after the Effective Date located within the area bounded by the Kennedy Expressway on the west, Congress Parkway on the south, Lake Shore Drive on the east and Kinzie Street on the north. Landlord or Tenant may designate, from time to time, in writing to the other, buildings that it believes are comparable office buildings in the downtown Chicago area, and such designation shall be binding, unless the other party objects to any such designation within thirty (30) days after receipt of the first party’s designation. Disputes as to which buildings are comparable to the Building shall be settled at the request of either party by the Executive Director of the Chicago Chapter of BOMA (or comparable or successor organization, if the Chicago Chapter of BOMA does not exist at the time of such dispute). In the event of any action, proceeding, arbitration or other resolution of a dispute under any of the provisions of this Lease, the determination of which requires the designation of comparable office buildings in downtown Chicago, a group of at least five (5) such comparable office buildings in downtown Chicago shall be used in resolving such action, proceeding, arbitration or dispute. The parties further acknowledge and agree that: (I) any group of office buildings which have been determined to constitute comparable office buildings in downtown Chicago shall be subject to such reasonable modifications made from time to time by mutual agreement of Landlord and Tenant (and any disputes regarding any such modifications shall be governed by the Executive Director of the Chicago Chapter of BOMA, as aforesaid), and (II) the standard of maintenance, operation, or condition of a building, whether now in existence or subsequently constructed, may change from time to time to such an extent that it should no longer be considered of a “first class” character (or, if formerly not of a “first class” character, to such an extent that it should be considered of such character), in which event any such building shall be deleted (or may be added, as applicable) to the group of comparable office buildings in downtown Chicago.

(iii) Notwithstanding the foregoing, Operating Expenses shall not include the following:

(1) depreciation and amortization charges (except as otherwise provided herein);

(2) principal or interest payments on and any other fees or charges (including, without, limitation, attorneys’ fees, court costs and other expenses) incurred in connection with obtaining or servicing any loans related to any Mortgages or any other debt costs or financing or refinancing costs (other than equipment rental (or costs incurred under equipment installment purchase or equipment financing agreements) for equipment used in the operation, maintenance and/or repair of the Property, and other than interest which is to be included in Operating Expenses pursuant to clause (42) below) or ground lease or master lease payments, if any;

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(3) expenses relating to the leasing of space in the Building (including, without limitation, costs associated with Landlord assuming or taking over the obligations of a tenant under a lease in another building, legal fees, real estate brokerage and leasing commissions, space planner fees, alterations to tenant premises, tenant improvement allowances, rent abatements or other concessions, and advertising and promotional expenses incurred in connection with the leasing of space in the Building);

(4) costs incurred in connection with the enforcement of leases or of any rules and regulations, disputes with actual or prospective tenants or with Mortgagees or Ground Lessors and any other legal expenses or fees not related to the operation and management of the Building;

(5) costs (including permit, license and inspection fees) incurred in constructing, improving, renovating, altering, painting or decorating any Common Conference Center or any tenant spaces or other areas exclusively used or occupied by (or reserved for the exclusive use or occupancy by) any tenant of the Building, and any costs and expenses of maintaining or repairing any Common Conference Center or such tenant spaces or such other areas exclusively used or occupied by (or reserved for the exclusive use or occupancy by) any tenant of the Building; except, however, for the costs of the Landlord Repairs required to be performed by Landlord pursuant to Article 8 hereof (and/or costs of maintenance, repairs and non-capital replacements in the nature of Landlord Repairs required under other leases at the Building which are not otherwise prohibited from being charged as Operating Expenses hereunder) and/or capital expenditures which Landlord is permitted to include in Operating Expenses pursuant to clause (42) below;

(6) costs of providing any service, supplies or materials (or level or amount thereof) to any tenant or occupant of the Building to the extent in excess of those services, supplies and materials that Landlord makes available to Tenant at Tenant’s request (or that Landlord furnishes to Tenant and are accepted by Tenant), or is otherwise obligated under this Lease to furnish to Tenant, free of any separate or additional charge (i.e., other than as part of Tenant’s Pro Rata Share of Operating Expenses) (e.g., the cost of providing increased trash removal services (or other increased services or services unique to retail use) to retail tenants of the Building, the cost of providing chilled or condenser water to any tenant and/or the cost of providing heating or air conditioning to any tenant outside of Regular Business Hours);

(7) costs for relocating tenants;

(8) [Intentionally Omitted];

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(9) costs of any electricity, gas or steam for any space in the Building leased to tenants (and the cost of any electricity, gas or steam for any other tenantable space in the Building which exceeds the minimum amount of such services necessary to preserve the safe and efficient operation of the Building in a manner consistent with first class standards), and the cost of any utility that is separately metered to tenants of the Building or for which Landlord is separately reimbursed (i.e., not reimbursed as part of base rent or a pass-though of operating expenses, such as Operating Expenses hereunder) (but this clause (9) shall not include: (x) the cost of electricity, gas or steam used to operate the central components of the Building’s HVAC systems in order to furnish HVAC during Regular Business Hours or ventilating at any other time, (y) costs of any utilities or services performed to the Common Areas, or (z) the cost of utilities used to operate the Building fire and life safety systems);

(10) auditing fees, other than those incurred in connection with the preparation of statements required pursuant to this Article 3 and similar provisions of any other leases of space in the Building;

(11) costs to remediate Hazardous Materials, except: (x) to the extent that such costs are incurred in connection with the remediation of Hazardous Materials required to be performed by Landlord as a result of an Environmental Law (or amendment thereto) first enacted after the Commencement Date or any Comparable Building Environmental Actions first being routinely taken after the Commencement Date, and (y) costs to remediate mold at the Building that Landlord is required to undertake pursuant to Article 28 below; provided, that such costs of remediating mold shall not be included in Operating Expenses to the extent that: (i) such remediation is required as a result of the negligence or intentional misconduct of Landlord or any other tenant of the Building (or any of their respective employees, principals, agents (including Landlord’s Agent), representatives or contractors), or any default, breach or violation of this Lease by Landlord (including any failure to perform Landlord Repairs), or (ii) such costs constitute costs for capital improvements or other capital items (except to the extent that such costs for capital improvements or other capital items are permitted to be included in Operating Expenses pursuant to clause (42) below). Nothing contained in this clause (11) shall limit Tenant’s obligations with respect to Hazardous Materials as set forth in Article 28 hereof;

(12) costs of any items to the extent Landlord receives payment, reimbursement or indemnity from (x) insurance (or would have received payment, reimbursement or indemnity (a) had Landlord maintained the insurance required by this Lease to be maintained by Landlord, or (b) had Landlord timely filed a claim thereunder and with commercially reasonable diligence pursued such claim, or (c) had Landlord not been

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prevented from recovering on such claim by reason of the insurer being insolvent or otherwise financially unable to perform its obligations under such policy); provided, that the amount of any reasonable and customary deductible paid for any such items by Landlord shall not be covered by this clause (12), or (y) any third party, other than from tenants paying to Landlord their respective share of operating expenses pursuant to rent adjustment provisions similar to this Article 3 (such payment, reimbursements or indemnity to be deducted from Operating Expenses in the year in which same was received or would have been received as aforesaid);

(13) costs of insurance against, or the portion of Landlord’s insurance premiums allocable to, acts of terrorism, in excess of $0.65 per square foot of Rentable Area of the Building per annum, except that the aforesaid limit shall increase on a cumulative and compounded basis by three percent (3%) per annum on the first day of the second Lease Year and each subsequent anniversary thereof;

(14) costs resulting from any condemnation or other governmental taking;

(15) costs of performing the Landlord Work and of initially constructing the Building and other Improvements (including, without limitation, the Garage and Common Areas);

(16) costs of: (i) correcting defects in the initial design or construction of the Building or other Improvements (x) which are identified in writing by Tenant to Landlord within the first two (2) Lease Years, or (y) of which Landlord otherwise has actual knowledge within such first two (2) Lease Years (except that the costs of normal repair, maintenance and replacements of components shall be included in Operating Expenses, except to the extent such costs are otherwise excluded from Operating Expenses pursuant to this Paragraph 3(B)), or (ii) the discharge of Landlord’s obligations under the Workletter or the workletters of other leases;

(17) rentals and other related expenses incurred in leasing, or costs of purchasing under an installment sales agreement or otherwise, air conditioning systems, elevators or other equipment ordinarily considered to be of a capital nature if purchased, except to the extent such amounts would otherwise have been included in Operating Expenses under clause (42) below had such items been initially purchased by Landlord, and except that short-term rental of equipment not affixed to the Building that is used in performing Building maintenance or repairs shall be included in Operating Expenses;

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(18) costs of utilities, services, or amenities provided to one or more other tenants in the Building, which items are not made available to Tenant, or are made available at a cost for which Tenant is separately charged (i.e., other than through its Pro Rata Share of Operating Expenses), or are provided to one or more other tenants to a materially greater extent or materially more favorable manner than provided to Tenant (or otherwise made available to Tenant) (but in the latter case, only to the extent of the cost component associated with the “materially greater extent” or “materially more favorable” component of such utilities, services or amenities);

(19) costs for any goods and services (including, without limitation, the utility and other costs of chilled or condenser water, overtime heat or air conditioning and extra cleaning) sold or supplied to tenants and occupants of the Building which is chargeable to Tenant separately under this Lease (i.e., other than through Tenant’s Pro Rata Share of Operating Expenses) for the same type of good or service, or is chargeable to the other tenant separately (i.e., and not as base rent or a pass-through of operating expenses) pursuant to its lease; except that for purposes of the foregoing: (a) the costs incurred by Landlord for any supplemental water or overtime HVAC provided to Tenant (and the amount to be deducted from Operating Expenses in respect thereof) shall be deemed equal to the amounts payable by Tenant for such items pursuant to Article 6 hereof, and (b) the costs of any supplemental water or overtime HVAC provided to any other tenant (and the amount to be deducted from Operating Expenses in respect thereof) shall be deemed equal to the amounts which would be payable by such tenant as if such services were supplied to Tenant hereunder (i.e., equal to the amount set forth in subclause (a) above);

(20) all costs of services provided to, or other expenses (including costs of insurance, to the extent in excess of the costs of insurance incurred for normal office use) incurred solely in connection with, any specialty facility such as an observatory, broadcast facility, luncheon club, food court, concierge area (unless such concierge service has been approved in writing by Tenant), antenna or satellite “farm” or similar area, conference center (including any Common Conference Center), recreational club, cafeteria, restaurants, sundries shop, newsstand or day care facility and costs of any clerks, attendants or other persons in any such specialty facility operated by or on behalf of Landlord; provided, that the costs and expenses of maintaining, repairing, operating or making replacements to the Fitness Center, and the costs of maintaining, repairing or making replacements to the On Site Food Service area of the Building described in Paragraph 6(Q)(i)) hereof and/or the sundries shop described in Paragraph 6(Q)(ii) hereof, shall not (without, in any case, limiting any other exclusion from Operating Expenses set forth herein, including the

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exclusions set forth in clauses (5), (6) and (42) of this Paragraph 3(B)(iii)) be excluded from Operating Expenses pursuant to this clause (20);

(21) salaries and benefits of any employee (whether paid by Landlord or Landlord’s managing agent): (a) above the grade of on-site property manager or similarly designated on-site individual who has responsibility for the management of the Building, and (b) who does not devote substantially all of his or her time to the Building, unless such salaries and benefits of any such employee at or below the grade of property manager who does not devote substantially all of his/her time to the Building are equitably prorated to reflect time spent on operating, managing or otherwise servicing the Building vis-à-vis time spent on matters unrelated to operating, managing or otherwise servicing the Building. Provided that the Landlord or property manager is either Hines Interests Limited Partnership, a Delaware limited partnership (“Hines”) or an Affiliate of Hines, then, notwithstanding the foregoing provisions of this clause (21), salaries and benefits of any one (1) regional or group property manager and one (1) regional or group property engineer may be included in Operating Expenses, as long as such salaries and benefits are equitably prorated to reflect time spent on operating, managing or otherwise servicing the Building vis-à-vis time spent on matters unrelated to operating, managing or otherwise servicing the Building;

(22) costs of Landlord’s general corporate overhead and general administrative expenses, including, without limitation, costs associated with the formation and/or operation of the business entity or entities that constitute(s) (a) Landlord, its corporate, partnership, or limited liability company shareholders, members, or partners, as the case may be and (b) property management companies (as the same are distinguished from the costs of managing, maintaining, repairing, operating and servicing the Building), including related entity accounting and legal matters and land trust fees;

(23) costs of defending any lawsuits;

(24) amounts paid to Affiliates of Landlord for goods supplied to the Building or for services (other than management services, the fees for which are subject to the limitations set forth herein) in or to the Building, to the extent the same would exceed the costs of such goods sold or services rendered by third parties that are not Affiliates of Landlord, on a competitive basis which are of a quality commensurate with the goods or services supplied or furnished by Landlord’s Affiliates;

(25) costs, other than those incurred for ordinary maintenance, security and insurance, for sculpture, paintings or other objects of art located within

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Common Areas, and costs arising from Landlord’s political or charitable contributions (except as permitted in clause (32) below);

(26) costs of painting or decorating in areas leased or intended to be leased to tenants (except that the cost and expense of painting and decorating, but not including artwork, in all Common Areas shall be included in Operating Expenses);

(27) costs of tools and equipment purchased (or leased) for use in the operation, repair or maintenance of the Building or other Improvements to the extent purchased (or leased) prior to the first day of the third (3^rd) Lease Year, or to the extent such costs (whenever incurred) constitute capital expenditures which are not otherwise permitted to be included in Operating Expenses pursuant to clause (42) below;

(28) costs (including fines and penalties) of correcting or remediating any violations of Laws, (x) which violations of Laws exist on the Commencement Date or existed during any period prior thereto, or (y) to the extent that such costs of correcting or remediating violations of Laws result from the negligence or intentional misconduct of Landlord (or its agents (including Landlord’s Agent), employees, principals, contractors or representatives) giving rise to a violation of Laws at the time that such negligence or intentional misconduct occurred, or to the extent that such costs of correcting or remediating violations of Laws result from any negligence in the design or construction of the Building, or any portion thereof. Nothing in this clause (28) shall limit Tenant’s obligations to comply with Laws, as set forth elsewhere in this Lease;

(29) gross rent that exceeds the fair rental value associated with operating the management office in the Building of not more than 3,500 square feet of Rentable Area, which (a) fair rental value, for purposes of the foregoing, shall be equal to the rate of Net Rent and Tenant’s Pro Rata Share of Operating Expenses and Taxes, on a per square foot basis, payable from time to time hereunder (but without regard to any rental credits or caps or abatements to which Tenant is entitled hereunder), (b) shall exclude any space devoted primarily to leasing of the Building and (c) shall be further equitably reduced to the extent such office is used by Landlord or its management agent to operate or manage properties other than the Building and the Property;

(30) fines, penalties, interest, overtime labor charges, surcharges, taxes, indemnity expenses, or any other similar costs incurred by Landlord on account of Landlord’s failure to comply with any Law, failure to make any payment of Operating Expenses when due, or breach of any lease, contract or undertaking, unless such fine, penalty, interest, overtime labor charge, surcharge, tax, indemnity expense or other similar cost is incurred because

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of Tenant’s failure to comply with any such Law, the terms of this Lease or to timely pay Tenant’s Pro Rata Share of Operating Expenses;

(31) expenditures for repairs or maintenance that are reimbursed by warranties, guarantees or service contracts (it being acknowledged and agreed that Landlord shall use commercially reasonable efforts to enforce all such warranties, guarantees or service contracts, as applicable);

(32) advertising, promotional and marketing expenses and dues to professional and lobbying associations (provided that membership dues for participation in real estate trade groups or organizations in an aggregate amount not exceeding $44,000 per year may be included in Operating Expenses, except that the aforesaid limit shall increase on a cumulative and compounded basis by three percent (3%) per year on the first day of the second Lease Year and each subsequent anniversary thereof);

(33) contributions to operating expense or tax or insurance reserves;

(34) bad debt losses suffered by Landlord and reserves therefor;

(35) costs of entertainment of current or prospective tenants, except to the extent permitted under clause (36) below;

(36) costs of activities relating to promoting Building tenant relations (e.g., holiday gifts and lobby entertainment) in excess of $27,000 per year, except that the aforesaid limit shall increase on a cumulative and compounded basis by three percent (3%) per year on the first day of the second Lease Year and each subsequent anniversary thereof;

(37) costs incurred by Landlord solely in connection with the operation, maintenance, repair, replacement, or third party management of the Garage, including any equipment used solely in connection with the operation thereof (it being understood that the costs (as reasonably determined by Landlord) incurred by Landlord for insurance which is incurred in connection with the Garage together with other portions of the Building (and not separately for the Garage) shall not be excluded from Operating Expenses pursuant to this clause 37, and, with respect to any other costs which Landlord reasonably determines are associated with the Garage together with other portions of the Building, only the amount equitably allocated to the Garage, as reasonably determined by Landlord, shall be excluded from Operating Expenses under this clause 37);

(38) costs related to management of the Building that, under a market-based management agreement with an unaffiliated management company providing for a management fee at the rate provided for in this Lease, would be borne by the management company and not reimbursed by the

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owner, including, without limitation, the manager’s general corporate overhead and general administrative and home office expenses (but not including any amounts that are otherwise specifically included in Operating Expenses under the terms this Lease);

(39) [Intentionally Omitted];

(40) costs of insurance against loss of or damage to any improvements (including any extraordinary improvements in the nature of Special Alterations under this Lease) in tenantable spaces made by, on behalf of, or for, any tenant of the Building (regardless of whether paid for by such tenant or paid for by Landlord through allowances or otherwise), other than insurance required to be carried by Landlord (or which Landlord is expressly permitted to carry) pursuant to this Lease (the cost of which shall be included in Operating Expenses hereunder);

(41) [Intentionally Omitted];

(42) costs of “capital improvements and other capital items,” as those terms are defined under generally accepted accounting principles consistently applied, except that Operating Expenses shall include the cost during the Term, as reasonably amortized on a fully amortizing, beginning-of-the-month, level payment basis by Landlord over the useful life (for accounting and not tax purposes) of the applicable capital improvement or other capital item, together with interest on the unamortized amount of said cost at a rate per annum equal to either (a) the actual rate of interest and other borrowing costs and expenses (amortized over the life of the applicable loan and ratably allocated to the relevant amount being amortized) incurred by Landlord, with respect to the cost of such capital item to the extent paid for directly through loan proceeds advanced by a third-party lender, if any, which is not an Affiliate of Landlord, pursuant to the terms of a bona fide loan, or (b) if such costs are not so financed, three percent (3%) over the then-current yield on United States Treasury obligations at the time that the capital item in question was purchased (as reported in the Wall Street Journal or similar financial publication) having a period of maturity closest in duration to the period over which the cost in question is to be amortized, of (x) any capital improvement, the installation of which commenced after the Commencement Date, or any capital item incurred after the Commencement Date, which improvement or item was intended to reduce, and actually reduces, Operating Expenses (as set forth below), or (y) any capital improvement, the installation of which is required to comply with any Laws (including any modifications to any existing Laws) first enacted or promulgated (or so modified) no earlier than the Commencement Date or to comply with any Comparable Building Environmental Actions first becoming routinely undertaken after the Commencement Date (not including, however, any such capital

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improvement that is required solely to cause the premises of any tenant of the Building (as opposed to other portions of the Building or Property) to comply with any such Laws or Comparable Buildings Environmental Actions, as a result of such tenant’s specific use of its premises (as opposed to office use generally)). The annual amortized amount so included in Operating Expenses for any year on account of such capital improvements or capital items which were intended to reduce and actually reduce Operating Expenses shall not exceed Landlord’s reasonable calculation of annual savings in Operating Expenses actually achieved by such improvements or items. For purposes of this Lease, “Laws” means all applicable federal, state, county, local and municipal governmental laws, statutes, ordinances, rules, regulations, codes, decrees, orders and other such requirements, applicable decisions by courts of the State of Illinois, and decisions of federal courts applying the laws of Illinois;

(43) Costs of repairs to the exterior portions of the Building (but not including repairs to any tenant identification signs or similar items affixed to the exterior of the Building), including the roof, façade (including any mullions), any canopies or similar features, and exterior of the lobbies of the Building (but excluding repairs to doors and entrances, and repairs to the Plaza and other exterior portions of the Property, which costs shall be included in Operating Expenses unless otherwise excluded under the other provisions of this Paragraph 3(B)); it being agreed, however, that cleaning and routine maintenance of (as opposed to repairs to) the exterior portions of the Building may be included in Operating Expenses (except to the extent excluded therefrom elsewhere in this Lease); and

(44) Taxes.

(iv) Notwithstanding anything contained in this Lease to the contrary, commencing with calendar year 2011, the amount Tenant is obligated to pay for Tenant’s Pro Rata Share of Controllable Operating Expenses (as defined below) shall not increase by more than three percent (3%) per calendar year (i.e., with the first such calendar year which is subject to this clause (iv) being calendar year 2011 as aforesaid) on a compounding and cumulative basis over the Term. As used herein, the term “Controllable Operating Expenses” means all Operating Expenses except the following: utilities, insurance premiums, capital improvements (to the extent allowable as Operating Expenses), repairs to the Property, and any other Operating Expenses to the extent: (x) that a component of such Operating Expenses is union labor wages, and/or (y) such Operating Expenses are incurred as a result of any Laws not in effect on the Commencement Date. To illustrate the foregoing, if Controllable Operating Expenses for calendar year 2010 were $2.00 per square foot of Rentable Area of the Building, then Controllable Operating Expenses for calendar year 2011 (i.e., being the first such calendar year which is subject to this clause (iv) as aforesaid) shall not, for purposes of this example, exceed $2.06 per square foot of Rentable Area of the Building, and

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Controllable Operating Expenses for calendar year 2012 shall not, for purposes hereof, exceed $2.1218 per square foot of Rentable Area of the Building.

(v) Operating Expenses shall be net of all discounts and reduced by all rebates actually received by Landlord. There shall be no duplication of costs or reimbursements.

(vi) For purposes of this Lease, the term “Landlord’s Actual Cost” shall mean the reasonable actual cost and expense incurred by Landlord in furnishing a particular service or item under this Lease (it being agreed that the foregoing use of the term “reasonable” shall not require Landlord to competitively bid the cost of every such service or item), without any profit or mark-up to Landlord on account thereof, including the reasonable cost of providing supplies, materials, third-party contractors and (to the extent in excess of amounts included in Operating Expenses, as provided above) Building personnel in furnishing such service or item.

(C) Special Allocation of Variable Operating Expenses. If the Property is less than one hundred percent (100%) occupied during all or a portion of any calendar year, or if one or more tenants included in the Rentable Area of the Building provide their own services that are not provided to such tenants by Landlord and which, if provided by Landlord, would otherwise be included in Operating Expenses, then Landlord, in accordance with the Accounting Principles, may determine the amount of variable Operating Expenses (i.e., costs that vary with occupancy levels), which (subject to the last sentence of this Paragraph 3(C)) shall only be the costs and expenses for cleaning, janitorial and trash removal services and supplies, electricity services related to HVAC service to tenant floors, persons that provide cleaning and other services to Building tenants, interior window washing, utilities (including electricity, water, and chilled or condenser water charges), and Building management fees, in each case, to the extent any of the foregoing vary with occupancy levels in the Building and that would have been paid had the Building been 100% occupied and had all of the tenants obtained such services from Landlord, and the amount so determined shall be deemed to have been the amount of variable Operating Expenses for such calendar year; except that in no event shall Tenant be obligated to pay (by virtue of the foregoing “gross-up” or for any other reason), as Additional Rent in any calendar year attributable to any such variable Operating Expenses, an amount in excess of “Tenant’s Occupancy Percentage” multiplied by the actual variable Operating Expense item(s) incurred by Landlord in such year. The term “Tenant’s Occupancy Percentage” shall mean a fraction expressed as a percentage, the numerator of which is the sum of (a) the Rentable Area of the Premises (adjusted, if applicable, for increases or decreases in such Rentable Area of the Premises during such year) plus (b) the “Unique Building Feature Square Footage” (as defined in Paragraph 3(M) below), and the denominator of which is the total Rentable Area of the Building leased to tenants (adjusted, if applicable, for increases or decreases in such Rentable Area leased to tenants during such year). Landlord and Tenant agree that for purposes of this Paragraph 3(C), Landlord may include only those costs set forth above as a variable Operating Expense as expressly provided in the provisions of this Paragraph 3(C), except to the extent that Landlord provides reasonable evidence that any other cost actually varies according to occupancy levels.

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(D) Lease Year-Defined. As used herein, the term “Lease Year” shall mean each consecutive twelve (12) calendar month period during the Term, commencing on the Commencement Date; except that, in all events, the first Lease Year shall end on the last day of the calendar month in which the day immediately prior to the first anniversary of the Commencement Date occurs (it being agreed that each subsequent Lease Year shall end on the applicable anniversary of such last day of such month). By way of example: (a) if the Commencement Date occurs on March 1, 2009, the first (1^st) Lease Year shall mean the period commencing on March 1, 2009, and ending on February 28, 2010 (i.e., the last day of the calendar month in which the day immediately prior to the first anniversary of the Commencement Date occurs), and the second (2^nd) Lease Year shall mean the period commencing on March 1, 2010 and ending on February 28, 2011, and (b) if the Commencement Date occurs on March 10, 2009, the first (1^st) Lease Year shall mean the period commencing on March 10, 2009, and ending on March 31, 2010 (i.e., the last day of the calendar month in which the day immediately prior to the first anniversary of the Commencement Date occurs), and the second (2^nd) Lease Year shall mean the period commencing on April 1, 2010 and ending on March 31, 2011.

(E) Tenant’s Pro Rata Share. For purposes of this Lease, “Tenant’s Pro Rata Share” shall mean a percentage determined by dividing (1) the sum of (a) the then Rentable Area of the Premises, plus (b) the “Unique Building Feature Square Footage” (as defined in Paragraph 3(M) below), by (2) the then Rentable Area of the Building (which Rentable Area of the Building shall include, in any case, the Unique Building Feature Square Footage). Appropriate adjustments shall be made in calculating Tenant’s Pro Rata Share on a per diem basis if the Rentable Area of the Premises or the Rentable Area of the Building changes during any calendar year falling in whole or in part within the Term as a result of the expansion or contraction of the Rentable Area of the Premises (or the Rentable Area of the Building, so long as Tenant’s Pro Rata Share is not increased as a result of any expansion, contraction or re-determination by Landlord of the Rentable Area of the Building, subject, however, to the terms of Article 9 and Article 11 hereinbelow).

(F) Manner of Payment of Operating Expenses.

(i) Landlord shall reasonably estimate at least ninety (90) days before the Commencement Date (for the first full or partial calendar year’s Operating Expenses due hereunder) and thereafter at least thirty (30) days after the commencement of each subsequent calendar year (for each such subsequent full or partial calendar year’s Operating Expenses due hereunder), the amounts Tenant shall owe for Operating Expenses for the applicable full or partial calendar year. Tenant shall pay to Landlord on the first (1^st) day of each month during such calendar year (or portion thereof) an amount equal to 1/12 of such estimate of Tenant’s Pro Rata Share of Operating Expenses for such year (or portion thereof). Landlord’s estimate of Tenant’s Pro Rata Share of Operating Expenses may be adjusted from time to time by Landlord within a calendar year, but not more frequently than twice in each calendar year and any such adjustments of estimates within a calendar year shall be based on Landlord’s reasonable expectations. If any adjustment shows an increase in Tenant’s estimated payments for the current calendar year, Tenant shall pay the difference between the new and former estimates, for the

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period from January 1 of the current calendar year through the month in which such adjustment is sent. Tenant shall make such payments within thirty (30) days after Landlord sends the adjusted estimate to Tenant. If any adjustment shows a decrease in Tenant’s estimated payments for the current calendar year, Tenant shall receive a credit for the difference between the new and former adjustments, for the period from January 1 of the current calendar year through the month in which such estimate is sent. Landlord shall credit such amount towards the next installment(s) of Rent due under this Lease.

(ii) Within one hundred twenty (120) days after the end of each calendar year, or as soon thereafter as practicable, but in no event later than two hundred forty (240) days following the end of each calendar year, Landlord shall provide a statement or statements (an “Operating Statement”) to Tenant signed by a financial officer or authorized representative of Landlord, showing: (a) the amount of actual Operating Expenses identifying major categories therefor, (b) the amount paid by Tenant toward Operating Expenses during said year on an estimated basis, and (c) any revised estimate of Tenant’s obligations for Operating Expenses for the then-current calendar year. Upon written request of Tenant, Landlord shall supply sufficient backup data, as may be reasonably requested by Tenant, to reasonably demonstrate to Tenant to its reasonable satisfaction the accuracy of such Operating Statement in accordance with the provisions of this Lease.

(iii) If any Operating Statement shows that Tenant’s estimated payments of Operating Expenses were less than Tenant’s actual obligations for Operating Expenses for such year, Tenant shall pay the difference within thirty (30) days after its receipt of the Operating Statement. If any Operating Statement shows that Tenant’s estimated payment of Operating Expenses exceeded Tenant’s actual obligations for Operating Expenses for such year, then Landlord shall refund the difference within thirty (30) days after the delivery of such Operating Statement; provided, however, that if this Lease shall not have terminated, Landlord, at Tenant’s written direction, shall credit such difference against the next installment(s) of Rent becoming due hereunder; and, provided, further, that, to the extent that a monetary Default exists at the time that Landlord is required to provide any such refund or credit to Tenant, Landlord shall have the right to offset the amount of such refund or credit against the amount of such monetary Default (including any costs incurred by Landlord relative thereto which are chargeable to Tenant pursuant to Article 22 hereof).

(iv) Tenant’s obligation to pay Tenant’s Pro Rata Share of Operating Expenses for any calendar year, and Landlord’s obligation to refund to Tenant any overpayment on account thereof, shall survive the expiration or sooner termination of this Lease, subject to clause (vi) below.

(v) In no event shall a decrease in Operating Expenses decrease the monthly Net Rent payable hereunder.

(vi) Notwithstanding anything to the contrary contained in this Article (but subject to the terms of Paragraph 3(B)(iii)(42) above), Tenant shall only be obligated to

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make any payments for Operating Expenses which are billed to Tenant within one (1) year after the earlier of: (x) the date that the Operating Statement relating to such Operating Expenses was delivered to Tenant, or (y) the date that the Operating Statement relating to such Operating Expenses was required to be delivered to Tenant as provided herein.

(G) Manner of Payment of Taxes.

(i) Tenant shall pay to Landlord (or as directed by Landlord in writing) Tenant’s Pro Rata Share of each semi-annual installment of Taxes for each year during the Term within the later of: (a) thirty (30) days of delivery by Landlord to Tenant of a statement, accompanied by a copy of the relevant tax bill (the “Tax Statement”), setting forth the amount of each semi-annual installment of Taxes for each year during the Term then due and payable and Tenant’s Pro Rata Share thereof, and (b) fifteen (15) days prior to the date set forth as the due date in the relevant tax bill. Tenant’s obligation to pay its Pro Rata Share of Taxes pursuant to this Paragraph 3(G)(i) for any calendar year which falls (in whole or in part) during the Term shall survive the expiration or sooner termination of this Lease. Landlord agrees to pay all Taxes when due and owing to the applicable governmental authority, except to the extent Tenant has theretofore failed to pay to Landlord Tenant’s Pro Rata Share of Taxes in a timely manner as set forth herein. Landlord agrees to pay (or cause to be paid), in a timely manner, all taxes and assessments (including general real estate taxes) which are or could become a lien against the Property relating to all periods prior to the Commencement Date.

(ii) [Intentionally Omitted].

(iii) Landlord shall use commercially reasonable efforts (which may include the institution of legal proceedings) to minimize Taxes, consistent with the practices to minimize Taxes taken at other comparable Class A office buildings in downtown Chicago.

(iv) Landlord shall, in a manner (and to the extent) consistent with the practices of other Class A office buildings in downtown Chicago, consult with appropriate representatives of the Cook County Assessor’s Office on at least an annual basis in furtherance of reasonably minimizing the Taxes attributable to the Property. In the event Landlord fails to, or elects not to, formally contest the amount or validity of any Taxes or seek a reduction in the valuation of the Property and prosecute any other appeal thereof (each, a “Contest“) for any given calendar year of the Term, Landlord shall so notify Tenant in writing at least thirty (30) days before the last day to file such Contest, and Tenant may, at any time after receipt of such notice, commence such Contest in connection with such calendar year, at Tenant’s sole cost and expense (except for Tenant’s reimbursement rights as hereinafter set forth), and Landlord shall at all times in connection with any such Contest made by Tenant reasonably cooperate with Tenant, at Tenant’s expense (subject to Tenant’s reimbursement rights as hereinafter set forth) (which may include the timely execution and delivery of any applications and other documents which are required to be executed by the owner of the Property). If Landlord

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has failed to deliver proper notice to Tenant as herein required on or before the aforementioned date, then Landlord shall be obligated to commence and pursue all necessary Contests in good faith to reduce the amount of Taxes for such calendar year. Any reasonable costs and expenses paid by Tenant in contesting Taxes shall, to the extent that Tenant is successful in reducing any Taxes, be reimbursed by Landlord, and such amount so reimbursed by Landlord may thereafter be included in Taxes as provided in Paragraph 3(A) above. In connection with any Contest (or any consultation by Landlord with representatives of the Cook County Assessor’s Office, as provided in the first sentence of this subparagraph above), at Tenant’s request, Landlord and Tenant shall confer with each other on all matters of material significance in connection therewith.

(v) If Taxes paid during any calendar year shall be refunded to Landlord in whole or in part for any reason whatsoever, then Landlord shall refund to Tenant Tenant’s equitable share (for the year during which the Taxes being refunded were originally required to be paid) of such refund (allocated in the case of special assessments to the applicable portion of the Term of this Lease) within thirty (30) days after Landlord receives such refund, or, if the Term of this Lease has not expired, at Tenant’s written direction, credit such refund to Tenant against the next installments of Rent becoming due hereunder; provided, however, that to the extent that a monetary Default exists at the time that Landlord is required to provide any such refund or credit to Tenant, Landlord shall have the right to offset the amount of such refund or credit against the amount of such monetary Default (including any costs incurred by Landlord relative thereto which are chargeable to Tenant pursuant to Article 22 hereof). Landlord’s obligation to pay such amounts shall survive the expiration or sooner termination of this Lease.

(vi) Notwithstanding anything contained in this Lease to the contrary, in no event shall the aggregate amount of Taxes, for purposes of determining Tenant’s Pro Rata Share of Taxes hereunder, exceed the following amounts for the following respective periods: (a) $1.00 per square foot of Rentable Area of the Building, for calendar year 2009; (b) $6.00 per square foot of Rentable Area of the Building plus any then “Tax Cap Savings” (as hereinafter defined), for calendar year 2010; (c) $10.00 per square foot of Rentable Area of the Building plus any then Tax Cap Savings, for calendar year 2011; (d) $12.00 per square foot of Rentable Area of the Building plus any then Tax Cap Savings, for calendar year 2012; and (e) $15.00 per square foot of Rentable Area of the Building plus any then Tax Cap Savings, for calendar year 2013 (for purposes of the foregoing, it is understood that Taxes “for” a given calendar year shall be deemed to be the Taxes which are due and payable within such calendar year, regardless of the period with respect to which such Taxes are assessed, as more fully described in Paragraph 3(A)(i) above; therefore, by way of example, the cap on Taxes for calendar year 2009 as set forth in subclause (a) of this Paragraph 3(G)(vi) shall refer to 2008 general real estate Taxes which are due and payable in 2009). To the extent actual Taxes for any of such five (5) calendar years described in the preceding sentence are less than the foregoing capped amounts for such respective calendar year, then the difference between the actual Taxes for such year and the capped amount for such calendar year (herein, the “Tax Cap Savings”) shall be carried forward (or, at Landlord’s option, if Tenant did not otherwise pay the full amount of Tenant’s Pro Rata Share of Taxes for a previous calendar year due

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to the aforedescribed capped amounts, carried backward) and added to the capped amount for such succeeding calendar year (or, at Landlord’s option, to the capped amount in any preceding calendar year, as aforesaid) in determining Tenant’s Pro Rata Share of Taxes due and owing under this Lease for such succeeding (or, if applicable, for any such preceding) calendar year.

(H) Proration. If Tenant’s obligation to pay Additional Rent commences other than on January 1 or if the Expiration Date or other date of termination of this Lease occurs other than on December 31, Tenant’s obligations to pay amounts towards Operating Expenses and Taxes for such first or final calendar years with respect to the Premises, as the case may be, shall be prorated to reflect the portion of such years after or before any such date, as the case may be. Such proration shall be made by multiplying the total estimated or actual (as the case may be) Taxes and Operating Expenses during or for, as the case may be, such calendar years by a fraction, the numerator of which shall be the number of days Tenant is required to pay Additional Rent, and the denominator of which shall be 365 (or 366 during any leap year).

(I) Landlord’s Records. Landlord shall make available in Chicago, Illinois all of the books and records respecting Taxes, Operating Expenses, Tenant’s After Hours HVAC Costs and all other components of Additional Rent, including all such books and records created by its managing agent (“Records”), for any calendar year until the fourth (4^th) anniversary of the last day of such calendar year and, if any dispute with respect to such calendar year is then pending, until such dispute is resolved. If Tenant, by notice (a “Records Examination Request”) to Landlord given within one (1) year of Tenant’s receipt of an Operating Statement or Tax Statement (either, a “Statement”) for any calendar year, shall so elect, then Tenant or its representative shall have the right to examine the Records for such calendar year and to meet with the individuals responsible for preparing and maintaining such Records upon reasonable prior notice during normal business hours at such location as Landlord shall designate in Chicago, Illinois. Any representative retained by Tenant shall be a mid-sized or larger recognized, independent certified public accounting firm (or, if it is then customary for real estate services firms to provide such services on behalf of tenants of comparable office buildings in downtown Chicago, such representative of Tenant may be a real estate services firm with one or more certified public accountants on staff (other than a real estate services firm which, as its primary business, performs audits of the operating expenses of commercial buildings)) familiar with the accounting practices of comparable office buildings in downtown Chicago, but such representative shall not be compensated on a contingency fee basis, unless the industry standard for the most reputable accounting and real estate services firms then providing auditing services for landlords or tenants of comparable Class A office buildings in downtown Chicago is to be compensated on a contingency fee basis. Tenant and its representative shall execute a reasonable confidentiality agreement in favor of Landlord prior to any such examination. Tenant may take exception to matters included in Taxes, Operating Expenses or Landlord’s billings to Tenant therefor, by sending notice specifying such exception and the reasons therefor to Landlord no later than the date that is the later of: (i) ninety (90) days after Landlord, after receipt of a Records Examination Request, makes all such Records for the applicable calendar year available for examination, and (ii) the date that is one (1) year after Tenant’s receipt of the applicable Statement (and Tenant and its representatives shall have no right to examine or audit such Records beyond such period, except as expressly provided below in this Paragraph 3(I)). Unless

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Landlord shall revise or re-issue any such Statement within one (1) year after the same has been delivered to Tenant, such Statement shall thereafter be binding upon Landlord (subject only to adjustments for Taxes as provided in Paragraph 3(A)(ii), Paragraph 3(G)(v) and Paragraph 3(G)(vi) above). The Statement for any calendar year shall be binding upon Tenant except for any matters as to which Tenant timely delivers a Records Examination Request and thereafter timely objects, as set forth above; provided, however, that if, for any calendar year (the “calendar year in question”), Tenant was overbilled for either of Taxes or Operating Expenses by more than three (3%) percent thereof (considering each of Taxes and Operating Expenses separately), then Tenant shall be given a new opportunity, with respect to the two (2) years preceding the calendar year in question, to review the Records for and take exception to the items of Taxes and/or Operating Expenses (as the case may be) for which Tenant was overbilled (and, for the purpose of applying the foregoing provisions of this Paragraph 3(I) to such new opportunity, the Statements for the two (2) preceding years shall be deemed to have been issued to Tenant upon the date it is determined that Tenant was so overbilled for the calendar year in question), except that Tenant shall only have one hundred twenty (120) days from such date on which the Statements for such two (2) preceding years are deemed to have been issued to Tenant within which to review such Records for such two (2) years and to take exception to the items of Taxes and/or Operating Expenses (as applicable) therein. In any event, Tenant acknowledges that Landlord’s ability to budget depends on the finality of such Statements, and accordingly agrees that time is of the essence of this Paragraph 3(I). If Tenant takes exception to any matter contained in a Statement as provided herein, and Landlord and Tenant fail to reach a mutually satisfactory resolution thereof within thirty (30) days after Tenant has taken such exception, such matter shall be resolved by an independent third party arbitrator selected by Landlord and Tenant who is a certified public accountant from a large or mid-size public accounting firm familiar with the accounting practices of comparable office buildings in downtown Chicago. If Landlord and Tenant fail to agree upon such arbitrator within thirty (30) days after their failure to resolve Tenant’s exception to the Statement, either party may request the President of the Illinois CPA Society (or a comparable entity if the Illinois CPA Society does not exist at any time during the Term) to appoint such arbitrator who shall be an independent third party who shall also be a certified public accountant from a mid-sized or large public accounting firm familiar with the accounting practices of comparable office buildings in downtown Chicago. Such independent arbitrator shall be appointed within thirty (30) days after such request. The costs of such arbitrator shall be paid equally by Landlord and Tenant. The determination of such arbitrator shall be made within thirty (30) days after such arbitrator is selected, and shall be final, binding, and conclusive upon the parties. Tenant shall pay all of the costs of Tenant’s accountant/auditor associated with such examination and dispute, unless it is finally determined that Tenant was overbilled with respect to either of Operating Expenses or Taxes by more than three percent (3%) thereof (considering each separately), in which case (in addition to reimbursing Tenant for the amount so overbilled) Landlord shall pay the reasonable costs of Tenant’s accountant/auditor with respect to the applicable Operating Expenses or Taxes, as the case may be. If, in connection with any such examination and dispute, it is finally determined that Tenant was overbilled with respect to Operating Expenses and Taxes by three percent (3%) thereof or less (considering each separately), then Landlord shall reimburse Tenant for an amount equal to the amount that Tenant was so overbilled. If it is finally determined that Tenant was overbilled with respect to either Operating Expenses or Taxes by more than three percent (3%) thereof (considering each

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separately), then Landlord shall (in addition to reimbursing the amount so overbilled and paying Tenant’s audit costs as provided herein), pay Tenant interest at the Default Rate on the amount so overbilled, accruing within the period commencing on the later of (X) the date on which the Statement for the Operating Expenses and/or Taxes (as applicable) in question was delivered by Landlord to Tenant (or, if not timely delivered by Landlord, the date that such Statement was required to be delivered by Landlord to Tenant pursuant to the terms hereof), or (Y) the date on which the overpayment in question was made by Tenant, and ending on the date on which Tenant is fully reimbursed for Tenant’s overpayment thereof. Pending resolution of any such exceptions in the foregoing manner, Tenant shall continue paying Taxes and Operating Expenses in the manner provided herein (and based on Landlord’s Statements therefor), subject to adjustment after any such exceptions are so resolved. Any payment or reimbursement to be made by Landlord to Tenant pursuant to this Paragraph 3(I) shall, if Tenant so requests in writing, be credited against the next installment(s) of Rent becoming due hereunder (rather than being paid to Tenant). Landlord and Tenant further agree that, to the extent that a monetary Default exists at the time that Landlord is required to provide any payment or reimbursement to Tenant under this Paragraph 3(I), Landlord shall have the right to offset the amount of such payment or reimbursement against the amount of such monetary Default (including any costs incurred by Landlord relative thereto which are chargeable to Tenant pursuant to Article 22 hereof).

(J) Rent and Other Charges.

(i) Net Rent, Additional Rent for Taxes and Operating Expenses, and any other amounts which Tenant is or becomes obligated to pay Landlord under this Lease are sometimes herein referred to collectively as “Rent”, and all remedies applicable to the non-payment of Rent shall be applicable thereto. Rent shall be paid either (at Tenant’s election) by wire transfer or check, in good funds which at the time or times of payment represents legal tender for public and private debts in the United States of America, at any office maintained by Landlord or its agent at the Property, or at such other place in the United States of America as Landlord may designate. The term “Additional Rent,” as used herein, shall mean all sums other than Net Rent payable by Tenant to Landlord under this Lease (which term “Net Rent” shall include, for purposes of this Lease, Tenant’s payment obligations under Paragraph 3(M)(i) hereof), including Tenant’s Pro Rata Share of Taxes and Operating Expenses, late charges, overtime or excess service charges, damages, and interest and other costs related to Tenant’s failure to perform any of its obligations under this Lease.

(ii) Rent shall be paid without any prior demand or notice therefor and without any deduction, set-off, or counterclaim, or relief from any valuation or appraisement laws except to the extent expressly provided to the contrary in this Lease, including (to the extent applicable) the abatement or credit of Rent expressly provided in Article 9, Article 11, Article 23, Article 29 and Article 34 hereof and Sections 9.b and 9.f of the Workletter. Unless otherwise specified, all Additional Rent (not including monthly payments of Operating Expenses, which shall be payable on the first (1^st) day of each calendar month during the Term or as otherwise specified herein, without Landlord’s demand therefor) shall be payable by Tenant within thirty (30) days after receipt of

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written demand therefor by Landlord, accompanied by reasonably detailed documentation substantiating the amount claimed to be due. Unless specifically provided to the contrary, wherever in this Lease Landlord is entitled to be reimbursed by Tenant for its costs, such costs shall be limited to Landlord’s Actual Costs.

(K) No Obligation Prior to Commencement Date. Notwithstanding anything to the contrary contained herein, in no event shall Tenant have any duty or obligation to pay any Additional Rent for Taxes or Operating Expenses, or any other amounts (except as expressly provided herein or in the Workletter), with respect to any period prior to the Commencement Date, notwithstanding the fact that any Delivery Date (including the Final Delivery Date) shall have occurred, or that Tenant may, prior to the Commencement Date, be in occupancy of the Premises (or any portion thereof) and/or using the same for any purpose (including the conduct of Tenant’s business), or that Tenant may be using the services described in Article 6 hereof.

(L) Abatement of Additional Rent for Taxes and Operating Expenses. Notwithstanding anything herein to the contrary, Tenant shall be entitled to an abatement of Additional Rent for Taxes and Operating Expenses for the period beginning on the Commencement Date and continuing through the day immediately preceding the one (1) year anniversary of the Commencement Date, which abatement shall apply with respect to the Initial Premises, as adjusted by any Pre-Term Expansion Premises or Pre-Term Contraction Space hereunder. Notwithstanding the foregoing, Tenant shall have the right, by written notice thereof to Landlord given on or before the Commencement Date, to spread out the abatement of Additional Rent for Taxes and Operating Expenses over a two-year period, (i.e., in lieu of the one-year abatement otherwise described in this Section 3(L)), in which case Tenant shall, instead of one-year abatement provided above, be entitled to an abatement of one-half of the amount of such Additional Rent for Taxes and Operating Expenses otherwise due hereunder for the period from and after the Commencement Date and continuing through the day immediately preceding the two (2) year anniversary of the Commencement Date (and the remaining one-half of such Additional Rent shall continue to be due and payable as and when payments on account of Additional Rent for Taxes and Operating Expenses are otherwise due and owing under this Lease). The foregoing abatement shall not otherwise affect any and all other obligations of Tenant hereunder during the entire such one-year (or, if applicable, two-year) abatement period described in this paragraph.

(M) Unique Building Features Rent. The parties acknowledge that, based on certain unique design features of the Building made to accommodate Tenant’s requirements which are described on Exhibit A-5 hereto (the “Unique Building Features”), Landlord has less area at the Building to lease to third parties than would have been available in the absence of such design features. Based on the foregoing and as part of the overall agreements of the parties under this Lease, the parties agree as follows:

(i) Tenant shall pay Landlord, as an additional rental amount, payable monthly in advance commencing on the Commencement Date hereof and for the balance of the Term, pursuant to the same payment terms as otherwise applicable to the payment of Net Rent hereunder, an amount equal to (a) the rate of Net Rent per square foot of

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Rentable Area as applicable to the Initial Premises from time to time under this Lease (and if more than one rate applies relative to the Initial Premises during any renewal period hereunder, then the weighted average rate per rentable square foot from time to time relative to applicable portion of the Initial Premises then being leased hereunder), multiplied by (b) number of square feet of Rentable Area of the Unique Building Features (the “Unique Building Feature Square Footage”) (all amounts payable under this Paragraph 3(M)(i) being deemed to be part of “Net Rent” for all purposes of this Lease); and

(ii) “Tenant’s Pro Rata Share” and “Tenant’s Occupancy Percentage”, as such terms are defined above in this Paragraph 3, shall be increased based on the Unique Building Feature Square Footage for purposes of determining Tenant’s Additional Rent due and owing hereunder, all as provided in the definitions of such terms set forth hereinabove.

Without limitation of the foregoing, it is estimated by the parties that the Unique Building Feature Square Footage shall be approximately 14,361 square feet (with the actual square footage of Rentable Area thereof being determined pursuant to the Measurement Method and as part of the final determination of all Rentable Area under this Lease), comprised of the following: (i) approximately 620 square feet of Rentable Area attributable to Tenant’s vertical conveyor system; (ii) approximately 3,429 square feet of Rentable Area attributable to the additional stairs on Tenant’s conference center floors; (iii) approximately 1,189 square feet of Rentable Area attributable to Tenant’s dedicated conference center elevator shuttle; (iv) approximately 495 square feet of Rentable Area attributable to Tenant’s dedicated food service shuttle elevator; (v) approximately 2,707 square feet of Rentable Area attributable to the balcony adjacent to Tenant’s conference center floors; (vi) approximately 1,602 square feet of Rentable Area attributable to Tenant’s TTR’s (as defined in Paragraph 1(C)(v) above) to the extent not located within the Initial Premises; and (vii) approximately 4,319 square feet of Rentable Area attributable to that portion of the third fire stairwell located in the Low-Rise and Mid-Rise portions of the Building (with the actual square footage of Rentable Area of each of the foregoing being determined pursuant to the Measurement Method and as part of the final determination of all Rentable Area under this Lease).

ARTICLE 4

Possession; Occupancy Prior to Commencement Date

(A) Possession. Possession of each portion of the Premises shall be tendered to Tenant by Landlord, with all Delivery Work (as defined in the Workletter) therein substantially completed (as defined in the Workletter), and in compliance with the terms hereof and the Workletter, in accordance with the following schedule (the “Delivery Date Schedule”):

(i) The portion of the Premises located on the 4^th and 5^th floors of the Building (the “Phase I Segment”) shall be delivered to Tenant on or before March 1, 2008 (the “Scheduled Phase I Delivery Date;” the date on which the entire Phase I Segment is actually delivered to Tenant with all of the Delivery Work

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substantially completed and in compliance with the terms hereof and the Workletter, is referred to herein as the “Phase I Delivery Date”);

(ii) The entire balance of the Low-Rise Floors Premises, together with any Pre-Term Expansion Premises located on Low-Rise Floors, if applicable, and reduced by any Pre-Term Contraction Space located on Low-Rise Floors, if applicable (the “Phase II Segment”), shall be delivered to Tenant on or before May 1, 2008 (the “Scheduled Phase II Delivery Date;” the date on which the entire Phase II Segment is actually delivered to Tenant with all of the Delivery Work substantially completed and in compliance with the terms hereof and the Workletter, is referred to herein as the “Phase II Delivery Date”); and

(iii) The entire Mid-Rise Floors Premises, reduced by any Pre-Term Contraction Space located on Mid-Rise Floors, if applicable (the “Phase III Segment”), shall be delivered to Tenant on or before June 1, 2008 (the “Scheduled Phase III Delivery Date;” the date on which the entire Phase III Segment is actually delivered to Tenant with all of the Delivery Work substantially completed and in compliance with the terms hereof and the Workletter, is referred to herein as the “Phase III Delivery Date”).

(B) For purposes hereof: (a) the term “Segment” shall mean any of the Phase I Segment, Phase II Segment or Phase III Segment, (b) the term “Delivery Date” shall mean any of the Phase I Delivery Date, Phase II Delivery Date or Phase III Delivery Date, (c) the term “Final Delivery Date” shall mean the last of the Delivery Dates to actually occur, and (d) the term “Scheduled Delivery Date” shall mean any of the Scheduled Phase I Delivery Date, the Scheduled Phase II Delivery Date or, the Scheduled Phase III Delivery Date. Wherever in this Lease the term “applicable” is used to describe the relationship between or among a Segment, a Delivery Date and/or a Scheduled Delivery Date, such term shall refer to the Segment, Delivery Date and Scheduled Delivery Date that have the same Roman numeral assigned thereto as provided above (for example, the Phase I Segment is “applicable” to the Phase I Delivery Date and Scheduled Phase I Delivery Date, and the Phase I Delivery Date is “applicable” to the Scheduled Phase I Delivery Date). Any failure of Landlord to deliver any Segment by the applicable Delivery Date hereunder shall be subject to the terms and provisions of Paragraph 29(C) hereof.

(C) Condition of Premises. Each Segment of the Premises shall be delivered to Tenant on or before the Scheduled Delivery Date applicable thereto, in vacant, broom clean condition, with all Delivery Work substantially completed, and otherwise in compliance with the terms and provisions of the Workletter and this Lease. After possession of any Segment is delivered to Tenant, Tenant may perform any Tenant Work (as defined in the Workletter) and Furniture Work (as defined in the Workletter) therein pursuant to the Workletter, and Landlord shall perform any Permitted Post Delivery Work therein in accordance with the Workletter. Landlord agrees that if the Delivery Work (or portions thereof) is substantially completed in any Segment prior to the Delivery Date or Scheduled Delivery Date applicable thereto (or Landlord Work is sufficiently completed, as determined by Landlord in its reasonable discretion, so as to allow Tenant to gain access to such Segment for purposes of performing its construction

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document field verification and/or space planning (if not theretofore completed) and construction activities in such Segment without interference to Landlord), Landlord shall cooperate with Tenant to allow Tenant to gain access to such Segment (or portions thereof) prior to the Delivery Date or Scheduled Delivery Date (as applicable) applicable thereto in order to enable Tenant to commence its construction document field verification and/or space planning (if not theretofore completed) and construction activities (including the Tenant Work and Furniture Work) prior to said Delivery Date or Scheduled Delivery Date (as applicable). Tenant’s acceptance of the Premises (or any Segment or portion thereof) shall not be deemed to release Landlord from any of its duties and obligations under the Workletter (including the obligation to perform and complete the Landlord Work and to pay the Tenant Work Allowance (as defined in the Workletter) in accordance with the terms of the Workletter) or from any of its obligations under this Lease with respect to the construction, operation, maintenance, repair or replacement of the Building and other Improvements or the providing of services to Tenant as provided for in this Lease.

(D) Occupancy Prior to Commencement Date. Landlord and Tenant acknowledge and agree that, commencing on the date on which each portion of the Premises is delivered by Landlord to Tenant, Tenant shall have the right to use and occupy such portion of the Premises (and other areas which Tenant has the right to use hereunder) for any purpose which complies with the terms of this Lease (including the performance of the Tenant Work and Furniture Work, and the conduct of Tenant’s business in the Premises), notwithstanding the fact that the Commencement Date may not yet have occurred. Any such use and occupancy of the Premises by Tenant (and/or any access or entry to the Premises by Tenant) prior to the Commencement Date shall be subject to each and all of the terms and provisions of this Lease, except that: (i) Tenant shall have no obligation to pay any Net Rent, Additional Rent for Tenant’s Pro Rata Share of Operating Expenses or Taxes, or (except as otherwise expressly provided herein or in the Workletter) any other amounts with respect to any such period prior to the Commencement Date, and (ii) except as provided in the Workletter, Landlord shall have no obligation to furnish any Building Services at any time prior to the date of issuance of a temporary or permanent certificate of occupancy from the City of Chicago relative to the Landlord Work.

ARTICLE 5

Use and Rules

(A) Tenant’s Use.

(i) Tenant may use the Premises for general office purposes and all lawful ancillary purposes consistent with Class A office building usage, including, but not limited to, the conducting of a commercial law practice and any activities reasonably ancillary thereto, and those ancillary purposes set forth below, and for no other purpose whatsoever. Tenant may use any storage space within the Premises (or described in Paragraph 6(M) below) for storage of records as well as furniture, equipment, supplies, attic stock and materials of the type customarily used by office building tenants or contemplated by the uses referred to in this Article.

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(ii) Tenant may also operate and maintain in the Premises, subject to all Laws and applicable provisions of this Lease, as uses ancillary to Tenant’s use of the Premises for general office purposes, (a) a kitchen, lunchroom, cafeteria, dining room, vending, lounge, break areas (that may include, without limitation, microwaves, coffee makers, toasters, refrigerators and dishwashers), exercise facilities, training centers, meeting facilities and automatic teller machines (all of which shall be solely for the use of Tenant’s personnel and office business invitees), (b) such printing, mail handling, duplicating, reproduction, photographic word processing, data processing, communications, and such other equipment and facilities or technologies (whether or not in existence or commercial use at the time of execution of this Lease), as Tenant may deem necessary, desirable or convenient for the conduct of its business or for the comfort, convenience or well being of its personnel and office business invitees, (c) additional lavatory facilities ancillary to Tenant’s conference center, (d) a day care center, and (e) such other uses as may, from time to time, be consistent with office tenancy in Class A office buildings in downtown Chicago (provided that such uses described in clauses (d) and (e) above do not result in an increase in any costs or liabilities to Landlord, unless Tenant agrees to pay the same).

(iii) Compliance With Laws:

(1) Tenant shall comply with (a) all Laws respecting all matters of occupancy, condition, use or maintenance of the Premises, and (b) all applicable regulations and requirements of Landlord’s fire insurance underwriters customarily applicable to Class A office buildings in downtown Chicago (which requirements of Landlord’s fire insurance underwriters shall not, in any event, prohibit or limit Tenant from using and occupying: (I) the Premises for office, storage, conference center and food preparation/service purposes, as permitted under this Lease, or (II) the other portions of the Property which Tenant has the right to use or occupy under this Lease for the purposes permitted under this Lease) respecting all matters of occupancy, condition, use or maintenance of the Premises, whether any of the foregoing matters described in subclause (a) or subclause (b) shall be directed to Tenant or Landlord (except that Tenant shall not be responsible for taking any actions to comply with such Laws or requirements to the extent that (1) such actions are required as a result of the acts or omissions (to the extent, in the case of omissions, that the same constitute negligence, or any violation of this Lease or Laws, and to the extent, in the case of acts, that such acts are not required of Landlord under this Lease) of Landlord or its agents, contractors or employees, (2) such Laws or requirements require the performance of capital improvements to the Premises based on changes or additions to such Laws or requirements which were not in effect as of the Commencement Date and which relate to general office use (e.g., the installation of additional fire or life safety equipment to the Premises required under a Law enacted after the Commencement Date which applies to all office buildings in Chicago) (as opposed to Tenant’s specific use of the Premises), and such

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capital improvements are not required solely as a result of any Alteration Work or Tenant Work performed by Tenant, or (3) such Laws or requirements relate to any Landlord Repair Areas within the Premises or to the providing of Building Services to the Premises and relate to general office use (as opposed to Tenant’s specific use of the Premises), and the actions required of Landlord to comply with such Laws or requirements are not required solely as a result of any Alteration Work or Tenant Work performed by Tenant; all subject, in any event, to the right of Landlord to include the costs thereof in Operating Expenses to the extent permitted pursuant to Paragraph 3(B) above). Tenant shall not: (x) make any use of the Premises or the Property, do anything in or on the Premises or Property or bring or keep anything in the Premises or the Property, that is not in compliance with any of the foregoing, or (y) permit any of its agents, representatives, employees, principals, contractors or subtenants to make any use of the Premises or Property, to do anything in or on the Premises or Property or bring or keep anything in the Premises or Property, that is not in compliance with any of the foregoing. Tenant shall procure and maintain all licenses and permits legally necessary for the operations of its business at the Premises.

(2) Landlord shall comply with all Laws and all applicable requirements of Landlord’s fire insurance underwriters respecting all matters of occupancy, condition, use or maintenance of

(a) the Landlord Repair Areas (including the Common Areas), and

(b) the Premises (but, as to this clause (b), only to the extent that such Laws or requirements (I) require the performance of capital improvements to the Premises based on changes or additions to such Laws or requirements which were not in effect as of the Commencement Date and which relate to general office use (e.g., the installation of additional fire or life safety equipment to the Premises required under a Law enacted after the Commencement Date which applies to all office buildings in Chicago) (as opposed to Tenant’s specific use of the Premises), or (II) relate to the providing of Building Services to the Premises),

in all cases not including any which relate solely to Tenant’s specific use of the Premises (as distinguished from general office use) or which result solely from any Tenant Work or Alteration Work performed by Tenant, whether any of the foregoing matters shall be directed to Tenant or Landlord (except that (subject in all events to the terms of Article 9 and Article 11 below) Landlord shall not be responsible for taking any actions to comply with such Laws to the extent that such actions are required (1) as result of the acts or omissions (to the extent, in the case of omissions, that the same constitute negligence, or any violation of this Lease or Laws,

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and to the extent, in the case of acts, that such acts are not required of Tenant under this Lease) of Tenant or its agents, contractors or employees, or (2) by any Laws, or any and all applicable Board of Fire Insurance Underwriters regulations and requirements that are required solely because of the specific use of the Premises by Tenant (as distinguished from general office use) or solely as a result of any Alteration Work or Tenant Work performed by Tenant). Landlord shall not: (x) make any use of the Property, do anything at the Property or bring or keep anything at the Property, that is not in compliance with any of the foregoing, or (y) permit any of its agents (including Landlord’s Agent), representatives, employees, principals or contractors to make any use of the Property, do anything at the Property or bring or keep anything at the Property, that is not in compliance with any of the foregoing. Landlord shall procure and maintain all licenses and permits legally necessary for the operations of its business at the Property.

(iv) Subject to the terms of the next sentence, Tenant shall not use the Premises in any manner inconsistent with the uses otherwise permitted hereunder, so as to cause a cancellation of Landlord’s insurance policies, or increase the premiums thereunder, unless Tenant agrees to pay for such increased premiums. Landlord agrees that Landlord’s insurance policies shall not, in any event, prohibit or limit Tenant from using and occupying: (a) the Premises for office, conference center, storage and food preparation/service purposes, as permitted under this Lease, or (b) the other portions of the Property which Tenant has the right to use or occupy under this Lease for the purposes permitted under this Lease, nor (in either case) impose any additional premiums as a result of any such use or occupancy.

(v) Tenant, at its sole cost and expense and after notice to Landlord, may contest by appropriate proceedings prosecuted diligently and in good faith, the legality or applicability of any Law affecting the Premises, provided that (a) Landlord shall not be subject to civil or criminal penalties or fines or prosecution for a crime or any other costs or liabilities (unless, in the case of such other costs or liabilities, Tenant agrees to pay the same), nor shall the Property or any part thereof be subject to any liens, encumbrances or to being condemned, nor shall the certificate of occupancy for the Premises or the Building or any other licenses or permits relative to the Building be suspended by reason of Tenant’s non-compliance with Laws (to the extent that compliance therewith is Tenant’s responsibility hereunder) or by reason of such contest, and (b) Tenant shall keep Landlord regularly advised as to the status of such proceedings. Landlord, at its sole cost and expense, may contest by appropriate proceedings prosecuted diligently and in good faith, the legality or applicability of any Law affecting the Property, provided that Tenant shall not be subject to civil or criminal penalties or fines or prosecution for a crime or any other costs or liabilities (unless, in the case of such other costs or liabilities, Landlord agrees to pay the same), nor shall the certificate of occupancy for the Premises or the Building or any other licenses or permits relative to the Premises be suspended by reason of Landlord’s non-compliance with Laws (to the extent that compliance therewith is Landlord’s responsibility hereunder) or by reason of such contest.

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(vi) Tenant shall comply with all rules set forth in Exhibit D attached hereto (such rules, as the same may be amended and supplemented in accordance with this paragraph, from time to time, being herein referred to as the “Rules”). Landlord shall have the right reasonably to amend and supplement such Rules, from time to time, as may reasonably be required for the safety, care or cleanliness of the Property or the preservation of good order therein, and all such amendments and supplements shall be binding upon Tenant fifteen (15) days after written notice to Tenant, so long as no such amendment or supplement is inconsistent with this Lease or adversely affects (except to a de minimis extent) Tenant’s use and occupancy of the Premises permitted under this Lease or Tenant’s performance of any Alteration Work. All Rules shall be applied on a non-discriminatory basis to tenants of the Building, in a reasonable manner, and in a manner which shall not interfere (except to a de minimis extent) with the use and occupancy of the Premises permitted under this Lease or Tenant’s performance of any Alteration Work. Nothing herein shall be construed to give Tenant or any other person any claim, demand or cause of action against Landlord arising out of the violation of such Rules by any other tenant, occupant or visitor of the Property.

(vii) Both Landlord and Tenant shall conduct their respective businesses at the Building (including Tenant’s performance of any Alteration Work) in a manner which avoids (a) material interference with the operation of the Building (it being agreed that Tenant’s use of the services and amenities described in Article 6 hereof in compliance with the terms of said Article 6 shall not constitute any such interference), and (b) strikes, picketing and boycotts of, on or about the Premises or the Building.

(B) Limitation on Other Businesses and Uses.

(i) Provided that this Lease and/or Tenant’s right of possession of the Premises shall not have been terminated, Landlord agrees that Landlord shall not, without the prior written consent of Tenant (which consent may be withheld in Tenant’s sole discretion), hereafter during the Term, permit the use or occupancy of any space at the Property for any of the following uses (except to the extent that applicable Laws prohibit any of the following restrictions) (“Prohibited Uses”): (a) use by any foreign, federal, state, county, municipal or other governmental or quasi-governmental entity or agency that regularly attracts to its premises large numbers of persons in the general public or results in a materially heightened security environment at the Building (e.g., an embassy), (b) any use that is inconsistent with the first class character of the Building, (c) retail sale of merchandise to the general public which regularly attracts large numbers of persons in the general public to the Building (other than in the Retail Area of the Building), or any bar or restaurant (other than: (x) in the Retail Area of the Building, and/or (y) cafeterias within office tenant spaces at the Building for use by such tenants and their employees, clients and other tenants and occupants of the Building, but not by members of the general public), (d) a hospital or clinic, medical or dental office, or rehabilitation center (other than solely as administrative offices connected with any such uses (and in no event for patient care)), (e) a travel or employment agency, other than any such agency which provides services to clients and/or customers by mail, telephonic or computerized means, or other means which do not involve visitation by such clients or customers to the

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Building, (f) a labor union office, (g) a school (other than for training of personnel of tenants and occupants of the Building as an incidental use of such tenants’ or occupants’ space), (h) a dance or music studio, or (i) any direct lease or license of space in the Building by Landlord to a Competitor Law Firm (as hereinafter defined). The term “Retail Area” shall mean (I) the portion of the ground floor of the Building designated by Landlord for retail tenancy, and (II) the portion of the ground floor of the Building designated by Landlord for providing On-Site Food Service; it being agreed that the Retail Area shall not, in any event, include any portion of the Main Lobby of the Building. For purposes hereof, the term “Competitor Law Firm” shall mean any of the following law firms: (A) Winston & Strawn LLP; (B) Mayer Brown Rowe & Maw LLP; (C) Jenner & Block LLP; (D) Sidley Austin Brown & Wood LLP; (E) Bartlit Beck Herman Palencher & Scott LLP; (F) Seyfarth Shaw LLP; (G) McDermott Will & Emery LLP; (H) Katten Muchin Zavis Rosenman; (I) DLA Piper Rudnick Gray Cary US LLP, and (J) Skadden Arps Slate Meagher & Flom LLP. Landlord shall not be deemed to have violated the Prohibited Use described in clause (i) above if any tenant or occupant of the Building enters into an assignment, sublease or other occupancy arrangement with any of the aforedescribed Competitor Law Firms, or if any tenant or occupant of the Building merges or consolidates with or into, or acquires or is acquired by, any of the aforedescribed Competitor Law Firms.

(ii) Neither Tenant nor any Transferee shall, without the prior written consent of Landlord (which consent may be withheld in Landlord’s sole discretion), use or occupy, or permit the use or occupancy of, any part of the Premises in any manner constituting a Prohibited Use.

(iii) Landlord shall ensure that the Building is, at all times, a non-smoking Building, and shall use reasonable efforts not to permit any user or occupant of the Building to smoke therein (subject, however to the terms of Paragraph 6(Q)(xi) below).

(iv) Except as required by applicable Laws, or as otherwise expressly provided elsewhere in this Lease (including Paragraph 6(Q) and Article 39 hereof, and including, in any event, any use of areas as shown on Attachment 1 to the Workletter, which shall be deemed permitted for all purposes of this Paragraph 5(B)(iv)), and without limiting Landlord’s obligations under Paragraph 21(F) hereof, Landlord shall not, without Tenant’s prior written consent, permit any material use of the Main Lobby or the Plaza of the Building. In the event that Landlord requests Tenant’s consent to any such material use, and Tenant fails to respond to such request within fifteen (15) Business Days after its receipt of such notice, then Landlord shall have the right to send a second notice to Tenant which shall (in addition to again requesting such consent) contain a provision stating “TENANT’S FAILURE TO RESPOND TO THE SUBJECT MATTER HEREOF WITHIN FIVE (5) BUSINESS DAYS AFTER ITS RECEIPT HEREOF SHALL CONSTITUTE TENANT’S CONSENT THERETO,” and in the event that Tenant fails to respond to such second notice within five (5) Business Days after Tenant’s receipt thereof, Tenant shall be deemed to have consented to the proposed use set forth in Landlord’s notice. Without limitation of the foregoing, without Tenant’s prior consent (or as otherwise expressly provided elsewhere in this Lease (including Paragraph 6(Q) and

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Article 39 hereof, and including any uses as shown in Attachment 1 to the Workletter)), Landlord shall not permit any retail use of space (or advertisement or signage for any retail space) in the Main Lobby (or in any area adjacent to and visible from the Main Lobby). Landlord and Tenant further agree that (without limiting Landlord’s obligations under Paragraph 21(F) hereof) except as expressly provided in this Lease (including Paragraph 6(Q) and Article 39 hereof, and including any uses as shown in Attachment 1 to the Workletter), or as otherwise required by applicable Laws, Tenant shall have the right to require Landlord to cease any non-material use of the Main Lobby or Plaza (at Landlord’s sole cost and expense, which shall not be included in Operating Expenses) undertaken without the prior written consent of Tenant (or “deemed” consent as provided above in this subclause (iv)), in the event that Tenant determines (in its sole discretion) that the same is not consistent with a Class A building or the overall character of the Property (it being acknowledged that any material use of the Main Lobby or Plaza not otherwise required by applicable Laws shall require Tenant’s prior consent (or “deemed” consent), as provided above). Nothing contained in this Paragraph 5(B)(iv) shall be deemed to prevent or limit Landlord or any tenant or occupant of the Building from using the Plaza or Main Lobby of the Building for purposes of normal pedestrian ingress and egress to and from the Building, or for temporary Building functions (e.g., holiday functions, ice cream socials for tenants and their employees, etc.) so long as the same are consistent with a Class A building and the overall character of the Property, (and such temporary Building functions shall not be deemed a “material” use of the Main Lobby or Plaza for purposes hereof).

ARTICLE 6

Services and Utilities

(A) Utilities and Services. Except as provided in Paragraph 3(B) above and below in this Article 6, and as otherwise expressly provided herein to the contrary, the costs of providing the following utilities and services required to be provided by Landlord shall be included in Operating Expenses (it being agreed, however, that the costs payable by Tenant for any utilities and services which are separately metered to the Premises (or any portion thereof) shall be based on the level of consumption of such utilities and services as measured by the applicable meters). Landlord shall provide the following services and utilities during the Term (and at such times prior to the commencement of the Term as are provided in the Workletter):

(i) Life safety service and electricity for emergency lighting, in accordance with Laws.

(ii) Heating, ventilating and air-conditioning service (“HVAC”) to the Premises (and the Common Areas) as described and further set forth on Exhibit E, from 8:00 a.m. until 8:00 p.m. Monday through Friday and 8:00 a.m. until 4:00 p.m. on Saturdays, except on Holidays (“Regular Business Hours”). “Holidays” for purposes of this Lease shall mean (exclusively): (a) New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day, and (b) any other day or days commonly observed as holidays by businesses in comparable Class A office buildings in

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downtown Chicago that Landlord and Tenant hereafter mutually agree in writing shall constitute “Holidays” hereunder. Landlord agrees to initiate the operation of the Building’s HVAC systems and equipment in a manner as may reasonably be appropriate for them to be operational at the beginning of the Regular Business Hours in accordance with the requirements specified in Exhibit E and maintained throughout such hours.

(iii) Domestic cold water at all times for sprinkler, cleaning, drinking, kitchen, lavatory and toilet purposes (provided that hot water shall also be supplied for normal lavatory purposes) at those points of supply provided for nonexclusive general use of all tenants in the Building. Consumption of water usage for the Premises shall be measured by one or more separate meters, which shall be installed by Landlord at Landlord’s sole cost and expense.

(iv) Cleaning and trash removal service Monday through Friday (except on Holidays) in and about the Premises, and Common Areas, as set forth on Exhibit F-1 attached hereto. In providing such cleaning and trash removal services, Landlord and Landlord’s contractors shall use only the Common Freight Elevators for purposes of gaining access to and from the Premises; provided, that Landlord and Landlord’s contractors may use the Tenant Freight Elevator (but not, without Tenant’s prior consent, the passenger elevators serving the Premises) for such purposes outside of Regular Business Hours, subject to the terms of Paragraph 6(A)(vi) below. Tenant shall have the right, from time to time, to require that cleaning and trash removal service be performed with respect to the Premises at any time after Regular Business Hours reasonably designated by Tenant (which may include, without limitation, late night service); provided, that to the extent that such times outside of Regular Business Hours designated by Tenant are outside of the hours specified on Exhibit F-1 attached hereto, and additional Landlord’s Actual Costs are incurred by Landlord as a result of providing such cleaning and trash removal services to the Premises during such times at Tenant’s request (and such additional costs would not have been incurred but for such request of Tenant), Tenant shall reimburse Landlord for such additional Landlord’s Actual Costs. Notwithstanding anything to the contrary in the foregoing, Tenant shall have the right (but not the obligation), by written notice to Landlord at any time, to elect to itself cause the entire Premises to be cleaned (rather than receiving cleaning services from Landlord) commencing no sooner than on the first calendar day of any calendar month occurring ninety (90) days after the giving of written notice thereof to Landlord (the “Tenant Cleaning Commencement Date”). If Tenant gives any such notice, then (a) commencing upon the Tenant Cleaning Commencement Date, Tenant, using a cleaning contractor of its choice (who shall have been approved prior thereto by Landlord, which approval shall not be unreasonably withheld so long as such selection is not likely to cause, in Landlord’s good faith opinion, labor disharmony at the Building) shall clean (and Landlord shall not clean) the Premises and provide trash removal services thereto (“Tenant Cleaning”) in accordance with the applicable standards of this Lease, (b) Tenant’s approved cleaning contractor shall be entitled, without charge and without discrimination, but subject to the applicable terms hereof and the Rules, to use in a reasonable and orderly manner the Common Freight Elevator in common with Landlord’s cleaning contractor (and, in all events, Tenant’s cleaning contractor shall have

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the right to use the Tenant Freight Elevator in accordance with Paragraph 6(A)(vi) below), and (c) there shall be deducted from Operating Expenses payable by Tenant an amount equal to the vacancy credit received by Landlord under its contract with its cleaning service provider for the Building by reason of the fact that Tenant (rather than Landlord) is providing cleaning and trash removal services with respect to the Premises. Tenant shall also have the right from time to time to revoke, and/or reinstitute Tenant Cleaning by giving notice thereof to Landlord as provided above in this Paragraph 6(A)(iv); provided, however, that: (x) Tenant may only give one (1) such notice revoking and/or reinstating Tenant Cleaning in any calendar year, and (y) Tenant shall not have the right to elect to clean less than the entire Premises, nor shall any subtenant or assignee of less than the entire Premises have the right to elect to clean the portion of the Premises it may occupy. Tenant’s cleaning contractor may share the locker room provided for Landlord’s cleaning contractor. Tenant’s cleaning contractor shall provide union labor if Landlord’s cleaning contractor is unionized.

(v) At least eighteen (18) passenger elevators serving the Main Lobby and the Premises: (a) all of which shall be in service on Business Days between the hours of 7:00 a.m. and 8:00 p.m., and on Saturdays between the hours of 8:00 a.m. and 4:00 p.m. (the “Regular Elevator Hours”), (b) at least nine (9) of which shall be in service at all times outside of Regular Elevator Hours, and (c) two (2) of which shall be dedicated to, and shall exclusively serve, Tenant’s designated conference center floors (i.e., being hereby confirmed and agreed to be the 6^th and 7^th floor portion of the Premises for all purposes hereof), it being agreed that, in each case, the availability of such elevators shall be subject to Unavoidable Delays and any necessary or customary repairs and maintenance thereof (without limiting the terms of Article 23 hereof). Of said passenger elevators serving the Premises: (x) at least eight (8) shall serve the Mid-Rise Floors Premises during Regular Elevator Hours, at least eight (8) shall serve the Low-Rise Floors Premises during Regular Elevator Hours, and two (2) shall exclusively serve Tenant’s designated conference center floors during Regular Elevator Hours, and (y) at least four (4) shall serve the Mid-Rise Floors Premises at all times outside of Regular Elevator Hours, at least four (4) shall serve the Low-Rise Floors Premises at all times outside of Regular Elevator Hours, and at least one (1) shall exclusively serve Tenant’s designated conference center floors at all times outside of Regular Elevator Hours. Landlord agrees that the eight (8) passenger elevators serving the Mid-Rise Floors Premises shall be located in an elevator bank that exclusively serves the Mid-Rise Floors Premises (and the Main Lobby), and that each of the elevators serving the Low-Rise Floors Premises and Mid-Rise Floors Premises shall be served by “crossover” elevator lobbies located on the 24^th floor of the Building, which shall allow Tenant to access each floor of the Mid-Rise Floors Premises from each floor of the Low-Rise Floors Premises (and vice versa) by passenger elevator without leaving the floors comprising the Premises (or, in the event that Tenant exercises one of its Contraction Options described in Article 34 hereof such that the 24^th floor no longer constitutes a part of the Premises, Landlord shall ensure that the crossover elevator lobbies located on the 24^th floor of the Building are at all times readily accessible (i.e., located in and accessible to and from, Common Areas on the 24^th floor) to and from both the Mid-Rise Floors Premises and Low-Rise Floors Premises, such that Tenant may access each floor of the Mid-Rise Floors Premises

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from each floor of the Low-Rise Floors Premises (and vice versa) by passenger elevator without using the elevator lobbies located in the Main Lobby of the Building). In the event Tenant is ever leasing space hereunder in the high-rise portion of the Building, then Landlord shall ensure that a crossover elevator lobby on a floor between or within the high-rise floors or the mid-rise floors at the Building is readily accessible (i.e., located in, and accessible to and from, Common Areas on such floor), such that Tenant may access each floor of the Premises located in the mid-rise portion of the Building from each floor of the Premises located in the high-rise portion of the Building (and vice versa) by passenger elevator without using the elevator lobbies located in the Main Lobby of the Building. All elevators in the low-rise and mid-rise elevator banks at the Building shall be designed and programmed to be able to stop at Tenant’s designated conference center floors. Tenant shall have the right to use all passenger elevators for mail cart runs between the floors of the Premises. In addition to the foregoing passenger elevators, Landlord shall provide at least two (2) passenger elevators which shall serve the Main Lobby and each floor of the Garage, which elevators shall be in service at all times (subject to Unavoidable Delays and any necessary or customary maintenance and repair thereof).

(vi) One (1) freight elevator (“Tenant Freight Elevator”) for Tenant’s exclusive use (i.e., not for use by Landlord, any other tenant or occupant of the Building or any other person or entity, except as approved by Tenant in writing, subject to the terms of the next sentence) serving the ground floor Loading Dock area of the Building and each floor of the Premises, which shall be in service at all times (subject to Unavoidable Delays and any necessary or customary maintenance and repair thereof). Notwithstanding the foregoing, Landlord and Landlord’s contractors shall have the right to use the Tenant Freight Elevator outside of (but not during) Regular Business Hours for purposes of providing Building Services and performing Landlord Repairs, and Tenant shall permit Landlord to allow other tenants of the Building to use the Tenant Freight Elevator outside of Regular Business Hours for purposes of allowing such tenants to conduct their initial move-in to (or move-out of) the Building or subsequent move-in to expansion space in the Building (including any construction work and furniture installation to be performed by any such other tenant in connection with its initial move-in to the Building or subsequent expansion space in the Building); provided that: (a) Landlord shall have scheduled any such use in advance with Tenant (it being agreed that Landlord may from time to time submit, for Tenant’s approval (as provided in the next sentence), a schedule proposing multiple proposed periodic uses (and not only a single proposed use) of the Tenant Freight Elevator), (b) Tenant shall have consented to such scheduled use, it being agreed that Tenant shall not withhold such consent except to the extent that Tenant proposes to use the Tenant Freight Elevator for Tenant’s own purposes during the period within which Landlord shall have proposed to schedule its (or another tenant’s) use thereof, and (c) Landlord and such Landlord’s contractors and tenants so using the Tenant Freight Elevator shall have agreed to protect the interior of the Tenant Freight Elevator from damage during all such times of usage thereof, and shall have further agreed to assume responsibility for the costs of repairing any damage caused thereby. In addition, Tenant shall reasonably cooperate with Landlord to allow Landlord use of the Tenant Freight Elevator from time to time (i.e., whether during Regular

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Business Hours or otherwise) on an occasional basis scheduled in advance with Tenant, in order to enable Landlord to provide the services, repairs and amenities set forth in this Lease to the Premises, so long as such use by Landlord would not interfere with Tenant’s own proposed use of the Tenant Freight Elevator during the period when Landlord is requesting use of the same. If applicable Laws, collective bargaining agreements, or bona fide security or building management concerns, require that use of the Tenant Freight Elevator outside of Regular Business Hours be attended by an operator or security personnel, Tenant shall, to the extent (and only to the extent) that Tenant’s (and not Landlord’s or any other tenant’s) use of the Tenant Freight Elevator after Regular Business Hours requires such attendance, reimburse Landlord for Landlord’s Actual Cost of such operator or personnel for the Tenant Freight Elevator. In addition, Tenant shall have the non-exclusive right, in common with Landlord and the other tenants and occupants of the Building (except as otherwise provided in Section 8 of the Workletter), to use one other freight elevator at the Building (the “Common Freight Elevator”) serving the ground floor Loading Dock area of the Building and each floor of the Premises, which shall also be in service at all times (subject to Unavoidable Delays and any necessary or customary maintenance and repair thereof); provided, however, that outside of Regular Business Hours, the Common Freight Elevator may be reserved by Landlord, Tenant or other Building tenants, based on reasonable, non-discriminatory scheduling thereof by Landlord. Tenant shall take all necessary precautions to avoid damage to any elevators (including those described in Paragraph 6(A)(v) above) used by Tenant at the Building, which shall include, without limitation, the use of carts and other means of transporting and delivering materials to and from the Premises which have rubber bumpers, and shall, in any event, promptly repair any damage so caused to any elevators by Tenant’s activities. Landlord and Landlord’s contractors shall take (and Landlord shall use reasonable efforts to cause other tenants to take) all necessary precautions to avoid damage to any elevators (including those described in Paragraph 6(A)(v) above) used by Landlord, Landlord’s contractors and/or other tenants at the Building, which shall include, without limitation, the use of carts and other means of transporting and delivering materials to and from the Premises or other tenant spaces which have rubber bumpers or other protective devices, and shall, in any event, promptly repair any damage so caused to any elevators by any such activities. Notwithstanding the foregoing, Tenant shall have the right to reasonably schedule use of the Common Freight Elevator on a preferential basis during any four (4) consecutive weekends preceding the expiration of the Term for Tenant’s move-out of the Building, and for the two (2) consecutive weekends preceding the effective date of any expansion of the Premises by one (1) full floor or more, or the effective date of any contraction of the Premises by one (1) full floor or more, for purposes of moving to or from (as the case may be) such space. Except to the extent otherwise set forth in Section 8 of the Workletter, all freight elevator service with respect to the Common Freight Elevator by Tenant shall be subject to reasonable scheduling by Landlord during Regular Business Hours and shall be used at no additional cost to Tenant and for normal use in common with Landlord and other tenants and their contractors, agents and visitors, provided, however, if applicable Laws, collective bargaining agreements, or bona fide security or building management concerns, require that such service by Tenant be attended by an operator or security

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personnel after Regular Business Hours, Tenant shall reimburse Landlord for Landlord’s Actual Cost of such operator or personnel for the Common Freight Elevator applicable to Tenant’s use thereof.

(B) Extra Utilities or Services. Landlord shall provide the following services and utilities, and to the extent the cost thereof is payable directly by Tenant as more specifically set forth below, then such cost shall be excluded from Operating Expenses hereunder.

(i) At least ten (10) tons per floor of chilled condenser water (allocated among the floors of the Premises as Tenant may request from time to time). Tenant shall pay for services requested and delivered under this clause (i) in an amount equal to Landlord’s Actual Costs therefor.

(ii) Heating and air conditioning service to the Premises in accordance with Exhibit E attached hereto at times outside of Regular Business Hours (including at all times on Sundays and Holidays) requested by Tenant. Each such request shall specify the hours for which and the portions of the Premises for which Tenant is requesting service. Tenant shall reimburse Landlord for Landlord’s Actual Cost of providing the services requested and delivered under this clause (ii) (“After Hours HVAC Costs”). Landlord anticipates that the amount of After Hours HVAC Costs initially charged to Tenant will be as follows: (a) $35.00 per floor per hour for ventilation service, and (ii) $50.00 per floor per hour for heating and air conditioning service. In the event Tenant requires any such after-hours HVAC service, Tenant shall so notify Landlord thereof (which notice may be given by facsimile, email or by telephone to such person or persons as may be designated by Landlord from time to time) as soon as reasonably practicable prior to the time such after-hours HVAC service is needed (provided, in no event shall greater than one (1) hour prior notice be required in order to provide such after-hours HVAC service). Landlord agrees that it shall use good faith efforts to accommodate all of Tenant’s requests for after-hours HVAC service as of the time that such service is requested by Tenant. Landlord shall have the right, by written notice to Tenant, to prescribe specific, reasonable procedures which are consistent with the foregoing terms of this Paragraph 6(B)(ii) for Tenant to request after-hours HVAC service (e.g., by providing one or more specific contact persons for Tenant to contact with such requests, or providing instructions to follow up written requests for after-hours HVAC service by Tenant by making a telephone call to one of such contact persons, if such requests are actually made by Tenant outside of Regular Business Hours), and Tenant agrees that it will thereafter comply with such reasonable procedures in making requests for after-hours HVAC service.

(iii) Freight elevator service through the Common Freight Elevator at times outside of Regular Business Hours, based on reasonable, non-discriminatory scheduling by Landlord; provided that, Landlord shall receive Tenant’s request therefor no later than 2:00 p.m. on a Business Day for service that evening or the next morning, or for service on any non-Business Day, no later than 2:00 p.m. on the most recent prior Business Day. Each such request shall specify the hours for which Tenant is requesting service and must be given in writing (which may be given by facsimile or email). Landlord shall

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administer the scheduling of such service for Tenant and for Landlord and other tenants in a reasonable, non-discriminatory manner. If applicable Laws, service or collective bargaining agreements, or security or building management concerns require that such service be attended by an operator or security personnel after Regular Business Hours, Tenant shall reimburse Landlord for Landlord’s Actual Cost of providing such operator or personnel to the extent attributable to Tenant’s use (and subject in any event to Paragraph 6(B)(vii) below, if applicable). Notwithstanding the foregoing: (i) Tenant’s use of the Common Freight Elevator in connection with the performance of the Tenant Work shall be governed by the terms of Section 8 of the Workletter, and (ii) Tenant shall have no obligation to schedule with Landlord, or to pay any extra cost or expense of any kind to Landlord in connection with, any use of the Tenant Freight Elevator (other than costs described in Paragraph 6(A)(vi) above, if applicable, for use of the Tenant Freight Elevator after Regular Business Hours), it being acknowledged that the Tenant Freight Elevator shall be available for use by Tenant at all times (subject to Paragraph 6(A)(vi) above, and Unavoidable Delays, casualty or any necessary or customary maintenance and repair thereof (subject to Paragraph 23(B)) during the Term (and prior to the commencement of the Term, as provided in the Workletter) at no additional cost (except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof) to Tenant.

(iv) Such cleaning and trash removal service in addition to that described on Exhibit F-1 as is available from Landlord’s janitorial service contractor; provided, that (a) the Tenant Cleaning Commencement Date shall not have occurred (or has occurred, but Tenant has thereafter revoked Tenant Cleaning as provided in Paragraph 6(A)(iv) above), (b) Landlord shall receive Tenant’s request therefor reasonably in advance, and (c) Tenant shall pay for such additional service by reimbursing Landlord for Landlord’s Actual Cost thereof, as charged by Landlord’s janitorial service contractor. Additionally, Tenant shall also be entitled to contract for such additional cleaning and/or maintenance services in the Premises directly with Landlord’s cleaning contractor (if the Tenant Cleaning Commencement Date shall not have occurred, or has occurred but Tenant has thereafter revoked Tenant Cleaning as provided in Paragraph 6(A)(iv) above), or with the contractor performing the Tenant Cleaning (if the Tenant Cleaning Commencement Date shall have occurred), all at Tenant’s sole cost and expense (and subject to Landlord’s prior approval of Tenant’s cleaning contractor as provided in Paragraph 6(A)(iv) above).

(v) Such other extra utilities or services as Tenant may from time to time reasonably request, provided that (a) the same are reasonable and feasible for Landlord to provide and do not involve modifications or additions to the Property or existing Building systems or equipment unless the same are reasonable and Tenant agrees to pay for the same (provided that if such modifications or additions also benefit other tenants of the Building, then any amounts collected by Landlord from such tenants as a contribution toward the cost of such modifications or additions shall be deducted from the amounts otherwise due from Tenant under this subclause (a)), (b) Landlord shall receive Tenant’s written request reasonably in advance, and (c) such services are generally available in comparable office buildings in downtown Chicago (all of which extra utilities or services provided to Tenant under this Paragraph 6(B)(v) are hereinafter referred to as “Extra

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Utilities and Services”). Tenant shall, for such Extra Utilities and Services, pay Landlord at a rate equal to Landlord’s Actual Costs for such Extra Utilities and Services.

(vi) All charges under this Paragraph 6(B) shall be due within thirty (30) days after billing by Landlord. Except where otherwise indicated above, Landlord shall comply with either written or oral requests for service under this Paragraph 6(B) by one or more specifically authorized employees of Tenant. Tenant shall be obligated to pay only for such services as it requests and which are provided under this Paragraph 6(B).

(vii) In the event that more than one tenant requests the same overtime services as Tenant has requested, and such services cover the Premises and the premises of such other tenant(s), the charge to Tenant shall be adjusted equitably.

(C) Monitoring Extra Utilities. Landlord may install and operate meters or any other reasonable system for monitoring or estimating any Extra Services and Utilities used by Tenant which are to be paid for by Tenant (including a system for Landlord’s engineer to reasonably estimate any such extra usage), and may charge Tenant for Landlord’s Actual Cost incurred in connection with such installation and operation. If (i) Tenant’s use of (or the number of persons working within) the Premises is beyond that of normal office use and beyond the capacity of the HVAC specifications applicable to the Premises as set forth in Exhibit E, and such use requires the installation and operation of any supplementary air-conditioning, ventilation, heat, electrical or other systems or equipment (or adjustments or modifications to the existing Building systems and equipment), and (ii) Landlord notifies Tenant of the need for such supplementary air-conditioning, ventilation, heat, electrical or other systems or equipment (or such adjustments or modifications to existing systems and equipment), then Tenant shall, within a reasonable time after such notice from Landlord, either cause its use of the Premises to comply with the requirements set forth in clause (i) above, or install any such supplemental system or equipment (or make such adjustment or modification), or otherwise mitigate the conditions giving rise to the need for supplemental cooling, at Tenant’s expense; provided that if Tenant fails to take such actions, Landlord shall have the right to give Tenant a second written notice notifying Tenant of the need for such supplemental systems or equipment (or adjustment or modification), which notice shall contain a sentence stating “TENANT’S FAILURE TO COMPLY WITH THE TERMS OF PARAGRAPH 6(C) OF THE LEASE WITHIN FIFTEEN (15) BUSINESS DAYS AFTER TENANT’S RECEIPT HEREOF SHALL GIVE LANDLORD THE SELF-HELP RIGHTS DESCRIBED IN SUCH PARAGRAPH 6(C),” and, in the event that Tenant fails, within fifteen (15) Business Days after Tenant’s receipt of such second notice, to either commence the installation of such supplemental systems or equipment (or commence such adjustment or modification of existing systems or equipment or such other mitigation actions) and diligently pursue the same to completion, or cause its use of the Premises to comply with the requirements set forth in clause (i) above, then Landlord shall have the right (without obligation) to install any such supplementary system or equipment (or make such adjustment or modification) on Tenant’s account, whereupon Tenant shall pay Landlord’s Actual Costs incurred by Landlord in providing, installing and/or operating such supplemental systems or equipment (or making such adjustment or modification), but only to the extent that the system or equipment so installed by Landlord is required as a result of the fact that Tenant’s use of (or the number of persons working within) the Premises is beyond the capacity of

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the HVAC specifications set forth on Exhibit E hereto. The foregoing terms of this Paragraph 6(C) shall not limit Tenant’s obligations and Landlord’s rights set forth in Paragraph 8(A) below in the event that Tenant’s failure to take action under this Paragraph 6(C) results in an Emergency Situation, as described therein.

(D) No Warranty.

(i) The term “Building Services” shall refer to electricity and the services and utilities referred to in Paragraphs 6(A), (B), (E), (G), (H), (I), (J), (K), (L) and (O). Landlord does not warrant that any Building Services will be free from interruptions by reason of Unavoidable Delays and neither such interruptions nor related repairs to the structural or mechanical systems of the Building shall be deemed an eviction or disturbance of Tenant’s use and possession of the Premises or any part thereof, or render Landlord liable to Tenant for abatement of Rent (except as provided herein), or relieve Tenant from performance of Tenant’s obligations under this Lease. Landlord shall use commercially reasonable efforts to avoid, and if it cannot avoid, to minimize any interruption in the Building Services required to be provided to the Premises hereunder. Landlord in no event shall be liable for damages attributable to loss of profits, business interruption or other consequential damages on account of any interruption in Building Services.

(ii) Subject to the following limitations, and Article 23 below, Landlord reserves the right to interrupt or curtail any Building Service at such time as may be necessary and for so long as may be required in order to make repairs, replacements, alterations or improvements to the Building or to comply with Laws. Except in cases of an emergency, Landlord shall give Tenant at least fifteen (15) Business Days’ prior written notice of Landlord’s intention voluntarily to effect any interruption or curtailment of any Building Service (and, except in case of an emergency, Landlord agrees to restrict the interruption or curtailment of Building Services to Saturdays, Sundays or Holidays).

(iii) Except for breakdowns, emergencies or work which requires taking an elevator out of service for longer than a single evening (“Major Elevator Work”), elevator maintenance and repair work shall be performed outside of Regular Business Hours. Landlord shall use reasonable efforts to limit Major Elevator Work at any given time to one (1) elevator serving the Mid-Rise Floors Premises and one (1) elevator serving the Low-Rise Floors Premises and to no more than one (1) elevator exclusively serving Tenant’s conference center floors.

(iv) For purposes of this Lease, “Unavoidable Delays” means delays or interruptions caused by strikes and lockouts (provided that such strikes and/or lockouts affect all or a material part of the work force available to perform the work or service in question in the Chicago metropolitan area (and not, for example, only certain individual companies or firms)), power failure (i.e., a failure by the electric utility company to provide power to the Building, and not a malfunction of Landlord’s electrical system at the Building), restrictive governmental laws or regulations not in effect as of the date of execution of this Lease (except that Unavoidable Delays shall in no event include delays

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resulting from any refusal, failure or delay by any governmental authority in issuing permits, authorizations or approvals for zoning or any construction or other work for any reason (“Permit Delays”)), condemnations, riots, insurrections, acts of terrorism, war, fire or other casualty, acts of God, or other reasonably unforeseeable circumstances not within the control of the party or its agents delayed in performing work or doing acts required under the terms of this Lease, but only, in each case, to the extent that such event or occurrence actually so delays such performance of work or other acts required hereunder. Notwithstanding the foregoing, delays resulting from (or exacerbated by) the following shall not constitute Unavoidable Delays: (a) lack of money; (b) financial inability; (c) inclement weather condition having direct impact upon the critical path activities in Landlord’s construction schedule as reasonably predictable for the time in question in the Chicago area based upon the most recent five (5) year average at or around Midway Airport; (d) reasonably foreseeable governmental action or inaction (taking into account the duration of the work or other action to be performed, and the facts reasonably available to the party performing such work or other action at the time in question), it being agreed, however, that Permit Delays (regardless of whether or not reasonably foreseeable) shall in no event constitute Unavoidable Delays, as provided in the preceding sentence; or (e) failure to order long-lead items sufficiently in advance of the time needed (to the extent that it would be commercially reasonable to do so). Whenever the Lease provides that a time or period shall be subject to an extension for Unavoidable Delays or that there shall be any other consequence of the occurrence of Unavoidable Delays, it shall be a condition of the right to claim an extension of time or other consequence as a result of an Unavoidable Delay that the party seeking such extension or consequence shall notify the other party thereof, specifying the nature and (to the extent known) the estimated length thereof. If such notice is given later than three (3) Business Days after the notifying party has actual knowledge of the existence of the Unavoidable Delays, then the Unavoidable Delays occurring during the period commencing on such fourth (4^th) Business Day and ending on the date of such notice, shall be disregarded and deemed not to have occurred.

(E) Electrical Service.

(i) Landlord shall bring electrical service capacity to the base Building electric closet on each floor of the Premises sufficient for electrical usage in the Premises of at least eight (8) watts per usable square foot connected load (the “Minimum Electrical Capacity”). Landlord and Tenant agree that in the event that Landlord and Tenant, working jointly and cooperatively with their respective engineers, hereafter determine that Tenant’s electrical needs for the Premises will exceed the Minimum Electrical Capacity (by reason of the improvements and equipment to be installed in the Premises in connection with the Tenant Work or otherwise), then Tenant may (at its cost), upon the approval of Landlord of the method of doing so (which approval shall not be unreasonably withheld), cause the electrical capacity of the Premises to be increased to the electrical capacity so determined by Landlord and Tenant (and their respective engineers), so long as such activity does not delay Landlord’s performance of the Landlord Work or otherwise give rise to any additional costs or liabilities to Landlord (unless Tenant agrees to pay the same). In the event that a dispute arises between

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Landlord and Tenant as to whether Tenant has a need for or right to an increase in the electrical capacity to be provided to the Premises as provided in the preceding sentence, such dispute shall be resolved pursuant to the Workletter Dispute Procedures set forth in Section 15 of the Workletter.

(ii) Tenant shall (a) make its own arrangements with the local electrical distribution utility reasonably designated by Landlord for the Building for the delivery of electricity to the Premises, and (b) from time to time make its own arrangements with the local electrical distribution utility which provides service to the Building for the supply of electricity for the Premises. Tenant shall pay, as and when due, directly to the local electrical distribution utility for the delivery of electricity to the Premises; provided, however, that if for any reason Tenant is not billed directly for electrical service, Landlord shall forward each bill received by it with respect to the Premises to Tenant and Tenant shall pay it promptly in accordance with its terms. Landlord agrees that no other tenant shall be permitted to install any electrical distribution equipment in any electrical closet located on any full floor leased to Tenant hereunder, subject to Landlord’s right to install therein conduit or other reasonable utility installations that do not interfere with Tenant’s use of the Premises, for the benefit of more than one floor of the Building. Tenant shall not gain access to, or place any property or equipment in, the electrical or riser closets in the Building (including any located within the Premises) without the prior consent of Landlord, which consent shall not be unreasonably withheld.

(iii) Landlord shall be responsible, and shall pay separately, for all electricity for the Common Areas (including those necessary for Landlord to furnish Building Services), and Landlord’s Actual Cost thereof shall be included in Operating Expenses.

(iv) If Tenant’s use of electricity in any portion of the Building located outside of the Premises is not separately metered for any reason, Tenant shall pay Landlord as Additional Rent, in monthly installments at the time prescribed for monthly installments of Net Rent, an amount, as reasonably estimated by Landlord from time to time (and reasonably confirmed by Tenant’s engineers), and based upon evaluations made by an engineer selected by Landlord and reasonably approved by Tenant, that Tenant otherwise would pay for such electricity. Said estimated amount shall be as if the same were separately metered to the Premises by the local electric utility company and billed to Tenant at such utility company’s then-current rates for similar customers. Tenant shall, at its sole cost and expense (as a component of the Tenant Work), install all electrical meters for all portions of the Initial Premises (and any expansion space leased by Tenant hereunder, except to the extent provided to the contrary in the Current Market Terms, if applicable to such expansion space).

(v) Tenant shall make no alterations or additions to the electric equipment or appliances used within or serving the Premises which would overload the CT cabinets or switches on any floor of the Premises (taking into consideration any increase in the electrical capacity of the Premises effected pursuant to Paragraph 6(E)(i) above); provided, however, that Tenant shall have the right, subject to Landlord’s approval, not to be unreasonably withheld (but subject to the other applicable provisions of the

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Workletter, if part of the Tenant Work, or Article 7 hereof), to (a) bring electricity from one floor of the Premises to another, and (b) install additional CT cabinets, switches, transformers and other electrical distribution equipment and, if necessary, to construct within the Premises additional vaults for that purpose. Any work performed by Tenant affecting the Building’s electrical system shall be subject to the terms of the Workletter (if part of the Tenant Work) or Article 7 hereof. Tenant covenants and agrees that at all times its use of electrical current shall never exceed the capacity of the feeders to the Building or the wiring installed in risers of the Building (as such capacity may be increased as provided in Paragraph 6(E)(i) above).

(vi) Landlord agrees to furnish to Tenant, upon Tenant’s written request, at Landlord’s Actual Cost, all replacement lamps, bulbs, ballasts and other lighting components used in the Premises, provided the same are customarily used in the Building or are otherwise furnished by Tenant to Landlord. Unless Tenant makes such request, Tenant shall have the right to furnish all such lamps, bulbs, ballasts and starters as Tenant shall require (subject to the use of union labor, if the Building uses union labor for such activities).

(F) Programs. Notwithstanding anything to the contrary in this Article 6 or elsewhere in this Lease, Landlord shall (i) design the Building and prepare the specifications therefor in accordance with the promulgated standards in existence as of the date hereof for obtaining a minimum LEED Certified Rating of “silver” for the shell and core of the Building in accordance with “The Chicago Standard” adopted by the City of Chicago, and Landlord shall use reasonable efforts to obtain such rating, and (ii) have the right to institute such other energy conservation policies, programs and measures on a Building-wide basis as may be required, and only for so long as required, to comply with any Laws, or if consistent with voluntary measures being taken at other Class A office buildings in downtown Chicago.

(G) Building Security. Landlord shall provide, or cause one or more contractor(s) to provide, security service to the Building in a manner consistent with Class A buildings in downtown Chicago, as more particularly described in Exhibit G attached hereto; provided, however, that in the event that security services commonly provided by Class A buildings in downtown Chicago are increased from time to time during the Term, Landlord shall (and, subject to Landlord’s prior approval, which shall not be unreasonably withheld, Tenant shall have the right to require Landlord to) increase the security services provided under this Lease in order to reflect the same; provided further, that Tenant shall have approved such increase in writing (which approval shall not be unreasonably withheld). Landlord shall advise Tenant in writing of any such changes to the Building security services a reasonable time prior to implementing such changes. In addition, Landlord agrees that subject to Unavoidable Delays, events of casualty or condemnation, modifications to the Building made in accordance with Article 21 hereof and other necessary or customary maintenance and repairs (during which performance of maintenance or repairs reasonable alternative access to the Building shall be made available), Landlord shall cause the Building Pedestrian Entrance to be open (or accessible by means of the Building security card key (or similar) identification system described above) at all times. For purposes hereof, the term “Building Pedestrian Entrance” shall mean the entrance to the

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Building to be located on LaSalle Street which is to be constructed pursuant to the plans and specifications approved by Tenant for the Landlord Work pursuant to the Workletter.

(H) Telephone and Data.

(i) Landlord shall maintain, repair and replace a telecommunications infrastructure (such infrastructure, together with any riser space that Tenant may use pursuant to Article 26 below, is referred to herein as “Landlord’s Telecommunication Infrastructure“), and Tenant shall be permitted to utilize portions thereof, all as more specifically set forth in Exhibit N attached hereto. Landlord agrees that the Landlord’s Telecommunications Infrastructure shall be sufficiently large, and shall contain equipment having sufficient capacity, to accommodate the Lines and telecommunications equipment of Tenant and the telecommunications equipment of the other tenants and occupants of the Building entitled to use the same, and to accommodate reasonable expansions of such uses in connection with reasonably foreseeable changes in technology. All of Landlord’s equipment located in Landlord’s Telecommunications Infrastructure shall be state-of-the-art as of the Effective Date, and Tenant shall have the right to require that Landlord thereafter cause such equipment to be updated to reflect changes in technology in a manner consistent with comparable Class A office buildings in downtown Chicago (in which event any capital expenditures incurred by Landlord in connection therewith shall be included in Operating Expenses in accordance with the same terms as otherwise set forth in clause (42) of Paragraph 3(B)(iii) hereof, amortized as set forth in said clause (42)).

(ii) The installation, maintenance, repair and replacement of any such Lines (and the conduit sleeves, which shall be installed by Landlord at Landlord’s sole cost and expense, for the same) in the Building Riser Closets and the NetPOP Rooms (as each such term is defined in Exhibit N) (herein, the “Riser Closets“ and the “NetPOP Rooms“, respectively) shall be performed by contractors selected by Tenant and approved in advance by Landlord, such approval not to be unreasonably withheld, and, at Landlord’s election, under the supervision of Landlord’s riser manager. Landlord shall not impose any separate charges on Tenant for any use of the Landlord’s Telecommunications Infrastructure by Tenant pursuant to this Lease (including this Article 6, Article 26, Article 27 and/or Article 37 hereof), except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof. All installation, maintenance, repair and replacement work performed by Tenant under this Paragraph 6(H) shall be performed in accordance with the respective terms and conditions of this Lease governing such activities (including the terms of the Workletter or Article 7 hereof, as applicable).

(iii) Tenant shall be permitted to obtain telecommunications service (voice and/or data) from such providers as it elects from time to time. Landlord shall permit any such providers to install facilities in the NetPOP Rooms in locations therein reasonably designated by Landlord. Any such installation shall be subject to Paragraph 27(B). Landlord shall not limit the number of, or impose any charge or unreasonable requirements on, such providers.

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(I) Efficient Class A Operation. Landlord shall operate or cause to be operated, the Property in a first class and efficient manner and shall provide or cause to be provided management and services of a quality consistent in all material respects with the standards from time to time applicable to the operation of comparable Class A office buildings in downtown Chicago; provided, however, that the terms of this sentence shall not be construed to obligate Landlord to provide services or amenities in addition to those described in this Article 6 (including all Extra Services and Utilities) or elsewhere in this Lease or to make repairs or perform maintenance in addition to those required of Landlord as described elsewhere in this Lease (it being agreed that the terms of this sentence shall apply to the quality and manner of Landlord’s operation of the Property, rather than the scope of services available to Tenant hereunder). In addition, Landlord shall comply with the specific standards provided in this Lease with respect to the matter in question.

(J) Building Directory. Landlord shall list the name of Tenant, and, at Tenant’s specific written request, Tenant’s specific departments in the Premises, its individual attorneys, and executives who are working in the Building (and the name(s) of any permitted sub-tenant(s) or assignee and their respective departments, principals and executives (in each case, to the extent that Landlord has received appropriate documentation of the identity thereof)), on the Building directory and in any computer or other directory serving the Building at no cost to Tenant (except as may otherwise be included in Operating Expenses). Landlord shall make such subsequent additions, deletions and changes as Tenant requests in and to the initial listing after the Commencement Date on a monthly basis without charge. If the Building’s directory at any time provides the capability for tenants to modify their own listings, Landlord shall permit Tenant to have such access to such system without charge to modify its listings. Landlord shall maintain such directories and keep computer directories operational at all times during the Term (subject to Unavoidable Delays, casualty or required maintenance or repair) and the cost thereof shall be included in Operating Expenses pursuant to Article 3 above.

(K) Use of Fire Stairs. Landlord shall ensure that each floor of the Building (including the Premises) is at all times served by fire stairs constructed, installed and maintained by Landlord in compliance with all Laws and insurance requirements. Landlord, at Landlord’s sole cost and expense, shall provide a Hi-Tower electronic locking system or alternative system approved by the governmental entity or entities having jurisdiction over the Building which will provide for electronic locking of stair doors, and which will be tied into the Building fire alarm systems, and which shall allow means for Tenant, at Tenant’s sole cost and expense, to install card readers or security devices to monitor door usage. Each floor of the Premises shall be accessible from each other floor of the Premises, and from the ground floor of the Building, by means of such fire stairs. So long as permitted by applicable Laws, including building and fire codes and requirements, and subject to any Rules adopted by Landlord from time to time as permitted hereunder, Tenant may at its sole cost and expense at all times during the Term (i) use the fire exit stairways for travel between and among floors of the Building in which the Premises are located, and (ii) upgrade Building standard improvements therein in accordance with the terms of the Workletter or, following the Commencement Date, Article 7 hereof (which stairway improvements may include the installation of a card reader or other system exclusively for Tenant’s use, so long as the same is incorporated into the Building’s fire and life-safety and security systems), as well as installation of drywall, carpeting (if permitted by Laws), paint of

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Tenant’s choice, and light fixtures, all in accordance with all applicable Laws. Tenant shall ensure that all stairwell entry doors to the Premises shall remain closed and locked at all times (except for access by means of the approved security system). Tenant expressly acknowledges and agrees that Landlord shall have no responsibility for security within such stairway areas, and shall not be liable for any loss or damage to person or property sustained by Tenant or any other person due to the use thereof in accordance with this subparagraph.

(L) Loading Docks/Staging Area. Approximately 1,600 square feet of the Building’s ground floor loading dock area shall be open for weekday daily deliveries, temporary storage of goods and materials and uses ancillary thereto, on weekdays (other than Holidays) during Regular Business Hours (subject to Unavoidable Delays, casualty or required maintenance or repair), with access from the alley off lower LaSalle Street and at all other times upon prior reasonable, non-discriminatory scheduling by Landlord, for Tenant’s exclusive use (i.e., not for use by Landlord, any other tenant or occupant of the Building or any other person or entity, except as approved by Tenant in writing) (the “Tenant Staging Area“). The exact location and size of the Tenant Staging Area shall be designated by Landlord on or before the Phase I Delivery Date and shall be subject to Tenant’s reasonable approval thereof. Tenant shall pay Rent for such Tenant Staging Area at the gross rental rate (i.e., there shall be no Operating Expenses or Taxes separately payable for any such Tenant Staging Area space) of $17.00 per square foot of Rentable Area thereof, increased on a cumulative, compounding basis commencing on the first day of the second Lease Year by two and one-half percent (2.5%) annually. In addition, Tenant shall have the non-exclusive right, in common with Landlord and the other tenants and occupants of the Building (except as otherwise provided in Section 8 of the Workletter), to use all other loading dock areas in the ground floor loading dock area of the Building (the “Common Loading Docks;” and collectively with the Tenant Staging Area, the “Loading Docks“), which shall also be in service at all times during Regular Business Hours on weekdays (other than Holidays) (subject to Unavoidable Delays, casualty or required maintenance or repair). Notwithstanding the foregoing, Tenant shall have the right to reasonably schedule use of the Common Loading Docks on a preferential basis (i) during any four (4) consecutive weekends preceding Tenant’s initial move-in to the Building, (ii) during any four (4) consecutive weekends preceding the expiration of the Term for Tenant’s move-out of the Building, and (iii) during the two (2) consecutive weekends preceding the effective date of any contraction or expansion of the Premises by one (1) full floor or more, for purposes of moving from or to such space. Except to the extent otherwise set forth in Section 8 of the Workletter, all service with respect to the Common Loading Docks shall be subject to reasonable scheduling by Landlord during Regular Business Hours and may be used at no additional cost to Tenant (except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof) and for normal use in common with Landlord and other tenants and their contractors, agents and visitors. Notwithstanding anything to the contrary in the foregoing, if applicable Laws, service or collective bargaining agreements, or security or building management concerns require that such Loading Dock service be attended by an operator or security personnel after Regular Business Hours, Tenant shall reimburse Landlord for Landlord’s Actual Cost of such operator or personnel during Tenant’s use of the Loading Docks after Regular Business Hours. Landlord shall use commercially reasonable efforts (including, without limitation, securing “no-parking” signs from the City of Chicago and paying any fees charged by the City of Chicago for such signs) to: (i) prevent vehicles from parking or stopping in the alley

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adjacent to the Loading Docks in a manner that would interfere with access thereto and (ii) request that the City of Chicago maintain such alley as a “no parking” zone and enforce such “no parking” restrictions. Notwithstanding the foregoing, Tenant’s use of the Loading Docks during the performance of the Tenant Work shall be governed by the terms of Section 8 of the Workletter.

(M) Storage Space. Provided that Tenant provides written notice to Landlord of Tenant’s desire to lease storage space no later than thirty (30) days prior to the Commencement Date, then, commencing on the Commencement Date, and continuing for the balance of the Term (except as provided below in this Paragraph 6(M)), Tenant shall have the right to lease and utilize an amount of storage space not less than 10,000 square feet of Rentable Area and not in excess of Tenant’s Pro Rata Share of all storage space located in the Building and being made available for tenant usage (so long as not less than 10,000 square feet of Rentable Area of storage space is made available to Tenant as aforesaid), which storage space need not be contiguous (but will be four (4) or fewer spaces of no less than 1,500 square feet of Rentable Area each), but shall be secure (i.e., having a lockable entrance), ventilated, heated and lighted space located in a portion of the Building designated by Landlord with reasonable access to and from the Tenant Freight Elevator and the Tenant Staging Area. Landlord shall have the right to relocate any such storage space from time to time to another location at the Building reasonably acceptable to Tenant upon not less than sixty (60) days prior written notice thereof to Tenant, so long as (i) the substitute space is of reasonably comparable size to the space being so relocated, (ii) the substitute space meets all of the criteria described in this Paragraph 6(M), and (iii) Landlord is responsible, at its expense, for moving all items being stored in the relocated space to the applicable substitute storage space, as well as for the security and condition of any and all items being so moved during the course of such move, and in such event, Landlord shall indemnify and hold Tenant harmless from and against, and shall compensate Tenant for, any and all loss or damage to any of the items so moved, to the extent such loss or damage occurred during the course of such move. Tenant shall use such storage space for purposes of storing files, records, furniture, equipment, supplies, attic stock and materials of the type customarily used by office building tenants, and for no other purposes. Landlord shall provide services to such storage space as are customarily provided to storage space in comparable Class A office buildings in downtown Chicago. Tenant shall pay Rent for such storage space at the gross rental rate (i.e., there shall be no Operating Expenses or Taxes separately payable for any such storage space) of $17.00 per square foot of Rentable Area thereof, increased on a cumulative, compounding basis commencing on the first day of the second Lease Year by two and one-half percent (2.5%) annually. Tenant’s use of such storage space shall be subject to such reasonable rules and regulations as Landlord from time to time may promulgate on a non-discriminatory basis, and, at Landlord’s request, the parties shall enter into a separate storage space lease in form and substance reasonably satisfactory to Landlord and Tenant, which shall be consistent with the terms of this Paragraph 6(M) and the terms of this Lease, and shall not impose any additional duties, obligations or liabilities upon Tenant (except to a de minimis extent). Tenant may elect at any time upon at least thirty (30) days’ prior written notice to Landlord to surrender to Landlord as of the last day of a calendar month thereafter any demisable portion of such storage space (i.e., meaning space which Landlord reasonably determines is capable of being demised as storage space to another tenant without additional cost to separately demise the same being imposed on Landlord) which has access to the Common Areas of the Building. In the event that Tenant does

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not elect to lease Tenant’s Pro Rata Share of the storage space at the Building effective as of the Commencement Date as provided above, but thereafter notifies Landlord that Tenant desires to lease any such storage space, Landlord shall give Tenant notice if any storage space at the Building is available (or when any additional storage space in the Building will become available), and Tenant shall have the right to lease the same upon the terms (including the then escalated rental rates, continuing to escalate as and when described above) set forth above commencing on the first day designated by Tenant on which such space is (or so becomes) available. Without limitation of the foregoing, and in addition to the storage rights otherwise provided above in this Paragraph 6(M), it is agreed that Tenant shall lease as storage space during the Term, at the Rent rates and other terms otherwise described above in this Paragraph 6(M) relative to other storage space at the Building, such portion of the space on the 5^th floor of the Building depicted as being part of the Initial Premises on Exhibit A-1 attached hereto as may be designated by Tenant, by written notice thereof delivered to Landlord on or before December 31, 2005 (time being of the essence); provided that in no event shall Tenant have the right to designate as such storage space on the 5^th floor any area which would result in less than 10,000 square feet of Rentable Area, in the aggregate, remaining as part of the Initial Premises hereunder on the 4^th and 5^th floors of the Building. In the event that Tenant fails to so timely deliver its notice as described in the preceding sentence, then the entire area on the 5^th floor which is designated on Exhibit A-1 as the 5^th floor portion of the Premises shall continue to be leased as part of the Initial Premises hereunder. The actual Rentable Area of any storage space so designated by Tenant on the 5^th floor shall be determined pursuant to the Measurement Method and as part of the determination of all Rentable Area under this Lease. Tenant shall have no right to surrender any such 5^th floor storage space to Landlord at any time during the Term, notwithstanding anything contained herein to the contrary.

(N) Air Testing. No later than sixty (60) days after the Commencement Date, Landlord shall perform (at its sole cost and expense), using an independent consultant specializing in indoor air quality testing, a test of the indoor air quality (including for detection of mold and other biological contaminants) of the Common Areas of the Building and the Premises, and deliver the results of such test to Tenant. Landlord shall thereafter perform such tests of the indoor air quality of the Building as are customarily performed by landlords of comparable office buildings in downtown Chicago, at such intervals as are customarily performed by such landlords (but in no event less than once per annum), the cost of which tests may be included in Operating Expenses. Landlord and Tenant acknowledge that any such test of the indoor air quality of the Premises and/or Common Areas of the Building need not be performed with respect to every floor or area of the Premises or Building, but rather may be based on such samplings of the indoor air quality of the Premises and Building as Landlord and its consultants reasonably determine are necessary in order to determine the general indoor air quality of the Premises and Common Areas of the Building.

(O) Fitness Center. Commencing on the Commencement Date, and at all times thereafter during the Term (subject to Unavoidable Delays, casualty or required maintenance or repair), Landlord shall provide and maintain, for exclusive use by Tenant (and its employees, principals, Partners, clients and guests) and the other tenants and occupants of the Building (and their employees, principals, clients and guests) from time to time (but not members of the general public) an unmanned health and fitness center consisting of between 4,000 and 7,000

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(inclusive) square feet of Rentable Area, which shall be located on the second (2^nd) floor of the Building in a location reasonably accessible from the common passenger elevators providing service to such second (2^nd) floor of the Building, and which shall provide the services and equipment described on Exhibit I attached hereto (the “Fitness Center”). The Fitness Center shall be constructed in accordance with the plans and specifications approved by Tenant for the Landlord Work (as provided in the Workletter), and shall thereafter be maintained by Landlord in a manner consistent with other Class A office buildings in downtown Chicago, and specifically in a manner comparable to the fitness center facilities and services currently provided at UBS Tower/One North Wacker Drive, and 111 South Wacker Drive, Chicago, Illinois; provided, however, that the Fitness Center at the Building shall be un-manned, unless Landlord otherwise elects to have the Fitness Center manned (at Landlord’s sole option), notwithstanding anything herein to the contrary. Landlord shall ensure that the equipment provided in the Fitness Center is at all times up-to-date, in good working condition and reasonably consistent with the equipment provided by high quality health and fitness centers located in Class A office buildings in the downtown Chicago area (and shall make modifications to such equipment from time to time in furtherance thereof), but Landlord shall not otherwise make any material modifications or alterations to the Fitness Center without the prior written consent of Tenant (which shall not be unreasonably withheld). Tenant shall be permitted to use the Fitness Center at no cost to Tenant, except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof (including, without limitation, costs of leasing the fitness center equipment, which shall be permitted to be included in Operating Expenses, notwithstanding anything in this Lease to the contrary) (and no membership fee or other charge of any kind relative to such Fitness Center usage shall be charged to Tenant or any employees, principals or Partners of Tenant). Landlord shall have the right to require each individual who is permitted to use the Fitness Center (as a condition to his/her use of the Fitness Center) to enter into a commercially reasonable separate agreement with Landlord pursuant to which, among other things, such individual acknowledges that neither Landlord nor any other Landlord Protected Parties will have any liability, responsibility or obligation of any kind relating to such individual’s use of the Fitness Center.

(P) Commencement of Building Services. Landlord’s obligation to provide the Building Services described in Paragraphs 6(A), (B), (E), (G), (H), (I), (K), and (L) shall commence with respect to each Segment of the Premises on the first to occur of: (i) the Commencement Date, (ii) Tenant’s occupancy of such Segment for the conduct of its business and Tenant’s request to Landlord to thereupon provide such Building Services, and (iii) any date provided therefor in the Workletter; provided, that, except as provided in the Workletter, Landlord shall have no obligation to cause such Building Services to be provided prior to the date on which a temporary or permanent certificate of occupancy for the Landlord Work shall have been issued by the City of Chicago. Landlord shall reasonably cooperate with Tenant’s requests to furnish the foregoing Building Services to portions of the Premises prior to the dates specified in the preceding sentence in accordance with Tenant’s reasonable requests therefor. Landlord’s obligation to provide the Building Services described in Paragraphs 6(J) and 6(O) hereof shall commence on the Commencement Date.

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(Q) Other Amenities.

(i) Landlord agrees that it shall, commencing on the Commencement Date, lease suitable space in the Retail Area of the Building reasonably selected by Landlord for use by one or more third party vendors for purposes of providing on-site food service serving breakfast and lunch foods at the Building comparable to the food service that is provided on the Effective Date by Cafe 200, and in all events of a quality consistent with that provided at other Class A office buildings in downtown Chicago (the cost of which on-site food service shall be borne by the individuals who actually use such food service) (“On-Site Food Service”), and Landlord shall thereafter use reasonable efforts to continue to lease suitable space in the Retail Area of the Building reasonably selected by Landlord for such On-Site Food Service operations at all times thereafter during the Term. Landlord shall require, in its agreement with any such third party vendors, that such On-Site Food Service shall be available at all times during the Term on weekdays (other than Holidays), from 7:00 a.m. through at least 3:00 p.m., and Landlord shall use commercially reasonable efforts to enforce such requirements. The identity, nature and extent of the On-Site Food Service shall be subject to Tenant’s written approval, not to be unreasonably withheld. If the On-Site Food Service is not initially open and operating as of the Commencement Date, then Tenant shall be entitled to a daily payment from Landlord equal to the lesser of (A) $20,000, or (B) the sum of (a) the actual daily costs incurred by Tenant in providing alternative catering/food service to its conference room facilities in the Building and (b) $10,000, which lesser of the amounts described in (A) or (B) shall be paid for each day such On-Site Food Service is not so open and operating at the Building following the Commencement Date and continuing through the date that the same is initially open and operating at the Building.

(ii) Landlord agrees that, prior to October 1, 2010, Landlord shall lease suitable space in or immediately adjacent to the Main Lobby reasonably selected by Landlord for use by one or more third party vendors for purposes of operating a sundries shop at the Building of a quality comparable to sundries shops located at other Class A office buildings in downtown Chicago (“Sundries Shop Service”), and Landlord shall thereafter use reasonable efforts to continue to lease suitable space in or immediately adjacent to the Main Lobby reasonably selected by Landlord for such Sundries Shop Service operations at all times thereafter during the Term. Landlord shall require, in its agreement with any such third party vendors, that such sundries shop shall be open for business at all times during the Term on weekdays (other than Holidays), from 7:00 a.m. through at least 5:00 p.m., and Landlord shall use commercially reasonable efforts to enforce such requirements.

(iii) Tenant shall have the right, at any time prior to December 1, 2005, to require (by written notice to Landlord) Landlord to install in a mutually acceptable location of the Main Lobby of the Building (as a component of the Landlord Work) a reception desk (which may, at Tenant’s election, also be used for security purposes) for Tenant’s exclusive use (a “Tenant Lobby Desk”). The size, materials and appearance of any such Tenant Lobby Desk shall be mutually acceptable to Landlord and Tenant, but in any event shall be consistent with the design and appearance of the Main Lobby. Tenant

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shall have the right to install and maintain a Tenant Sign on any such Tenant Lobby Desk (or the lobby wall behind such Tenant Lobby Desk), subject to and in accordance with the terms of Article 39 hereof. Landlord further agrees that, at all times during the Term hereof (or any applicable Renewal Term), Tenant shall be the sole tenant or occupant of the Building permitted to utilize and maintain a permanent reception or security desk in the Main Lobby of the Building, and Landlord shall not permit or authorize any other tenant or occupant of the Building to construct, utilize or maintain any reception or security desk in the Main Lobby of the Building at any such time; provided that the foregoing shall not limit Landlord’s rights to have general Building reception and security desks in the Main Lobby; and provided further that Landlord shall be authorized to permit other tenants or occupants of the Building to place a temporary reception desk in the Main Lobby in connection with special events in such tenants’ or occupants’ premises in the Building so long as (a) such temporary reception desk does not remain in the Main Lobby for more than twenty-four (24) hours in any instance, (b) Landlord provides Tenant with written notice of such proposed temporary reception desk not less than ten (10) Business Days prior to the date on which such temporary reception desk is to be placed in the Main Lobby, and (c) such temporary reception desk, or the proposed use and operation thereof, does not detract from the Class A nature of the Building or adversely affect the security of the Building.

(iv) Landlord agrees that it shall cause at least one (1) automatic teller machine (providing banking services that are no less comprehensive than those customarily provided by automatic teller machines of reputable banks and financial institutions as of the Effective Date) of a reputable bank or financial institution (“ATM Service”) to be installed and maintained in a location in the Main Lobby of the Building reasonably acceptable to Landlord and Tenant, commencing on or before the later of (A) the Commencement Date, and (B) October 1, 2009, and Landlord shall thereafter use reasonable efforts to continue to have ATM Service operations in a location in the Main Lobby reasonably acceptable to the parties at all times thereafter during the Term. Landlord shall not charge any direct or indirect fee to Tenant (nor shall any cost be included in Operating Expenses) for use of such automatic teller machine (provided that the foregoing shall not preclude any normal charges which may be imposed by the operator of such automatic teller machine).

(v) Landlord agrees that it shall, commencing on the Commencement Date, and at all times thereafter during the Term, provide a service for receiving messenger packages of Tenant at the Building, and delivering such packages to the Premises in such manner as Tenant shall reasonably designate from time to time, all in a manner consistent with the mail and messenger services provided at Class A buildings located in downtown Chicago (and all at no additional cost to Tenant, except that the cost of such service may be included in Operating Expenses (except to the extent excluded therefrom pursuant to Article 3 above)). Such messenger service shall be based in a location reasonably acceptable to Landlord and Tenant (which may be adjacent to the Main Lobby, the Tenant Freight Elevator, the Common Freight Elevator or the Loading Docks). At Tenant’s sole option (exercisable by at least sixty (60) days’ prior written notice to Landlord at any time during or prior to the commencement of the Term), Tenant shall

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have the right to provide such messenger receiving service itself (rather than receiving such service from Landlord), in which event Tenant’s staff and personnel shall have the right to use such mutually acceptable area adjacent to the Main Lobby of the Building therefor (at no cost to Tenant), and Landlord shall no longer be responsible for providing such service (and no cost of any such service shall be included in Operating Expenses); provided, that Tenant shall thereafter have the right (exercisable no more frequently than one (1) time every three (3) Lease Years) to require Landlord to re-institute such service at any time by not less than sixty (60) days’ prior written notice to Landlord.

(vi) Landlord and Tenant acknowledge that Landlord shall have the right (without any obligation to do so whatsoever), at any time, at Landlord’s discretion, to provide a business conference center at the Building for use by Building tenants and their employees, principals, clients and guests (but not members of the general public) (a “Common Conference Center”). In the event Landlord, at any time, at its sole discretion, so provides any such Common Conference Center, then Tenant shall have the right to use the same, in common with the other tenants of the Building, on the basis of reasonable, non-discriminatory scheduling by Landlord, based on Tenant’s requests for use thereof. In the event Landlord, at any time, at its sole discretion, so provides any such Common Conference Center, then Landlord shall be permitted to charge Tenant a reasonable fee for Tenant’s actual use of any such Common Conference Center (taking into account that the costs of maintaining and operating the Common Conference Center shall not be included in Operating Expenses), on an hourly or daily rate based on Landlord’s reasonable estimate of the market value thereof (which hourly or daily rate shall not exceed the hourly or daily rate charged by Landlord to any other tenant of the Building for use of the Common Conference Center).

(vii) Landlord agrees that it shall lease suitable space in the Retail Area of the Building reasonably selected by Landlord for use by a third party vendor for purposes of providing on-site coffee service at the Building (which coffee service may be provided by the vendor or vendors providing the On-Site Food Service described above), in all events of a quality consistent with that provided at other Class A office buildings in downtown Chicago (the cost of which on-site coffee service shall be borne by the individuals who actually use such coffee service) (“On-Site Coffee Service”), commencing on or before the later of (A) the Commencement Date or (B) May 1, 2009, and Landlord shall thereafter use reasonable efforts to continue to lease suitable space in the Retail Area of the Building reasonably selected by Landlord for such On-Site Coffee Service operations at all times thereafter during the Term. Landlord shall require, in its agreement with any such third party vendor, that such On-Site Coffee Service shall be available at all times during the Term on weekdays (other than Holidays), from 7:00 a.m. through at least 3:00 p.m., and Landlord shall use commercially reasonable efforts to enforce such requirements.

(viii) Landlord agrees that it shall lease suitable space in the Retail Area of the Building (the “Restaurant Space”) reasonably selected by Landlord and reasonably approved by Tenant for use by a third party vendor for purposes of providing an on-site white table cloth sit-down restaurant serving lunch and dinner foods at the Building, in all

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events of a quality consistent with that provided at other Class A office buildings in downtown Chicago (the cost of which on-site sit-down restaurant shall be borne by the individuals who actually use such sit-down restaurant facility) (“On-Site Sit-Down Restaurant”), commencing on or before the later of (A) the Commencement Date, or (B) December 1, 2009, and Landlord shall thereafter use reasonable efforts to continue to lease the Restaurant Space (or such alternative suitable space in the Retail Area of the Building reasonably selected by Landlord and reasonably approved by Tenant) for such On-Site Sit-Down Restaurant operations at all times thereafter during the Term. Landlord shall require, in its agreement with any such third party vendor, that such On-Site Sit-Down Restaurant shall be available at all times during the Term on weekdays (other than Holidays), from 11:00 a.m. through at least 8:00 p.m., and Landlord shall use commercially reasonable efforts to enforce such requirements.

(ix) Landlord agrees that it shall use reasonable efforts to have the following additional amenities available at or adjacent to the Building as of the Commencement Date (or as soon thereafter as reasonably practicable), at no additional cost to Tenant, all subject to obtaining all necessary governmental and quasi-governmental approvals therefor: (A) taxi stand adjacent to the Building on LaSalle Street, and (B) “Wendella” (or comparable) river taxi stop adjacent to the Building.

(x) Landlord agrees that it shall use reasonable efforts to lease suitable space in the Retail Area of the Building reasonably selected by Landlord for use by one or more third party vendors for purposes of providing the following additional amenities, if, when and to the extent Landlord determines, in good faith, that there is sufficient demand therefor from tenants at the Building and/or from other members of the public: (A) dry cleaner, (B) shoe shine/barber shop, and (C) concierge service.

(xi) Landlord shall not designate any portion of the Property as a smoking area without Tenant’s prior consent as to the location and configuration of such area.

(xii) Tenant shall have the right (at its cost) to obtain and receive cable television, internet, satellite and similar service within the Premises at any time and from time to time during the Term, and Landlord agrees that it shall reasonably cooperate with Tenant in connection with obtaining and receiving such service, which may include, without limitation, taking such reasonable actions as may be necessary to permit the cable company selected by Tenant to gain access to, install and maintain such lines and other customary equipment at the Property as may be reasonably necessary to provide such service.

(xiii) In no event shall Tenant have any Lease termination rights hereunder as a result of Landlord’s failure to comply with its obligations to provide any of the amenities under this Paragraph 6(Q) at any time during the Term.

(xiv) Without limitation of the foregoing terms of this Paragraph 6(Q), it is understood and agreed that the respective areas shown on Attachment 1 to the Workletter which are initially contemplated for the various respective amenities described in said

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Attachment 1 shall, in any event, be deemed “suitable space” acceptable to both Landlord and Tenant for such respective amenity, for all purposes of this Paragraph 6(Q).

(R) Bicycle Parking. Subject to the terms of this Paragraph 6(R), during the Term, Tenant shall have the right in common with other tenants and occupants of the Building, at no additional cost to Tenant (except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof), to use an indoor or outdoor area at the Property in a location mutually acceptable to Landlord and Tenant (the “Bicycle Parking Area”) for purposes of parking bicycles of Tenant’s, and its permitted assignees’ and subtenants’ (i.e., as permitted under Paragraph 20 below), and their respective employees, principals, clients and invitees. Landlord shall, at Landlord’s cost, install (and thereafter maintain and repair at Landlord’s cost, subject to inclusion in Operating Expenses to the extent permitted under Paragraph 3(B) hereof) one or more bicycle racks within the Bicycle Parking Area having a reasonable number of bicycle parking spaces (based on Landlord’s reasonable estimate of the demand therefor from Tenant and the other tenants and occupants of the Building), and Tenant shall have the right to use Tenant’s Pro Rata Share of such bicycle parking spaces. Landlord shall secure the Bicycle Parking Area in a manner which Landlord in good faith deems appropriate (which may include the installation of a lockable fence around the Bicycle Parking Area), and if the manner in which Landlord so secures the Bicycle Parking Area requires keys for entry thereto, Landlord shall make available to Tenant one (1) key for each bicycle parking space which Tenant is permitted to use hereunder for purposes of gaining access to the Bicycle Parking Area. Each individual whom Tenant permits to use the Bicycle Parking Area shall, as a condition to his/her use of the Bicycle Parking Area, be required to enter into a commercially reasonable separate agreement with Landlord pursuant to which, among other things, such individual shall acknowledge that neither Landlord nor any other Landlord Protected Parties will have any liability, responsibility or obligation of any kind relating to such individual’s use of the Bicycle Parking Area. Landlord shall have the right to restrict any individual who has not signed any such separate agreement with Landlord from using the Bicycle Parking Area.

ARTICLE 7

Alterations and Liens

(A) Permitted Alterations; Consent Alterations.

(i) Subject to the terms of this Article 7, Tenant shall have the right, without the consent of Landlord, to make any additions, changes, alterations or improvements (“Alteration Work”) in and to the Premises or the Building systems and equipment pertaining to the Premises. Without limiting the generality of the foregoing, it is specifically agreed that, subject to clause (ii) below and Paragraph 7(C) below, Tenant’s right to perform Alteration Work shall include, without limitation, the right (a) to install conduit, cabling and wiring within the Premises or within any shafts, conduits or risers running among the floors of the Premises, (b) to carpet, paint or decorate, (c) to reinforce floors and columns, (d) to make slab cuts for purpose of installing stairs and running risers, conduits and ducts, (e) to make beam cuts, (f) to install stone floors and/or raised floors, (g) to install additional toilets, showers and other plumbing facilities, (h) to install

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kitchen exhaust ducts, (i) to install, remove and relocate non-structural walls in the Premises (including any walls therein consisting of drywall or similar materials), and (j) whenever permitted by Law, and subject to the Workletter and other terms of this Lease, to use BX cable rather than rigid conduit.

(ii) Notwithstanding anything to the contrary in the foregoing, the following Alteration Work shall be performed by Tenant only with Landlord’s prior written consent, which consent may be granted or withheld in Landlord’s sole and absolute discretion:

(1) any Alteration Work that would adversely affect (except to a de minimis extent) the structure of the Building;

(2) any Alteration Work to basic Building systems that would adversely affect (except to a de minimis extent) the operation of the Building or its mechanical, electrical, plumbing, HVAC, life safety or other basic Building systems;

(3) any Alteration Work that would adversely affect (except to a de minimis extent) Landlord’s ability to perform its obligations or provide services to Tenant or other tenants or increase the costs thereof (except to a de minimis extent, and only to the extent that Tenant agrees to pay such increased costs);

(4) any Alteration Work which would require entry into another tenant’s premises (unless the affected tenant has granted approval for such entry by Tenant or its representatives, or unless under the applicable lease Landlord has the right to allow Tenant or its representatives to make such entry without such tenant’s approval, and Landlord reasonably determines that such work will not materially interfere with such tenant’s use and occupancy of its premises); or

(5) any Alteration Work in the Premises or Building visible from the Common Areas on a multi-tenant floor that would materially detract from the aesthetic integrity of the Building or its design.

The Alteration Work described in clauses (1)-(5) of the preceding sentence is sometimes referred to herein as “Consent Alteration Work.” Landlord’s consent to any Consent Alteration Work may be conditioned upon, among other things, Tenant’s use of contractors selected by Landlord for such Consent Alteration Work, and/or Landlord’s (rather than Tenant’s) performance of all or any portion of such Consent Alteration Work (in which event Tenant shall reimburse Landlord for Landlord’s Actual Costs incurred in connection therewith).

(iii) Without limitation of the other requirements set forth herein, Tenant shall be required to give Landlord prior written notice of: (x) any Consent Alteration Work, (y) any Alteration Work whose cost is reasonably expected to exceed $750,000 in any

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single instance (whether or not Landlord’s consent is required), and (z) any Alteration Work which could reasonably be expected to result in excessive odors, noise or other disturbance to other occupants of the Building (whether or not Landlord’s consent is required); which notice shall include a description of the contemplated work and the types of materials being used.

(iv) Notwithstanding anything to the contrary contained herein, Landlord and Tenant acknowledge that the terms of this Article 7 shall not apply to Tenant’s initial improvements to the Premises (i.e., the Tenant Work and the Furniture Work), which shall instead be covered by the Workletter.

(v) Tenant shall be deemed to be the owner of all Alteration Work constructed or installed in the Premises by Tenant, except to the extent that Tenant elects (or is required) to leave any Alteration Work in the Premises upon the expiration or sooner termination of this Lease (or Tenant’s right to possession hereunder) in accordance with Article 12 hereof, in which event such Alteration Work shall become the property of Landlord as and when provided in said Article 12.

(B) Requirements.

(i) As a condition to Tenant’s performing any Consent Alteration Work, Tenant shall comply with the following requirements (so long as the same are generally applicable throughout the Building to all tenants):

(1) submission of plans and specifications for Landlord’s prior written approval, which approval may be granted or withheld in Landlord’s sole and absolute discretion,

(2) unless Tenant engages one of the Landlord approved contractors or subcontractors (the current list of which is set forth in Exhibit K hereto, but is subject to change by Landlord from time to time throughout the Term), Landlord’s prior approval of contractors and subcontractors, which approval shall not be unreasonably withheld,

(3) reasonable requirements imposed by Landlord as to the manner and times during which such Alteration Work shall be conducted, and

(4) submission of “as built” drawings, or final drawings with field notes, for all such Consent Alteration Work, if applicable, in such form as Landlord may reasonably request.

(ii) In connection with Tenant’s performance of any Alteration Work (regardless of whether the same constitutes Consent Alteration Work), Tenant shall comply with the following requirements (so long as the same are generally applicable throughout the Building to all tenants):

(1) obtaining necessary permits,

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(2) obtaining from Tenant’s contractors performing such Alteration Work insurance in form, content and amounts customarily required in Class A office buildings in downtown Chicago in connection with the performance of work comparable to the Alteration Work in question, and obtaining insurance certificates that name Landlord and such other parties as are reasonably identified by Landlord as additional insureds thereunder,

(3) obtaining such sworn statements and affidavits from Tenant (in customary form, listing the persons and entities with whom Tenant has contracted in connection with the performance of any Alteration Work), and such lien waivers, affidavits and sworn statements from Tenant’s contractors, subcontractors and materialmen performing or providing services in connection with any Alteration Work, as Landlord may reasonably require.

(iii) Whenever in this Lease Landlord has a right of prior approval over any architect, engineer, contractor, or subcontractor to be used by Tenant, Landlord shall not unreasonably withhold such consent or (except as expressly permitted herein) limit Tenant to one or a limited number of architects, engineers, contractors, or subcontractors.

(iv) No welding and no Alteration Work that is audible (except to a de minimis extent) or causes excessive vibration or odors in occupied office premises other than the Premises shall be performed during Regular Business Hours. All Alteration Work shall comply with all insurance requirements applicable to the Building and with all Laws. All Alteration Work shall be performed in a good and workmanlike manner, lien free (subject to Tenant’s rights under Paragraph 7(D) below) in compliance with all Laws and the terms of this Lease, and all materials used shall be of a high quality comparable to or better than those materials used in the Premises and Property. In the case of Consent Alteration Work, Landlord may require that such Consent Alteration Work be performed under Landlord’s supervision; provided however Tenant shall not be required to pay any fee to Landlord in connection with Landlord’s review, approval or supervision of any Consent Alteration Work, except that, if in connection with any Consent Alteration Work proposed by Tenant, Landlord reasonably determines that review of Tenant’s proposed plans and specifications by a third party structural, mechanical or electrical engineer (i.e., not an employee of Landlord or any Affiliate thereof) is necessary, Tenant shall be obligated to reimburse Landlord for Landlord’s Actual Costs incurred in connection with such third party engineer’s review of Tenant’s proposed plans and specifications.

(v) If Landlord consents to or supervises any Alteration Work, the same shall not be deemed a warranty as to the adequacy of the design, workmanship or quality of materials or that the same comply with Laws, and Landlord hereby expressly disclaims any responsibility or liability for the same; provided however, Landlord shall notify Tenant to the extent Landlord has actual knowledge that any planned Alteration Work shall be deficient in any of the foregoing respects. Tenant shall be responsible, at its sole cost and expense, for any alterations to the Building required in order to comply with applicable Laws occasioned by such Alteration Work.

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(vi) If, Landlord fails, within ten (10) days after its receipt of Tenant’s request for consent to or approval of any Consent Alteration Work, plans, specifications, contractors, subcontractors, or any other submission made pursuant to this Article 7 that requires Landlord’s consent or approval, to notify Tenant that Landlord withholds such consent or approval (including therewith a statement identifying its reasons therefor with reasonable specificity), then Tenant shall have the right to give Landlord a second written notice requesting consent to the proposed Alteration Work, plans, specifications, contractors, subcontractors or other submission (as applicable), which notice shall (in addition to again requesting such consent) contain a sentence stating “LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER LANDLORD’S RECEIPT HEREOF SHALL CONSTITUTE LANDLORD’S CONSENT TO THE SUBJECT MATTER HEREOF,” and, in the event that Landlord fails to respond to such second notice within five (5) Business Days after Landlord’s receipt thereof, then Landlord shall be deemed to have consented to the proposed Alteration Work, plans, specifications, contractors, subcontractors or other submission (as applicable).

(vii) Except as expressly set forth in this Lease, Landlord shall not have any obligation to repair, maintain or replace any portion of the Alteration Work installed in the Premises by Tenant.

(viii) Landlord shall reasonably cooperate, at Tenant’s expense, with Tenant’s efforts to obtain any necessary permits or licenses and shall execute any applications or other documents required by Law or any governmental agency to be executed by the building owner (at no out-of-pocket cost or liability to Landlord, unless Tenant agrees to pay the same) and Tenant shall indemnify and hold harmless Landlord for any cost, expense or liability incurred as a result of the performance of Landlord’s duties under this Paragraph 7(B)(viii).

(ix) All Consent Alteration Work shall be performed substantially in accordance with the plans and specifications approved by Landlord therefor, and all Alteration Work described in clause (y) or (z) of Paragraph 7(A)(iii) above shall be performed substantially in accordance with the description of the work and materials furnished by Tenant therefor. Landlord shall have the right to deliver (or to cause Tenant to deliver) reasonable construction rules and regulations that are consistent with the terms and provisions of this Lease to Tenant’s contractors performing Alteration Work to the Premises from time to time (which construction procedures and regulations shall be subject to reasonable modification by Landlord from time to time during the Term), in which event Tenant shall cause such rules and regulations to be incorporated (subject to immaterial variations required by such contractors or variations mutually and reasonably agreed to between Landlord and Tenant) into Tenant’s contracts with its contractors performing the applicable Alteration Work (and shall require its contractors to include such rules and regulations in their contracts with their respective subcontractors performing such Alteration Work), and shall thereafter use reasonable efforts to enforce such rules and regulations in connection with the performance of the applicable Alteration Work (it being agreed, however, that in the event of any conflict or

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inconsistency between the terms and provisions of any such construction rules and regulations delivered by Landlord and the terms and provisions of this Lease, the terms and provisions of this Lease shall govern). All materials and equipment shall be of first quality and (except for Tenant’s personal property) free of all liens and encumbrances.

(x) Tenant’s contractors shall be licensed union contractors (unless no union contractors are available to perform the particular work in question or union contractors do not customarily perform the particular work in question and the use of such non-union contractors will not create disharmony with other union contractors at the Building) possessing good labor relations capable of performing quality workmanship and shall work in harmony with Landlord’s contractors and subcontractors in the Building.

(xi) Tenant shall perform any Alteration Work (and shall cause its contractors to perform such Alteration Work) so as not to interfere with the use and enjoyment of the Building by other tenants of the Building (except to a de minimis extent).

(C) Special Alterations.

(i) As used herein the term “Special Alteration” means any Consent Alteration Work involving structural work not typically undertaken in office space and requiring extraordinary demolition costs for the removal thereof, but specifically excluding the following: (i) beam cuts, slab penetrations or floor openings which are (in each case) 144 square inches in size or less, (ii) electrical or telecommunications risers and conduits or Lines, (iii) any interconnecting stair cases between any floors within the Premises or the restoration of the stairway pathway hole through the slab between such floors, (iv) raised or special flooring, and (v) conveyors and dumbwaiters.

(ii) If Landlord expressly states in writing in its consent to such Special Alteration (including any Special Alteration constructed or installed pursuant to the Workletter) that Landlord may require such Special Alteration to be removed upon expiration of the Term or earlier termination of this Lease, Landlord shall be deemed to have reserved its rights to require such removal by Tenant in accordance with the terms of Article 12 hereof, but may not otherwise require such removal if Landlord has not so advised Tenant in writing; provided, however, that in the event that under the terms of this Lease (or the Workletter, as applicable), Landlord’s consent is not required for the installation or construction of any such Special Alteration, then Tenant shall notify Landlord of the installation or construction of such Special Alteration, and Landlord shall have the right to notify Tenant within ten (10) Business Days after its receipt of such notice whether Landlord shall require that such Special Alteration be removed upon expiration of the Term or earlier termination of this Lease. In the event that Landlord fails to so notify Tenant of any such removal requirement as provided in this Paragraph 7(C)(ii), then Tenant shall have no obligation to remove such Special Alteration under this Lease.

(D) Liens. Tenant shall keep the Property and Premises free from any mechanic’s, materialman’s or similar liens or other such encumbrances in connection with any Alteration

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Work performed by or on behalf of Tenant on or respecting the Premises (and not performed by or on behalf of Landlord), and shall indemnify and hold Landlord harmless from and against any claims, liabilities, judgments, or costs (including reasonable attorneys’ fees) arising out of such liens or encumbrances or in connection therewith. Within twenty (20) Business Days after written notice from Landlord, Tenant shall remove any such lien or encumbrance by bond or otherwise, or provide a title insurance endorsement (or other security (e.g., a letter of credit)) reasonably satisfactory to Landlord and its Mortgagees or Ground Lessors, and covering all costs of defense, in which case Tenant shall not be deemed to be in breach and shall have the right to contest in good faith or otherwise deal with such lien claims as Tenant deems best (provided that if Tenant does not release any such lien or encumbrance within such twenty (20) Business Day period, then Tenant shall be required to diligently contest the same in good faith and shall, in any event, have the same released of record prior to final enforcement or foreclosure thereof). If Tenant shall fail to do so, Landlord may, after delivery of notice to Tenant of Landlord’s intent so to act, bond over, insure over, or pay the amount necessary to remove such lien or encumbrance, without being responsible for investigating the validity thereof. In each case, the amount so paid shall be deemed Additional Rent under this Lease payable upon demand, without limitation as to other remedies available to Landlord under this Lease. Nothing contained in this Lease shall authorize Tenant to do any act that shall subject Landlord’s title to the Property or Premises to any liens or encumbrances whether claimed by operation of law or express or implied contract. Any claim to a lien or encumbrance upon the Property or Premises arising in connection with any Alteration Work performed by or on behalf of Tenant on or respecting the Premises (and not performed by or on behalf of Landlord) shall be null and void, or at Landlord’s option shall attach only against Tenant’s interest in the Premises and shall in all respects be subordinate to Landlord’s title to the Property and Premises.

ARTICLE 8

Maintenance and Repairs

(A) Tenant’s Repairs and Maintenance. Except for Landlord’s obligations specified under this Lease, Tenant shall maintain and keep in first class attractive condition, in good, safe and sanitary condition, in compliance with all Laws, and in working order and repair, the Premises including, without limitation, all property installed in the Premises by Tenant (and including all equipment and facilities associated with any kitchen located at the Premises), but excluding the items specifically required to be maintained and repaired by Landlord pursuant to Paragraph 8(B) below (“Tenant’s Repairs”) at all times during the Term, subject to ordinary wear and tear, casualty and condemnation (which casualty and condemnation shall instead be governed by Article 9 and Article 11 below). Without limiting the foregoing, Tenant shall maintain and repair all of the fixtures, equipment and appurtenances in the Premises (including all electrical, plumbing, heating, ventilation and air conditioning, sprinklers and life safety systems providing service solely to the Premises up to the point of connection of localized distribution to the Premises); provided, that Tenant shall not be required to maintain or repair any VAV or Fan Powered boxes located in the Premises, or any equipment located in the electrical and/or riser closets to which Tenant is not permitted to gain access pursuant to Paragraph 6(E)(ii) above or Base Building lavatories and bathrooms and janitor closets. Tenant shall also maintain and repair (in accordance with the applicable terms of Paragraph 6(H) and Article 27 hereof) in

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good condition all Lines and other telecommunications equipment of Tenant (including any of the same located in the Landlord’s Telecommunication Infrastructure), up to (and including) the point of connection within the NetPOP Rooms, and with Tenant’s antenna equipment described in Article 37 below (and the term “Tenant’s Repairs” shall include such maintenance and repair). Subject in all events to the terms Paragraphs 10(E)(iv) and 25(A) hereof; and not including any repairs required as a result of events of casualty or condemnation (which events of casualty and condemnation shall, instead, be governed by Article 9 and Article 11 below, respectively), Tenant shall also repair (or, at Landlord’s option, reimburse Landlord for Landlord’s Actual Cost of repairing) any damage caused to the portions of the Building located outside of the Premises to the extent arising from the acts of Tenant, its agents, employees or contractors (and the term “Tenant’s Repairs” shall include such repairs). In the event that any Tenant’s Repairs are required, Tenant shall promptly arrange for the same either through Landlord (but only if Landlord agrees, in its sole discretion, to so coordinate such Tenant’s Repairs, in which case Tenant shall reimburse Landlord for Landlord’s Actual Costs), or if Tenant so elects, using such other contractors as Tenant shall select, subject to Landlord’s approval not to be unreasonably withheld (it being agreed that, in any event, Landlord will not both refuse to coordinate Tenant’s Repairs and unreasonably disapprove Tenant’s proposed contractors to perform the same in a manner which would cause Tenant to be in violation of this Lease, cause an Emergency Situation to occur, or otherwise adversely affect Tenant’s use, occupancy and enjoyment of the Premises or the other areas of the Property which Tenant has the right to use and/or occupy hereunder). In the event that Tenant fails to perform any Tenant’s Repairs as required above or take any other action required of Tenant under this Lease, and such failure results in the occurrence of an Emergency Situation, then Tenant shall cause such Tenant Repairs or other actions as are necessary to remediate such condition to be performed continuously during and after Regular Business Hours (subject to Unavoidable Delays); provided, that if Tenant fails to commence promptly or to perform diligently such Tenant’s Repairs as are necessary to remediate such condition, then Landlord, upon providing Tenant with such prior notice as is reasonable under the circumstances (which notice: (x) may, if circumstances so dictate, be given by contacting by telephone any representative of Tenant designated by Tenant in writing to Landlord from time to time as an emergency contact person for the Premises (it being agreed that Landlord shall use reasonable efforts to actually speak with (as opposed to leaving a message for) each such emergency contact person of Tenant, but that if Landlord is unable to reach any such contact person of Tenant and the Emergency Situation in question requires immediate action, Landlord may undertake such action without actually speaking with any such contact person, in which event Landlord shall leave a message for such person, if an answering machine or message service is available therefor), and (y) shall clearly indicate that Landlord intends to take steps necessary to remedy the event giving rise to the Emergency Situation in question), may perform such Tenant’s Repairs or other actions at Tenant’s expense; provided, further, that in so undertaking such Tenant’s Repairs or other actions, Landlord shall use all reasonable efforts to avoid (and if it cannot avoid, to minimize) interference with Tenant’s use or occupancy of the Premises in connection therewith (without limiting the terms of Paragraph 23(B) hereof), and Landlord shall (subject to the terms of Paragraphs 10(E)(iv) and 25(A) hereof, and not including repairs required as a result of events of casualty or condemnation (which events of casualty and condemnation are instead covered by Article 9 and Article 11 hereof, respectively)) promptly repair, at Landlord’s sole cost and expense (except that, to the extent that the damage in question

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is a natural consequence of performing the Tenant Repairs or other actions in question (i.e., such damage would have been required or would have resulted in the event that Tenant had originally performed such Tenant’s Repairs or other actions) (“Necessary Self-Help Repairs”), then Tenant shall be responsible for the cost and expense of repairing such damage), any damage to the Premises or any of Tenant’s improvements, equipment or property therein caused as a result of Landlord’s performance of such Tenant’s Repairs or such other actions. In any case, in the event that Landlord exercises the foregoing right to conduct Tenant’s Repairs, Landlord shall: (a) proceed in accordance with all applicable Laws; (b) retain to effect such actions only such reputable contractors and suppliers as are insured in accordance with the terms of Article 10 hereof; (c) effect such repairs or perform such other actions in a good and workmanlike and commercially reasonable manner; and (d) use new or like new materials.

(B) Landlord’s Repairs and Maintenance. Landlord shall perform all maintenance and make all repairs and replacements (collectively referred to herein as “Landlord Repairs”) necessary to keep the following (as the same may be modified, altered, replaced and/or reconstructed from time to time in compliance with the terms of this Lease, the “Landlord Repair Areas”) in a first class attractive condition, in good and sanitary condition, in compliance with all Laws, and in good working order and repair (the cost of which shall be included in Operating Expenses, except as otherwise limited as provided in Article 3), consistent with other Class A office buildings in downtown Chicago at all times during the Term, subject to ordinary wear and tear, casualty and condemnation: (i) the Common Areas, (ii) the Garage, Common Conference Center and Fitness Center, (iii) all mechanical, electrical, plumbing, HVAC, Life Safety and communications riser systems (but not any communications riser systems or facilities installed by Tenant), and other utility systems servicing the Premises (except, in each case, to the extent Tenant is responsible therefor as provided in Paragraph 8(A) above, and/or to the extent that the same constitute part of the Tenant Work or Alteration Work installed in the Premises by Tenant), including, without limitation, any component of the kitchen black iron exhaust system located outside of the Premises (including all vertical components thereof) (it being agreed that the cost of maintaining and repairing such black iron exhaust system shall be Tenant’s responsibility (notwithstanding the fact that Landlord shall be responsible for the actual performance of maintenance and repair work thereto, as provided above), except for costs of repairs required as a result of damage thereto caused by a default of Landlord hereunder or by the negligence or willful misconduct of Landlord or its agents (including Landlord’s Agent), employees, principals, contractors or representatives, which shall, subject to Article 25 below, be Landlord’s responsibility), any VAV boxes located in the Premises, and any equipment located in the electrical and/or riser closets to which Tenant is not permitted to gain access pursuant to Paragraph 6(E)(ii) above; (iv) the Building’s structure, roof, floors, sub-floors, structural perimeter walls, curtain wall and exterior plate glass, in accordance with the specifications set forth in Exhibit F-2 attached hereto (not including, however, any Alteration Work or Tenant Work installed in the Premises by Tenant), (v) all lavatory and bathroom facilities located in the core areas of the Building on the floors occupied by Tenant (except that, to the extent that Tenant shall have installed any unusual Tenant Work or Alteration Work therein not customarily located in office tenant bathroom facilities at comparable Class A office buildings in downtown Chicago (e.g., shower facilities and specialized fixtures), and the cost of maintaining the same exceeds the cost of maintaining normal lavatory and bathroom facilities, Tenant shall be solely responsible for any such excess cost (and the same shall not be

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included in Operating Expenses)), (vi) all machinery and equipment necessary to provide the services of Landlord described in Article 6 (except to the extent that Tenant is responsible therefor as provided in Paragraph 8(A) above), (vii) the Loading Docks (excluding, however, the Tenant Staging Area, which shall instead be Tenant’s responsibility hereunder) and the elevators (including the Tenant Freight Elevator) serving the Premises, the Garage and the Common Areas of the Building, (viii) the Monument, all exterior signage at the Property and all signage located in the Main Lobby of the Building (other than any required repairs to (as opposed to ordinary maintenance of) the Tenant Signs in the Main Lobby of the Building, which shall instead be performed by Tenant, at its expense), (ix) all Improvements (including the Plaza) located outside the Building, and (x) the Base Building Conditions set forth on Exhibit N attached hereto and made a part hereof (the “Base Building Conditions”) and all other elements of the Landlord Work (in each case, to the extent that the same is not included in the items set forth in clauses (i) through (ix) above). Subject in all events to the terms of Paragraphs 10(E)(iv) and 25(A) hereof, and not including any repairs required as a result of events of casualty or condemnation (which events of casualty and condemnation shall instead be governed by Article 9 and Article 11 below, respectively), or Necessary Self-Help Repairs (which Necessary Self-Help Repairs shall be governed by Paragraph 8(A) above), Landlord shall also repair (or, at Tenant’s option, reimburse Tenant for Tenant’s actual, reasonable, out-of-pocket cost of repairing) any damage caused to the Premises as a result of the acts of Landlord, its agents, employees or contractors (and the term “Landlord Repairs” shall include such repairs). No other promises of Landlord to alter, remodel, improve, repair, decorate or clean the Property or any part thereof have been made and no representation respecting the condition of the Property or any part thereof has been made to Tenant by or on behalf of Landlord except to the extent expressly set forth in this Lease (including the Workletter). Subject to Paragraph 6(D), Landlord shall cause Landlord’s Repairs to be performed with reasonable commercial diligence, and may, at its option, perform such Landlord Repairs during Regular Business Hours; provided, that, (a) except in the case of an Emergency Situation, Landlord shall cause Landlord Repairs to be done outside of Regular Business Hours if the performance thereof effectively shall prevent or materially interfere with or disrupt the normal business activities of Tenant in the Premises, and (b) in the case of an Emergency Situation involving any Landlord Repair Area, or any other condition involving any Landlord Repair Area the remediation of which is reasonably necessary for Tenant’s use, occupancy or enjoyment of the Premises or any material portion thereof for the conduct of Tenant’s business therein (an “Adverse Condition”), Landlord shall cause such Landlord Repairs which are required to eliminate the Adverse Condition to be performed continuously during and after Regular Business Hours (subject to Unavoidable Delays). For purposes hereof, the term “Emergency Situation” shall mean a situation which poses an imminent threat: (x) to the physical well-being of persons at the Property, (y) of damage to property of any person or entity at the Property (including any mechanical space at the Property, the Premises or any other tenant’s premises at the Building), or (z) of damage to or failure of Building systems.

(C) Tenant Self-Help. If an Emergency Situation or Adverse Condition involving the Premises (or other areas of the Property which Tenant has the right to use or occupy pursuant to this Lease) or Tenant’s personnel or property exists, then, without limitation of the provisions of Article 6 and Article 23 of this Lease, Landlord shall promptly commence and diligently perform all Landlord Repairs or take such other actions, if any, required of Landlord under this Lease necessary to cure or remediate such Emergency Situation or Adverse Condition

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(“Emergency Repairs”). If Landlord fails to commence promptly or to perform diligently such Emergency Repairs or other actions required of Landlord under this Lease to cure or remediate such Emergency Situation or Adverse Condition, then Tenant, upon providing Landlord with such prior notice as is reasonable under the circumstances (which notice: (x) may, if circumstances so dictate, be given by contacting by telephone any representative of Landlord at the office of the Building or any person designated by Landlord in writing to Tenant from time to time as an emergency contact person for the Building (it being agreed that Tenant shall use reasonable efforts to actually speak with (as opposed to leaving a message for) each such representative or emergency contact person of Landlord, but that if Tenant is unable to reach any such contact person or representative of Landlord and the Emergency Situation in question requires immediate action, Tenant may undertake such action without actually speaking with any such representative or contact person, in which event Tenant shall leave a message for such person, if an answering machine or message service is available therefor), and (y) shall clearly indicate that Tenant intends to take steps necessary to remedy the event giving rise to the Emergency Situation or Adverse Condition in question), may perform such Emergency Repairs or other actions at Landlord’s expense; provided, however, that in no event shall Tenant undertake any actions which will or are reasonably likely to adversely affect (other than to a de minimis extent) the structure of the Building or any Building systems or the premises of any other tenant of the Building. If Tenant exercises its right to perform Emergency Repairs or other actions on Landlord’s behalf, as provided above, then Landlord shall reimburse the actual out-of-pocket reasonable cost thereof within thirty (30) days following Tenant’s delivery of: (i) a written notice describing in reasonable detail the action taken by the Tenant, and (ii) reasonably satisfactory evidence of the cost of such remedy. In any case, in the event any Emergency Repairs are not accomplished by Landlord within a forty-eight (48) hour period after Landlord receives notice of the applicable Emergency Situation or Adverse Condition, Landlord within five (5) Business Days following Tenant’s written request therefor, shall provide to Tenant a preliminary schedule setting forth the basic steps Landlord proposes to be taken to effect the Emergency Repairs or other actions and the times when such work is proposed to be done. If Tenant undertakes any action pursuant to this Paragraph 8(C), Tenant shall (a) proceed in accordance with all applicable Laws; (b) retain to effect such actions only such reputable contractors and suppliers as are duly licensed in the City of Chicago and insured in accordance with the provisions of Article 7; (c) effect such repairs or perform such other actions in a good and workmanlike and commercially reasonable manner; (d) use new or like new materials; (e) take reasonable efforts to minimize any material interference or impact on the other tenants and occupants of the Property, and (e) otherwise comply with all applicable requirements set forth in Article 7 hereof (other than any requirements to obtain Landlord’s approval of, or to provide Landlord with notice of, any Alteration Work set forth in said Article 7).

(D) Noise Specifications. Landlord covenants and agrees that Landlord shall not, at any time during the Term, cause the generation of noise at the Property that causes the level of noise within the Premises to exceed the specifications set forth on Exhibit O attached hereto (the “Noise Specifications”) (subject to emergency situations or other matters outside of Landlord’s reasonable control, in each case, for a limited period of time that is reasonable under the circumstances). Without limiting the generality of the foregoing, no equipment, facilities, systems or property of any kind (other than equipment, facilities or property of Tenant) installed or permitted to be installed by Landlord at the Property at any time within the Term, and no

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construction work or activities, cleaning work or activities or any other activity of Landlord, shall cause generation of noise levels within the Premises that exceed the Noise Specifications (subject to emergency situations or other matters outside of Landlord’s reasonable control, in each case, for a limited period of time that is reasonable under the circumstances). In the event that the level of noise within the Premises exceeds the Noise Specifications at any time during the Term for any of the foregoing reasons, Landlord shall, as soon as reasonably possible after notice thereof from Tenant (which may be given in writing or by telephone), take such actions as may be necessary to cause the noise levels within the Premises to be decreased so as to comply with the Noise Specifications.

ARTICLE 9

Casualty Damage

(A) Casualty.

(i) If any portion of the Landlord Repair Areas shall be damaged by fire or other casualty (including, without limitation, by reason of a terrorist attack), Landlord shall (subject to the terms and provisions of this Article 9) repair and restore the same (“Landlord’s Restoration Work”) with reasonable promptness to substantially the condition existing prior to the casualty, except for modifications required by zoning and building codes and other Laws then in effect, and except as otherwise provided in Paragraph 9(B) below.

(ii) If, as a result of any such damage, all or any portion of the Premises is rendered Untenantable, then Landlord, within thirty (30) days after the occurrence of any such damage, or as soon as reasonably possible thereafter (but in any event within seventy-five (75) days after the occurrence of such damage), shall cause to be delivered to Tenant an estimate, prepared by a qualified, independent, experienced and reputable architect and/or general contractor and addressed to Tenant, of the number of days (assuming no unusual delays in the receipt of insurance proceeds, no overtime or other premiums, and no Unavoidable Delays), measured from the date of the casualty, that will be required for Landlord to substantially complete the repair and restoration of (i) all portions of the Landlord Repair Areas in or surrounding the Premises or on any part of any floor which is leased to Tenant, (ii) those components of the Landlord Repair Areas consisting of the Building systems and equipment which serve the Premises, (iii) the Main Lobby and the Building Pedestrian Entrance, and (iv) to the extent required to render the Premises tenantable, any other portion of the Landlord Repair Areas (“Landlord’s Basic Restoration Work”).

(a) If the aforesaid estimate exceeds three hundred (300) days, and if as a result of such fire or other casualty a material portion of the Premises shall be rendered untenantable (with “material portion”, for purposes of this Paragraph 9(A)(ii)(a) and for purposes of Paragraph 9(F) below, being defined in a substantially comparable manner as described in Paragraph 11(a)(ii) below), then Tenant may elect to terminate this Lease

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by notifying Landlord in writing of such termination no later than the thirtieth (30^th) day following Tenant’s receipt of such estimate from Landlord.

(b) If the aforesaid estimate exceeds ninety (90) days and such fire or casualty shall have occurred after the 365th day before the then Expiration Date, then either Landlord or Tenant may elect to terminate this Lease by notifying the other in writing of such termination no later than (a) the thirtieth (30^th) day following Tenant’s receipt of such estimate from Landlord if Tenant shall so terminate the Lease, and (b) the earlier of the thirtieth (30^th) day following Landlord’s delivery of said estimate to Tenant and the ninetieth (90^th) day after such fire or other casualty, if Landlord shall terminate this Lease.

(c) If Landlord shall fail to cause the required architect’s and/or general contractor’s estimate to be delivered timely and such failure continues for ten (10) Business Days after Tenant’s notice to Landlord of such failure, then, for all purposes of this Article 10, an architect’s estimate of longer than 300 days shall be deemed to have been delivered to Tenant upon the eleventh (11th) Business Day after Tenant’s written notice as aforesaid, but Landlord shall not have the right to terminate this Lease on the basis of any estimate so deemed to have been delivered.

(iii) If as a result of any fire or other casualty the Building is damaged such that a material portion of the Rentable Area in the Building shall be rendered Untenantable (which may include Untenantability resulting from the inability to provide Building services to such Rentable Area as a result of damage to the Landlord Repair Areas), irrespective of whether, as a result of any such damage, all or any portion of the Premises is rendered Untenantable, then Landlord, within seventy-five (75) days after the occurrence of any such damage, shall cause to be delivered to Tenant an estimate, prepared by a qualified, independent, experienced and reputable architect and/or general contractor, of the number of days (assuming no unusual delays in the receipt of insurance proceeds, no overtime or other premiums, and no Unavoidable Delays), measured from the date of the casualty, that will be required for Landlord to substantially complete and repair the restoration of the Landlord Repair Areas at the Property. If the aforesaid estimate exceeds thirteen (13) months, then, provided that as a result of such fire or other casualty leases covering not less than 100% of the Rentable Area of the Building then subject to lease (excluding the Premises) shall also be terminated, Landlord may elect to terminate this Lease by notifying Tenant in writing of such termination concurrently with Landlord’s delivery of said estimate to Tenant as hereinabove provided;

(iv) Any termination notice delivered pursuant to this Paragraph 9(A) shall be effective on the date of its delivery, provided, however, that if any portion of the Premises remains tenantable in accordance with all applicable Laws then Tenant shall have the right, in such termination notice (if given by Tenant) or by notice given within thirty (30) days of its receipt of such termination notice (if given by Landlord), to set a

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different termination date with respect to the tenantable portion of the Premises, so long as such different date is no later than the one hundred eightieth (180^th) day following such notice (or, in the case of a termination notice given under Paragraph 9(A)(ii)(b) above, the then Expiration Date of this Lease).

(v) Landlord and Tenant each agree that (subject to Article 29 hereof) the rights and remedies provided in this Article 9 shall be their sole rights and remedies on account of any damage caused by fire or other casualty, and, except as expressly provided in this Article 9 (and Article 29), (a) each party waives any right to terminate this Lease or account thereof, (b) Tenant waives any right to an abatement of rent on account thereof, and (c) each party waives any right to recover damages from the other party on account of any such damage to the Premises or Property.

(B) Unless this Lease is terminated as provided in Paragraph 9(A), Landlord shall proceed with reasonable diligence and promptness, given the nature of the damage to be repaired, to effect Landlord’s Restoration Work, all subject to reasonable delays for insurance adjustments, zoning laws, building codes, and other Laws then in effect and Unavoidable Delays. Notwithstanding anything to the contrary herein set forth, Landlord shall not have any duty pursuant to this Article 9 or otherwise to repair or restore any of the initial leasehold improvements effected by Tenant pursuant to the Workletter or any subsequent leasehold improvements effected pursuant to Article 7 or to Tenant’s equipment, furniture, furnishings, or personal property (as any of the same may have been altered prior to the occurrence of such casualty). Unless this Lease is terminated as provided in Paragraph 9(A), if and to the extent that any damaged leasehold improvements must be removed in order for Landlord to prosecute Landlord’s Restoration Work or to eliminate any hazard or nuisance resulting from such damaged leasehold improvements, then, after Landlord gives Tenant access for that purpose, Tenant shall proceed with reasonable diligence, given the nature of the work, to remove such damaged leasehold improvements in accordance with applicable Laws, subject to reasonable delays for insurance adjustments and Unavoidable Delays. Unless this Lease is terminated as provided in Paragraph 9(A), in the event of any loss or damage to the Premises by reason of fire or other casualty, Tenant shall, to the extent that insurance proceeds are available to Tenant therefor (or would have been available to Tenant had Tenant carried the insurance required to be carried pursuant to this Lease and complied with the terms of such insurance policies), restore the Tenant Insured Improvements to a functional, safe, lawful and tenantable condition, but Tenant shall otherwise have no duty or obligation to restore any of the leasehold improvements, equipment, furniture, furnishings or personal property therein (it being agreed that, subject to the provisions of Article 7 and the preceding terms of this sentence, Tenant shall be permitted to restore the Premises to a condition different from that existing prior to the fire or other casualty). Tenant shall proceed with reasonable diligence, given the nature of the work, to effect such restoration in a good and workmanlike manner and in accordance with applicable Laws, subject to Unavoidable Delays. If this Lease is terminated as provided in Paragraph 9(A), Tenant, no later than the expiration or sooner termination of this Lease, shall remove the damaged leasehold improvements to the extent required by applicable Laws (unless the Building is to be razed and/or demolished, in which case Tenant shall have no obligation to remove any such improvements). All of such work shall be done by Tenant at Tenant’s sole cost and expense, and shall be subject to all the provisions of Article 7 hereof.

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(C) The parties acknowledge that in the event of any loss or damage to the Premises, Building, Improvements or Property (or any equipment, fixtures, furnishings or personal property therein) from fire or other casualty, Landlord shall be entitled to the full proceeds of any insurance coverage carried by Landlord in connection with such loss or damage, and Tenant shall be entitled to the full proceeds of any insurance coverage carried by Tenant in connection with such loss or damage.

(D) Notwithstanding any provision in this Lease to the contrary, Landlord shall not be liable for any loss of business, inconvenience or annoyance arising from any repair, restoration or rehabilitation of any portion of the Premises or the Building as a result of any damage from fire or other casualty.

(E) If any fire or casualty damage to the leasehold improvements in the Premises or to the Building renders all or any portion of the Premises Untenantable, then Net Rent and Additional Rent under Article 3 shall abate with respect to the Untenantable space during the period beginning with the date such space becomes Untenantable and Tenant ceases to use such space for the normal conduct of its business and ending when:

(i) Landlord shall have substantially completed (as hereinafter defined) Landlord’s Basic Restoration Work and delivered the applicable previously Untenantable space to Tenant; and

(ii) there shall have elapsed a period of time (not to exceed 180 days) sufficient for Tenant, commencing after Landlord shall have provided Tenant with access to the Premises (and provided that the Landlord’s Basic Restoration Work is substantially completed or that the Premises is then otherwise in condition reasonably suitable for Tenant to perform construction and restoration work therein) for that purpose and proceeding with reasonable commercial diligence, to (a) complete the Tenant Work pursuant to the terms of the Workletter, if such casualty shall have occurred prior to the completion of such Tenant Work, or (b) restore the leasehold improvements to the condition existing prior to the casualty, or to such other condition as Tenant shall elect as hereinabove provided, if such casualty shall have occurred on or subsequent to the completion of the Tenant Work in the Premises (it being agreed that if Tenant is given access to the Premises as provided in this clause (ii) prior to Landlord’s substantial completion of Landlord’s Basic Restoration Work, then the parties shall reasonably cooperate with each other in connection with the respective work being performed by each party);

provided, however, that if Tenant shall sooner reoccupy such space or any portion thereof for the ordinary conduct of its business, then such abatement shall thereupon end with respect to such space or portion thereof. Such abatement shall be in an amount bearing the same ratio to the total amount of such Net Rent and Additional Rent under Article 3 for such period as the portion of the Rentable Area of the Premises rendered Untenantable bears to the Rentable Area of the entire Premises. If this Lease terminates pursuant to this Article 9, Net Rent and Additional Rent under Article 3 shall be apportioned on a per diem basis and be paid to the date of the fire or casualty with appropriate adjustment for the portion of the Premises that Tenant continues to

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occupy to conduct its business from the date of the fire or casualty until said termination. For purposes of clause (i) above, the Landlord’s Basic Restoration Work shall be deemed to have been “substantially completed” as of the date (a) of such “substantial completion” identified in a written certification to Tenant from a qualified, independent, experienced and reputable architect, being the date (which date shall not be earlier than three (3) Business Days prior to the date on which such certification is delivered to Tenant) that such architect shall have determined that, in such architect’s professional judgment, the Landlord’s Basic Restoration Work has been completed in accordance with the plans and specifications therefor and all Laws, subject only to minor finish-out and “punch-list” items that shall not interfere with Tenant’s use of the Property for the purposes set forth in the Lease and shall not prevent Landlord from complying with its duties and obligations under the Lease, (b) all barriers, scaffolds and construction barricades constructed or installed in connection with the performance of the Landlord’s Basic Restoration Work shall have been removed, (c) safe and reasonable ingress to and egress from the Building through the Plaza and Building Pedestrian Entrance shall be available, and (d) Landlord shall have obtained and delivered to Tenant any new or revised temporary or permanent certificate of occupancy for the Building (but not individual tenant spaces) from the City of Chicago required for the use and occupancy of the Building in accordance with the same certificate of occupancy requirements set forth in the Workletter (or other written evidence reasonably satisfactory to Tenant (as provided in the Workletter) that the Building may lawfully be used and occupied for the same purposes, as permitted pursuant to the certificate of occupancy required under the Workletter) as a result of the occurrence of the fire or other casualty in question (and/or the performance of the Landlord’s Basic Restoration Work), it being agreed that any such approvals may be issued subject to the completion by Tenant of Tenant’s work described in Paragraphs 9(B) and/or 9(E)(ii) above.

(F) If Landlord does not complete Landlord’s Basic Restoration Work by the lapse of a period of time after such fire or other casualty equal to the following (the “Outside Restoration Period”):

(i) if the initial estimate by the architect did not give rise to a right of termination pursuant to Paragraph 9(A), then the lesser of (x) 150% of the number of days of restoration initially estimated by the architect pursuant to Paragraph 9(A) and (y) four hundred fifty (450) days; and

(ii) if such estimate gave rise to a right of termination pursuant to Paragraph 9(A) but the party or parties having such right of termination shall have waived such right of termination, then 125% of the number of days of restoration initially estimated by the architect,

then Tenant, provided the Premises or any material portion thereof affected by such fire or other casualty remain Untenantable, shall have the right to terminate the Lease by delivery of written notice of such election to Landlord within ten (10) days following the expiration of the Outside Restoration Period. If Tenant timely elects to terminate this Lease pursuant to this Paragraph 9(F), Tenant’s notice of termination shall set forth the date upon which this Lease shall terminate, which date shall be any date within the 120 day period following the date on which it shall have delivered such termination notice.

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(G) The terms and provisions of this Article 9 shall apply to any damage to the Building or other Improvements caused as a result of fire or other casualty, regardless of whether such damage occurs during, or prior to the commencement of, the Term; provided, however, that in no event shall Landlord have any right to terminate this Lease pursuant to this Article 9 at any time prior to the Commencement Date; and provided further, that nothing contained in this Article 9 (and no occurrence of any fire or other casualty) shall obviate, limit or otherwise affect the terms and provisions of Article 29 of this Lease or the Workletter (or any of Tenant’s rights and remedies thereunder).

(H) Notwithstanding anything to the contrary herein set forth, Landlord shall have no duty pursuant to this Article 9 to repair or restore any portion of Tenant’s alterations or any other tenant improvements or additions made by or on behalf of Tenant in the Premises, including the Tenant Work or any other Alteration Work made by or on behalf of Tenant in the Premises (but specifically excluding the Landlord Repair Areas).

ARTICLE 10

Insurance, Subrogation, and Waiver of Claims

(A) Tenant’s Property Insurance. Tenant, at its sole cost and expense, shall maintain in force and effect, commercial property insurance under policies issued by insurers that are licensed or authorized to conduct business in Illinois with a minimum Best rating of “A-” and a “financial size category” of at least “XII,” or an equivalent rating and financial size category of another rating agency or as may be in effect with respect to any rating agency from time to time. Such commercial property insurance shall, at a minimum, cover the perils insured under the ISO special causes of loss form (CP 10 30), which provides “all risk” coverage (with a deductible amount not to exceed $150,000, or such larger commercially reasonable deductible, if a $150,000 deductible is not then being offered on commercially reasonable terms), and said insurance shall cover improvements and betterments installed by or on behalf of Tenant, including, but not limited to, the Tenant Work, any Alteration Work performed by Tenant, wall and floor coverings, lighting fixtures, built-in cabinets and bookshelves installed by Tenant (but excluding the Landlord Repair Areas) (collectively, the “Tenant Insured Improvements”), and any other property elected by Tenant (in its sole discretion). Tenant at its election may maintain extra expense coverage as part of its commercial property insurance. In no event shall Landlord be liable to Tenant for any business interruption or other consequential loss, or any other loss whatsoever sustained by Tenant on account of any occurrence of an event insurable under the commercial property insurance required to be carried by Tenant, whether or not such insurance is in effect, even if such loss is caused by the act or omission of Landlord, its employees, officers, directors, or agents. Such insurance shall provide that it is specific, primary and noncontributory as to the Tenant Insured Improvements and shall contain a replacement cost endorsement and a clause pursuant to which the carriers waive all rights of subrogation against the Landlord with respect to losses payable under such policies.

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(B) Tenant’s Liability Insurance.

(i) Tenant shall, at Tenant’s expense, maintain commercial general liability insurance and umbrella coverage covering liability arising from premises operations, independent contractors, personal injury, advertising injury and liability assumed under an insured contract on an occurrence basis (and, to the extent applicable, host liquor or dram shop liability insurance) under policies issued by insurers that are licensed, or recognized as a surplus lines insurer, for the conduct of business in Illinois with a minimum Best rating of “A-” and a “financial size category” of at least “XII,” or an equivalent rating and financial size category of another rating agency or as may be in effect with respect to any rating agency from time to time. Limits of insurance on the general liability insurance policy or policies shall be not less than $1,000,000 combined single limit for personal injury, bodily injury, sickness and property damage for any one occurrence, and $10,000,000 combined single limit for such injuries, sickness and damage for any one occurrence on the excess umbrella policy or policies. Tenant’s liability policies shall name Landlord, its beneficiaries, trustees, managing agent, any Mortgagees and/or Ground Lessors (collectively, the “Landlord Protected Parties”), and such other party or parties as Landlord may reasonably identify, from time to time, as additional insureds. Tenant’s liability insurance shall also include blanket broad-form contractual liability coverage to insure Tenant’s indemnity obligations set forth in this Lease.

(ii) Tenant shall also maintain workers’ compensation insurance and Employer’s Liability insurance with limits of not less than $1,000,000 per occurrence or such greater limits as are required by applicable Laws.

(iii) Tenant shall also maintain such other insurance or coverages as Landlord reasonably requests, from time to time, consistent with insurance requirements imposed on tenants reasonably comparable to Tenant at other comparable Class A office buildings in downtown Chicago.

(C) Landlord’s Property Insurance. Landlord agrees to purchase and keep in force and effect commercial property insurance insuring the Building and other Improvements, including any alterations or additions thereto made by Landlord (but such insurance shall in all events exclude those in the nature of tenant improvements) in an amount equal to one hundred percent (100%) of the full replacement cost of such items (which may exclude footings, foundations and any other below grade structural improvements), subject to a reasonable deductible not to exceed $150,000 (or such larger commercially reasonable deductible, if a $150,000 deductible is not then being offered on commercially reasonable terms, or if larger deductibles are customarily being maintained by landlords comparable to landlord at other comparable Class A office buildings in downtown Chicago). Said commercial property insurance policy shall, at a minimum, cover the perils insured under the ISO special causes of loss form (CP 10 30) which provides “all risk” coverage and shall be provided under policies issued by insurers that are licensed and approved to conduct business in Illinois with a minimum Best rating of “A-” and a “financial size category” of at least “XII,” or an equivalent rating and financial size category of another rating agency or as may be in effect with respect to any rating

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agency from time to time. In no event shall Tenant be liable to Landlord for any business interruption (including loss of rent) or other consequential loss, or any other loss whatsoever, sustained by Landlord on account of any occurrence of an event insurable under the commercial property insurance required to be carried by Landlord, whether or not such insurance is in effect, even if such loss is caused by the act or omission of Tenant, its employees, officers, directors, or agents. Such insurance shall provide that it is primary and noncontributory and shall contain a replacement cost endorsement and a clause pursuant to which the carrier waives all rights of subrogation against Tenant and any subtenants of the Premises (the “Tenant Protected Parties”) and the other occupants of the Premises with respect to losses payable under such policies; provided that, in the case of the Tenant Protected Parties (other than Tenant) and the other occupants of the Premises, Landlord receives a mutual waiver of subrogation in writing from such other parties. Such property insurance shall not insure improvements to the Premises (other than Landlord Repair Areas therein). In addition to the foregoing insurance, Landlord shall also maintain “Service Interruption/Rent Loss” insurance in an amount, and with deductibles reasonably comparable to, Service Interruption/Rent Loss insurance carried by other comparable office buildings in downtown Chicago (which may include Service Interruption/Rent Loss insurance covering any period described in clause (ii) of Paragraph 9(E) above within which Tenant does not pay Rent hereunder by reason of its performance of restoration work to the Premises after the occurrence of a fire or other casualty, as provided in said Paragraph 9(E) hereof, and/or any comparable periods of rental abatement provided for in other tenant leases at the Building).

(D) Landlord’s Liability Insurance.

(i) Landlord shall maintain commercial general liability insurance and umbrella coverage covering liability arising from premises operations, independent contractors, personal injury, advertising injury, products completed operations and liability assumed under an insured contract (including tort liability of another assumed in a business contract) on an occurrence basis. Limits on insurance on the general liability policy or policies shall be not less than $1,000,000 combined single limit for personal injury, bodily injury, sickness, and property damage from any one occurrence, and $10,000,000 combined single limit for such injuries, sickness and damage for any one occurrence on the excess umbrella policy or policies. All such policies shall be issued by insurers that are licensed, or recognized as a surplus lines insurer, for the conduct of business in Illinois with a minimum Best rating of “A-” and a “financial size category” of at least “XII,” or an equivalent rating and financial size category of another rating agency or as may be in effect for any rating agency from time to time. Landlord’s liability policies shall name Tenant and such other party or parties as Tenant may reasonably identify, from time to time, as additional insureds. Landlord’s liability insurance shall also include blanket broad-form contractual liability coverage to insure Landlord’s indemnity obligations set forth in this Lease.

(ii) Landlord shall also maintain workers’ compensation insurance and Employer’s Liability insurance with limits of not less than $1,000,000 per occurrence or such greater limits as required by Laws.

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(iii) Landlord shall also maintain all other insurance customarily carried from time to time by owners of comparable office buildings in downtown Chicago, including, without limitation, terrorism insurance, if customarily carried by owners of comparable office buildings in downtown Chicago (it being agreed that, as of the Effective Date, owners of comparable office buildings in downtown Chicago do customarily carry terrorism insurance).

(E) General Provisions and Evidence of Insurance.

(i) Tenant shall provide Landlord with certificates evidencing the coverage required pursuant to Paragraphs 10(A) and 10(B), together with reasonably satisfactory evidence of payment of premiums (and showing the Landlord Protected Parties as additional insureds in the liability insurance policy only) on or prior to the first Delivery Date to occur, and thereafter on or before the date any of the then existing insurance policies is to expire, which shall state that such insurance coverage may not be canceled (nor may any material change be made thereto) without at least thirty (30) days’ prior written notice to Landlord, and shall provide renewal certificates to Landlord at least seven (7) days prior to expiration of such policies. Such certificates of insurance shall be in the form currently designated “Acord 27” (Evidence of Property Insurance) and “Acord 25-S” (Certificate of Liability Insurance) (with necessary changes to such forms, if any, to comply with the specific terms and requirements set forth herein), shall be binding on Tenant’s insurance company, and shall expressly provide that such certification conveys to Landlord and the Landlord Protected Parties all the rights and privileges afforded under the Tenant’s insurance policies as primary insurance. At Landlord’s request, Tenant shall provide Landlord with copies of the underlying insurance policies evidenced by the aforesaid insurance certificates. Landlord may periodically (but in no event more frequently than the term covered by Tenant’s then current insurance policies), require that Tenant reasonably increase the aforementioned coverage required of Tenant in a manner comparable to the increases requested of tenants reasonably comparable to Tenant by landlords of comparable office buildings in downtown Chicago, provided that Landlord provides notice of such requirement at least thirty (30) days prior to the date on which Tenant’s then current insurance policies are scheduled to expire. Tenant may periodically (but in no event more frequently than the term covered by Landlord’s then current insurance policies) require that Landlord reasonably increase the aforementioned coverage required of Landlord in a manner comparable to the increases made by landlords of comparable office buildings in downtown Chicago, provided that Tenant provides notice of such requirement at least thirty (30) days prior to the date on which Landlord’s then current insurance policies are scheduled to expire.

(ii) Landlord shall provide Tenant, upon Tenant’s request therefor from time to time, with reasonable evidence that Landlord maintains the insurance coverage required pursuant to Paragraphs 10(C) and 10(D), together with reasonably satisfactory evidence of payment of premiums (and including reasonably satisfactory evidence that the parties required to be named as additional insureds under Paragraph 10(D) above are

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named as additional insureds in the liability insurance policy only). Such evidence shall include the then current expiration date(s) of Landlord’s insurance policies.

(iii) Except as provided to the contrary herein, any insurance carried by Landlord or Tenant shall be for the sole benefit of the party carrying such insurance and its additional insureds. Except as provided herein, any insurance policies hereunder may be “blanket policies;” provided that the coverage afforded and allocated thereunder, as it relates to the Premises or the Building and other Improvements (as applicable), shall not be reduced or diminished or otherwise be different from that which would exist under a separate policy meeting all other requirements of this Lease.

(iv) Without limiting the generality of Paragraphs 25(A) and (B) hereof (and except as provided in Paragraph 9(C) hereof), Landlord and Tenant each hereby agrees to look solely to, and seek recovery only from, its respective commercial property insurance carrier in the event of a property loss to the extent that such coverage is agreed to be provided hereunder (for this purpose, any applicable deductible or self-insured amount shall be treated as though it were recoverable under such policies) and Landlord and Tenant each waives all rights and claims against the other for such losses (to the extent of such coverage), and waives all rights of subrogation of its respective insurer (to the extent of such coverage). Without limiting the generality of Paragraphs 25(A) and (B) hereof, Landlord and Tenant each hereby further agrees that its respective commercial property insurance policies are now, or shall prior to the Commencement Date be, endorsed such that said waiver of subrogation shall not affect the right of the insured to recover thereunder.

ARTICLE 11

Condemnation

(A) If the entire Building, Property or Premises shall be taken or condemned by any competent authority for any public or quasi-public use or purpose, then the Term of this Lease shall end upon the effective date of such taking or condemnation. If only a part of the Building or Property shall be so taken or condemned:

(i) Landlord shall have the right to terminate this Lease (by written notice thereof to Tenant given no later than sixty (60) days after the later of (1) the effective date of the taking or condemnation in question or (2) the date of the order, settlement or other disposition entered in connection with such condemnation) if: (a) such taking or condemnation would render the operation of the Building economically unfeasible, and (b) the leases of all other tenants in the Building are terminated; it being agreed that any such termination shall be effective upon not less than one hundred eighty (180) days’ written notice prior to the date of termination designated in the notice; and/or

(ii) Tenant shall have the right to terminate this Lease (by written notice thereof to Landlord given no later than sixty (60) days after the effective date of the taking or condemnation in question) if a material portion of the Premises is affected

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thereby, which, for purposes hereof, shall mean if: (a) more than twenty percent (20%) of the Rentable Area of the Premises is so taken or condemned, (b) twenty percent (20%) or less of the Rentable Area of the Premises is so taken or condemned, but such taking or condemnation renders more than twenty percent (20%) of the Rentable Area of the Premises Untenantable (e.g., electricity, HVAC, telephones and/or computer systems are unavailable to, and Tenant has ceased occupancy of, the affected portions of the Premises), or (c) all portions of the Building or Property providing reasonable access to and from the Premises are so taken or condemned; it being agreed that any such termination shall be effective as of the date of termination specified by Tenant in its notice to Landlord (which date of termination specified by Tenant shall not be earlier than the effective date of the taking or condemnation in question).

If this Lease is terminated pursuant to this Article, Rent at the then-current rate shall be apportioned as of the date of the termination of this Lease, and, except as otherwise provided herein, there shall be no apportionment of the award payable as a result of the applicable taking or condemnation to or for the benefit of Tenant. If a portion of the Premises or Building is taken or condemned by any competent authority for any public or quasi-public purpose or use and the Lease is not terminated pursuant to the foregoing provisions of this Article, then (I) from and after the date when possession of such portion of the Premises or Building is required for such use until such possession ends, the Net Rent and Tenant’s Pro Rata Share, as the case may be, shall be equitably adjusted to reflect the reduced area of the Premises and/or Building, and (II) Landlord shall promptly effect Landlord’s Restoration Work for the portion of the Premises and Building not taken, but affected by such taking, including any required demising and separation work. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any claim available to Tenant under applicable Law for any taking of any leasehold improvements paid for by Tenant (which may include any improvements paid for from any allowance provided by Landlord (including the Tenant Work Allowance), but only to the extent that the amount of such allowance provided by Landlord and used to pay for such improvements shall have been amortized pursuant to Tenant’s payment of Rent hereunder) and of any trade fixtures and personal property of Tenant, and for moving expenses, fees of consultants, brokers, attorneys and other professionals incurred by Tenant in connection with moving to another location.

(B) If any portion of the Property other than the Building is taken by condemnation or if the temporary use or occupancy of all or any part of the Premises shall be taken by condemnation during the Term, this Lease shall be and remain unaffected by such condemnation, and Tenant shall continue to pay in full the Rent payable hereunder (except as provided in Paragraph 11(A) above and below in this Paragraph 11(B)). In the event of any such temporary taking for use or occupancy of all or any part of the Premises, so long as Tenant does not exercise its right to terminate as provided in the next sentence, Tenant shall be entitled to appear, claim, prove and receive the portion of the award for such taking that represents compensation for use or occupancy of the Premises during the Term and Landlord shall be entitled to appear, claim, prove and revive the portion of the award that represents the costs of restoration of the Premises and the use or occupancy of the Premises after the end of the Term hereof. Notwithstanding the foregoing:

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(i) if any temporary taking of all or any part of the Premises is reasonably anticipated to exceed, or actually exceeds, one hundred eighty (180) days, then Tenant shall have the right, by written notice to Landlord within sixty (60) days following the effective date of the temporary taking (or within sixty (60) days after the expiration of such one hundred eighty (180) day period, as applicable), to terminate this Lease with respect to that portion of the Premises so taken, and if more than twenty percent (20%) of the Rentable Area of the Premises is so taken, then Tenant shall have the right to terminate this Lease in its entirety, except that Tenant shall not be entitled to any portion of the award for such taking that represents compensation for use or occupancy of the Premises beyond the date of the termination; and

(ii) if all or a substantial portion of the Plaza shall be taken or condemned, the Net Rent payable by Tenant hereunder shall (effective as of the effective date of the taking or condemnation) be equitably reduced to reflect any decrease in the market value of the Premises resulting from such taking or condemnation of the Plaza (which reduction in Net Rent shall take into consideration (and shall in no event exceed) Tenant’s Pro Rata Share of the difference between: (x) the award payable to Landlord by reason of such taking or condemnation, less (y) any portion of such award to be used by Landlord for performing any Landlord’s Restoration Work in connection therewith); it being agreed that if the parties are unable to agree upon the amount of any such reduction in the Net Rent hereunder within thirty (30) days after the commencement of negotiations therefor, then the amount of such reduction shall be determined pursuant to an arbitration procedure substantially similar to the procedure provided for the determination of the Current Market Terms, as set forth in Article 35 hereof.

(C) The terms and provisions of this Article 11 shall apply to any taking or condemnation of the Building, regardless of whether such the same shall occur during, or prior to the commencement of, the Term.

ARTICLE 12

Return of Possession

At the expiration or earlier termination of this Lease or Tenant’s right of possession, Tenant shall surrender possession of the Premises in safe condition, and in substantially the same condition as the same was in on the Commencement Date, ordinary wear and tear and damage by fire or other casualty or condemnation excepted (which casualty and condemnation shall instead be subject to Article 9 or Article 11 above, as applicable); provided, however, that (i) Tenant shall have the right (but not the obligation) to leave in place any improvements, fixtures and/or Alteration Work constructed or installed by Tenant in the Premises upon the termination of the Term (other than Special Alterations which Landlord may have required Tenant to remove pursuant to Paragraph 7(C) above or below in this Article 12), and in all events Tenant shall, upon such termination, leave in place any walls, ceilings, doors and non-decorative attached lighting installed by Tenant in the Premises and located therein as of the date of such termination, and (ii) as long as Tenant and Tenant’s contractors use reasonable and customary precautions to avoid damage to the Premises in connection with the removal of Tenant’s

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property, trade fixtures and debris (and as long as the Premises is in safe condition upon the expiration or earlier termination of this Lease or Tenant’s right to possession), Tenant shall not be obligated to repair any damage caused to the Premises as a result of such removal of Tenant’s property, trade fixtures and debris from the Premises, except that: (x) to the extent that any such damage is caused to any portion of the Landlord Work located at or within the Premises, Tenant shall be responsible for the repair of such damage (or, at Landlord’s option, Tenant shall reimburse or pay Landlord for Landlord’s Actual Cost of repairing such damage), and (y) to the extent that any damage is caused by Tenant or its employees, agents or contractors to any portion of the Building located outside of the Premises in connection with Tenant’s move-out of the Premises, Tenant shall be responsible for the repair of such damage (or, at Landlord’s option, Tenant shall reimburse or pay Landlord for Landlord’s Actual Cost of repairing such damage); subject, however, in each case, to the terms of Paragraphs 10(E)(iv) and 25(B) hereof, and not including any damage caused as a result of events of casualty or condemnation (which events of casualty and condemnation shall instead be governed by Article 9 and Article 11 hereof, respectively). Upon such expiration or earlier termination of this Lease or Tenant’s right of possession, Tenant shall surrender to Landlord all keys, any key cards or other devices permitting access to the Building or the Premises, and shall advise Landlord as to the combination of any locks or vaults then remaining in the Premises, and shall remove all trade fixtures and personal property, with the exception of telecommunications lines and other telecommunications wiring, cabling and equipment and computer cabling and equipment conduit and pullboxes, which Tenant may, but shall not have the obligation to, leave in the Premises. Tenant shall have the right (but not the obligation) to remove any Tenant Work or Alteration Work upon or prior to the expiration of this Lease, so long as Tenant complies with the terms of the first sentence of this Article 12. All improvements, fixtures and other items in or upon the Premises that are not removed by Tenant upon or prior to the expiration of the Term, whether installed by Tenant or Landlord, shall become Landlord’s property without compensation, allowance or credit to Tenant, as provided below. However, if prior to such termination or expiration Landlord so directs by at least ninety (90) days’ prior written notice to Tenant (or, in the event of a termination of the Term prior to the expiration date thereof as a result of a casualty, condemnation or Default, such prior written notice to Tenant as is practicable under the circumstances), Tenant shall remove any Special Alterations with respect to which, pursuant to Article 7, Landlord reserved its rights to require such removal and Tenant shall repair any damage caused by such removal. If Tenant fails to perform any such repairs or restoration, or fails to remove any Special Alterations from the Premises as required hereunder, then without limitation of Landlord’s other rights and remedies under this Lease, Landlord may do so, and Tenant shall reimburse Landlord for Landlord’s Actual Cost therefor within thirty (30) days following written demand therefor. All property removed from the Premises by Landlord pursuant to any provisions of this Lease or any Law, which Tenant failed to remove in breach of this Lease, may be handled or stored by Landlord at Tenant’s expense upon the termination of the Term (or the termination of Tenant’s right of possession hereunder), and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. All property not removed from the Premises or retaken from storage by Tenant after expiration or earlier termination of this Lease or Tenant’s right to possession, at Landlord’s option, upon delivery of ten (10) Business Days’ prior written notice to Tenant of such abandonment unless so removed

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by Tenant within such ten (10) Business Day period, shall be conclusively deemed to have been conveyed by Tenant to Landlord as if by bill of sale without payment by Landlord.

ARTICLE 13

Holding Over

(A) Holding Over. Unless Landlord expressly agrees otherwise in writing, if Tenant shall remain in possession of all or any portion of the Premises beyond the Term, Tenant shall pay Landlord:

(i) for the first one hundred twenty (120) days of any such holdover, an amount of Net Rent equal to 125% of the Net Rent applicable immediately preceding Tenant’s holdover of possession of the Premises beyond the Term, plus 100% of all Additional Rent, and

(ii) thereafter during any such holdover, (I) an amount of Net Rent equal to the greater of (x) the Net Rent payable by Tenant pursuant to clause (i) above, or (y) an amount of Net Rent determined pursuant to the Current Market Terms (as provided in Article 35 hereof) (it being agreed that, until the Current Market Terms are determined pursuant to Article 35 hereof, Tenant shall continue to pay Net Rent at the rate set forth in clause (i) above during such holdover, with any applicable reconciliation of such amounts paid by Tenant to occur within thirty (30) days after the determination of the Net Rent pursuant to such Current Market Terms), plus (II) 100% of Additional Rent,

in all events, only with respect to the portion of the Premises as to which Tenant has retained possession from time to time after the expiration or earlier termination of this Lease (but with respect to the entire portion of the Premises on any partial floor of which Tenant has so retained possession, as provided in the next succeeding sentence), and prorated on a per diem basis for each day Tenant shall retain possession of the Premises or any part thereof after expiration or earlier termination of this Lease during such period. For purposes of calculating the amount of Net Rent and Additional Rent payable by Tenant as provided above, in the event that Tenant remains in possession of any portion of any floor of the Building included in its entirety within the Premises, Tenant shall be deemed to have held over with respect to all of the Rentable Area of such floor so included in the Premises. The foregoing provisions shall not be deemed to limit or constitute a waiver by Landlord of any rights of re-entry or other rights or remedies of Landlord provided herein or at law and shall not serve as permission for Tenant to hold over, nor serve to extend the Term (although after commencement of said holdover Tenant shall remain bound to comply with all provisions of this Lease until Tenant vacates the Premises, and such vacation shall be subject to the provisions of Article 12), it being understood that any such holdover shall (subject to Paragraph 13(B) below) constitute an immediate Default under this Lease. Landlord and Tenant further agree that, in the event that any such holdover by Tenant shall extend for greater than one hundred twenty (120) days beyond the Term, then Tenant shall also indemnify and defend Landlord from and against all actual, direct claims and damages sustained or incurred by Landlord by reason of Tenant’s holding over beyond (but not within) such one hundred twenty (120) day period, including, without limitation, all Holdover Damages

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(but in all events, without duplication of any amounts payable by Tenant pursuant to Article 22 hereof), which Holdover Damages shall be limited as set forth below in this Paragraph 13(A). For purposes of the foregoing, the term “Holdover Damages” shall mean (without duplication of any amounts payable by Tenant pursuant to Article 22 hereof) any and all actual holdover costs, penalties, rentals and damages incurred by a prospective tenant of all or any portion of the portion of the Premises with respect to which Tenant shall have held over beyond the foregoing one hundred twenty (120) day period under such tenant’s then existing lease for space at another building, to the extent that Landlord is obligated to pay such holdover costs, penalties, rentals and/or damages under a binding agreement entered into between Landlord and such prospective tenant (it being agreed that Landlord shall use reasonable efforts to mitigate the amount of any such costs, penalties, rentals and/or damages payable by Landlord, and (x) to the extent that such mitigation is required to be undertaken by Landlord pursuant to applicable Laws, Tenant shall be responsible for the incremental costs incurred by Landlord as a result of such mitigation, and (y) to the extent that such mitigation is not required to be undertaken by Landlord pursuant to applicable Laws, Landlord shall not be obligated to incur any incremental costs in connection with such mitigation unless Tenant agrees in writing to pay such incremental costs). At Tenant’s request made at any time during the last six (6) months of the Term, Landlord shall notify Tenant of any leasing of the Premises (or any portion thereof) for a term commencing following the expiration of the Term (or of Tenant’s right of possession hereunder) which may give rise to any indemnification obligations of Tenant pursuant to this Paragraph 13(A). Notwithstanding the foregoing, Landlord and Tenant acknowledge that the holdover rental amounts set forth in subsections (i) and (ii) of this Paragraph 13(A), and the indemnification obligations set forth in this Paragraph 13(A), have been specifically negotiated by Landlord and Tenant to be, and the same shall be, Landlord’s sole monetary remedy on account of Tenant’s holding over in or retaining possession of the Premises or any part thereof, and in no event shall Landlord be entitled to recover any other monetary damages or award, whether direct, indirect, special or consequential.

(B) Consensual Holdover. Notwithstanding the provisions of Paragraph 13(A) to the contrary, if Tenant provides written notice to Landlord (a “Holdover Notice”) at least eighteen (18) months prior to the Expiration Date, but no earlier than thirty-six (36) months prior to the Expiration Date, and so long as Tenant is not then in material Default (it being understood that any Default in payment of Rent hereunder which is in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall be deemed “material” for purposes of the foregoing), then the Expiration Date with respect to the entire then current Premises shall be extended for one (1) period of either six (6) or twelve (12) months as specified by Tenant in the Holdover Notice (the “Consensual Holdover Period”), which election, once made, shall be irrevocable by Tenant. Tenant’s use and occupancy of the Premises during the Consensual Holdover Period shall be upon the same terms and conditions contained in this Lease, except that during the Consensual Holdover Period, Tenant shall be required to pay Landlord each month an amount equal to one hundred twenty-five percent (125%) of the Net Rent then applicable to the Premises and one hundred percent (100%) of all Additional Rent then due and payable hereunder during the Consensual Holdover Period. If following Tenant’s delivery of a Holdover Notice Tenant timely delivers a Renewal Notice extending the Term of the Lease, then Tenant’s Holdover Notice shall be deemed to be revoked and Net Rent payable during the relevant renewal period shall be at the base rent or net rent specified in the Current

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Market Terms as described in Paragraph 34(O), 34(P), 34(Q) or 34(R) (as applicable). The foregoing revocation shall not restrict Tenant from again delivering another Holdover Notice as set forth above in advance of a subsequent expiration of the Term.

ARTICLE 14

No Waiver

No provision of this Lease will be deemed waived by either party unless expressly waived in writing signed by the waiving party. No waiver shall be implied by delay or any other act or omission of either party. No waiver by either party of any provision of this Lease shall be deemed a waiver of such provision with respect to any subsequent matter relating to such provision, and Landlord’s consent or approval respecting any action by Tenant shall not constitute a waiver of the requirement for obtaining Landlord’s consent or approval respecting any subsequent action. Acceptance of Rent by Landlord shall not constitute a waiver of any breach by Tenant of any term or provision of this Lease or constitute a renewal or extension of the Term hereof. No acceptance of a lesser amount than the Rent herein stipulated shall be deemed a waiver of Landlord’s right to receive the full amount due, nor shall any endorsement or statement on any check or payment or any letter accompanying such check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the full amount due. The acceptance of Rent or of the performance of any other term or provision from any person or entity other than Tenant, including any Transferee, shall not constitute a waiver of Landlord’s right to approve any Transfer. Receipt by Tenant of a partial payment payable by Landlord shall not constitute a waiver by Tenant of Landlord’s obligation to make full payment. Payment by Tenant of any amount claimed to be due by Landlord shall not be deemed a waiver by Tenant of the right to contest such claim.

ARTICLE 15

Attorneys’ Fees and Jury Trial

In the event of any litigation between the parties, the prevailing party (as determined by the applicable judge) in the action or proceeding shall be entitled to obtain, as part of the judgment, all reasonable attorneys’ fees, costs and expenses incurred in connection with such litigation (including the reasonable fees, costs and expenses associated with or otherwise performed by Partners, associates, legal assistants or other attorneys practicing law in Tenant’s law firm), except as may be limited by applicable Law. In the interest of obtaining a speedier and less costly hearing of any dispute, the parties hereby each irrevocably waive the right to trial by jury in any action or proceeding under or arising out of or related to this Lease or the Premises. Wherever in this Lease Tenant has the right to be paid or reimbursed for any attorneys’ fees and/or expenses, such fees and/or expenses shall include, without limitation, the reasonable fees, costs and expenses associated with or otherwise performed by Partners, associates, legal assistants or other attorneys practicing law in Tenant’s law firm.

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ARTICLE 16

Personal Property Taxes, Rent Taxes and Other Taxes

Tenant shall pay prior to delinquency all taxes, charges or other governmental impositions assessed against or levied upon Tenant’s personal property located in the Premises. Whenever possible, Tenant shall cause all such items to be assessed and billed separately from the property of Landlord. In the event any such items shall be assessed and billed with the property of Landlord, Tenant shall pay Landlord its share of such taxes, charges or other governmental impositions within thirty (30) days after Landlord delivers a statement and a copy of the assessment or other documentation showing the amount of such impositions specifically attributable to Tenant’s property. All taxes, charges or other governmental impositions assessed against or levied upon the personal property located at the Property of any other tenant shall be excluded from Taxes. Tenant shall pay any rent tax, sales tax, service tax and value added tax, on the Rent payable hereunder or any other applicable tax on the services herein or otherwise respecting this Lease, to the extent such taxes are not included in Taxes or Operating Expenses pursuant to Article 3 above.

ARTICLE 17

Entry by Landlord

(A) Landlord may enter the Premises at all reasonable times (and Tenant shall have the right to have its representatives present) so long as Landlord provides Tenant with at least twenty-four (24) hours’ prior telephonic notice thereof (except in the case of an Emergency Situation in which case no prior notice shall be required, but Landlord shall endeavor in good faith to provide prompt oral notice) to: inspect the same; exhibit the same to prospective purchasers, Mortgagees, Ground Lessors or, during the last eighteen (18) months of the Term, tenants; determine whether Tenant is complying with all of its obligations under this Lease; supply janitorial and other services to be provided by Landlord to Tenant under this Lease (as to which no prior notice shall be required); and make repairs in or to the Building or the Premises or improvements to the Building (and, if required under this Lease, to the Premises) to the extent and in the manner permitted hereunder; provided, however, that all such work shall be done as promptly as reasonably possible and so as to cause as little interference to Tenant as reasonably possible. Except in the case of any Emergency Situation or as otherwise provided hereunder, any such work and services to be provided by Landlord to Tenant under this Lease (other than changing of light bulbs and similar work) to be performed within any portion of the Premises shall be done outside of Regular Business Hours, unless Tenant otherwise requests. Landlord shall at all times have and retain a key with which to unlock all of the doors in, on or about the Premises (excluding Tenant’s vaults, safes and similar areas designated by Tenant in writing in advance), and Landlord shall have the right to use reasonable means to open such doors to obtain entry to the Premises, and any entry to the Premises obtained by Landlord by any such means, if done in accordance with the provisions of this Article 17 and Article 8 above (but subject to Article 23 hereof), shall not under any circumstances be deemed or construed to be a forcible or unlawful entry into or a detainer of the Premises or an eviction, actual or constructive, of Tenant

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from any part of the Premises. Such entry by Landlord shall not act as a termination of Tenant’s duties under this Lease.

(B) In connection with any work performed by Landlord in the Premises pursuant to this Article 17, Landlord shall (a) perform the same outside of Regular Business Hours (except in the event of an Emergency Situation or as otherwise provided in this Lease), (b) clean up and, except in the event of an Emergency Situation, restore (e.g., ceilings fully closed up with lighting functional) all areas being utilized for such work each morning prior to the commencement of Regular Business Hours such that there is no material interference with Tenant’s operations during Regular Business Hours resulting therefrom, and (c) promptly after the completion of its work, restore or repair any damage to the Premises and any of Tenant’s property therein as may have been affected by the performance of such work to the condition existing prior to the performance of such work. If Landlord fails to make such restoration or repair within ten (10) days after written notice from Tenant, then Tenant shall have the right to give Landlord a second written notice containing a sentence stating “IF LANDLORD FAILS TO MAKE THE APPLICABLE RESTORATION OR REPAIR WITHIN TWO (2) BUSINESS DAYS AFTER LANDLORD’S RECEIPT HEREOF, TENANT SHALL HAVE THE RIGHT TO MAKE SUCH RESTORATION OR REPAIR,” and, in the event that Landlord fails to make such restoration or repair within two (2) Business Days after Landlord’s receipt thereof (and provided Landlord has not commenced such restoration or repair within such two (2) Business Day period, or fails thereafter to diligently prosecute such restoration or repair to completion), Tenant shall have the right (but not the obligation) to make such restoration and repair and to charge Landlord for the actual, reasonable costs incurred by Tenant therefor by written invoice to Landlord, in which event Landlord shall pay the amount of such invoice to Tenant within thirty (30) days after Landlord’s receipt thereof.

ARTICLE 18

Subordination, Nondisturbance and Attornment

(A) Subordination, Non-Disturbance and Attornment. Landlord may hereafter encumber the Property or any interest therein with mortgages, may enter into one or more ground leases of the Land, may sell and lease back the Land, or any part of the Land, and may encumber the leasehold estate under such sale and leaseback arrangement with one or more mortgages (any such mortgage on the Property or any part thereof or on any such leasehold estate is herein called a “Mortgage” and the holder of any such Mortgage is herein called a “Mortgagee” and any such lease of the Land is herein called a “Ground Lease” and the lessor under any such lease is herein called the “Ground Lessor”). Landlord agrees to obtain from any existing or future Mortgagee or any Ground Lessor, from time to time, a subordination, non-disturbance and attornment agreement (“SNDA”) in a form no less favorable to Tenant in any material respect than the form attached hereto as Exhibit P (in the case of Mortgagees) (and, in the case of Ground Lessors, a form no less favorable to Tenant an any material respect from the form attached as Exhibit P, but with such reasonable, mutually acceptable modifications thereto as may be necessary to reflect differences between a ground lease and a mortgage), which Tenant shall, no later than ten (10) days thereafter, execute and return to such Mortgagee or Ground Lessor, provided that no such

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instrument shall be effective or binding on Tenant unless and until the same shall be executed and delivered to Tenant by such Mortgagee or Ground Lessor.

(B) Subordination by Mortgagee. Notwithstanding anything to the contrary contained herein, any Mortgagee or Ground Lessor may subordinate its Mortgage or Ground Lease, as the case may be, to this Lease by sending Tenant notice in writing subordinating such Mortgage or Ground Lease to this Lease, and Tenant agrees to execute and deliver to such Mortgagee or Ground Lessor such further instruments consenting to or confirming the subordination of such Mortgage or Ground Lease to this Lease, which instruments shall be in form and substance reasonably satisfactory to Tenant, within ten (10) Business Days after notice to Tenant of such request.

ARTICLE 19

Estoppel Certificates; Financial Information

(A) Tenant Estoppel Certificates. Tenant (and any Major Transferees) shall, at any time and from time to time, upon not less than fifteen (15) Business Days’ prior written notice from Landlord, in connection with any sale, financing or other material transaction of Landlord, execute, acknowledge and deliver to Landlord an estoppel certificate in the form of Exhibit Q-1 attached hereto (the “Tenant Estoppel Certificate”). The Tenant Estoppel Certificate shall be addressed to Landlord, and, if Landlord shall so request, to any current or prospective Mortgagee, Ground Lessor, or any assignee thereof, and to any prospective purchaser of the Land, improvements or both comprising the Property, and to any other party Landlord may request, which has or intends to acquire a direct, indirect, or collateral or security interest in the Property or Landlord. In addition, the Tenant Estoppel Certificate may be modified to contain certifications to the actual knowledge of Tenant (or the Major Transferee, as applicable) of such reasonable, non-confidential factual matter regarding this Lease not expressly set forth in the form attached as Exhibit Q-1, as may be reasonably requested by the intended addressee, or as may otherwise be specified in good faith by Tenant. Any Tenant Estoppel Certificate delivered pursuant to this Article may be relied upon by each party to whom it is addressed and the Tenant Estoppel Certificate, if required by its addressee(s), may so specifically state.

(B) Landlord Estoppel Certificates. Landlord agrees at any time and from time to time upon not less than fifteen (15) Business Days’ prior written notice from Tenant, in connection with any sale, financing, Transfer or other material transaction of Tenant, to execute, acknowledge and deliver to Tenant an estoppel certificate in the form of Exhibit Q-2 attached hereto (the “Landlord Estoppel Certificate”). The Landlord Estoppel Certificate shall be addressed to Tenant, and, if Tenant shall so request, to any current or prospective Transferee and to any other party Tenant may request, which has or intends to acquire a direct or indirect interest in Tenant or Tenant’s leasehold interest hereunder or has, or intends to, loan money to Tenant. In addition, the Landlord Estoppel Certificate may be modified to contain certifications to Landlord’s actual knowledge, of such reasonable, non-confidential factual matters regarding this Lease not expressly set forth in the form attached as Exhibit Q-2, as may be reasonably requested by the intended addressee, or as may otherwise be specified in good faith by Landlord. Any Landlord Estoppel Certificate delivered pursuant to this Article may be relied upon by each party

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to whom it is addressed and the Landlord Estoppel Certificate, if required by its addressee(s), may so specifically state.

(C) Tenant Financial Statements. In the event that Landlord desires to sell or transfer any of its right, title or interest in the Property or any portion thereof, or to enter into one or more Mortgages or Ground Leases with respect to the Property or any portion thereof, or if otherwise reasonably requested by any Mortgagee or any investor in the Landlord, Landlord shall have the right to request that Tenant and any Major Transferees provide Landlord with copies of their most recent annual financial statements (which shall, in the case of Tenant, be audited financial statements, consistent in form with the audited financial statements heretofore delivered by Tenant to Landlord, or such other reasonable audited form as Tenant may hereafter adopt for its own internal business and accounting purposes), and, in such event, and provided that Landlord and any proposed transferee, Mortgagee or Ground Lessor shall execute a reasonable confidentiality agreement in favor of Tenant and/or such Major Transferee (as applicable), Tenant and/or such Major Transferee (as applicable) shall deliver copies of such financial statements to Landlord within twenty-one (21) days after such request of Landlord; provided, that in no event shall Tenant or any Major Transferee be obligated to deliver any such financial statements on more than two (2) occasions during any twelve (12) month period during (or prior to the commencement of) the Term.

ARTICLE 20

Assignment and Subletting

(A) Transfers. Except as provided in Paragraph 20(D) below, Tenant shall not, without the prior written consent of Landlord, (i) assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, directly or indirectly, this Lease or any interest hereunder, by operation of law or otherwise, (ii) sublet the Premises or any part thereof, or (iii) otherwise permit the use of the Premises by any persons other than Tenant and its employees (all of the foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”). If Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice shall include: (a) the proposed effective or commencement date (which shall not be less than twenty-one (21) days after Tenant’s notice in the case of a sublease of one (1) floor or less of the Premises and shall not be less than thirty (30) days with respect to a sublease of more than one (1) floor of the Premises or an assignment of the Lease or other Transfer), and, except in the case of an assignment, the proposed expiration date, (b) in the case of a sublease, a description or depiction of the portion of the Premises to be Transferred (herein called the “Subject Space”), (c) the material terms of the proposed Transfer, including the consideration therefor, (d) the name and address of the proposed Transferee, and a copy of all then existing documentation entered into between Tenant and the proposed Transferee, if any, pertaining to the proposed Transfer, (e) a description of the nature of the subtenant’s or assignee’s business to be conducted at the Premises or the Subject Space, (f) current financial information with respect to the proposed Transferee, including its most recent financial statements, and (g) a form of sublease or assignment document substantially similar to the form of sublease or assignment document to be executed in connection with such Transfer (it

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being understood that a fully executed copy of the actual sublease or assignment document shall be delivered to Landlord by Tenant prior to Landlord’s delivery of an executed consent (or prior to the time that Landlord is deemed to have consented) to such assignment or sublease, as provided in Paragraph 20(B) below; provided, that in lieu of the items described in the foregoing clauses (a), (b), (c), (d), (e) and (g), Tenant may deliver to Landlord a copy of the applicable executed sublease or assignment document. Any Transfer made without complying with this Article, at Landlord’s option, shall be null, void and of no effect, and, following the delivery of Landlord’s written notice and lapse of Tenant’s opportunity to cure pursuant to Paragraph 22(A)(viii), shall constitute a Default. Tenant shall also deliver to Landlord such other non-confidential information regarding any Transferee to a Transfer requiring Landlord’s consent hereunder as Landlord may reasonably request.

(B) Approval. Notwithstanding the provisions of Paragraph 20(A), but subject to the third sentence of this Paragraph 20(B), and subject to the provisions of Paragraph 20(I) below, Landlord shall not unreasonably withhold, condition or delay its consent to a proposed Transfer (including, without limitation, a proposed assignment, sublease or license arrangement to another tenant or occupant of the Building) (except that Landlord in its sole and absolute discretion shall have the right to withhold consent to any mortgage, pledge, hypothecation, or encumbrance of this Lease or any lien, claim or other encumbrance upon Tenant’s right, title or interest under this Lease, or any other Transfer other than a proposed assignment, sublease or license transaction; provided, further, that Landlord shall consent to, and shall cooperate with Tenant in connection with, reasonable and customary financing arrangements entered into by Tenant which result in Tenant’s granting of liens against any of the Tenant Work, Alteration Work or other equipment and personal property installed or placed by Tenant in the Premises, including without limitation, the execution of commercially reasonable landlord lien subordination and estoppel documents). Landlord and Tenant agree that Landlord shall be acting reasonably in withholding its consent only if any one or more of the following applies: (i) Landlord reasonably demonstrates that the Transferee is of a character or reputation or engaged in a business that will materially damage the reputation of the Building, (ii) the Transferee intends to use the Premises or applicable Subject Space for purposes that are not permitted under this Lease or for a Prohibited Use, (iii) the Transferee is a government (or agency or instrumentality thereof) that regularly attracts to its premises large numbers of persons in the general public or results in a materially heightened security environment at the Building (e.g., an embassy), (iv) there exists a material Default at the time Tenant requests consent to the proposed Transfer (it being understood that any Default in the payment of Rent in excess of one month’s Net Rent and Additional Rent then due and owing hereunder shall be deemed “material” for purposes of the foregoing), and/or (v) the proposed Transferee is a party to a letter of intent with Landlord or Landlord shall have received from such proposed Transferee an executed proposal or offer/term sheet, or Landlord has otherwise delivered to the proposed Transferee a lease document draft, containing the basic business terms of a proposed lease for space in the Building and, in each case, Landlord demonstrates to Tenant’s reasonable satisfaction that Landlord is then (or has, in the past thirty (30) days, been) in active, good faith negotiations with said proposed Transferee for space in the Building that would be in lieu of, as opposed to in addition to, the space offered to the proposed Transferee by Tenant. Notwithstanding anything to the contrary contained in the preceding sentence, during the period (and only during the period) that commences on the Effective Date and ends on the earlier of: (I) the last day of the second (2^nd) Lease Year, and (II) the date on which eighty

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percent (80%) of the Rentable Area of the office portion of the Building (including the Premises, but not including the Fitness Center or any Common Conference Center) shall initially be subject to one or more leases or occupancy agreements, Landlord shall have the right to withhold its consent to any Transfer proposed by Tenant in Landlord’s sole discretion, other than: (A) a Transfer undertaken pursuant to Paragraph 20(D) below (which shall be subject to the terms of said Paragraph 20(D)), and/or (B) one or more subleases of portions of the Premises not to exceed, in the aggregate, 51,000 square feet of Rentable Area (which shall be subject to the terms of the first two sentences of this Paragraph 20(B)). If Landlord fails to give Tenant written notice that Landlord either (1) does not consent to a proposed Transfer, or (2) elects to exercise its “Sublease/License First Offer Rights” under Paragraph 20(I) below, within (x) ten (10) Business Days (for a sublease of one (1) full floor or less space in the Building) or (y) fifteen (15) Business Days (for any assignment, other sublease or other Transfer) of Landlord’s receipt of Tenant’s written request and the materials specified in subclauses (a) through (g) of Paragraph 20(A) above, then Tenant shall have the right to give Landlord a second written notice requesting consent to the proposed Transfer, which notice shall (in addition to again requesting such consent) contain a sentence stating “LANDLORD’S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER LANDLORD’S RECEIPT HEREOF SHALL CONSTITUTE LANDLORD’S CONSENT TO THE PROPOSED TRANSFER,” and, in the event that Landlord fails to respond to such second notice within five (5) Business Days after Landlord’s receipt thereof, then, provided Tenant and the proposed Transferee shall have each executed and delivered to Landlord the appropriate form of consent (as set forth in the next sentence), Landlord shall be deemed to have consented to the proposed Transfer. Landlord’s consent shall be set forth in an instrument in the form of Exhibit R-1 (in the case of an assignment) or Exhibit R-2 (in the case of a sublease), and shall not be effective until such instrument shall have been countersigned by Tenant and such assignee or subtenant, as the case may be. Landlord shall not impose a charge (including the cost of legal fees to review any proposed Transfer documentation) on Tenant as a condition of obtaining Landlord’s consent to a Proposed Transfer. Tenant shall have the right, without the consent of or notice to Landlord, to advertise the availability of any space in the Premises to prospective subtenants and assignees, in such manner as Tenant shall elect (in its sole discretion), without any restriction as to the rental rate (or other terms) that may be so advertised.

(C) Recognition, Non-Disturbance and Attornment.

(i) Generally. Any sublease (and, if applicable, any license agreement) shall by its terms be expressly subject and subordinate to all of the terms, covenants and conditions of this Lease and shall terminate, in any event, no later than the date of expiration or termination of this Lease (or Tenant’s right to possession hereunder), subject to the rights any such subtenant may succeed to hereunder as provided in this Article 20. Upon the written request of Tenant, from time to time, however, so long as any proposed subtenant occupies or will occupy not less than one (1) full floor of space in the Premises pursuant to a written sublease to which Landlord has consented (or is deemed or required to have consented), and such subtenant does not occupy its Subject Space pursuant to an Exempt Transfer (other than an Exempt Transfer to which Tenant shall have obtained Landlord’s consent (notwithstanding that such consent is not required hereunder), which consent shall be granted or withheld by Landlord subject to the criteria subject set forth in

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Paragraph 20(B) above) (a “Qualified Subtenant”), Landlord shall enter into one or more recognition, non-disturbance and attornment agreement(s) with any Qualified Subtenant (or with Tenant and such Qualified Subtenant), in recordable form (each, a “Recognition Agreement”), which shall provide, among other things, that if this Lease (or Tenant’s right to possession under this Lease) is canceled or terminated in accordance with the terms hereof or by the surrender hereof, whether voluntarily or by operation of law, prior to the then expiration date of this Lease and prior to the expiration date of such sublease (including extensions and renewals thereunder), then Landlord, for itself, its successors and assigns, as well as for any subsequent owner of the Property, shall covenant for the benefit of the Qualified Subtenant under any such sublease that:

(1) the Qualified Subtenant shall enjoy quiet and peaceful possession under its sublease, subject, however, to the terms of this Paragraph 20(C);

(2) subject to the terms of this Paragraph 20(C), the sublease of the Qualified Subtenant shall continue in full force and effect and Landlord shall recognize the sublease and the Qualified Subtenant’s rights thereunder (except as expressly provided below) and shall thereby establish direct privity of estate and contract as between Landlord and the Qualified Subtenant under said sublease with the same force and effect as though the sublease were originally made from Landlord in favor of the Qualified Subtenant thereunder (provided that in no event shall the expiration date of any such sublease, including extensions and renewals thereunder, extend beyond the stated expiration date of this Lease in effect as of the date of the early termination hereof (or the stated expiration date hereof in effect as of the date of the early termination of Tenant’s right to possession hereunder), except to the extent that such Qualified Subtenant has, pursuant to its sublease with Tenant, been granted any of Tenant’s Renewal Option(s) hereunder, in which event such Qualified Subtenant shall continue to have the right to exercise such Renewal Option(s) so granted to it from and after the termination of this Lease (or Tenant’s right to possession hereunder); and

(3) subject to the terms of this Paragraph 20(C), Landlord shall assume such obligations on the part of the Tenant under such sublease; except, that Landlord shall not be liable in any way to any Qualified Subtenant for any prior act, omission, neglect or default on the part of Tenant, as landlord under said sublease, or be responsible for any monies owing by or on deposit with Tenant to the credit of the Qualified Subtenant (other than such monies turned over by Tenant to Landlord) and the Qualified Subtenant shall not have the right to set-off or assert against Landlord any such claim or any damages arising therefrom;

subject to (x) the agreement of the Qualified Subtenant under the Recognition Agreement to attorn to Landlord, and (y) the Qualified Subtenant’s observance and performance of all of the terms, covenants and conditions under this Lease

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applicable and ratably allocable to the Subject Space demised under such sublease, with the exception that the Qualified Subtenant shall pay to Landlord directly as gross rent payable under such sublease for the use and occupancy of the subleased premises the greater of (1) the base net rent and additional rent payable, from time to time, as set forth under such sublease, and (2) the Rent set forth under this Lease, ratably allocated on a square foot basis, between the Rentable Area of the Subject Space and the balance of the Rentable Area of the Premises existing prior to the termination, which would have been otherwise payable by Tenant under this Lease, and all other Additional Rent as set forth in the Lease, in each case, ratably allocated, if applicable (e.g., for Tenant’s Pro Rata Share of Operating Expenses and Taxes), on a square foot basis, between the Rentable Area of the Subject Space and the balance of the Rentable Area of the Premises existing prior to the Lease termination. Without limitation of any of the other terms and provisions set forth in this Paragraph 20(C), it is acknowledged and agreed that the Recognition Agreement with any Qualified Subtenant shall provide that, from and after the termination of this Lease (or Tenant’s right to possession hereunder) as aforesaid: (a) the Qualified Subtenant shall not have any rights under its sublease that are greater than the rights of Tenant set forth in this Lease, (b) the Qualified Subtenant shall not have obligations or liabilities under its sublease with respect to the Subject Space leased by such Qualified Subtenant that are less than the obligations and liabilities of the Tenant with respect to such Subject Space, as provided in this Lease, (c) the Landlord shall not have rights with respect to the Subject Space leased by such Qualified Subtenant under its sublease that are less than the Landlord has under this Lease with respect to such Subject Space, and (d) the Landlord shall not have any duties or liabilities to the Qualified Subtenant under its sublease that are greater than the duties and liabilities that Landlord has to Tenant under this Lease; and, in the event that any of the requirements described in subclauses (a) through (d) above are not satisfied by the sublease of the Qualified Subtenant, then Landlord may, at its option, effective on or after the date on which this Lease (or Tenant’s right of possession hereunder) has terminated as aforesaid, require the Qualified Subtenant to modify the terms of its sublease accordingly, as an express condition to the effectiveness of the Recognition Agreement and the other terms and conditions for such Qualified Subtenant’s rights of non-disturbance as provided in this Paragraph 20(C). In any event, each Recognition Agreement with a Qualified Subtenant shall provide that, at the request of Landlord or the Qualified Subtenant thereunder, at any time after the termination of this Lease (or Tenant’s right to possession hereunder) as aforesaid, the Qualified Subtenant and Landlord shall enter into such documentation as may reasonably be requested by the requesting party (which may, at either party’s option, consist of an amended and restated lease instrument entered into directly between Landlord and such Qualified Subtenant) further evidencing and/or effectuating the terms of this Paragraph 20(C). Any Recognition Agreement shall also provide that, to the extent that the Subject Space subleased by a Qualified Subtenant is located on a partial floor of the Building, and such Subject Space is not demised as separate

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space from the balance of the space located on such floor of the Building (e.g., by reason of the absence of multi tenant corridors and other customary improvements required in order to cause such floor to be configured as a customary multi tenant floor), then if this Lease (or Tenant’s right of possession hereunder) shall terminate: (X) such Qualified Subtenant shall, at its cost, thereafter cause the Subject Space on any such partial floor to be so separately demised (which shall include, if the same have not yet been installed on such floor, the installation of multi tenant corridors and other customary improvements required in order to cause such floor to be configured as a customary multi tenant floor), or (Y) if Landlord so elects (by written notice to the Qualified Subtenant), Landlord shall perform such work necessary to cause the Subject Space to be separately demised (as described above), in which event the Qualified Subtenant shall reimburse Landlord for Landlord’s Actual Costs incurred in connection therewith.

(ii) Relocation. To the extent that the Subject Space sublet by a Qualified Subtenant is not located on one or more floors of the Building which, alone or taken together with other Subject Space that is subject to a Recognition Agreement, constitute a contiguous block of floors in the Building that is located on either (x) the highest or lowest floor(s) of the Low-Rise Floors Premises, or (y) the highest or lowest floor(s) of the Mid-Rise Floors Premises (which may, at Landlord’s option, exclude any floors of the Premises, to the extent used in full or substantial part by Tenant for conference center and/or food preparation/service purposes and not for normal office usage), then the Recognition Agreement applicable to such Subject Space shall provide that, in the event of a cancellation or termination of this Lease (or Tenant’s right to possession hereunder) as aforesaid, Landlord shall have the one-time right, at the cost of the Qualified Subtenant and at no cost to Landlord, upon not less than one hundred twenty (120) days’ prior notice to the Qualified Subtenant, to relocate the portion of the Subject Space leased by such Qualified Subtenant located on floor(s) of the Building which do not satisfy the criteria set forth above to other office space in the Building which has been improved with customary office improvements, installations and alterations (e.g., Landlord shall not relocate any portion of the Subject Space which is used primarily for office purposes to any space in the Building which is primarily used for conference center or food preparation/service purposes or which has never been built-out for office purposes (i.e., so-called “raw” space), unless Landlord causes such space to be built-out (at Landlord’s expense) in a manner consistent with office use) which are in reasonably good condition (it being agreed in any event that (a) any office space located in the Premises and/or (b) any tenant space in the Building which is in a condition the quality of which is reasonably consistent with the quality of the condition of the Subject Space leased by such Qualified Subtenant immediately prior to the termination of this Lease (or Tenant’s right to possession hereunder) as aforesaid, shall, in the case of either (a) or (b), be deemed to be in “reasonably good condition” for purposes of the foregoing). In the event that Landlord exercises any such relocation right, then the applicable Qualified Subtenant shall be required to vacate and surrender such portion of the Subject Space, and to occupy such relocated space, no later than the expiration of such one hundred (120) day period.

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(iii) Parking. To the extent that Tenant’s sublease with a Qualified Subtenant grants rights in favor of such Qualified Subtenant to exercise any of Tenant’s parking rights described in Article 36 hereof, then the Recognition Agreement of such Qualified Subtenant shall also provide that the Qualified Subtenant may continue to exercise such parking rights thereunder after the termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid; provided, however, that, to the extent that such sublease shall have conferred upon such Qualified Subtenant the right to use more than one (1) parking space for each 5,000 square feet of Rentable Area located in the Subject Space of such Qualified Subtenant, Landlord shall have the right to limit the number of parking spaces which such Qualified Subtenant has the right to use pursuant to the Recognition Agreement to one (1) parking space for each 5,000 square feet of Rentable Area located in such Subject Space.

(iv) Signage. To the extent that Tenant’s sublease with a Qualified Subtenant grants rights in favor of such Qualified Subtenant to install and maintain one or more Tenant Signs in the Main Lobby of the Building pursuant to Paragraph 39(C)(i) hereof, then the Recognition Agreement of such Qualified Subtenant shall provide that such Qualified Subtenant shall, after the termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid, only have the right to install and maintain: (x) in the event that such Qualified Subtenant leases at least 100,000 square feet of Rentable Area within any elevator bank of the Building, one (1) Tenant Sign in the area designated for tenant signage for such elevator bank within the Main Lobby, or (y) in the event that such Qualified Subtenant leases at least 300,000 square feet of Rentable Area of the Building, Tenant Signs in all locations of the Main Lobby at which Tenant has the right to install and maintain Tenant Signs pursuant to Paragraph 39(C)(i) hereof (including on (or on the lobby wall behind) any Tenant Lobby Desk). To the extent that Tenant’s sublease with a Qualified Subtenant grants rights in favor of such Qualified Subtenant to install and maintain an Exterior Tenant Sign at the Property pursuant to Paragraph 39(B) hereof, then the Recognition Agreement of such Qualified Subtenant shall provide that such Qualified Subtenant may continue to have such rights to install and maintain its Exterior Tenant Sign after the termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid only if such Qualified Subtenant leases at least 300,000 square feet of Rentable Area in the Building.

(v) Expansion Rights.

(1) To the extent that Tenant’s sublease with a Qualified Subtenant grants rights in favor of such Qualified Subtenant to exercise any of Tenant’s Expansion Options under Paragraphs 34(A) through (K) hereof, and/or rights of first offer under Paragraph 34(N) hereof, then the Recognition Agreement of such Qualified Subtenant shall provide that the Qualified Subtenant may, after the termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid, only have the right to exercise: (x) any one (1) of Tenant’s Expansion Options for each 75,000 square feet of Rentable Area leased by such Qualified Subtenant at the Building (e.g., a Qualified Subtenant which leases less than 75,000 square

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feet of Rentable Area at the Building shall not have any right to exercise any Expansion Option, a Qualified Subtenant which leases at least 75,000 (but less than 150,000) square feet of Rentable Area at the Building shall have the right to exercise one (1) Expansion Option, and a Qualified Subtenant which leases at least 150,000 square feet of Rentable Area at the Building shall have the right to exercise two (2) Expansion Options), it being agreed that in the event that such Qualified Subtenant has been granted, pursuant to its sublease, the right to exercise a greater number of Expansion Options than are exercisable pursuant to the preceding terms of this clause (x), the number of such Expansion Options exercisable by such Qualified Subtenant after the termination of this Lease (or Tenant’s right to possession hereunder) as aforesaid shall be reduced to the maximum number of Expansion Options exercisable by such Qualified Subtenant pursuant to the preceding terms of this clause (x) (and that, subject to such maximum number, the Qualified Subtenant shall have the right to select which of the specific Expansion Options so granted to such Qualified Subtenant will continue to be exercisable after such termination of this Lease (or Tenant’s right to possession hereunder)), and (y) Tenant’s rights of first offer under Paragraph 34(N) hereof only to the extent that (a) such Qualified Subtenant has also been granted the right to exercise one or more of Tenant’s Expansion Options hereunder which remain in effect pursuant to subclause (x) above, and (b) such right of first offer applies only to the floor(s) to which the Expansion Option(s) which remain in effect pursuant to subclause (x) above granted in favor of such Qualified Subtenant applies.

(2) To the extent that Tenant’s sublease with a Qualified Subtenant grants rights in favor of such Qualified Subtenant to expand the Subject Space sublet by such Qualified Subtenant by adding thereto a fixed amount of space (which fixed amount of space may be stated as within a range of a designated maximum and a designated minimum square footage on a given floor or floors) within a portion of the Premises not yet sublet to such Qualified Subtenant effective as of a fixed date (as specified in said sublease) (which fixed date may be stated as being within a certain designated window period), then the Recognition Agreement of such Qualified Subtenant shall provide that the Qualified Subtenant shall have the right to exercise such expansion rights with respect to such portion of the Premises after the termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid only to the extent that:

(X) such Qualified Subtenant is required to either: (I) add to its premises the space to which such fixed expansion rights apply within fifteen (15) Business Days after receipt by such Qualified Subtenant of written notice from Landlord (which notice of Landlord shall be sent on or after the date of the termination or cancellation of this Lease (or Tenant’s right to possession

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hereunder) as aforesaid) that Landlord will require such Qualified Subtenant to add such space to its premises, or (II) waive such fixed expansion rights in favor of such Qualified Subtenant effective as of the date that is fifteen (15) Business Days after its receipt of such notice from Landlord; it being agreed that if such Qualified Subtenant fails to respond to any such notice from Landlord within the fifteen (15) Business Day period set forth above, such Qualified Subtenant shall be deemed to have elected to waive such fixed expansion rights as provided in clause (II) above;

(Y) such expansion rights apply only to one or more floors within the Premises which, when taken together with the Subject Space sublet by such Qualified Subtenant, constitute a contiguous block of space in the Building leased by such Qualified Subtenant (subject in all events to Landlord’s relocation rights (if applicable) as set forth in Paragraph 20(C)(ii) above); and

(Z) such expansion rights apply to (I) all of the Rentable Area located on one or more floors of the Building, (II) all of the Rentable Area located on one or more floors of the Building which is not leased by such Qualified Subtenant, or (III) all of the Rentable Area located on one or more floors of the Building which is not leased by another tenant of the Building (with the effect that such expansion rights cannot apply to any partial floor, unless the balance of such floor is then being leased by the Qualified Subtenant or another tenant of the Building).

(vi) Sublease May Contain Other Rights. Nothing contained in the foregoing Paragraphs 20(C)(i)-(v) above shall in any way limit the rights which Tenant may grant in favor of, or which may be exercisable by, a Qualified Subtenant pursuant to any sublease between Tenant and such Qualified Subtenant during any period within which this Lease remains in effect (so long as such rights do not violate the terms of this Lease), it being acknowledged and agreed that the limitations set forth in said Paragraphs 20(C)(i)-(v) above shall apply only to the rights that such Qualified Subtenant shall continue to be entitled to exercise pursuant to a Recognition Agreement after any termination or cancellation of this Lease (or Tenant’s right to possession hereunder) as aforesaid.

(D) No Consent Required. Notwithstanding anything to the contrary contained herein, Tenant may, at any time and from time to time, without the consent of Landlord and (except as expressly provided below) without any notice to Landlord, assign this Lease or any interest hereunder to, or sublease the Premises or any part thereof (which sublease may, but need not be, in writing) to, or permit the occupancy of the Premises (which permission to occupy may but need not be in writing, and which permission, if not a sublease of space or an assignment of all or any interest in this Lease, shall be deemed a license only, and shall terminate upon any termination of this Lease or Tenant’s right to possession hereunder), or any part thereof, by:

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(i) any service provider, vendor, client or customer of Tenant or any Affiliate (except that, no assignment shall be made pursuant to this clause (i), and no sublease or license shall be entered into pursuant to this clause (i), if such assignment, sublease or license would, at the time of such assignment, sublease or license, cause the aggregate Rentable Area subject to all assignments, subleases and licenses entered into pursuant to this clause (i) to exceed ten percent (10%) of the Rentable Area of the Premises); (ii) any successor entity of Tenant resulting from a merger, reorganization or consolidation with Tenant (provided that such merger, reorganization or consolidation is undertaken primarily for independent business purposes, and not primarily for purposes of transferring this Lease or any interest in the Premises); (iii) any entity succeeding to all or substantially all of the business and assets of Tenant (provided that such transaction is undertaken primarily for independent business purposes, and not primarily for purposes of transferring this Lease or any interest in the Premises); (iv) any entity that, at the effective or commencement date of the Transfer, is an Affiliate of Tenant; or (v) any entity that, at the time of the effective or commencement date of such Transfer, is acquiring all or substantially all of the business being conducted at the Premises by Tenant or its Affiliates (provided that such transaction is undertaken primarily for independent business purposes, and not primarily for purposes of transferring this Lease or any interest in the Premises) (any such Transfer described in any of clauses (i) through (v) above being herein referred to as an “Exempt Transfer”). The following shall also constitute “Exempt Transfers” for purposes of this Lease, and shall not require the consent of, or any notice to Landlord (except that Tenant shall provide Landlord with notice of any Exempt Transfer described in the following clauses (a) and (c) within a reasonable time after the consummation thereof): (a) any change of the organizational form of Tenant (e.g., from a limited liability partnership to a limited liability company), (b) any addition or withdrawal of Partners to or from Tenant (or the death of any Partner), (c) any dissolution of Tenant and immediate reconstitution of Tenant into a new partnership or other legal entity (provided that such new partnership or other legal entity succeeds to substantially all of the business of the Tenant entity immediately preceding such dissolution, and assumes Tenant’s obligations and liabilities under this Lease), and/or (d) the reallocation of equity, ownership, voting or other interests in Tenant among Partners of Tenant. An “Affiliate” of any person or entity is a person or entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the first such person or entity. The word “control” means the power, directly or indirectly, by voting rights, contract or otherwise, to direct or cause the direction of the management or policies of a person or entity. Notwithstanding anything contained in this Paragraph 20(D) to the contrary, (1) no assignment or sublease pursuant to this Paragraph 20(D) shall violate any of the conditions set forth in clauses (i), (ii) and (iii) of the second sentence of Paragraph 20(B), (2) Tenant shall provide notice to Landlord of any express assignment of all of Tenant’s rights and interests under this Lease made by Tenant pursuant to this Paragraph 20(D) within a reasonable time after the effective date of such assignment, and any assignee of all of Tenant’s rights and interest under this Lease permitted pursuant to this Paragraph 20(D) shall expressly assume all of Tenant’s obligations and liabilities hereunder without releasing the assignor, and (3) Tenant shall provide notice to Landlord of any written sublease made by Tenant pursuant to this Paragraph 20(D) within a reasonable time after the commencement date of such sublease, and any sublease permitted pursuant to this Paragraph 20(D) shall be subject and subordinate to all of the terms, covenants and conditions of this Lease (and shall, in any event, terminate upon the termination of this Lease or Tenant’s right

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to possession hereunder, subject only to the terms of Paragraph 20(C) above, to the extent applicable).

(E) Profits. With respect to each Lease Year, Tenant shall pay to Landlord, in the manner set forth below in this Paragraph 20(E), an amount equal to fifty percent (50%) of the aggregate profits, after recovery of all of Tenant’s reasonable, actual, out-of-pocket costs incurred in connection therewith, derived by Tenant from all subleases of the Premises or assignments of this Lease which assignments or subleases are not Exempt Transfers within such Lease Year. For purposes of the foregoing, “profit” means all rent or other compensation paid by all sublessees and assignees of Tenant within any Lease Year in excess of the Rent payable by Tenant under this Lease within such Lease Year (ratably allocable to the Subject Space, in case of one or more subleases), less reasonable expenses and costs of Tenant incurred to induce or otherwise related to such subleasing or assignment during such Lease Year, including, without limitation: (i) marketing and brokerage costs, (ii) reasonable attorneys’ fees and expenses, (iii) cash inducements, construction and reconstruction costs, rent subsidies, lease assumption costs, moving allowances, tenant improvements and fit out costs, and furniture, fixtures and equipment paid for by Tenant, and (iv) other allowances and any other economic concessions or services actually paid or provided to any assignees and sublessees. Within one hundred twenty (120) days following the expiration of any Lease Year during which one or more Transfers shall have occurred (or, in the case of one or more subleases, within which such subleases shall be in effect), Tenant shall deliver to Landlord a statement, certified by an accountant or authorized representative of Tenant, setting forth in reasonable detail the computation of any “profit” Tenant has derived from all Transfers with respect to such Lease Year (“Tenant’s Statement”). Concurrently with the delivery of Tenant’s Statement to Landlord, Tenant shall pay to Landlord fifty percent (50%) of the amount of all profits (if any) actually derived by Tenant with respect to the Lease Year to which such Tenant’s Statement applies (as set forth in such Tenant’s Statement), but only to the extent that all such profits have actually been received by Tenant.

(F) Terms of Consent. Following an Exempt Transfer or if Landlord consents (or is deemed to have consented) to any other Transfer: (a) the terms and conditions of this Lease, including among other things, Tenant’s liability for the Premises or the Subject Space, as the case may be, shall in no way be deemed to have been waived, released or modified, (b) any consent granted by Landlord shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (c) any subtenant shall have the same rights and obligations with respect to an assignment of its sublease and/or under-subletting as Tenant has with respect to an assignment of this Lease and/or subletting, except to the extent that the sublease shall impose additional restrictions or obligations, and (d) except as to any Exempt Transfer of a type with respect to which, under the above terms of this Article 20, no notice is required to be given to Landlord under this Article 20, Tenant shall deliver to Landlord promptly after execution (but in no event later than thirty (30) days thereafter), an original executed copy of all documentation pertaining to such Transfer. Any sublease or license hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease or Tenant’s right to possession hereunder shall be terminated during the term of any sublease or license, Landlord shall, subject to Paragraph 20(C) and any Recognition Agreement have the right to: (i) treat such subleases and licenses canceled and repossess the subject space by any lawful means, or (ii) require that such subtenant or licensee attorn to and recognize Landlord as its landlord under any such sublease or license (as

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applicable). If Tenant is in monetary Default under this Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent and attorney-in-fact, to direct any Transferee to make all payments under or in connection with the Transfer directly to Landlord (which Landlord shall apply towards Tenant’s obligations under this Lease) until such Default is cured.

(G) Transferees May Exercise Rights.

(i) Subject to the terms of this Paragraph 20(G), and except where otherwise expressly prohibited under this Lease, Tenant shall have the right, at Tenant’s option, to assign to a Transferee (other than to a licensee) any or all of Tenant’s rights under this Lease (including Tenant’s rights under Article 26, Article 27, and Article 34 through Article 39 hereof) (but such assignment shall be subject to all terms and conditions pertaining to the exercise of such rights as set forth in this Lease, and Tenant shall, in any event, remain liable and responsible for all of the duties, obligations and liabilities of the “Tenant” under this Lease after any Transfer to a Transferee (subject, however to the terms set forth in Exhibits R-1 and R-2 attached hereto) and Tenant shall, if requested by Landlord, join in the exercise of any rights under Article 34 and/or Article 39 hereof). Notwithstanding anything to the contrary contained herein, in no event shall Tenant assign Tenant’s rights under Paragraph 39(B) hereof in a manner which would permit more than one (1) person or entity to exercise such rights at any given time under this Lease (i.e., only one (1) person or entity shall have the right to maintain an Exterior Tenant Sign at the Property at any given time under this Lease).

(ii) Notwithstanding the foregoing, Tenant’s rights under Paragraph 39(B) hereof, and Paragraph 39(C)(i)-(ii) hereof (collectively, the “Subject Signage Rights”) may not be assigned by Tenant to any Transferee that is not a Major Transferee. In addition, Landlord and Tenant agree that Landlord shall have the right to notify Tenant (a “Signage Competition Restriction Notice”) that Landlord has entered into a lease of space at the Building with another tenant which contains provisions which prohibit the grant of exterior signage rights at the Property to, companies or firms that are engaged in a business which competes with the business conducted by such other tenant at the Building (a “Signage Competition Restriction”) (it being agreed that in no event shall any such Signage Competition Restriction apply to (x) the originally-named Tenant herein (including any successor to the originally-named Tenant herein (or either of them) (or any subsequent successor(s) to such successor(s)) by any Exempt Transfer which constitutes a merger, consolidation, asset sale or acquisition or similar transaction) or any business conducted by the originally-named Tenant herein (or any such successor), (y) a law firm, or (z) any Major Transferee (or any business conducted thereby) to whom Tenant shall have assigned any of the Subject Signage Rights prior to any receipt by Tenant of a Signage Competition Restriction Notice from Landlord which would have applied to such Major Transferee (or the business conducted thereby), provided that notice of the assignment of such Subject Signage Rights to such Major Transferee has been provided to Landlord), in which event Tenant agrees that it shall not, during any period after its receipt of such Signage Competition Notice within which such Signage Competition Restriction remains in effect, assign the Subject Signage Rights to any Major Transferee which would, if it exercised the Subject Signage Rights, cause a

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violation of the Signage Competition Restriction (unless such assignment expressly provides that such Subject Signage Rights may not be exercised by the assignee thereof during any period within which such Signage Competition Restriction remains in effect); provided, however, that, notwithstanding anything to the contrary in the foregoing, Landlord covenants and agrees that in no event shall more than two (2) Signage Competition Restrictions be in effect at any given time during (or prior to the commencement of) the Term. Any Signage Competition Restriction Notice shall be provided by Landlord within a reasonable period of time after the lease containing the Signage Competition Restriction in question has been entered into, and shall contain a copy of the provisions of such lease which contain the Signage Competition Restriction. For purposes of this Lease, the term “Major Transferee” shall mean any permitted assignee under this Article 20 of all of Tenant’s right, title and interest in or to this Lease, or any permitted subtenant under this Article 20 subleasing at least 100,000 square feet of Rentable Area of the Premises.

(iii) In the event that Tenant assigns any of its rights under this Lease to any Transferee: (a) Tenant shall notify Landlord in writing of the specific rights so assigned by Tenant (except that: (x) in connection with an assignment by Tenant of all of its rights under this Lease to a Transferee, such notice may generally state that all rights of Tenant under this Lease are being assigned to the Transferee thereunder, and (y) in connection with a sublease or license by Tenant of any portion of the Premises, Tenant need not specifically notify Landlord of any rights assigned to the subtenant or licensee thereunder which relate to the portion of the Premises subleased or licensed thereto (e.g., the right to receive Building Services in such portion of the Premises)), and (b) neither Tenant nor any other person or entity (other than the Transferee to whom such rights have been assigned) shall thereafter have any right to exercise or enforce any such rights to the extent that such rights have been so assigned during any period within which such Transferee has the right to exercise and/or enforce such specific rights (it being understood, for purposes of clarification, that in the case of a partial assignment of any of Tenant’s rights under this Lease to a Transferee (e.g., without limitation, an assignment of some, but not all, of Tenant’s signage rights under Article 39 hereof), Tenant shall retain the right to exercise and enforce those rights not specifically assigned to the Transferee (subject, however, in the case of Tenant’s exterior signage rights under Article 39, to the terms of Paragraph 20(G)(i) above)). Tenant and any such Transferee shall execute such instruments as Landlord may reasonably request in order to confirm the assignment of any such rights to a Transferee.

(H) Non-Waiver. The consent by Landlord to any Transfer shall not relieve Tenant, or any person claiming through or by Tenant, of the obligation to obtain the consent of Landlord, pursuant to this Article 20, to any further Transfer to the extent otherwise herein required. Any Transfer hereunder shall not release or discharge Tenant of or from any liability, whether past, present or future, under this Lease, and Tenant shall continue fully liable thereunder.

(I) Sublease First Offer Right. Notwithstanding anything herein to the contrary, for any proposed sublease or license arrangement (other than an Exempt Transfer under Paragraph 20(D) above), which involves a portion of the Premises comprising one (1) full floor

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or more (or its equivalent, in terms of Rentable Area), Landlord shall have the right, by notice to Tenant given within the same time frames as provided for Landlord’s consent to be delivered under Paragraph 20(B) above, to elect to enter into the proposed sublease or license arrangement directly with Tenant, with Landlord being the subtenant or licensee hereunder, all in accordance with the same terms as otherwise applicable to the proposed sublease or license to which Tenant was seeking Landlord’s consent thereunder. In the event Landlord so exercises such right as provided in the preceding sentence (herein, the “Sublease/License First Offer Right”), then Landlord and Tenant shall enter into the sublease or license documentation which would otherwise have applied for the prospective third-party sublessee or licensee, and the parties shall take such further action and execute such further instruments as may be reasonably requested by either party hereto to effectuate the foregoing exercise of Landlord’s Sublease/License First Offer Right.

ARTICLE 21

Certain Rights Reserved By Landlord

Landlord shall have the following rights, exercisable without notice (except as expressly provided in this Lease) without effecting an eviction, constructive or actual, or disturbance of Tenant’s use or possession or giving rise to any claim for set-off or abatement of Rent (except as expressly provided in this Lease):

(A) To require that all types of window shades, blinds, drapes, and other similar window coverings conform to the building standard specifications therefor delivered to Tenant. This Paragraph 21(A), however, shall not be applicable to any inner shades, blinds, drapes or window coverings that are separated from the exterior window pane by blinds, shades, drapes or window coverings conforming to the building standard specifications, so long as such inner shades, blinds, drapes or window coverings do not materially detract from the Class A nature and appearance of the Building. Landlord shall enforce said building standard specifications uniformly against all tenants and occupants of the Building.

(B) To grant to anyone the exclusive right to use the Retail Area of the Property for the retail sale of goods and services therefrom so long as any such exclusive right shall not operate to exclude Tenant from the Premises or from the office uses and related uses expressly permitted in Article 5 above, subject, however, to the terms of Paragraph 42(A) hereof. Landlord agrees that Landlord shall not hereafter confer upon any tenant or occupant of the Building any right to exclusive uses of the Building which will restrict Tenant’s (or any Transferee’s) use of the Premises for office, conference center or cafeteria purposes in compliance with this Lease.

(C) To approve (such approval not to be unreasonably withheld) the weight, size and location of safes and other heavy equipment and bulky articles in and about the Premises and the Building (so as not to overload the floors of the Premises), and to require all such items to be moved into and out of the Building and the Premises only at such times and in such manner as Landlord shall reasonably direct (provided that the foregoing terms of this Paragraph 21(C) shall not apply as to the initial Tenant Work, which shall instead be governed by the Workletter

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attached hereto). Tenant shall provide notice to Landlord prior to moving any such heavy equipment and bulky articles into or out of the Building, and shall pay to Landlord Landlord’s Actual Costs incurred in connection with the supervision thereof (provided that such notice and payment obligation shall not apply to the initial Tenant Work or to the initial tenant work in connection with any of Tenant’s Expansion Premises, First Proposal Space or Offer Space, as the case may be, which shall instead be governed by the Workletter and by the terms of Paragraphs 7 and 34 hereof, as applicable). Tenant shall not place a load upon any floor of the Premises that exceeds fifty (50) pounds per square foot “live load” (except that, with respect to the area on each floor of the Premises located within two hundred (200) feet of the core of the Building (and in any event not less than 1,000 square feet of Rentable Area in the aggregate on each such floor), such fifty (50) pound per square foot “live load” limitation shall be increased to two hundred (200) pounds per square foot “live load”), or twenty (20) pounds per square foot “partition load,” without reinforcing (at Tenant’s sole cost and expense) any floors in the Premises or elsewhere in the Building as may be required in order to preserve the structural integrity of the Building, except to the extent such loads have been reviewed and approved by a structural engineer reasonably designated by Landlord and such loads have been determined to be consistent with the Building’s existing design capacities, or in order to comply with Laws, to handle any additional load (it being understood that any such reinforcing of the floors of the Building shall be subject to the terms and provisions of Article 7 hereof, or the Workletter if performed in connection with the performance of the Tenant Work); provided, Landlord shall, at Landlord’s sole cost and expense and as part of the Landlord Work hereunder, cause a rectangular area of approximately 7,000-10,000 square feet located on one (1) floor of the Initial Low-Rise Floors Premises, and additional areas of approximately 6,500 square feet located on each of up to three (3) additional floors of the Initial Low-Rise Floors Premises, to be reinforced to support two hundred (200) pounds per square foot “live load” in all such areas (i.e., all as more specifically referenced in Exhibit N attached hereto).

(D) To temporarily limit or prevent access to the Property, shut down elevator service (without limiting the terms of Paragraph 23(B) hereof), activate elevator emergency controls, or otherwise take such action or preventative measures deemed reasonably necessary by Landlord for the safety of tenants or other occupants of the Property or the protection of the Property and other property located thereon or therein, (i) in case of fire, invasion, insurrection, riot, civil disorder, terrorist act, public excitement or other dangerous condition, or threat thereof or any other Emergency Situation, or (ii) in order to perform any maintenance or repairs that require Building closure; so long as (except in Emergency Situations or as otherwise required by Law, in which event Landlord shall give Tenant such notice as is practical under the circumstances) Landlord shall give Tenant at least fifteen (15) Business Days’ prior written notice of Landlord’s intention to close the Building pursuant to this clause (ii) (and, except in case of an Emergency Situation or as otherwise required by Law, Landlord shall restrict any such closure pursuant to this clause (ii) to Saturday, Sunday or any Holidays). Tenant shall have the right (but only once with respect to any particular closure), by written notice given to Landlord within ten (10) Business Days after Tenant’s receipt of such notice from Landlord, to require Landlord to postpone such closure under clause (ii) above for up to thirty (30) days beyond the date set forth in Landlord’s notice (to the extent that such postponement does not give rise to an Emergency Situation and is permitted by applicable Laws). Landlord shall use commercially reasonable efforts to avoid taking any of the actions set forth in this Paragraph 21(D) and, if not possible

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using such commercially reasonable efforts, then to minimize the impact on Tenant and its use and occupancy of the Premises.

(E) To install and maintain pipes, ducts, and conduits above the hung ceiling of the Premises, provided that such pipes, ducts and conduits are located not less than eight inches (8”) above the ceiling or in the base building columns or shafts in the Premises, to serve other parts or other tenants of the Building; provided that (i) except as part of the Landlord Work pursuant to the Landlord Work Plans approved by Landlord and Tenant pursuant to the Workletter, all pipes shall be installed in the columns or shafts of the Premises, (ii) no reduction in the usable area of the Premises results therefrom, (iii) no such installation or maintenance shall interfere (except to a de minimis extent) with Tenant’s use of the Premises for the conduct of its business and other rights and benefits under this Lease, (iv) any damage caused thereby to the Premises or Tenant’s property is promptly repaired at Landlord’s expense, (v) no access panels are required to access the pipes, ducts and conduits which are exposed in the occupied portions of the Premises, and (vi) such installation does not materially adversely affect the aesthetics of the Tenant Work or the Premises, as reasonably determined by Tenant. All work in the Premises (and, to the extent commercially reasonable, all other work that would cause interference with the conduct of Tenant’s business if performed during Regular Business Hours) under this Paragraph 21(E) shall be performed outside of Regular Business Hours.

(F) To decorate or to make alterations, additions, or improvements, structural or otherwise, in or to the Property, or any part thereof (including without limitation changes and reductions in corridors and other public areas and the installation of other structures, facilities, amenities and features therein); provided, however, that, except to the extent that Tenant shall have consented in writing thereto in advance or such action is required by applicable Laws or is otherwise expressly permitted under this Lease, in no event shall any such decorations, alterations, installations, additions or improvements in or to the Property: (a) be located in the Premises or on any full floor in which the Premises are located; (b) except as expressly permitted elsewhere in this Lease (including Article 39 and Paragraph 6(Q) hereof) constitute material decorations, alterations, installations, additions or improvements to the Main Lobby or the Plaza, (c) except as expressly permitted elsewhere in this Lease (including Article 39 hereof), be made to the exterior (including the windows, mullions and “skin”) of the Building, the Monument, any Tenant Sign, the elevators of the Building, or the stairways serving the Premises, or the appearance of any of the foregoing; (d) adversely affect any Building Services to be provided by Landlord hereunder; (e) cause any increase in Net Rent, Additional Rent or Tenant’s Pro Rata Share on account thereof, or (f) otherwise adversely affect the character of the Building as a Class A office building; and provided, further, that no such decorations, alterations, installations, additions or improvements to the Property shall in any way limit or otherwise affect any of Tenant’s rights, or Landlord’s duties and obligations, under this Lease; and provided, further, that except as expressly provided in this Lease (including Article 39 and Paragraph 6(Q) hereof) or as required by applicable Laws, Tenant shall have the right to require Landlord to remove and/or restore any non-material decorations, alterations, installations, additions or improvements in or to the Main Lobby or Plaza (at Landlord’s sole cost and expense, which shall not be included in Operating Expenses) made without the prior written consent of Tenant, in the event that Tenant determines (in its sole discretion) that the same are not consistent with a first class building or the overall design and appearance of the Property (it being acknowledged that any material

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decorations, alterations, installations, additions or improvements to the Main Lobby or Plaza not otherwise required by applicable Laws shall require Tenant’s prior consent, as provided above). In connection with any repairs, maintenance, improvements or alterations, in or about the Property, required or permitted to be made by Landlord under this Lease, Landlord may temporarily erect scaffolding and other structures reasonably required, and may temporarily close public entry ways, other public areas, restrooms, stairways or corridors, so long as Tenant continues to have access to the Premises at all times (subject to Emergency Situations or other matters that are described in Paragraph 21(D) or are beyond the reasonable control of Landlord). Landlord shall take commercially reasonable steps to minimize any interference with Tenant’s access to the Premises and its operations therein resulting from any actions taken by Landlord under this Article 21. Any work to be performed in the Premises shall be performed in accordance with the provisions of Article 17.

ARTICLE 22

Tenant Default and Landlord Remedies

(A) Default by Tenant. Each of the following events, shall constitute a “Default” by Tenant, and shall give rise to Landlord’s remedies set forth in Paragraph 22(B) below:

(i) failure by Tenant to make when due any payment of Rent, and the continuation of such failure for ten (10) Business Days after written notice specifying such failure; or

(ii) failure by Tenant to observe or perform any of the terms or conditions set forth in Paragraph 7(D) hereof and the continuation of such failure beyond the expiration of any notice and cure period therein provided; or

(iii) failure by Tenant to observe or perform any of its obligations set forth in Paragraph 28(A) hereof, and the continuation of such failure for fifteen (15) Business Days after receipt of written notice from Landlord specifying such failure (except, that if the nature of Tenant’s failure is such that more time is reasonably required in order to cure, and Tenant commences to cure within such fifteen (15) Business Day period, then such period shall be extended so long as Tenant is diligently pursuing such cure to completion);

(iv) failure by Tenant to deliver: (x) an SNDA within the period specified in Paragraph 18(A) hereof, (y) a Tenant Estoppel Certificate within the period specified in Paragraph 19(A) hereof, or (z) Tenant’s financial statements within the period specified in Paragraph 19(C) hereof, and the continuation, in any such case, of such failure for five (5) Business Days (or, in the case of a failure under subclause (z), for ten (10) Business Days) after receipt of written notice from Landlord specifying such failure; or

(v) failure by Tenant to observe or perform any of the terms or conditions of this Lease to be observed or performed by Tenant other than the payment of Rent, or as provided elsewhere in this Paragraph 22(A), and the continuation of such failure for thirty

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(30) days after written notice specifying such failure (except, that if the nature of Tenant’s failure is such that more time is reasonably required in order to cure, and Tenant commences to cure within such thirty (30) day period, then such period shall be extended so long as Tenant is diligently pursuing such cure to completion); or

(vi) failure by Tenant to comply with the Rules, and the continuation of such failure for thirty (30) days after written notice specifying such failure (except, that if the nature of Tenant’s failure is such that more time is reasonably required in order to cure, and Tenant commences to cure within such thirty (30) day period, then such period shall be extended so long as Tenant is diligently pursuing such cure to completion); or

(vii)(a) the making by Tenant of any general assignment for the benefit of creditors, (b) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or the filing by or against Tenant of a petition for reorganization or arrangement or seeking other relief under any Law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days), (c) appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located on the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within ninety (90) days, (d) attachment, execution or other judicial seizure of substantially all of Tenant’s assets located on the Premises or of Tenant’s interest in this Lease, or (e) Tenant’s admitted insolvency or admission of an inability to pay its debts as they mature; or

(viii) there occurs a Transfer of this Lease, or the Premises or any part thereof, in violation of Article 20 which is not cured within ten (10) days after written notice specifying such violation.

The notice and cure periods provided herein are in lieu of, and not in addition to, any notice and cure periods provided by Laws. To the extent that any of the foregoing notice periods provided for in this Article 22 and elsewhere in this Lease are greater than the notice periods required under the statutes of the State of Illinois, such greater notice periods as are provided for herein shall substitute for any such statutory notice periods, and, to the extent not prohibited by such statutes, any notices given pursuant to the terms hereof shall be deemed the notice required by any such statutes.

(B) Remedies. If a Default occurs, then during the continuance thereof, Landlord shall have the rights and remedies hereinafter set forth, each of which shall be distinct, separate and cumulative with and in addition to any other right or remedy allowed under any Law and/or other provisions of this Lease, any and all of which may be exercised with or without further notice and with or without demand whatsoever, concurrently or successively, and at such time or times and in such order as Landlord may from time to time determine:

(i) Landlord may terminate this Lease and repossess the Premises by detainer suit, summary proceedings or other lawful means (in which event Tenant shall peaceably quit and surrender the Premises to Landlord), and recover from Tenant as damages an amount of money equal to the sum of: (a) any unpaid Rent as of the termination date,

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including interest at the Default Rate, (b) any unpaid Rent which would have accrued after the termination date through the time of award, including interest at the Default Rate, (c) the present value of any unpaid Rent which would have accrued after the time of award during the balance of the Term, less the present value of the then current market rental value of the Premises for such period, after deduction from the said current market rental value of the Premises of the reasonably estimated Costs of Reletting (as defined in Paragraph 22(E)) for such balance of the Term (such net amount not to be less than zero in any event, it being the intention of the parties that Landlord shall have no obligation to pay to Tenant or to offset against other sums Tenant owes to Landlord the excess, if any, of the present value of the then current market rental value of the Premises over the present value of said unpaid Rent), and (d) any other amounts necessary to compensate Landlord for all direct damages (without limitation of the specific rights and remedies to which Landlord is entitled pursuant to the provisions of Article 13 hereof, but otherwise excluding consequential or punitive damages) and other out-of-pocket losses, costs, and expenses caused by Tenant’s failure to perform its obligations under this Lease to the extent such amounts are not included in the above. For purposes of computing the amount of Rent herein that would have accrued after the time of award, Tenant’s Pro Rata Share of Taxes and Operating Expenses, shall be projected, based upon the average rate of increase, if any (but subject to any applicable caps on such increase as set forth in this Lease), in such items from the Commencement Date through the time of award. Present value shall be computed on the basis of a discount rate equal to the then-current yield on United States Treasury obligations at the time of such computation as reported in the Wall Street Journal or similar financial publication having a maturity approximately equal to the remainder of the Term as reasonably determined by Landlord; provided, if no such obligations of such maturity exist, then such discount rate shall be reasonably selected by Landlord.

(ii) Landlord may terminate Tenant’s right of possession and repossess the Premises by detainer suit, summary proceedings or other lawful means (in which event Tenant shall peaceably quit and surrender the Premises to Landlord), without terminating this Lease (and if applicable Law permits, and Landlord shall not have expressly terminated the Lease in writing, any termination shall be deemed a termination of Tenant’s right of possession only), in which event Landlord shall use commercially reasonable efforts to mitigate its damages by attempting to relet all or any part of the Premises to a Replacement Tenant, for such rent and upon such terms as shall be reasonably satisfactory to Landlord (including the right to relet the Premises for a term greater or lesser than that remaining under the Term of this Lease and the right to relet the Premises as a part of a larger area and the right to change the character or use made of the Premises). For the purpose of such reletting, Landlord is authorized to first lease other available space at the Building before reletting the Premises, or to decorate or to make any repairs, changes, alterations or additions in or to the Premises that may be necessary or convenient. In such event, Landlord may recover from Tenant the sum of: (a) any unpaid Rent as of the date possession is terminated, including interest at the Default Rate, (b) any unpaid Rent which accrues during the Term from the date possession is terminated through the time of award (or which may have accrued from the time of any earlier award or awards obtained by Landlord through the time of the

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subsequent award or awards), including interest at the Default Rate, less any Net Re-Letting Proceeds (as defined in Paragraph 22(E)) received by Landlord during such period, (c) all Rent from time to time which accrues from and after the date of the award less any Net Re-Letting Proceeds received by Landlord during such period, and (d) any other amounts necessary to compensate Landlord for all direct damages caused by Tenant’s failure to perform its obligations under this Lease to the extent such amounts are not included in the above (including, without limitation, payment of all Costs of Reletting as and when actually paid or incurred by Landlord). Landlord may bring suits for such amounts or portions thereof, at any time or times as the same accrue or after the same have accrued, and no suit or recovery of any portion due hereunder shall be deemed a waiver of Landlord’s right to collect all amounts to which Landlord is entitled hereunder, nor shall the same serve as any defense to any subsequent suit brought for any amount not theretofore reduced to judgment.

Without limiting the generality of the introduction sentence of this Paragraph 22(B), an election by Landlord to terminate Tenant’s right to possession of all or any part of the Premises or exercise any one or more of its other rights and remedies, without terminating this Lease, shall not preclude a subsequent election by Landlord to terminate this Lease. Wherever in this Lease the term “Tenant’s right to possession shall have terminated” (or words of similar import) is used, such term shall be deemed to refer to a termination of Tenant’s right of possession of the Premises by reason of the occurrence of a Default hereunder, as provided in Paragraph 22(B)(ii) above.

(C) Specific Performance, Collection of Rent. Except as expressly provided in this Lease to the contrary, Landlord and Tenant shall each at all times have the rights and remedies (which shall be cumulative with each other and with respect to Landlord in addition to those rights and remedies available to Landlord under Paragraph 22(B)), as may be available under applicable Law and other provisions of this Lease, without prior demand or notice except as required by applicable Law or this Lease, including without limitation the right to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof.

(D) Interest. Any Rent payable under this Lease which is not paid when due shall accrue interest at the Default Rate from the date that is ten (10) Business Days after the date of Landlord’s written notice to Tenant of such non-payment until payment is received by Landlord; provided, that if one (1) installment of Net Rent, Tenant’s Pro Rata Share of Taxes or Tenant’s Pro Rata Share of Operating Expenses (collectively, “Regularly Scheduled Rent Payments”) is not paid when due by Tenant within any twelve (12) consecutive month period within the Term, then any subsequent installment of any component of the Regularly Scheduled Rent Payments coming due within such twelve (12) consecutive month period which is not paid when due by Tenant shall accrue interest at the Default Rate from the date that such installment was due (rather than ten (10) Business Days after written notice from Landlord of such non-payment as provided above) until payment thereof is received by Landlord. Such interest payments shall not be deemed consent by Landlord to late payments, nor a waiver of Landlord’s right to insist upon timely payments at any time, nor a waiver of any remedies to which Landlord is entitled as a result of the late payment of Rent. Such interest is in addition to and shall not diminish or

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represent a substitute for any of Landlord’s rights or remedies under any other provision of this Lease.

(E) Certain Definitions. “Net Re-Letting Proceeds” shall mean the total amount of rent and other consideration paid by any Replacement Tenants. “Costs of Re-Letting” shall include, without limitation, all Landlord’s Actual Costs incurred by Landlord (reflecting the remaining portion of the Term (and not the term of the lease of the Replacement Tenant, to the extent different from the remaining portion of the Term) at the time of such expenditure; e.g., if the then remaining portion of the Term is two (2) years, and the lease with the Replacement Tenant is for a ten (10) year term, the Costs of Re-Letting shall be the costs appropriately allocable to two (2) of the ten (10) years included in such term of the Replacement Tenant’s lease) for any repairs, maintenance, changes, alterations and improvements to the Premises, brokerage commissions, advertising costs, reasonable attorneys’ fees, any customary free rent periods or credits, tenant improvement allowances, take-over lease obligations and other customary, necessary or appropriate economic incentives required to enter leases with Replacement Tenants. “Replacement Tenants” shall mean any persons not affiliated with Landlord to whom Landlord re-lets the Premises or any portion thereof pursuant to this Article. “Default Rate” shall mean the lower of (i) the sum of (x) the rate per annum equal to the rate of interest announced from time to time by Bank One, N.A., or its successor (and if no successor so exists, then such other major national bank as reasonably selected by Landlord), as its prime rate of interest (such rate to change from time to time as and when such prime rate changes) (the “Prime Rate”), and if there be more than one such rate, then for purposes hereof, the highest rate shall be applicable, plus (y) three percent (3%), and (ii) the highest rate permitted by applicable Law.

(F) Removal. Any and all property that may be removed from the Premises by Landlord pursuant to the authority of this Lease or at Law, to which Tenant is or may be entitled, may be handled, removed, or stored in a commercial warehouse or otherwise by Landlord (at Tenant’s risk, cost, and expense if Tenant was required but failed to remove same from the Premises), and Landlord shall in no event be responsible for the value, preservation, or safekeeping of that property. Tenant shall pay to Landlord, upon demand, any and all expenses incurred in any removal and all storage charges against that property that Tenant was required but failed to remove as long as the same shall be in Landlord’s possession or under the Landlord’s control. Any property of Tenant not removed from the Premises or retaken from storage by Tenant after the end of the Term or Tenant’s right to possession hereunder shall be conclusively presumed to have been abandoned by Tenant unless Tenant removes such items within ten (10) Business Days after written demand therefor from Landlord. Without limiting the generality of the foregoing, in the event that Tenant fails to vacate the Premises in the condition required under Article 12 hereof, Landlord shall have the right (but not the obligation) to restore the Premises to such condition, all at Tenant’s sole cost and expense.

(G) Landlord Action. In the event of a Default (or in the event of a default by Tenant hereunder giving rise to an Emergency Situation), Landlord may, but shall not be obligated to, after reasonable notice to Tenant and without waiving or releasing Tenant from any other obligation under this Lease, make such payment or perform such other act to the extent

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Landlord may deem desirable and in that connection pay reasonable expenses and employ counsel, and Tenant shall reimburse Landlord for any such expenses.

(H) Other Matters. No re-entry or repossession, repairs, changes, alterations and additions, re-letting, acceptance of keys from Tenant, or any other action or omission by Landlord shall be construed as an election by Landlord to terminate this Lease or Tenant’s right to possession, or accept a surrender of the Premises, nor shall the same operate to release the Tenant in whole or in part from any of Tenant’s obligations hereunder, unless express written notice of such intention is sent by Landlord or its agent to Tenant. To the fullest extent permitted by Law, in the event Landlord exercises its rights to terminate possession under Paragraph 22(B)(ii) above, then all rent and other consideration paid by any Replacement Tenants shall be applied: first, to the Costs of Re-Letting, second, to the payment of any Rent theretofore accrued, and the remainder, if any, shall be held by Landlord and applied to the payment of other obligations of Tenant to Landlord as the same become due (with any remainder to be retained by Landlord). Landlord may apply payments received from Tenant to any obligations of Tenant then accrued, without regard to such obligations as may be designated by Tenant. Tenant hereby irrevocably waives any right otherwise available under any Law to redeem or reinstate this Lease.

(I) Waiver of Consequential and Punitive Damages. Without limitation of the specific rights and remedies to which Landlord is entitled pursuant to the provisions of Article 13 hereof, in no event shall Tenant be liable for, and Landlord, on behalf of itself and its successors and assigns (and their respective agents, contractors, subcontractors, employees, invitees and licensees), hereby waives any claim for, any consequential or punitive damages (including loss of profits or business opportunity) arising under or in connection with this Lease.

ARTICLE 23

Landlord Default and Tenant Remedies; Untenantability; Tenant Offset

(A) Default by Landlord and Tenant’s Remedies. If any act or omission of Landlord would, under applicable Laws, give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this Lease (other than pursuant to a right of cancellation or termination expressly set forth in this Lease), or to abate or offset against payment of Rent (other than a right of abatement or offset expressly set forth in this Lease, including Paragraph 23(C) below) or to claim a partial or total eviction, Tenant shall not be entitled to exercise any such right or remedy (subject to the last sentence of this Paragraph 23(A)), unless such act or omission shall have continued unremedied for ten (10) days after written notice from Tenant is given to Landlord (in the case of a default curable solely by the payment of money), and thirty (30) days or such longer period as may be provided elsewhere in this Lease for all other defaults, after written notice thereof is given to Landlord; except, that if such default is susceptible of cure, but more than thirty (30) days are reasonably required to effect such remedy of non-monetary defaults, then Tenant shall not be entitled to exercise any such right or remedy if Landlord commences to remedy such act or omission within thirty (30) days after receipt of Tenant’s notice thereof and thereafter diligently prosecutes such remedy to completion (a “Landlord Default”). The aforementioned periods of time permitted for Landlord to cure non-monetary

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defaults shall be extended for any period of time during which Landlord is delayed in, or prevented from, curing due to Unavoidable Delays, so long as Landlord is diligently pursuing such cure to completion. If Landlord fails to cure within the times permitted for cure herein, Landlord shall be subject to all remedies as may be available to Tenant at law or in equity (subject, however, to any and all other applicable provisions of this Lease). Notwithstanding anything to the contrary contained in the foregoing, the notice and cure requirements, periods and rights set forth in this Article 23 shall not apply to Landlord’s duties and obligations set forth in Article 29 hereof or in the Workletter (it being acknowledged that any notice and cure rights applicable to said Article 29 and/or the Workletter are set forth therein).

(B) Untenantability; Interruption in Services.

(i) If, as a result of a Material Building Services Failure, or Landlord’s failure to perform any Landlord Repairs, the Premises or any portion thereof become Untenantable and such Untenantability continues for more than two (2) consecutive calendar days (or, if the policy for service interruption or rent loss insurance maintained (or required to be maintained) by Landlord hereunder does not insure the rent abatement resulting from such condition, such Untenantability continues for four (4) consecutive calendar days) (which two (2) or four (4) consecutive calendar day period, as applicable, shall not be extended for Unavoidable Delays), then Rent shall thereafter abate with respect to the Premises or the portion thereof that is rendered Untenantable as a result of such Material Building Services Failure or failure to perform any Landlord Repairs, and Rent shall also abate with respect to any additional portions of the Premises that are not functionally usable and that are not used by Tenant for normal business operations due to the relocation of a portion of Tenant’s operations; provided, that the Untenantability of any office portion of the Premises that does not contain systems serving other portions of the Premises shall not be deemed to render any other portion of the Premises functionally unusable as aforesaid; and provided further, that, notwithstanding anything to the contrary in the foregoing proviso, in the event that fifty percent (50%) or more of the Rentable Area of the Premises is Untenantable as a result of the Material Building Services Failure or failure to perform any Landlord Repairs, then the entire Premises (to the extent that the same is not used by Tenant for the normal conduct of its business) shall be deemed to be Untenantable. Rent shall continue to abate for the duration of such Untenantability from and after said two (2) or four (4) consecutive calendar day period, as applicable. Landlord agrees at all times to use reasonable efforts to correct any Untenantability of the Premises.

(ii) If any period of Untenantability resulting from a Material Building Services Failure (which was not otherwise caused by Tenant’s default hereunder or from the negligence or intentional misconduct of Tenant, its agents, employees, principals, invitees, contractors or other representatives), or resulting from a failure by Landlord to perform Landlord Repairs, affects (a) more than 25% of the Rentable Area of the Premises (said space described in this subclause (a) being herein called “Material Affected Space”), or (b) a portion of the Premises which, when so rendered Untenantable, materially and adversely affects Tenant’s ability to use the remainder of the Premises under normal circumstances (including without limitation with full electrical

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and HVAC Building Services provided with respect thereto) for its normal business operations (for example, but not by way of limitation, the floor(s) on which Tenant’s primary computer equipment and/or data center are located), and continues for more than one hundred twenty (120) consecutive days (or three hundred (300) consecutive days, to the extent the same results from, or Landlord’s ability to cure such matter is delayed by, Unavoidable Delays), then Tenant shall have the right (during the period such Untenantability persists beyond the foregoing one hundred twenty (120) or three hundred (300) (as applicable) consecutive day period), but exercisable only by written notice to Landlord within the forty-five (45) day period following said one hundred twenty (120) or three hundred (300) (as applicable) consecutive day period, to terminate this Lease with respect to said Material Affected Space, and only in the case of subclause (b) to terminate this Lease in its entirety, which termination shall be effective upon receipt of such written notice. If this Lease is terminated pursuant to this Paragraph 23(B)(ii) with respect to all or a portion of the Premises, then Net Rent and other scheduled payments of Rent shall be apportioned with respect to the Premises so terminated on a per diem basis and shall be paid to the date of the event giving rise to such Untenantability (with appropriate adjustment for the portion of the Premises that Tenant continues to occupy for the normal conduct of its business from the date of such event to said termination).

(iii) For purposes of this Lease (including Article 9 and Article 11), “Untenantable” and “Untenantability” means with respect to the Premises or the premises of any other tenant (or any portion of either), that the same cannot reasonably be used and occupied by Tenant or such other tenant (as applicable) in the ordinary and normal course of its business with no material adverse disruption in work environment and in accordance with applicable Laws, for any reason whatsoever, including (without limitation) by reason of: (a) the condition of the Premises (or such other premises, as applicable), (b) lack of or material impairment to access, electricity, HVAC or water service, and (c) any failure of the air quality in the Premises (or such other premises, as applicable) to comply with applicable Laws, except that the Premises shall in no event be deemed to have become Untenantable by reason of an interruption of elevator service, so long as elevator service is being provided by: (x) four (4) or more of the passenger elevators serving the Low-Rise Floors Premises, (y) four (4) or more of the passenger elevators serving the Mid-Rise Floors Premises, and (z) one (1) freight elevator serving the entire Premises; provided however, that Tenant shall have the following rights and remedies (each of which shall be exercisable by Tenant regardless of whether or not Tenant actually uses or occupies any portion of the Premises for conduct of its business or any other purpose, but which shall be without duplication of each other) in the event that:

(1) one (1) passenger elevator serving the Premises (or any portion thereof) shall remain inoperable for in excess of sixty (60) consecutive days, then, as Tenant’s sole monetary remedy hereunder by reason of the fact that such one (1) elevator is so inoperable (and in lieu of any other rights to reduce or abate Rent provided herein), Tenant shall have the right to a reduction in the amount of Net Rent payable hereunder in an amount equal to the product of (I) $5,000 (subject to increase as provided below), and

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(II) the number of days in the period commencing on the first day after such sixty (60) consecutive day period and ending on the date on which such elevator is again made available;

(2) more than one (1), but less than four (4) passenger elevators serving the Premises (or any portion thereof) shall remain inoperable for in excess of sixty (60) consecutive days, then, as Tenant’s sole monetary remedy hereunder by reason of the fact that such elevators are so inoperable (and in lieu of any other rights to reduce or abate Rent provided herein), Tenant shall have the right to a reduction in the amount of Net Rent payable hereunder in an amount equal to the product of (I) $15,000 (subject to increase as provided below), and (II) the number of days in the period commencing on the first day after such sixty (60) consecutive day period and ending on the date on which such elevators are again made available; or

(3) four (4) or more passenger elevators serving the Premises (or any portion thereof) shall remain inoperable for in excess of two (2) consecutive calendar days (or, if the policy for service interruption or rent loss insurance maintained (or required to be maintained) by Landlord hereunder does not insure the rent reduction resulting from such condition, such condition continues for four (4) consecutive calendar days), or one (1) or more dedicated shuttle elevators exclusively serving Tenant’s designated conference center floors (i.e., the 6^th and 7^th floors of the Building) shall remain inoperable for in excess of five (5) consecutive business days, then (without limiting Tenant’s rights in the event that such condition results in the Untenantability of the Premises, as provided above), Tenant shall have the right to a reduction in the amount of Net Rent payable hereunder in an amount equal to: (X) for the first ten (10) days beyond such two (2) or four (4) (as applicable) consecutive day period or such five (5) consecutive business day period (as the case may be) within which such condition continues, the product of (I) $15,000 (subject to increase as provided below) and (II) the number of days in the period commencing on the first day after such two (2) or four (4) (as applicable) consecutive day period or such five (5) consecutive business day period (as the case may be) and ending on the earlier of the expiration of such ten (10) day period and the date on which a sufficient number of such elevators are again made available such that less than four (4) elevators remain inoperable and neither of the dedicated shuttle elevators exclusively serving Tenant’s designated conference center floors (i.e., the 6^th and 7^th floors of the Building) remain inoperable, and (Y) for the period beyond such first ten (10) days within which such condition continues, the product of (a) $30,000 (subject to increase as provided below) and (b) the number of days commencing on the first day after such ten (10) day period, and ending on the date on which a sufficient number of such elevators are again made available such that less than four (4) elevators

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remain inoperable and neither of the dedicated shuttle elevators exclusively serving Tenant’s designated conference center floors (i.e., the 6^th and 7^th floors of the Building) remain inoperable.

All dollar amounts specified in the foregoing clauses (1) through (3) above shall be increased on a cumulative and compounded basis by two and one-half percent (2.5%) per annum, commencing on the first day of the second Lease Year and each subsequent anniversary thereof.

(iv) For purposes of this Lease, “Material Building Service Failure” shall mean any material interruption, failure, decrease or impairment of any of the Building Services to be provided in accordance with the terms and provisions of this Lease (including Article 6) for any reason whatsoever.

(v) The provisions of Paragraphs 23(B)(i)-(iii) hereof shall not be applicable to any Untenantability (or any elevators being rendered inoperable) by reason of damage by fire or other casualty or condemnation and the same shall be governed by the provisions of Article 9 and Article 11 hereof, respectively.

(vi) The rights of Tenant to abate Rent and to terminate this Lease as a result of the occurrence of any Untenantability resulting from a Material Building Service Failure and/or failure by Landlord to perform any Landlord Repairs or from any elevators being rendered inoperable, as expressly provided above in this Paragraph 23(B), shall be Tenant’s sole and exclusive remedies in the event of the occurrence of any Untenantability resulting from a Material Building Service Failure and/or any Untenantability resulting from a failure by Landlord to perform Landlord Repairs during the Term under this Lease, and/or any elevators (other than the Building passenger elevators serving the Garage, it being agreed that Tenant shall not have the right to terminate this Lease solely by reason of the fact that any such Garage elevators may be inoperable) being rendered inoperable (except as provided in Article 9 and Article 11 hereof and Paragraphs 8(C) and 23(C) hereof), as applicable; provided, however, that nothing contained in the foregoing shall be deemed or construed to limit any of Tenant’s rights or remedies with respect to matters which occur prior to the commencement of the Term of this Lease (including Tenant’s rights and remedies set forth in Article 29 hereof and in the Workletter); and provided further, that to the extent that: (x) any Untenantability resulting from a Material Building Service Failure or failure to perform any Landlord Repairs shall arise as a result of any breach or violation of this Lease by Landlord, or any negligence or intentional misconduct of Landlord or its employees, principals, agents (including Landlord’s Agent), representatives or contractors (and not from Unavoidable Delays), (y) such Untenantability continues for more than ten (10) consecutive days, and (z) the actual, direct costs sustained or incurred by Tenant in connection with any relocation of Tenant’s personnel, property and/or operations to alternative space (including moving costs to and from such alternative space and rental costs of such alternative space) by reason of such Untenantability exceed the amount of the abatement of Rent to which Tenant is entitled hereunder accruing after such initial ten (10) business day period by reason of such Untenantability (the amount of any such

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excess is referred to herein as “Excess Untenantability Relocation Costs”), then, to the extent that such Excess Untenantability Relocation Costs are not covered by any insurance then carried by Tenant, Landlord shall pay or reimburse Tenant for the amount of such Excess Untenantability Relocation Costs (which payment shall be in addition to, and not in lieu of, the abatement of Rent to which Tenant is entitled herein). Tenant agrees to use commercially reasonable efforts to mitigate any Excess Untenantability Relocation Costs payable by Landlord to Tenant pursuant hereto (at no incremental cost to Tenant unless Landlord agrees in writing to pay such incremental costs).

(vii) Tenant agrees to provide Landlord with prompt written notice of the occurrence of any Untenantability affecting the Premises with respect to which Tenant intends to exercise its rights and/or remedies set forth in this Paragraph 23(B).

(C) Offset Rights. Any amounts payable by Landlord to Tenant under this Lease (including the Workletter) which are not paid when due shall accrue interest at the Default Rate from the date that is five (5) Business Days after the date of Tenant’s written notice to Landlord of such non-payment until payment is received by Tenant. Landlord and Tenant further agree that in the event that Landlord fails to pay any amount required to be paid by Landlord to Tenant pursuant to this Lease or the Workletter within five (5) Business Days after the date the same is due, then Tenant shall have the right to give Landlord a second written notice (an “Offset Exercise Notice”) requesting payment of such costs, which notice shall contain a sentence stating “LANDLORD’S FAILURE TO PAY THE FULL AMOUNT IN QUESTION WITHIN FIVE (5) BUSINESS DAYS AFTER LANDLORD’S RECEIPT HEREOF SHALL GIVE TENANT THE RIGHT TO OFFSET SUCH UNPAID AMOUNT AGAINST THE PAYMENT OF RENT,” and, in the event that Landlord fails to fully pay such costs within five (5) Business Days after such Offset Exercise Notice is provided to Landlord, any such unpaid amounts, together with all accrued and unpaid interest thereon, may be offset against the next installment of Rent and other amounts then due Landlord hereunder (in order of payment) until all such unpaid amounts and interest thereon have been either fully offset or paid by Landlord in full; provided, however, that in the event that: (i) the amount with respect to which Tenant shall have exercised the foregoing offset rights exceeds $100,000 pursuant to any single Offset Exercise Notice (or series of related Offset Exercise Notices), and (ii) Landlord shall in good faith believe that Tenant is not entitled to exercise such offset rights described in such Offset Exercise Notice as provided above, then Landlord shall have the right, within five (5) Business Days after Landlord’s receipt of such Offset Exercise Notice, to notify Tenant that Landlord has elected to dispute such exercise by Tenant of its offset rights hereunder (an “Offset Dispute Notice”) (which Offset Dispute Notice shall describe, with reasonable specificity, the reason(s) that Landlord in good faith believes that Tenant is not entitled to exercise such offset rights), in which event Tenant shall not offset the amount in question except to the extent that the dispute shall thereafter be resolved in its favor, as provided below. In the event that Landlord properly delivers an Offset Dispute Notice to Tenant as provided above, then Tenant shall have the right to submit the dispute to arbitration, which arbitration shall be governed by a procedure substantially similar in all respects to the arbitration procedure described in Section 15 of the Workletter (except that the arbitrator which shall resolve such dispute shall be an expert in the subject matter of such dispute (rather than a Workletter Qualified Arbitrator), and the non-prevailing party to such arbitration (as determined by the arbitrator) shall (in addition to paying

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the costs and expenses of the arbitrator, as provided in Section 15 of the Workletter) be responsible for the payment of all reasonable expert and attorneys’ fees, costs and expenses incurred by the prevailing party in connection with such arbitration), and, in the event that, pursuant to such arbitration procedure: (x) it is determined that Tenant is entitled to offset all or any portion of the amount set forth in the Offset Exercise Notice, then Tenant shall have the right to offset such amount against the next installment(s) of Rent coming due under this Lease (in order of payment), together with interest accruing thereon at the Default Rate from the date which is five (5) Business Days after the date of the initial notice from Tenant to Landlord that the payment which is the subject matter of such offset right was initially due from Landlord (as set forth in the first sentence of this Paragraph) until the date that such offset is completed, and Landlord shall have no further defense with respect to such offset, or (y) it is determined that Tenant is not entitled to offset any portion of the amount set forth in the Offset Exercise Notice, then Tenant shall not make any offset of such amount against the payment of Rent, and Tenant shall have no further claims with respect to such offset. Landlord and Tenant further agree that, if Landlord fails to pay the Tenant Work Allowance as and when provided in the Workletter, or any Expansion Allowance, First Proposal Allowance, Renewal Allowance or ROFO Allowance pursuant to the terms of Article 34 hereof, Tenant shall have the offset rights provided for in Section 6 of the Workletter (subject to and in accordance with the terms thereof); it being agreed that any and all rights of Landlord to dispute Tenant’s exercise of its offset rights with respect to the payment of the Tenant Work Allowance and/or any Expansion Allowance, First Proposal Allowance, Renewal Allowance or ROFO Allowance, are set forth in the Workletter (and shall be governed thereby, rather than the preceding terms of this Paragraph 23(C) describing Landlord’s rights to dispute Tenant’s exercise of its other offset rights under this Lease and the Workletter). The foregoing terms shall be binding upon any purchaser or transferee under Article 24, regardless of whether the same relate to matters occurring prior to such purchase or transfer, and upon any Mortgagee or Ground Lessor, regardless of whether the same relate to matters occurring prior to the date of the Mortgage or Ground Lease (as applicable) of such Mortgagee or Ground Lessor, or prior to the date of the exercise or enforcement of any rights or remedies thereunder or in any way relating thereto (including any foreclosure or deed in lieu of foreclosure); provided that, in the case of a Mortgagee or Ground Lessor or any successor Landlord by virtue of a foreclosure of any Mortgage (or deed in lieu thereof) such terms shall be subject to any contrary or inconsistent terms of any SNDA executed and delivered by Tenant and such Mortgagee or Ground Lessor.

(D) Intentionally omitted.

(E) Rights Cumulative. Except where expressly indicated in this Lease and/or the Workletter, and subject to the terms of Article 24 below, Tenant’s rights and remedies set forth in this Lease may be exercised at the option of Tenant, and are in addition to, and not a substitute for, the rights and remedies available to Tenant at law or in equity, including, without limitation, the right to seek damages (subject to Article 24 below), declaratory, injunctive or other equitable relief to specifically enforce this Lease.

(F) Waiver of Consequential and Punitive Damages. Without limitation of the specific rights and remedies to which Tenant is entitled pursuant to the provisions of Section 23(B) hereof, Article 29 hereof and/or the Workletter, in no event shall Landlord be

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liable for, and Tenant, on behalf of itself and its successors, assigns and Transferees (and their respective agents, contractors, subcontractors, employees, invitees and licensees), hereby waives any claim for, any consequential or punitive damages (including loss of profits or business opportunity) arising under or in connection with this Lease.

ARTICLE 24

Conveyance by Landlord; Liability of Landlord

(A) Conveyance by Landlord. In the event the landlord hereunder transfers or sells the Property (and, except as provided in the last sentence of this Paragraph 24(A), nothing herein shall be construed to restrict or prevent such sale or transfer), then (i) such purchaser or transferee shall thereupon be and become landlord hereunder and shall be deemed to have fully assumed and be liable for all obligations of this Lease required to be performed by the landlord hereunder accruing from and after such sale or transfer (and the term “Landlord” shall thereafter be deemed to refer to such purchaser or transferee); provided, that such purchaser or transferee (w) shall be liable for obligations of the landlord under this Lease arising prior to such sale or transfer to the extent that such obligations arise from then uncured breaches or defaults under this Lease on the part of the transferor landlord, or other liabilities of the transferor landlord, which are (in either case) expressly and specifically referenced in an estoppel certificate executed in good faith by Tenant and delivered to such purchaser or transferee prior to the closing of the sale or transfer in question (to the extent that Tenant in good faith pursues Tenant’s claims and/or demands (which need not include the institution of legal proceedings) with respect to such breaches or defaults (if not theretofore cured) so referenced in an estoppel certificate within the one (1) year period following such closing), (x) shall be obligated to correct any physical conditions existing on the date of such sale or transfer which are in violation of the Lease (including any failure to perform Landlord’s Repairs), even if such physical condition(s) arose out of an act or omission of the prior landlord, (y) shall be obligated to pay or credit Tenant for any overpayment by Tenant of Operating Expenses or Taxes for any prior period as required hereunder, and (z) shall in all events be bound by Tenant’s offset rights described in Paragraph 22(C) hereof and in the Workletter, regardless of whether the duty, obligation or liability giving rise to such offset rights arose prior to, on or after the date on which such purchaser or transferee acquired its interest in the Property (but without limiting the rights of any such purchaser or transferee to rely on the veracity of any estoppel certificate delivered by Tenant thereto in connection with the applicable sale or transfer), (ii) Tenant shall attorn to such purchaser or transferee and such purchaser or transferee shall recognize Tenant’s rights hereunder, and (iii) the seller or transferor shall be discharged and released from, and shall not be liable for, all obligations as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease arising from and after the date of such transfer, or for any obligations arising prior to the date of such transfer that are expressly assumed by the buyer or transferee successor Landlord hereunder pursuant to a written instrument that is delivered to Tenant. Landlord shall, as a condition to the effectiveness of any limitation on Tenant’s rights to pursue the proceeds of any sale or transfer of the Property made by a seller/transferor Landlord in connection with any damages for a breach or non-performance of this Lease by such Landlord (as provided in Paragraph 24(B) below), provide Tenant with at least fifteen (15) Business Days’ prior notice of any sale or transfer of the Building or Property by Landlord, and shall provide

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Tenant with an opportunity to execute and deliver a Tenant estoppel certificate to Landlord and the purchaser or transferee in connection with, and at least fifteen (15) Business Days prior to the closing of, any such sale or transfer. The terms of this Paragraph 24(A) shall be subject to any contrary or inconsistent terms of any SNDA, as it relates to transfers to a Mortgagee or Ground Lessor, or any successor Landlord by virtue of a foreclosure of any Mortgage (or deed in lieu of such foreclosure). Notwithstanding anything to the contrary contained herein, the original named Landlord under this Lease covenants and agrees that such party shall not sell or transfer the Property, or sell or transfer (or permit the sale or transfer of) any interest in the entity that constitutes such originally named Landlord hereunder, in either case such that Hines no longer has control over the management and performance of the Landlord Work, prior to the date on which all of the Landlord Work is substantially completed pursuant to the Workletter (it being agreed that the terms of this sentence shall in no event be deemed to prevent or limit Landlord from executing and delivering any Mortgage (or to prevent or limit any Mortgagee from exercising its rights and remedies thereunder), or from transferring the Property in connection with the execution and delivery of any Ground Lease (or to prevent or limit any Ground Lessor from exercising its rights and remedies thereunder)).

(B) Liability of Landlord. Except as provided below, none of Landlord’s covenants, undertakings or agreements are made or intended as personal covenants, undertakings or agreements by Landlord, and (except as provided below in this Paragraph 24(B)) any liability of Landlord (or if Landlord is a land trust, Landlord’s beneficiary) for damages or breach or nonperformance by Landlord or otherwise arising under or in connection with this Lease or the relationship of Landlord and Tenant hereunder, shall be collectible only out of:

(i) Landlord’s interest in the Property (or if Landlord is the beneficiary of a land trust, Landlord’s right, title and interest in such land trust), in each case, as the same may then be encumbered by a loan made by a bona-fide third party lender that is not an Affiliate of Landlord;

(ii) any proceeds of insurance payable to (or recovered by) Landlord under Landlord’s property insurance policies applicable to the Property, or proceeds of condemnation payable to Landlord with respect to the Property, which proceeds, in either case, have not been used in good faith by Landlord in connection with Landlord’s ownership, operation, maintenance, repair or restoration of the Building;

(iii) any proceeds of any sale or transfer of the Building by Landlord, but only in the case of this clause (iii) with respect to breaches, defaults or liabilities of the Landlord expressly and specifically referenced in an estoppel certificate executed (or which would have been executed had Tenant received timely notice of such sale as provided in Paragraph 24(A) above) in good faith by Tenant prior to the closing of the sale or transfer in question (to the extent that Tenant in good faith pursues Tenant’s claims and/or demands (which need not include the institution of legal proceedings) with respect to such breaches, defaults or liabilities (if not theretofore cured) so referenced in an estoppel certificate within the one (1) year period following such closing); and

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(iv) any rental income derived by Landlord from the Property, excluding, however, any such rental income which has been:

(1) distributed by Landlord to its members, partners or other owners (including for purposes of this subclause (1) a waiver and release by Tenant of any claim Tenant may have to assert any right which the Landlord or any trustee or similar person may otherwise have on behalf of the Landlord to require repayment to Landlord (in connection with the satisfaction of debts of Landlord in any bankruptcy, dissolution, reorganization, or similar proceeding involving Landlord) by any of the members, partners or other owners of the Landlord of any such rental income derived from the Property which has been distributed by Landlord to such members, partners or owners), it being agreed that: (x) no past, present or future members, partners or other owners of Landlord (but not including the Landlord itself) shall be named as a party in any suit or other judicial proceeding of any kind or nature whatsoever brought by Tenant against Landlord for payment of any such rental income derived by Landlord from the Property which has been distributed to such members, partners or owners, and (y) no attachment, execution or other writ of process shall be sought, issued or levied upon any such rental income derived by Landlord from the Property which has been distributed to its members, partners or other owners, nor shall Tenant proceed against or seek to recover any such rental income derived by Landlord from the Property which has been distributed by Landlord to its members, partners or other owners; and/or

(2) used in good faith by Landlord in connection with Landlord’s ownership, operation, maintenance, repair or restoration of the Building;

and (except as provided in this Paragraph 24(B)) no personal liability is assumed by, nor at any time may be asserted against, Landlord (or if Landlord is a land trust, Landlord’s beneficiary), its beneficiaries, trustees, members, partners, shareholders, directors, officers or employees, or its other owners, direct or remote, all such liability, if any, being expressly waived and released by Tenant. The limitations of liability of Landlord contained in this Article shall apply equally to and inure to the benefit of the Landlord Protected Parties (as defined in Paragraph 10(B) above). Notwithstanding the foregoing, and except as otherwise provided in this Lease or in the Guaranty, there shall be no limitation of any kind on the liability of: (A) Landlord (i.e., meaning solely the entity comprising “Landlord,” and not any of its members, partners, shareholders, directors, officers or employees, or its other owners, direct or remote, or any other Landlord Protected Parties), in connection with any of Landlord’s duties, obligations, requirements or liabilities: (x) to construct the Building and other Improvements and complete the Landlord Work in compliance with this Lease and the Workletter, (y) under Article 29 and Article 41 of this Lease, or (z) under any term or provision of the Workletter, or (B) the Guarantor (i.e., meaning solely the entity comprising “Guarantor,” and not any of its members, partners, shareholders, directors, officers or employees, or its other owners, direct or remote), with respect to any of its duties, obligations, requirements and liabilities under the Guaranty.

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(C) Landlord’s Agent. Tenant understands and agrees that if any instrument involving the Building is executed by Landlord’s agent (“Landlord’s Agent”) on behalf of Landlord, then Landlord’s Agent executes such instrument, not in its own right but solely as Landlord’s Agent and that nothing in this Lease shall be construed as creating any liability whatsoever against such Landlord’s Agent, its owners, direct and remote, and their respective directors, officers or employees and in particular, without limiting the generality of the foregoing, there shall be no liability of Landlord’s Agent to pay any indebtedness or sum accruing thereunder, or to perform any covenant or agreement whether expressed or implied therein contained, it being agreed that Landlord shall have sole responsibility therefor.

ARTICLE 25

Waiver; Indemnification

(A) Tenant Waiver. To the extent permitted by Law, Tenant waives and releases the Landlord Protected Parties from all claims for damage to property sustained by Tenant relating to

(i) directly or indirectly, any act or omission of any Landlord Protected Parties and/or Landlord’s contractors;

(ii) the Property, Building or Premises or any part thereof or any equipment or appurtenance becoming out of repair;

(iii) any accident in or about the Property, Building or Premises; or

(iv) directly or indirectly, any act or omission of any tenant or occupant of the Property or Building or of any other person,

except for any such damage that is both (A) caused as a result of (x) any breach or violation of this Lease by Landlord, (y) any negligence or intentional misconduct of Landlord or any other Landlord Protected Party (or any of their respective agents, representatives, principals, employees or contractors), and/or (z) the performance by Landlord or any Landlord Protected Party (or any of their respective agents, representatives, principals, employees or contractors) of any Landlord Work, or any other alterations, modifications or improvements to the Property, or any Landlord Repairs, and (B) covered by the insurance carried (or required to be carried) by Landlord pursuant to this Lease, but only up to the specified dollar limits required for Landlord’s insurance as are set forth in Article 10 hereof (it being agreed that Tenant’s waiver of claims for property damage set forth above shall apply to any insurance carried by Landlord in excess of the specified dollar limits required under this Lease, regardless of whether such insurance would otherwise have covered the damage in question). Nothing contained in this Paragraph 25(A) shall limit the terms of Paragraph 10(E)(iv) hereof.

(B) Landlord Waiver. To the extent permitted by Law, Landlord waives and releases the Tenant Protected Parties from all claims for damage to property sustained by Landlord relating to

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(i) directly or indirectly, any act or omission of any Tenant Protected Parties and/or Tenant’s contractors;

(ii) the Property, Building or Premises or any part thereof or any equipment or appurtenance becoming out of repair;

(iii) any accident in or about the Property, Building or Premises; or

(iv) directly or indirectly, any act or omission of any tenant or occupant of the Property or Building or of any other person,

except for any such damage that is both (A) caused as a result of (x) any breach or violation of this Lease by Tenant, (y) any negligence or intentional misconduct of Tenant, any other Tenant Protected Party or any other occupant of the Premises (or any of their respective agents, representatives, principals, employees or contractors), and/or (z) the performance by Tenant or any Tenant Protected Party or any other occupant of the Premises (or any of their respective agents, representatives, principals, employees or contractors) of any Tenant Work, Alteration Work or Tenant Repairs, and (B) covered by the insurance carried (or required to be carried) by Tenant pursuant to this Lease, but only up to the specified dollar limits required for Tenant’s insurance as are set forth in Article 10 hereof (it being agreed that Landlord’s waiver of claims for property damage set forth above shall apply to any insurance carried by Tenant in excess of the specified dollar limits required under this Lease, regardless of whether such insurance would otherwise have covered the damage in question). Nothing contained in this Paragraph 25(B) shall limit the terms of Paragraph 10(E)(iv) hereof.

(C) Application. The foregoing Paragraphs 25(A) and (B) shall (subject to the exception at the end of each such Paragraph) apply especially, but not exclusively, to damage caused by the flooding of basements or other subsurface areas, refrigerators, sprinkling devices, air-conditioning apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster, broken glass, sewage, gas, odors or noise, or the bursting or leaking of pipes or plumbing fixtures, and shall apply equally whether the damage results from the act or omission of Landlord, Tenant, other tenants of the Building or of any other person, or whether the damage is caused by or resulted from any thing or circumstance above mentioned or referred to, or any other thing or circumstance, whether of a like or of a wholly different nature.

(D) Tenant’s Property. Subject to the exception at the end of the first sentence of Paragraph 25(A) hereof, all property situated at the Property or in the Building or the Premises and belonging to Tenant, its agents, contractors, employees, or invitees or any occupant of the Premises, shall be situated thereat at the risk of Tenant or such other person only, and except to the extent otherwise required by applicable Law, Landlord shall not be liable for damage, theft, misappropriation, or loss of that property.

(E) Landlord’s Property. Subject to the exception at the end of the first sentence of Paragraph 25(B) hereof, all property situated at the Property or in the Building or the Premises and belonging to Landlord, its agents, contractors, employees, or invitees or any occupant of the Building, shall be situated thereat at the risk of Landlord or such other person only, and except to

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the extent otherwise required by applicable Law, Tenant shall not be liable for damage, theft, misappropriation or loss of that property.

(F) Tenant Indemnity. To the extent permitted by Law, and subject to the terms of Paragraphs 10(E)(iv), 25(B) and 25(E) above, Tenant shall protect, defend, indemnify and hold harmless the Landlord Protected Parties and Landlord’s Affiliates, and their respective agents, employees, members, managers, officers, directors, shareholders and partners, from and against any and all claims asserted against any such person (including all liabilities, damages, judgments, orders, decrees, actions, proceedings, fines, penalties, costs and expenses, including without limitation, court costs and reasonable attorneys’ fees arising out of any such claim) for loss of life or damage or injury to person or property, to the extent caused by or arising out of: (x) any breach or violation of this Lease by Tenant, (y) any negligence or intentional misconduct of Tenant, any other Tenant Protected Party or any other occupant of the Premises (or any of their respective agents, representatives, principals, employees or contractors) involving the Property, and/or (z) the performance by Tenant, any Tenant Protected Party or any other occupant of the Premises (or any of their respective agents, representatives, principals, employees or contractors) of any Tenant Work, Alteration Work or Tenant Repairs. Tenant’s obligations and liabilities pursuant to this Paragraph 25(F) shall survive the expiration or earlier termination of this Lease. Nothing contained herein shall, however, be deemed to obligate Tenant: (i) to indemnify Landlord or any other person or entity against claims asserted against Landlord or such other person or entity arising out of Landlord’s or such other person’s or entity’s own negligence or willful misconduct, or (ii) to indemnify Landlord or any other Landlord Protected Parties against any claim, loss or damage arising out of Landlord’s violation of this Lease.

(G) Landlord Indemnity. To the extent permitted by Law, and subject to the terms of Paragraphs 10(E)(iv), 25(A) and 25(D) above, Landlord shall protect, defend, indemnify and hold harmless Tenant and its agents, employees, members, managers, officers, directors, shareholders and partners from and against any and all claim asserted against any such person (including all liabilities, damages, judgments, orders, decrees, actions, proceedings, fines, penalties, costs and expenses, including without limitation, court costs and reasonable attorneys’ fees arising out of any such claim) for loss of life or damage or injury to person or property, to the extent caused by or arising out of: (x) any breach or violation of this Lease by Landlord, (y) any negligence or intentional misconduct of Landlord or any other Landlord Protected Party (or any of their respective agents, representatives, principals, employees or contractors) involving the Property, and/or (z) the performance by Landlord or any Landlord Protected Party (or any of their respective agents, representatives, principals, employees or contractors) of any Landlord Work, or any other alterations, modifications or improvements to the Property, or any Landlord Repairs. Landlord’s obligations and liabilities pursuant to this Paragraph 25(G) shall survive the expiration or earlier termination of this Lease. Nothing contained herein shall, however, be deemed to obligate Landlord: (i) to indemnify Tenant or any other person or entity against claims asserted against Tenant or such other person or entity arising out of Tenant’s or such other person’s or entity’s own negligence or willful misconduct, or (ii) to indemnify Tenant or any other Tenant Protected Parties against any claim, loss or damage arising out of Tenant’s violation of this Lease.

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(H) Survival. The provisions of this Article 25 shall survive the expiration or earlier termination of this Lease.

ARTICLE 26

Emergency Generator

(A) Tenant shall have access to and use of the Tenant Generator Space (as defined in Exhibit N attached hereto) for the installation, use, maintenance and repair of a diesel-powered electric generator and other related equipment, including fuel tanks, fuel lines, mountings and supports (collectively, the “Tenant Generator”) for purposes of providing emergency and back-up electrical power to the Premises, all to the extent permitted by and in accordance with applicable Laws, but exclusive of any emergency power required for the base Building’s life safety systems, including base Building life safety devices required by governmental entities or agencies having jurisdiction over the Building and installed in the Premises, which installation shall be at the sole cost and responsibility of Landlord. Tenant, at its cost, shall install, maintain (in good and safe condition and repair, in compliance with all Laws), insure and remove (at the end of the Term) the Tenant Generator and shall, at its sole cost and expense, repair any and all damage caused to the Building or any equipment or property as a result of Tenant’s exercise of the rights granted in this Article 26. Tenant shall pay Rent for use of such Tenant Generator Space area at the gross rental rate (i.e., there shall be no Operating Expenses or Taxes separately payable for any such Tenant Generator Space) of $17.00 per square foot of Rentable Area thereof, increased on a cumulative, compounding basis commencing on the first day of the second Lease Year by two and one-half percent (2.5%) annually; provided that no such Rent shall be payable relative to any separate space used for housing Tenant’s fuel tank (i.e., as opposed to being used for housing the generator and other related equipment constituting the Tenant Generator hereunder). Installation of the Tenant Generator shall be performed at Tenant’s sole cost and expense in accordance with the provisions of the Workletter (if part of the Tenant Work) or Article 7. Landlord shall ensure that no equipment of Landlord or any other tenant or occupant of the Building interferes with the operation of the Tenant Generator or any equipment related thereto, and, if any such interference shall arise, Landlord shall, at no cost to Tenant, promptly remedy such interference. Landlord and Tenant agree that upon the termination of this Lease or Tenant’s right to possession hereunder, for any reason, Tenant’s rights under this Article 26 shall simultaneously terminate. Within fifteen (15) Business Days following the expiration or earlier termination of the Term, Tenant shall remove the Tenant Generator from the Building and repair any damage caused to the Building as a result thereof.

(B) If Tenant requires riser space or other space for conduit, wiring and/or cabling connecting the Premises and/or the Building’s switchgear room to the Tenant Generator, and/or space or pathways for fuel lines connecting the Tenant Generator to the fuel tanks supplying fuel for the Tenant Generator, Landlord shall make such riser space and other space available to Tenant at no cost to Tenant, and such riser space and other space shall be provided and maintained by Landlord, and used by Tenant, as though the same constituted a part of the Landlord’s Telecommunications Infrastructure (as set forth in Article 6 and Article 27 hereof and Exhibit N attached hereto). Any lines, cabling and/or wiring installed by Tenant in such riser or other space shall constitute components of “Lines” for purposes of this Lease; provided, Tenant

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shall not be required to remove any such lines, cabling and/or wiring upon the expiration or earlier termination of this Lease.

ARTICLE 27

Communications and Computer Lines

(A) Installation of Lines by Tenant. Tenant may install, maintain, replace, remove or use any communications and computer conduit, cabling, wiring, and related equipment (collectively, and together with any electrical cabling, wiring and related equipment installed by Tenant pursuant to Article 26 hereof, the “Lines”) at the Property serving the Premises at no additional cost (except for costs relating thereto that are permitted to be included in Operating Expenses pursuant to Article 3 hereof), so long as:

(i) such Lines shall be located solely within Landlord’s Telecommunications Infrastructure, the Premises, the roof space that Tenant is permitted to use pursuant to Article 37 hereof, the Tenant Staging Area and/or the area in which any Tenant Lobby Desk installed in the Main Lobby pursuant to Paragraph 6(Q)(iii) hereof is located;

(ii) any such installation, maintenance, replacement and removal shall be subject to all applicable Laws and to the applicable provisions of the Workletter (if part of the Tenant Work) or Article 7, and shall not unreasonably interfere with the use of any then existing Lines at the Property; and

(iii) if any Lines installed by Tenant require shielding in order to prevent such Lines from causing electromagnetic interference to any Lines installed by Landlord or any other person, Tenant shall install such shielding as shall be reasonably necessary to eliminate such interference.

(B) Landlord Supervision of Lines in Landlord’s Telecommunication Infrastructure. Landlord may reasonably direct, monitor and/or supervise the installation, maintenance, replacement and removal of, Lines in the Landlord’s Telecommunication Infrastructure (but Landlord shall have no right to monitor or control the information transmitted through such Lines), at no cost to Tenant (other than actual charges payable to the Building’s riser management company, if applicable). Such right shall not be in limitation of other rights that may be available to Landlord by Law or otherwise. Prior to installing any Lines within the Landlord’s Telecommunications Infrastructure, Tenant shall provide Landlord with reasonably detailed plans and specifications describing such installation.

(C) Avoidance of Interference and Landlord’s Telecommunication Infrastructure Capacity. Landlord shall not, and shall not permit any person (other than Tenant) to, install electrical risers, lines, or other equipment in such proximity to Landlord’s Telecommunications Infrastructure that results in electromagnetic interference with any of Tenant’s Lines that may be then or thereafter located therein. If any such electromagnetic interference shall arise that adversely affects the effective use of Tenant’s Lines for their intended use, Landlord shall install such shielding as shall be reasonably necessary to eliminate such

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adverse effects. Landlord shall provide Tenant with reasonable prior notice of any work or activity within the Landlord’s Telecommunications Infrastructure of which Landlord or Landlord’s Agent is aware which is reasonably likely to interfere with or adversely affect the operation of Tenant’s Lines for their intended use, and, in the event that any such interference or other adverse effect is reasonably likely to disrupt or adversely affect the operation of Tenant’s primary data center in the Premises, Landlord shall (except in the case of an Emergency Situation or as otherwise required by applicable Laws) obtain Tenant’s consent prior to undertaking or permitting such work or other activity.

(D) Voice, Data and Cable Providers.

(i) Landlord has designed the Building such that it shall have the capacity to be served by at least six (6) carriers/vendors at each separate NetPOP Room for voice and data transmission. Tenant may use any or all of such carriers, and such use shall be provided without mark-up, profit, commission or other compensation by Tenant or any such carriers to Landlord. In addition to the foregoing, Tenant shall have the right, at its option, to contract for Tenant’s use with telecommunications and electronic data transmission providers selected by Tenant, and if Tenant so contracts with any such providers, Landlord shall have no obligation to maintain or repair the equipment furnished by such providers. Landlord shall, however, permit any such providers to install facilities in the Building’s two (2) NetPOP Rooms in locations therein reasonably designated by Landlord (as provided in Paragraph 6(H)(iii) hereof), in order to provide telecommunications services to Tenant directly through the facilities and equipment of such provider. Any services furnished to Tenant by such providers shall be paid for solely by Tenant. Landlord shall not limit the number of, or impose any charge or other unreasonable requirements on, such providers. Landlord shall restrict access, for security reasons, to all of Landlord’s Telecommunication Infrastructure. Landlord shall also restrict access, for security reasons, to Tenant’s telecommunication closets that are within full floors of the Premises and to Tenant’s enclosed portion of closets of tenants on any multi-tenant floor comprising a portion of the Premises so that other tenants and Landlord (except in the case of emergency) shall have access to such closets only in the company of an employee of Tenant. Without limiting the generality of the foregoing sentence, subject to Paragraph 27(B), Tenant and such service providers shall have access at all reasonable times to (upon reasonable prior notice to Landlord and, if reasonably required by Landlord, when accompanied by Landlord, Landlord’s Agent or riser manager) and use of Landlord’s Telecommunication Infrastructure and other areas reasonably required to connect Tenant with such service providers, all without cost to Tenant.

(ii) Landlord and Tenant shall jointly select the Building’s sole cable and satellite television providers and Tenant shall have the right to contract directly with such provider directly without mark-up, profit, commission or other compensation paid by Tenant or any such carriers to Landlord.

(iii) Tenant shall have the right, as more specifically described in Exhibit N attached hereto, to install antennas, wires and related gear and equipment in the ceilings and in the floor of the Premises for purposes of wireless communications, and Tenant

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shall not be limited to dish-type antennae (such that other configurations, including verticals to a maximum height of 12 feet, may be permitted), so long as the installation, use and maintenance of such gear and equipment complies with all Laws, does not unreasonably interfere with any other tenant’s use and occupancy of its premises or the operation of the Building, and is performed in accordance of this Lease (including the Workletter or Article 7 hereof, as applicable).

(E) Termination. Landlord and Tenant agree that upon the termination of this Lease for any reason, or termination of Tenant’s right to possession hereunder, Tenant’s rights under this Article 27 shall simultaneously terminate; provided, Tenant shall not be required to remove any Lines installed by Tenant hereunder upon the expiration or earlier termination of this Lease.

ARTICLE 28

Hazardous Materials

(A) No Hazardous Materials. Landlord covenants to Tenant that all work performed by Landlord in, on, or under the Land, the Building and the other Improvements (including all Landlord Work) shall be performed in a manner that does not incorporate therein any Hazardous Materials, except for normal quantities of Hazardous Materials customarily incorporated in such work at comparable office buildings in downtown Chicago in full compliance with Environmental Laws, and in a manner which does not result in injury or health risks to persons. Landlord further covenants that no work performed by Landlord in, on or under the Land, the Building and the other Improvements (including all Landlord Work) shall be performed in a manner that involves the Handling of Hazardous Materials, except for normal quantities of Hazardous Materials customarily Handled in connection with such work at comparable office buildings in downtown Chicago in full compliance with all Environmental Laws, and in a manner which does not result in injury or health risks to persons. Landlord further agrees that, to the extent required by Law, or to the extent such removal is typically performed in comparable office buildings in downtown Chicago (“Comparable Building Environmental Actions”), Landlord shall, at its sole cost and expense (subject to inclusion in Operating Expenses, to the extent permitted under Article 3 hereof), promptly remove or remediate, or cause to be removed or remediated, any Hazardous Materials on the Property (except for Tenant’s Hazardous Materials, and except to the extent permitted below in this Paragraph 28(A)) promptly after discovery thereof, including any mold in the Premises, Common Areas or other areas of the Building which Tenant has the right to use and/or occupy hereunder (or any other area of the Building which would expose the Premises, Common Areas or such other areas to mold) in amounts and/or concentrations that would result in injury or health risks to persons (regardless of whether such mold remediation is required under Laws or would constitute a Comparable Building Environmental Action); provided, however, that Landlord shall not be responsible for the remediation of any mold located in the Building to the extent that such mold results from Tenant’s negligence, intentional misconduct or failure to perform Tenant Repairs or other obligations required of Tenant under this Lease (it being agreed that Tenant shall be responsible for the remediation of any mold located in the Building which is so caused by Tenant’s negligence, intentional misconduct or failure to perform Tenant Repairs, to the extent that such remediation is required by Laws or typically performed in comparable office buildings in

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downtown Chicago, or such mold is in amounts and/or concentrations that would result in injury or health risks to persons, and to the extent that such mold is located in portions of the Building located outside the Premises, Landlord may at its option perform such remediation so required of Tenant in which event Tenant shall pay Landlord’s Actual Costs therefor). Tenant agrees that Tenant shall, at its sole cost and expense, promptly remove or remediate, or cause to be removed or remediated, any Tenant’s Hazardous Materials on the Property (except to the extent permitted below) promptly after discovery thereof. Tenant agrees that, except as permitted by this Paragraph 28(A), no Hazardous Materials shall be Handled upon, about, above or beneath the Premises or any portion of the Property by Tenant, its subtenants or its assignees, or their respective contractors, clients, officers, directors, employees, or invitees (any such Hazardous Materials so handled being referred to as “Tenant’s Hazardous Materials”); and Landlord agrees that, except as permitted by this Paragraph 28(A), no Hazardous Materials shall be Handled upon, about, above or beneath the Premises or any portion of the Property by or on behalf of Landlord or its contractors, officers, directors, employees or invitees (but specifically excluding tenants or occupants of the Building) (any such Hazardous Materials so Handled shall be known as “Landlord’s Hazardous Materials”). Notwithstanding the foregoing, normal quantities of Tenant’s Hazardous Materials or Landlord’s Hazardous Materials customarily used in the conduct of general administrative and executive office activities (e.g., copier fluids and cleaning supplies), or the construction or maintenance of leasehold improvements or the Building, may be Handled, as the case may be, in compliance with Environmental Laws, and in a manner that does not result in injury or health risks to persons. Landlord’s Hazardous Materials and Tenant’s Hazardous Materials shall be Handled at all times in compliance with the manufacturer’s instructions therefor and all applicable Environmental Laws.

(B) “Environmental Laws” means and includes all now and hereafter existing statutes, laws, ordinances, codes, regulations, rules, rulings, orders, decrees, directives and requirements by any Regulatory Authority regulating, relating to, or imposing liability or standards of conduct concerning public health and safety or the environment.

(C) “Hazardous Materials” means (a) any material or substance: (i) which is defined or becomes defined as a “hazardous substance,” “hazardous waste,” “toxic substance,” “contaminant,” “infectious waste,” “chemical mixture or substance,” or “air pollutant” under Environmental Laws; (ii) containing petroleum, crude oil or any fraction thereof (except to the extent used in connection with emergency back-up generators in accordance with applicable law); (iii) containing polychlorinated biphenyls (PCB’s); (iv) containing asbestos; (v) which is radioactive; (vi) which is infectious; or (vii) which possesses inherently toxic, reactive, flammable or corrosive characteristics, as all such terms are used in their broadest sense, to the extent any such items are or become regulated by Environmental Laws; (b) mold, or (c) other biological contaminants which cause a nuisance upon or waste to the Premises or any portion of the Property.

(D) “Handle,” “handle,” “Handled,” “handled,” “Handling,” or “handling” shall mean any installation, handling, generation, storage, treatment, use, disposal, discharge, release, manufacture, refinement, presence, migration, emission, transportation, or any other activity of any type in connection with or involving Hazardous Materials.

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(E) “Regulatory Authority” shall mean any federal, state or local governmental agency, commission, board or political subdivision.

ARTICLE 29

Conditions to Tenant’s Obligations; Construction Schedule; Delays

(A) Tenant Conditions. The obligations of Tenant under this Lease shall be subject to Landlord’s satisfaction of each of the following conditions on or before the dates specified below (collectively, the “Tenant Conditions”):

(i) No later than October 31, 2005, Landlord shall have acquired fee simple title to the Land (the date on which Landlord actually acquires fee simple title to the Land is referred to herein as the “Landlord Acquisition Date”).

(ii) No later than thirty (30) days after the Landlord Acquisition Date, Landlord shall have obtained and delivered to Tenant: (a) a leasehold title insurance policy in the amount of $10,000,000, with an effective date no earlier than the Landlord Acquisition Date, with extended coverage over the standard exceptions, insuring Tenant’s interest under this Lease subject only to the title exceptions listed on Exhibit T attached hereto (the “Permitted Title Exceptions”), and such other title exceptions which, in Tenant’s reasonable judgment, could not adversely affect Tenant, the Building or other Improvements or the Property (or Tenant’s rights to use and occupancy of the same as provided herein), and including the endorsements listed on said Exhibit T hereto; provided, that any such title insurance policy shall be obtained at Tenant’s sole cost, and Landlord shall be deemed to have satisfied the condition set forth in this clause (a) in the event that Landlord delivers Tenant a commitment for such title policy which otherwise conforms to all requirements set forth herein that is subject only to Tenant’s payment of the premium (at no more than normal rates) for such title insurance policy, and (b) a then current ALTA survey of the Land certified to Tenant (and such other parties as Tenant may designate).

(iii) No later than October 1, 2006, Landlord shall have (a) entered into a binding contract with respect to general conditions and fees only with a general contractor for the construction of the Building and (b) obtained any municipal or other permits necessary to commence demolition work on the Land. Landlord agrees to furnish Tenant with a copy of the construction contract described in clause (a) above promptly after full execution and delivery of the same, and copies of the permits described in clause (b) above promptly after issuance of the same.

Time is of the essence of each of the foregoing deadlines and the deadlines set forth below. Notwithstanding anything to the contrary contained in this Lease, there shall be no extension of any of the foregoing deadlines or the deadlines set forth below for any reason (including Unavoidable Delays), unless otherwise hereafter approved in writing by Tenant (in its sole discretion); provided, that any of the foregoing deadlines and the deadlines set forth below may be extended by Landlord to the extent (and only to the extent) that the Tenant Condition

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applicable to such deadline cannot be satisfied by Landlord on or prior to such deadline solely as a result of the occurrence of a Tenant Delay (as defined in the Workletter); it being agreed that the duration of any such extension of any such deadline shall be one (1) day for each day that the Tenant Condition applicable thereto cannot be satisfied by Landlord solely as a result of such Tenant Delay; and provided, further, that Tenant shall have the right to require Landlord to take any reasonable actions requested by Tenant to mitigate and minimize the period that any Tenant Condition cannot be satisfied as a result of any Tenant Delay (which may include, without limitation, the use of overtime labor), as long as Tenant agrees in writing to pay any incremental costs incurred by Landlord in connection therewith. Tenant may, in its sole discretion, waive or extend the deadline for any Tenant Condition at any time (and from time to time) by express written notice to Landlord of such waiver or extension. In the event that any Tenant Condition is not satisfied (or waived in writing by Tenant) for any reason on or before the deadline applicable thereto as set forth above or below (or as hereafter extended as provided above), then Tenant shall have the following rights, as its sole remedy for such failure of such Tenant Condition:

(a) if the Landlord Acquisition Date is not on or before October 31, 2005, Landlord shall pay to Tenant, within five (5) Business Days after demand, an amount equal to $2,000,000.

(b) if the Landlord Acquisition Date is not on or before December 31, 2005, Tenant may elect to terminate this Lease by written notice given to Landlord at any time prior to the Landlord Acquisition Date. If Tenant does not exercise such option to terminate this Lease and Landlord subsequently acquires fee simple title to the Land and timely satisfies the Landlord Occupancy Requirements described in Paragraph 29(C)(a) below, then the Initial Rent Credit shall be reduced by $2,000,000 (i.e., the $2,000,000 payment under subclause (a) above shall be deemed a pre-payment of the Initial Rent Credit).

(c) if the Tenant Condition set forth in clause (iii) above is not satisfied on or before October 1, 2006, Landlord shall pay to Tenant, within five (5) Business Days after demand, an amount equal to $4,000,000.

(d) if the Tenant Condition described in clause (iii) above is not satisfied on or before December 1, 2006, Tenant may elect to terminate this Lease by written notice given to Landlord at any time prior to the date such Tenant Condition is satisfied. If Tenant does not exercise such option to terminate and Landlord subsequently satisfies such Tenant Condition and timely satisfies the Landlord Occupancy Requirements described in Paragraph 29(C)(a) below, then the Initial Rent Credit shall be reduced by $4,000,000 (i.e., the $4,000,000 payment under subclause (c) above shall be deemed a pre-payment of the Initial Rent Credit).

(e) if the Tenant Condition set forth in clause (ii) above is not satisfied on or before the deadline applicable thereto, as its sole remedy,

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Tenant shall have the right (but not the obligation) to obtain the title insurance policy and/or survey described in said clause (ii), and to charge Landlord for any and all incremental, reasonable, out-of-pocket costs and expenses incurred by Tenant by reason of such failure, in which event Landlord shall reimburse Tenant for such costs within thirty (30) days after Tenant’s delivery of a written invoice therefor.

Any payment that Landlord is required to make to Tenant pursuant to this Paragraph 29(A) shall be made in immediately available funds. If this Lease is terminated under this Paragraph 29(A), then neither Landlord nor Tenant shall thereafter have any further rights or obligations hereunder (including, without limitation, any obligations of Landlord under Paragraph 29(C) below or under the Workletter attached hereto). Landlord and Tenant further agree that, in the event that Landlord delivers written notice to Tenant (a “Landlord Abandonment Notice”) that Landlord will be unable to satisfy one of the Tenant Conditions described in clauses (i) and (iii) above (whichever is applicable) as provided above for reasons beyond Landlord’s reasonable control, despite Landlord’s use of all good faith, reasonable efforts to do so (which Landlord Abandonment Notice shall specifically designate the Tenant Condition which Landlord will be unable to satisfy (the Tenant Condition so designated by Landlord in the Landlord Abandonment Notice is referred to herein as the “Abandonment Tenant Condition”), and the reasons that Landlord will be unable to satisfy the same), and, as a result, Landlord and its Affiliates have elected to permanently abandon the acquisition of the Land and/or the construction of the Building, then, provided (and only provided) that such Landlord Abandonment Notice shall have been delivered to Tenant no later than fifteen (15) Business Days after the deadline for the Abandonment Tenant Condition as set forth in clause (b) and clause (d) (as the case may be) above (as the same may be extended for Tenant Delay as set forth above), then Tenant shall terminate this Lease pursuant to this Paragraph 29(A) pursuant to the Abandonment Tenant Condition set forth in the Landlord Abandonment Notice within thirty (30) days after Tenant’s receipt of such Landlord Abandonment Notice, and the amount payable by Landlord to Tenant by reason of such termination shall be the amount set forth in clause (a) or (c) above which is applicable to such Abandonment Tenant Condition, and Tenant shall be permitted to retain such sum or sums following such termination.

(B) Construction Schedule. Attached hereto as Exhibit U is a schedule for the construction of the Building and performance of the Landlord Work (the “Construction Schedule”). From time to time, but not less frequently than monthly, Landlord shall furnish to Tenant a current progress report with respect to Landlord’s then status of performance relative to the Construction Schedule, setting forth the then current status of construction and Landlord’s reasonable projections of future construction. As more fully provided in the Construction Schedule, Landlord agrees to achieve the following milestones: (i) award contract for purchase of structural steel – December 1, 2006; (ii) commence construction of the Building enclosure – November 1, 2007; (iii) complete installation of two (2) functional power utility feeds to the Building – May 1, 2008; and (iv) substantially complete the Curtain Wall and Elevator Work (as defined in the Workletter) and complete installation of Building grounding and lightning protection systems – December 1, 2008. The foregoing milestones identified in clauses (i) through (iv) are herein referred to as “Critical Construction Milestones”).

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(C) Delays. For purposes of this Lease, the term “Landlord Occupancy Requirements” shall mean Landlord’s duties and responsibilities to: (a) cause each Segment of the Premises to be delivered to Tenant with the Delivery Work substantially completed (and in compliance with the terms and provisions of this Lease and the Workletter) on or before the Scheduled Delivery Date applicable thereto; (b) satisfy each of the Critical Construction Milestones; and (c) cause the Building C of O Date to occur on or before February 1, 2009. Landlord acknowledges that Tenant may incur substantial liability, cost and expense in the event that Landlord fails, for any reason, to cause each Landlord Occupancy Requirement to be satisfied in compliance with the terms and provisions of this Lease and the Workletter, and, without limiting the terms of Paragraph 29(A) above or any terms set forth in the Workletter pertaining to certain rental abatements as therein provided, Landlord and Tenant agree that:

(i) If any Landlord Occupancy Requirement is not satisfied in compliance with the terms and provisions of this Lease and the Workletter for any reason (including, without limitation, Unavoidable Delays) other than as set forth in clause (1) below, then Landlord shall (a) indemnify and hold harmless Tenant from and against any and all actual losses, costs, damages, fines, penalties, liabilities and expenses (including, without limitation, court costs and reasonable attorneys’ fees) paid, sustained or incurred by Tenant, as a result of any failure of such Landlord Occupancy Requirement to be satisfied in compliance with the terms of this Lease and the Workletter, and (b) with respect to the Landlord Occupancy Requirements set forth in clause (a) and clause (c) of Paragraph 29(C) above, and with respect to any failure of Landlord to substantially complete the Curtain Wall and Elevator Work (as defined in the Workletter) on or before December 1, 2008 as aforesaid, Landlord shall, in addition to its indemnity obligations set forth in clause (a) above (and in addition to the abatement of Net Rent and Additional Rent provided in Paragraph 2(B) and Paragraph 3(L), respectively, hereof and any applicable extension of the Commencement Date as provided in Paragraph 2(B) above), provide Tenant with an additional abatement of Net Rent and Additional Rent payable under this Lease in the amount of two (2) days of Net Rent and Additional Rent for each such day of delay beyond the applicable delivery, milestone or completion date, as the case may be. Notwithstanding anything to the contrary in the foregoing, Landlord and Tenant agree that:

(1) To the extent (and only to the extent) that a Landlord Occupancy Requirement is not satisfied in compliance with this Lease or the Workletter solely by reason of the occurrence of one or more Tenant Delays, then, for purposes of the preceding sentence, the deadline for the applicable Landlord Occupancy Requirement shall be extended by one (1) day for each day that the satisfaction of the Landlord Occupancy Requirement is actually delayed solely by reason of such Tenant Delay(s); provided, however, that Tenant shall have the right to require Landlord to take any reasonable actions requested by Tenant to mitigate and minimize the delay of the satisfaction of any Landlord Occupancy Requirement that occurs by reason of any Tenant Delay (which may include, without limitation, the use of overtime labor), as long as Tenant agrees in writing

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to pay any incremental costs incurred by Landlord in connection therewith.

(2) In no event shall Landlord’s liability for monetary penalties, damages, claims or other amounts (excluding, for purposes of this Paragraph 29(C)(2), the value of any abatement of Net Rent and Additional Rent provided above in this Paragraph 29(C)(i)) under this Paragraph 29(C), collectively with the “Article 29 Liabilities” (as defined in the Guaranty) of the Guarantor under the Guaranty, exceed the amount of (the “Liability Cap”): (x) $10,000,000 in the event that one or more Landlord Occupancy Requirements are not satisfied in accordance with the terms of this Lease and the Workletter as a result of the occurrence of one or more Unavoidable Delays, or (y) $20,000,000, in the event that one or more Landlord Occupancy Requirements are not satisfied in accordance with the terms of this Lease and the Workletter for any reasons whatsoever other than Unavoidable Delays (or Tenant Delays, as provided above). Landlord and Tenant acknowledge and confirm that, to the extent that the satisfaction of one or more Landlord Occupancy Requirements is delayed as a result of multiple factors, some of which constitute Unavoidable Delays, and some of which do not constitute Unavoidable Delays, then: (A) to the extent that the delay in question would have occurred by reason of the Unavoidable Delays regardless of whether the events that did not constitute Unavoidable Delays had occurred or not occurred, then such delay shall be deemed, for purposes of determining the Liability Cap, to have resulted from Unavoidable Delays, and (B) otherwise, the Liability Cap shall be equal to the sum of: (a) $10,000,000, plus (b) the product of (I) $10,000,000, multiplied by (II) a fraction, the numerator of which is the aggregate number of days of such delay(s) that resulted from factors other than Unavoidable Delays and Tenant Delays, determined consecutively and not concurrently (e.g., if the Phase I Delivery Date occurs two (2) days after the Scheduled Phase I Delivery Date and Phase II Delivery Date occurs three (3) days after the Scheduled Phase II Delivery Date, the total number of days of delay shall be deemed to be five (5) days), and the denominator of which is the total number of days of such delay(s) (determined consecutively and not concurrently) resulting from all factors whatsoever (including Unavoidable Delays) other than Tenant Delays.

(3) In the event of a dispute between the parties regarding the extent to which a delay of the occurrence of the satisfaction of a Landlord Occupancy Requirement shall have occurred as a result of Tenant Delays, Unavoidable Delays or other factors, such dispute shall be resolved pursuant to the procedures set forth in Section 15 of the Workletter.

Any payment of amounts that Landlord is required to pay pursuant to this clause (i) shall be made by Landlord to Tenant (or to such other party as Tenant may direct in writing)

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within thirty (30) days after Tenant’s written request therefor (which shall include reasonable evidence of the costs described therein), in immediately available funds.

(ii) If any Landlord Occupancy Requirement is not, for any reason (including Unavoidable Delays) except as provided in the next sentence, satisfied on or before the date that is one (1) year after the deadline applicable thereto (each, a “Final Deadline”), and Tenant has not theretofore taken occupancy of any portion of the Premises for the normal conduct of Tenant’s business therein (not including, for purposes of this sentence, any use or occupancy of the Premises for purposes of performing the Tenant Work or Furniture Work, or for use as a data center, computer center or copying center or similar purpose ancillary to Tenant’s business) as a result thereof, then, without limiting Tenant’s rights and remedies hereunder, Tenant shall have the right (but not the obligation) to terminate this Lease by written notice to Landlord within ninety (90) days after the Final Deadline, in which event Landlord shall (without limiting Tenant’s rights and remedies under clause (i) above) pay to Tenant all Reimbursement Costs within thirty (30) days after Tenant’s written request therefor. Notwithstanding anything to the contrary in the foregoing, Landlord and Tenant agree that to the extent (and only to the extent) that a Landlord Occupancy Requirement is not satisfied on or before the Final Deadline applicable thereto solely by reason of the occurrence of one or more Tenant Delays, then, for purposes of the foregoing sentence only, such Final Deadline shall be extended by one (1) day for each day that the satisfaction of the applicable Landlord Occupancy Requirement is delayed by reason of such Tenant Delay(s) (subject to Tenant’s rights to cause Landlord to mitigate any such delay, as provided in Paragraph 29(C)(i)(1) above).

(iii) For purposes hereof, the term “Reimbursement Costs” means all reasonable, out of pocket costs and expenses incurred, sustained or paid by Tenant in connection with this Lease, including, without limitation, attorneys’ fees and expenses, brokerage commissions and expenses, consultants’ fees and expenses, architectural, engineering and design fees and expenses, any costs and expenses paid, sustained or incurred by Tenant in connection with any Tenant Work, Furniture Work or other Alteration Work (except to the extent that Tenant has been reimbursed by Landlord for such costs and expenses from the Tenant Work Allowance (as defined in the Workletter) and telecommunications and data storage costs.

(iv) To the extent that Landlord (or Guarantor) pays any sums or amounts to third parties pursuant to its duties and obligations under this Paragraph 29(C), such costs shall be applied against the Liability Cap only to the extent that such costs constitute Landlord’s Actual Costs. Landlord agrees that it shall provide Tenant with reasonably detailed documentation describing such any such costs which Landlord (or Guarantor) proposes to apply against the Liability Cap. Landlord and Tenant acknowledge and confirm that the Liability Cap applies, collectively, to Landlord’s liabilities under this Article 29 and the “Article 29 Liabilities” (as defined in the Guaranty) of the Guarantor, and in no event shall the liability of Landlord under this Article 29 and the “Article 29 Liabilities” (as defined in the Guaranty) of the Guarantor, collectively, exceed the overall amount of the Liability Cap.

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(D) Guaranty of Landlord’s Obligations. Concurrently with its execution and delivery of this Lease, Landlord shall cause Hines (in such capacity, the “Guarantor”) to execute and deliver to Tenant a guaranty in the form of Exhibit Y attached hereto and made a part hereof (the “Guaranty”). Landlord and Tenant agree that Landlord may hereafter deliver to Tenant one or more guaranties (in form and substance no less favorable to Tenant than the Guaranty), executed by persons or entities having financial strength (including net worth) that is equal to or greater than that of Guarantor as of the Effective Date (or which is otherwise reasonably acceptable to Tenant), in replacement of any or all of the Guarantor’s “Tenant Work Allowance Liabilities” (as defined in the Guaranty) set forth in Section 2.b of the Guaranty, and/or any of Guarantor’s “Construction Funding Liabilities” (as defined in the Guaranty) set forth in Section 2.c of the Guaranty, in which event Guarantor shall, upon the execution and delivery of such replacement guaranty to Tenant, be released from the “Tenant Work Allowance Liabilities” and/or “Construction Funding Liabilities” (each as defined in the Guaranty), as applicable, which are so covered by such replacement guaranty.

(E) Survival. The terms and provisions of this Article 29 shall survive any termination of this Lease (subject, in the case of the liability of the Landlord, to the express terms and conditions of this Article 29, and in case of the liability of the Guarantor under the Guaranty, to the terms and provisions of the Guaranty).

(F) Sole Monetary Remedies. Landlord and Tenant acknowledge and confirm that Tenant’s sole remedy to receive money damages from Landlord by reason of Landlord’s failure to substantially complete the Landlord Work on or prior to the deadlines applicable thereto, and/or to deliver possession of the Premises to Tenant on or prior to the deadlines applicable thereto, is set forth in this Article 29 and the Workletter; provided, however, that nothing contained in this Paragraph 29(F) shall in any way limit or otherwise affect: (i) any equitable rights or remedies of Tenant (except that Tenant’s sole rights to terminate this Lease by reason of the failure of any Tenant Condition or any failure by Landlord to comply with its obligations under this Article 29 or (prior to the Commencement Date) the Workletter shall be Tenant’s rights to terminate this Lease specified in Paragraphs 29(A) and (C) above, and (in the event of a fire or other casualty or condemnation affecting the Property) Tenant’s rights under Articles 9 and 10 hereof), or (ii) any rights or remedies of Tenant with respect to any matters affecting or relating to the Landlord Work (including, without limitation, the quality and condition of the Landlord Work, and the manner in which the same is performed) other than the timing of the substantial completion thereof.

ARTICLE 30

Notices

Except as expressly provided to the contrary in this Lease, every notice or other communication to be given by either party to the other with respect hereto or to the Premises or Property, shall be in writing and shall not be effective for any purpose unless the same shall be served personally or by next Business Day delivery by a nationally recognized air courier service, if to Tenant, as follows:

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PRIOR TO THE COMMENCEMENT DATE:

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL 60601

Attn.: Executive Director

with copies to:

the same address, Attn: Director of Administration – Chicago

AFTER THE COMMENCEMENT DATE:

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, Illinois 60610

Attn: Executive Director

with copies to:

the same address, Attn: Director of Administration – Chicago

if to Landlord, as follows:

300 LaSalle LLC

c/o Hines Interests Limited Partnership

70 West Madison Street, Suite 440

Chicago, Illinois 60602

Attn: Greg Van Schaack

with copies to:

the same address, Attn: C. Kevin Shannahan

and:

Hines Interests Limited Partnership

2800 Post Oak Boulevard, Suite 5010

Houston, Texas 77056

Attn: Jeffrey C. Hines

or such other (or additional) address or addresses as Tenant or Landlord may from time to time designate by notice given as above provided. Every notice or other communication hereunder shall be deemed to have been given as of the date of actual receipt thereof, unless receipt thereof failed to occur by reason of refusal of the addressee to accept the same or by reason of a change of address of the addressee for which no prior notice was given to the sender (and in either such event notice shall be deemed given on the next Business Day after such notice was appropriately sent). Notices from Landlord hereunder may be sent by Landlord’s managing agent for the Building, any management company of Landlord or Landlord’s attorneys. In the event that the Tenant hereunder shall at any time consist of more than one (1) person or entity, then any notice sent by any of the persons or entities so comprising the Tenant shall be binding on the Tenant

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hereunder and all of the persons or entities so comprising the Tenant (and, in the event of conflicting notices from the persons or entities comprising the Tenant, Landlord shall be permitted to rely on the first notice received by Landlord from any person or entity comprising the Tenant with respect to the subject matter of such conflict). In the event that the Landlord hereunder shall at any time consist of more than one (1) person or entity, then any notice sent by any of the persons or entities so comprising the Landlord shall be binding on the Landlord hereunder and all of the persons or entities so comprising the Landlord (and, in the event of conflicting notices from the persons or entities comprising the Landlord, Tenant shall be permitted to rely on the first notice received by Tenant from any person or entity comprising the Landlord with respect to the subject matter of such conflict).

ARTICLE 31

Real Estate Brokers

Landlord represents that it has dealt only with Landlord’s Agent and Tenant represents that it has dealt only with Staubach Midwest, LLC (“Tenant’s Broker”) (together the “Brokers”), as broker, agent or finder in connection with this Lease and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Lease or are entitled to any commission in connection therewith. Landlord and Tenant each agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from any breach of the foregoing representation made by the indemnifying party. Landlord agrees to pay to the Brokers all amounts owing to the Brokers in respect of this Lease pursuant to separate commission agreements between Landlord and the Brokers. Landlord agrees that, at the written direction of Tenant and Tenant’s Broker, Landlord shall pay or make available to Tenant (rather than Tenant’s Broker) any commissions, fees or other amounts then due and payable to Tenant’s Broker in connection with this Lease or the Premises, in such manner as Tenant and Tenant’s Broker shall jointly so direct (which may include, without limitation, the payment of such amounts (or any portion thereof) directly to Tenant, the addition of amounts (or any portion thereof) to the Tenant Work Allowance (or any other allowance to which Tenant is entitled hereunder) and/or the credit of such amounts (or any portion thereof) against the payment of Rent.

ARTICLE 32

Covenant of Quiet Enjoyment

Landlord covenants and agrees that Tenant shall, during the Term, peaceably and quietly have, hold and enjoy the Premises, free from hindrance or disturbance by Landlord or any person claiming by, through or under Landlord, subject to the terms, covenants, conditions, provisions and agreements hereof and the rights of any Mortgagees and Ground Lessors set forth in any SNDA executed and delivered in accordance with Article 18 hereof.

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ARTICLE 33

Captions and Severability

The captions, headings, and arrangements of the Articles and Paragraphs of this Lease and the paragraphs of any of the Exhibits are for convenience of reference only and shall not be considered or referred to in resolving questions of interpretation. If any term or provision of this Lease shall be found invalid, void, illegal, or unenforceable with respect to any particular person by a court of competent jurisdiction, it shall not affect, impair or invalidate any other terms or provisions hereof, or its enforceability with respect to any other person, the parties hereto agreeing that they would have entered into the remaining portion of this Lease notwithstanding the omission of the portion or portions adjudged invalid, void, illegal, or unenforceable with respect to such person.

ARTICLE 34

Expansion, Right of First Offer, Renewals and Contraction

(A) Pre-Term Expansion Option. Subject to the terms and provisions of this Article 34, Landlord hereby grants Tenant the following option to include in the Premises all of the Rentable Area located on one (1) full floor in the Building (any such space so included in the Premises is referred to herein as “Pre-Term Expansion Premises”), in accordance with the following provisions:

(i) Tenant shall have a one-time option (“Pre-Term Expansion Option”) to include Pre-Term Expansion Premises in the Premises in accordance with the provisions herein, provided that: (a) this Lease is then in full force and effect, and no material Default by Tenant shall have occurred and be continuing, and (b) Tenant shall not exercise or have exercised its Pre-Term Contraction Option under Paragraph 34(T)(i). Tenant shall exercise this Pre-Term Expansion Option, if at all, by delivering written notice of such exercise (“Pre-Term Expansion Notice”) to Landlord on or before September 1, 2007 (“Pre-Term Expansion Notice Deadline”). In the Pre-Term Expansion Notice, Tenant shall refer to this Paragraph 34(A)(i) and Tenant shall elect, at its option, to have the Pre-Term Expansion Premises consist of either the 23^rd floor of the Building or the 15^th floor of the Building (and in the absence of any such election so designated in the Pre-Term Expansion Notice, then the Pre-Term Expansion Premises shall be the 23^rd floor of the Building).

(ii) If Tenant fails to deliver the Pre-Term Expansion Notice by the Pre-Term Expansion Notice Deadline, then Tenant shall be deemed to have waived its Pre-Term Expansion Option. If Tenant duly exercises its Pre-Term Expansion Option, the other applicable terms and provisions for the Pre-Term Expansion Premises shall be as provided therefor in Paragraph 34(L) below.

(B) First Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount

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equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “First Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 23^rd floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 22^nd floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “First Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s First Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s First Expansion Option, all or any portion of the space located on a floor that would have constituted the First Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s First Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s First Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(B). Tenant shall exercise the First Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “First Expansion Notice”) on or before January 1, 2014 (the “First Expansion Notice Deadline”). If Tenant fails to deliver the First Expansion Notice by the First Expansion Notice Deadline, Tenant shall be deemed to have waived its First Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the First Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled First Expansion Delivery Date”) on which Landlord intends to deliver possession of the First Expansion Premises to Tenant, which date shall not be earlier than January 1, 2015, nor later than April 1, 2015; and in the event Landlord has elected to substitute a floor as the First Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(C) Second Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the

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“Second Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 22^nd floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 21^st floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Second Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Second Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Second Expansion Option, all or any portion of the space located on a floor that would have constituted the Second Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or as Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Second Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Second Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(C). Tenant shall exercise the Second Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Second Expansion Notice“) on or before January 1, 2015 (the “Second Expansion Notice Deadline”). If Tenant fails to deliver the Second Expansion Notice by the Second Expansion Notice Deadline, Tenant shall be deemed to have waived its Second Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Second Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Second Expansion Delivery Date”) on which Landlord intends to deliver possession of the Second Expansion Premises to Tenant, which date shall not be earlier than January 1, 2016, nor later than April 1, 2016; and in the event Landlord has elected to substitute a floor as the Second Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(D) Third Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Third Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 21^st floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

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(ii) the 20^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Third Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Third Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Third Expansion Option, all or any portion of the space located on a floor that would have constituted the Third Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Third Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Third Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(D). Tenant shall exercise the Third Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Third Expansion Notice”) on or before January 1, 2016 (the “Third Expansion Notice Deadline”). If Tenant fails to deliver the Third Expansion Notice by the Third Expansion Notice Deadline, Tenant shall be deemed to have waived its Third Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Third Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Third Expansion Delivery Date”) on which Landlord intends to deliver possession of the Third Expansion Premises to Tenant, which date shall not be earlier than January 1, 2017, nor later than April 1, 2017; and in the event Landlord has elected to substitute a floor as the Third Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(E) Fourth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Fourth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 20^th floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 19^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Fourth Expansion Premises”) in each case, to the extent that such floor (or any portion

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thereof) is not, at the time of the exercise of Tenant’s Fourth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Fourth Expansion Option, all or any portion of the space located on a floor that would have constituted the Fourth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Fourth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Fourth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(E). Tenant shall exercise the Fourth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Fourth Expansion Notice”) on or prior January 1, 2017 (the “Fourth Expansion Notice Deadline”). If Tenant fails to deliver the Fourth Expansion Notice by the Fourth Expansion Notice Deadline, Tenant shall be deemed to have waived its Fourth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Fourth Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Fourth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Fourth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2018, nor later than April 1, 2018; and in the event Landlord has elected to substitute a floor as the Fourth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(F) Fifth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Fifth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 15^th floor of the Building, if Tenant shall not have exercised the Pre-Term Contraction Option under Paragraph 34(T) with respect to the 14^th floor and if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 15^th floor; or

(ii) the 14^th floor of the Building, if Tenant shall have exercised the Pre-Term Contraction Option, and the Pre-Term Contraction Space includes the 14^th floor of the Building; or

(iii) the 16^th floor of the Building if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 15^th floor;

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(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Fifth Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Fifth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Fifth Expansion Option, all or any portion of the space located on a floor that would have constituted the Fifth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Fifth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Fifth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(F). Tenant shall exercise the Fifth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Fifth Expansion Notice”) on or before January 1, 2018 (the “Fifth Expansion Notice Deadline”). If Tenant fails to deliver the Fifth Expansion Notice by the Fifth Expansion Notice Deadline, Tenant shall be deemed to have waived its Fifth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Fifth Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Fifth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Fifth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2019, nor later than April 1, 2019; and in the event Landlord has elected to substitute a floor as the Fifth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(G) Sixth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Sixth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 19^th floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 18^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Sixth Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Sixth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Sixth Expansion

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Option, all or any portion of the space located on a floor that would have constituted the Sixth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Sixth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Sixth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(G). Tenant shall exercise the Sixth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Sixth Expansion Notice”) on or before January 1, 2019 (the “Sixth Expansion Notice Deadline”). If Tenant fails to deliver the Sixth Expansion Notice by the Sixth Expansion Notice Deadline, Tenant shall be deemed to have waived its Sixth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Sixth Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Sixth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Sixth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2020, nor later than April 1, 2020; and in the event Landlord has elected to substitute a floor as the Sixth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(H) Seventh Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Seventh Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 18^th floor of the Building, if Tenant shall not have exercised either the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 17^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Seventh Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Seventh Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Seventh Expansion Option, all or any portion of the space located on a floor that would have constituted the Seventh Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Seventh Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable),

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and (y) Tenant shall have the right to exercise Tenant’s Seventh Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(H). Tenant shall exercise the Seventh Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Seventh Expansion Notice”) on or before January 1, 2020 (the “Seventh Expansion Notice Deadline”). If Tenant fails to deliver the Seventh Expansion Notice by the Seventh Expansion Notice Deadline, Tenant shall be deemed to have waived its Seventh Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Seventh Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Seventh Expansion Delivery Date”) on which Landlord intends to deliver possession of the Seventh Expansion Premises to Tenant, which date shall not be earlier than January 1, 2021, nor later than April 1, 2021; and in the event Landlord has elected to substitute a floor as the Seventh Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(I) Eighth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Eighth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 17^th floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor; or

(ii) the 16^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Eighth Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Eighth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Eighth Expansion Option, all or any portion of the space located on a floor that would have constituted the Eighth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Eighth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Eighth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(I). Tenant shall exercise the Eighth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Eighth Expansion Notice”) on or before January 1, 2021 (the “Eighth Expansion

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Notice Deadline”). If Tenant fails to deliver the Eighth Expansion Notice by the Eighth Expansion Notice Deadline, Tenant shall be deemed to have waived its Eighth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Eighth Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Eighth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Eighth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2022, nor later than April 1, 2022; and in the event Landlord has elected to substitute a floor as the Eighth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(J) Ninth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Ninth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 16^th floor of the Building, if Tenant shall not have exercised the Pre-Term Expansion Option under Paragraph 34(A); or

(ii) the 40^th floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to either the 15^th floor or the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Ninth Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Ninth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Ninth Expansion Option, all or any portion of the space located on a floor that would have constituted the Ninth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Ninth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Ninth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), as provided in this Paragraph 34(J). Tenant shall exercise the Ninth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Ninth Expansion Notice”) on or before January 1, 2023 (the “Ninth Expansion Notice Deadline”). If Tenant fails to deliver the Ninth Expansion Notice by the Ninth Expansion Notice Deadline, Tenant shall be deemed to have waived its Ninth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Ninth Expansion Notice, Landlord shall notify Tenant of the date (the

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“Scheduled Ninth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Ninth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2024, nor later than April 1, 2024; and in the event Landlord has elected to substitute a floor as the Ninth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(K) Tenth Expansion Option. Provided no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Tenant shall have the one-time option (the “Tenth Expansion Option”) to expand the Premises to include all of the Rentable Area on one (1) floor of the Building. Such one (1) floor shall be:

(i) the 40^th floor of the Building, if Tenant shall not have exercised either the Pre-Term Expansion Option under Paragraph 34(A) or the Pre-Term Contraction Option under Paragraph 34(T); or

(ii) the 39^th floor of the Building, if Tenant shall have exercised the Pre-Term Contraction Option and the Pre-Term Contraction Space consists of the 39^th floor of the Building only; or

(iii) the 38^th floor of the Building, if Tenant shall have exercised the Pre-Term Contraction Option and the Pre-Term Contraction Space includes the 39^th and 38^th floors of the Building but does not include the 14 ^th floor of the Building; or

(iv) the 15^th floor of the Building if Tenant shall have exercised the Pre-Term Contraction Option and the Pre-Term Contraction Space includes the 14^th floor of the Building; or

(v) the 43^rd floor of the Building, if Tenant shall have exercised the Pre-Term Expansion Option under Paragraph 34(A) relative to either the 15^th floor or the 23^rd floor;

(such one (1) floor determined in accordance with the foregoing provisions is referred to herein as the “Tenth Expansion Premises”) in each case, to the extent that such floor (or any portion thereof) is not, at the time of the exercise of Tenant’s Tenth Expansion Option, leased by Tenant as First Proposal Space or Accepted Offer Space pursuant to Paragraphs 34(M) or 34(N) (respectively) below. In the event that, at the time of the exercise of Tenant’s Tenth Expansion Option, all or any portion of the space located on a floor that would have constituted the Tenth Expansion Premises is being leased by Tenant as First Proposal Space pursuant to Paragraph 34(M) below or Accepted Offer Space pursuant to Paragraph 34(N) below, then: (x) Tenant shall have no right to exercise Tenant’s Tenth Expansion Option as to the space on such floor so leased by Tenant as First Proposal Space or Accepted Offer Space (as applicable), and (y) Tenant shall have the right to exercise Tenant’s Tenth Expansion Option as to all (but not less than all) of the space on such floor which is not so leased by Tenant as First Proposal Space

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or Accepted Offer Space (as applicable), as provided in this Paragraph 34(K). Tenant shall exercise the Tenth Expansion Option, if at all, by delivering to Landlord written notice of such exercise (the “Tenth Expansion Notice”) on or before January 1, 2024 (the “Tenth Expansion Notice Deadline”). If Tenant fails to deliver the Tenth Expansion Notice by the Tenth Expansion Notice Deadline, Tenant shall be deemed to have waived its Tenth Expansion Option. Landlord shall also have the right to substitute a different floor in the high-rise portion of the Building in accordance with Paragraph 34(L)(i) below. Within ten (10) Business Days after Landlord’s receipt of the Tenth Expansion Notice, Landlord shall notify Tenant of the date (the “Scheduled Tenth Expansion Delivery Date”) on which Landlord intends to deliver possession of the Tenth Expansion Premises to Tenant, which date shall not be earlier than January 1, 2025, nor later than April 1, 2025; and in the event Landlord has elected to substitute a floor as the Tenth Expansion Premises, as provided in the preceding sentence, then such notice shall also set forth the floor so designated.

(L) Expansion Options Generally.

(i) Landlord Right to Substitute Floors. If Tenant exercises an Expansion Option under Paragraphs 34(B) through (K), and there is no remaining full floor in the Low-Rise Floors or Mid-Rise Floors of the Building that is “Available Space” (as defined in Paragraph 34(M)) as of the date of Tenant’s exercise of any Expansion Option under Paragraphs 34(B) through (K), then Landlord shall have the right to substitute any full floor above the Mid-Rise Floors as the applicable Expansion Premises thereunder, in which case such floor so designated by Landlord shall be the applicable Expansion Premises for purposes thereof; provided Landlord may only exercise Landlord’s right once under this Paragraph 34(L)(i) to substitute another floor for Expansion Premises under Paragraphs 34(B) through (K). However, the foregoing provisions shall not be deemed to limit in any way Landlord’s rights to substitute other floors as the applicable Expansion Premises as set forth in Paragraphs 34(B) through (K).

(ii) Application of Lease. Each Expansion Premises with respect to which Tenant exercises the applicable Expansion Option shall be included in the Premises upon the same terms, covenants and conditions as are applicable to the Premises, except to the extent, if any, otherwise provided below:

(1) The term of the letting of the Expansion Premises shall expire on the Initial Term Expiration Date, subject to extension of the Term pursuant to Paragraphs 34(O), 34(P), 34(Q), 34(R) and 34(S), or termination thereof pursuant to Paragraph 34(Y) hereof.

(2) Net Rent and Additional Rent in respect of Taxes and Operating Expenses, with respect to the Expansion Premises, shall commence to be payable on the date (the “Expansion Option Rent Commencement Date”) which is:

(a) if such Expansion Premises is not Pre-Term Expansion Premises, the earlier of:

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(i) the date that is one hundred eighty (180) days after the later of (x) the date on which Landlord actually tenders possession of the applicable Expansion Premises to Tenant in the condition required by this Paragraph 34(L), and (y) the applicable Scheduled Expansion Delivery Date, and

(ii) the date Tenant commences to conduct ordinary business in the Expansion Premises, or

(b) if such Expansion Premises is Pre-Term Expansion Premises, on the Commencement Date.

(3) The amount of Net Rent per square foot of Rentable Area with respect to any Pre-Term Expansion Premises shall be equal to that applicable to the Premises (as such Net Rent increases from time to time) as set forth in Exhibit C, or applicable during any Renewal Term, as determined below in this Article 34. The amount of Net Rent per square foot of Rentable Area with respect to the First Expansion Premises or the Second Expansion Premises shall be (a) $25.00 per square foot of Rentable Area, escalating on an annual compounding basis of 2.5% per year starting January 1, 2010, if located on the Low-Rise Floors, or (b) $27.00 per square foot of Rentable Area, escalating on an annual compounding basis of 2.5% per year starting January 1, 2010, if located on the Mid-Rise Floors, or (c) $29.00 per square foot of Rentable Area, escalating on an annual compounding basis of 2.5% per year starting January 1, 2010, if located on any floor above the Mid-Rise Floors, in each case subject to adjustment during any Renewal Term, as determined below in the Article 34. The amount of Net Rent with respect to any Expansion Premises other than Pre-Term Expansion Premises, First Expansion Premises or Second Expansion Premises shall be the amount thereof determined pursuant to the Current Market Terms with respect thereto, which shall also include all other Tenant Concessions, if any, specified in said Current Market Terms, all as determined pursuant to Article 35 and Exhibit W attached hereto.

(4) The Rentable Area of the Premises shall be increased by the Rentable Area of the Expansion Premises effective as of the applicable Expansion Option Rent Commencement Date.

(5) Tenant’s Pro Rata Share shall be increased to reflect the Rentable Area of the Expansion Premises, effective as of the applicable Expansion Option Rent Commencement Date.

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(6) Landlord shall pay to Tenant the applicable Expansion Allowance. The Expansion Allowance shall be used and disbursed subject to and in accordance with the conditions, provisions and procedures set forth in Section 6 of the Workletter (as though the Expansion Allowance constituted a part of the Tenant Work Allowance thereunder, and as though the “Expansion Premises” was substituted for the Premises thereunder, and the Alteration Work being performed at the Expansion Premises was substituted for the “Tenant Work” thereunder). Landlord and Tenant further agree that, in the event that Tenant has not used or applied the entire amount of any Expansion Allowance by the date that is eighteen (18) months after the Expansion Option Rent Commencement Date applicable thereto, Landlord shall have the right, upon thirty (30) days’ prior written notice to Tenant, to require Tenant to apply the remaining balance of such Expansion Allowance against the installment(s) of Rent next coming due under the Lease, in order of payment.

(7) Landlord shall deliver the applicable Expansion Premises to Tenant on the applicable Scheduled Expansion Delivery Date in its then “as-is” condition (but including, in any event, in compliance with all Base Building Conditions applicable thereto, subject only to a reasonable, mutually acceptable punch-list of minor defects or items to be completed by Landlord in order to comply with such Base Building Conditions, and provided that if Landlord has theretofore installed a Common Conference Center within the applicable Expansion Premises, then Landlord shall be responsible for removing any elements thereof which are in excess of a customary office premises build-out, and to restore such affected areas to a base building condition, all at Landlord’s sole cost and expense); except that, to the extent that any improvements or property are located in such Expansion Premises at the time that Tenant exercises the applicable Expansion Option, and Landlord: (x) has (and will continue to have, as of the delivery of Tenant’s Expansion Improvement Notice described below) the right, under its lease with the then existing tenant thereof, to require that such improvements or property remain in the Expansion Premises as of the date the same is delivered to Tenant (or if such space is not then leased to another tenant) (it being agreed that Landlord shall, if Tenant so requests, inform Tenant of any rights that any such existing tenant of such space may have to remove (or cause to be removed) any such improvements or property therefrom), or (y) has (and will continue to have, as of the delivery of Tenant’s Expansion Improvement Notice described below) the right, under its lease with the then existing tenant thereof, to require that such improvements or property be removed by such tenant from the Expansion Premises as of the date the same is delivered to Tenant, then Tenant shall have the right to require Landlord to cause all or any portion of such improvements or property to remain in or be removed from (as applicable) the Expansion Premises, at no cost to Tenant, when the Expansion Premises is delivered to Tenant; provided, that Tenant shall

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exercise such right by written notice to Landlord (an “Expansion Improvement Notice”) given no later than the later of: (X) thirty (30) days after the date of the applicable Expansion Notice, and (Y) six (6) months prior to the applicable Scheduled Expansion Delivery Date); and provided further, that Landlord agrees that it will, within a reasonable time after Tenant’s delivery of the applicable Expansion Notice, but subject to the rights of any existing tenant(s) of the applicable Expansion Space (which rights of such existing tenant(s) shall not altogether prohibit Tenant from inspecting the applicable Expansion Premises), provide Tenant with an opportunity to inspect the applicable Expansion Premises for purposes of enabling Tenant to determine whether it will elect to exercise such right; and provided further, that Landlord shall have no liability to Tenant, and Landlord shall not be deemed to be in default under this Lease, if Landlord is unable to cause such improvements or property to remain in or be removed from (as applicable) the Expansion Premises as provided above due solely to the failure of the prior tenant of such space to have complied with the terms of its lease requiring that such improvements or property so remain or be removed (but Landlord agrees to use reasonable efforts (without cost to Landlord) to enforce such terms of any such lease).

Following exercise by Tenant of an Expansion Option, and within thirty (30) days following written request by either Landlord or Tenant, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the leasing of the applicable Expansion Premises pursuant hereto and the terms and conditions of such leasing provided for herein. The failure or refusal of either party to do so, however, shall not affect the validity of the leasing of the Expansion Premises.

(iii) Delivery. So long as Landlord has not granted any person or entity rights which conflict with the applicable Expansion Option, Landlord shall have no liability to Tenant, and Landlord shall not be deemed to be in default under this Lease, if it is unable to deliver Expansion Premises to Tenant on the applicable Scheduled Expansion Delivery Date due solely to the failure of any tenant or any of its subtenants to have vacated such space by the time such tenant was required to so vacate, or due to fire or other casualty. If, however, Landlord fails to deliver possession of the Expansion Premises in the condition required by this Paragraph 34(L) by the date which is the 60th day after the applicable Scheduled Expansion Delivery Date, Tenant shall be entitled to an abatement of Rent allocable to such Expansion Premises that is otherwise payable hereunder for a period that commences on the Expansion Option Rent Commencement Date and is equal in length to one day for each day in the period commencing on the Scheduled Expansion Delivery Date and ending on the date on which Landlord actually delivers possession of the Expansion Premises to Tenant in the condition required by this Paragraph 34(L). In the event Landlord fails to deliver possession of such Expansion Premises in the condition required by this Paragraph 34(L) by the date which is the sixtieth (60th) day after the applicable Scheduled Expansion Delivery Date, Tenant also shall have the option (a) to rescind its previous exercise of the Expansion Option by notice to Landlord given at any time prior to the first to occur of (A) the fifteenth (15^th) Business Day after

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such sixty (60) day period (or, for each consecutive thirty (30) day period following the expiration of such sixty (60) day period during which any such failure to deliver possession of the Expansion Premises continues, within fifteen (15) Business Days after the expiration of such thirty (30) day period), and (B) the delivery to Tenant of the Expansion Premises in the condition required by this Paragraph 34(L), in which event Landlord shall have no liability to Tenant on account of such failure timely to deliver (except that Landlord shall not be released from such liability if it shall have granted any person or entity rights which conflict with such Expansion Option) and shall have no further obligation to deliver the Expansion Premises, or (b) to lease from Landlord, on a temporary basis (until the Expansion Premises is delivered to Tenant) and at the same Rent, other space in the Building, to the extent available and not subject to any prior leasing rights of any other party, comparable in size to the Expansion Premises. Landlord shall use commercially reasonable efforts to regain possession of the Expansion Premises as promptly as reasonably possible, which may include the prosecution of litigation against any occupant of such space.

(iv) Certain Definitions.

(1) The term “Expansion Option” shall mean any or all of the Pre-Term Expansion Option, the First Expansion Option, the Second Expansion Option, the Third Expansion Option, the Fourth Expansion Option, the Fifth Expansion Option, the Sixth Expansion Option, the Seventh Expansion Option, the Eighth Expansion Option, the Ninth Expansion Option and the Tenth Expansion Option.

(2) The term “Expansion Premises” shall mean any or all of the Pre-Term Expansion Premises, the First Expansion Premises, the Second Expansion Premises, the Third Expansion Premises, the Fourth Expansion Premises, the Fifth Expansion Premises, the Sixth Expansion Premises, the Seventh Expansion Premises, the Eighth Expansion Premises, the Ninth Expansion Premises and the Tenth Expansion Premises.

(3) The term “Scheduled Expansion Delivery Date” shall mean any or all of the Scheduled First Expansion Delivery Date, Scheduled Second Expansion Delivery Date, Scheduled Third Expansion Delivery Date, Scheduled Fourth Expansion Delivery Date, Scheduled Fifth Expansion Delivery Date, Scheduled Sixth Expansion Delivery Date, Scheduled Seventh Expansion Delivery Date, Scheduled Eighth Expansion Delivery Date, Scheduled Ninth Expansion Delivery Date and Scheduled Tenth Expansion Delivery Date; provided, that with respect to the Pre-Term Expansion Option, the term “Scheduled Expansion Delivery Date”) shall mean the Scheduled Phase III Delivery Date (i.e., if located on the Mid-Rise Floors) or the Scheduled Phase II Delivery Date (i.e., if located on the Low-Rise Floors), all as provided in Paragraph 4(A) above. Nothing contained in this Article 34 shall limit Tenant’s rights and remedies provided elsewhere in this Lease (including Article 4 and Article 29

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hereof) if the Pre-Term Expansion Premises is not delivered to Tenant on or before the Scheduled Phase II Delivery Date in accordance with the terms of this Lease.

(4) The term “Expansion Notice Deadline” shall mean any or all of the Pre-Term Expansion Notice Deadline, First Expansion Notice Deadline, the Second Expansion Notice Deadline, the Third Expansion Notice Deadline, the Fourth Expansion Notice Deadline, the Fifth Expansion Notice Deadline, the Sixth Expansion Notice Deadline, the Seventh Expansion Notice Deadline, the Eighth Expansion Notice Deadline, the Ninth Expansion Deadline and the Tenth Expansion Notice Deadline.

(5) The term “Expansion Allowance” shall mean, with respect to:

(a) any Pre-Term Expansion Premises, an amount equal to $65.00 per square foot of Rentable Area comprising the Pre-Term Expansion Premises;

(b) each of the First Expansion Premises and Second Expansion Premises, an amount equal to the product of (i) the number of square feet of Rentable Area comprising the Expansion Premises, and (ii) the dollar amount, expressed on a per-square-foot-of-Rentable-Area basis, set forth in the “Unamortized Balance” column of Exhibit V attached hereto corresponding to the month in which the 180^th day following the Scheduled Expansion Delivery Date occurs; and

(c) any other Expansion Premises, an amount equal to the construction allowance, if any, included in the determination of the Current Market Terms in connection with Tenant’s exercise.

(6) The term “Expansion Notice” shall mean any or all of the First Expansion Notice, Second Expansion Notice, Third Expansion Notice, Fourth Expansion Notice, Fifth Expansion Notice, Sixth Expansion Notice, Seventh Expansion Notice, Eighth Expansion Notice, Ninth Expansion Notice or Tenth Expansion Notice.

(M) Tenant’s Right of First Proposal. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease is in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have the right (the “Right of First Proposal”) at any time (and from time to time) during the period commencing on September 1, 2007 and ending on March 1, 2014 (the “Initial Lease–Up Period”), to lease any Available Space in the Building by providing Landlord with written notice of such exercise (which notice shall specify the Available Space that Tenant desires to Lease); provided, however, that, in the event that Tenant exercises its Right of First Proposal

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with respect to any Available Space located on any floor of the Building, then (a) Tenant must exercise its Right of First Proposal with respect to at least one-half of the Rentable Area of the then Available Space located on such floor of the Building, and (b) if Tenant exercises its Right of First Proposal with respect to less than a full floor, then Tenant shall reimburse Landlord, within thirty (30) days after Landlord’s demand therefor, an amount equal to the Landlord’s Actual Costs incurred by Landlord in constructing/installing a multi-tenant corridor on such floor multiplied by a fraction, the numerator of which is the Rentable Area of the First Proposal Space on such floor which is the subject of Tenant’s exercise of such Right of First Proposal, and the denominator of which is the total Rentable Area of such full floor at the Building; and (c) if such First Proposal Space is located in the High-Rise portion of the Building, then such First Proposal Space leased by Tenant must be on the lowest floor or floors in such High-Rise portion of the Building which then contain Available Space, and must be on contiguous floor(s) to any prior First Proposal Space leased by Tenant in the High-Rise portion of the Building, if such contiguous floor(s) then contain Available Space. For purposes hereof, the term “Available Space” shall mean any office space located in the Building which, at the time Landlord receives Tenant’s written notice exercising Tenant’s Right of First Proposal: (i) has never been subject to a fully executed and delivered lease, occupancy agreement, or option to lease, or (ii) has been subject to a fully executed and delivered lease, occupancy agreement or option to lease, to the extent that such lease, occupancy agreement or option to lease has expired (or to the extent that such tenant’s rights thereunder have expired or have been waived as to portions of its premises or as to any space that was subject to any expansion rights, rights of refusal, rights of offer or similar rights thereunder); provided, notwithstanding the foregoing to the contrary, the term Available Space shall exclude any office space located in the Building which, at the time Landlord receives Tenant’s written notice exercising Tenant’s Right of First Proposal: (a) is the subject of a fully executed and delivered, commercially reasonable, complete letter of intent or proposal/offer sheet to enter into a lease, occupancy agreement or option to lease, or (b) if no such letter of intent exists, is the subject of Landlord’s negotiations with a prospective tenant and Landlord has delivered to such prospective tenant a lease document draft (and Landlord agrees to provide reasonable evidence thereof to Tenant, if Tenant so requests)). The parties further agree that for purposes of this Paragraph 34(M), (1) any space that is subject to any expansion rights, rights of refusal, rights of offer or similar rights in favor of any other tenant under any such lease, occupancy agreement, option to lease, letter of intent, or negotiations shall, for purposes hereof, also be excluded from the term “Available Space”, and (2) the term “First Proposal Space” shall mean any Available Space with respect to which Tenant exercises its Right of First Proposal. In the event that Tenant exercises its Right of First Proposal as to any First Proposal Space:

(i) Landlord shall deliver the applicable First Proposal Space to Tenant on or before the date that is the later of: (x) sixty (60) days after the date on which Landlord receives Tenant’s notice exercising the Right of First Proposal, or (y) the Phase II Delivery Date (if located on Low-Rise Floors) or the Phase III Delivery Date (if located on Mid-Rise Floors) or October 1, 2008 (if located on High-Rise Floors), as the case may be. The First Proposal Space shall be delivered to Tenant in accordance with Base Building Conditions, subject to a reasonable, mutually acceptable punch-list of minor defects or items to be completed by Landlord in order to comply with such Base Building Conditions, ordinary wear and tear excepted, and otherwise in “as-is” condition;

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(ii) Each First Proposal Space with respect to which Tenant exercises its Right of First Proposal shall be included in the Premises upon the same terms, covenants and conditions as are applicable to the Premises, except to the extent, if any, otherwise provided below:

(1) The term of the letting of the applicable First Proposal Space shall expire on the Initial Term Expiration Date, subject to extension of the Term pursuant to Paragraphs 34(O), 34(P), 34(Q), 34(R) and 34(S), or termination thereof pursuant to Paragraph 34(Y) hereof;

(2) Net Rent and Additional Rent in respect of Taxes and Operating Expenses, with respect to the First Proposal Space, shall commence to be payable on the date (the “First Proposal Rent Commencement Date”) which is the later of:

(a) the date that is the earlier of: (x) one hundred eighty (180) days after the date on which Landlord actually tenders possession of the applicable First Proposal Space to Tenant in the condition required by this Paragraph 34(M), or (y) the date Tenant commences to conduct ordinary business in the First Proposal Space, or

(b) the Commencement Date;

(3) The amount of Net Rent per square foot of Rentable Area with respect to the First Proposal Space shall be equal to (i) that applicable to the Premises (as such Net Rent increases from time to time) as set forth in Exhibit C attached hereto, if located on any Low-Rise Floors or Mid-Rise Floors at the Building (with (A) a prorated portion of (a) the per square foot rate of the Initial Rent Credit [i.e., being $28.50 per square foot], multiplied by (b) the square footage of Rentable Area of the First Proposal Space, and (B) a prorated portion of the one-year abatement of Additional Rent relative to the First Proposal Space as otherwise provided for the Initial Premises under Paragraph 3(L) hereof, which proration in each case shall be based upon the number of months then remaining in the Term hereof from and after the First Proposal Rent Commencement Date, and which credit under subclause (A) shall be applied against Net Rent for the First Proposal Space first coming due in the same manner as applicable to the Initial Rent Credit under Paragraph 2(B) above, and which abatement under subclause (B) shall be applied against Additional Rent attributable to the First Proposal Space first coming due in the same manner as applicable to the Additional Rent abatement under Paragraph 3(L) above) or (ii) $29.00 per square foot of Rentable Area, escalating on an annual compounding basis of 2.5% per year starting January 1, 2010, if located on any floor above the Mid-Rise Floors, in each case subject to applicable adjustment during any Renewal Term, as determined below in this Article 34;

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(4) The Rentable Area of the Premises shall be increased by the Rentable Area of the First Proposal Space;

(5) Tenant’s Pro Rata Share shall be increased to reflect the Rentable Area of the First Proposal Space, effective as of the applicable First Proposal Rent Commencement Date; and

(6) Landlord shall make available to Tenant an allowance (a “First Proposal Allowance”) in an amount equal to the product of (i) the number of square feet of Rentable Area comprising the First Proposal Space, and (ii) the dollar amount, expressed on a per-square-foot-of-Rentable-Area basis, set forth in the “Unamortized Balance” column of Exhibit V attached hereto corresponding to the month in which the First Proposal Rent Commencement Date occurs. Any First Proposal Allowance shall be used and disbursed subject to and in accordance with the conditions, provisions and procedures set forth in Section 6 of the Workletter (as though the First Proposal Allowance constituted a part of the Tenant Work Allowance, and as though the “First Proposal Space” was substituted for the Premises thereunder, and the Alteration Work being performed at the First Proposal Space was substituted for the “Tenant Work” thereunder). Landlord and Tenant further agree that, in the event that Tenant has not used or applied the entire amount of any First Proposal Allowance by the date that is eighteen (18) months after the First Proposal Space Rent Commencement Date applicable thereto, Landlord shall have the right, upon thirty (30) days’ prior written notice to Tenant, to require Tenant to apply the remaining balance of such First Proposal Allowance against the installment(s) of Rent next coming due under the Lease, in order of payment.

(iii) Following exercise by Tenant of its Right of First Proposal, and within thirty (30) days following written request by either Landlord or Tenant, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the leasing of the applicable First Proposal Space pursuant hereto and the terms and conditions of such leasing provided for herein. The failure or refusal of either party to do so, however, shall not affect the validity of the leasing of the First Proposal Space.

Tenant shall have the right, from time to time during the Initial Lease-Up Period, to send written inquiries to Landlord as to the status of the leasing of the Building, and the extent to which any Available Space then exists. Landlord shall respond to any such written inquiries of Tenant, and shall furnish to Tenant a report describing the then-current status of the leasing of the Building within ten (10) Business Days after Landlord’s receipt thereof.

(N) Tenant’s Right of First Offer.

(i) ROFO Areas and ROFO Periods. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of

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Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease is in full force and effect, and Tenant’s right of possession shall have not been terminated, and subject to the terms and provisions of this Article 34, Landlord hereby grants Tenant a right of first offer (the “ROFO”) to lease and/or to be granted certain options to lease office space that Landlord desires to lease in the following areas of the Building during the following periods of time (collectively, the “ROFO Area”): (a) on the Low-Rise Floors or Mid-Rise Floors of the Building if the Scheduled Offer Space Delivery Date is on or prior to January 1, 2019, or (b) on any floor of the Building if the Scheduled Offer Space Delivery Date is after January 1, 2019 (each such period, a “ROFO Period”), all in accordance with the terms of this Paragraph 34(N). Except as otherwise expressly provided herein, Landlord shall not lease, and/or grant any Fixed/ROFO Expansion Rights (as hereinafter defined) with respect to, any portion of the applicable ROFO Area to any other party where the anticipated commencement date would occur during the applicable ROFO Period, unless Landlord first offers such portion of the ROFO Area to Tenant pursuant to this Paragraph 34(N). However, Tenant’s ROFO shall not apply in the circumstances described as the “ROFO Exceptions” in Paragraph 34(N)(ix) below. Reference is made to Paragraph 34(N)(x) below for the definitions of certain capitalized terms used in this Paragraph 34(N).

(ii) Landlord’s Offer Notice; Offer Space. Subject to the ROFO Exceptions described in Paragraph 34(N)(ix) below (in which case, Tenant’s ROFO shall not apply), Landlord, from time to time, may give one or more Offer Notices to Tenant respecting portions of the applicable ROFO Area which Landlord proposes to lease (the “Offer Space”), and/or for which Landlord proposes to grant Fixed/ROFO Expansion Rights in connection with the leasing of other space in the Building or in connection with an existing lease at the Building (“Expansion/ROFO Offer Space”), in either case with a Scheduled Offer Space Delivery Date for such Offer Space and/or a scheduled delivery date with respect to any Expansion/ROFO Offer Space occurring during the applicable ROFO Period as described above. The term “Offer Notice” shall mean a notice referring to this Paragraph 34(N) and:

(1) describing the Offer Space to which it relates, including the Rentable Area thereof, and, if the Offer Space includes a portion less than all of the Rentable Area of any floor, including a floor plan of such floor with such portion hatched,

(2) describing any Expansion/ROFO Offer Space which Landlord proposes to make available to other third parties pursuant to Other Tenant Fixed Expansion Rights and/or Other Tenant ROFO Rights, including the relevant terms of such Other Tenant Fixed Expansion Rights and/or Other Tenant ROFO Rights (collectively, the “Fixed/ROFO Expansion Rights”) which Landlord proposes to grant to a third party;

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(3) setting forth the date or dates (in each case, the “Scheduled Offer Space Delivery Date”) on which, Landlord reasonably believes, on the basis of written agreements then in effect, that Landlord shall be able to deliver to Tenant possession of the Offer Space; provided, the Scheduled Offer Space Delivery Date shall be no earlier than the date that is the last to occur of: (x) one hundred and twenty (120) days after the date of such Offer Notice, or (y) the Commencement Date;

(4) setting forth the approximate length of time that Landlord intends to lease the Offer Space to other parties, and the number and approximate lengths of time of any Other Tenant Renewal Options to be included therewith, if Tenant does not exercise this ROFO; and

(5) setting forth Landlord’s good faith opinion of the Current Market Terms for the Offer Space.

(iii) Tenant’s Acceptance Notice; Accepted Offer Space; Lapse and Reinstatement of ROFO. Tenant shall have the right, by delivering to Landlord a notice (an “Acceptance Notice”), within ten (10) Business Days after Tenant receives any Offer Notice, (a) to lease all (but not less than all) of: the Offer Space, and (b) if Tenant so elects in its sole discretion, to be granted the Fixed/ROFO Expansion Rights with respect to the Expansion/ROFO Offer Space (if any) covered by such Offer Notice. The Offer Space as to which Tenant timely gives an Acceptance Notice is herein called “Accepted Offer Space.” Tenant, in its Acceptance Notice, shall state whether it agrees with Landlord’s estimate of the Current Market Terms set forth in Landlord’s Offer Notice and, if not, Tenant shall include in its Acceptance Notice a statement of Tenant’s good faith opinion of the Current Market Terms for the Accepted Offer Space. This ROFO shall expire and lapse when less than two (2) years remain before the then scheduled Expiration Date of this Lease, as it may have been renewed or extended from time to time; provided, notwithstanding the foregoing to the contrary, if Tenant timely exercises any Renewal Option under Paragraphs 34(O) through (R), then this ROFO shall be deemed to have been reinstated effective upon delivery of Tenant’s applicable Renewal Notice thereunder.

(iv) Tenant’s Failure to Exercise; Landlord’s Leasing and Granting Rights to Offer Space to Other Parties. If Tenant rejects any Offer Notice, or Tenant otherwise fails to deliver a timely Acceptance Notice, then Landlord shall be entitled to lease all or any portion of the Offer Space, and/or Landlord may grant all or any of the Fixed/ROFO Expansion Rights with respect to all or any portion of any Expansion/ROFO Offer Space, in each case to any other party or parties at any time or times and otherwise on such terms as Landlord shall determine in its sole discretion, subject to Paragraph 34(N)(v) below and the following provisions. If Landlord’s Offer Notice included any Other Tenant Renewal Rights, Other Tenant Fixed Expansion Rights and/or Other Tenant ROFO Rights, then Landlord may: (a) grant all or any portion of such option rights so long as the same are consistent in all material respects with Landlord’s Offer Notice relative thereto, (b) honor the subsequent exercise of such options and/or enter into negotiated

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amendments with such parties who were granted such options generally consistent with such provisions, but in lieu of requiring the strict exercise thereof, and/or (c) renew and extend the term of the leases with any such parties who were granted such options and with respect to any and all such spaces (whether pursuant to the exercise of any renewal or extension options granted therein or otherwise); provided, however, that all of the foregoing provisions (a), (b) and (c) shall be subject and subordinate in all respects to each of Tenant’s Expansion Options described in Paragraphs 34(A) through 34(L); without limiting the generality of the foregoing, any Other Tenant Renewal Rights, Other Tenant Fixed Expansion Rights and/or Other Tenant ROFO Rights granted to other parties under the foregoing provisions shall be subject and subordinate to Tenant’s Expansion Options described in Paragraphs 34(A) through 34(K).

(v) Change in Terms; Landlord’s Failure to Lease Offer Space After Tenant Rejects. After Tenant rejects or fails to provide a timely Acceptance Notice in response to Landlord’s Offer Notice, Landlord shall nevertheless not lease any remaining portion of the applicable Offer Space and/or grant any remaining portion of the applicable Fixed/ROFO Expansion Rights identified in Landlord’s Offer Notice to any other party, and shall instead provide a subsequent Offer Notice to Tenant (to which Tenant may respond as though it were an initial Offer Notice under this Paragraph 34(N)), to the extent Landlord shall have not executed lease documents for such applicable portion of the Offer Space with one or more third parties, or Landlord shall not have granted any such applicable Fixed/ROFO Expansion Rights generally in accordance with the terms for such Fixed/ROFO Expansion Rights set forth in Landlord’s Offer Notice, in either case within 180 days following the date on which Tenant rejects or fails to provide a timely Acceptance Notice in response to Landlord’s Offer Notice respecting such Offer Space and/or such Fixed/ROFO Expansion Rights, as the case may be.

(vi) Accepted Offer Space; Basic Business Terms. For any Accepted Offer Space, the following terms and conditions shall apply:

(1) Net Rent and Additional Rent in respect of Taxes and Operating Expenses with respect to any Accepted Offer Space shall commence to be payable on the earlier to occur of the following dates (such earlier date being herein called the “Offer Space Rent Commencement Date”):

(a) one hundred eighty (180) days after the later of (i) the date on which Landlord actually tenders possession of the Accepted Offer Space to Tenant in the condition required by this Paragraph 34(N), and (ii) the Scheduled Offer Space Delivery Date; and

(b) the date Tenant commences to conduct ordinary business in the Accepted Offer Space;

(2) The amount of Net Rent with respect to the Accepted Offer Space shall be equal to: (a) the net or base rent specified in Landlord’s Offer Notice, if Tenant agreed in its Acceptance Notice with Landlord’s estimate of the

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Current Market Terms set forth in Landlord’s Offer Notice, or (b) otherwise, the net or base rent specified in the Current Market Terms for the Accepted Offer Space as determined pursuant to Article 35;

(3) The Rentable Area of the Premises shall be increased by the Rentable Area of the Accepted Offer Space effective as of the Offer Space Rent Commencement Date;

(4) Tenant’s Pro Rata Share shall be increased to reflect the Rentable Area of the Accepted Offer Space, effective as of the Offer Space Rent Commencement Date;

(5) Landlord shall pay to Tenant a construction allowance for the performance by Tenant of Alteration Work in the Accepted Offer Space an amount equal to the construction allowance, if any, included in the determination of the Current Market Terms applicable to the Accepted Offer Space (a “ROFO Allowance”); provided, however, that for the first two (2) full floors of Accepted Offer Space at the Building, the ROFO Allowance shall be an amount equal to the product of (i) the number of square feet of Rentable Area comprising the Accepted Offer Space, and (ii) the dollar amount, expressed on a per-square-foot-of-Rentable-Area basis, set forth in the “Unamortized Balance” column of Exhibit V attached hereto corresponding to the month in which the Offer Space Rent Commencement Date occurs. Any ROFO Allowance shall be used and disbursed subject to and in accordance with the conditions, provisions and procedures set forth in Section 6 of the Workletter (as though the ROFO Allowance constituted a part of the Tenant Work Allowance, and as though the “Accepted Offer Space” was substituted for the Premises thereunder, and the Alteration Work being performed at the Accepted Offer Space was substituted for the “Tenant Work” thereunder). Landlord and Tenant further agree that, in the event that Tenant has not used or applied the entire amount of any ROFO Allowance by the date that is eighteen (18) months after the Offer Space Rent Commencement Date applicable thereto, Landlord shall have the right, upon thirty (30) days’ prior written notice to Tenant, to require Tenant to apply the remaining balance of such ROFO Allowance against the installment(s) of Rent next coming due under the Lease, in order of payment;

(6) Tenant shall be paid or otherwise be entitled to realize the benefit of the other Tenant Concessions (as defined on Exhibit W attached hereto), if any, specified in said Current Market Terms, as set forth in Landlord’s Offer Notice (or, if Tenant does not agree therewith, then as determined pursuant to Article 35); and

(7) Except as otherwise provided herein, the Accepted Offer Space shall be included in the Premises upon the same terms, covenants and conditions as

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are applicable to the Premises, including the term of the letting of such Accepted Offer Space which shall expire on the Expiration Date of this Lease as extended or renewed from time to time; provided, if the Accepted Offer Space (or any portion thereof) in question is subject to any Other Tenant Fixed Expansion Right (granted by Landlord in favor of another tenant of the Building in compliance with the terms of this Paragraph 34(N)), then the term of the letting of such Accepted Offer Space shall expire on the date designated by Landlord in its applicable Offer Notice (which date shall be no earlier than one hundred twenty (120) days prior to the date on which the other tenant to whom such Other Tenant Fixed Expansion Right shall have been granted shall have the right to gain occupancy of such Accepted Offer Space pursuant to the Other Tenant Fixed Expansion Right).

(vii) Space Delivery Conditions For Accepted Offer Space. If Tenant timely gives an Acceptance Notice, then on each respective Scheduled Offer Space Delivery Date, Landlord shall deliver the applicable Accepted Offer Space to Tenant in its then “as-is” condition (but including, in any event, in compliance with all Base Building Conditions applicable thereto, subject only to a reasonable, mutually acceptable punch-list of minor defects or items to be completed by Landlord in order to comply with such Base Building Conditions) (except that, to the extent that any improvements or property are located in such Accepted Offer Space at the time that Tenant gives its Acceptance Notice, and Landlord: (A) has (and will continue to have, as of the delivery of Tenant’s Offer Space Improvement Notice described below) the right, under its lease with the then existing tenant thereof, to require that such improvements or property remain in the Accepted Offer Space as of the date the same is delivered to Tenant (or if such space is not then leased to another tenant) (it being agreed that Landlord shall, if Tenant so requests, inform Tenant of any rights that any such existing tenant of such space may have to remove (or cause to be removed) any such improvements or property therefrom), or (B) has (and will continue to have, as of the delivery of Tenant’s Offer Space Improvement Notice described below) the right, under its lease with the then existing tenant thereof, to require that such improvements or property be removed by such tenant from the Accepted Offer Space as of the date the same is delivered to Tenant, then Tenant shall have the right to require Landlord to cause all or any portion of such improvements or property to remain in or be removed from (as applicable) the Accepted Offer Space when the Accepted Offer Space is delivered to Tenant; provided, that Tenant shall exercise such right by written notice to Landlord (an “Offer Space Improvement Notice”) given no later than the later of: (X) thirty (30) days after the date of the applicable Acceptance Notice, and (Y) six (6) months prior to the applicable Scheduled Offer Space Delivery Date); and provided further, that Landlord agrees that it will, within a reasonable time after Tenant’s delivery of the applicable Acceptance Notice, but subject to the rights of any existing tenant(s) of the applicable Accepted Offer Space (which rights of such existing tenant(s) shall not altogether prohibit Tenant from inspecting the applicable Accepted Offer Space), provide Tenant with an opportunity to inspect the applicable Accepted Offer Space for purposes of enabling Tenant to determine whether it will elect to exercise such right; and provided further, that Landlord shall have no

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liability to Tenant, and Landlord shall not be deemed to be in default under this Lease, if Landlord is unable to cause such improvements or property to remain in or be removed from (as applicable) the Accepted Offer Space as provided above due solely to the failure of the prior tenant of such space to have complied with the terms of its lease requiring that such improvements or property so remain or be removed (but Landlord agrees to use reasonable efforts (without cost to Landlord) to enforce such terms of any such lease).

(viii) Failure or Delay in Delivering Accepted Space. So long as, when Landlord gives an Offer Notice, Landlord is entitled, on the basis of written agreements then in effect, to possession of the Accepted Offer Space no later than each applicable Scheduled Offer Space Delivery Date set forth therein, Landlord shall not be deemed to be in default under this Lease if it is unable to deliver any Accepted Offer Space on such Scheduled Offer Space Delivery Date due solely to the failure of such tenant or any of its subtenants to have vacated such space by the time such tenant was required to so vacate, or due to fire or other casualty. If, however, Landlord fails to deliver possession of any Accepted Offer Space in the condition required by Paragraph 34(N)(vii) by the 90th day after the Scheduled Offer Space Delivery Date, Tenant shall be entitled to an abatement of Rent allocable to such Accepted Offer Space that is otherwise payable hereunder for a period that commences on the Offer Space Rent Commencement Date and is equal in length to one day for each day in the period commencing on the 90^th day following the Scheduled Offer Space Delivery Date and ending on the date on which Landlord delivers to Tenant possession of such Accepted Offer Space in the condition required by Paragraph 34(N)(vii). In the event Landlord fails to deliver possession of such Accepted Offer Space in the condition required by this Paragraph 34(N) by the date which is the sixtieth (60^th) day after the applicable Scheduled Offer Space Delivery Date, Tenant also shall have the option, by written notice to Landlord given at any time prior to the earlier of (A) the fifteenth (15^th) Business Day after such sixty (60) day period (or, for each consecutive thirty (30) day period following the expiration of such sixty (60) day period during which any such failure to deliver possession of the Accepted Offer Space continues, within fifteen (15) Business Days after the expiration of such thirty (30) day period), and (B) the delivery to Tenant of the Accepted Offer Space in the condition required by Paragraph 34(N)(vii), (a) to rescind its Acceptance Notice (or, if such Accepted Offer Space is to be delivered in segments on more than one (1) Scheduled Offer Space Delivery Date and any such segment of Accepted Offer Space is not delivered on the Scheduled Offer Space Delivery Date applicable thereto, to rescind its Acceptance Notice either (at Tenant’s sole election) with respect to all of the Accepted Offer Space or with respect to such segment which is not delivered on the Scheduled Offer Space Delivery Date applicable thereto; provided that Tenant shall not rescind its Acceptance Notice as to any segment of Accepted Offer Space which Tenant shall have occupied for purposes of conducting ordinary business therein or for purposes of performing Alteration Work therein), in which event Landlord shall have no liability to Tenant on account of such failure timely to deliver, or (b) to lease from Landlord, on a temporary basis (until the Accepted Offer Space (or segment thereof) is delivered to Tenant) and at the same Rent, other space in the Building, to the extent available and not subject to any prior leasing rights of any other party, comparable in size to the Accepted Offer Space (or segment thereof). Landlord shall use commercially reasonable efforts to

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regain possession of such Accepted Offer Space as promptly as reasonably possible, which may include the prosecution of litigation against any occupant of such space.

(ix) ROFO Exceptions. Notwithstanding anything to the contrary in this Paragraph 34(N), Tenant’s ROFO shall not apply in the following circumstances (collectively, “ROFO Exceptions”):

(1) Landlord may elect to exclude from the ROFO Area any internally contiguous spaces containing less than 10,000 square feet of Rentable Area each, and in such case to enter into leases respecting such spaces with other parties and/or grant other parties Other Tenant Renewal Rights, Other Tenant Fixed Expansion Rights, and/or Other Tenant ROFO Rights respecting such spaces;

(2) Landlord may enter into leases with and/or grant any options to any other party respecting any ROFO Area (A) at any time from and after the date hereof and prior to September 1, 2008, or (B) at any time after the lapse without exercise of the First Renewal Option, Second Renewal Option, Third Renewal Option or Fourth Renewal Option, and this ROFO shall not apply with respect to such space (provided that the foregoing subclause (A) shall be subject in any event to the terms of Section 34(N)(xi) below);

(3) If Landlord and Tenant enter into any lease document adding space to the Premises pursuant to any other provision of this Lease or otherwise, this ROFO shall not apply thereafter with respect to such space so added to the Premises; and

(4) If Tenant exercises Tenant’s Pre-Term Contraction Option (as described in Paragraph 34(T) below), or any other Contraction Option (as described in Paragraphs 34(U) through (X) below), then Landlord may enter into any lease documents with other parties respecting the subject Contraction Space, and Tenant’s ROFO shall not apply thereto, subject to the following conditions: (a) each such lease shall have a term commencing within the eighteen (18) month period immediately following the delivery of the applicable Contraction Notice exercising such Contraction Option, and (b) such leases in the aggregate shall not include more Rentable Area in the Building than the Rentable Area of the subject Contraction Space, and (c) such leases may include Other Tenant Renewal Rights, Other Tenant Fixed Expansion Rights and/or Other Tenant ROFO Rights (subject, in any event, to Paragraph 34(N)(xi) below).

(x) Definitions. For all purposes of this Lease, the following terms shall have the following meanings:

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“Current Market Terms” shall have the meaning ascribed to such term in Exhibit W attached hereto.

“Other Tenant Renewal Rights” shall mean any rights granted in favor of another tenant of the Building pursuant to such tenant’s initial lease or any amendment, modification, supplement or restatement of such lease, to extend or renew the space initially leased by such tenant, in any case to the extent granted in accordance with Paragraph 34(N)(iv) above.

“Other Tenant Fixed Expansion Rights” shall mean any rights granted in favor of another tenant of the Building pursuant to such tenant’s initial lease or any amendment, modification, supplement or restatement of such lease, to expand its premises by adding thereto a fixed amount or range of a maximum and minimum Rentable Area on a given floor or floors in the Building effective as of a fixed date or within a designated window period, in any case to the extent granted in accordance with Paragraph 34(N)(iv) above.

“Other Tenant ROFO Rights” shall mean any rights of first offer, rights of first refusal, or rights to obtain a proposal to lease additional space in the Building granted to another tenant of the Building pursuant to such tenant’s initial lease or any amendment, modification, supplement or restatement of such lease, in any case to the extent granted in accordance with Paragraph 34(N)(iv) above.

(xi) Tenant’s Fixed Expansion Rights. Except as expressly provided to the contrary in this Article 34, nothing contained in this Paragraph 34(N) shall be deemed to limit or otherwise affect Tenant’s Expansion Options under Paragraphs 34(A) through 34(L) hereof). Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and confirm that all Other Tenant Renewal Rights, Other Tenant Fixed Expansion Rights and Other Tenant ROFO Rights shall be subject and subordinate in all respects to each of Tenant’s Expansion Options described in Paragraphs 34(A) through 34(L) hereof.

(O) First Renewal Option. Tenant shall have the option (the “First Renewal Option”) to extend the Term of this Lease as to the First Renewal Premises for either five (5) years or ten (10) years at Tenant’s election (such election to be made and set forth in the First Renewal Notice) commencing on the day immediately following the Initial Term Expiration Date (the “First Renewal Term”).

(i) The term “First Possible Renewal Premises” shall mean all of the Premises subject to this Lease at the time of the giving of the First Renewal Notice, including any portion of the Premises as to which an Acceptance Notice shall have been given pursuant to Paragraph 34(N) even if such portion of the Premises shall not yet have been delivered to Tenant. The term “First Renewal Premises” shall mean all or such portions of the First Possible Renewal Premises as shall be specified by Tenant (in its sole discretion) in Tenant’s First Renewal Notice (and in the absence of any such specific designation in the Tenant’s First Renewal Notice, the First Renewal Premises shall be the

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entire First Possible Renewal Premises), except that (a) Tenant must specify a minimum of 250,000 square feet of Rentable Area, (b) with respect to each floor of the Building on which Tenant specifies that any part of the First Renewal Premises shall be located in Tenant’s First Renewal Notice, Tenant must include all of the First Possible Renewal Premises located on such floor, and (c) Tenant shall not exclude from the First Renewal Premises any floor on which the First Possible Renewal Premises is located unless such floor is: (x) either the highest or lowest floor of a contiguous block of full or partial floors which constitutes the First Possible Renewal Premises, or (y) not contiguous to any other floor on which the First Possible Renewal Premises is located. Nothing contained in this subparagraph shall limit Tenant’s rights set forth in Paragraph 34(N)(viii) hereof to rescind its Acceptance Notice with respect to Accepted Offer Space, subject to the terms of said Paragraph 34(N)(viii).

(ii) The First Renewal Term shall be upon the terms and conditions contained herein, including without limitation the payment of Tenant’s Pro Rata Share of Taxes and Operating Expenses, determined on the same basis as set forth in Article 3 of this Lease, except that (a) the Net Rent for the First Renewal Term shall be equal to the net or base rent specified in the Current Market Terms for the First Renewal Premises for the First Renewal Term, (b) Tenant shall be paid or shall otherwise be entitled to realize the benefit of the Tenant Concessions, if any, specified in the Current Market Terms, and (c) if the First Renewal Premises shall be less than the entire First Possible Renewal Premises, Tenant’s Pro Rata Share shall be recalculated on the basis of the Rentable Area of the First Renewal Premises.

(iii) If Tenant desires to exercise the First Renewal Option, Tenant shall deliver to Landlord notice of such exercise (the “First Renewal Notice”) no earlier than the date that is twenty-one (21) full calendar months, and no later than the date that is eighteen (18) full calendar months, prior to the Initial Term Expiration Date.

(iv) Landlord, within ten (10) Business Days after its receipt of the First Renewal Notice, shall deliver to Tenant (“Landlord’s Estimate Notice”) Landlord’s determination of the Current Market Terms for the First Renewal Premises for the First Renewal Term. Within fifteen (15) Business Days after Tenant’s receipt of Landlord’s Estimate Notice, Landlord and Tenant shall commence negotiations to determine the Current Market Terms for the First Renewal Premises. If Landlord and Tenant shall have not agreed upon the Current Market Terms within the applicable period provided for in Paragraph 35(A)(i) below, the Current Market Terms shall be determined in accordance with the balance of Article 35 hereof.

(P) Second Renewal Option. Tenant shall have the option (the “Second Renewal Option”) to extend the Term of this Lease as to the Second Renewal Premises for either five (5) years or ten (10) years at Tenant’s election (such election to be made and set forth in the Second Renewal Notice) commencing upon the expiration of the First Renewal Term (the “Second Renewal Term”).

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(i) The term “Second Possible Renewal Premises” shall mean all of the Premises subject to this Lease at the time of the giving of the Second Renewal Notice, including any portion of the Premises as to which an Acceptance Notice shall have been given pursuant to Paragraph 34(N) even if such portion of the Premises shall not yet have been delivered to Tenant. The term “Second Renewal Premises” shall mean all or such portions of the Second Possible Renewal Premises as shall be specified by Tenant (in its sole discretion) in Tenant’s Second Renewal Notice (and in the absence of any such specific designation in the Tenant’s Second Renewal Notice, the Second Renewal Premises shall be the entire Second Possible Renewal Premises), except that (a) Tenant must specify a minimum of 250,000 square feet of Rentable Area, (b) with respect to each floor of the Building on which Tenant specifies that any part of the Second Renewal Premises shall be located in Tenant’s Second Renewal Notice, Tenant must include all of the Second Possible Renewal Premises located on such floor, and (c) Tenant shall not exclude from the Second Renewal Premises any floor on which the Second Possible Renewal Premises is located unless such floor is: (x) either the highest or lowest floor of a contiguous block of full or partial floors which constitutes the Second Possible Renewal Premises, or (y) not contiguous to any other floor on which the Second Possible Renewal Premises is located. Nothing contained in this subparagraph shall limit Tenant’s rights set forth in Paragraph 34(N)(viii) hereof to rescind its Acceptance Notice with respect to Accepted Offer Space, subject to the terms of said Paragraph 34(N)(viii).

(ii) The Second Renewal Term shall be upon the terms and conditions contained herein, including without limitation the payment of Tenant’s Pro Rata Share of Taxes and Operating Expenses, determined on the same basis as set forth in Article 3 of this Lease, except that (a) the Net Rent for the Second Renewal Term shall be equal to the net or base rent specified in the Current Market Terms for the Second Renewal Premises for the Second Renewal Term, (b) Tenant shall be paid or shall otherwise be entitled to realize the benefit of the Tenant Concessions, if any, specified in the Current Market Terms, and (c) if the Second Renewal Premises shall be less than the entire Second Possible Renewal Premises, Tenant’s Pro Rata Share shall be recalculated on the basis of the Rentable Area of the Second Renewal Premises.

(iii) If Tenant desires to exercise the Second Renewal Option, Tenant shall deliver to Landlord notice of such exercise (the “Second Renewal Notice”) no earlier than the date that is twenty-one (21) full calendar months, and no later than the date that is eighteen (18) full calendar months, prior to the date on which the First Renewal Term is scheduled to expire.

(iv) Landlord, within ten (10) Business Days after its receipt of the Second Renewal Notice, shall deliver to Tenant Landlord’s Estimate Notice containing Landlord’s determination of the Current Market Terms for the Second Renewal Premises for the Second Renewal Term. Within fifteen (15) Business Days after Tenant’s receipt of Landlord’s Estimate Notice, Landlord and Tenant shall commence negotiations to determine the Current Market Terms for the Second Renewal Premises. If Landlord and Tenant shall have not agreed upon the Current Market Terms within the applicable period

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provided for in Paragraph 35(A)(i) below, the Current Market Terms shall be determined in accordance with the balance of Article 35 hereof.

(Q) Third Renewal Option. Tenant shall have the option (the “Third Renewal Option”) to extend the Term of this Lease as to the Third Renewal Premises for either five (5) years or ten (10) years at Tenant’s election (such election to be made and set forth in the Third Renewal Notice) commencing upon the expiration of the Second Renewal Term (the “Third Renewal Term”).

(i) The term “Third Possible Renewal Premises” shall mean all of the Premises subject to this Lease at the time of the giving of the Third Renewal Notice, including any portion of the Premises as to which an Acceptance Notice shall have been given pursuant to Paragraph 34(N) even if such portion of the Premises shall not yet have been delivered to Tenant. The term “Third Renewal Premises” shall mean all or such portions of the Third Possible Renewal Premises as shall be specified by Tenant (in its sole discretion) in Tenant’s Third Renewal Notice (and in the absence of any such specific designation in the Tenant’s Third Renewal Notice, the Third Renewal Premises shall be the entire Third Possible Renewal Premises), except that (a) Tenant must specify a minimum of 250,000 square feet of Rentable Area, (b) with respect to each floor of the Building on which Tenant specifies that any part of the Third Renewal Premises shall be located in Tenant’s Third Renewal Notice, Tenant must include all of the Third Possible Renewal Premises located on such floor, and (c) Tenant shall not exclude from the Third Renewal Premises any floor on which the Third Possible Renewal Premises is located unless such floor is: (x) either the highest or lowest floor of a contiguous block of full or partial floors which constitutes the Third Possible Renewal Premises, or (y) not contiguous to any other floor on which the Third Possible Renewal Premises is located. Nothing contained in this subparagraph shall limit Tenant’s rights set forth in Paragraph 34(N)(viii) hereof to rescind its Acceptance Notice with respect to Accepted Offer Space, subject to the terms of said Paragraph 34(N)(viii).

(ii) The Third Renewal Term shall be upon the terms and conditions contained herein, including without limitation the payment of Tenant’s Pro Rata Share of Taxes and Operating Expenses, determined on the same basis as set forth in Article 3 of this Lease, except that (a) the Net Rent for the Third Renewal Term shall be equal to the net or base rent specified in the Current Market Terms for the Third Renewal Premises for the Third Renewal Term, (b) Tenant shall be paid or shall otherwise be entitled to realize the benefit of the Tenant Concessions, if any, specified in the Current Market Terms, and (c) if the Third Renewal Premises shall be less than the entire Third Possible Renewal Premises, Tenant’s Pro Rata Share shall be recalculated on the basis of the Rentable Area of the Third Renewal Premises.

(iii) If Tenant desires to exercise the Third Renewal Option, Tenant shall deliver to Landlord notice of such exercise (the “Third Renewal Notice”) no earlier than the date that is twenty-one (21) full calendar months, and no later than the date that is eighteen (18) full calendar months, prior to the date on which the Second Renewal Term is scheduled to expire.

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(iv) Landlord, within ten (10) Business Days, after its receipt of the Third Renewal Notice, shall deliver to Tenant Landlord’s Estimate Notice containing Landlord’s determination of the Current Market Terms for the Third Renewal Premises for the Third Renewal Term. Within fifteen (15) Business Days after Tenant’s receipt of Landlord’s Estimate Notice, Landlord and Tenant shall commence negotiations to determine the Current Market Terms for the Third Renewal Premises. If Landlord and Tenant shall have not agreed upon the Current Market Terms within the applicable period provided for in Paragraph 35(A)(i) below, the Current Market Terms shall be determined in accordance with the balance of Article 35 hereof.

(R) Fourth Renewal Option. Tenant shall have the option (the “Fourth Renewal Option”) to extend the Term of this Lease as to the Fourth Renewal Premises for either five (5) years or ten (10) years at Tenant’s election (such election to be made and set forth in the Fourth Renewal Notice) commencing upon the expiration of the Third Renewal Term (the “Fourth Renewal Term”).

(i) The term “Fourth Possible Renewal Premises” shall mean all of the Premises subject to this Lease at the time of the giving of the Fourth Renewal Notice, including any portion of the Premises as to which an Acceptance Notice shall have been given pursuant to Paragraph 34(N) even if such portion of the Premises shall not yet have been delivered to Tenant. The term “Fourth Renewal Premises” shall mean all or such portions of the Fourth Possible Renewal Premises as shall be specified by Tenant (in its sole discretion) in Tenant’s Fourth Renewal Notice (and in the absence of any such specific designation in the Tenant’s Fourth Renewal Notice, the Fourth Renewal Premises shall be the entire Fourth Possible Renewal Premises), except that (a) Tenant must specify a minimum of 250,000 square feet of Rentable Area, (b) with respect to each floor of the Building on which Tenant specifies that any part of the Fourth Renewal Premises shall be located in Tenant’s Fourth Renewal Notice, Tenant must include all of the Fourth Possible Renewal Premises located on such floor, and (c) Tenant shall not exclude from the Fourth Renewal Premises any floor on which the Fourth Possible Renewal Premises is located unless such floor is: (x) either the highest or lowest floor of a contiguous block of full or partial floors which constitutes the Fourth Possible Renewal Premises, or (y) not contiguous to any other floor on which the Fourth Possible Renewal Premises is located. Nothing contained in this subparagraph shall limit Tenant’s rights set forth in Paragraph 34(N)(viii) hereof to rescind its Acceptance Notice with respect to Accepted Offer Space, subject to the terms of said Paragraph 34(N)(viii).

(ii) The Fourth Renewal Term shall be upon the terms and conditions contained herein, including without limitation the payment of Tenant’s Pro Rata Share of Taxes and Operating Expenses, determined on the same basis as set forth in Article 3 of this Lease, except that (a) the Net Rent for the Fourth Renewal Term shall be equal to the net or base rent specified in the Current Market Terms for the Fourth Renewal Premises for the Fourth Renewal Term, (b) Tenant shall be paid or shall otherwise be entitled to realize the benefit of the Tenant Concessions, if any, specified in the Current Market Terms, and (c) if the Fourth Renewal Premises shall be less than the entire Fourth

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Possible Renewal Premises, Tenant’s Pro Rata Share shall be recalculated on the basis of the Rentable Area of the Fourth Renewal Premises.

(iii) If Tenant desires to exercise the Fourth Renewal Option, Tenant shall deliver to Landlord notice of such exercise (the “Fourth Renewal Notice”) no earlier than the date that is twenty-one (21) full calendar months, and no later than the date that is eighteen (18) full calendar months, prior to the date on which the Third Renewal Term is scheduled to expire.

(iv) Landlord, within ten (10) Business Days, after its receipt of the Fourth Renewal Notice, shall deliver to Tenant Landlord’s Estimate Notice containing Landlord’s determination of the Current Market Terms for the Fourth Renewal Premises for the Fourth Renewal Term. Within fifteen (15) Business Days after Tenant’s receipt of Landlord’s Estimate Notice, Landlord and Tenant shall commence negotiations to determine the Current Market Terms for the Fourth Renewal Premises. If Landlord and Tenant shall have not agreed upon the Current Market Terms within the applicable period provided for in Paragraph 35(A)(i) below, the Current Market Terms shall be determined in accordance with the balance of Article 35 hereof.

(S) Renewal Options – General.

(i) Tenant shall not be entitled to exercise a Renewal Option if on the date Tenant exercises such Renewal Option, (a) a material Default then exists (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), (b) this Lease or Tenant’s right of possession has been terminated, or (c) this Lease is not in full force and effect. Tenant shall not be entitled to exercise the Second Renewal Option unless Tenant shall have exercised the First Renewal Option, Tenant shall not be entitled to exercise the Third Renewal Option unless Tenant shall have exercised the Second Renewal Option, and Tenant shall not be entitled to exercise the Fourth Renewal Option unless Tenant shall have exercised the Third Renewal Option.

(ii) Following exercise by Tenant of a Renewal Option and determination of the Current Market Terms for the respective Renewal Term, at the request of either party hereto and within thirty (30) days after such request, Landlord and Tenant shall enter into a mutually acceptable supplement to this Lease confirming the renewal of this Lease for such Renewal Term, the Renewal Premises, and the terms of such renewal. The failure or refusal of either party to do so, however, shall not affect the validity of the exercise of the Renewal Option.

(iii) The term “Renewal Term” shall mean the First Renewal Term, the Second Renewal Term, the Third Renewal Term, or the Fourth Renewal Term. The term “Renewal Option” shall mean the First Renewal Option, the Second Renewal Option, the Third Renewal Option, or the Fourth Renewal Option. The term “Renewal

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Premises” shall mean the First Renewal Premises, the Second Renewal Premises, the Third Renewal Premises, or the Fourth Renewal Premises.

(iv) In connection with Tenant’s exercise of the applicable Renewal Option, Landlord shall pay to Tenant a construction allowance for the performance of Alteration Work in the First Renewal Premises, Second Renewal Premises, Third Renewal Premises or Fourth Renewal Premises (as applicable) equal to the construction allowance, if any, included in the determination of the Current Market Terms (a “Renewal Allowance”). Any Renewal Allowance shall be used and disbursed subject to and in accordance with the conditions, provisions and procedures set forth in Section 6 of the Workletter (as though the Renewal Allowance constituted a part of the Tenant Work Allowance). Landlord and Tenant agree that, in the event that Tenant has not used or applied the entire amount of any Renewal Allowance for the purposes permitted hereunder by the date that is eighteen (18) months after the commencement of the Renewal Term applicable thereto, Landlord shall be entitled to retain the remaining Renewal Allowance, and Tenant shall have no further rights to such remaining Renewal Allowance or to any credit against Rent therefor.

(T) Pre-Term Contraction Option. Subject to the terms and provisions of this Article 34, Landlord hereby grants Tenant the following option to reduce the size of the Premises by deleting therefrom all of the Rentable Area located on one (1) or two (2) or three (3) floors in the Building (any such space so deleted from the Premises is referred to herein as “Pre-Term Contraction Space”), in accordance with the following provisions:

(i) Tenant shall have a one-time option (“Pre-Term Contraction Option”) to delete Pre-Term Contraction Space from the Premises in accordance with the provisions herein, provided that: (a) this Lease is then in full force and effect, and no material Default by Tenant shall have occurred and be continuing, and (b) Tenant shall not exercise or have exercised the Pre-Term Expansion Option under Paragraph 34(A). Tenant shall exercise this Pre-Term Contraction Option, if at all, by delivering written notice of such exercise (“Pre-Term Contraction Notice”) to Landlord on or before the first to occur of September 1, 2007 or Tenant’s commencement of any Tenant Work in such Pre-Term Contraction Space (“Pre-Term Contraction Notice Deadline”). In the Pre-Term Contraction Notice, Tenant shall refer to this Paragraph 34(T)(i) and elect to delete all of the Rentable Area located, at Tenant’s option, on either one (1) floor or two (2) floors or three (3) floors in accordance with the parameters described in the next succeeding sentence. If Tenant exercises this Pre-Term Contraction Option: (x) to delete three (3) floors, then such floors shall be the 39^th, 38^th and 14^th floors of the Building, (y) to delete two (2) floors, then such floors shall be either the 39^th and 38^th floors or the 39^th and 14^th floors of the Building (as so designated by Tenant), or (z) to delete one (1) floor, then such floor shall be either the 39^th floor or the 14^th floor of the Building.

(ii) If Tenant fails to deliver the Pre-Term Contraction Notice, by the Pre-Term Contraction Notice Deadline, then Tenant shall be deemed to have waived its Pre-Term Contraction Option. In the event that Tenant properly exercises the Pre-Term Contraction Option, the applicable Pre-Term Contraction Space shall be deleted from the

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Premises effective as of the date of Tenant’s Pre-Term Contraction Notice, as though the Premises had never included the applicable Pre-Term Contraction Space, and the Net Rent, Tenant Work Allowance, Rentable Area of the Premises and Tenant’s Pro Rata Share shall be reduced to reflect such deletion. Following any exercise by Tenant of the Pre-Term Contraction Option, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the deletion of the applicable Pre-Term Contraction Space from the Premises, as well as the new Net Rent, Tenant Work Allowance, Rentable Area of the Premises and Tenant’s Pro Rata Share. The failure or refusal of either party to do so, however, shall not affect the validity of Tenant’s exercise of the Pre-Term Contraction Option.

(U) First Contraction Option. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have the right (the “First Contraction Option”) to reduce the size of the Premises by deleting therefrom either (the “First Contraction Space”): (x) the highest or lowest full or (subject to the next sentence) partial floor of the Low-Rise Contiguous Floors Premises then leased by Tenant, or (y) the highest or lowest full or (subject to the next sentence) partial floor of the Mid-Rise Contiguous Floors Premises then leased by Tenant; provided, however, that in the event Tenant exercises the Second Expansion Option under this Lease, then Tenant may not exercise its First Contraction Option for any space located on or above the floor in which the Second Expansion Premises are located. In the event that Tenant elects to exercise Tenant’s First Contraction Option as to only a portion of the Rentable Area on any floor of the Building, then Tenant must include in such exercise all of the Rentable Area on such floor then leased by Tenant. For purposes hereof, the term “Low-Rise Contiguous Floors Premises” shall mean the then existing portions of the Low-Rise Floors Premises, as previously expanded or contracted, which, when taken together, comprise a contiguous block of (full or partial) floors, i.e., Tenant is then leasing office space on each such floor within such block directly from Landlord under this Lease co-terminously with the Expiration Date for the initial Premises. For purposes hereof, the term “Mid-Rise Contiguous Floors Premises” shall mean the then existing portions of the Mid-Rise Floors Premises, as previously expanded or contracted, which, when taken together, comprise a contiguous block of (full or partial) floors, i.e. Tenant is then leasing office space on each such floor within such block directly from Landlord under this Lease co-terminously with the Expiration Date for the initial Premises. Tenant’s First Contraction Option shall be subject to the following terms and conditions:

(i) Tenant shall exercise Tenant’s First Contraction Option by providing Landlord with written notice thereof (the “First Contraction Notice”) on or before February 28, 2015. Tenant’s First Contraction Notice shall specify: (a) the location of the First Contraction Space (as selected by Tenant in accordance with the provisions hereof), and (b) the effective date of the deletion of the First Contraction Space from the Premises, which shall be February 29, 2016 (the “First Contraction Effective Date”);

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(ii) Effective on the First Contraction Effective Date, the First Contraction Space shall be deleted from the Premises, and the Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share shall be proportionately reduced to reflect such deletion;

(iii) Tenant shall vacate the First Contraction Space on or prior to the First Contraction Effective Date and surrender the same to Landlord free and clear of the rights of any subtenants, licensees or other parties claiming by, through or under Tenant, in accordance with the terms of Article 12 hereof; provided, however, that, in addition to Tenant’s restoration obligations set forth in said Article 12, Tenant shall, at its expense, close any stair penetrations installed by Tenant (or by Landlord pursuant to the Workletter, but not including stair penetrations for the fire stairs described in Paragraph 6(K) hereof) within the First Contraction Space, and remove any internal stairways constructed by Tenant within the First Contraction Space;

(iv) Tenant shall pay to Landlord, no later than the date that is thirty (30) days prior to the First Contraction Effective Date, an amount equal to:

(1) The unamortized portion (calculated as of the First Contraction Effective Date), determined by fully amortizing such amount monthly over a twenty (20) year amortization period (or such shorter period for any First Contraction Space which does not constitute part of the Initial Premises, equal to the period from and after the initial commencement date for the leasing thereof and through the Initial Term Expiration Date), using an interest rate on the unamortized portion thereof equal to 7% per annum, assuming equal monthly installments of principal and interest (with interest in advance), commencing on the commencement date of the term for the applicable space constituting the First Contraction Space, of either:

(a) if the First Contraction Space constitutes part of the Initial Premises, the sum of:

(i) the product of (x) $65.00, multiplied by (y) the number of square feet of Rentable Area in the First Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Brokers in connection with Tenant’s lease of the Initial Premises per square foot of Rentable Area in the Initial Premises, multiplied by the number of square feet of Rentable Area in the First Contraction Space (it being agreed that the aggregate amount of any such commissions paid to the Brokers hereunder shall be deemed to have been calculated in the manner set forth on Exhibit Z attached hereto for purposes

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of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(U)(iv)); or

(b) if the First Contraction Space constitutes Expansion Premises, First Proposal Space or Accepted Offer Space, the sum of

(i) the amount of any Expansion Allowance, ROFO Allowance or First Proposal Allowance (as applicable) used or applied by Tenant pursuant to this Article 34 with respect to the First Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Tenant’s Broker (and/or any other broker of Tenant) and any broker of Landlord in connection with Tenant’s lease of the First Contraction Space (it being agreed that the aggregate amount of any such commissions paid to any broker(s) of Landlord shall be deemed to have been calculated in the manner set forth in that portion of Exhibit Z attached hereto dealing with payments to the Landlord’s broker for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(U)(iv) attributable to the commissions paid to any broker(s) of Landlord); and

(v) Following any exercise by Tenant of the First Contraction Option, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the deletion of the First Contraction Space from the Premises, as well as the new Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share. The failure or refusal of either party to do so, however, shall not affect the validity of Tenant’s exercise of the First Contraction Option.

(V) Second Contraction Option. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have the right (the “Second Contraction Option”) to reduce the size of the Premises by deleting therefrom either (the “Second Contraction Space”): (x) the highest or lowest full or (subject to the next sentence) partial floor of the Low-Rise Contiguous Floors Premises then leased by Tenant, or (y) the highest or lowest full or (subject to the next sentence) partial floor of the Mid-Rise Contiguous Floors Premises then leased by Tenant; provided, however, that in the event Tenant exercises the Sixth Expansion Option under this Lease, then Tenant may not exercise its Second Contraction Option for any space located on or above the floor in which the Sixth Expansion Premises are located. In the event that Tenant elects to exercise Tenant’s Second Contraction Option as to only a portion of the Rentable Area on any floor of the Building, then Tenant must include in such exercise all of the Rentable Area on such

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floor then leased by Tenant. Tenant’s Second Contraction Option shall be subject to the following terms and conditions:

(i) Tenant shall exercise Tenant’s Second Contraction Option by providing Landlord with written notice thereof (the “Second Contraction Notice”) on or before February 28, 2019. Tenant’s Second Contraction Notice shall specify: (a) the location of the Second Contraction Space (as selected by Tenant in accordance with the provisions hereof), and (b) the effective date of the deletion of the Second Contraction Space from the Premises, which shall be February 29, 2020 (the “Second Contraction Effective Date”);

(ii) Effective on the Second Contraction Effective Date, the Second Contraction Space shall be deleted from the Premises, and the Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share shall be proportionately reduced to reflect such deletion;

(iii) Tenant shall vacate the Second Contraction Space on or prior to the Second Contraction Effective Date and surrender the same to Landlord free and clear of the rights of any subtenants, licensees or other parties claiming by, through or under Tenant, in accordance with the terms of Article 12 hereof; provided, however, that, in addition to Tenant’s restoration obligations set forth in said Article 12, Tenant shall, at its expense, close any stair penetrations installed by Tenant (or by Landlord pursuant to the Workletter, but not including stair penetrations for the fire stairs described in Paragraph 6(K) hereof) within the Second Contraction Space, and remove any internal stairways constructed by Tenant within the Second Contraction Space;

(iv) Tenant shall pay to Landlord, no later than the date that is thirty (30) days prior to the Second Contraction Effective Date, an amount equal to:

(1) The unamortized portion (calculated as of the Second Contraction Effective Date), determined by fully amortizing such amount monthly over a twenty (20) year amortization period (or such shorter period for any Second Contraction Space which does not constitute part of the Initial Premises, equal to the period from and after the initial commencement date for the leasing thereof and through the Initial Term Expiration Date), using an interest rate on the unamortized portion thereof equal to 7% per annum, assuming equal monthly installments of principal and interest (with interest in advance), commencing on the commencement date of the term for the applicable space constituting the Second Contraction Space, of either:

(a) if the Second Contraction Space constitutes part of the Initial Premises, the sum of:

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(i) the product of (x) $65.00, multiplied by (y) the number of square feet of Rentable Area in the Second Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Brokers in connection with Tenant’s lease of the Initial Premises per square foot of Rentable Area in the Initial Premises, multiplied by the number of square feet of Rentable Area in the Second Contraction Space (it being agreed that the aggregate amount of any such commissions paid to the Brokers hereunder shall be deemed to have been calculated in the manner set forth on Exhibit Z attached hereto for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(V)(iv)); or

(b) if the Second Contraction Space constitutes Expansion Premises, First Proposal Space or Accepted Offer Space, the sum of

(i) the amount of any Expansion Allowance, ROFO Allowance or First Proposal Allowance (as applicable) used or applied by Tenant pursuant to this Article 34 with respect to the Second Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Tenant’s Broker (and/or any other broker of Tenant) and any broker of Landlord in connection with Tenant’s lease of the Second Contraction Space (it being agreed that the aggregate amount of any such commissions paid to any broker(s) of Landlord shall be deemed to have been calculated in the manner set forth in that portion of Exhibit Z attached hereto dealing with payments to the Landlord’s broker for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(V)(iv) attributable to the commissions payable to any broker(s) of Landlord); and

(v) Following any exercise by Tenant of the Second Contraction Option, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the deletion of the Second Contraction Space from the Premises, as well as the new Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share. The failure or refusal of either party to do so, however, shall not affect the validity of Tenant’s exercise of the Second Contraction Option.

(W) Third Contraction Option. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess

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of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have the right (the “Third Contraction Option”) to reduce the size of the Premises by deleting therefrom either (the “Third Contraction Space”): (x) the highest or lowest full or (subject to the next sentence) partial floor of the Low-Rise Contiguous Floors Premises then leased by Tenant, or (y) the highest or lowest full or (subject to the next sentence) partial floor of the Mid-Rise Contiguous Floors Premises then leased by Tenant. In the event that Tenant elects to exercise Tenant’s Third Contraction Option as to only a portion of the Rentable Area on any floor of the Building, then Tenant must include in such exercise all of the Rentable Area on such floor then leased by Tenant. Tenant’s Third Contraction Option shall be subject to the following terms and conditions:

(i) Tenant shall exercise Tenant’s Third Contraction Option by providing Landlord with written notice thereof (the “Third Contraction Notice”) on or before February 28, 2022. Tenant’s Third Contraction Notice shall specify: (a) the location of the Third Contraction Space (as selected by Tenant in accordance with the provisions hereof), and (b) the effective date of the deletion of the Third Contraction Space from the Premises, which shall be February 28, 2023 (the “Third Contraction Effective Date”);

(ii) Effective on the Third Contraction Effective Date, the Third Contraction Space shall be deleted from the Premises, and the Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share shall be proportionately reduced to reflect such deletion;

(iii) Tenant shall vacate the Third Contraction Space on or prior to the Third Contraction Effective Date and surrender the same to Landlord free and clear of the rights of any subtenants, licensees or other parties claiming by, through or under Tenant, in accordance with the terms of Article 12 hereof; provided, however, that, in addition to Tenant’s restoration obligations set forth in said Article 12, Tenant shall, at its expense, close any stair penetrations installed by Tenant (or by Landlord pursuant to the Workletter, but not including stair penetrations for the fire stairs described in Paragraph 6(K) hereof) within the Third Contraction Space, and remove any internal stairways constructed by Tenant within the Third Contraction Space;

(iv) Tenant shall pay to Landlord, no later than the date that is thirty (30) days prior to the Third Contraction Effective Date, an amount equal to:

(1) The unamortized portion (calculated as of the Third Contraction Effective Date), determined by fully amortizing such amount monthly over a twenty (20) year amortization period (or such shorter period for any Third Contraction Space which does not constitute part of the Initial Premises, equal to the period from and after the initial commencement date for the leasing thereof and through the Initial Term Expiration Date), using an interest rate on the unamortized portion thereof equal to 7% per annum, assuming equal monthly installments of principal and interest (with

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interest in advance), commencing on the commencement date of the term for the applicable space constituting the Third Contraction Space, of either:

(a) if the Third Contraction Space constitutes part of the Initial Premises, the sum of:

(i) the product of (x) $65.00, multiplied by (y) the number of square feet of Rentable Area in the Third Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Brokers in connection with Tenant’s lease of the Initial Premises per square foot of Rentable Area in the Initial Premises, multiplied by the number of square feet of Rentable Area in the Third Contraction Space (it being agreed that the aggregate amount of any such commissions paid to the Brokers hereunder shall be deemed to have been calculated in the manner set forth on Exhibit Z attached hereto for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(W)(iv)); or

(b) if the Third Contraction Space constitutes Expansion Premises, First Proposal Space or Accepted Offer Space, the sum of

(i) the amount of any Expansion Allowance, ROFO Allowance or First Proposal Allowance (as applicable) used or applied by Tenant pursuant to this Article 34 with respect to the Third Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Tenant’s Broker (and/or any other broker of Tenant) and any broker of Landlord in connection with Tenant’s lease of the Third Contraction Space (it being agreed that the aggregate amount of any such commissions paid to any broker(s) of Landlord shall be deemed to have been calculated in the manner set forth in that portion of Exhibit Z attached hereto dealing with payments to the Landlord’s broker for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(W)(iv) attributable to the commissions paid to any broker(s) of Landlord); and

(v) Following any exercise by Tenant of the Third Contraction Option, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease

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confirming the deletion of the Third Contraction Space from the Premises, as well as the new Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share. The failure or refusal of either party to do so, however, shall not affect the validity of Tenant’s exercise of the Third Contraction Option.

(X) Fourth Contraction Option. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have the right (the “Fourth Contraction Option”) to reduce the size of the Premises by deleting therefrom either (the “Fourth Contraction Space”): (x) the highest or lowest full or (subject to the next sentence) partial floor of the Low-Rise Contiguous Floors Premises then leased by Tenant, or (y) the highest or lowest full or (subject to the next sentence) partial floor of the Mid-Rise Contiguous Floors Premises then leased by Tenant. In the event that Tenant elects to exercise Tenant’s Fourth Contraction Option as to only a portion of the Rentable Area on any floor of the Building, then Tenant must include in such exercise all of the Rentable Area on such floor then leased by Tenant. Tenant’s Fourth Contraction Option shall be subject to the following terms and conditions:

(i) Tenant shall exercise Tenant’s Fourth Contraction Option by providing Landlord with written notice thereof (the “Fourth Contraction Notice”) on or before February 28, 2025. Tenant’s Fourth Contraction Notice shall specify: (a) the location of the Fourth Contraction Space (as selected by Tenant in accordance with the provisions hereof), and (b) the effective date of the deletion of the Fourth Contraction Space from the Premises, which shall be February 28, 2026 (the “Fourth Contraction Effective Date”);

(ii) Effective on the Fourth Contraction Effective Date, the Fourth Contraction Space shall be deleted from the Premises, and the Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share shall be proportionately reduced to reflect such deletion;

(iii) Tenant shall vacate the Fourth Contraction Space on or prior to the Fourth Contraction Effective Date and surrender the same to Landlord free and clear of the rights of any subtenants, licensees or other parties claiming by, through or under Tenant, in accordance with the terms of Article 12 hereof; provided, however, that, in addition to Tenant’s restoration obligations set forth in said Article 12, Tenant shall, at its expense, close any stair penetrations installed by Tenant (or by Landlord pursuant to the Workletter, but not including stair penetrations for the fire stairs described in Paragraph 6(K) hereof) within the Fourth Contraction Space, and remove any internal stairways constructed by Tenant within the Fourth Contraction Space;

(iv) Tenant shall pay to Landlord, no later than the date that is thirty (30) days prior to the Fourth Contraction Effective Date, an amount equal to:

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(1) The unamortized portion (calculated as of the Fourth Contraction Effective Date), determined by fully amortizing such amount monthly over a twenty (20) year amortization period (or such shorter period for any Fourth Contraction Space which does not constitute part of the Initial Premises, equal to the period from and after the initial commencement date for the leasing thereof and through the Initial Term Expiration Date), using an interest rate on the unamortized portion thereof equal to 7% per annum, assuming equal monthly installments of principal and interest (with interest in advance), commencing on the commencement date of the term for the applicable space constituting the Fourth Contraction Space, of either:

(a) if the Fourth Contraction Space constitutes part of the Initial Premises, the sum of:

(i) the product of (x) $65.00, multiplied by (y) the number of square feet of Rentable Area in the Fourth Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Brokers in connection with Tenant’s lease of the Initial Premises per square foot of Rentable Area in the Initial Premises, multiplied by the number of square feet of Rentable Area in the Fourth Contraction Space (it being agreed that the aggregate amount of any such commissions paid to the Brokers hereunder shall be deemed to have been calculated in the manner set forth on Exhibit Z attached hereto for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(X)(iv)); or

(b) if the Fourth Contraction Space constitutes Expansion Premises, First Proposal Space or Accepted Offer Space, the sum of

(i) the amount of any Expansion Allowance, ROFO Allowance or First Proposal Allowance (as applicable) used or applied by Tenant pursuant to this Article 34 with respect to the Fourth Contraction Space, plus

(ii) the aggregate amount of any brokerage commissions paid by Landlord to the Tenant’s Broker (and/or any other broker of Tenant) and any broker of Landlord in connection with Tenant’s lease of the Fourth Contraction Space (it being agreed that the aggregate amount of any such commissions paid to any broker(s) of Landlord shall be deemed to have been calculated in the manner set forth in

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that portion of Exhibit Z attached hereto dealing with payments to the Landlord’s broker for purposes of determining the amount of the fee payable by Tenant pursuant to this Paragraph 34(X)(iv) attributable to the commissions paid to any broker(s) of Landlord); and

(v) Following any exercise by Tenant of the Fourth Contraction Option, Landlord and Tenant shall enter into a mutually-acceptable supplement to this Lease confirming the deletion of the Fourth Contraction Space from the Premises, as well as the new Net Rent, Rentable Area of the Premises and Tenant’s Pro Rata Share. The failure or refusal of either party to do so, however, shall not affect the validity of Tenant’s exercise of the Fourth Contraction Option.

(Y) Early Termination Option. Provided that no material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing), this Lease shall be in full force and effect, and Tenant’s right of possession shall have not been terminated, Tenant shall have a one-time right (“Early Termination Option”) to terminate this Lease in its entirety, effective on February 28, 2025 (“Early Termination Date”), as though such date were the original Expiration Date set forth in this Lease, provided that Tenant delivers to Landlord written notice irrevocably and unconditionally exercising the Early Termination Option (“Lease Termination Notice”) on or before February 28, 2023. If Tenant exercises the Early Termination Option, the following terms and conditions shall apply:

(i) Effective on the Early Termination Date, the Lease shall be deemed to have been terminated as though it had expired in accordance with its terms; however, Tenant shall continue to timely pay all Net Rent and Additional Rent under the Lease and comply with each and every term and provision hereof accruing through the Early Termination Date (and all such obligations accruing through the Early Termination Date shall survive such termination, including, but not limited to, any Additional Rent not yet determined or billed prior to the Early Termination Date).

(ii) Tenant shall vacate the entire then existing Premises on or prior to the Early Termination Date and surrender the same to Landlord free and clear of the rights of any subtenants, licensees or other parties claiming by, through or under Tenant, in accordance with the terms of Article 12 hereof;

(iii) Tenant shall pay to Landlord, no later than the date that is thirty (30) days prior to the Early Termination Date, as a cancellation fee and not as liquidated damages or a penalty, and as a further condition to the effectiveness of Tenant’s exercise of Tenant’s Early Termination Option an amount equal to: (a) twelve (12) full months of Net Rent (at the rates scheduled to be in effect under the Lease for the period immediately following the Termination Date), and (b) twelve (12) full months of Additional Rent for Operating Expenses and Taxes (in the amounts that Landlord is

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billing Tenant on an estimated basis for the calendar year in which the Early Termination Date occurs).

(Z) Tenant’s Right to Lease from Other Building Tenants. Notwithstanding any provision of any lease or other agreement with any other tenant from time to time leasing space in the Building which may give Landlord the right to withhold consent to any sublease by such other tenant to Tenant, or any assignment of any lease by such other tenant to Tenant, or any right to recapture (by any means) the premises proposed to be subleased by such other tenant to Tenant or the premises covered by any lease proposed to be assigned by such other tenant to Tenant, Landlord agrees that (i) Landlord shall have no consent or recapture rights with respect to any such sublease by such other tenant to Tenant, or with respect to any such assignment of any lease by such other tenant to Tenant (provided that Tenant shall, in any event, notify Landlord of any such sublease or assignment prior to the effective date thereof), (ii) if so requested by such other tenant or Tenant, Landlord shall nevertheless consent in writing to any such sublease or assignment and shall not exercise any such recapture right, and (iii) Tenant may furnish a copy of this Paragraph 34(Z) to any Building tenant, and any such Building tenant may rely thereon.

ARTICLE 35

Determination by Arbitration

(A) Exchange of Estimates.

(i) Within fifteen (15) Business Days after either (a) Tenant delivers an Acceptance Notice with respect to the exercise of its rights of first offer under Paragraph 34(N) and Tenant does not state in its Acceptance Notice that it agrees with Landlord’s estimate of the Current Market Terms set forth in Landlord’s Offer Notice, or (b) Tenant receives a Landlord’s Estimate with respect to any of the Renewal Options under Paragraphs 34(O) through (R), or (c) Landlord has delivered notice to Tenant of Landlord’s estimate of the Current Market Terms for any other purpose for which the Current Market Terms are required to be determined under this Lease, Landlord and Tenant shall commence negotiations to agree upon the Current Market Terms applicable thereto. If the Landlord and Tenant are unable to reach agreement on the Current Market Terms within fifteen (15) Business Days in the event of clause (a), or thirty (30) calendar days in the event of clause (b) or clause (c), after the end of the applicable fifteen (15) Business Day period, then the Current Market Terms shall be determined in accordance with Paragraph 35(A)(ii) below.

(ii) If Landlord and Tenant fail to agree on the Current Market Terms within the foregoing applicable period, then within seven (7) days thereafter, the Landlord and Tenant shall, at the Building’s management office, each simultaneously submit to the other in a sealed envelope its signed, written, good faith estimate of the Current Market Terms (the “Estimates”). If the net present value of the higher of the base rent or net rent (less the net present value of the applicable Tenant Concessions) specified in the Estimates is not more than one hundred ten percent (110%) of net present value of the

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lower of the base or net rent (less the net present value of the applicable Tenant Concessions) specified in said Estimates, then the Current Market Terms shall be calculated based upon the average of the two Estimates. Otherwise, unless the parties agree upon the Current Market Terms within seven (7) days of the submission of the Estimates, the question shall be determined by arbitration in accordance with Paragraphs 35(B)-(C) below.

(B) Selection of Arbitrators. Within seven (7) days after the initiation of the arbitration proceedings by either party, which shall be accomplished by giving written notice to the other party, the parties shall select, as an arbitrator, a mutually acceptable independent, State of Illinois licensed real estate broker with experience in commercial office leasing, including at least ten (10) years continuous experience in representing landlords or tenants, or both, in the leasing of commercial office space in comparable office buildings in downtown Chicago, and working knowledge of current rental rates and market practices in comparable office buildings in downtown Chicago (a “Qualified Arbitrator”). If the parties fail to select a Qualified Arbitrator, then, within a second period of seven (7) days, each party shall select a Qualified Arbitrator, and within ten (10) days thereafter, the two appointed Qualified Arbitrators shall select a third Qualified Arbitrator and the third Qualified Arbitrator shall be the arbitrator and shall determine the question of Current Market Terms (and each party shall bear the costs of the Qualified Arbitrator appointed by it to select the third Qualified Arbitrator). If one party shall fail to make such selection within said second seven (7) day period, then the Qualified Arbitrator chosen by the other party shall be the sole arbitrator. If the two appointed Qualified Arbitrators shall fail to select a third Qualified Arbitrator, then the third Qualified Arbitrator shall be selected by the Executive Director of the Chicago Chapter of BOMA (or a comparable successor or substitute organization designated by the parties, if the Chicago Chapter of BOMA no longer exists), in accordance with its rules.

(C) Arbitration of Current Market Terms. Within two (2) Business Days after the Qualified Arbitrator has been selected as provided in Paragraph 35(B) above, Landlord and Tenant shall submit their respective Estimates to the Qualified Arbitrator. As soon thereafter as practicable, but in any case within twenty-one (21) days, the Qualified Arbitrator shall select one of the two Estimates of Current Market Terms submitted by the Landlord and Tenant, which shall be the one that is closer to the Current Market Terms as determined by the Qualified Arbitrator, and the Qualified Arbitrator shall not designate any other economic terms as the Current Market Terms. The Estimate so selected shall be the Current Market Terms. The decision of the Qualified Arbitrator as to the Current Market Terms shall be submitted in writing to, and shall (subject to Paragraph 35(D) below) be final and binding on, Landlord and Tenant. The parties shall be permitted, within fifteen (15) Business Days after the selection of the Qualified Arbitrator and upon reasonable prior notice to the other party hereto, to present evidence of their respective determinations of the Current Market Terms to the Qualified Arbitrator. If the Qualified Arbitrator believes that expert advice would materially assist him or her, (s)he may retain one or more qualified persons, including, but not limited to, legal counsel, brokers, architects or engineers, to provide such expert advice. The party whose Estimate is not chosen by the Qualified Arbitrator shall pay the costs of the Qualified Arbitrator and of any experts retained by the Qualified Arbitrator. Any fees of any counsel or expert engaged directly by the Landlord or Tenant, however, shall be borne by the party obtaining such counsel, expert

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or arbitrator, except as expressly provided herein. If a compromise is reached between the parties before the Qualified Arbitrator makes a decision, the cost of the arbitration shall be equally divided between the parties.

(D) Tenant’s Right to Rescind Renewal Option. If Tenant disagrees, at Tenant’s sole option, with the final determination of Current Market Terms made pursuant to either Paragraph 35(A)(ii) or Paragraph 35(C) above for any Renewal Option under Paragraphs 34(O) through (S), then Tenant may rescind Tenant’s exercise of the applicable Renewal Option by delivering written notice thereof (“Renewal Rescission Notice”), referring to this Paragraph 35(D) and irrevocably and unconditionally exercising such right of rescission, to Landlord within fifteen (15) Business Days after the determination of Current Market Terms is made hereunder. In such case: (i) any otherwise remaining Renewal Options under Article 34 shall thereupon be automatically deleted, and (ii) at Landlord’s sole option, Landlord may elect (“Short Term Extension Election”) to extend the then current Expiration Date of this lease to be the day (“New Final Expiration Date”) that is the last day of the eighteenth (18^th) full calendar month following the date on which Tenant delivers the Renewal Rescission Notice to Landlord. In order to make such Short Term Extension Election, Landlord shall so notify Tenant within ten (10) Business Days after receiving Tenant’s Renewal Rescission Notice. If Landlord makes such Short Term Extension Election: (a) this Lease shall be extended for a period (“Short Term Extension Period”) commencing on the day after the then scheduled Expiration Date and expiring on such New Final Expiration Date, and (b) during the Short Term Extension Period, all provisions of this Lease then in effect shall remain in full force in accordance with their terms, and Tenant shall continue to pay Net Rent at the rate of Net Rent then payable hereunder (and Tenant shall have no further Renewal Options).

(E) Judgment. Except in the case where Tenant rescinds a Renewal Option as provided above, the determination by a Qualified Arbitrator pursuant to this Article 35 shall be deemed an arbitration award, and judgment on the award may be entered in any court having jurisdiction thereof.

(F) Landlord’s Estimate Governs Pending Determination. To the extent that any amount which is to be based on the Current Market Terms becomes due or payable by either party prior to the date on which such Current Market Terms are actually determined pursuant to the foregoing provisions of Article 35 of this Lease, then such amount shall, pending the determination of such actual Current Market Terms (as provided above), be based on Landlord’s Estimate of such Current Market Terms, it being agreed that in the event that the such actual Current Market Terms are thereafter determined to be different from Landlord’s Estimate thereof, the parties shall reconcile any amounts paid pursuant to Landlord’s Estimate based on such actual Current Market Terms within thirty (30) days after the determination thereof.

ARTICLE 36

Parking

(A) Generally; Monthly Parking Spaces. Landlord agrees that, as a component of the Landlord Work required to be performed pursuant to the Workletter, Landlord shall construct

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the Garage at the Building in accordance with the plans and specifications approved by Tenant for the Landlord Work. Landlord shall provide or cause to be provided to Tenant, up to one hundred fifty (150) parking permits, each granting the right to use one (1) unreserved parking space in the Garage (the “Monthly Parking Spaces”), which Monthly Parking Spaces shall be available for use by Tenant commencing on the Commencement Date. Not less than 75% of the initial 150 parking permits provided to Tenant under this Article 36 shall allow for self-parking privileges, and the balance of the permits provided under this Article 36 may, at Landlord’s election, correspond to valet parking rights at the Garage. Tenant (and its employees, principals, Partners, contractors, vendors, invitees and clients, and the persons and entities which are permitted to use and occupy the Premises pursuant to Article 20 hereof) (collectively, “Users”) shall have the right to use such Monthly Parking Spaces at all times, on a monthly basis for a fee equal to the monthly rate established by Landlord or its Garage operator, from time to time, for parking in the Garage, which shall not exceed the prevailing monthly rates for comparable parking garages in the vicinity of the Building. Tenant (or its Users) shall pay Landlord or (at Landlord’s direction) Landlord’s Garage operator such monthly parking fee for each Monthly Parking Space that Tenant has the right to use hereunder; provided, however, that notwithstanding anything to the contrary in the foregoing, from time to time, on not less than sixty (60) days’ prior notice to Landlord, Tenant may elect to reduce the number of Monthly Parking Spaces that it uses and pays for, and/or (if Tenant has previously so elected to reduce the number of said Monthly Parking Spaces) to increase the number of Monthly Parking Spaces that Tenant uses and pays for (but not to a number greater than 150 parking permits), except as hereinafter provided. Further, in the event Tenant leases any additional space at the Building pursuant to its various options set forth in Article 34 above, then, upon not less than sixty (60) days prior notice to Landlord (which notice must be delivered, if at all, within ninety (90) days following the commencement date for the leasing of such additional space), Tenant shall be entitled to up to an additional three (3) parking permits under this Article 36 for each full floor of additional space leased by Tenant at the Building under said Article 34 (it being understood that Tenant shall not be entitled to additional parking permits hereunder for any additional space leased by Tenant under Article 34 which is less than a full floor increment at the Building). At Landlord’s election, Tenant shall also be deemed to have elected to reduce the number of Monthly Parking Spaces by one (1) Monthly Parking Space for each Monthly Parking Space for which Tenant fails to timely pay the monthly charges; provided, that such failure continues for fifteen (15) Business Days after written notice from Landlord to Tenant. In the event that Tenant elects (or is deemed to have elected) to reduce the number of Monthly Parking Spaces it (or its Users) use on a monthly basis as provided in the preceding two sentences, Landlord shall have the right to grant or confer upon other tenants and occupants of the Building rights to use any of such parking spaces that Tenant has elected not to so use; provided, however, that Tenant shall have the right to re-institute its (or its Users’) use of such parking spaces (as Monthly Parking Spaces) at any time upon sixty (60) days’ prior written notice to Landlord, and no rights granted or conferred by Landlord upon any such other tenants and occupants of the Building to use such parking spaces shall prevent or limit Tenant (or its Users) from re-instituting such use within such time frame.

(B) Daily Parking Spaces. Landlord and Tenant agree that Tenant and its Users shall have the right (in common with the other tenants and occupants of the Building, on a first-come, first-served basis) to use any parking spaces located in the Garage (including parking spaces that

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formerly constituted Monthly Parking Spaces described in Paragraph 36(A) above which Tenant has elected (or is deemed to have elected) at such time not to use on a monthly basis) that are not subject to prior parking rights granted to any other tenant or occupant of the Building, on a daily basis. With respect to each parking space that is used by Tenant or its Users on a daily basis, Tenant (or the individual which so uses such parking space) shall pay Landlord (or, if Landlord so directs, Landlord’s Garage operator) for the use of such parking space, the daily rate established by Landlord or its Garage operator, from time to time, for parking in the Garage, which shall not exceed the prevailing daily parking rates for comparable parking garages in the vicinity of the Building; provided, that the rate charged by Landlord or its Garage operator to Tenant and its Users for daily parking in the Garage on weekends shall be a reduced rate, not to exceed the prevailing daily parking rates for comparable parking garages in the vicinity of the Building for parking on weekends; and provided further, that in the event that the owners and/or managers of parking garages at comparable office buildings in downtown Chicago charge a reduced daily rate for parking therein on Holidays, then the rate charged by Landlord or its Garage operator to Tenant and its Users for daily parking in the Garage on such Holidays shall be a reduced rate reflecting such reduced rate in effect at the parking garages of comparable office buildings in downtown Chicago.

(C) Use of Garage and Parking Spaces. Tenant (or each User which Tenant permits to use one or more of the Monthly Parking Spaces) shall be required to enter into a separate, commercially reasonable agreement with the Landlord or the operator of the Garage for the use of the Monthly Parking Spaces, subject to the terms hereof. Use of the Garage shall be limited to Building tenants and their Users, in each case holding valid monthly or daily garage passes subject to such security and access control systems as Landlord may from time to time reasonably establish (which systems shall be integrated with the Building’s security system), and shall not be used by the general public; provided, however, that in the event that Tenant hereafter elects to reduce the number of Monthly Parking Spaces it uses hereunder pursuant to Paragraph 36(A) above (and/or other tenants of the Building have not elected to use all of the parking spaces at the Garage or hereafter elect to reduce the number of parking spaces they use pursuant to their leases or occupancy agreements), and Landlord is unable, after using commercially reasonable efforts, to provide such parking spaces to tenants and occupants of the Building, then to the extent that Landlord, acting in good faith, determines that it would be prudent to do so taking into account the then current national and local security environment, Landlord shall have the right to make such parking spaces which Tenant (or such other tenant(s)) have elected not to use available to members of the public (it being agreed that, prior to making any such parking spaces available to the public, Landlord shall reasonably consult with Tenant regarding the same, and shall institute such additional security measures for the Garage as Landlord in good faith deems prudent in connection therewith). Access to the Garage shall be open twenty-four (24) hours a day seven (7) days a week (subject to fire or other casualty or Unavoidable Delays, or closures (subject to Article 21 hereof) for necessary maintenance or repair). Landlord shall cause at least one (1) attendant to be stationed in the Garage at all times between the hours of 6:00 a.m. and 8:00 p.m. on weekdays (other than Holidays) during periods within which public parking at the Garage is not permitted, and twenty four (24) hours a day seven (7) days a week during periods within which public parking at the Garage is permitted. Landlord shall cause communications equipment (such as an intercom or dedicated telephone) to be installed in the Garage in order to enable persons using the Garage to communicate with

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Landlord’s personnel stationed at the Building security desk in the Main Lobby of the Building during periods when an attendant is not stationed in the Garage. Tenant shall use the parking spaces located in the Garage solely for the parking of motor vehicles of Tenant and its Users. Tenant shall at all times comply with (and the provisions hereof shall be expressly subject to) all applicable Laws regarding the use of the Garage. Landlord reserves the right to adopt, modify and enforce reasonable rules (the “Garage Rules”) governing the use of the Garage from time to time, including any security key card (which shall be integrated with the Building’s security system), sticker or other identification or entrance system; provided however the Garage Rules shall be consistent with this Lease and not adversely affect (except to a de minimis extent) Tenant’s use and occupancy of the Premises or the Garage. All Garage Rules shall be adopted and applied on a non-discriminatory basis to the users of the Garage in a reasonable manner in a manner which shall not interfere (except to a de minimis extent) with the use of the Premises or the Garage. Landlord may refuse to permit any person who violates any such Garage Rules to park in the Garage, and any violation of the Rules shall subject the car to removal, at such person’s expense from the Garage.

(D) Other Provisions Regarding Garage and Parking Spaces.

(i) If Landlord utilizes a card-key access system for access to the Garage, Landlord’s charge for any replacement cards shall be at Landlord’s Actual Cost therefor. Landlord also reserves the right to close all or any portion of the Garage in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the Garage, or if required by casualty, condemnation, or Unavoidable Delay. In such event, Landlord shall refund any prepaid parking fees hereunder for each of the Monthly Parking Spaces rendered unusable as a result thereof, prorated on a per diem basis and shall use its reasonable efforts to complete such maintenance or repair as soon as reasonably possible.

(ii) Tenant shall not perform any Alteration Work with respect to the Monthly Parking Spaces or any other portion of the Garage.

(iii) Landlord and Tenant agree that upon the termination of this Lease for any reason, or termination of Tenant’s right to possession hereunder, Tenant’s rights under this Article 36 shall simultaneously terminate.

(iv) Landlord shall provide (or cause to be provided) hand car washing services to Users of the Garage, for which Landlord (or the operator of the Garage) may charge reasonable fees.

(v) Without limitation of the preceding provisions of this Article 36, commencing on the Commencement Date and continuing for the balance of the Term, Landlord shall make available to Tenant, at a monthly rate equal to 120% of the rates otherwise applicable from time to time for the balance of the Monthly Parking Spaces up to forty percent (40%) of Tenant’s total parking spaces provided under this Article 36, in the Garage, on a reserved basis, located at a location mutually agreeable to the parties, which reserved spaces shall be as a substitute for (and not in addition to) unreserved

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Monthly Parking Spaces otherwise available to Tenant under this Section 36, which reserved parking spaces may be used by Tenant for the same purposes and in accordance with the balance of the provisions of this Section 36. Landlord shall use commercially reasonable efforts, including the posting of signage and periodic inspection, to enforce the reserved nature of such reserved parking spaces.

ARTICLE 37

Roof Satellite Dish/Antennae/Supplemental Cooling

Tenant shall have the right to use and gain secured access to a portion of the roof of the Building pursuant to Exhibit N attached hereto (or other area of the Building available to tenants or others for roof equipment) having a size that is at least as large as the larger of: (i) Tenant’s Pro Rata Share of the space on the Building roof that is available to tenants and occupants of the Building (and any third parties) for the installation and use of rooftop equipment (including satellite and antenna equipment), or (ii) space that is sufficient for the installation, use and maintenance of the satellite dishes and related communication receiving/sending equipment more specifically referenced in Exhibit N attached hereto (the “Rooftop Area”), provided that such Rooftop Area has a southwest exposure and permits proper orientation and operation at all times of such satellite dishes and related communication receiving/sending equipment, all of which satellite dishes and related communication receiving/sending equipment shall be for Tenant’s own use and the use of other occupants of the Premises, for the transmission and receipt of radio, microwave and other communication signals. If Tenant so requests in writing to Landlord, Landlord shall also provide to Tenant (within a reasonable time after such written request by Tenant) sufficient additional space on the roof of the Building that is not larger than 2,000 square feet of contiguous Rentable Area (which shall also constitute part of the “Rooftop Area” for purposes hereof) for Tenant to install and maintain a supplemental cooling tower/unit, as more specifically described in Exhibit N attached hereto, serving any data center area in the Premises, as well as adequate interior space for any chillers required in connection therewith, as well as riser space through the Building for purposes of enabling Tenant to connect any such supplemental cooling system with Tenant’s data center. Tenant, at its cost, shall install, maintain (in good and safe condition and repair, in compliance with all Laws) and insure any equipment installed in the Rooftop Area (or other areas in which Tenant shall have installed equipment pursuant to this Article 37) by Tenant and shall, at its sole cost and expense, obtain any zoning or other governmental approvals necessary for such equipment, and repair any and all damage caused to the Building or any equipment or property (subject to the terms of Paragraphs 10(E)(iv) and 25(B) hereof) as a result of Tenant’s exercise of the rights granted in this Article 37. Tenant shall not be required to pay Landlord any fees or Rent for the use of the Rooftop Area (or other areas in which Tenant shall have installed equipment pursuant to this Article 37). Installation of such equipment shall be performed at Tenant’s sole cost and expense in accordance with the provisions of the Workletter (if part of the Tenant Work) or Article 7. Tenant agrees that access to the Rooftop Area shall be reasonably controlled by Landlord in accordance with Landlord’s riser maintenance plan and rooftop rules and regulations adopted and uniformly enforced for the Building from time to time, and Tenant shall coordinate any activity in the Rooftop Area with prior written notice to and the involvement of Building personnel. If any equipment is installed on the roof of the Building (or other area of the Building available to

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tenants or others for roof equipment) by Landlord or any other tenant or occupant of the Building subsequent to the installation of Tenant’s equipment and the same causes interference with Tenant’s equipment, Landlord shall arrange, at no cost to Tenant, for such other equipment to be relocated, shielded or removed so as to remedy such interference within thirty (30) days following Tenant’s notice thereof. Tenant’s operation or use of its equipment in the Rooftop Area shall not prevent or unreasonably interfere with the operation or use of any equipment of Landlord or any current tenant or occupant of the Building to the extent that such equipment was installed prior to the installation of Tenant’s equipment. If Tenant’s equipment causes any such interference, then Landlord may so notify Tenant, and Landlord may require Tenant to replace, shield or relocate such equipment of Tenant, in which event Tenant shall (at its sole cost), within thirty (30) days of receipt of such notice (or, if a government permit is required to replace or relocate such equipment, then within thirty (30) days of the obtaining of such permit (which Tenant shall make prompt application for, with Landlord’s cooperation but at no cost to Landlord)), replace, shield or relocate Tenant’s equipment so as to eliminate such interference. Landlord and Tenant agree that upon the termination of this Lease for any reason, or termination of Tenant’s right to possession hereunder, Tenant’s rights under this Article 37 shall simultaneously terminate. Within fifteen (15) Business Days following the expiration or earlier termination of the Term (or Tenant’s right to possession hereunder), Tenant shall remove its equipment from the Rooftop Area (or such other areas in which Tenant shall have installed equipment pursuant to this Article 37) and repair and restore the same and any damage caused to the Building as a result thereof (subject to Paragraphs 10(E)(iv) and 25(B) hereof). At Landlord’s request, the parties shall enter into a separate roof-top license agreement in form and substance reasonably satisfactory to Landlord and Tenant, which shall be consistent with the terms of this Article 37 and the terms of this Lease, and shall not impose any additional duties, obligations, fees or liabilities upon Tenant (except to a de minimis extent).

ARTICLE 38

Building Identification

(A) Unless Tenant otherwise agrees in writing, the Building shall at all times be referred to by its common street address of 300 North LaSalle Street, Chicago, Illinois. Landlord shall not change (or permit any other person or entity to change) the name or address of the Building (except to the extent required to change the address of the Building under applicable Laws or by the United States Postal Service) without the prior written consent of Tenant (which shall not be unreasonably withheld). Landlord further agrees that it shall not grant or confer upon any person or entity any rights to name or identify the Building during the Term hereof without the prior written consent of Tenant (not to be unreasonably withheld).

(B) Tenant’s approval rights under Paragraph 38(A) above shall only apply so long as: (a) this Lease remains in full force and effect and Tenant’s right of possession hereunder shall not have been terminated, and (b) either Tenant or a Transferee pursuant to an Exempt Transfer shall be leasing at least 100,000 square feet of Rentable Area at the Building. Tenant’s approval rights under this Article 38 are personal to the original named Tenant, any successor thereto pursuant to an Exempt Transfer, and any permitted assignee hereunder who succeeds to Tenant’s entire interest under this Lease, and may not be transferred or assigned to any other party.

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ARTICLE 39

Signage

(A) Tenant Signage Rights. Subject to the provisions of this Article 39, Tenant shall have the right, subject to (i) Landlord’s reasonable prior review and approval and (ii) the receipt by Tenant of all necessary approvals therefor pursuant to applicable Laws, to display its company name or logo in the locations designated below in this Article 39 (collectively, “Tenant Signs” and individually, a “Tenant Sign”).

(B) Exterior Signage.

(i) Monument. Landlord shall, prior to the Commencement Date (subject to and in accordance with the terms of the Workletter), construct and install (at its sole cost and expense), as a component of the Landlord Work, an exterior monument sign (the “Monument”) with a location, design, configuration and appearance, and including materials, acceptable to Tenant (in accordance with the standards for approval of the Landlord Work as set forth in the Workletter) in an area of the Plaza acceptable to Tenant (with reasonable proximity to the Building Pedestrian Entrance), in its sole discretion. The Monument shall be for the exclusive purpose of installing and maintaining (A) a Tenant Sign thereon, if Tenant so elects under Paragraph 38(B)(ii) below, and (B) a Landlord sign designating the street address of the Building (which Landlord sign shall, in any event, be no more prominent (in size and location on the Monument) than the Tenant Sign (if any) installed on such Monument), and (C) signage identifying not more than two (2) other tenants in the Building that each lease over 100,000 square feet of Rentable Area at the Building at the time such signage rights are granted by Landlord (provided that Tenant’s Sign (if any) installed on such Monument shall be higher in location and larger in size (and therefore more prominent) than that of any other tenant name therein), and neither Landlord nor any other tenant or occupant of the Building shall have any right to use the Monument for any other purpose. No alterations or modifications shall be made to the Monument without the prior written consent of Tenant (which may be granted or withheld in Tenant’s sole discretion). The Monument Sign (and the name of Tenant on the Tenant Sign thereon) shall be visible from LaSalle Street.

(ii) Exterior Tenant Sign. Tenant shall have the right to install and maintain one (1) Tenant Sign on the Monument (the “Exterior Tenant Sign”). Prior to any installation of the Exterior Tenant Sign, Tenant shall submit to Landlord, for Landlord’s approval, reasonably detailed plans and specifications (including the size) therefor. If such plans and specifications for the Exterior Tenant Sign indicate that the Exterior Tenant Sign to be installed by Tenant will: (a) consist of materials reasonably acceptable to Landlord, and (b) comply with the terms and provisions of clause (ii) of the first sentence of Paragraph 39(A) above, then Landlord shall grant its approval thereof (pursuant to clause (i) of the first sentence of Paragraph 39(A) above) within ten (10) Business Days after Landlord’s receipt of such plans and specifications. On or prior to the date on which the Design Development Plans (as defined in the Workletter) are agreed upon pursuant to the Workletter, Landlord and Tenant shall, working

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cooperatively and in good faith, determine the exact location in which the Monument is to be located, and shall within a reasonable time thereafter determine the approximate size and dimensions of the Exterior Tenant Sign thereon.

(iii) Other Exterior Signage. Landlord covenants and agrees that Landlord shall not grant or confer upon any other tenant or occupant of the Building any rights to place, install or maintain any signage on or at the exterior of the Building or the Property (except as provided in clause (y) of the next sentence). Landlord further covenants and agrees that Landlord shall not, without Tenant’s prior written consent (which may be granted or withheld in Tenant’s sole discretion), place or install, or permit the placement or installation of, any signage, graphics or other symbols on the exterior of the Building (or on the interior windows of the Building in a manner intended for exposure to the exterior of the Building) or the exterior Common Areas of the Property, other than (x) signage identifying the property manager of the Building (which shall be less prominent (in size and location) than the Exterior Tenant Sign, and shall not be located on the Monument on which the Exterior Tenant Sign is located, it being agreed that such signage of the property manager may be located on the revolving door glass of the Building Pedestrian Entrance in a manner substantially similar to other buildings in downtown Chicago for which Hines is the property manager), (y) signage for retail and restaurant tenants and occupants of the Building affixed to the exterior façade of the Retail Area of the Building (or on the interior windows of the Retail Area in a manner intended for exposure to the exterior of the Building) or elsewhere at the exterior of or within Retail Area of the Building which satisfies a reasonable set of criteria on which Landlord and Tenant, working cooperatively, shall reasonably agree on or prior to the date on which the Design Development Plans are agreed upon pursuant to the Workletter, and/or (z) a sign designating the common street address of the Building on the Monument as provided above or signage on any exterior monument sign installed by Landlord identifying tenants that each lease over 100,000 square feet of Rentable Area at the Building at the time such signage rights are granted by Landlord (provided that Landlord shall only be permitted to grant a maximum of two such other tenants exterior monument signage rights, in the aggregate, whether on the Monument as described in Section 39(B)(i) above and/or on any other exterior monument sign). Until the exterior retail signage criteria described in clause (y) of the preceding sentence have been determined by Landlord and Tenant as provided above, Tenant shall have the right (in its sole discretion) to approve any signage placed on the exterior of the Building (or on or in the interior windows of the Building in a manner placed for exposure to the exterior of the Building), other than signage described in clauses (x) and (z) of the preceding sentence or in Section 39(B)(i) above. When the exterior retail signage criteria described above have been agreed upon by Landlord and Tenant, Landlord shall thereafter have the right to modify such exterior retail signage criteria from time to time during the Term with Tenant’s prior approval, which shall not be unreasonably withheld, in connection with general design changes to the Retail Area of the Building.

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(C) Interior Signage.

(i) Tenant’s Lobby Signage. Tenant shall have the right to install and maintain no more than two (2) prominent Tenant Signs in the Main Lobby (in addition to any one (1) Tenant Sign which Tenant elects to install on (or on the lobby wall behind) any Tenant Lobby Desk installed in the Main Lobby pursuant to Paragraph 6(Q)(iii) hereof); one (1) of which shall (if Tenant elects to install the same) be located in an area of the Main Lobby designated by Tenant in or immediately adjacent to the entrance of the elevator banks area of the Main Lobby serving the Low-Rise Floors, and the other of which shall (if Tenant elects to install the same) be located in an area of the Main Lobby designated by Tenant in or immediately adjacent to the entrance of the elevator bank area of the Main Lobby serving the Mid-Rise Floors (which areas designated by Tenant shall, in any event, be consistent with the overall design and layout of the Main Lobby) (the “Elevator Lobby Signage Area”), or such other areas upon which Landlord and Tenant may agree (in each party’s sole discretion) in connection with the review and approval of the overall design and layout of the Main Lobby of the Building pursuant to the Workletter. Prior to any installation of any such Tenant Signs, Landlord shall submit to Tenant, for Tenant’s approval, reasonably detailed plans and specifications therefor. If such plans and specifications for such Tenant Signs indicate that such signage will: (a) consist of materials reasonably acceptable to Tenant, and (b) comply with the terms and provisions of clause (ii) of the first sentence of Paragraph 39(A) above, then Tenant shall grant its approval thereof within fifteen (15) Business Days after Tenant’s receipt of such plans and specifications. On or prior to the date on which the Design Development Plans are agreed upon pursuant to the Workletter, Landlord and Tenant shall, working cooperatively and in good faith, determine the exact location(s) in which the Tenant Signs are to be located in the Main Lobby, and shall within a reasonable time thereafter determine the approximate size and dimensions of such Tenant Signs.

(ii) Lobby Signage of Other Tenants. Landlord may grant or confer upon other tenants of the Building the right to place signage containing their respective names and/or logos in the Main Lobby; provided (and only provided), that (a) such tenant leases at least 50,000 square feet of Rentable Area in the Building or is otherwise a retail or restaurant tenant at the Building, (b) no such signage shall be larger (and therefore more prominent) than, or, if located within the Elevator Lobby Signage Area, located higher (or in a more prominent position) than, any Tenant Sign permitted to be installed in the Main Lobby (other than the Tenant Sign, if any, at (or on the lobby wall behind) any Tenant Lobby Desk), and (c) in no event shall any other tenant have the right to install more than one (1) sign in the Main Lobby, (any such signage that satisfies all of the foregoing criteria is referred to herein as “Qualified Lobby Signs of Other Tenants”). Landlord may also allow other tenants of the Building to place from time to time (but not on a regular basis) in the Main Lobby reasonable signage on a stanchion provided by Landlord, welcoming specified invitees of other tenants of the Building or identifying a special event taking place at such other tenant’s premises, substantially similar to Tenant’s permitted signage described in Paragraph 39(C)(iii) below, all in a manner reasonably acceptable to Tenant. Landlord may also allow other tenants leasing space in the high-rise portion of the Building to have signage in the high-

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rise elevator lobby bank area in the Main Lobby, which signage shall be excluded from any restrictions or conditions otherwise described in this Paragraph 39(C)(ii). In the event that any other tenant of the Building proposes to install a Qualified Lobby Sign of Other Tenants during any period within which Tenant has not installed any Tenant Sign in the Main Lobby (or if at such time the only Tenant Sign(s) installed by Tenant in the Main Lobby is a Tenant Sign on (or on the lobby wall behind) a Tenant Lobby Desk, and Landlord elects (or is not required) to permit such installation of such signage of such other tenant, Landlord shall notify Tenant at least thirty (30) days prior to the date that such other tenant is permitted to install such Qualified Lobby Signs of Other Tenants in the Main Lobby in order to allow Tenant to determine whether Tenant will elect to install one or more Tenant Signs in the Main Lobby as permitted under Paragraph 39(C)(i) in connection with the installation of such other tenant’s signage (and, if Tenant so elects, the relative size and location of the Tenant Sign(s) and Qualified Lobby Signs of Other Tenants shall be determined in accordance with the terms of this Paragraph 39(C)). Except for the stanchion signage and the high-rise elevator bank signage described above, Landlord shall not, without Tenant’s prior written consent (which may be granted or withheld in Tenant’s sole discretion), place or install, or permit the placement or installation of, any tenant identification signage in the Main Lobby, other than Qualified Lobby Signs of Other Tenants. In the event that any signage which, when installed, satisfied the criteria required of Qualified Lobby Signs of Other Tenants, ceases to satisfy such criteria (for example, as a result of the fact that a tenant which at one time leased 50,000 square feet or more of Rentable Area at the Building has ceased to lease at least 50,000 square feet of Rentable Area at the Building), then Landlord shall, as soon as reasonably possible, cause such signage to be removed.

(iii) Tenant Ground Floor Directional Signage. Tenant shall have the right to place from time to time (but not on a regular basis) within the Main Lobby, on a stanchion which shall be made available by Landlord therefor, reasonable signage welcoming specified invitees of Tenant or identifying a special event taking place at the Premises, provided that Tenant provides Landlord with reasonable advance notification thereof.

(iv) Tenant Entryway Signage. Tenant shall have the right to install, maintain, repair, replace and remove Tenant Signs prominently in the elevator lobby of each full floor of the Premises and Tenant shall have the right to display Tenant Signs on or adjacent to the door to the Premises on any floor Tenant partially leases. Landlord shall also install at Landlord’s expense Building standard directional signs for Tenant in the elevator lobbies of any partial floor leased by Tenant.

(D) Other Requirements.

(i) Without limitation of the specific requirements described above, the size and quality of all signage at the Building (including all Tenant Signs) shall be consistent with Class A office building standards and the overall design and appearance of the Building and Property (and the portion thereof at which such signs are installed).

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(ii) Except as expressly provided to the contrary herein, Tenant shall be solely responsible for all costs and expenses relating to the design, permitting (including receipt of all necessary building and other permits and/or approvals), fabrication and installation of any and all Tenant Signs in accordance with the terms and provisions of this Article 39. Tenant shall also be responsible for ongoing repair of all Tenant Signs in the Main Lobby, but Landlord shall be responsible for ongoing maintenance and repair of the Exterior Tenant Sign, and routine maintenance (but not repair) of the Tenant Sign(s) in the Main Lobby of the Building, as provided in Article 8 hereof.

(iii) In the performance of any installation, Alteration Work, repair, replacement, maintenance and removal and/or any other work with respect to any Tenant Sign, Tenant shall comply with all of the applicable provisions of this Lease (including, without limitation, the terms of the Workletter (if such sign is included as part of the Tenant Work), or Article 7 hereof).

(iv) Tenant’s rights under Paragraphs 39(B) and 39(C)(i)-(ii) shall not be assignable by Tenant to any Transferee other than a Major Transferee without the prior written consent of Landlord (which may be granted or withheld in Landlord’s sole discretion), and any assignment by Tenant of its rights under Paragraphs 39(B) and/or 39(C)(i)-(ii) hereof shall be subject to the terms of Paragraph 20(G)(ii) and (in the case of an assignment of Tenant’s rights under Paragraph 39(B)) Paragraph 20(G)(i) hereof. Tenant (or any Major Transferee) may, without the consent of Landlord, assign or transfer all of its rights under Paragraph 39(B), and all or any portion of its rights under Paragraph 39(C)(i)-(ii), to any Major Transferee (subject, however, in the case of an assignment of Tenant’s rights under Paragraph 39(B) and/or 39(C)(i)-(ii) hereof, to the terms of Paragraph 20(G)(ii) hereof), in which event Tenant (or the assigning Major Transferee) shall provide Landlord with notice of such assignment. Tenant may assign any of Tenant’s other rights under this Article 39 in connection with any assignment or sublease made in compliance with the terms of Article 20 of this Lease.

(v) At the expiration or earlier termination of the Term (or termination of Tenant’s right of possession hereunder), or the earlier termination of Tenant’s signage rights as described in clause (vi) below, Tenant shall, at its sole cost and expense, remove all Tenant Signs, and restore the areas of the Building where the same were located to a condition reasonably consistent with the condition of the areas of the Building in the immediate vicinity of such Tenant Signs as of the date of such removal.

(vi) Tenant’s rights to install the Exterior Tenant Sign and Tenant Signs in the Main Lobby under this Article 39 shall only apply so long as: (a) this Lease remains in full force and effect and Tenant’s right of possession hereunder shall not have been terminated, and (b) either Tenant, a Transferee pursuant to an Exempt Transfer, or a Major Transferee of Tenant to whom Tenant shall have assigned Tenant’s rights under this Article 39, shall be leasing at least 100,000 square feet of Rentable Area at the Building. In addition, Landlord and Tenant agree that Tenant shall have no right to commence the installation of any Exterior Tenant Sign or Tenant Sign in the Main Lobby pursuant to this Article 39 if, at the time that Tenant proposes to commence such

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installation, a material Default shall have occurred and be continuing (it being understood that a Default in the payment of Rent in excess of an amount equal to one month’s Net Rent and Additional Rent then due and owing hereunder shall in any event be deemed a “material” Default for purposes of the foregoing).

(vii) Landlord shall not at any time place or install (or allow to be placed or installed) any construction signage at the Property which contains the name of Tenant or any other tenant of the Building, without Tenant’s prior written consent in each instance (which consent may be granted or withheld in Tenant’s sole and absolute discretion).

ARTICLE 40

Exculpation of Tenant’s Partners

(A) Tenant’s Liability; Limitations on Partners’ Liability. Tenant is currently constituted as an Illinois limited liability partnership (“LLP”) and as such, shall be liable for the payment and performance of the duties and obligations of Tenant under, with respect to or arising out of this Lease or the use or occupancy of the Premises (collectively, “Lease Obligations”) to the extent (but only to the extent) of the assets of Tenant (which term “assets” shall include, without limitation, fixed assets, furnishings, fixtures, equipment, cash, investments, accounts receivable and accrued charges for work in process, collectively, for purposes of this Lease, “Tenant’s Assets”). In no event shall Tenant’s Assets include or be deemed to include for any purpose:

(i) the assets of any of the past, present or future partners, members, shareholders and other owners of equity in Tenant (as Tenant is now, or may hereafter be, constituted) or the individual persons who, directly or indirectly, own an interest in any such partner that is a corporation or other legal entity (any of the foregoing being referred to herein, individually, as a “Partner”, and collectively, as “Partners”);

(ii) the assets of any investment entities in which the ownership interests are directly owned by Partners or employees of Tenant, or the assets of any qualified or non-qualified employee benefit plans maintained for the benefit of any Partners or employees of Tenant including, without limitation, any portion of Tenant’s Assets designated by Tenant (in the ordinary course or otherwise, for independent purposes, and not for purposes of avoiding or limiting liability under this Lease) from time to time which are available to pay liabilities (whether current, accrued or future) of the qualified and nonqualified retirement, disability, and death benefit plans of Tenant and any additional or successor retirement, disability, and death benefit plans of Tenant or its successors (as amended, the “Plans”) (such assets having been accrued before, during or after the Term of this Lease and including, but not limited to, checking accounts, deposit accounts, certificates of deposit, shares of stock in corporations, and life insurance policies (including cash surrender value and policy proceeds thereof) together with interest, profits, gains and other income earned on all of the above);

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(iii) Accounts constituting client funds that are solely the property of clients of Tenant (“Client Funds”); or

(iv)(1) any negative capital accounts which may from time to time exist in the partnership, (2) any obligation of any of the Partners to contribute capital to the partnership, pursuant to the partnership agreement or otherwise, or (3) any right which the partnership or any trustee or similar person may otherwise have on behalf of the partnership to require contribution from any of the Partners to satisfy debts of the partnership in any bankruptcy, dissolution, reorganization, or similar proceeding involving the partnership (items (i)-(iv) above, collectively, “Excluded Assets”).

(B) Landlord, for itself and all successors and assigns, hereby covenants and agrees that, regardless of Tenant’s status as an LLP or any change in such status: (a) none of the Partners or employees of Tenant (or any of their respective heirs, executors, trustees, administrators, beneficiaries or representatives) (collectively, “Excluded Parties”) shall be personally liable for any Lease Obligations; (b) no Excluded Party shall be named as a party in any suit or other judicial proceeding of any kind or nature whatsoever brought against Tenant with respect to any Lease Obligations, except to the extent necessary to secure jurisdiction of Tenant or to recover any judgment from Tenant’s Assets or to recover possession of the Premises.

Further, Landlord hereby waives any right it may have to seek use and occupancy charges from any Excluded Party (but not from Tenant) in the event that this Lease is rejected by a trustee or debtor-in-possession in any bankruptcy, dissolution, reorganization or similar proceeding involving the partnership; and agrees that no attachment, execution or other writ of process shall be sought, issued or levied upon any Excluded Assets. For purposes of these Paragraphs 40(A) and (B), “Excluded Assets” shall not include any Partner’s interest in any then undistributed Tenant’s Assets from and after the date of termination of this Lease (or Tenant’s right of possession of the Premises) by Landlord by reason of the occurrence of a Default. The provisions of Paragraphs 40(A) and (B) shall not: (a) constitute a waiver, release or impairment of any obligations of Tenant under this Lease; or (b) impair Landlord’s rights to realize upon Tenant’s Assets for recovery of any judgment against Tenant.

Landlord further acknowledges and agrees that, in the event of any insolvency, bankruptcy, receivership, custodianship, liquidation, reorganization, assignment for the benefit of creditors or other proceeding for the liquidation, dissolution or other winding up of Tenant or any of its properties, Landlord shall not receive or be entitled to receive, directly or indirectly, any payments from or any distributions or redistributions of any of the Excluded Assets or any proceeds thereof (whether in cash or other property), whether payable under the terms of any plan or reorganization, by any receiver, trustee, liquidator, custodian, conservator or any other person having authority to effect any such payment or otherwise.

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ARTICLE 41

Representations and Warranties

(A) Landlord’s Representations and Warranties. Landlord represents and warrants to Tenant as the Effective Date as follows:

(i) Landlord possesses all requisite right, power and authority to enter into this Lease and perform its obligations hereunder;

(ii) Landlord’s execution of this Lease and performance of its obligations hereunder do not violate any agreements by which Landlord or, to Landlord’s knowledge, the Property are bound;

(iii) As of the Effective Date, Landlord is a party to a valid and binding contract, pursuant to which Landlord has agreed to purchase, and the current owner of the Land has agreed to sell, the Land;

(iv) There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Landlord, or, to Landlord’s actual knowledge, the Property, which Landlord in good faith believes could individually or in the aggregate interfere with Tenant’s rights under this Lease or the ability of Landlord to consummate the obligations contemplated by this Lease; and

(v) Upon obtaining all applicable zoning approvals and the C of O, Tenant’s use of the Premises for office, conference center, food preparation and all other purposes provided in the Lease shall be permitted under all applicable zoning Laws affecting the Building and/or the Property, and, to Landlord’s knowledge, with all covenants, conditions, restrictions and agreements affecting the Building and/or the Property (subject, however, to Permitted Title Exceptions); provided, the foregoing shall not be construed to constitute a representation or warranty that any specific design or configuration of the Premises proposed by Tenant shall comply with any such Laws.

(B) Tenant’s Representations and Warranties. Tenant represents and warrants to Landlord as of the Effective Date as follows:

(i) Tenant possesses all requisite right, title and authority to enter into this Lease and perform its obligations hereunder;

(ii) Tenant’s execution of this Lease and performance of its obligations hereunder do not violate any agreements by which Tenant is bound; and

(iii) There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Tenant which Tenant in good faith believes could individually or in the aggregate interfere with Landlord’s rights under this Lease or the ability of Tenant to consummate the obligations contemplated by this Lease.

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ARTICLE 42

Miscellaneous

(A) Retail Provisions. Provided that this Lease and/or Tenant’s right of possession of the Premises shall not have been terminated, Landlord shall not, without the prior written consent of Tenant (which consent may be withheld by Tenant in its sole discretion), enter into any lease of space located in the Building or at the Property for any retail use, or to any retail tenant, other than for first class retail uses and to retail tenants comparable in reputation and character, quality and type of retail use to retail uses and retail tenants at comparable Class A office buildings in downtown Chicago, such as (without limitation) those at 70 West Madison Street and those at 35 West Wacker Drive as of the Effective Date. All retail uses of the Building (other than the sundries shop and automatic teller machine described in Paragraph 6(Q) above) shall be confined to the Retail Areas of the Building. For purposes hereof, the term “retail” shall be deemed to include bar and restaurant uses (but shall not include cafeterias within office tenant spaces at the Building for use by such tenants and their employees, clients and other tenants and occupants of the Building, but not by members of the general public). Landlord may, at its option, in connection with any proposed lease of retail space at the Building, request by written notice to Tenant that Tenant confirm in writing whether Tenant agrees that the specific proposed retail use and/or tenant thereunder complies with the foregoing requirements of this Paragraph 42(A), and, if Tenant fails to respond to any such written notice within ten (10) Business Days after Tenant’s receipt thereof, then Landlord shall have the right to send a second notice to Tenant, which second notice shall (in addition to again requesting such confirmation) contain a sentence stating “TENANT’S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER TENANT’S RECEIPT HEREOF SHALL CONSTITUTE TENANT’S CONSENT TO THE RETAIL USE OR TENANT PROPOSED HEREIN,” and in the event that Tenant fails to respond to such second notice within five (5) Business Days after Tenant’s receipt thereof, Tenant shall be deemed to have confirmed that such proposed retail use and/or tenant complies with the foregoing requirements of this Paragraph 42(A).

(B) Binding. Each of the terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators, guardians, custodians, successors and assigns, subject to the provisions of Article 20 respecting Transfers by Tenant and the provisions of Article 24 respecting transfers by Landlord.

(C) Short Form of Lease. As soon as reasonably possible after the Landlord Acquisition Date, Landlord and Tenant shall execute and deliver a short form of this Lease, in form and substance reasonably acceptable to Landlord and Tenant. Tenant shall have the right, at any time after the Landlord Acquisition Date, to record any such short form of this Lease at its sole cost and expense. In the event that any such short form of this Lease is so executed, delivered and recorded, then, within ten (10) days following the end of the Term (or Tenant’s right of possession of the Premises), Tenant shall enter into such documentation as reasonably required by Landlord to remove the same of record.

(D) Laws. This Lease shall be construed in accordance with the Laws of the State of Illinois, without regard to principles of conflicts of law. Landlord and Tenant hereby submit to

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local jurisdiction in the County of Cook, State of Illinois and each agrees that any action by Tenant against Landlord or Landlord against Tenant, as the case may be, shall be instituted in the County of Cook, State of Illinois, and that courts located in Cook County shall have personal jurisdiction over Tenant for any action brought by Landlord against Tenant, and courts located in Cook County shall have personal jurisdiction over Landlord for any action brought by Tenant against Landlord, in the County of Cook, State of Illinois.

(E) Air. Except to the extent otherwise expressly set forth herein, this Lease does not grant any legal rights to “light and air” outside the Premises, nor any particular view or cityscape visible from the Premises.

(F) Amendments. This Lease and the Exhibits hereto shall not be amended, changed or modified in any way, unless in writing executed by Landlord and Tenant.

(G) Survival of Obligations. Any obligations of Landlord and Tenant accruing prior to the expiration of the Lease shall survive the expiration or earlier termination of the Lease, and Landlord and Tenant shall promptly perform all such obligations whether or not this Lease has expired or been terminated.

(H) No Joint Venture. Nothing contained in this Lease shall be deemed or construed by the parties to this Lease, or by any third party, to create the relationship of principal and agent, partnership, joint venture, or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of rent nor any other provisions contained in this Lease nor any acts of the parties to this Lease shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.

(I) Interpretation. Landlord and Tenant have jointly participated in the drafting of this Lease. Accordingly, this Lease shall be construed neither for nor against Landlord or Tenant notwithstanding the party which drafted same, but shall be given a fair and reasonable interpretation in accordance with the meaning of its terms and the intent of the parties.

(J) Exhibits. The Exhibits set forth in the Table of Contents or otherwise attached hereto are incorporated into this Lease by reference and made a part hereof.

(K) Full Agreement. This Lease, the Workletter, and the Exhibits contain all the terms and provisions between Landlord and Tenant relating to the matters set forth herein and no prior or contemporaneous agreement or understanding pertaining to the same shall be of any force or effect, except any such contemporaneous agreement specifically referring to and modifying this Lease, signed by both parties.

(L) Counterparts. This Lease may be executed in several counterparts, and all so executed shall constitute one agreement, binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. Only one such counterpart may be required as proof of the existence and terms of this Lease.

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(M) No Promotion. Landlord and Tenant each agrees that, except as provided below in this Paragraph 42(M), neither it, nor any of its agents (including, in the case of Landlord, Landlord’s Agent) shall, without the prior written consent of the other party in each instance, use in advertising or publicity the name of the other party (or any Affiliate of the other party, or any partner or employee of the other party, or any tradename, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof of the other party). In the event that either party or its agents shall make any such use of the other party’s name (or the name of any Affiliate of the other party, or any partner or employee of the other party), and such other party notifies the party using such name that it finds such use objectionable in any manner, then the non-objecting party shall immediately thereafter cease (and/or cause its agents to cease, as applicable) using such name in the manner as to which such objection has been made. Nothing contained in this Paragraph 42(M) shall be deemed to prevent Landlord and Tenant (and their respective agents) from disclosing the fact that this Lease exists and Tenant is a tenant of the Building. This provision shall survive termination of this Lease.

(N) Confidentiality.

(i) Each of Landlord and Tenant agrees that it shall not (except as permitted below) disclose the non-public financial terms of this Lease (including, to the extent non-public, the amount of the Net Rent and the amount of the Tenant Work Allowance) to any other person or entity without the prior written consent of the other party. Notwithstanding the foregoing, either party may, without the consent of the other, disclose the financial terms of this Lease to: (a) its respective partners, officers, directors, members, managers, employees, brokers, consultants and advisors, and existing or prospective transferees, Mortgagees, Ground Lessors, investors and/or purchasers of the Property, provided (in each case) that such persons and entities are advised of the obligation not to disclose such information and agree not to disclose such information, (b) the extent required by Laws (including any valid subpoena or any order of a court of competent jurisdiction), or (c) any person or entity to the extent reasonably deemed necessary by a party in order to enforce and/or exercise its rights or remedies under this Lease, or to defend itself in connection with any claim, demand, suit or proceeding in connection with this Lease or the Property. This provision shall survive the termination of this Lease.

(ii) Without limiting the terms of Paragraph 42(N)(i) above, Landlord and Tenant each acknowledges that it or its agents or employees (or employees of their respective agents) may, in the course of performing their respective responsibilities under this Lease, be exposed to or acquire information which is proprietary to or confidential to the other or its affiliated companies or their clients or to third parties to whom the other or its affiliated companies owe a duty of confidentiality. Any and all non-public information of any form which is, when delivered by one party to another hereunder, designated as confidential and proprietary by the delivering party, shall be deemed to be confidential and proprietary information. Each party agrees that it and its agents and employees (a) shall hold such information in strict confidence and shall not copy, reproduce, sell, assign, license, market, transfer or otherwise dispose of, give or disclose such information to third parties or use such information for any purposes whatsoever

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(other than the provision of services to Tenant as contemplated by this Lease or the enforcement of rights under this Lease or in connection with any litigation or other proceeding or as otherwise required by Laws), and (b) shall advise each of its agents and employees who may be exposed to such proprietary and confidential information of their obligations to keep such information confidential. This provision shall survive termination of this Lease.

(iii) Landlord and Tenant agree that each party’s sole remedy against the other in connection with any breach or violation of this Paragraph 42(N) shall be to obtain an injunction or other equitable relief preventing the further disclosure of the confidential material which has been disclosed by the breaching party (or its agents), and that no money damages shall be recoverable by either party in connection therewith. The parties further agree that no such breach or violation of the terms of this Paragraph 42(N) by Tenant shall constitute a Default under this Lease (or an event which, with the passage of time or giving of notice or both would constitute a Default hereunder), and that no such breach or violation of the terms of this Paragraph 42(N) by Landlord shall constitute a Landlord Default under this Lease (or an event which, with the passage or time or giving of notice or both would constitute a Landlord Default hereunder).

(O) Publicity. All press releases issued at any time hereafter concerning Landlord’s and Tenant’s execution of this Lease, the duration of the Term, the size of the Premises, the location of the Premises, and the individuals involved in the negotiation and execution of this Lease shall be subject to the prior written approval of Landlord and Tenant.

(P) Business Day. As used herein, the term “Business Day” shall mean any day other than a Saturday, Sunday, any Holiday, or any day on which banking institutions in the State of Illinois are closed for business with the general public. If any period expires on a day which is not a Business Day, or any event or condition is required by the terms of this Lease to occur or be fulfilled on a day which is not a Business Day, such period shall expire, or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day; provided, however, that this sentence shall not apply to those provisions of this Lease which contemplate performance on a non-Business Day (e.g., various provisions of Article 6).

(Q) Reasonableness. When this Lease provides that a party’s consent or approval shall not be “unreasonably withheld,” the phrase shall be deemed to include “conditioned or delayed.” Wherever in this Lease or the Workletter either Landlord’s or Tenant’s consent or approval is required, Landlord and Tenant each hereby acknowledges its duty to act in each such case consistent with a covenant of good faith and fair dealing (except where such party is expressly granted the right hereunder or in the Workletter to act in its sole discretion).

(R) Certain Interpretational Rules. For purposes of this Lease, whenever the words “include,” “includes,” “including,” “e.g.,” or “for example” are used, they shall be deemed to be followed by the words “without limitation” (to the extent that such words do not, in fact, so follow) and, whenever the circumstances or the context requires, the singular shall be construed as the plural, the masculine shall be construed as the feminine and/or the neuter and vice versa.

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(S) Rent. All amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated Net Rent, Tenant’s Pro Rata Share of Taxes and Operating Expenses, Additional Rent or Rent, shall constitute rent for the purposes of Section 502(b)(6) of the United States Bankruptcy Code.

(T) Landlord’s Agent. Unless Landlord delivers written notice to Tenant to the contrary, Landlord’s managing agent for the Building (which, as of the Commencement Date, is Hines) is authorized to act as Landlord’s agent in connection with the performance of this Lease, and Tenant shall be entitled to rely upon correspondence received from such agent. Tenant acknowledges that Landlord’s managing agent is acting solely as agent for Landlord in connection with the foregoing; and neither Landlord’s managing agent nor any of its direct or indirect partners, members, managers, officers, shareholders, directors, employees, principals, agents or representatives shall have any liability to Tenant in connection with the performance of this Lease, and Tenant waives any and all claims against any and all of such parties arising out of, or in any way connected with, this Lease, the Building or the Property. Landlord shall use reasonable efforts to cause Hines, or any other property manager engaged at the Building from time to time, to perform in accordance with performance standards consistent with performance standards maintained by property managers at other comparable Class A office building in downtown Chicago, Illinois (the “Class A Property Management Performance Standards”). Without limitation of the foregoing, it is agreed that, unless Landlord and Tenant mutually agree otherwise, Hines (or its affiliate) will remain as the property manager of the Building during the entire Term hereof (including, without limitation, any Renewal Terms), provided that (i) Hines (or such affiliate) continues to perform in accordance with the Class A Property Management Performance Standards, (ii) Hines (or such affiliate) does not charge Landlord more than a market level property management fee (subject in all events to the limitations set forth in Paragraph 3(B)(ii) hereof), and (iii) Hines (or such affiliate) continues to conduct property management services at one or more other Class A office buildings in downtown Chicago, Illinois. Subject to the terms of the preceding sentence, it is further agreed that Tenant shall have the right to approve any new property management company proposed to be engaged at the Building (i.e., other than Hines or its affiliates), which approval shall not be unreasonably withheld, conditioned or delayed, so long as such new property management company is reasonably capable of achieving and maintaining at all times the Class A Property Management Performance Standards and is otherwise experienced in the management of comparable Class A office buildings in downtown Chicago, Illinois.

(U) Time. Time is of the essence of each and every provision of this Lease.

(V) Joint and Several Liability. In the event that the Tenant hereunder shall at any time consist of more than one (1) person or entity, the obligations and liabilities of such persons or entities comprising the Tenant under this Lease shall be joint and several; subject, however, in all events to the terms of Article 40 hereof. In the event that the Landlord hereunder shall at any time consist of more than one (1) person or entity, the obligations and liabilities of such persons or entities comprising the Landlord under this Lease shall be joint and several; subject, however, in all events to the terms of Article 24 hereof.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, Landlord and Tenant have executed this instrument as of the day and year first above written.

LANDLORD:
300 LASALLE LLC, a Delaware limited liability company
By:	Hines Interests Limited Partnership, a Delaware limited partnership, its sole member
	By:	Hines Holdings, Inc., a Texas corporation, its general partner
		By:/s/ C. Kevin Shannahan
		Name:	C. Kevin Shannahan
		Title:	Executive Vice President
TENANT:
KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	Stephen G. Tomlinson, P.C., an Illinois professional service corporation, a partner
	By:/s/ Stephen G. Tomlinson
	Name:     Stephen G. Tomlinson
	Title:   President

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FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“Amendment”) is entered into as of the 26th day of June, 2007 by and between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

A. Landlord and Tenant have entered into a certain Office Lease (“Original Lease”) dated August 25, 2005 for space in a certain building (“Building”) located or to be located on the real estate known as 300 N. LaSalle Street, Chicago, Illinois (said Original Lease, as amended hereby and as further amended from time to time, being referred to herein as the “Lease”).

B. The parties have agreed, among other things, to modify the definition of “Rentable Area” under the Original Lease for purposes of determining the Rentable Area of the Building under the Lease, and to modify certain expansion rights under the Lease, and to confirm and modify certain other terms and provisions set forth in the Lease, all upon the terms and conditions hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Landlord and Tenant agree as follows:

1. Recitals; Definitions. The recitals hereto are hereby incorporated as part of this Amendment by reference thereto. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Original Lease.

2. Expansion Options. Without limitation of the terms of Paragraph 34(L)(i) of the Original Lease, it is hereby agreed that if Tenant exercises an Expansion Option under Paragraphs 34(B) through (K) of the Lease, and if Tenant had, prior to such exercise, either (i) failed to timely exercise any previous Expansion Option under Article 34 of the Lease (any such floor which constituted the Expansion Premises for the Expansion Option which Tenant so failed to exercise being referred to as a “Failed Expansion Premises Floor”), or (ii) exercised any of its contraction options relative to a full floor at the Building under Paragraphs 34(U) through (X) of the Original Lease (any such floor which constituted the contraction space for such contraction option being referred to as a “Contraction Premises Floor”), then Landlord shall have the right to substitute any such Failed Expansion Premises Floor or Contraction Premises Floor (as the case may be) as the applicable Expansion Premises for the Expansion Option being so exercised by Tenant, in which case such floor so designated by Landlord shall be the applicable Expansion Premises for purposes of the Lease. The foregoing shall not be deemed to limit any of the other terms and conditions set forth in Article 34 of the Lease (as amended hereby) relative to the Expansion Premises thereunder. If Landlord elects to exercise its right to substitute any floors as the applicable Expansion Premises under this Paragraph 2, then Landlord shall notify Tenant of the substitute floor within ten (10) Business Days after Landlord’s receipt of the applicable Expansion Notice from Tenant.

3. Rentable Area of the Building – Changed Definition. The following language is added to the 11th line of Paragraph 1(C)(v) of the Original Lease, immediately following the

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language “is located” and immediately before the parenthetical beginning with the language “(but shall include…”:

“or any portion of the Retail Area (other than such portion of said Retail Area designated by Landlord from time to time for retail banking use)”

Further, the following language is added immediately following the language “Common Conference Center” and immediately before the language “and shall include” in the 12th line of said Paragraph 1(C)(v) of the Original Lease:

“and any portion of the Retail Area designated by Landlord from time to time for retail banking use”.

Without limitation of the foregoing, it is understood and agreed that the modifications to the definition of Rentable Area of the Building described in this Paragraph 3 shall apply in determining “Tenant’s Pro Rata Share” under Paragraph 3(E) of the Original Lease.

4. Designation of Rentable Area of Premises and Building and of Tenant’s Pro Rata Share. Landlord and Tenant hereby agree that, subject to the last sentence of this Paragraph 4, and subject to changes thereto from time to time as expressly contemplated by Paragraph 1(C)(v) of the Original Lease, for purposes of the Lease:

(a) The Rentable Area of the Premises shall be deemed to be 626,808 square feet (the Rentable Area of the various floors of the Premises being set forth on Exhibit A attached hereto and made a part hereof);

(b) The Rentable Area of the Building shall be deemed to be 1,246,922 square feet; and

(c) Tenant’s Pro Rata Share shall be deemed to be 50.27%.

Tenant reserves the right, pursuant to Paragraph 1(C)(iii) of the Original Lease, to cause the Rentable Area of the Premises and Building to be determined based on an actual measurement of such space (upon and subject to the terms of said Paragraph 1(C)(iii)), and Landlord and Tenant acknowledge and confirm that the designations of the Rentable Area of the Premises and Building, and of Tenant’s Pro Rata Share, as set forth in this Paragraph 4, may be subject to modification based on any such actual measurement pursuant to Paragraph 1(C)(iii) (all upon and subject to the terms of said Paragraph 1(C)(iii)). The parties intend this Amendment to act as the Lease supplement described in Paragraph 1(C)(iv) of the Lease relative to the initial determination of Rentable Areas under Paragraph 1(C)(ii) of the Lease, and the parties hereby agree that the stacking plan attached hereto as Exhibit A-4 shall be deemed the revised stacking plan contemplated by said Paragraph 1(C)(iv) and shall be deemed incorporated as the revised Exhibit A-4 to the Lease. Further, it is hereby agreed that, subject to the limitations and provisions set forth in Paragraph 1(C)(v) and elsewhere in the Lease, if the Rentable Area of the Premises and/or the Building changes at any time following the date hereof and prior to the Commencement Date under the Lease, based on changes to the Landlord Work Plans otherwise permitted under the Lease, then Landlord shall reasonably re-determine the Rentable Area of the Premises and/or the Building, including specifically Tenant’s Pro Rata Share hereunder, to

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reflect such changes; provided that Tenant shall have the reasonable right to confirm the accuracy of Landlord’s re-determination by written notice thereof to Landlord no later than sixty (60) days after Landlord provides notice to Tenant of such re-determination, all to the same extent as otherwise set forth in Paragraph 1(C)(v) of the Lease with respect to Tenant’s right to confirm changes based on reconfigurations, additions or modifications as originally contemplated therein.

5. Operating Expenses. The following language “or the Non-Bank Retail Area” is hereby added following the word “Garage” in each instance in clause (37) of Paragraph 3(B)(iii) of the Original Lease. Further, the following language is added to the end of clause (37) of Paragraph 3(B)(iii) of the Original Lease:

“(it being agreed that, for purposes of the foregoing, the term “Non-Bank Retail Area” shall mean the entire Retail Area at the Building, other than any portion of such Retail Area designated by Landlord from time to time for retail banking use)”

6. Landlord Work Plans; Base Building Condition Changes. It is hereby confirmed by the parties that the Landlord Work Plans under the Lease have heretofore been mutually approved and accepted by and on behalf of Landlord and Tenant. Without limitation of the foregoing, the following changes are hereby made to Exhibit N of the Lease, and the terms of the Lease and the Landlord Work Plans, as applicable, are hereby modified and supplemented accordingly:

(a) The second sentence of Section A.3 of Exhibit N (beginning with the language “Tenant’s Data Center…”) is hereby deleted.

(b) The second full paragraph of Section A.3 of Exhibit N (beginning with the language “The raised tile floor in Tenant’s Data Center…” and continuing through the end of subclause “e” of said paragraph) is hereby deleted.

(c) The parenthetical at the end of Section B.3 of Exhibit N (beginning with the language “(subject to a credit to be provided to Tenant. . .”) is hereby deleted.

(d) The last sentence of Section C.3 of Exhibit N (beginning with the language “Men’s and women’s…) is deleted and the following is substituted therefor: “Men’s and women’s restrooms shall be provided on each floor, except the Conference Center Floors, with fixture counts based on code requirements.”

(e) Section C.7 of Exhibit N is deleted and the following is substituted therefor: “Core walls shall be gypsum board (taped and floated, ready for paint to a minimum of 9’-6” above the finished floor).”

(f) The third sentence of Section T of Exhibit N (beginning with the language “Landlord shall provide…”) is hereby deleted, and the following sentence is hereby substituted therefor: “Landlord shall provide capacity in the Base Building Design for assembly occupancy fixture counts for the men’s and women’s restrooms to be located on each Conference Center Floor of the Premises, and because Tenant will be upgrading the men’s and women’s restrooms on each of the Conference Center Floors, Tenant will

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install the men’s and women’s restrooms on each Conference Center Floor, at Tenant’s own cost.” Further, the following language is added to the fourth sentence of said Section T, in subclause (i) therein, following the words “approximately 2,700 square feet”: “in which Tenant will install, at Tenant’s cost, stone material or flooring material of said balcony”.

7. Noise Levels. The language “, including the El Train” is hereby deleted in each instance in Exhibit O to the Original Lease. Further, the language “to meet sound performance of a NC 40 criteria for ambient sound levels, including the El train” is hereby deleted in Section B.1. of Exhibit N to the Original Lease, and the following language is hereby substituted therefor: “to attempt to meet the following associated listed NC levels (it being understood and agreed that Landlord shall be deemed to have met all of the following specified NC level requirements so long as Landlord installs the glass otherwise described in the following clauses (a) and (b), whether or not such NC levels are actually achieved thereby, as both Landlord and Tenant have heretofore agreed that such glass is designed to meet said NC levels, and Landlord’s sole obligation with respect to such NC levels shall be to so install the following specified glass): (a) for Floors 6 and 7–NC 40 including the El train–GL-1A Glass Modified (1/4” Monolithic Glass, 1/2” Air, 3/8” Laminated Glass with Saflex AC lamination) on four elevations; and (b) for Floors 9 through 40—NC 40 with intermittent noise levels to NC 43–GL-1A Glass (1/4” Monolithic Glass, 1/2” Air, 3/8” Laminated Glass) on the west, south and north elevation and GL-1 Glass (1/4” Monolithic Glass, 1/2” Air, 1/4” Monolithic Glass) on the east elevation.”

8. Real Estate Brokers. Landlord and Tenant represent to each other that they have dealt only with the Brokers as brokers, agents or finders in connection with this Amendment and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Amendment or are entitled to any commission in connection therewith. Each of Landlord and Tenant agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from its breach of any of the foregoing representations. Landlord shall be responsible for the payment of any fees or commissions due to Brokers by reason of the execution, delivery and/or performance of this Amendment pursuant to separate commission agreements between Landlord and the Brokers, and Landlord shall indemnify and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) relating thereto.

9. Counterparts. This Amendment may be executed in any number of counterparts, and each of which when so executed shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

10. Prior Negotiations. This Amendment supersedes all prior negotiations, representations, understandings and agreements of, by or between Landlord and Tenant with respect to the subject matter hereof, all of which shall be deemed fully merged herein.

11. Liability of Parties. Articles 24 and 40 of the Original Lease are hereby incorporated herein as if restated herein in full.

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12. Full Force and Effect. Except as amended hereby, the terms of the Original Lease are hereby ratified and confirmed, and the Lease (as amended hereby) shall continue in full force and effect. Without limitation of the foregoing, the terms of Article 24 and Article 40 of the Original Lease shall apply to this Amendment and to the Lease, as amended hereby.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Amendment as of the day and year first above written.

LANDLORD:						TENANT:
300 LASALLE LLC, a Delaware limited liability company						KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	300 LaSalle Holdings LLC, a Delaware limited liability company					By:	Stephen G. Tomlinson, P.C., an Illinois professional service corporation, a partner
	By:	Hines 300 LaSalle Associates LP, a Texas limited partnership
		By:	Hines 300 LaSalle GP LLC, a Delaware limited liability company				By:/s/ Stephen G. Tomlinson Name: Stephen G. Tomlinson
							Title: President
			By:	Hines Interests Limited Partnership, a Delaware limited partnership
				By:	Hines Holdings, Inc., a Texas corporation
					By:/s/ Greg Van Schaack
					Name: Greg Van Schaack
					Title: SVP

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SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (“Amendment”) is entered into as of the 29th day of April, 2008 by and between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

A. Landlord and Tenant have entered into a certain Office Lease (“Original Lease”) dated August 25, 2005, as amended by First Amendment to Lease (“First Amendment”) dated June 26, 2007 and as further amended by letter agreement (“Letter Agreement”) dated August 31, 2007, for space in a certain building (“Building”) located or to be located on the real estate known as 300 N. LaSalle Street, Chicago, Illinois (said Original Lease, as so amended by the First Amendment and by the Letter Agreement, as amended hereby, and as further amended from time to time, being referred to herein as the “Lease”).

B. Pursuant to Paragraph 34(A)(i) of the Lease, Tenant has exercised its Pre-Term Expansion Option to include the Pre-Term Expansion Premises as part of the Initial Premises under the Lease.

C. Landlord and Tenant desire to amend the Lease to, among other things, confirm the addition of the 23rd floor of the Building to the “Premises” being demised under the Lease, as the “Pre-Term Expansion Premises” under the Lease, and for other matters, all upon the terms and conditions hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Landlord and Tenant agree as follows:

1. Recitals and Exhibits; Definitions. The above recitals and the exhibits attached hereto are hereby incorporated as part of this Amendment by reference thereto. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Lease.

2. Pre-Term Expansion Premises. The “Premises” being demised under the Lease (and, in particular, the “Low-Rise Floors Premises” and the “Initial Premises” under the Lease) shall, for all purposes under the Lease (including without limitation delivery of possession thereof to Tenant simultaneously with the balance of the Low-Rise Floors Premises on the Phase II Delivery Date), be deemed to include the Pre-Occupancy Expansion Space described in Recital C above. Accordingly, the Original Lease is hereby amended as follows:

(i) Paragraph 1(A) of the Original Lease (entitled “Lease of Premises”) is hereby amended by adding the language “and the entire 23rd floor” in the third line thereof, immediately following the language “and the entire 6th, 7th and 9th through 14th floors (inclusive)” as set forth therein.

(ii) Exhibit A-1 to the Original Lease is hereby amended by adding Exhibit A-1 attached to this Amendment as part of said Exhibit A-1 to the Original Lease (which Exhibit A-1 attached hereto sets forth a depiction of the 23rd floor portion of the Initial Low-Rise Floors

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Premises, being added as part of the Initial Low-Rise Floors Premises pursuant to this Amendment).

(iii) Based on the addition of the 23rd floor as part of the Premises under the Lease, as set forth in this Amendment, and based on certain other minor corrections to the agreed upon Rentable Area of the Building, it is hereby acknowledged and agreed that the following changes are made to Paragraph 4 of the First Amendment (all subject to the balance of the terms of said Paragraph 4 and all subject to changes thereto from time to time as expressly contemplated by Paragraph 1(C)(v) of the Original Lease):

(a) the Rentable Area of the Premises shall be deemed to be 632,162 square feet (and Paragraph 4(a) of the First Amendment is amended accordingly);

(b) the Unique Building Feature Square Footage shall be deemed to be 18,688 square feet of Rentable Area;

(c) The Rentable Area of the Building shall be deemed to be 1,246,929 square feet (and Paragraph 4(b) of the First Amendment is amended accordingly);

(d) Tenant’s Pro Rata Share shall be deemed to be 52.20% (and Paragraph 4(c) of the First Amendment is amended accordingly) (and, without limitation of the foregoing, for purposes of Paragraph 3 of this Amendment, Tenant’s Pro Rata Share for the Pre-Term Expansion Premises shall be deemed to be 1.93% and Tenant’s Pro Rata Share for the balance of the Initial Premises shall be deemed to be 50.27%, both subject to adjustment as provided in the opening language of this Paragraph 2(iii)), and

(e) Exhibit A to the First Amendment (setting forth the Rentable Area of the various floors of the Premises) is hereby replaced by Exhibit A attached to this Amendment.

(iv) Paragraph 6.a. of the Workletter attached as Exhibit B to the Original Lease is hereby amended by deleting the parenthetical “(and any Pre-Term Expansion Premises but less any Pre-Term Contraction Space, if applicable)” therefrom (it being understood that Tenant shall be entitled to the Tenant Work Allowance with respect to the Pre-Term Expansion Premises described in this Amendment, pursuant to the terms and conditions set forth in the Workletter attached as Exhibit B to the Original Lease, by virtue of such Pre-Term Expansion Premises being included as part of the “Initial Premises” under the Lease, as provided above in this Amendment, and the language deletion described above in this subparagraph (iv) is for clarification purposes, so that there is no double counting of the Tenant Work Allowance otherwise attributable to the Pre-Term Expansion Premises described in this Amendment).

3. Tax Caps. Notwithstanding anything in the Lease to the contrary, it is hereby agreed that the terms of Paragraph 3(G)(vi) of the Original Lease, regarding certain caps on Taxes as therein described, shall not apply with respect to the 23rd floor “Pre-Term Expansion Premises” being added to the Premises under this Amendment. Based on the foregoing, it is agreed that Tenant’s Pro Rata Share of Taxes shall be calculated separately (i) for such Pre-Term Expansion Premises, and (ii) for the balance of the Initial Premises, for calendar years 2009 through 2013 (inclusive) (the “Tax Cap Years”), as follows. (A) “Tenant’s Pro Rata Share” for

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the Pre-Term Expansion Premises hereunder, for purposes of determining Tenant’s Pro Rata Share of Taxes attributable to the Pre-Term Expansion Premises for the Tax Cap Years, shall mean a percentage determined by dividing (a) the Rentable Area of the Pre-Term Expansion Premises hereunder, by (2) the then Rentable Area of the Building (which Rentable Area of the Building shall include, in any case, the Unique Building Feature Square Footage, as defined in the Original Lease), and (B) “Tenant’s Pro Rata Share” for the balance of the Initial Premises (i.e., excluding the Pre-Term Expansion Premises hereunder), for purposes of determining Tenant’s Pro Rata Share of Taxes attributable to such balance of the Initial Premises for the Tax Cap Years, shall mean a percentage determined by dividing (x) the sum of the Rentable Area of such balance of the Initial Premises plus the Unique Building Feature Square Footage, by (y) the then Rentable Area of the Building (which Rentable Area of the Building shall include, in any case, the Unique Building Feature Square Footage). As described in the first sentence of this Paragraph 3, it is understood and agreed that there shall be no cap on Taxes, as it relates to Tenant’s Pro Rata Share of Taxes attributable to the Pre-Term Expansion Premises for the Tax Cap Years, all notwithstanding anything set forth in Paragraph 3(G)(vi) of the Original Lease or elsewhere in the Lease to the contrary.

4. Tenth Expansion Option. Paragraph 34(K) of the Original Lease is hereby amended by deleting subclauses (i) through (v) from the second sentence thereof, and by substituting the following language therefor: “(i) the 43rd floor of the Building, or any other floor in the high-rise portion of the Building (i.e., with the phrase “high-rise portion of the Building” meaning any of the floors above the “Mid-Rise Floors”) as designated by Landlord in its notice delivered to Tenant designating the “Scheduled Tenth Expansion Delivery Date” as otherwise described below in this Paragraph 34(K) (which notice shall be delivered within ten (10) Business Days after Landlord’s receipt of the Tenth Expansion Notice, as provided in the last sentence of this Paragraph 34(K) hereinbelow);”. It is understood and agreed that the foregoing designation of the floor which will constitute the Tenth Expansion Premises, including the foregoing right of Landlord to designate a floor in the high-rise portion of the Building as the “Tenth Expansion Premises”, as provided above in this Paragraph 4, shall not be deemed to limit, in any way, any of Landlord’s other rights to substitute floors as the applicable Expansion Premises (including, without limitation, the applicable Tenth Expansion Premises) under the Lease, all as otherwise set forth in Paragraphs 34(B) through 34(L) of the Lease and in Paragraph 2 of the First Amendment. Further, Landlord and Tenant acknowledge and confirm that the preceding description of the floor of the Building which will otherwise constitute the applicable Tenth Expansion Premises shall not limit any of the other terms set forth in Article 34 of the Lease or in Paragraph 2 of the First Amendment (including, without limitation, the terms of Paragraph 34(K) of the Original Lease regarding reductions in the respective Tenth Expansion Premises if all or any portion of the applicable Tenth Expansion Premises is otherwise being leased by Tenant as First Proposal Space or Accepted Offer Space), all as expressly set forth in said Article 34 and in said First Amendment.

5. Pre-Term Expansion and Contraction Options. The parties acknowledge and agree that: (i) Tenant has no further “Pre-Term Expansion Options” under Paragraph 34(A) of the Original Lease, and (ii) Tenant has no further “Pre-Term Contraction Options” under Paragraph 34(T) of the Original Lease (and said Paragraphs 34(A) and 34(T) of the Original Lease are hereby deemed null and void in their entirety).

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6. Designation of Floors on which the Expansion Premises shall be Located. The parties acknowledge that: (i) Paragraphs 34(B)-34(K) of the Original Lease designate the floors of the Building on which the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Expansion Premises (each as defined in the Lease) are to be located, by reference to whether or not Tenant shall have exercised certain Pre-Term Expansion Options or Pre-Term Contraction Options under the Lease. Because Tenant has exercised Tenant’s Pre-Term Expansion Option as to the 23rd floor, as provided in this Amendment (and has not exercised its Pre-Term Contraction Option, nor exercised its Pre-Term Expansion Option as to any other floor of the Building), and based on a certain modified agreement of the parties relative to the designation of the Fourth Expansion Premises and the Fifth Expansion Premises as described below in this Paragraph 6, Landlord and Tenant acknowledge, agree and confirm that:

(a) The First Expansion Premises shall be located on the 22nd floor of the Building;

(b) The Second Expansion Premises shall be located on the 21st floor of the Building;

(c) The Third Expansion Premises shall be located on the 20th floor of the Building;

(d) The Fourth Expansion Premises shall be located on the 15th floor of the Building;

(e) The Fifth Expansion Premises shall be located on the 19th floor of the Building;

(f) The Sixth Expansion Premises shall be located on the 18th floor of the Building;

(g) The Seventh Expansion Premises shall be located on the 17th floor of the Building;

(h) The Eighth Expansion Premises shall be located on the 16th floor of the Building;

(i) The Ninth Expansion Premises shall be located on the 40th floor of the Building; and

(j) The Tenth Expansion Premises shall be located on the floor as otherwise described in Paragraph 4 of this Amendment.

Landlord and Tenant acknowledge that the designations of the Fourth Expansion Premises and the Fifth Expansion Premises, as set forth above, modifies the terms set forth in the Original Lease relative to such initially intended designations, and the parties agree to the above designations of the Fourth Expansion Premises and the Fifth Expansion Premises for all purposes of the Lease, notwithstanding anything in the Original Lease to the contrary. Landlord and Tenant further acknowledge and confirm that the preceding designations of the floors of the

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Building as the applicable Expansion Premises shall not limit any of the other terms set forth in Article 34 of the Lease or in Paragraph 2 of the First Amendment (including, without limitation, the terms of Paragraphs 34(B) through (K) of the Original Lease regarding reductions in any respective Expansion Premises if all or any portion of the applicable Expansion Premises is otherwise being leased by Tenant as First Proposal Space or Accepted Offer Space, and including, without limitation, any of Landlord’s rights to substitute floors as the applicable Expansion Premises as set forth in Paragraphs 34(B) through (L) of the Original Lease and in Paragraph 2 of the First Amendment), all as expressly set forth in said Article 34 and in said First Amendment.

7. On-Site Food Service. The following language is added to the end of Paragraph 6(Q)(i) of the Original Lease, immediately following the language “open and operating at the Building”: “(provided that if Landlord has entered into a binding lease, management agreement or other contractual commitment with a third-party operator for the On-Site Food Service (in any such case, a “Contractual Commitment”), requiring (1) the operator to be initially open and operating on or before the later to occur of (i) the Commencement Date, or (ii) the one hundred eightieth (180th) day after the date of mutual execution of such Contractual Commitment by such operator and Landlord, and (2) the operator to provide catering/food service to Tenant’s conference room facilities in the Building at all times following the date of the Contractual Commitment and prior to the date such operator is initially open and operating at the Building, upon Tenant’s request therefor from time to time, and at a cost to Tenant which does not add any additional service fee, delivery fee, or comparable charge as a result of the furnishing of such catering/food service originating from an off-site location (i.e., such prices shall be reasonably comparable to the charges that would be imposed by the operator if the catering/food service was delivered to Tenant’s conference room facilities from an on-site location), then from and after such time as Landlord and said operator have so entered into such Contractual Commitment (and so long as said operator continues to provide catering/food service to Tenant’s conference room facilities in the Building in the manner set forth above), the aforedescribed daily payment shall instead be equal to $2,000.00 for each day thereafter that the On-Site Food Service is not so initially open and operating at the Building following the Commencement Date and continuing through the date that the On-Site Food Service is so initially open and operating at the Building)”.

8. Common Conference Center-Lease Modifications. Paragraph 1(C)(v) of the Original Lease, as amended by Paragraph 3 of the First Amendment, is amended by deleting the entire parenthetical beginning in the 11th line of said Paragraph 1(C)(v) of the Original Lease (i.e., beginning with the language “(but shall include any Common Conference Center…”) and by substituting the following parenthetical therefor: “(but shall include any Common Conference Center, unless such Common Conference Center is located within the Retail Area, and shall include any portion of the Retail Area designated by Landlord from time to time for retail banking use, and shall include the “Unique Building Feature Square Footage” described in Paragraph 3(M) below)”. Further, Paragraph 3(B)(iii)(5) of the Original Lease is amended by deleting all references to the “Common Conference Center” therefrom. Further, Paragraph 6(Q)(vi) of the Original Lease is amended by deleting the language “shall not be included in Operating Expenses” from the 13th line thereof, and by substituting the language “shall be included in Operating Expenses, as and to the extent permitted under this Lease” therefor. Finally, Paragraph 3(B)(iii)(20) of the Original Lease is hereby amended in the following

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respects: (i) the parenthetical “(including any Common Conference Center)” is deleted, and the parenthetical “(excluding, however, any Common Conference Center)” is substituted therefor; and (ii) the language “or any Common Conference Center” is added after the language “Fitness Center”; and (iii) the following language is hereby added at the end of said Paragraph 3(B)(iii)(20), immediately following the language “pursuant to this clause (20)”: “(it being understood and agreed that the costs and expenses of maintaining, and operating any Common Conference Center at the Building may include, without limitation, a gross rental amount associated with such Common Conference Center space; provided that Operating Expenses shall not include any such gross rental amount that exceeds the “fair rental value” of such Common Conference Center space, as determined pursuant to the terms set forth below in this clause (20), and provided further, that all income derived from usage charges (if any) for the Common Conference Center in any given calendar year shall be applied as a credit against any such gross rental amount for the Common Conference Center otherwise being included in Operating Expenses for such calendar year; for purposes of the foregoing, the term “fair rental value”, as it relates to any such Common Conference Center space, shall be equal to the rate of Net Rent and Additional Rent, on a rentable square foot basis, payable from time to time under this Lease (but without regard to any rental abatements to which Tenant may otherwise be entitled under this Lease), or such lesser amount as determined by Landlord, at its discretion)”.

9. Supply Air Duct Riser Work-7th Floor. To accommodate Tenant’s desired ceiling height on the west side of the 7th floor, Landlord shall perform, or cause to be performed, certain modifications to the supply air duct riser on the west side of the 7th floor as per Kendall Heaton (KHA) Architect’s Supplemental Information (ASI) No. 203, and Landlord shall be responsible for all costs incurred in connection with the performance of such modification work. The parties hereby agree that the work to be performed pursuant to the preceding sentence shall constitute “Permitted Post Delivery Work” under the Workletter attached as Exhibit B to the Original Lease, for all purposes under the Lease.

10. Real Estate Brokers. Landlord and Tenant represent to each other that they have dealt only with the Brokers as brokers, agents or finders in connection with this Amendment and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Amendment or are entitled to any commission in connection therewith. Each of Landlord and Tenant agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from its breach of any of the foregoing representations. Landlord shall be responsible for the payment of any fees or commissions due to Brokers by reason of the execution, delivery and/or performance of this Amendment pursuant to separate commission agreements between Landlord and the Brokers, and Landlord shall indemnify and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) relating thereto.

11. Counterparts. This Amendment may be executed in any number of counterparts, and each of which when so executed shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

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12. Prior Negotiations. This Amendment supersedes all prior negotiations, representations, understandings and agreements of, by or between Landlord and Tenant with respect to the subject matter hereof, all of which shall be deemed fully merged herein.

13. Liability of Parties. Articles 24 and 40 of the Original Lease are hereby incorporated herein as if restated herein in full.

14. Full Force and Effect. Except as amended hereby, the terms of the Original Lease are hereby ratified and confirmed, and the Lease (as amended hereby) shall continue in full force and effect. Without limitation of the foregoing, the terms of Article 24 and Article 40 of the Original Lease shall apply to this Amendment and to the Lease, as amended hereby.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Amendment as of the day and year first above written.

LANDLORD:						TENANT:
300 LASALLE LLC, a Delaware limited liability company						KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	300 LaSalle Holdings LLC, a Delaware limited liability company					By:	Stephen G. Tomlinson, P.C., an Illinois professional service corporation, a partner
	By:	Hines 300 LaSalle Associates LP, a Texas limited partnership
		By:	Hines 300 LaSalle GP LLC, a Delaware limited liability company				By:/s/ Stephen G. Tomlinson Name:  Stephen G. Tomlinson
							Title:  President
			By:	Hines Interests Limited Partnership, a Delaware limited partnership
				By:	Hines Holdings, Inc., a Texas corporation
					By:/s/ Greg Van Schaack
					Name: Greg Van Schaack
					Title: Senior Vice President

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THIRD AMENDMENT TO LEASE

THIS THIRD AMENDMENT TO LEASE (“Amendment”) is entered into as of the 29th day of July, 2008 by and between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

A. Landlord and Tenant have entered into a certain Office Lease (“Original Lease”) dated August 25, 2005, as amended by First Amendment to Lease (“First Amendment”) dated June 26, 2007, as further amended by letter agreement (“Letter Agreement”) dated August 31, 2007, and as further amended by Second Amendment to Lease dated April 29, 2008 (“Second Amendment”) for space in a certain building (“Building”) located or to be located on the real estate known as 300 N. LaSalle Street, Chicago, Illinois (said Original Lease, as so amended by the First Amendment and by the Letter Agreement and by the Second Amendment, as amended hereby, and as further amended from time to time, being referred to herein as the “Lease”).

B. Tenant has requested, and Landlord has agreed, to include the 21st floor of the Building comprising approximately 24,038 square feet of Rentable Area (herein, the “21st Floor Premises”) as part of the Initial Premises under the Lease.

C. Landlord and Tenant desire to amend the Lease to, among other things, confirm the addition of the 21st Floor Premises to the “Premises” being demised under the Lease, and for other matters, all upon the terms and conditions hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Landlord and Tenant agree as follows:

1. Recitals and Exhibits; Definitions. The above recitals and the exhibits attached hereto are hereby incorporated as part of this Amendment by reference thereto. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Lease.

2. 21st Floor Premises. The “Premises” being demised under the Lease (and, in particular, the “Low-Rise Floors Premises” and the “Initial Premises” under the Lease) shall, for all purposes under the Lease (other than with respect to delivery of possession thereof to Tenant simultaneously with the balance of the Low-Rise Floors Premises on the Phase II Delivery Date, which delivery of the 21st Floor Premises shall instead be governed by Paragraph 5 below), be deemed to include the 21st Floor Premises described in Recital B above. Accordingly, the Original Lease is hereby amended as follows:

(i) Paragraph 1(A) of the Original Lease (entitled “Lease of Premises”), as amended by Paragraph 2(i) of the Second Amendment, is hereby further amended by adding the language “and the entire 21st floor” in the third line thereof, immediately following the language “and the entire 21st floor” as set forth therein (which language “and the entire 21st floor” was heretofore added to Paragraph 1(A) of the Original Lease pursuant to Paragraph 2(i) of the Second Amendment).

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(ii) Exhibit A-1 to the Original Lease, as amended by Paragraph 2(ii) of the Second Amendment, is hereby further amended by adding Exhibit A-1 attached to this Amendment as part of said Exhibit A-1 to the Original Lease (which Exhibit A-1 attached hereto sets forth a depiction of the 21st floor portion of the Initial Low-Rise Floors Premises, being added as part of the Initial Low-Rise Floors Premises pursuant to this Amendment).

(iii) Based on the addition of the 21st floor as part of the Premises under the Lease, as set forth in this Amendment, it is hereby acknowledged and agreed that the following changes are made to Paragraph 4 of the First Amendment (all subject to the balance of the terms of said Paragraph 4 and all subject to changes thereto from time to time as expressly contemplated by Paragraph 1(C)(v) of the Original Lease):

(a) the Rentable Area of the Premises shall be deemed to be 656,200 square feet (and Paragraph 4(a) of the First Amendment is amended accordingly);

(b) the Tenant’s Pro Rata Share shall be deemed to be 54.124%, calculated by dividing 656,200, being the Rentable Area of the Premises following the addition of the 21st Floor Premises hereunder, plus 18,688, being the Unique Building Feature Square Footage, by 1,246,929, being the Rentable Area of the Building (and Paragraph 4(c) of the First Amendment is amended accordingly) (and, without limitation of the foregoing, for purposes of Paragraph 3 of this Amendment, Tenant’s Pro Rata Share for the 21st Floor Premises shall be deemed to be 1.928% and Tenant’s Pro Rata Share for the balance of the Initial Premises shall be deemed to be 52.196%, both subject to adjustment as provided in the opening language of this Paragraph 2(iii)), and

(c) Exhibit A to the First Amendment (setting forth the Rentable Area of the various floors of the Premises), as amended by the replacement Exhibit A attached to the Second Amendment, is hereby further replaced by Exhibit A attached to this Amendment.

(iv) It is understood and agreed that Tenant shall be entitled to the Tenant Work Allowance with respect to the 21st Floor Premises described in this Amendment, pursuant to the terms and conditions set forth in the Workletter attached as Exhibit B to the Original Lease, by virtue of such 21st Floor Premises being included as part of the “Initial Premises” under the Lease, as provided above in this Amendment.

3. Tax Caps. Notwithstanding anything in the Lease to the contrary, it is hereby agreed that the terms of Paragraph 3(G)(vi) of the Original Lease, regarding certain caps on Taxes as therein described, shall not apply with respect to the 21st Floor Premises being added to the Premises under this Amendment. Based on the foregoing, it is agreed that Tenant’s Pro Rata Share of Taxes shall be calculated separately (i) for such 21st Floor Premises, and (ii) for the 23rd floor portion of the Premises added to the Premises pursuant to the Second Amendment (which separate calculation relative to such 23rd floor is otherwise set forth in the Second Amendment), and (iii) for the balance of the Initial Premises, for calendar years 2009 through 2013 (inclusive) (the “Tax Cap Years”), as follows. (A) “Tenant’s Pro Rata Share” for the 21st Floor Premises hereunder, for purposes of determining Tenant’s Pro Rata Share of Taxes attributable to the 21st Floor Premises for the Tax Cap Years, shall mean a percentage

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determined by dividing (a) the Rentable Area of the 21st Floor Premises hereunder, by (2) the then Rentable Area of the Building (which Rentable Area of the Building shall include, in any case, the Unique Building Feature Square Footage, as defined in the Original Lease), and (B) “Tenant’s Pro Rata Share” for the portion of the Initial Premises located on the 23rd floor of the Building, for purposes of determining Tenant’s Pro Rata Share of Taxes attributable to such 23rd floor portion of the Premises for the Tax Cap Years shall be determined as set forth in Paragraph 3 the Second Amendment, and (C) “Tenant’s Pro Rata Share” for the balance of the Initial Premises (i.e., excluding the 21st Floor Premises hereunder and excluding the portion of the Initial Premises located on the 23rd floor of the Building), for purposes of determining Tenant’s Pro Rata Share of Taxes attributable to such balance of the Initial Premises for the Tax Cap Years, shall mean a percentage determined by dividing (x) the sum of the Rentable Area of such balance of the Initial Premises plus the Unique Building Feature Square Footage, by (y) the then Rentable Area of the Building (which Rentable Area of the Building shall include, in any case, the Unique Building Feature Square Footage). As described in the first sentence of this Paragraph 3, it is understood and agreed that there shall be no cap on Taxes, as it relates to Tenant’s Pro Rata Share of Taxes attributable to the 21st Floor Premises for the Tax Cap Years, all notwithstanding anything set forth in Paragraph 3(G)(vi) of the Original Lease or elsewhere in the Lease to the contrary.

4. Second Expansion Option. It is acknowledged that the 21st Floor Premises hereunder consists of the space otherwise designated in the Lease as the “Second Expansion Premises”, and that Tenant shall, accordingly, no longer have any “Second Expansion Option” rights pursuant to Paragraph 34(C) of the Lease. Accordingly, the parties acknowledge and agree that: (i) Tenant has no further “Second Expansion Option” under Paragraph 34(C) of the Original Lease (as the same may have heretofore been amended), and (ii) Paragraph 34(C) of the Original Lease (as the same may have heretofore been amended) is hereby deemed null and void in its entirety.

5. Delivery of 21st Floor Premises. Landlord shall deliver possession of the 21st Floor Premises to Tenant, with all Delivery Work therein substantially completed, on or before September 1, 2008 (the “Scheduled 21st Floor Delivery Date”; the date on which the 21st Floor Premises is actually delivered to Tenant with all of the Delivery Work substantially completed in compliance with the Lease and the Workletter is referred to as the “21st Floor Delivery Date”). In the event the 21st Floor Delivery Date has not occurred as of the Scheduled 21st Floor Delivery Date, then Landlord shall have no liability in connection therewith, and neither the Commencement Date nor the Term of the Lease shall be extended on account thereof; and as the sole remedy therefor, (i) Tenant shall be entitled to an abatement of Net Rent and an abatement of all Additional Rent attributable to Operating Expenses and Taxes, in each case as it relates solely to the 21st Floor Premises, for that number of days equal to the number of days in which the 21st Floor Delivery Date is delayed beyond the Scheduled 21st Floor Delivery Date and (ii) Landlord shall use commercially reasonable efforts to cause the 21st Floor Delivery Date to occur as soon thereafter as reasonably practicable. Except as provided in this Paragraph 5, all other terms of the Lease applicable to the Initial Premises (and, in particular, the Initial Low-Rise Floors Premises) shall apply with respect to the 21st Floor Premises being added to the Initial Premises (and, in particular, being added to the Initial Low-Rise Floors Premises) hereunder.

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6. Scheduled Delivery Dates. The parties acknowledge and agree that, without limitation of the terms of Paragraph 5 above relative to delivery of the 21st Floor Premises hereunder, each Segment has heretofore been delivered to Tenant on or before the respective Scheduled Delivery Date for such Segment, with all Delivery Work being substantially completed therein in compliance with the terms of the Lease (including the Workletter attached thereto). Nothing herein shall limit the terms of the Lease (including the Workletter attached thereto) regarding Landlord’s requirements to perform and complete any Permitted Post Delivery Work within any such Segment and to otherwise complete all other remaining portions of the Landlord’s Work, all in accordance with the terms and conditions otherwise set forth in the Lease (including the Workletter attached thereto) pertaining thereto.

7. Real Estate Brokers. Landlord and Tenant represent to each other that they have dealt only with the Brokers as brokers, agents or finders in connection with this Amendment and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Amendment or are entitled to any commission in connection therewith. Each of Landlord and Tenant agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from its breach of any of the foregoing representations. Landlord shall be responsible for the payment of any fees or commissions due to Brokers by reason of the execution, delivery and/or performance of this Amendment pursuant to separate commission agreements between Landlord and the Brokers, and Landlord shall indemnify and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) relating thereto.

8. Counterparts. This Amendment may be executed in any number of counterparts, and each of which when so executed shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

9. Prior Negotiations. This Amendment supersedes all prior negotiations, representations, understandings and agreements of, by or between Landlord and Tenant with respect to the subject matter hereof, all of which shall be deemed fully merged herein.

10. Liability of Parties. Articles 24 and 40 of the Original Lease are hereby incorporated herein as if restated herein in full.

11. Full Force and Effect. Except as amended hereby, the terms of the Original Lease are hereby ratified and confirmed, and the Lease (as amended hereby) shall continue in full force and effect. Without limitation of the foregoing, the terms of Article 24 and Article 40 of the Original Lease shall apply to this Amendment and to the Lease, as amended hereby.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Amendment as of the day and year first above written.

LANDLORD:						TENANT:
300 LASALLE LLC, a Delaware limited liability company						KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	300 LaSalle Holdings LLC, a Delaware limited liability company					By:	Stephen G. Tomlinson, P.C., an Illinois professional service corporation, a partner
	By:	Hines 300 LaSalle Associates LP, a Texas limited partnership
		By:	Hines 300 LaSalle GP LLC, a Delaware limited liability company				By: /s/ Stephen G. Tomlinson Name:  Stephen G. Tomlinson Title:  President
			By:	Hines Interests Limited Partnership, a Delaware limited partnership
				By:	Hines Holdings, Inc., a Texas corporation
					By: /s/ C. Kevin Shannahan
					Name: C. Kevin Shannahan
					Title: Executive Vice President

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FOURTH AMENDMENT TO LEASE

THIS FOURTH AMENDMENT TO LEASE (“Amendment”) is entered into as of the 6th day of April, 2009 by and between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

A. Landlord and Tenant have entered into a certain Office Lease (“Original Lease”) dated August 25, 2005, as amended by First Amendment to Lease (“First Amendment”) dated June 26, 2007, as further amended by letter agreement (“Letter Agreement”) dated August 31, 2007, as further amended by Second Amendment to Lease dated April 29, 2008 (“Second Amendment”) and as further amended by Third Amendment to Lease dated July 29, 2008 (“Third Amendment”) for space in a certain building (“Building”) located or to be located on the real estate known as 300 N. LaSalle Street, Chicago, Illinois (said Original Lease, as so amended by the First Amendment and by the Letter Agreement and by the Second Amendment and by the Third Amendment, as amended hereby, and as further amended from time to time, being referred to herein as the “Lease”).

B. Paragraph 1(D) of the Original Lease contemplates that, within a reasonable time after the Commencement Date under the Original Lease, Landlord and Tenant will enter into a confirmatory amendment to the Original Lease, confirming the actual Commencement Date, Initial Term Expiration Date, and certain other matters described therein.

C. Landlord and Tenant desire to enter into said confirmatory amendment, upon the terms and conditions set forth in this Amendment, and Landlord and Tenant further desire to confirm certain Rentable Area measurements for the Initial Premises under the Lease, and to confirm the Unique Building Feature Square Footage and Tenant’s Pro Rata Share under the Lease, and to provide for certain clarifications regarding certain tax characterization and treatment for the Tenant Work Allowance and Tenant Work under the Lease, and to confirm and agree to certain other matters, all upon the terms and conditions hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Landlord and Tenant agree as follows:

1. Recitals and Exhibits; Definitions. The above recitals and the exhibits attached hereto are hereby incorporated as part of this Amendment by reference thereto. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Lease.

2. Confirmation of Commencement Date and Initial Term Expiration Date. Pursuant to Paragraph 1(D) of the Original Lease, Landlord and Tenant hereby acknowledge and confirm that the Commencement Date of the Lease is March 1, 2009, and that the Initial Term Expiration Date of the Lease is February 28, 2029.

3. Measurements; Tenant’s Pro Rata Share. Landlord and Tenant hereby agree that, subject to changes thereto from time to time following the Commencement Date as

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expressly contemplated by the Original Lease (including Paragraph 1(C)(v) and Article 34 thereof), for purposes of the Lease:

(a) The Rentable Area of the Initial Premises shall be deemed to be 658,213 square feet (the Rentable Area of the various floors of the Premises being set forth on Exhibit A attached hereto and made a part hereof);

(b) The Unique Building Feature Square Footage shall be deemed to be 16,675 (the Unique Building Feature Square Footage located on the various floors of the Building being set forth on Exhibit A-1 attached hereto and made a part hereof);

(c) The Rentable Area of the Building shall be deemed to be 1,246,929 square feet; and

(d) Tenant’s Pro Rata Share shall be deemed to be 54.124%.

Landlord and Tenant hereby acknowledge and agree that Tenant has waived its measurement rights under Paragraph 1(C)(iii) of the Original Lease, and that the determination of the Rentable Area of the Initial Premises and the Building, and of the Unique Building Feature Square Footage and Tenant’s Pro Rata Share, as set forth in this Section 3, shall be binding on the parties (subject to changes from time to time expressly contemplated by the Original Lease, including Paragraph 1(C)(v) and Article 34 thereof). The agreed-upon measurements and Tenant’s Pro Rata Share information set forth above in this Section 3 shall replace and supercede any such measurements and Tenant’s Pro Rata Share information set forth in the Original Lease or in any of the amendments to the Lease entered into prior to the date of this Amendment. Without limitation of the foregoing, Exhibit A to the First Amendment (setting forth the Rentable Area of the various floors of the Initial Premises), as amended by the replacement Exhibit A attached to the Second Amendment and the further replacement Exhibit A attached to the Third Amendment, is hereby further replaced by Exhibit A attached to this Amendment.

4. Landlord Work. Landlord and Tenant hereby acknowledge and confirm that all aspects of the Landlord Work, other than the “Deferred Work Items” (as defined in Section 3.e.iv of the Workletter), have been completed on or before the required dates therefor as set forth in the Lease. Without limitation of the foregoing, Landlord and Tenant hereby acknowledge and confirm that Landlord has timely satisfied those “Landlord Occupancy Requirements” described in subclauses (a), (b) and (c) of Paragraph 29(C) of the Original Lease, and Tenant further acknowledges and confirms that, to its knowledge, Landlord has not caused or permitted any “Landlord Chargeable Conduct” or “Landlord Delay” to occur prior to the date of this Amendment, as such terms are described in Section 9 of the Workletter. Nothing contained in the foregoing shall be deemed to limit Landlord’s warranty obligations set forth in Section 3.k of the Workletter or Landlord’s maintenance and repair obligations set forth in the Lease (including Paragraph 8(B) of the Original Lease).

5. Guaranty Termination. Reference is made to that certain Guaranty dated as of August 25, 2005 by Hines Interests Limited Partnership (“Guarantor”), a Delaware limited partnership, in favor of Tenant (as amended, the “Guaranty”). Pursuant to Section 19 of the Guaranty, Tenant acknowledges and agrees that the Guaranty is hereby terminated and of no

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further force or effect, and that Guarantor is hereby released from all of Guarantor’s Obligations and Liabilities thereunder. Nothing contained in the foregoing shall be deemed to release Landlord from (or to terminate) any of the obligations or liabilities of Landlord under the Lease (including this Amendment).

6. Tax Treatment for Tenant Work Allowance/Tenant Work. The following modifications are hereby made to the Lease, effective as of the date of the Original Lease:

(a) The following language is hereby added to the beginning of Paragraph 7(A)(v) of the Original Lease, as the opening language of the first sentence thereof:

“Subject to the terms of Paragraph 42(W) hereinbelow regarding ownership of certain portions of the Tenant Work paid for by the Tenant Work Allowance (as more fully set forth in said Paragraph 42(X)),”

(b) The following parenthetical language is hereby added immediately after the phrase “shall become Landlord’s property” in the fourth (4th) sentence of Paragraph 12 of the Original Lease: “(or, if applicable under Paragraph 42(W) below, shall remain Landlord’s property)”. Further, the following parenthetical language is hereby added immediately after the phrase “to require such removal” in the fifth (5th) sentence of said Paragraph 12 of the Original Lease: “(and irrespective of whether such items were paid for from the Tenant Work Allowance, as described in Paragraph 42(W) below)”. Finally, the following parenthetical language is hereby added to the end of the last sentence of said Paragraph 12, immediately after the language “without payment by Landlord”: “(or, if applicable under Paragraph 42(W) below, shall remain Landlord’s property, without further payment by Landlord)”.

(c) The following new Paragraph 42(W) is hereby added to the Original Lease, as the last paragraph in the body of said Lease:

“(W) Tenant Work Allowance Characterization. Landlord and Tenant acknowledge and agree that all payments of the “Tenant Work Allowance” under the Workletter that are applied to the cost of Tenant Work (as defined in the Workletter) shall be characterized by them for income tax reporting purposes, as capital expenditures made by Landlord for improvements to the Premises that constitute real property for federal income tax purposes that were and are at all times the property of Landlord, and that none of these amounts are intended to be, nor shall they be, characterized as capital expenditures made by Tenant to the Premises or in any other fashion be characterized as income to Tenant. The parties will file all income tax returns (including amended tax returns) in a manner consistent with such characterization and treatment, and shall not take any position inconsistent with such characterization and treatment for any other income tax-related purpose. It is further acknowledged and agreed that Tenant shall have the right to use all such items included as part of the Tenant Work, as otherwise permitted under this Lease, and that such items located at the Premises shall be deemed part of the demised Premises for purposes of this Lease, and that all provisions with respect to such Tenant Work as set

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forth in this Lease (including, without limitation, provisions regarding insurance, ad valorem taxes, maintenance, repair, restoration, etc.) shall apply in full force and effect in accordance with the terms and provisions of this Lease, notwithstanding the characterization and treatment described above in this Paragraph 42(W).”

7. Real Estate Brokers. Landlord and Tenant represent to each other that they have dealt only with the Brokers as brokers, agents or finders in connection with this Amendment and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Amendment or are entitled to any commission in connection therewith. Each of Landlord and Tenant agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from its breach of any of the foregoing representations. Landlord shall be responsible for the payment of any fees or commissions due to Brokers by reason of the execution, delivery and/or performance of this Amendment pursuant to separate commission agreements between Landlord and the Brokers, and Landlord shall indemnify and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) relating thereto.

8. Counterparts. This Amendment may be executed in any number of counterparts, and each of which when so executed shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

9. Prior Negotiations. This Amendment supersedes all prior negotiations, representations, understandings and agreements of, by or between Landlord and Tenant with respect to the subject matter hereof, all of which shall be deemed fully merged herein.

10. Liability of Parties. Articles 24 and 40 of the Original Lease are hereby incorporated herein as if restated herein in full.

11. Full Force and Effect. Except as amended hereby, the terms of the Lease are hereby ratified and confirmed, and the Lease (as amended hereby) shall continue in full force and effect. Without limitation of the foregoing, the terms of Article 24 and Article 40 of the Original Lease shall apply to this Amendment and to the Lease, as amended hereby.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Amendment as of the day and year first above written.

LANDLORD:						TENANT:
300 LASALLE LLC, a Delaware limited liability company						KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	300 LaSalle Holdings LLC, a Delaware limited liability company					By:	Kevin R. Evanich, P.C., an Illinois professional service corporation, a partner
	By:	Hines 300 LaSalle Associates LP, a Texas limited partnership
		By:	Hines 300 LaSalle GP LLC, a Delaware limited liability company				By: /s/ Kevin R. Evanich Name:  Kevin R. Evanich, P.C. Title:  President
			By:	Hines Interests Limited Partnership, a Delaware limited partnership
				By:	Hines Holdings, Inc., a Texas corporation
					By: /s/ C. Kevin Shannahan
					Name: C. Kevin Shannahan
					Title: Executive Vice President

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FIFTH AMENDMENT TO LEASE

THIS FIFTH AMENDMENT TO LEASE (“Amendment”) is entered into as of the 6th day of August, 2009 by and between 300 LASALLE LLC, a Delaware limited liability company (“Landlord”), and KIRKLAND & ELLIS LLP, an Illinois limited liability partnership (“Tenant”).

A. Landlord and Tenant have entered into a certain Office Lease (“Original Lease”) dated August 25, 2005, as amended by First Amendment to Lease (“First Amendment”) dated June 26, 2007, as further amended by letter agreement (“Letter Agreement”) dated August 31, 2007, as further amended by Second Amendment to Lease dated April 29, 2008 (“Second Amendment”), as further amended by Third Amendment to Lease dated July 29, 2008 (“Third Amendment”) and as further amended by Fourth Amendment to Lease dated April 6, 2009 (“Fourth Amendment”), for space in a certain building (“Building”) located on the real estate known as 300 N. LaSalle Street, Chicago, Illinois (said Original Lease, as so amended by the First Amendment and by the Letter Agreement and by the Second Amendment and by the Third Amendment and by the Fourth Amendment, as amended hereby, and as further amended from time to time, being referred to herein as the “Lease”).

B. Landlord and Tenant desire to amend the Lease to, among other things, confirm their agreement regarding certain changes to the Net Rent and Tenant Work Allowance provisions set forth in the Lease, and for other matters, all upon the terms and conditions hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Landlord and Tenant agree as follows:

1. Recitals; Definitions. The above recitals are hereby incorporated as part of this Amendment by reference thereto. All capitalized terms used but not otherwise defined herein shall have the same meanings as set forth in the Lease.

2. Additional Tenant Work Allowance; Additional Net Rent.

(a) The parties agree that, subject to the terms and conditions set forth in this Paragraph 2, the Tenant Work Allowance under the Lease shall be increased from the amount otherwise provided in the Lease by the additional overall amount of $7,898,556.00 (i.e., being $12.00 per square foot of Rentable Area of the Initial Premises) (the “Additional Tenant Work Allowance”), payable by Landlord to Tenant in two equal installments, with the first such installment being in the amount of $3,949,278.00 (i.e., being $6.00 per square foot of Rentable Area of the Initial Premises) (the “First Additional Tenant Work Allowance Installment”) and being payable from Landlord to Tenant on or before March 1, 2010, and with the second such installment being in the amount of $3,949,278.00 (i.e., being $6.00 per square foot of Rentable Area of the Initial Premises) (the “Second Additional Tenant Work Allowance Installment”) and being payable from Landlord to Tenant on or before March 1, 2011. It is hereby agreed, notwithstanding anything herein or in the Lease to the contrary, that Tenant shall have no obligation to deliver to Landlord any further Tenant Requisition or any other submittals of any type or nature in connection with Landlord’s disbursement of the Additional Tenant Work Allowance under this Amendment. Tenant shall notify Landlord, within thirty (30) days following Landlord’s request therefor from time to time, as to how much of the Additional Tenant Work Allowance was applied to the cost of the Tenant Work for purposes of Paragraph 42(W) of the Lease (and shall furnish Landlord with such related information as may be reasonably necessary for Landlord to file appropriate tax return materials in accordance with said Paragraph

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42(W) of the Lease). Subject to the terms of this Paragraph 2(a), the Additional Tenant Work Allowance shall be deemed part of the “Tenant Work Allowance” for all purposes of the Lease.

(b) Upon and subject to Tenant’s receipt of the First Additional Tenant Work Allowance Installment (as defined in Paragraph 2(a) above), Tenant shall be obligated to pay to Landlord, as additional “Net Rent” for all purposes under the Lease (i.e., in addition to all other Net Rent otherwise payable from time to time under the Lease), the following amount for the following period (herein, the “First Net Rent Increase Amount”), payable on a monthly basis in accordance with the terms and conditions otherwise applicable to the payment of Net Rent under the Lease (but without regard to any Net Rent credit, abatement or other set-off rights set forth in the Lease, all of which shall have no force or effect with respect to the First Net Rent Increase Amount and all of which are hereby waived by Tenant with respect to (and only with respect to) such First Net Rent Increase Amount):

Period	Annual Net Rent (RSF of Initial Premises)	Annual Net Rent	Monthly Net Rent
June 1, 2010 through May 31, 2011	$6.00	$3,949,278.00	$329,106.50

(c) Upon and subject to Tenant’s receipt of the Second Additional Tenant Work Allowance Installment (as defined in Paragraph 2(a) above), Tenant shall be obligated to pay to Landlord, as additional “Net Rent” for all purposes under the Lease (i.e., in addition to all other Net Rent otherwise payable from time to time under the Lease), the following amounts for the following period (herein, the “Second Net Rent Increase Amount”), payable on a monthly basis in accordance with the terms and conditions otherwise applicable to the payment of Net Rent under the Lease (but without regard to any Net Rent credit, abatement or other set-off rights set forth in the Lease, all of which shall have no force or effect with respect to the Second Net Rent Increase Amount and all of which are hereby waived by Tenant with respect to (and only with respect to) such Second Net Rent Increase Amount):

Period	Annual Net Rent (RSF of Initial Premises)	Annual Net Rent	Monthly Net Rent
June 1, 2011 through May 31, 2012	$6.00	$3,949,278.00	$329,106.50

(d) It is understood and agreed that Tenant’s obligation to pay the First Net Rent Increase Amount is expressly conditioned upon Tenant’s receipt of the First Additional Tenant Work Allowance Installment and that Tenant obligation to pay the Second Net Rent Increase Amount is expressly conditioned upon Tenant’s receipt of the Second Additional Tenant Work Allowance Installment. In the event Landlord, for any reason or for no reason whatsoever, fails to timely pay the First Additional Tenant Work Allowance Installment as provided in Paragraph 2(a), then such failure shall in no event be deemed a default of Landlord hereunder or under the Lease or give rise to any claims of Tenant on account thereof, provided that in such case, as the sole recourse of either party hereunder or under the Lease on account thereof, Tenant shall have no obligation to pay the First Net Rent Increase Amount hereunder, and the terms of Paragraph 2(b) above shall have no further force or effect, and Landlord shall have no further obligation to pay such First Additional Tenant Work Allowance Installment hereunder. Further, without

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limitation of the terms of the preceding sentence, in the event Landlord, for any reason or for no reason whatsoever, fails to timely pay the Second Additional Tenant Work Allowance Installment as provided in Paragraph 2(a), then such failure shall in no event be deemed a default of Landlord hereunder or under the Lease or give rise to any claims of Tenant on account thereof, provided that in such case, as the sole recourse of either party hereunder or under the Lease on account thereof, Tenant shall have no obligation to pay the Second Net Rent Increase Amount hereunder, and the terms of Paragraph 2(c) above shall have no further force or effect, and Landlord shall have no further obligation to pay such Second Additional Tenant Work Allowance Installment hereunder.

(e) Except as expressly provided hereunder, nothing herein shall affect any of the rights and obligations of the parties with respect to the payment of Net Rent, Additional Rent for Taxes and Operating Expenses and all other Rent due and owing under the Lease, all as otherwise provided in the Lease (as amended hereby).

3. Real Estate Brokers. Landlord and Tenant represent to each other that they have dealt only with the Brokers as brokers, agents or finders in connection with this Amendment and that insofar as each party knows, no brokers other than the Brokers have participated in the procurement of Tenant or in the negotiation of this Amendment or are entitled to any commission in connection therewith. Each of Landlord and Tenant agrees to indemnify and hold the other harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) arising from its breach of any of the foregoing representations. Landlord shall be responsible for the payment of any fees or commissions due to Brokers by reason of the execution, delivery and/or performance of this Amendment pursuant to separate commission agreements between Landlord and the Brokers, and Landlord shall indemnify and hold Tenant harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys’ fees) relating thereto.

4. Counterparts. This Amendment may be executed in any number of counterparts, and each of which when so executed shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

5. Prior Negotiations. This Amendment supersedes all prior negotiations, representations, understandings and agreements of, by or between Landlord and Tenant with respect to the subject matter hereof, all of which shall be deemed fully merged herein.

6. Liability of Parties. Articles 24 and 40 of the Original Lease are hereby incorporated herein as if restated herein in full.

7. Full Force and Effect. Except as amended hereby, the terms of the Lease are hereby ratified and confirmed, and the Lease (as amended hereby) shall continue in full force and effect. Without limitation of the foregoing, the terms of Article 24 and Article 40 of the Original Lease shall apply to this Amendment and to the Lease, as amended hereby.

[Signature Page Follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Amendment as of the day and year first above written.

LANDLORD:						TENANT:
300 LASALLE LLC, a Delaware limited liability company						KIRKLAND & ELLIS LLP, an Illinois limited liability partnership
By:	300 LaSalle Holdings LLC, a Delaware limited liability company					By:	Stephen G. Tomlinson, P.C., an Illinois professional service corporation, a partner
	By:	Hines 300 LaSalle Associates LP, a Texas limited partnership					By:/s/ Stephen g. Tomlinson, P.C. Name: Stephen G. Tomlinson Title: President
		By:	Hines 300 LaSalle GP LLC, a Delaware
			limited liability company
			By:	Hines Interests Limited Partnership, a Delaware limited partnership
				By:	Hines Holdings, Inc., a Texas corporation
					By:/s/ C. Kevin Shannahan
					Name: Greg Van Schaack
					Title: SVP

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EX-10.61

Exhibit 10.61

Execution Version

AGREEMENT OF SALE AND PURCHASE

BETWEEN

HINES VAF UB PLAZA, L.P.

as Seller

AND

KBS CAPITAL ADVISORS LLC

as Purchaser

pertaining to

Union Bank Plaza

Los Angeles, California

EXECUTED EFFECTIVE AS OF

August 16, 2010

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1
Section 1.1	Definitions	1
Section 1.2	References; Exhibits and Schedules	9
ARTICLE II AGREEMENT OF PURCHASE AND SALE		9
Section 2.1	Agreement	9
Section 2.2	Indivisible Economic Package	9
ARTICLE III CONSIDERATION		10
Section 3.1	Purchase Price	10
Section 3.2	Assumption of Obligations	10
Section 3.3	Method of Payment of Purchase Price	10
Section 3.4	Independent Consideration	10
Section 3.5	Conditions to Purchaser’s and Seller’s Obligations	10
ARTICLE IV EARNEST MONEY DEPOSIT AND ESCROW INSTRUCTIONS		12
Section 4.1	The Deposit	12
Section 4.2	Escrow Instructions	12
Section 4.3	Documents Deposited into Escrow	12
Section 4.4	Close of Escrow	13
Section 4.5	Termination Notices	13
Section 4.6	Indemnification of Title Company	14
Section 4.7	Maintenance of Confidentiality by Title Company	14
Section 4.8	Investment of Earnest Money Deposit	14
Section 4.9	Designation of Reporting Person	15
Section 4.10	Purchaser’s Title Company; Co-Insurance	15
ARTICLE V INSPECTION OF PROPERTY		16
Section 5.1	Entry and Inspection	16
Section 5.2	Document Review	18
Section 5.3	Entry and Inspection Obligations	20
Section 5.4	No Right of Termination	20
Section 5.5	Sale “As Is”	21
Section 5.6	Purchaser’s Release of Seller	23
Section 5.7	Natural Hazard Disclosure Statement	24
Section 5.8	California Health and Safety Code Section 25359.7	25
ARTICLE VI TITLE AND SURVEY MATTERS		25
Section 6.1	Survey	25
Section 6.2	Title Commitment	25
ARTICLE VII INTERIM OPERATING COVENANTS AND ESTOPPELS		29
Section 7.1	Interim Operating Covenants	29
Section 7.2	Estoppels	30
Section 7.3	SNDAS	31
Section 7.4	OFAC	31

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ARTICLE VIII REPRESENTATIONS AND WARRANTIES		31
Section 8.1	Seller’s Representations and Warranties	31
Section 8.2	Purchaser’s Representations and Warranties	33
ARTICLE IX CONDEMNATION AND CASUALTY		34
Section 9.1	Significant Casualty	34
Section 9.2	Casualty of Less Than a Significant Portion	34
Section 9.3	Condemnation of Property	35
ARTICLE X CLOSING		35
Section 10.1	Closing	35
Section 10.2	Purchaser’s Closing Obligations	36
Section 10.3	Seller’s Closing Obligations	36
Section 10.4	Prorations	37
Section 10.5	Delivery of Real Property	40
Section 10.6	Costs of Title Company and Closing Costs	40
Section 10.7	Post-Closing Delivery of Tenant Notice Letters	40
Section 10.8	Assignment of Construction Contracts	40
ARTICLE XI BROKERAGE		41
Section 11.1	Broker	41
ARTICLE XII CONFIDENTIALITY		41
Section 12.1	Confidentiality	41
ARTICLE XIII REMEDIES		42
Section 13.1	Default by Seller	42
Section 13.2	Default by Purchaser	43
Section 13.3	Consequential and Punitive Damages	43
ARTICLE XIV NOTICES		43
Section 14.1	Notices	43
ARTICLE XV ASSIGNMENT AND BINDING EFFECT		45
Section 15.1	Assignment; Binding Effect	45
ARTICLE XVI PROCEDURE FOR INDEMNIFICATION AND LIMITED SURVIVAL OF
	REPRESENTATIONS, WARRANTIES AND COVENANTS	45
Section 16.1	Survival of Representations, Warranties and Covenants	45
ARTICLE XVII MISCELLANEOUS		46
Section 17.1	Waivers	46
Section 17.2	Recovery of Certain Fees	46
Section 17.3	Time of Essence	46
Section 17.4	Construction	47
Section 17.5	Counterparts	47
Section 17.6	Severability	47
Section 17.7	Entire Agreement	47
Section 17.8	Governing Law	47
Section 17.9	No Recording	47

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Section 17.10	Further Actions	47
Section 17.11	No Other Inducements	48
Section 17.12	Exhibits	48
Section 17.13	No Partnership	48
Section 17.14	Limitations on Benefits	48
Section 17.15	Limitation of Liability	48

EXHIBITS
Exhibit A –	Legal Description of Real Property
Exhibit B –	List of Personal Property
Exhibit C –	List of Operating Contracts
Exhibit D-1 -	Form of Tenant Estoppel Certificate
Exhibit D-2 -	Form of Union Bank of California Tenant Estoppel Certificate
Exhibit E -	Statement Required for the Issuance of ALTA Owners and Loan Policies
Exhibit F -	List of Pending Lawsuits
Exhibit G -	List of Tenants
Exhibit H -	Non-Foreign Entity Certification
Exhibit I -	General Conveyance, Bill of Sale, Assignment and Assumption
Exhibit J -	Grant Deed
Exhibit K -	Documents
Exhibit L -	WTC Parking Lease Assignment and Assumption
Exhibit M -	Leasing Costs
Exhibit N -	Scheduled Licenses and Permits
Exhibit O -	Form of Contractor’s Certificate
Exhibit P -	Fourth Amendment to Major Tenant’s Tenant Lease
Exhibit Q -	Leasing Costs with respect to
	Fourth Amendment to Major Tenant’s Tenant Lease

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AGREEMENT OF SALE AND PURCHASE

THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”) is entered into and effective for all purposes as of August 16, 2010 (the “Effective Date”), by and between HINES VAF UB PLAZA, L.P., a Delaware limited partnership (“Seller”), and KBS CAPITAL ADVISORS LLC, a Delaware limited liability company (“Purchaser”).

In consideration of the mutual promises, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1      Definitions.    For purposes of this Agreement, the following capitalized terms have the meanings set forth in this Section 1.1:

“Additional Deposit” has the meaning ascribed to such term in Section 4.1.

“Affiliate” means any person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with Purchaser or Seller, as the case may be. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have the meanings correlative to the foregoing.

“Agreement” has the meaning ascribed to such term in the opening paragraph.

“Authorities” means the various governmental and quasi-governmental bodies or agencies having jurisdiction over Seller, the Real Property or the Improvements (or any portion thereof).

“Broker” has the meaning ascribed to such term in Section 11.1.

“Business Day” means any day other than a Saturday, Sunday or a day on which national banking associations are authorized or required to close in the State of California.

“Central Plants Agreement” means that certain Energy Supply Agreement between Trigen-LA Energy Corporation, a California corporation, f/k/a Central Plants, Inc., and f/k/a/ Sempra Facilities Management and Seller, dated April 21, 2008.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601 et seq.), as the same may be amended.

“Certificate as to Foreign Status” has the meaning ascribed to such term in Section 10.3(g).

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“Certifying Party” has the meaning ascribed to such term in Section 4.5.

“Closing” means the consummation of the purchase and sale of the Property contemplated by this Agreement, as provided for in Article X.

“Closing Date” means the date on which the Closing occurs, which date will be September 15, 2010, or such earlier or later date to which Purchaser and Seller may hereafter agree in writing.

“Closing Documents” means the documents referred to in Section 10.3(a), (b), (c) and (g) executed by Seller at Closing

“Closing Statement” has the meaning ascribed to such term in Section 10.4(a).

“Closing Surviving Obligations” means the covenants, rights, liabilities and obligations set forth in Sections 3.2, 3.3, 4.9, 5.1(e), 5.2(d), 5.2(f) (subject to Section 16.1), 5.3, 5.5, 5.6, 7.4, 8.1 (subject to Section 16.1), 8.2, 10.4 (subject to the limitations therein), 10.6, 10.7, 11.1, 13.3, 14.1, 15.1, 16.1 and Article XVII.

“Closing Time” has the meaning ascribed to such term in Section 10.4(a).

“Code” has the meaning ascribed to such term in Section 4.4(a).

“Commitment” has the meaning ascribed to such term in Section 6.2(a).

“Construction Contracts” has the meaning ascribed to such term in Section 10.8.

“Construction Contracts Lien Exception” has the meaning ascribed to such term in Section 6.2(a).

“Cure Period” has the meaning ascribed to such term in Section 6.2(b).

“Deed” has the meaning ascribed to such term in Section 10.2(b).

“Deposit Time” means 10:30 a.m. Pacific Time on the Closing Date.

“Documents” has the meaning ascribed to such term in Section 5.2(a).

“Earnest Money Deposit” has the meaning ascribed to such term in Section 4.1.

“Effective Date” has the meaning ascribed to such term in the opening paragraph of this Agreement.

“Employee” has the meaning ascribed to such term in Section 5.1(e).

“Employer” has the meaning ascribed to such term in Section 5.1(e).

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“Environmental Laws” means all federal, state and local environmental laws, rules, statutes, directives, binding written interpretations, binding written policies, ordinances and regulations issued by any Authorities and in effect as of the date of this Agreement with respect to or which otherwise pertain to or affect (i) the Real Property or the Improvements (or any portion thereof), (ii) the use, ownership, occupancy or operation of the Real Property or the Improvements (or any portion thereof), (iii) Seller, or (iv) Purchaser, and as same have been amended, modified or supplemented from time to time prior to and are in effect as of the date of this Agreement, including but not limited to CERCLA, the Hazardous Substances Transportation Act (49 U.S.C. § 1802 et seq.), RCRA, the Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. § 11001 et seq.), the Radon and Indoor Air Quality Research Act (42 U.S.C. § 7401 note, et seq.), comparable state and local laws, and any and all rules and regulations which are in effect as of the date of this Agreement under any and all of the aforementioned laws.

“Escrow Instructions” has the meaning ascribed to such term in Section 4.2.

“Executed SNDA” has the meaning ascribed to such term in Section 7.3.

“Executive Order” has the meaning ascribed to such term in Section 7.4.

“Existing Survey” has the meaning ascribed to such term in Section 6.1.

“Existing Tenant Costs” means (a) Leasing Costs accruing after the Closing Date with respect to Tenant Leases entered into on or prior to the Effective Date but only to the extent such Leasing Costs are included in the Tenant Leases, included in the leasing commission agreements noted on Exhibit C or otherwise included in a written notice delivered to Purchaser prior to the expiration of the Inspection Period, and (b) Leasing Costs which are payable by the landlord after the Effective Date with respect to the Major Tenant’s Tenant Lease (regardless of whether the obligation for such costs or allowances accrued, arose or was triggered prior to, on or after the Effective Date) but only to the extent such Leasing Costs are included in the Major Tenant’s Tenant Lease (including all amendments thereto), included in the leasing commission agreements noted on Exhibit C, or otherwise included in a written notice delivered to Purchaser prior to the expiration of the Inspection Period. Without limiting the foregoing, Existing Tenant Costs shall include, without limitation, all of the Leasing Costs payable with respect to that certain Fourth Amendment to Office/Retail Lease, dated August 10, 2010, between Seller and the Major Tenant, a copy of which is attached hereto as Exhibit P, which Leasing Costs shall include the costs shown on Exhibit Q and shall be deemed payable after the Effective Date for purposes of this Agreement (regardless of whether such Leasing Costs became payable prior to, on or after the Effective Date).

“GAP Notice” has the meaning ascribed to such term in Section 6.2(c)

“General Conveyance” has the meaning ascribed to such term in Section 10.2(c).

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“Governmental Regulations” means all laws, ordinances, rules and regulations of the Authorities applicable to Seller or Seller’s use and operation of the Real Property or the Improvements or any portion thereof.

“Hazardous Substances” means all (a) electromagnetic waves, urea formaldehyde foam insulation and transformers or other equipment that contains dielectric fluid containing polychlorinated biphenyls of 50 ppm or greater, (b) any solid, liquid, gaseous or thermal contaminant, including smoke vapor, soot, fumes, acids, alkalis, chemicals, waste, petroleum products or byproducts, asbestos, PCBs, phosphates, lead or other heavy metals, chlorine or radon gas, (c) any solid or liquid wastes (including hazardous wastes), hazardous air pollutants, hazardous substances, hazardous chemical substances and mixtures, toxic substances, pollutants and contaminants, as such terms are defined in any Environmental Law, including, without limitation CERCLA, RCRA, the National Environmental Policy Act (42 U.S.C. § 4321 et seq.), the Hazardous Substances Transportation Act, the Toxic Substances Control Act, the Clean Water Act (33 U.S.C. § 1321 et seq.), the Clean Air Act, the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as such Environmental Laws have been amended and/or supplemented from time to time prior to the date of this Agreement, and any and all rules and regulations promulgated under any of the above, and (d) any other chemical, material or substance, the use or presence of which, or exposure to the use or presence of which, is prohibited, limited or regulated by any Environmental Laws, in effect as of or prior to the date of this Agreement or as the same may be amended or supplemented after the date of this Agreement.

“Improvements” means all buildings, structures, fixtures, parking areas and other improvements owned by Seller and located on the Real Property.

“Independent Consideration” has the meaning ascribed to such term in Section 3.4.

“Initial Deposit” has the meaning ascribed to such term in Section 4.1.

“Inspection Agreement” means that certain Inspection and Confidentiality Agreement dated August 4, 2010 between Seller and Purchaser.

“Inspection Period” has the meaning ascribed to such term in Section 5.1(a).

“Leasing Costs” means the following costs incurred in connection with the lease of space in the Property: (i) leasing commissions, (ii) brokerage commissions, (iii) tenant improvement allowances, (iv) space planning costs, (v) any lease assumption costs or termination fees Seller agreed to assume with respect to any Tenant’s lease of space in other buildings prior to the execution of a Tenant Lease in the Property, and (vi) attorneys’ fees.

“Licensee Parties” has the meaning ascribed to such term in Section 5.1(b).

“Licenses and Permits” means any and all of Seller’s right, title and interest, to the extent assignable without the necessity of consent or assignable only with consent and such consent has been obtained, in and to, collectively, licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps and entitlements issued, approved or granted by the

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Authorities prior to Closing in connection with the Real Property and the Improvements, together with all renewals and modifications thereof.

“Lien Related Notice” has the meaning ascribed to such term in Section 6.2(f).

“Major Tenant” means Union Bank of California.

“Natural Hazard Expert” has the meaning ascribed to such term in Section 5.7.

“New Exceptions” has the meaning ascribed to such term in Section 6.2(c).

“New Tenant Costs” has the meaning ascribed to such term in Section 10.4(e).

“OFAC” has the meaning ascribed to such term in Section 7.4.

“Official Records” means the Official Records of Real Property in the Office of the Clerk and Recorder of the City of Los Angeles and County of Los Angeles, California.

“Operating Contracts” means all of Seller’s right, title and interest in and to, collectively, the service agreements, maintenance contracts, equipment leasing agreements, leasing commission agreements, warranties, guarantees, bonds and other contracts for the provision of labor, services, materials or supplies relating solely to the Real Property, Improvements or Personal Property and under which Seller is currently paying for services rendered in connection therewith, as listed on Exhibit C attached hereto, together with any and all renewals, supplements, amendments and modifications thereof, and any and all new such agreements entered into after the Effective Date, to the extent permitted by Section 7.1(f), except that any existing management agreements will be terminated at Closing and are excluded from such term.

“Operating Expense Recoveries” has the meaning ascribed to such term in Section 10.4(c).

“Other Party” has the meaning ascribed to such term in Section 4.5.

“Outstanding Construction Contracts” has the meaning ascribed to such term in Section 10.8.

“Permissible Matters” means (i) monetary liens (including, without limitation, any liens filed or recorded in the Official Records arising under contracts or work performed by Seller in the six (6) months immediately preceding the Closing Date) which do not exceed $550,000 in the aggregate; (ii) any other matters to which Purchaser agrees in writing (in its sole and absolute discretion) to permit to be cured by affirmative insurance; and (iii) general exceptions which are the subject of the extended coverage under Section 6.2(a).

“Permitted Exceptions” has the meaning ascribed to such term in Section 6.2(d).

“Permitted Outside Parties” has the meaning ascribed to such term in Section 5.2(b).

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“Personal Property” means all of Seller’s right, title and interest in and to, collectively, the equipment, appliances, tools, supplies, machinery, furnishings and other tangible personal property attached to, appurtenant to, located in and used exclusively by Seller in connection with its ownership or operation of the Improvements (including, without limitation, the personal property set forth on Exhibit B attached hereto) but specifically excluding (i) the personal property identified as to be excluded on Exhibit B, (ii) any items of personal property owned by Tenants of the Improvements and (iii) any items of personal property owned by third parties and leased to Seller.

“Property” has the meaning ascribed to such term in Section 2.1.

“Proration Items” has the meaning ascribed to such term in Section 10.4(a).

“Purchase Price” has the meaning ascribed to such term in Section 3.1.

“Purchaser” has the meaning ascribed to such term in the opening paragraph of this Agreement.

“Purchaser’s Information” has the meaning ascribed to such term in Section 5.2(c).

“Purchaser’s Title Company” means Chicago Title Insurance Company, 4041 MacArthur Boulevard, Suite 490, Newport Beach, CA 92660, Attn: John Premac, Telephone: (949) 724.3111, Facsimile: (949) 724.3181.

“RCRA” means the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as amended by the Hazardous and Solid Wastes Amendments of 1984, and as further amended.

“Real Property” means those certain parcels of or interests in real property commonly known as Union Bank Plaza in Los Angeles, California, as more particularly described on Exhibit A attached hereto and made a part hereof, together with all of Seller’s right, title and interest, if any, in and to the appurtenances pertaining thereto, including but not limited to Seller’s right, title and interest in and to the streets, alleys and right-of-ways which abut such real property, and any easement rights, air rights, subsurface rights, development rights and water rights appurtenant to such real property.

“Records and Plans” means, collectively: (i) all books and records, including but not limited to property operating statements, specifically relating to the Improvements; (ii) all structural reviews, architectural drawings and engineering, soils, seismic, geologic and architectural reports, studies and certificates pertaining to the Real Property or the Improvements; and (iii) all final plans, specifications and drawings of the Improvements or any portion thereof. The terms “Records and Plans” shall not include (1) any document or correspondence which would be subject to the attorney- client privilege; (2) any document or item which Seller is contractually or otherwise bound to keep confidential; (3) any documents pertaining to the marketing of the Property for sale to prospective purchasers; (4) any internal memoranda, reports or assessments of Seller or Seller’s Affiliates relating to Seller’s valuation of the Property; (5) appraisals of the Property whether prepared internally by Seller or Seller’s

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Affiliates or externally; (6) any documents or items which Seller considers confidential or proprietary; (7) any documents or items which are not in Seller’s possession and control; and (8) any materials projecting or relating to the future performance of the Property.

“REIT” has the meaning ascribed to such term in Section 12.1.

“Rentals” has the meaning ascribed to such term in Section 10.4(b), and some may be “Delinquent” in accordance with the meaning ascribed to such term in Section 10.4(b).

“Reporting Person” has the meaning ascribed to such term in Section 4.9(a).

“Representatives” has the meaning ascribed to such term in Section 12.1.

“Scheduled Licenses and Permits” shall mean the Licenses and Permits set forth on Exhibit N attached hereto and made a part hereof.

“Schindler Contract” shall mean that certain Construction Contract, effective November 1, 2008, by and between Seller and Schindler Elevator Corporation, as the same may have been amended.

“Seller” has the meaning ascribed to such term in the opening paragraph of this Agreement.

“Seller Released Parties” has the meaning ascribed to such term in Section 5.6(a).

“Significant Portion” means damage (i) by fire or other casualty to the Real Property and the Improvements or a portion thereof requiring repair costs in excess of Fifteen Million and No/100 Dollars ($15,000,000) as such repair costs are reasonably estimated by Seller; or (ii) that entitles the Major Tenant to terminate its Tenant Lease unless the Major Tenant has waived such termination right or such termination right has expired by its terms prior to exercise by the Major Tenant.

“SNDA” has the meaning ascribed to such term in Section 7.3.

“Tenant Deposits” means, collectively, any and all security deposits, paid or deposited by the Tenants to Seller, as landlord, or any other person on Seller’s behalf pursuant to the Tenant Leases, which have not been applied to obligations under the Tenant Leases (together with any interest which has accrued thereon, but only to the extent such interest has accrued for the account of the respective Tenants).

“Tenant Leases” means the following pertaining to the Improvements: (i) any and all written leases, rental agreements, occupancy agreements and license agreements (and any and all written renewals, amendments, modifications and supplements thereto together with any lease guaranties) entered into on or prior to the Effective Date and in full force and effect, as listed on Exhibit G attached hereto (ii) any and all new written leases, rental agreements, occupancy agreements and license agreements together with any lease guaranties entered into after the Effective Date and prior to the Closing Date in accordance with Section 7.1(e) of this

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Agreement; and (iii) any and all new written renewals, amendments, modifications and supplements to any of the foregoing entered into after the Effective Date and prior to the Closing Date in accordance with Section 7.1(e) of this Agreement, and, as to (ii) and (iii) only, to the extent approved by Purchaser pursuant to Section 7.1(e) to the extent such approval is required under Section 7.1(e). Tenant Leases will not include subleases, franchise agreements or similar occupancy agreements entered into by Tenants which, by their nature, are subject to Tenant Leases.

“Tenant Notice Letters” has the meaning ascribed to such term in Section 10.7.

“Tenants” means all persons or entities leasing, renting or occupying space within the Improvements pursuant to the Tenant Leases, but expressly excludes any subtenants, licensees, concessionaires, franchisees or other persons or entities whose occupancy is derived through Tenants.

“Termination Notice” has the meaning ascribed to such term in Section 5.1(a).

“Termination Surviving Obligations” means the rights, liabilities and obligations set forth in Sections 3.4, 4.5, 4.6, 5.1(e), 5.2, 5.3, 5.6, 7.4, 11.1, 12.1, 14.1, 13.3, 15.1 and Articles XIII and XVII.

“Title Company” means Chicago Title Company, 700 South Flower, Suite 800 Los Angeles, California, 90017, Attn: David Balassi, Phone: (213) 488-4394.

“Title Notice” has the meaning ascribed to such term in Section 6.2(b).

“Title Policy” has the meaning ascribed to such term in Section 6.2(a).

“To Seller’s Knowledge” means the present actual (as opposed to constructive or imputed) knowledge solely of James Bonham and Joseph Tupy, without any independent investigation or inquiry whatsoever. Such individuals are named in this Agreement solely for the purpose of establishing the scope of Seller’s knowledge. Such individuals shall not be deemed to be parties to this Agreement nor to have made any representations or warranties hereunder, and no recourse shall be had to such individuals for any of Seller’s representations and warranties hereunder (and Purchaser hereby waives any liability of or recourse against such individuals).

“Uninsured Significant Casualty” has the meaning ascribed to such term in Section 9.1.

“WTC Parking Lease” means that certain Parking Lease Agreement dated September 25, 2000, respecting a portion of a garage located on that certain real property commonly known as the World Trade Center located at 350 South Figueroa Street, Los Angeles, California, by and among The Equitable-Nissei Figueroa Company, a California joint venture, as tenant, and Royal Investment Systems Partnerships (RIS) (03)-(07) and Haseko Corporation, a Japanese corporation, as landlord, as evidenced by that certain Memorandum of Parking Lease Agreement dated September 25, 2000, recorded in the Official Records on October 13, 2000 as Instrument No. 00-1601504, as amended by the First Amendment to Parking Lease Agreement, dated November 1, 2001, by and among Royal Investment Systems Partnerships (RIS) (03)-(07)

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and Haseko Corporation and 445 South Figueroa, LLC, a California limited liability company, as assigned pursuant to that certain Memorandum of Assignment of Parking Lease Agreement dated October 18, 2002, recorded in the Official Records on October 18, 2002 as Instrument No. 02-2457651.

Section 1.2      References; Exhibits and Schedules. Except as otherwise specifically indicated, all references in this Agreement to Articles or Sections refer to Articles or Sections of this Agreement, and all references to Exhibits or Schedules refer to Exhibits or Schedules attached hereto, all of which Exhibits and Schedules are incorporated into, and made a part of, this Agreement by reference. The words “herein,” “hereof,” “hereinafter” and words and phrases of similar import refer to this Agreement as a whole and not to any particular Section or Article.

ARTICLE II

AGREEMENT OF PURCHASE AND SALE

Section 2.1      Agreement. Seller hereby agrees to sell, convey and assign to Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date and subject to the terms and conditions of this Agreement, all of the following (collectively, the “Property”):

(a)      the Real Property;

(b)      the Improvements;

(c)      the Personal Property;

(d)      any and all of Seller’s right, title and interest as lessor in and to the Tenant Leases and, subject to the terms of the respective applicable Tenant Leases, the Tenant Deposits;

(e)      any and all of Seller’s right, title and interest as lessee in and to the WTC Parking Lease;

(f)      any and all of Seller’s right, title and interest in and to the Central Plants Agreement; and

(g)     any and all of Seller’s right, title and interest in and to the Operating Contracts and the Licenses and Permits, in each case to the extent assignable without the necessity of consent or approval and, if consent or approval is required, to the extent any necessary consent or approval has been obtained.

Section 2.2      Indivisible Economic Package. Purchaser has no right to purchase, and Seller has no obligation to sell, less than all of the Property, it being the express agreement and understanding of Purchaser and Seller that, as a material inducement to Seller and Purchaser to enter into this Agreement, Purchaser has agreed to purchase, and Seller has agreed to sell, all of the Property, subject to and in accordance with the terms and conditions hereof.

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ARTICLE III

CONSIDERATION

Section 3.1      Purchase Price.    The purchase price for the Property (the “Purchase Price”) will be Two Hundred Eight Million and No/100 Dollars ($208,000,000.00) in lawful currency of the United States of America, payable as provided in Section 3.3.

Section 3.2      Assumption of Obligations.    As additional consideration for the sale and purchase of the Property, effective as of Closing, Purchaser will be deemed to have, and by virtue of closing the purchase of the Property, Purchaser shall have assumed and agreed to perform, pay, discharge, observe and comply with, as applicable, (i) all of the covenants, liabilities, duties, debts, obligations and responsibilities of Seller, Seller’s predecessors in title (if any) and Seller’s Affiliates pursuant to the Tenant Leases, the Central Plants Agreement, the WTC Parking Lease, the Operating Contracts and the Scheduled Licenses and Permits assigned to Purchaser and which accrue on or after the Closing Date and (ii) any Leasing Costs for which Purchaser is responsible under Section 10.4(e) below. The provisions of this Section 3.2 shall fully survive the Closing without limitation.

Section 3.3      Method of Payment of Purchase Price.    No later than the Deposit Time, Purchaser will deposit in escrow with the Title Company the Purchase Price (subject to adjustments described in Section 10.4), together with all other costs and amounts to be paid by Purchaser at Closing pursuant to the terms of this Agreement, by Federal Reserve wire transfer of immediately available funds to an account to be designated by the Title Company. No later than 12:00 p.m. Pacific Time on the Closing Date: (a) Purchaser will cause the Title Company to (i) pay to Seller by Federal Reserve wire transfer of immediately available funds to an account to be designated by Seller, the Purchase Price (subject to adjustments described in Section 10.4), less any costs or other amounts to be paid by Seller at Closing pursuant to the terms of this Agreement, and (ii) pay to all appropriate payees the other costs and amounts to be paid by Purchaser at Closing pursuant to the terms of this Agreement; and (b) Seller will direct the Title Company to pay to the appropriate payees out of the proceeds of Closing payable to Seller, all costs and amounts to be paid by Seller at Closing pursuant to the terms of this Agreement.

Section 3.4      Independent Consideration.      The sum of One Hundred Dollars ($100.00) (the “Independent Consideration”) out of the Earnest Money Deposit is independent of any other consideration provided hereunder, shall be fully earned by Seller upon the Effective Date hereof, and is not refundable to Purchaser under any circumstances. Accordingly, if this Agreement is terminated for any reason by either party, the Independent Consideration shall be paid by the Title Company to Seller.

Section 3.5      Conditions to Purchaser’s and Seller’s Obligations.

(a)      Conditions to Purchaser’s Obligations.    In addition to any other conditions expressly provided in this Agreement, the obligation of Purchaser to purchase and pay for the Property is subject to the satisfaction (or waiver by Purchaser) as of the Closing of the following conditions:

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    (i)        Subject to the provisions of Section 8.1, each of the representations and warranties made by Seller in Section 8.1 shall be true and correct in all material respects when made and as of the Closing Date.

    (ii)       Seller shall have performed or complied in all material respects with each obligation required by this Agreement to be performed or complied with by Seller pursuant to Section 10.3.

    (iii)      At the Closing, the Title Company shall have issued, or irrevocably committed to issue, the Title Policy in accordance with Section 6.2.

    (iv)      Purchaser shall have received fully executed estoppel certificates in accordance with the provisions of Section 7.2 of this Agreement.

    (v)       Seller shall have performed or complied in all material respects with each obligation required by this Agreement to be performed or complied with by Seller pursuant to Sections 7.1(c), (e), (f) and (g).

    (vi)      The conditions to Closing set forth in Section 10.8 of this Agreement have been satisfied.

Purchaser’s closing of the purchase provided for herein shall evidence Purchaser’s satisfaction with or waiver of each of such conditions. If any conditions to Purchaser’s obligation to close are not satisfied at Closing, as Purchaser’s sole and exclusive remedy (Purchaser hereby waiving all other remedies except as expressly provided below in the proviso to this sentence), Purchaser may terminate this Agreement in which event Purchaser shall be entitled to a return of the Earnest Money Deposit (subject to Section 4.5); provided, however in the event the condition under Section 3.5(a)(ii) is not satisfied or waived by Purchaser on or before Closing, Purchaser shall be entitled to pursue its remedies under Section 13.1.

(b)      Conditions to Seller’s Obligations.    In addition to any other conditions expressly provided in this Agreement, the obligation of Seller to sell the Property is subject to the satisfaction (or waiver by Seller) as of the Closing of the following conditions:

    (i)       Each of the representations and warranties made by Purchaser in Section 8.2 shall be true and correct in all material respects when made and on and as of the Closing Date.

    (ii)      Purchaser shall have performed or complied in all material respects with each obligation required by this Agreement to be performed or complied with by the Purchaser pursuant to Section 10.2.

Seller’s closing of the sale provided for herein shall evidence Seller’s satisfaction with or waiver of each of such conditions. If any conditions to Seller’s obligation to close are not satisfied at Closing, Seller may terminate this Agreement and in the event either condition under subsection (i) or (ii) is not satisfied or waived by Seller on or before Closing, Seller shall be entitled to pursue its remedies under Section 13.2.

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ARTICLE IV

EARNEST MONEY DEPOSIT AND ESCROW INSTRUCTIONS

Section 4.1      The Deposit.    Within one (1) Business Day after the execution and delivery of this Agreement, Purchaser shall deposit with the Title Company, in good funds immediately collectible by the Title Company, the sum of One Million and No/100 Dollars ($1,000,000.00) (the “Initial Deposit”), which will be held in escrow by the Title Company pursuant to the terms of this Agreement. If Purchaser fails to timely deposit the Initial Deposit in accordance with this Section 4.1, this Agreement shall automatically terminate and all further rights and obligations of the parties under this Agreement shall terminate (except for the Termination Surviving Obligations). If Purchaser fails to terminate this Agreement pursuant to Section 5.1(a) on or before the expiration of the Inspection Period, Purchaser shall be obligated to deposit with the Title Company within one (1) Business Day after the expiration of the Inspection Period, in good funds, immediately collectible by the Title Company, the sum of Five Million and No/100 Dollars ($5,000,000.00) (the “Additional Deposit”), which will also be held in escrow by the Title Company pursuant to the terms of this Agreement. The Initial Deposit (plus all interest earned thereon) and the Additional Deposit (plus all interest earned thereon) shall be the “Earnest Money Deposit” for purposes of this Agreement. If Purchaser has not timely terminated this Agreement pursuant to Section 5.1(a) on or before the expiration of the Inspection Period and Purchaser fails to timely deposit the Additional Deposit in accordance with this Section 4.1, notwithstanding anything to the contrary contained in this Agreement, the Initial Deposit and the Independent Consideration shall immediately be paid to Seller, this Agreement shall automatically terminate and all further rights and obligations of the parties under this Agreement shall terminate (except for the Termination Surviving Obligations).

Section 4.2      Escrow Instructions.  Article IV of this Agreement constitutes the escrow instructions of Seller and Purchaser to the Title Company with regard to the Earnest Money Deposit and the Closing (the “Escrow Instructions”). By its execution of the joinder attached hereto, the Title Company agrees to be bound by the provisions of this Article IV. If any requirements relating to the duties or obligations of the Title Company hereunder are not acceptable to the Title Company, or if the Title Company requires additional instructions, the parties agree to make such deletions, substitutions and additions to the Escrow Instructions as Purchaser and Seller hereafter mutually approve in writing and which do not substantially alter this Agreement or its intent. In the event of any conflict between this Agreement and such additional escrow instructions, this Agreement will control.

Section 4.3      Documents Deposited into Escrow.  On or before the Deposit Time,

(a) Purchaser will cause the difference between the Purchase Price and the Earnest Money Deposit (subject to the prorations and adjustments provided for in this Agreement) to be transferred to the Title Company’s escrow account, in accordance with the timing and other requirements of Section 3.3,

(b) Purchaser will deliver in escrow to the Title Company the documents described and provided for in Section 10.2(a), (b), (c), (d), (e), (f), (g), (h) and (i) below; and

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(c) Seller will deliver in escrow to the Title Company the documents described and provided for in Section 10.3(a), (b), (c), (d), (e), (f), (g), (h), (l) and (m) below.

Section 4.4      Close of Escrow. Provided that the Title Company has not received from Seller or Purchaser any written termination notice as described and provided for in Section 4.5 (or if such a notice has been previously received, provided that the Title Company has received from such party a withdrawal of such notice), when Purchaser and Seller have delivered the documents required by Section 4.3, the Title Company will:

(a)      If applicable and when required, file with the Internal Revenue Service (with copies to Purchaser and Seller) the reporting statement required under section 6045(e) of the Internal Revenue Code of 1986, as amended (the “Code”) and Section 4.9;

(b)      Insert the applicable Closing Date as the date of any document delivered to the Title Company undated, and assemble counterparts into single instruments;

(c)      Disburse to Seller, by wire transfer to Seller of immediately available federal funds, in accordance with wiring instructions to be obtained by the Title Company from Seller, the Purchase Price as adjusted in accordance with the provisions of this Agreement;

(d)      Deliver the Deed (with documentary tax information to be affixed after recording) to Purchaser by agreeing to cause same to be recorded in the Official Records and agreeing to obtain conformed copies of the recorded Deed for delivery to Purchaser and to Seller following recording (the parties hereby acknowledging that the actual recording of the Deed and delivery of conformed copies may actually occur following Closing, as contemplated in Section 10.1 below);

(e)      Issue to Purchaser the Title Policy required by Section 6.2(a) of this Agreement;

(f)      Deliver to Seller, in addition to Seller’s Closing proceeds, all documents deposited with the Title Company for delivery to Seller at the Closing; and

(g)      Deliver to Purchaser (i) all documents deposited with the Title Company for delivery to Purchaser at the Closing and (ii) any funds deposited by Purchaser in excess of the amount required to be paid by Purchaser pursuant to this Agreement.

Section 4.5      Termination Notices. If at any time the Title Company receives a certificate of either Seller or Purchaser (for purposes of this Section 4.5, the “Certifying Party”) stating that: (a) the Certifying Party is entitled to receive the Earnest Money Deposit pursuant to the terms of this Agreement, and (b) a copy of the certificate was delivered as provided herein to the other party (for purposes of this Section 4.5, the “Other Party”) prior to or contemporaneously with the giving of such certificate to the Title Company, then, unless the Title Company has then previously received, or receives within three (3) Business Days after receipt of the Certifying Party’s certificate, contrary instructions from the Other Party, the Title Company, within one (1) Business Day after the expiration of the foregoing three (3) Business Day period, will deliver the Independent Consideration to Seller and the Earnest Money Deposit to the Certifying Party, and thereupon the Title Company will be discharged and released from

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any and all liability hereunder. If the Title Company receives contrary instructions from the Other Party within three (3) Business Days following the Title Company’s receipt of said certificate, the Title Company will not so deliver the Earnest Money Deposit, but will continue to hold the same pursuant hereto, subject to Section 4.6. Notwithstanding anything in this Agreement to the contrary, in the event Seller or Purchaser elects to terminate this Agreement pursuant to the express provisions of this Agreement, the Earnest Money shall only be disbursed in accordance with this Section 4.5; provided, however, the foregoing provisions of this Section 4.5 shall be inapplicable with respect to any Termination Notice issued by Purchaser on or before the expiration of the Inspection Period pursuant to Section 5.1 of this Agreement, with it being agreed that Purchaser shall be entitled to, and Title Company shall issue, an immediate refund of the Earnest Money Deposit to Purchaser, without regard to the terms and conditions of this Section 4.5 upon (1) the Title Company’s receipt from Purchaser of a copy of the Termination Notice sent to Seller certifying to Seller and the Title Company that Purchaser timely delivered such Termination Notice to Seller pursuant to this Agreement (including, without limitation, Section 5.1(a) hereof), and (2) the Title Company’s delivery of written notice to Seller, by facsimile transmission as set forth in Section 14.1 below (with a confirmation copy to be sent as required by Section 14.1 below), of the Title Company’s receipt of such Termination Notice. In no event shall Seller be entitled to submit a certificate to the Title Company stating that it is entitled to receive the Earnest Money Deposit pursuant to this Section 4.5 with respect to any termination of this Agreement which occurs prior to the expiration of the Inspection Period.

Section 4.6      Indemnification of Title Company. If this Agreement or any matter relating hereto becomes the subject of any litigation or controversy, Purchaser and Seller jointly and severally, will hold Title Company free and harmless from any loss or expense, including reasonable attorneys’ fees, that may be suffered by it by reason thereof other than as a result of Title Company’s gross negligence or willful misconduct. In the event conflicting demands are made or notices served upon Title Company with respect to this Agreement, or if there is uncertainty as to the meaning or applicability of the terms of this Agreement or the Escrow Instructions, Purchaser and Seller expressly agree that the Title Company will be entitled to file a suit in interpleader and to obtain an order from the court requiring Purchaser and Seller to interplead and litigate their several claims and rights among themselves. Upon delivery of the Independent Consideration to Seller and the filing of the action in interpleader and the deposit of the Earnest Money Deposit into the registry of the court, the Title Company will be fully released and discharged from any further obligations imposed upon it by this Agreement.

Section 4.7      Maintenance of Confidentiality by Title Company. Except as may otherwise be required by law or by this Agreement, the Title Company will maintain in strict confidence and without the prior written consent of Purchaser and Seller in each instance, will not disclose to anyone the existence of this Agreement, the identity of the parties hereto, the amount of the Purchase Price, the provisions of this Agreement or any other information concerning the transactions contemplated hereby.

Section 4.8      Investment of Earnest Money Deposit. Title Company will invest and reinvest the Earnest Money Deposit, at the instruction and sole election of Purchaser, only in (a) bonds, notes, Treasury bills or other securities constituting direct obligations of, or guaranteed by the full faith and credit of, the United States of America, and in no event maturing beyond the

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Closing Date, or (b) an interest-bearing account at Bank of America, N.A. or some other commercial bank mutually acceptable to Seller, Purchaser and Title Company. The investment of the Earnest Money Deposit will be at the sole risk of Purchaser and no loss on any investment will relieve Purchaser of its obligations to pay to Seller as liquidated damages the original amount of the Earnest Money Deposit as provided in Article XIII, or of its obligation to pay the Purchase Price. All interest earned on the Earnest Money Deposit prior to the payment of the Earnest Money Deposit to Purchaser or Seller pursuant to this Agreement will be the property of Purchaser and will be reported to the Internal Revenue Service as income of Purchaser. Purchaser will provide the Title Company with a taxpayer identification number and will pay all income taxes due by reason of interest accrued on the Earnest Money Deposit.

Section 4.9      Designation of Reporting Person. In order to assure compliance with the requirements of section 6045 of the Code, and any related reporting requirements of the Code, the parties hereto agree as follows:

(a)      The Title Company (for purposes of this Section 4.9, the “Reporting Person”), by its execution hereof, hereby assumes all responsibilities for information reporting required under section 6045(e) of the Code.

(b)      Seller and Purchaser each hereby agree:

(i)      to provide to the Reporting Person all information and certifications regarding such party, as reasonably requested by the Reporting Person or otherwise required to be provided by a party to the transaction described herein under section 6045 of the Code; and

(ii)     to provide to the Reporting Person such party’s taxpayer identification number and a statement (on Internal Revenue Service Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Reporting Person), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Reporting Person is correct.

(c)      Each party hereto agrees to retain this Agreement for not less than four years from the end of the calendar year in which Closing occurred, and to produce it to the Internal Revenue Service upon a valid request therefor.

(d)      The addresses for Seller and Purchaser are as set forth in Section 14.1 hereof, and the real estate subject to the transfer provided for in this Agreement is described in Exhibit A.

Section 4.10      Purchaser’s Title Company; Co-Insurance.

(a)      Purchaser shall have the right to have Purchaser’s Title Company coordinate the transaction contemplated hereunder on Purchaser’s behalf with the Title Company, and the Title Company and Purchaser’s Title Company shall reach an agreement as to the sharing of any fees payable as a result of the transaction hereunder. In no event shall Seller be responsible for coordinating such fee sharing or for any failure of the Title Company or

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Purchaser’s Title Company to comply with any such agreement between them. The Title Company (not Purchaser’s Title Company) shall act as escrow agent.

(b)      Seller acknowledges and agrees that Purchaser shall have the right to procure “co-insurance” and “reinsurance” with respect to the Title Policy to be issued at Closing in such reasonable amounts (which may take into account the requirements of Purchaser’s lender, but in no event shall the Title Company insure less than fifty percent (50%) of the Purchase Price), and from such title companies as Purchaser shall select in reasonable cooperation with Seller and the Title Company (except that any reinsurance with respect to the Title Company’s portion shall be with Fidelity National Title Insurance Company), and Seller shall deliver to any title company issuing “co-insurance” all documents that Seller has agreed to deliver to the Title Company under the Agreement in order to issue the Title Policy; provided, however, the right to procure such “co-insurance” and “reinsurance” is subject to the obtainment of such “co-insurance” and “reinsurance” satisfying the following conditions: (i) no delay in Closing, (ii) no increase in the amount payable by Seller for the Title Policy, (iii) no requirement that Seller provide any documents that Seller is not obligated to provide under this Agreement, and (iv) no alteration or amendment to the provisions of Article VI of this Agreement. Purchaser shall submit to Seller a written proposal for such “co-insurance” and/or “reinsurance” prior to the expiration of the Inspection Period meeting the foregoing requirements and conditions, which proposal shall be subject to the reasonable approval of Seller. If Purchaser fails to timely submit such proposal, Seller (acting reasonably) does not approve Purchaser’s proposal or Purchaser does not satisfy the foregoing requirements and conditions, no “co-insurance” or “reinsurance” shall be issued, and the Title Company shall issue the Title Policy in the amount of the Purchase Price.

ARTICLE V

INSPECTION OF PROPERTY

Section 5.1      Entry and Inspection.

(a)     Purchaser shall have from the date of the Inspection Agreement through and including 5:00 p.m. Pacific Time on August 20, 2010 (the “Inspection Period”) to examine, inspect and investigate the Property in accordance with the terms and conditions of this Article V and to determine whether the Property is acceptable to Purchaser (in Purchaser’s sole and absolute judgment and discretion). Notwithstanding anything to the contrary in this Agreement, Purchaser may terminate this Agreement by giving written notice of termination to Seller (the “Termination Notice”) on or before the expiration of the Inspection Period. If Purchaser does not give a Termination Notice, this Agreement shall continue in full force and effect. If this Agreement terminates pursuant to this Section 5.1(a), the Independent Consideration shall be paid to Seller and the Earnest Money Deposit shall be refunded to Purchaser immediately upon request of Purchaser, and all further rights and obligations of the parties under this Agreement shall terminate (except for the Termination Surviving Obligations).

(b)     From and after the Effective Date (or such earlier date as the Inspection Agreement became effective) and through the end of the Inspection Period, but subject to the other provisions of this Article V, Seller will permit Purchaser and its authorized agents, representatives and consultants (collectively, the “Licensee Parties”) the right to enter upon the

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Real Property or Improvements at all reasonable times during normal business hours to perform additional inspections of the Property and communicate with Tenants and service providers; provided, however, Purchaser shall have the right to interview or communicate with Tenants without Seller’s prior written consent but only if such interviews or communications are first coordinated through Seller and Seller shall have the right to participate in any such interviews and communications; and provided, further, however, that Purchaser shall have the right to coordinate interviews with service providers but Purchaser shall not interview service providers unless Purchaser provides 24 hours prior written notice to Seller of the time and place of such interviews and Seller shall have the right to participate in any such interviews. Purchaser will provide to Seller written notice of the intention of Purchaser or the other Licensee Parties to enter the Real Property or Improvements at least 24 hours prior to such intended entry and specify the intended purpose therefor and the inspections and examinations contemplated to be made and/or the Tenants and service providers with whom any Licensee Party desires to communicate. At Seller’s option, Seller may be present for any such entry, inspection and communication with any Tenants or service providers. Notwithstanding anything to the contrary contained herein, no physical testing or sampling shall be conducted during any such entry by Purchaser or any Licensee Party upon the Real Property or Improvements without Seller’s specific prior written consent, which consent may be withheld, delayed or conditioned in Seller’s sole and absolute discretion; provided, however, that prior to giving any such approval, Seller shall be provided with a written sampling plan in reasonable detail in order to allow Seller a reasonable opportunity to evaluate such proposal. If Purchaser or the other Licensee Parties undertake any borings or other disturbances of the soil, the soil shall be recompacted to its condition as existed immediately before any such borings or other disturbances were undertaken. Notwithstanding the foregoing, Purchaser shall not be liable or responsible for (i) the mere discovery of unfavorable conditions existing at or on the Property unless Purchaser’s or any Licensee Party’s actions exacerbate such unfavorable conditions or cause further damage or destruction to the Property; or (ii) any matters caused by the gross negligence or willful misconduct of Seller. If Purchaser or any Licensee Party takes any sample from the Real Property or Improvements in connection with any testing, Purchaser shall, upon the request of Seller, provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing.

(c)     Subject to the obligations set forth in Section 5.3 below, the Licensee Parties shall have the right to communicate directly with the Authorities for any good faith reasonable purpose in connection with this transaction contemplated by this Agreement; provided, however, (i) except for routine due diligence inquiries (e.g., a zoning letter with respect to the Property) or when the communication is to obtain material that is generally available to the public, Purchaser shall provide Seller at least 48 hours prior written notice of Purchaser’s intention to communicate with any Authorities and Seller shall have the right to participate in any such communications and (ii) any such communication must be conducted without disclosing any of the terms of this Agreement and in no event shall any Licensee Party make any such disclosure to any Authority.

(d)     Purchaser expressly agrees, acknowledges and confirms that, prior to the expiration of the Inspection Period, Purchaser and its Licensee Parties shall have inspected and investigated the Property and conducted such tests, evaluations and assessments of the Property as Purchaser deems necessary, appropriate or prudent in connection with Purchaser’s acquisition of the Property and the consummation of the transaction contemplated by this Agreement, all in accordance with the terms and conditions of this Article V.

(e)     From and after the Effective Date (or such earlier date as the Inspection Agreement became effective) and through the date which is three (3) months after the Closing Date,

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Purchaser shall not solicit the employment of any employee engaged in the operation, maintenance and/or management of the Property (an “Employee”) of Seller, Seller’s property manager or an Affiliate of either Seller or Seller’s property manager (each, an “Employer”), nor encourage any Employee to discontinue or not to renew his or her relationship with his or her Employer, in each case, without obtaining Seller’s prior written consent. As used in the foregoing sentence, “solicit” shall not include postings or advertisements to the general public regarding employment opportunities with respect to the operation, maintenance and/or management of the Property or any Employee’s response thereto, provided that Purchaser shall not, prior to the expiration of the three (3)-month period set forth in this Section 5.1(e), hire any Employee who responded to any such posting or advertisement or otherwise encourage any such Employee to discontinue or not to renew his or her relationship with his or her Employer. If Seller believes that Purchaser has violated the provisions of the immediately preceding sentence, Seller shall have the right to seek relief from any court of competent jurisdiction against Purchaser. Purchaser acknowledges that money damages alone shall not adequately compensate Seller in the event of a breach of such covenants; therefore, Purchaser agrees that in addition to all remedies available at law, in equity or under this Agreement, Seller shall be entitled to injunctive relief for the enforcement of this covenant. Such remedies shall not constitute the exclusive remedies available to Seller for a breach of this Section 5.1(e) and shall be in addition to all other remedies at law or equity available thereto.

Section 5.2      Document Review.

(a)      No later than three (3) Business Days following the Effective Date, Seller shall provide copies of or make available to Purchaser (for Purchaser’s review, inspection, examination, analysis, verification and photocopying) at either the office of Seller, Seller’s property manager or at the Real Property, the following relative to the Property to the extent in Seller’s possession or control (collectively, the “Documents”): (i) the environmental reports and studies of the Property listed on Exhibit K; (ii) assessments (special or otherwise), ad valorem and personal property tax bills for the two (2) previous tax years; (iii) Seller’s most current rent roll including rent steps, CPI increases and base year expense stops; (iv) income and expense statements, including capital expenditures, for the two (2) most recent calendar years and the current calendar year to date; (v) an operating statement for the Property for the current calendar year and the immediately three preceding calendar years; (vi) copies of the Tenant Leases, the WTC Parking Lease, the Central Plants Agreement, the Operating Contracts, the Scheduled Licenses and Permits and the Records and Plans; (vii) a current inventory of the Personal Property; (viii) the structural reports of the Property and property condition reports of the Property listed on Exhibit K; and (ix) the additional items set forth on Exhibit K attached hereto.

(b)      Purchaser acknowledges that any and all of the Documents may be proprietary and confidential in nature and have been provided to Purchaser solely to assist Purchaser in determining the feasibility of purchasing the Property. Subject only to the provisions of Article XII, Purchaser agrees not to disclose the contents of the Documents, or any of the provisions, terms or conditions contained therein, to any party outside of Purchaser’s organization other than its attorneys, partners, accountants, lenders or investors (collectively, the “Permitted Outside Parties”). Purchaser further agrees that within its organization, or as to the Permitted Outside Parties, the Documents will be disclosed and exhibited only to those persons within Purchaser’s organization or to those Permitted Outside Parties who are responsible for determining the feasibility of Purchaser’s acquisition of the Property, and Purchaser shall cause such persons within Purchaser’s organization to, and shall instruct such Permitted Outside Parties to, maintain confidentiality with respect to any Documents so disclosed to such persons or such Permitted Outside Parties. Purchaser further acknowledges that the Documents and other information relating to the leasing arrangements between Seller and the Tenants or prospective tenants are proprietary and confidential in nature. Purchaser agrees not to divulge the contents of such Documents and other information except in strict accordance with the confidentiality standards set forth in this Section 5.2 and Article XII. In permitting Purchaser and the Permitted Outside Parties to review the Documents or

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information to assist Purchaser, Seller has not waived any privilege or claim of confidentiality with respect thereto, and no third party benefits or relationships of any kind, either express or implied, have been offered, intended or created by Seller and any such claims are expressly rejected by Seller and waived by Purchaser and the Permitted Outside Parties, for whom, by its execution of this Agreement, Purchaser is acting as an agent with regard to such waiver. The provisions of this Section 5.2(b) shall not be applicable after the Closing Date if Closing occurs.

(c)      Not later than ten (10) Business Days following the date this Agreement is terminated for any reason, (i) Purchaser will return to Seller all of the Documents (and all copies Purchaser has made of the Documents), and (ii) provided this Agreement is not terminated by Purchaser pursuant to Section 13.1 hereof, Purchaser will deliver to Seller a copy of any third party studies, reports or test results regarding any part of the Property obtained by Purchaser, before or after the execution of this Agreement, in connection with Purchaser’s inspection of the Property (collectively, “Purchaser’s Information”); provided, however, Seller shall be subject to the provisions regarding confidentiality and reliance contained in any such Purchaser’s Information, and Purchaser will not make any representations and warranties with respect to the accuracy thereof.

(d)      Purchaser expressly agrees, acknowledges and confirms that, prior to the expiration of the Inspection Period, Purchaser and its Licensee Parties shall have reviewed, inspected, examined, analyzed, verified and photocopied the Documents to the extent that Purchaser deems necessary, appropriate or prudent in connection with Purchaser’s acquisition of the Property and the consummation of the transaction contemplated by this Agreement, all in accordance with the terms and conditions of this Article V. Purchaser acknowledges that some of the Documents may have been prepared by third parties and may have been prepared prior to Seller’s ownership of the Property. Purchaser hereby acknowledges that, except as expressly provided in Section 8.1 below (as limited by Section 16.1 of this Agreement), Seller has not made and does not make any representation or warranty regarding the truth, accuracy or completeness of the Documents or the sources thereof (whether prepared by Seller, Seller’s Affiliates or any other person or entity). Seller has not undertaken any independent investigation as to the truth, accuracy or completeness of the Documents and is providing the Documents solely as an accommodation to Purchaser.

(e)      Notwithstanding any provision of this Agreement to the contrary, no termination of this Agreement will terminate Purchaser’s obligations pursuant to this Section 5.2.

(f)      Seller, shall, without representation, warranty or liability of any kind to Purchaser or any Affiliate of Purchaser, provide to Purchaser (at Purchaser’s expense) copies of, or shall provide Purchaser reasonable access to, such factual information as may be reasonably requested by Purchaser, and in the possession or control of Seller, or its property manager or accountants, to enable Purchaser’s auditor to conduct an audit of the income statements of the Property for the year to date of the year in which Closing occurs plus up to one (1) prior calendar year (provided, however, such audit shall not include an audit of management fees or interest expenses). Purchaser shall be responsible for all out-of-pocket costs associated with this audit. Seller shall reasonably cooperate (at no cost to Seller) with Purchaser’s auditor in the conduct of such audit. In addition, Seller agrees to provide, without representation, warranty or liability of any kind to Purchaser or any Affiliate of Purchaser, if requested by such auditor, historical financial statements for the Property, including income and balance sheet data for the Property, whether required before or after Closing. Without limiting the foregoing, (i) Purchaser or its designated independent or other auditor may audit Seller’s operating statements of the Property, at Purchaser’s expense, and Seller shall, without representation, warranty or liability of any kind to Purchaser or any Affiliate of Purchaser, provide such documentation as Purchaser or its auditor may reasonably request in order to complete such audit, and (ii) Seller shall furnish to Purchaser such financial and other information as may be reasonably required by Purchaser or any Affiliate of Purchaser to make

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any required filings with the Securities and Exchange Commission or other governmental authority; provided, however, that the foregoing obligations of Seller shall be limited to providing such information or documentation as may be in the possession of, or reasonably obtained by, Seller, its property manager or accountants, at no material cost to Seller, and in the format that Seller (or its property manager or accountants) have maintained such information. This Section 5.2(f) shall be subject to the limitations in Section 16.1.

Section 5.3      Entry and Inspection Obligations.

(a)     Purchaser agrees that in entering upon the Real Property or Improvements and inspecting or examining the Property and communicating with any Tenants, Purchaser and the other Licensee Parties will not: (i) disturb the Tenants or interfere with their use of the Property pursuant to their respective Tenant Leases; (ii) interfere with the operation and maintenance of the Property; (iii) damage any part of the Property or any personal property owned or held by any Tenant or any other person or entity; (iv) injure or otherwise cause bodily harm to Seller or any Tenant, or to any of their respective agents, guests, invitees, contractors and employees, or to any other person or entity; (v) permit any liens to attach to the Property by reason of the exercise of Purchaser’s rights under this Article V; (vi) interview or communicate with any Tenants or service providers except in accordance with Section 5.1(b); or (vii) reveal or disclose any information obtained concerning the Property and the Documents to anyone outside Purchaser’s organization, except in accordance with the confidentiality standards set forth in Section 5.2(b) and Article XII. Purchaser will: (i) maintain and cause those entering the Real Property or Improvements to maintain comprehensive general liability (occurrence) insurance in terms (including contractual indemnity coverage with respect to the indemnity in Section 5.3(b)) and amounts satisfactory to Seller covering any accident arising in connection with the presence or activities of Purchaser or the other Licensee Parties on the Real Property and Improvements, and, prior to any entry upon the Real Property or Improvements, deliver to Seller a certificate of insurance verifying such coverage and verifying that Seller is named as an additional insured on such coverage; (ii) promptly pay when due the costs of all inspections, entries, samplings and tests and examinations done with regard to the Property; and (iii) promptly restore the Property to its condition as existed immediately prior to any such inspection, investigations, examinations, entries, samplings and tests, but in no event later than ten (10) days after the damage occurs. Nothing contained in this Section 5.3 shall be deemed or construed as Seller’s consent to any further physical testing or sampling with respect to the Property after the date hereof.

(b)     Purchaser hereby indemnifies, defends and holds Seller and its members, partners, agents, officers, directors, employees, successors, assigns and Affiliates harmless from and against any and all liens, claims, causes of action, damages, liabilities, demands, suits, and obligations, together with all losses, penalties, costs and expenses relating to any of the foregoing (including but not limited to court costs and reasonable attorneys’ fees) arising out of any inspections, investigations, examinations, entries, samplings or tests conducted by Purchaser or any Licensee Party, whether prior to or after the date hereof, with respect to the Property or any violation of the provisions of this Section 5.3; provided, however, Purchaser shall not be obligated to indemnify Seller for (i) the mere discovery of unfavorable conditions existing at or on the Property unless Purchaser’s or any Licensee Party’s actions exacerbate such unfavorable conditions or cause further damage or destruction to the Property; or (ii) any matters caused by the gross negligence or willful misconduct of Seller.

(c)     Notwithstanding any provision of this Agreement to the contrary, neither the Closing nor a termination of this Agreement will terminate Purchaser’s obligations pursuant to this Section 5.3.

Section 5.4      No Right of Termination. Purchaser acknowledges and agrees that the right to enter and inspect and examine the Property and communicate with Tenants pursuant to Article V has been

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given to Purchaser solely as an accommodation to Purchaser in connection with Purchaser’s contemplated ownership and operation of the Property following the Closing. Prior to the expiration of the Inspection Period, Purchaser shall conduct such inspections, examinations, tests, evaluations and assessments of the Property as Purchaser deems necessary, appropriate and prudent (subject to the provisions of this Article V) and Purchaser shall have no right to terminate this Agreement after the end of the Inspection Period based upon the results of any inspections, examinations, tests, evaluations or assessments.

Section 5.5      Sale “As Is”.      THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED BETWEEN SELLER AND PURCHASER, THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENT OF SELLER AND PURCHASER, AND PURCHASER HAS CONDUCTED (OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD) ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY AND THE DOCUMENTS. OTHER THAN THE SPECIFIC MATTERS REPRESENTED IN SECTION 8.1 HEREOF (AS LIMITED BY SECTION 16.1 OF THIS AGREEMENT) OR IN ANY OF THE CLOSING DOCUMENTS, WHICH EXCEPTIONS SHALL APPLY TO ALL OF THE FOLLOWING PROVISIONS OF THIS SECTION 5.5, PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION, WARRANTY OR STATEMENT OF SELLER OR ANY OF SELLER’S AFFILIATES, AGENTS OR REPRESENTATIVES, AND PURCHASER HEREBY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS, WARRANTIES OR STATEMENTS HAVE BEEN MADE EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1 OF THIS AGREEMENT (AS LIMITED BY SECTION 16.1 OF THIS AGREEMENT) OR IN ANY OF THE CLOSING DOCUMENTS. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1 OF THIS AGREEMENT (AS LIMITED BY SECTION 16.1 OF THIS AGREEMENT) OR IN ANY OF THE CLOSING DOCUMENTS, SELLER SPECIFICALLY DISCLAIMS, AND NEITHER IT NOR ANY OF ITS AFFILIATES NOR ANY OTHER PERSON IS MAKING, ANY REPRESENTATION, WARRANTY, STATEMENTS OR ASSURANCE WHATSOEVER TO PURCHASER AND NO WARRANTIES, REPRESENTATIONS, STATEMENTS OR ASSURANCES OF ANY KIND OR CHARACTER, EITHER EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED UPON BY PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THE MAINTENANCE, REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE PROPERTY, OR ANY PORTION THEREOF, INCLUDING BUT NOT LIMITED TO (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (e) ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN, OR UNKNOWN, OR LATENT, WITH RESPECT TO THE PROPERTY, (f) THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY OR THE TENANTS AND (g) THE COMPLIANCE OR LACK THEREOF OF THE PROPERTY WITH GOVERNMENTAL REGULATIONS, IT BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT, EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1 OF THIS AGREEMENT (AS LIMITED BY SECTION 16.1 OF THIS AGREEMENT) OR IN ANY OF THE CLOSING DOCUMENTS, THE PROPERTY WILL BE CONVEYED AND TRANSFERRED TO PURCHASER IN ITS

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PRESENT CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS”, WITH ALL FAULTS. Purchaser represents that it is a knowledgeable, experienced and sophisticated purchaser of real estate and the other types of interests contemplated to be sold hereunder, and that it is relying solely on the express representations and warranties contained in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement), the Closing Documents and its own expertise and that of Purchaser’s consultants in purchasing the Property. Prior to the expiration of the Inspection Period, Purchaser shall have conducted such inspections, investigations and other independent examinations of the Property and related matters as Purchaser deems necessary, including but not limited to the physical and environmental conditions thereof, and will rely upon same and not upon any statements of Seller (excluding the specific matters represented by Seller in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement and the Closing Documents) or any of its Affiliates, or any of their respective partners, members, owners, officers, directors, employees, agents, representatives or attorneys. Purchaser acknowledges that all information obtained by Purchaser was obtained from a variety of sources and Seller will not be deemed to have represented or warranted the completeness, truth or accuracy of any of the Documents or other such information heretofore or hereafter furnished to Purchaser except as expressly provided in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement) or the Closing Documents. Subject to the express representations and warranties contained in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement) and in the Closing Documents, upon Closing, Purchaser will assume the risk that adverse matters, including, but not limited to, adverse physical and environmental conditions, may not have been revealed by Purchaser’s inspections and investigations. Purchaser further hereby assumes the risk of changes in applicable Environmental Laws relating to past, present and future environmental health conditions on, or resulting from the ownership or operation of, the Property. Purchaser acknowledges and agrees that upon Closing, except as expressly set forth to the contrary in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement) and in the Closing Documents, Seller will sell and convey to Purchaser, and Purchaser will accept the Property, “AS IS, WHERE IS,” with all faults. Purchaser further acknowledges and agrees that there are no oral agreements, warranties or representations, collateral to or affecting the Property, by Seller, any Affiliate of Seller, any agent of Seller or its Affiliates or any third party. Seller is not liable or bound in any manner by any oral or written statements, representations or information pertaining to the Property furnished by any real estate broker, agent, employee, servant or other person, except for the express representations and warranties contained in Section 8.1 of this Agreement (as limited by Section 16.1 of this Agreement) and in the Closing Documents. Purchaser acknowledges that the Purchase Price reflects the “AS IS, WHERE IS” nature of this sale and any faults, liabilities, defects or other adverse matters that may be associated with the Property. Purchaser, with Purchaser’s counsel, has fully reviewed the disclaimers and waivers set forth in this Agreement, and understands the significance and effect thereof. Purchaser acknowledges and agrees that the disclaimers and other agreements set forth herein are an integral part of this Agreement, and that Seller would not have agreed to sell the Property to Purchaser for the Purchase Price without the disclaimer and other agreements set forth in this Agreement. The terms and conditions of this Section 5.5 will expressly survive the Closing without limitation and will not merge with the provisions of any Closing documents.

Purchaser Initials

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Section 5.6        Purchaser’s Release of Seller.

(a)      Seller Released From Liability.    Purchaser, on behalf of itself and its Affiliates, and their respective partners, members, owners, officers, directors, agents, representatives and controlling persons, hereby releases Seller and Seller’s Affiliates, and their respective partners, members, owners, officers, directors, agents, representatives and controlling persons (collectively, the “Seller Released Parties”) from any and all liability, responsibility, claims, damages, losses and expenses arising out of or related to the condition (including the presence in the soil, air, structures and surface and subsurface waters, of Hazardous Substances that have been or may in the future be determined to be toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Property under current or future federal, state and local laws, regulations or guidelines), valuation, salability or utility of the Property, or its suitability for any purpose whatsoever. Without limiting the foregoing, Purchaser, on behalf of itself and its Affiliates, and their respective partners, members, owners, officers, directors, agents, representatives and controlling persons, specifically releases the Seller Released Parties from any and all responsibility, claims, damages, losses and expenses Purchaser may have against any of the Seller Released Parties now or in the future arising from the environmental condition of the Property or the presence of Hazardous Substances or contamination on or emanating from the Property. The foregoing waivers and releases by Purchaser shall survive, without limitation, either (i) the Closing and shall not be deemed merged into the provisions of any Closing documents or (ii) any termination of this Agreement.

Purchaser Initials

(b)      Purchaser’s Waiver of Objections.    Purchaser acknowledges that it has (or shall have prior to the expiration of the Inspection Period) inspected the Property, observed its physical characteristics and existing conditions and had the opportunity to conduct such investigations and studies on and of said Property and adjacent areas as it deems or deemed necessary, and Purchaser, on behalf of itself and its Affiliates, and their respective partners, members, owners, officers, directors, agents, representatives and controlling persons, hereby waives any and all objections to or complaints (including but not limited to actions based on federal, state or common law and any private right of action under CERCLA, RCRA or any other state and federal law to which the Property is or may be subject) against any of the Seller Released Parties regarding physical characteristics and existing conditions, including without limitation structural and geologic conditions, subsurface soil and water conditions and solid and hazardous waste and Hazardous Substances on, under, adjacent to or otherwise affecting the Property or related to prior uses of the Property. The foregoing waivers and releases by Purchaser shall survive, without limitation, either (i) the Closing and shall not be deemed merged into the provisions of any Closing documents or (ii) any termination of this Agreement.

Purchaser Initials

(c)      Changes in Laws.    Purchaser further hereby assumes the risk of changes in applicable laws and regulations relating to past, present and future environmental, safety or

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health conditions on, or resulting from the ownership or operation of, the Property, and the risk that adverse physical characteristics and conditions, including without limitation the presence of Hazardous Substances or other substances, may not be revealed by its investigation.

            Purchaser Initials

(d)      Limitation on Release and Waiver.    Notwithstanding the provisions of Section 5.5 above or this Section 5.6, the releases and waivers and other matters set forth herein shall not, however, relieve Seller of its liability for: (i) any breach of any express representation or warranty of Seller contained in Section 8.1 of this Agreement (subject to the limitations of Section 16.1 of this Agreement) or in any of the Closing Documents; or (ii) any breach by Seller of its covenants or agreements contained in this Agreement which are Closing Surviving Obligations (subject to the limitations in this Agreement applicable thereto).

(e)      Waiver of California Civil Code Section 1542.    With respect to the releases and waivers made by Purchaser in favor of Seller as set forth in this Section 5.6, Purchaser expressly waives all rights under California Civil Code Section 1542, which provides that:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

Purchaser hereby expressly confirms that Purchaser has been represented and advised by counsel regarding this Agreement and the purpose, meaning and effect of the waivers and releases contained in this Section 5.6, including, but not limited to, with respect to Purchaser’s rights under California Civil Code Section 1542, and hereby declares that such waivers and releases are given freely and with full understanding by Purchaser of the consequences thereof.

Purchaser Initials

(f)      Survival.    The provisions of this Section 5.6 shall survive, without limitation, either (i) the Closing and shall not be deemed merged into the provisions of any Closing documents or (ii) any termination of this Agreement.

Section 5.7      Natural Hazard Disclosure Statement.    Purchaser and Seller acknowledge that Seller may be required to disclose if any of the Property lies within the following natural hazard areas or zones: (i) a special flood hazard area designated by the Federal Emergency Management Agency (42 U.S.C. Section 4104(a)); (ii) an area of potential flooding (California Gov’t. Code Sections 8589.4 and 8589.5); (iii) a very high fire hazard severity zone (California Gov’t. Code Sections 51178, 51179, and 51183.5); (iv) a wildland area that may contain substantial forest fire risks and hazards (California Pub. Res. Code Sections 4125 and 4136); (v) an earthquake fault or special studies zone (California Pub. Res. Code Sections 2621.9 and 2622); or (vi) a seismic hazard zone (California Pub. Res. Code Sections 2694 and 2696).

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Purchaser acknowledges that Seller will engage the services of a reputable company specializing in providing natural hazards disclosure information (“Natural Hazard Expert”) to examine the maps and other information specifically made available to the public by government agencies for the purposes of enabling Seller to fulfill any disclosure obligations with respect to natural hazards and to report the results of its examination to Purchaser and Seller in writing. The written report prepared by the Natural Hazard Expert regarding the results of its examination shall fully and completely discharge Seller from its disclosure obligations referred to herein. Seller hereby agrees to deliver to Purchaser a copy of a current Natural Hazard Disclosure Report issued by the Natural Hazard Expert with respect to the Property prior to the Closing Date. Purchaser acknowledges and agrees that nothing contained in the Natural Hazard Disclosure Report shall entitle Purchaser to terminate this Agreement or otherwise release or excuse Purchaser from any of its obligations under this Agreement. Purchaser hereby expressly assumes responsibility for fully investigating the condition of the Property, including without limitation whether the Property is located in any Natural Hazard Area, prior to the expiration of the Investigation Period, and Purchaser agrees that it will engage consultants who have the expertise to perform such investigation. Purchaser further acknowledges and agrees that the matters and information set forth in the Natural Hazards Disclosure Report to be provided to Purchaser by Seller as set forth herein may change on or prior to the Closing, and that Seller will have no obligation to update, modify, or supplement such Natural Hazards Disclosure Report prior to Closing.

Section 5.8      California Health and Safety Code Section 25359.7.      Purchaser acknowledges and agrees that the sole inquiry and investigation Seller conducted in connection with the environmental condition of the Property is to obtain the environmental report(s) which are listed in Exhibit K hereto and that, for purposes of California Health and Safety Code Section 25359.7, Seller has acted reasonably in relying upon said inquiry and investigation, and the delivery of this Agreement constitutes written notice to Purchaser under such code section.

ARTICLE VI

TITLE AND SURVEY MATTERS

Section 6.1      Survey.    Prior to the execution and delivery of this Agreement, Seller has delivered to Purchaser a copy of that certain survey of the Real Property, dated November 8, 2007, prepared by Mollenhauer Group (the “Existing Survey”). Seller shall have no obligation to obtain any modification, update or recertification of the Existing Survey.

Section 6.2      Title Commitment.

(a)      Prior to the execution and delivery hereof, Seller has caused the Title Company to furnish to Purchaser a preliminary title report or title commitment dated June 17, 2010 (the “Commitment”), by the terms of which the Title Company agrees to issue to Purchaser at Closing an owner’s policy of title insurance (the “Title Policy”) in the amount of the Purchase Price on the ALTA Owner Policy of Title Insurance with extended coverage (subject to the terms of this Section 6.2(a)), Standard Form Rev. 6/17/06 (as amended to date) insuring Purchaser’s fee simple title to the Real Property to be good and indefeasible, subject to the terms of such policy and the exceptions described therein. Notwithstanding anything to the contrary contained in this Section 6.2(a), the Title Policy may except from extended coverage

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any unrecorded liens or unrecorded claims (or right to liens or claims) for work, services, labor or materials performed or supplied under Construction Contracts assigned to Purchaser in accordance with Section 10.8 hereof (each, hereinafter referred to as, a “Construction Contracts Lien Exception”); provided, however, if a Construction Contracts Lien Exception has been filed or recorded in the Official Records prior to the Closing Date, then the terms and conditions of Sections 6.2(b) and (c) shall apply with respect to such Construction Contracts Lien Exception. As a condition to Purchaser’s obligation to close, the Title Company shall deliver the Title Policy to Purchaser at Closing effective as of the date and time of the recording of the Deed, in the amount of the Purchase Price, insuring Purchaser as owner of fee simple title to the Real Property (or leasehold title to the portion of the Real Property covered by the WTC Parking Lease), and subject only to the Permitted Exceptions. Notwithstanding the foregoing, the Title Policy may be delivered after Closing if at the Closing the Title Company issues a currently effective, duly executed “marked up” Commitment and irrevocably commits in writing to issue the Title Policy in the form of the “marked up” Commitment promptly after the Closing Date. The provisions of this Section 6.2 are subject to the terms and provisions of Section 4.10 hereof.

(b)      Purchaser shall have until the date which is three (3) Business Days prior to the expiration of the Inspection Period to notify Seller, in writing (the “Title Notice”), of such objections as Purchaser may have to anything contained in the Title Commitment or the Existing Survey. In the event Purchaser delivers timely notice of objections to title or to matters shown on the Existing Survey, Seller shall have two (2) Business Days after receipt of the Title Notice (the “Cure Period”) to notify Purchaser in its sole and absolute discretion: (i) that Seller has removed such objectionable exceptions from title or otherwise obtained affirmative insurance over such objectionable exceptions (and provided reasonable evidence thereof); or (ii) that Seller elects not to cause such exceptions to be removed or affirmatively insured over. Notwithstanding anything to the contrary contained in this Section 6.2, Seller agrees that Seller shall not be permitted to obtain affirmative insurance pursuant to clause (i) for any matters with respect to the Property whatsoever except for Permissible Matters (however, Purchaser acknowledges that Seller is not obligated to remove any such matters and this sentence does not negate Seller’s right not to cure any exceptions objected to by Purchaser pursuant to this Section 6.2). If Seller gives Purchaser notice under clause (ii) above or if Seller fails to give any notice to Purchaser within the two (2) Business Day period, Seller shall be deemed to have elected not to cure such exceptions and Purchaser shall have until the expiration of the Inspection Period to notify Seller that Purchaser will take title to the Property subject to all uncured exceptions or that Purchaser will terminate this Agreement (failing which, Purchaser shall be deemed to have elected to take title to the Property subject to all uncured exceptions). If this Agreement is terminated by Purchaser pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for the Termination Surviving Obligations) and the Independent Consideration shall be paid to Seller and the Earnest Money Deposit shall be returned to Purchaser upon Purchaser’s compliance with Section 4.5. Notwithstanding anything to the contrary provided in this Section 6.2, to the extent Seller notifies Purchaser in writing under this Section 6.2(b) that Seller shall affirmatively insure over any matter objected to by Purchaser in the Title Notice, then Seller’s obtaining such affirmative insurance shall be a condition to Purchaser’s obligation to close the transaction contemplated hereunder; provided, however, in no event shall Seller’s failure to obtain such affirmative insurance constitute a default by Seller under this Agreement.

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(c)      Purchaser may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title (i) raised by the Title Company between the expiration of the Inspection Period and the Closing, (ii) not disclosed in writing by the Title Company to Purchaser prior to the expiration of the Inspection Period, and (iii) not disclosed in writing by Seller to Purchaser and the Title Company prior to the expiration of the Inspection Period (“New Exceptions”); provided that Purchaser must notify Seller of any objection to any such New Exception prior to the date which is the earlier to occur of (x) two (2) Business Days after being made aware of the existence of such New Exception and (y) the Closing Date. If Purchaser fails to deliver to Seller a notice of objections on or before such date, Purchaser will be deemed to have waived any objection to the New Exceptions, and the New Exceptions will be included as Permitted Exceptions subject to the provisions of Section 6.2(e). Seller will have not less than five (5) days from the receipt of Purchaser’s notice (and, if necessary, Seller may extend the Closing Date to provide for such five (5) day period and for two (2) days following such period for Purchaser’s response), within which time Seller may, but is under no obligation to, remove or otherwise obtain affirmative insurance over the objectionable New Exceptions except as provided for in Section 6.2(e). If, within the five (5) day period, Seller does not remove or otherwise obtain affirmative insurance over the objectionable New Exceptions (to the extent permitted in Section 6.2(b) above as to Permissible Matters only), then Purchaser may terminate this Agreement upon notice to Seller no later than two (2) days following expiration of the five (5) day cure period. If this Agreement is terminated by Purchaser pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for the Termination Surviving Obligations) and the Independent Consideration shall be paid to Seller and the Earnest Money Deposit shall be returned to Purchaser upon Purchaser’s compliance with Section 4.5. If Purchaser fails to terminate this Agreement in the manner set forth above, the New Exceptions (except those Seller has removed or otherwise affirmatively insured over (as to Permissible Matters only) or is obligated by Section 6.2(e) to remove) will be included as Permitted Exceptions.

(d)      The term “Permitted Exceptions” means:

(i)      those matters noted in the Commitment that either are not timely objected to in writing in the Title Notice or the Gap Notice, or if timely objected to in writing by Purchaser, are those which Seller has elected (or is deemed to have elected) not to remove or cure or has been unable to remove or cure prior to the expiration of the Cure Period, and subject to which Purchaser has elected or is deemed to have elected to accept the conveyance of the Property; provided, however, Permitted Exceptions under this clause (i) only (but not under clauses (ii) through (v) below) shall exclude any liens or claims (whether recorded or unrecorded) for work, service, labor or materials performed or supplied to the Property unless, pursuant to subsection (f) below, Seller furnishes a Lien Related Notice to Purchaser and Purchaser is deemed to have elected to accept the conveyance of the Property subject thereto (in which event such liens or claims (whether recorded or unrecorded) shall be deemed Permitted Exceptions for the purposes hereof); provided, further, however, in no event shall anything contained in the immediately preceding proviso obligate Seller to remove any liens or claims referenced in such immediately preceding proviso;

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(ii)      taxes and assessments for the year of Closing and for any other year if not yet due and payable as of Closing;

(iii)      all matters shown on the Existing Survey;

(iv)      Permissible Matters which have been removed or affirmatively insured over through the use of a bond or otherwise; and

(v)      any unrecorded liens or unrecorded claims (or right to liens or claims), which do not exceed, in the aggregate, the amount of credit received by Purchaser pursuant to Section 10.8, for work, services, labor or materials performed or supplied under Construction Contracts assigned to Purchaser in accordance with Section 10.8 hereof.

(e)      Notwithstanding any provision of this Section 6.2 to the contrary, Seller will be obligated to cure exceptions to title to the Real Property and Improvements relating to liens and security interests securing any loan to Seller, including the loan secured by the deed of trust currently encumbering the Property.

(f)      At any time on or prior to Closing, Seller may provide written notice (“Lien Related Notice”) to Purchaser of any liens or claims (whether recorded or unrecorded) for work, service, labor or materials performed or supplied to the Property (including, without limitation, any of the foregoing to which the Title Company determines to take exception in the Title Policy) and such Lien Related Notice shall set forth whether Seller will, on or prior to Closing, remove or otherwise obtain affirmative insurance with respect to such lien or claim (to the extent permitted in Section 6.2(b) as to Permissible Matters). If Seller agrees in the Lien Related Notice to remove or otherwise obtain affirmative insurance, such removal or affirmative insurance (as applicable) shall be a condition to Purchaser’s obligation to purchase the Property; provided, however, in no event shall Seller’s failure to satisfy such condition be a default by Seller under this Agreement. If the Lien Related Notice provides that Seller will not remove or obtain affirmative insurance with respect to such lien or claim, then Purchaser may terminate this Agreement by furnishing written notice to Seller no later than two (2) Business Days following the delivery of the Lien Related Notice (and, if necessary, the Closing Date shall be extended only to the extent necessary to permit Purchaser to respond in such two (2)-Business-Day period). If this Agreement is terminated by Purchaser pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for the Termination Surviving Obligations) and the Independent Consideration shall be paid to Seller and the Earnest Money Deposit shall be returned to Purchaser upon Purchaser’s compliance with Section 4.5. If Purchaser fails to terminate this Agreement in the manner set forth above, the liens and claims set forth in the Lien Related Notice (except those Seller has removed or otherwise affirmatively insured over (as to Permissible Matters only)) will be included as Permitted Exceptions.

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ARTICLE VII

INTERIM OPERATING COVENANTS AND ESTOPPELS

Section 7.1      Interim Operating Covenants.    Seller covenants to Purchaser that Seller will:

(a)      Operations. From the Effective Date until Closing, (i) continue to operate, manage and maintain the Improvements in the ordinary course of Seller’s business and substantially in accordance with Seller’s present practice, subject to ordinary wear and tear and further subject to Article IX of this Agreement; (ii) other than the transaction contemplated by this Agreement and leasing activities and service contracts as permitted pursuant to this Agreement, refrain from voluntarily encumbering the Property (unless such encumbrance is released prior to Closing) or voluntarily modifying any Permitted Exceptions; and (iii) not enter into any back-up or stand-by purchase contracts with respect to the Property.

(b)      Maintain Insurance.   From the Effective Date until Closing, maintain fire and extended coverage insurance on the Improvements which is at least equivalent in all material respects to Seller’s insurance policies covering the Improvements as of the Effective Date.

(c)      Personal Property.   From the Effective Date until Closing, not transfer or remove any Personal Property from the Improvements except for the purpose of repair or replacement (if such item cannot be repaired) thereof. Any items of Personal Property replaced after the Effective Date will be installed prior to Closing and will be of substantially similar quality of the item of Personal Property being replaced.

(d)      Comply with Governmental Regulations.   From the Effective Date until Closing, not knowingly take any action that Seller knows would result in a failure to comply in all material respects with all Governmental Regulations applicable to the Property, it being understood and agreed that prior to Closing, Seller will have the right to contest any such Governmental Regulations.

(e)      Leases.   From the Effective Date until the expiration of the Inspection Period, not enter into any new lease or any amendments, expansions or renewals of Tenant Leases without the prior written consent of Purchaser, which consent will not be unreasonably withheld and will be deemed given unless written objection thereto is given within two (2) Business Days after receipt of the relevant information. From the day immediately following the end of the Inspection Period until Closing, Seller shall not enter into any new lease or any amendments, expansions or renewals of Tenant Leases without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion and shall be deemed withheld unless such consent is given within two (2) Business Days after receipt of the relevant information. However, nothing herein shall be deemed to require Purchaser’s consent to any amendment, expansion or renewal which Seller, as landlord, is required to honor pursuant to any Tenant Lease.

(f)      Service Contracts.   From the Effective Date until Closing, not enter into any service contract other than in the ordinary course of business, unless such service contract is

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terminable on thirty (30) days notice without penalty or unless Purchaser consents thereto in writing, which approval will not be unreasonably withheld, delayed or conditioned.

(g)      Notices. To the extent received by Seller, from the Effective Date until Closing, promptly deliver to Purchaser copies of written default notices under Tenant Leases, notices of lawsuits and notices of violations affecting the Property.

Section 7.2      Estoppels.    It will be a condition to Closing that Seller obtain and deliver to Purchaser, from the Major Tenant and other Tenants leasing space which when added to the Major Tenant aggregates at least 80% of the leased space within the Improvements, executed estoppel certificates, with no material modifications from the estoppel certificate form attached hereto as Exhibit D-1, except that Seller has agreed to submit the estoppel certificate with respect to the Major Tenant on the form attached hereto as Exhibit D-2 (however, it is understood that, with respect to the Major Tenant, the form prescribed by the Major Tenant’s Tenant Lease shall satisfy the requirement of this Section 7.2); provided, however, (i) the modification or deletion of paragraph 14 of the form of estoppel certificate attached as Exhibit D-1 by any Tenant will not be deemed a material modification which would cause such tenant estoppel certificate to fail to satisfy the requirements for an acceptable estoppel certificate under this Section 7.2; (ii) except as provided in (iii) below, to the extent that the form as so completed requires information not required of a Tenant under the provisions of its Tenant Lease, Seller will exercise good faith efforts to obtain an estoppel certificate for such Tenant in the form completed as provided below, or in a form as close thereto as reasonably possible, but in any event an estoppel certificate executed by a Tenant in the form prescribed by its Tenant Lease shall satisfy the requirement of this Section 7.2, (iii) Seller will submit the form attached hereto as Exhibit D-2 to the Major Tenant, but in any event an estoppel certificate executed by the Major Tenant in the form prescribed by its Tenant Lease shall satisfy the requirement of this Section 7.2, (iv) Purchaser will not unreasonably withhold approval of any estoppel certificate as modified by a Tenant and delivered by Seller to Purchaser, provided that the information included in such estoppel is not materially inconsistent with the information included in the estoppel form completed for such Tenant pursuant to the below provisions of this Section 7.2 and (v) if Purchaser does not furnish written notice to Seller of any specific objections to any estoppel certificate modified by a Tenant (whether in draft form or executed by the Tenant) and submitted to Purchaser within three (3) days of receipt, such revised estoppel shall be deemed approved by Purchaser. No later than one (1) Business Day after the Effective Date, Seller will deliver to Purchaser completed forms of estoppel certificates, in the form attached hereto as Exhibit D-1 (or, with respect to the Major Tenant, Exhibit D-2 or the form prescribed by the Major Tenant’s Tenant Lease) and containing the information contemplated thereby, for all Tenants. Within two (2) Business Days following Purchaser’s receipt thereof, Purchaser will send to Seller notice either (i) approving such forms as completed by Seller or (ii) setting forth in detail all changes to such forms which Purchaser believes to be appropriate to make the completed forms of estoppel certificates accurate and complete. Seller will make such changes to the extent Seller agrees such changes are appropriate, except that Seller will not be obligated to make any changes which request more expansive information than is contemplated by Exhibit D-1 (or, with respect to the Major Tenant, Exhibit D-2 or the form prescribed by the Major Tenant’s Tenant Lease). Within one (1) Business Day following Seller’s receipt of Purchaser’s approval of the completed forms and/or the changes Purchaser desires to be made to the forms, Seller shall deliver to the Tenants the forms approved by Purchaser and the other

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forms completed by Seller pursuant to the immediately preceding sentence and Seller shall make reasonable inquiries to Tenant to encourage Tenant to return the estoppels prior to the expiration of the Inspection Period. Notwithstanding anything contained herein to the contrary, in no event shall Seller’s failure to obtain the required number of acceptable estoppel certificates in accordance with the provisions of this Section 7.2 constitute a default by Seller under this Agreement.

Section 7.3      SNDAS.   Seller agrees to provide to the Tenants specified by Purchaser in writing on or after the Effective Date a subordination, non-disturbance and attornment agreement in the form provided by Purchaser or Purchaser’s lender (“SNDA”) and completed by Purchaser at no cost to Seller, to the extent any such SNDA is actually delivered by Purchaser to Seller. Seller shall request that each such Tenant execute and deliver such executed SNDA (“Executed SNDA”) to Purchaser (with a copy to Seller) on or before the Closing Date; provided, however, it will not be a condition to Purchaser’s or Seller’s obligation to close hereunder that any such Executed SNDA be so delivered. If any Executed SNDA is not delivered to Purchaser on or prior to the Closing Date, neither Purchaser nor Seller shall have the right to extend the Closing Date or terminate this Agreement as the result thereof. Notwithstanding anything herein to the contrary, in no event shall Purchaser’s failure to receive any such SNDA constitute a default by Seller under this Agreement.

Section 7.4      OFAC.   Pursuant to United States Presidential Executive Order 13224 (“Executive Order”), Seller is required to ensure that it does not transact business with persons or entities determined to have committed, or to pose a risk of committing or supporting, terrorist acts and those persons (i) described in Section 1 of the Executive Order or (ii) listed in the “Alphabetical Listing of Blocked Persons, Specially Designated Nationals, Specially Designated Terrorists, Specially Designated Global Terrorists, Foreign Terrorist Organizations, and Specially Designated Narcotics Traffickers” published by the United States Office of Foreign Assets Control (“OFAC”), 31 C.F.R. Chapter V, Appendix A, as in effect from time to time (as to (i) and (ii), a “Blocked Person”). If Seller learns that Purchaser is becoming or appears to be a Blocked Person, Seller may delay the sale contemplated by this Agreement pending Seller’s conclusion of its investigation into the matter of Purchaser’s status as a Blocked Person. If Seller determines that Purchaser is or becomes a Blocked Person, Seller shall have the right to immediately terminate this Agreement and take all other actions necessary or in the opinion of Seller appropriate to comply with applicable law and Purchaser shall receive a return of the Earnest Money Deposit. The provisions of this Section 7.4 will survive termination of this Agreement.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.1      Seller’s Representations and Warranties.   The representations and warranties of Seller set forth below in this Section 8.1 constitute the sole representations and warranties of Seller. If any such representations and warranties contained in this Section 8.1 are, or have become, not true and correct in any immaterial respect prior to Closing, then Seller shall not be in breach of this Agreement with respect thereto, and Purchaser shall have no remedy therefor. If any such representations and warranties contained in this Section 8.1 are, or have become, not true and correct in any material respect prior to Closing, Seller shall not be in breach

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of this Agreement with respect thereto, and Purchaser’s sole and exclusive remedy (Purchaser hereby waiving all other remedies it may have, whether at law or in equity or otherwise) with respect thereto shall be (i) to waive same and consummate the transaction contemplated in this Agreement or (ii) to terminate this Agreement by furnishing written notice thereof to the Seller on or prior to the Closing Date (in which event this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement (except with respect to the Termination Surviving Obligations) and the Earnest Money Deposit shall be disbursed in accordance with and subject to the provisions of Section 4.5). Subject to the limitations set forth in Article XVI of this Agreement (including, without limitation, Seller’s right to disclose information to Purchaser contrary to such representations and warranties and to update such representations and warranties as of the Closing), Seller represents and warrants to Purchaser the following (which representations and warranties are made, subject to Section 16.1(b), as of the Effective Date and shall be deemed remade, subject to Section 16.1(b), as of the time immediately prior to Closing):

(a)      Status.    Seller is a limited partnership duly organized and validly existing under the laws of the State of Delaware.

(b)      Authority.    The execution and delivery of this Agreement and the performance of Seller’s obligations hereunder have been or will be duly authorized by all necessary action on the part of Seller, and this Agreement constitutes the legal, valid and binding obligation of Seller, subject to equitable principles and principles governing creditors’ rights generally.

(c)      Suits and Proceedings.    To Seller’s Knowledge (x) as of the Effective Date, except as listed in Exhibit F, there are no legal actions, suits or similar proceedings pending and served, or threatened against Seller relating to the Property or Seller’s ownership or operation of the Property, and (y) as of the Closing Date, there are no legal actions, suits or similar proceedings pending and served, or threatened against Seller relating to the Property or Seller’s ownership or operation of the Property except those which satisfy any one or more of the following: (i) are listed in Exhibit F, (ii) are adequately covered by existing insurance, (iii) are bonded in accordance with applicable law, and/or (iv) the amount of monetary relief requested in connection therewith is less than $2,000,000.00.

(d)      Non-Foreign Entity.    Seller is not a “foreign person” or “foreign corporation” as those terms are defined in the Code (and the regulations promulgated thereunder).

(e)      Tenants.    To Seller’s Knowledge (i) there are no written leases or occupancy agreements affecting the Real Property or Improvements to which Seller is a party and bound with any parties other than the Tenants listed on Exhibit G and Tenants who entered into Tenant Leases with Landlord pursuant to Section 7.1(e) after the Effective Date, and (ii) Seller has not received any written notice from a Tenant that Seller is in default of any material obligations of Seller with respect to the Property under Tenant Leases, which default has not been cured.

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(f)      Service Contracts.    To Seller’s Knowledge, the Documents made available to Purchaser pursuant to Section 5.2(a) hereof include copies of all service contracts listed on Exhibit C under which Seller is currently paying for services rendered in connection with the Property.

(g)      No Violations.    To Seller’s Knowledge, Seller has not received prior to the Effective Date any written notification from an Authority (i) that the Real Property and Improvements are in violation of any applicable fire, health, building, use, occupancy or zoning laws or (ii) that any work is required to be done to the Real Property and Improvements by Seller to comply with applicable laws and regulations where such work remains outstanding and, if unaddressed, would have a material adverse affect on the Property or use of the Property as currently operated.

(h)      Non-Contravention.    The execution and delivery of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or Authority or conflict with, result in a breach of, or constitute a default under the organizational documents of Seller, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Seller is a party or by which it is bound.

Section 8.2      Purchaser’s Representations and Warranties.    Purchaser represents and warrants to Seller the following (which representations and warranties are made as of the Effective Date and shall be deemed remade as of Closing):

(a)      Status.    Purchaser is a limited liability company duly organized and validly existing under the laws of the State of Delaware.

(b)      Authority.    The execution and delivery of this Agreement and the performance of Purchaser’s obligations hereunder have been or prior to the end of the Inspection Period will be duly authorized by all necessary action on the part of Purchaser and its constituent owners and/or beneficiaries and this Agreement constitutes the legal, valid and binding obligation of Purchaser, subject to equitable principles and principles governing creditors’ rights generally.

(c)      Non-Contravention.    The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or Authority or conflict with, result in a breach of, or constitute a default under the organizational documents of Purchaser, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Purchaser is a party or by which it is bound.

(d)      Consents.    No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained or will be obtained on or prior to the Closing Date) in connection with the execution and delivery of this Agreement by Purchaser or the performance by Purchaser of the transactions contemplated hereby.

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(e)      Prohibited Persons.    Purchaser is not, and to Purchaser’s knowledge, no Affiliate of Purchaser is, or has been determined by the U.S. Secretary of the Treasury to be acting on behalf of, a Blocked Person, or has otherwise been designated as a Person (i) with whom an entity organized under the laws of the United States (or a state hereof) is prohibited from entering into transactions or (ii) from whom such an entity is prohibited from receiving money or other property or interests in property. In addition, neither Purchaser nor any Affiliate of Purchaser is located in, or operating from, a county subject to U.S. economic sanctions administered by OFAC.

ARTICLE IX

CONDEMNATION AND CASUALTY

Section 9.1      Significant Casualty.    If, prior to the Closing Date, all or a Significant Portion of the Real Property and Improvements is destroyed or damaged by fire or other casualty, Seller will notify Purchaser of such casualty. Purchaser will have the option to terminate this Agreement upon notice to Seller given not later than the earlier to occur of (x) the Closing Date or (y) ten (10) days after receipt of Seller’s notice. If this Agreement is terminated, the Earnest Money Deposit will be returned to Purchaser upon Purchaser’s compliance with Section 4.5 and thereafter neither Seller nor Purchaser will have any further rights or obligations to the other hereunder except with respect to the Termination Surviving Obligations. If Purchaser does not elect to terminate this Agreement, Seller will not be obligated to repair such damage or destruction but (a) as to the Real Property and/or Improvements, Seller will assign and turn over to Purchaser all of the insurance proceeds paid to Seller (or, if such proceeds have not been awarded, any and all of Seller’s right, title and interest therein), net of reasonable collection costs and any costs incurred by Seller to restore the Property, with respect to such fire or other casualty, and (b) the parties will proceed to Closing pursuant to the terms hereof without abatement of the Purchase Price, except that, as to the Real Property and/or Improvements Purchaser will receive a credit for the lesser of (i) any insurance deductible amount or (ii) the cost of such repairs which have not been made by Seller, if any (other than repairs which are the responsibility of Tenants under Tenant Leases) as reasonably estimated by Seller. Notwithstanding the foregoing, if (A) the insurance proceeds to be assigned to Purchaser as provided in this Section 9.1 plus the credit in the immediately preceding sentence are less than (B) the amount required to restore the Improvements (excluding repairs which are the responsibility of Tenants under Tenant Leases) to the condition which existed prior to the casualty, as reasonably estimated by Seller (“Uninsured Significant Casualty”), Seller may, but is not obligated to, provide a credit to Purchaser at Closing equal to the amount of such Uninsured Significant Casualty. If Seller agrees to provide such credit at Closing in a written notice to Purchaser given prior to the Closing Date, the parties will proceed to Closing pursuant to the terms hereof. If Seller does not agree to provide such credit at Closing, Purchaser will have the option to terminate this Agreement upon notice to Seller given not later than the earlier to occur of (x) the Closing Date or (y) ten (10) days after receipt of Seller’s notice, failing which Purchaser shall be obligated to close without any credit for the Uninsured Significant Casualty. If this Agreement is terminated, the Earnest Money Deposit will be returned to Purchaser upon Purchaser’s compliance with Section 4.5 and thereafter neither Seller nor Purchaser will have any further rights or obligations to the other hereunder except with respect to the Termination Surviving Obligations.

Section 9.2        Casualty of Less Than a Significant Portion.    If less than a Significant Portion of the Real Property and/or Improvements is damaged as aforesaid, Purchaser shall not have the right to terminate this Agreement and Seller will not be obligated to repair such damage or destruction but (a) as to the Real Property and/or Improvements, Seller will assign and turn over to Purchaser all of the insurance proceeds paid to Seller (or, if such proceeds have not been awarded, any and all of its right, title and interest therein), net of reasonable collection costs and costs incurred by Seller to restore the Property, with respect to such fire or other casualty, and (b) the parties will proceed to Closing pursuant to the terms

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hereof without abatement of the Purchase Price, except that, as to the Real Property and/or Improvements, Purchaser will receive a credit for the lesser of (i) any insurance deductible amount or (ii) the cost of such repairs which have not been made by Seller, if any (other than repairs which are the responsibility of Tenants under Tenant Leases) as reasonably estimated by Seller.

The parties agree that the provisions of Section 9.1 and 9.2 shall apply and control in the event that the same are inconsistent with any laws or statutes of the State of California that would otherwise govern risk of loss with respect to contracts for the purchase and sale of real property, including, without limitation, California Civil Code Section 1662, and the parties hereby waive their respective rights under any and all such laws and statutes.

Section 9.3      Condemnation of Property.    In the event of condemnation or sale in lieu of condemnation of all or any portion of the Real Property and/or Improvements prior to the Closing, except as provided below Purchaser will have the option, by providing Seller written notice prior to the earlier of (x) the Closing Date or (y) ten (10) days after receipt of Seller’s notice of such condemnation or sale, of terminating Purchaser’s obligations under this Agreement or electing to have this Agreement remain in full force and effect. In the event Purchaser does not terminate this Agreement pursuant to the preceding sentence, Seller will assign to Purchaser any and all claims for the proceeds of such condemnation or sale to the extent the same are applicable to the Real Property and/or Improvements, net of reasonable collection costs and any costs incurred by Seller to restore the Property, and Purchaser will take title to the Property with the assignment of such proceeds and subject to such condemnation and without reduction of the Purchase Price. Should Purchaser elect to terminate Purchaser’s obligations under this Agreement under the provisions of this Section 9.3, the Earnest Money Deposit will be returned to Purchaser upon Purchaser’s compliance with Section 4.5, and neither Seller nor Purchaser will have any further obligation under this Agreement except for the Termination Surviving Obligations. Notwithstanding anything to the contrary herein, if any eminent domain or condemnation proceeding is instituted (or notice of same is given) for the taking of less than all of the Real Property and/or Improvements, the Improvements may be used in substantially the same manner as though such rights have not been taken, and such taking does not materially adversely affect the ingress and egress to the Real Property and/or Improvements, Purchaser will not be entitled to terminate this Agreement as to any part of the Property, but any award resulting therefrom will be assigned to Purchaser at Closing and will be the exclusive property of Purchaser upon Closing.

The parties agree that the provisions of this Section 9.3 shall apply and control in the event that the same are inconsistent with any laws or statutes of the State of California that would otherwise govern the effect of, or the rights of the parties with respect to any awards or payments made in respect of, the exercise of the power of eminent domain as applied to contracts for the purchase and sale of real property, including, without limitation, California Civil Code Section 1662 and California Code of Civil Procedure Sections 1260.220 and 1263.010, and the parties hereby waive their respective rights under any and all such laws and statutes.

ARTICLE X

CLOSING

Section 10.1      Closing.    The Closing of the sale of the Property by Seller to Purchaser will occur on the Closing Date through the escrow established with the Title Company. At Closing, the events set forth in this Article X will occur (provided that the parties hereby acknowledge and agree that the actual recording of the Deed may occur following Closing, provided that the Title Company complies with Section 6.2 with respect to the issuance of the Title Policy), it being understood that the performance or tender of performance of all matters set forth in this Article X are mutually concurrent conditions which may be waived by the party for whose benefit they are intended.

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Section 10.2      Purchaser’s Closing Obligations. At or before the Deposit Time, Purchaser, at its sole cost and expense, will deliver the following items in escrow with the Title Company pursuant to Section 4.3, for delivery to Seller at Closing as provided herein:

(a)      The Purchase Price, after all adjustments are made at the Closing as herein provided, by Federal Reserve wire transfer of immediately available funds, in accordance with the timing and other requirements of Section 3.3;

(b)      A counterpart of the grant deed substantially in the form attached hereto as Exhibit J (the “Deed”), duly executed and acknowledged by Purchaser;

(c)      Four (4) counterparts of the General Conveyance, Bill of Sale and Assignment and Assumption substantially in the form attached hereto as Exhibit I (the “General Conveyance”) duly executed by Purchaser;

(d)      A counterpart of the Assignment and Assumption of Parking Lease, with respect to the WTC Parking Lease, substantially in the form attached hereto as Exhibit L (the “WTC Parking Lease Assignment”) duly executed by Purchaser;

(e)      Evidence reasonably satisfactory to Seller that the person executing the Closing documents on behalf of Purchaser has full right, power, and authority to do so;

(f)      A counterpart of each of the Tenant Notice Letters, duly executed by Purchaser;

(g)      A California Preliminary Change of Ownership Report, properly completed and executed by Purchaser;

(h)      A counterpart of any required State, County or Municipal transfer declaration forms; and

(i)      Such other documents as may be reasonably necessary or appropriate to effect the consummation of the transactions which are the subject of this Agreement.

Section 10.3      Seller’s Closing Obligations.   At or before the Deposit Time, Seller, at its sole cost and expense, will deliver the following items (a), (b), (c), (d), (e), (f), (g), (h) and (l) in escrow with the Title Company pursuant to Section 4.3; and upon receipt of the Purchase Price, Seller shall deliver the following items (i), (j) and (k) to Purchaser at the Improvements:

(a)      A counterpart of the Deed, duly executed and acknowledged by Seller conveying to Purchaser the Real Property and the Improvements, which Deed shall be delivered to Purchaser by the Title Company agreeing to cause same to be recorded in the Official Records (with documentary transfer tax information to be affixed after recording);

(b)      Four (4) counterparts of the General Conveyance duly executed by Seller;

(c)      A counterpart of the WTC Parking Lease Assignment duly executed by Seller;

(d)      A counterpart of each of the Tenant Notice Letters, duly executed by Seller;

(e)      A counterpart of any required State, County or Municipal transfer declaration forms;

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(f)      Evidence reasonably satisfactory to Title Company and Purchaser that the person executing the Closing documents on behalf of Seller has full right, power and authority to do so;

(g)      A certificate in the form attached hereto as Exhibit H (“Certificate as to Foreign Status”), duly executed by Seller, certifying that Seller is not a “foreign person” as defined in section 1445 of the Code, and a California Real Estate Withholding Certificate Form 593-C, duly executed by Seller, confirming that no withholding of the Purchase Price is required under applicable law;

(h)      The Tenant Deposits, at Seller’s option, either (i) in the form of a cashier’s check issued by a bank reasonably acceptable to Purchaser or (ii) as part of an adjustment to the Purchase Price. In the event the Tenant Deposits are in the form of a letter of credit, then Seller shall deliver at Closing the original letter(s) of credit, together with such documentation required to be executed by Seller to enable the letter(s) of credit to be assigned to Purchaser upon approval thereof by the issuer of the letter(s) of credit;

(i)      The Personal Property;

(j)      Originals (if any) of the Licenses and Permits, the Tenant Leases, and the Operating Contracts in Seller’s possession and control;

(k)      All keys to the Improvements which are in Seller’s possession;

(l)      A Statement Required for the Issuance of ALTA Owners and Loan Policies in the form attached hereto as Exhibit E; and

(m)     Such other documents as may be reasonably necessary or appropriate to effect the consummation of the transactions which are the subject of this Agreement.

Section 10.4     Prorations.

(a)      Seller and Purchaser agree to adjust, as of 11:59 p.m. on the day immediately preceding the Closing Date (the “Closing Time”), the following (collectively, the “Proration Items” (based upon the periods to which they relate and regardless as to when payable)): real estate and personal property taxes and assessments which are required to be paid for the calendar year in which the Closing occurs, utility bills (except as hereinafter provided), collected Rentals (subject to the terms of (c) below) and operating expenses payable by the owner of the Property. Seller will be charged and credited for the amounts of all of the Proration Items relating to the period up to and including the Closing Time, and Purchaser will be charged and credited for all of the Proration Items relating to the period after the Closing Time. Such preliminary estimated Closing prorations shall be set forth on a preliminary closing statement to be prepared by Seller and submitted to Purchaser for Purchaser’s approval (which approval shall not be unreasonably withheld, delayed or conditioned) five (5) days prior to the Closing Date (the “Closing Statement”). The Closing Statement, once agreed upon, shall be signed by Purchaser and Seller and delivered to the Title Company for purposes of making the preliminary proration adjustment at Closing subject to the final cash settlement provided for below. The preliminary proration shall be paid at Closing by Purchaser to Seller (if the preliminary prorations result in a net credit to Seller) or by Seller to Purchaser (if the preliminary prorations result in a net credit to Purchaser) by increasing or reducing the cash to be delivered by Purchaser in payment of the Purchase Price at the Closing. If the actual amounts of the Proration Items are not known as of the Closing Time, the prorations will be made at Closing on the basis of the best evidence then available; thereafter, when actual figures are received, re-prorations will be made on the basis of the actual figures, and a final cash settlement will be made between Seller and Purchaser. No prorations will be made in relation to insurance premiums (except to the extent

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covered by the proration of Operating Expense Recoveries), and Seller’s insurance policies will not be assigned to Purchaser. Final readings and final billings for utilities will be made if possible as of the Closing Time, in which event no proration will be made at the Closing with respect to utility bills (except to the extent covered by the proration of Operating Expense Recoveries). Seller will be entitled to all deposits presently in effect with the utility providers, and Purchaser will be obligated to make its own arrangements for deposits with the utility providers. A final reconciliation of Proration Items shall be made by Purchaser and Seller on or prior to April 30, 2011. The provisions of this Section 10.4 (excluding subsection (e) which is governed by Section 3.2 above and subsection (f) which is governed by Section 16.1 below) will survive the Closing until May 31, 2011.

(b)      Purchaser will receive a credit on the Closing Statement for the prorated amount (as of the Closing Time) of all Rentals previously paid to and collected by Seller and attributable to any period following the Closing Time. After the Closing, Seller will cause to be paid or turned over to Purchaser all Rentals, if any, received by Seller after Closing and properly attributable to any period following the Closing Time. “Rentals” as used herein includes fixed monthly rentals, additional rentals, percentage rentals, escalation rentals (which include each Tenant’s proportionate share of building operation and maintenance costs and expenses as provided for under the applicable Tenant Lease, to the extent the same exceeds any expense stop specified in such Tenant Lease), retroactive rentals, all administrative charges, utility charges, tenant or real property association dues, storage rentals, special event proceeds, temporary rents, telephone receipts, locker rentals, vending machine receipts and other sums and charges payable to Seller or its successor by Tenants under the Tenant Leases or from other occupants or users of the Property, excluding specific tenant billings which are governed by Section 10.4(d) below. Rentals are “Delinquent” if they were due prior to the Closing Time and payment thereof has not been made on or before the Closing Time. Delinquent Rentals will not be prorated. Purchaser agrees to send monthly bills to Tenants with respect to the collection of any Delinquent Rentals, but Purchaser will have no liability for the failure to collect any such amounts and will not be required to conduct lock-outs or take any other legal action to enforce collection of any such amounts owed to Seller by Tenants of the Property. All sums collected by Purchaser from and after Closing from each Tenant (excluding Tenant payments for Operating Expense Recoveries attributable to the period prior to the Closing Time governed by Section 10.4(c) below and tenant specific billings for tenant work orders and other specific services as described in and governed by Section 10.4(d) below) will be applied first to current amounts owed by such Tenant to Purchaser and then to prior delinquencies owed by such Tenant to Seller. Any sums collected by Purchaser and due Seller will be promptly remitted to Seller. Notwithstanding the foregoing, however, after the date which is six (6) months following the Closing Date Seller may collect Delinquent Rentals, amounts owed for Operating Expense Recoveries and billings for tenant work orders directly from Tenants, provided, however, in no event will Seller have the right to threaten termination of any Tenant Lease.

(c)      Seller will prepare a reconciliation as of the Closing Time of the amounts of all billings and charges for operating expenses and taxes in excess of the applicable expense stop, if any, specified in each Tenant Lease (collectively, “Operating Expense Recoveries”) for calendar year 2010. If less amounts have been collected from Tenants for Operating Expense Recoveries for calendar year 2010 than would have been owed by Tenants under the Tenant Leases if the reconciliations under such Tenant Leases were completed as of the Closing Time based on the operating expenses and taxes incurred by Seller for calendar year 2010 up to the Closing Time (as prorated pursuant to Section 10.4(a) above), Purchaser, upon completion of 2010 year-end operating expense and tax reconciliations in 2011, shall use reasonable efforts to collect such underpayments and shall pay to Seller Seller’s share of said underpayments (after deducting from all such collected amounts the reasonable out-of-pocket costs incurred by Purchaser to collect from any such delinquent Tenant) promptly upon collection thereof, and notwithstanding anything to the contrary in the last sentence of Section 10.4(a) above, Purchaser’s obligation to pay Seller under this sentence shall survive Closing without limitation. For purposes of the

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immediately preceding sentence, reasonable efforts shall not require Purchaser to institute any lawsuit to collect such underpayments. If more amounts have been collected from Tenants for Operating Expense Recoveries for calendar year 2010 than would have been owed by Tenants under the Tenant Leases if the reconciliations under such Tenant Leases were completed as of the Closing Time based on the operating expenses and taxes incurred by Seller for calendar year 2010 up to the Closing Time (as prorated pursuant to Section 10.4(a) above), Seller will pay to Purchaser at Closing as a credit against the Purchase Price such excess collected amount. Purchaser and Seller agree that such proration of Operating Expense Recoveries at Closing for calendar year 2010 will fully relieve Seller from any responsibility to Tenants or Purchaser for such matters subject to Seller’s and Purchaser’s right and obligation to finalize prorations within ninety (90) days after Closing solely to make adjustments necessary to the extent estimates used in the calculation of such reconciliation at Closing differ from actual bills received after Closing for those items covered by such reconciliation at Closing or to correct any errors. In this regard, Purchaser will be solely responsible, from and after Closing, for (i) collecting from Tenants the amount of any outstanding Operating Expense Recoveries for calendar year 2010 for periods before and after Closing, and (ii) where appropriate, reimbursing Tenants for amounts attributable to Operating Expense Recoveries for calendar year 2010, as may be necessary based on annual reconciliations for Operating Expense Recoveries for such calendar year.

(d)      With respect to specific tenant billings for work orders, special items performed or provided at the request of a given Tenant or other specific services, which are collected by Purchaser or Seller after the Closing Time but relate to any such specific services rendered by Seller or its property manager prior to the Closing Time and which are identified on the Tenant’s payment as relating to such specific services or which are clearly identifiable as being payment for any such specific services, Purchaser shall cause such collected amounts to be paid to Seller, or Seller may retain such payment if such payment is received by Seller after the Closing Time.

(e)      Notwithstanding any provision of this Section 10.4 to the contrary (but subject to the provisions of Section 10.4(f) below as limited by Section 16.1), Purchaser will be solely responsible for Existing Tenant Costs; provided, however, Purchaser shall be entitled to a credit against the Purchase Price at Closing solely for the specific Leasing Costs and rental abatements identified on Exhibit M to be paid by Seller, but such credit against the Purchase Price (1) as to Leasing Costs, shall be reduced at Closing by the amount of any such Leasing Costs which have been paid as of the Closing Date by Seller and (2) with respect to rental abatements, shall be based upon the unexpired rental abatement period pursuant to the terms of the corresponding Tenant Lease as of the Closing Date and as set forth on Exhibit M. Subject to any approval rights which Purchaser may have pursuant to Section 7.1(e) of this Agreement, Purchaser further agrees to be solely responsible for (i) all Leasing Costs payable in connection with any new Tenant Lease executed on or after the Effective Date, and (ii) all Leasing Costs payable with respect to any renewal, expansion or other right exercised under a Tenant Lease after the Effective Date (collectively, “New Tenant Costs”), and Purchaser will pay to Seller at Closing as an addition to the Purchase Price an amount equal to any New Tenant Costs and Existing Tenant Costs (excluding those referenced on Exhibit M) paid by Seller after the Effective Date and prior to Closing, but with respect to any new Tenant Lease or new amendment to a Tenant Lease entered into after the Effective Date, only to the extent such New Tenant Costs (other than attorneys’ fees) were included in the leases or lease amendments submitted to Purchaser for approval pursuant to Section 7.1(e) of this Agreement or otherwise expressly disclosed to Purchaser in writing prior to the approval by Purchaser of such Tenant Lease or amendment. The provisions of Section 10.4(e) shall fully survive Closing without limitation.

(f)      Subject to Section 16.1, Seller will be solely responsible for Leasing Costs under Tenant Leases entered into prior to the Effective Date to the extent unpaid as of the Closing Date which accrued during the period of time Seller owned the Property excluding (i) the Leasing Costs identified on

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Exhibit M for which Purchaser receives a credit at Closing and (ii) New Tenant Costs and Existing Tenant Costs. The provisions of this Section 10.4(f) shall survive Closing subject to the limitations and only for the time period set forth in Section 16.1.

Section 10.5      Delivery of Real Property.    Upon completion of the Closing, Seller will deliver to Purchaser possession of the Real Property and Improvements, subject to the Tenant Leases and the Permitted Exceptions.

Section 10.6      Costs of Title Company and Closing Costs.    Costs of the Title Company and other Closing costs incurred in connection with the Closing will be allocated as follows:

(a)      Purchaser will pay (i) all premium and other costs for the ALTA portion of the Title Policy and any endorsements, (ii) all premiums and other costs for any mortgagee policy of title insurance, including but not limited to any endorsements or deletions, (iii) the costs associated with any modifications, updates or recertifications of the Existing Survey, (iv) Purchaser’s attorneys’ fees, (v) 1/2 of all of the Title Company’s escrow and closing fees, if any, and (vi) all recording fees;

(b)      Seller will pay (i) the premium for the CLTA portion of the Title Policy, (ii) 1/2 of all of the Title Company’s escrow and closing fees, (iii) Seller’s attorneys’ fees; (iv) any transfer tax imposed by the County and State in which the Real Property is located; and (v) any transfer tax imposed by the City in which the Real Property is located;

(c)      Any other costs and expenses of Closing not provided for in this Section 10.6 or in other provisions of this Agreement shall be allocated between Purchaser and Seller in accordance with the custom in the county in which the Real Property is located; and

(d)      If the Closing does not occur on or before the Closing Date for any reason whatsoever, the costs incurred through the date of termination will be borne by the party incurring same.

Section 10.7      Post-Closing Delivery of Tenant Notice Letters.    Immediately following Closing, Purchaser will deliver to each Tenant (via messenger or certified mail, return receipt requested) a written notice executed by Purchaser and Seller (i) acknowledging the sale of the Property to Purchaser, (ii) acknowledging that Purchaser has received and is responsible for the Tenant Deposits (specifying the exact amount of the Tenant Deposits) and (iii) indicating that rent should thereafter be paid to Purchaser and giving instructions therefor (the “Tenant Notice Letters”). Purchaser shall provide to Seller a copy of each Tenant Notice Letter promptly after delivery of same, and proof of delivery of same promptly after such proof is available. This Section 10.7 shall survive Closing.

Section 10.8      Assignment of Construction Contracts.    Seller and Purchaser acknowledge that Seller has entered into the construction contracts identified as “Construction Contracts” on Exhibit C attached hereto (collectively, the “Construction Contracts” and, individually, a “Construction Contract”). If all the work under any Construction Contract is completed and paid for prior to Closing, (i) Seller shall notify Purchaser of such completion, (ii) such Construction Contract shall not be assigned to Purchaser at Closing, (iii) Exhibit C shall be updated to delete such Construction Contract, and (iv) if the work under the Schindler Contract is completed prior to Closing, as a condition precedent to Purchaser’s obligation to complete Closing, Seller shall provide Purchaser with copies of unconditional lien waivers from the contractor under the Schindler Contract. If, however, all the work under any Construction Contract has not been completed at or prior to Closing (collectively, the “Outstanding Construction Contracts” and, individually, an “Outstanding Construction Contract”), subject to the conditions set forth below, and as a condition precedent to Purchaser’s obligation to complete the Closing (as to clauses (A) and (C) below), (A) such Outstanding Construction Contract shall be assigned to

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Purchaser at Closing, (B) Purchaser shall assume the obligations under such Outstanding Construction Contract pursuant to the General Conveyance, and (C) Purchaser shall be entitled to a credit against the Purchase Price in the amount of the costs of the work remaining to be paid to the contractor under such Outstanding Construction Contract as set forth in the contractor’s certificate provided in clause (x) below. As a condition to such assignment and assumption and as a condition precedent to Purchaser’s obligation to complete the Closing: (x) Seller shall deliver to Purchaser a certificate executed by the contractor under each Outstanding Construction Contract substantially in the form attached hereto as Exhibit O (with such changes to such form to which Seller and Buyer may mutually agree (in their reasonable discretion) prior to the expiration of the Inspection Period) together with the Joinder attached to such certificate executed by Seller, and (y) Seller shall deliver to Purchaser partial lien waiver(s) from the contractor(s) under such Outstanding Construction Contract with respect to the portion of the work under the Outstanding Construction Contract for which payment has been made to such contractor. Purchaser’s closing of the purchase provided for herein shall evidence Purchaser’s satisfaction with or waiver of each of such conditions in this Section 10.8. Notwithstanding anything contained herein to the contrary, in no event shall Seller’s failure to satisfy the conditions set forth above in this Section 10.8 constitute a default by Seller under this Agreement.

ARTICLE XI

BROKERAGE

Section 11.1      Broker.    Seller agrees to pay to Jones Lang LaSalle (“Broker”) a real estate commission at Closing (but only in the event of Closing in compliance with this Agreement) pursuant to a separate agreement. The payment of the commission by Seller to Broker will fully satisfy the obligations of the Seller for the payment of a real estate commission hereunder. Other than as stated in the first sentence of this Section 11.1, Purchaser and Seller represent to the other that no real estate brokers, agents or finders’ fees or commissions are due or will be due or arise in conjunction with the execution of this Agreement or consummation of this transaction by reason of the acts of such party, and Purchaser and Seller will indemnify, defend and hold the other party harmless from any brokerage or finder’s fee or commission claimed by any person asserting his entitlement thereto at the alleged instigation of the indemnifying party for or on account of this Agreement or the transactions contemplated hereby. The provisions of this Article XI will survive any Closing or termination of this Agreement.

ARTICLE XII

CONFIDENTIALITY

Section 12.1      Confidentiality.    Seller and Purchaser each expressly acknowledges and agrees that, until the Closing occurs, the transactions contemplated by this Agreement and the terms, conditions and negotiations concerning the same will be held in the strictest confidence by each of them and will not be disclosed by either of them except (i) to their respective legal counsel, accountants, consultants, officers, investors, lenders, clients, partners, members, owners, directors and shareholders (collectively, the “Representatives”), and except and only to the extent that such disclosure to such Representatives may be necessary for their respective performances hereunder or (ii) as otherwise required by applicable law (INCLUDING, IN THE CASE OF EITHER PARTY, IF ANY AFFILIATE (OR ENTITY ADVISED BY ANY AFFILIATE) OF A PARTY MUST DISCLOSE THE TRANSACTION AND/OR THE TERMS OF THE TRANSACTION IN ANY DOCUMENT AS REQUIRED BY THE FEDERAL SECURITIES OR SIMILAR LAWS, OR ANY RULES OR REGULATIONS PROMULGATED THEREUNDER). Purchaser further acknowledges and agrees that, until the Closing occurs, all information obtained by Purchaser in connection with the Property will not be disclosed by Purchaser to any third persons without the prior written consent of Seller other than to the Representatives in accordance with the other provisions of this Article XII. Without limiting the foregoing, in no event shall Seller or Purchaser, prior to Closing, make any public announcements or press statements regarding the

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transactions contemplated by this Agreement or the terms, conditions and negotiations concerning the same. Nothing contained in this Article XII will preclude or limit either party to this Agreement from disclosing or accessing any information otherwise deemed confidential under this Article XII in connection with that party’s enforcement of its rights or its defense against claims (as to each other and as to third parties) under this Agreement, or in response to lawful process or subpoena or other valid or enforceable order of a court of competent jurisdiction or any filings (including those for financial reporting purposes) with governmental authorities required by reason of the transactions provided for herein pursuant to an opinion of counsel. The provisions of this Article XII will survive any termination of this Agreement. Notwithstanding anything stated to the contrary in the Inspection Agreement, to the extent there is any inconsistency between the provisions of this Section 12.1 and the provisions of the Inspection Agreement, the provisions of this Section 12.1 shall govern and control.

Notwithstanding the foregoing and anything to the contrary in this Section 12.1 or in the Inspection Agreement, nothing contained herein or in the Inspection Agreement shall impair Purchaser’s (or its permitted assignee’s) right to disclose information relating to this Agreement or the Property (a) to any due diligence representatives and/or consultants that are engaged by, work for or are acting on behalf of, any securities dealers and/or broker dealers evaluating Purchaser or its permitted assignees, (b) in connection with any filings (including any amendment or supplement to any S-11 filing) with governmental agencies (including the SEC) by any REIT (“REIT”) holding an interest (direct or indirect) in any permitted assignee of Purchaser to the extent such information is disclosed in such filings as required by applicable law, such information is customarily disclosed by the REIT or its filings or, in the REIT’s opinion, or the opinion of its auditors, such information should be disclosed based upon the auditing practices of the REIT’s auditors, and (c) to any broker/dealers in the REIT’s broker/dealer network and any of the REIT’s investors to the extent the REIT customarily discloses such information to such broker/dealers.

ARTICLE XIII

REMEDIES

Section 13.1      Default by Seller.   In the event the Closing of the purchase and sale transaction provided for herein does not occur as herein provided by reason of any default of Seller, Purchaser may, as Purchaser’s sole and exclusive remedy, elect by notice to Seller within ten (10) Business Days following the scheduled Closing Date, either of the following: (a) terminate this Agreement, in which event Purchaser will receive from the Title Company the Earnest Money Deposit (and the Independent Consideration shall be paid to Seller), whereupon Seller and Purchaser will have no further rights or obligations under this Agreement, except with respect to the Termination Surviving Obligations; or (b) seek to enforce specific performance of the Agreement by filing a specific performance action within ten (10) Business Days after Purchaser elects to pursue the remedy set forth in this clause (b), and in either event, Purchaser hereby waives all other remedies, including without limitation, any claim against Seller for damages of any type or kind including, without limitation, consequential or punitive damages. Failure of Purchaser to make the foregoing election within the foregoing ten (10) Business Day period or, if Purchaser elects the remedy set forth in clause (b), failure of Purchaser to file a specific performance action within such ten (10) Business Day period, shall be deemed an election by Purchaser to terminate this Agreement and receive from the Title Company the Earnest Money Deposit, whereupon Seller and Purchaser will have no further rights or obligations under this Agreement, except with respect to the Termination Surviving Obligations. Notwithstanding the foregoing, nothing contained in this Section 13.1 will limit Purchaser’s remedies at law, in equity or as herein provided in the event of a breach by Seller of any of the Closing Surviving Obligations after Closing or the Termination Surviving Obligations after termination.

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Section 13.2      Default by Purchaser.   IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN DO NOT OCCUR AS PROVIDED HEREIN BY REASON OF ANY DEFAULT OF PURCHASER, PURCHASER AND SELLER AGREE IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX THE DAMAGES WHICH SELLER MAY SUFFER. PURCHASER AND SELLER HEREBY AGREE THAT (i) AN AMOUNT EQUAL TO THE EARNEST MONEY DEPOSIT, TOGETHER WITH ALL INTEREST ACCRUED THEREON, IS A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT SELLER WOULD SUFFER IN THE EVENT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY, AND (ii) SUCH AMOUNT WILL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR PURCHASER’S DEFAULT AND FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY, AND WILL BE SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY) FOR ANY DEFAULT OF PURCHASER RESULTING IN THE FAILURE OF CONSUMMATION OF THE CLOSING, WHEREUPON THIS AGREEMENT WILL TERMINATE AND SELLER AND PURCHASER WILL HAVE NO FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EXCEPT WITH RESPECT TO THE TERMINATION SURVIVING OBLIGATIONS. SUCH PAYMENT OF THE AMOUNT EQUAL TO THE EARNEST MONEY DEPOSIT, PLUS INTEREST ACCRUED THEREON, IS NOT INTENDED AS A PENALTY, BUT SHALL BE LIQUIDATED DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED HEREIN WILL LIMIT SELLER’S REMEDIES AT LAW, IN EQUITY OR AS HEREIN PROVIDED IN THE EVENT OF A BREACH BY PURCHASER OF ANY OF THE CLOSING SURVIVING OBLIGATIONS OR THE TERMINATION SURVIVING OBLIGATIONS.

Purchaser Initials Seller Initials

Section 13.3      Consequential and Punitive Damages.   Each of Seller and Purchaser waive any right to sue the other for any consequential or punitive damages for matters arising under this Agreement. This Section 13.3 shall survive Closing or termination of this Agreement.

Purchaser Initials Seller Initials

ARTICLE XIV

NOTICES

Section 14.1      Notices.    All notices or other communications required or permitted hereunder may be given either by the parties hereto or their respective legal counsel (in which event such notice or communication shall be deemed to have been given by such party) and will be in writing, and will be given by (a) personal delivery, or (b) professional expedited delivery service with proof of delivery, or (c) United States mail, postage prepaid, registered or certified mail, return receipt requested, or (d) facsimile (provided that such facsimile is confirmed by the sender by personal delivery or expedited delivery service in the manner previously described), sent to the intended addressee at the address set forth below, or to such other address or to the

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attention of such other person as the addressee will have designated by written notice sent in accordance herewith and will be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service or mail, as of the date of first attempted delivery on a Business Day at the address or in the manner provided herein, or, in the case of facsimile transmission, upon receipt if on a Business Day and, if not on a Business Day, on the next Business Day. For the avoidance of doubt, facsimile delivery may be confirmed by the sender sending such notice or other communication by personal delivery or expedited delivery service in the manner previously described. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement will be as follows:

To Purchaser:	KBS Capital Advisors LLC
	620 Newport Center Drive, Suite 1300
	Newport Beach, CA 92660
	Attn:	Christopher Aust
	Fax:	(949) 417-6518
with copy to:	KBS Capital Advisors LLC
	620 Newport Center Drive, Suite 1300
	Newport Beach, California 92660
	Attn:	Jim Chiboucas
	Fax:	(949) 417-6523
with copy to:	Morgan, Lewis & Bockius LLP
	5 Park Plaza, Suite 1750
	Irvine, California 92614
	Attn:	Bruce Fischer
	Fax:	(949) 399-7001
To Seller:	Hines U.S. Office Value Added Fund, L.P.
	300 Atlantic Street, Suite 206
	Stamford, Connecticut 06901
	Attn:	David J. Congdon and Beth Raskin
	Fax:	(203) 967-4488
with copy to:	Hines Interests Limited Partnership
	445 South Figueroa Street, Suite 20
	Los Angeles, California 90071
	Attn:	Colin Shepherd
	Fax:	(213) 629-1423
with copy to:	Baker Botts L.L.P.
	2001 Ross Avenue, Suite 600
	Dallas, Texas 75201
	Attn:	Patricia M. Stanton
	Fax:	(214) 661-4704

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ARTICLE XV

ASSIGNMENT AND BINDING EFFECT

Section 15.1      Assignment; Binding Effect.    Purchaser will not have the right to assign this Agreement without Seller’s prior written consent. Notwithstanding the foregoing, Purchaser may assign its rights under this Agreement to (i) an Affiliate of Purchaser or (ii) an entity wholly owned indirectly by KBS Real Estate Investment Trust II, Inc., without the consent of Seller, provided that (x) any such assignment does not relieve the assigning Purchaser of its obligations hereunder, (y) Purchaser gives Seller advance written notice thereof, and (z) Purchaser executes agreement in form reasonably satisfactory to Seller in which such assignee assumes all of Purchaser’s obligations under this Agreement. This Agreement will be binding upon and inure to the benefit of Seller and Purchaser and their respective successors and permitted assigns, and no other party will be conferred any rights by virtue of this Agreement or be entitled to enforce any of the provisions hereof. Whenever a reference is made in this Agreement to Seller or Purchaser, such reference will include the successors and permitted assigns of such party under this Agreement.

ARTICLE XVI

PROCEDURE FOR INDEMNIFICATION AND LIMITED SURVIVAL OF

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 16.1      Survival of Representations, Warranties and Covenants.

(a)      Notwithstanding anything to the contrary contained in this Agreement, (1) the representations and warranties of Seller set forth in Section 8.1 and Seller’s liability under Section 8.1 and (2) Seller’s liability under Sections 5.2(f) and 10.4(f), will survive the Closing for a period of six (6) months. With respect to any suit, claim or cause of action that Purchaser has or may have (i) as a result of any alleged untruth, inaccuracy or breach of such representations or warranties under Section 8.1 and/or (ii) in connection with Seller’s obligations (or as a result of Seller’s alleged failure to perform same) under Sections 5.2(f) and 10.4(f), Purchaser must give Seller written notice of any such claims, and must file any such suits, claims or causes of action against Seller based thereon, in each instance prior to the expiration of said six (6) month period. In the event Purchaser fails to provide such notice and file such suits, claims or causes of action within such six (6) month period, Seller shall have no liability whatsoever to Purchaser with respect to (1) the representations and warranties set forth in Section 8.1, and (2) the obligations of Seller set forth in Sections 5.2(f) and 10.4(f). Purchaser will not have any right to bring any suit, claim or cause of action against Seller as a result of any alleged untruth, inaccuracy or breach of such representations and warranties under Section 8.1 or in connection with Seller’s obligations (or as a result of Seller’s alleged failure to perform same) under Section 5.2(f) unless and until the aggregate amount of all liability and losses arising out of all such untruths, inaccuracies, breaches and failures exceeds $100,000 and then only to the extent of such excess. In addition, notwithstanding anything to the contrary contained in this Agreement or any of the Closing documents, including, without limitation, the provisions of Section 17.15 of this Agreement, in no event shall Seller’s liability for all such untruths, inaccuracies, breaches and/or failures under Sections 8.1 and 5.2(f) (including Seller’s liability for attorneys’ fees and costs in connection with such untruths, inaccuracies and/or breaches) exceed, in the aggregate, $1,500,000.

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(b)      Notwithstanding anything to the contrary contained in this Agreement, Seller shall have no liability with respect to any of Seller’s representations, warranties and covenants herein if, prior to the Closing, Purchaser has actual knowledge of any breach of a representation, warranty or covenant of Seller herein, or Purchaser obtains actual knowledge (from whatever source, including, without limitation, any tenant estoppel certificates, as a result of Purchaser’s due diligence tests, investigations and inspections of the Property or the Documents; or as a result of written disclosure by Seller or any of Seller’s agents, representatives or employees) that contradicts any of Seller’s representations, warranties or covenants herein (and the representations and warranties of Seller shall be deemed modified thereby to be accurate), and Purchaser nevertheless consummates the transaction contemplated by this Agreement (in which event any such breach or contradiction shall be deemed waived by Purchaser).

(c)      The Closing Surviving Obligations will survive Closing without limitation unless a specified period is otherwise provided in this Agreement. All other representations, warranties, covenants and agreements made or undertaken by Seller under this Agreement, unless otherwise specifically provided herein, will not survive the Closing Date but will be merged into the Closing documents delivered at the Closing. The Termination Surviving Obligations shall survive termination of this Agreement without limitation unless a specified period is otherwise provided in this Agreement.

ARTICLE XVII

MISCELLANEOUS

Section 17.1    Waivers.   No waiver of any breach of any covenant or provisions contained herein will be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision contained herein. No extension of time for performance of any obligation or act will be deemed an extension of the time for performance of any other obligation or act.

Section 17.2    Recovery of Certain Fees.   In the event a party hereto files any action or suit against another party hereto by reason of any breach of any of the covenants, agreements or provisions contained in this Agreement, then in that event the prevailing party will be entitled to have and recover of and from the other party all attorneys’ fees and costs resulting therefrom, subject, however, in the case of Seller, to the limitations set forth in Section 16.1 above. For purposes of this Agreement, the term “attorneys’ fees” or “attorneys’ fees and costs” shall mean all court costs and the fees and expenses of counsel to the parties hereto, which may include printing, photostatting, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or collection of any judgment obtained in any such proceeding. The provisions of this Section 17.2 shall survive the entry of any judgment, and shall not merge, or be deemed to have merged, into any judgment.

Section 17.3    Time of Essence.   Seller and Purchaser hereby acknowledge and agree that time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof.

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Section 17.4      Construction.    Headings at the beginning of each article and section are solely for the convenience of the parties and are not a part of this Agreement. Whenever required by the context of this Agreement, the singular will include the plural and the masculine will include the feminine and vice versa. This Agreement will not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same. All exhibits and schedules referred to in this Agreement are attached and incorporated by this reference, and any capitalized term used in any exhibit or schedule which is not defined in such exhibit or schedule will have the meaning attributable to such term in the body of this Agreement. In the event the date on which Purchaser or Seller is required to take any action under the terms of this Agreement is not a Business Day, the action will be taken on the next succeeding Business Day.

Section 17.5      Counterparts.    To facilitate execution of this Agreement, this Agreement may be executed in multiple counterparts, each of which, when assembled to include an original, electronic (by .pdf) or faxed signature for each party contemplated to sign this Agreement, will constitute a complete and fully executed agreement. All such fully executed original or faxed/electronic counterparts will collectively constitute a single agreement.

Section 17.6      Severability.    If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of law or public policy, all of the other conditions and provisions of this Agreement will nevertheless remain in full force and effect, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to reflect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

Section 17.7      Entire Agreement.    This Agreement is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument, signed by the party to be charged or by its agent duly authorized in writing, or as otherwise expressly permitted herein.

Section 17.8      Governing Law.    THIS AGREEMENT WILL BE CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW THAT MIGHT CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

Section 17.9      No Recording.    The parties hereto agree that neither this Agreement nor any affidavit concerning it will be recorded.

Section 17.10      Further Actions.    The parties agree to execute such instructions to the Title Company and such other instruments and to do such further acts as may be reasonably necessary to carry out the provisions of this Agreement.

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Section 17.11  No Other Inducements.    The making, execution and delivery of this Agreement by the parties hereto has been induced by no representations, statements, warranties or agreements other than those expressly set forth herein.

Section 17.12  Exhibits.   Exhibits A through Q, inclusive, are incorporated herein by reference.

Section 17.13  No Partnership.   Notwithstanding anything to the contrary contained herein, this Agreement shall not be deemed or construed to make the parties hereto partners or joint venturers, it being the intention of the parties to merely create the relationship of Seller and Purchaser with respect to the Property to be conveyed as contemplated hereby.

Section 17.14  Limitations on Benefits.   It is the explicit intention of Purchaser and Seller that no person or entity other than Purchaser and Seller and their permitted successors and assigns is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, Purchaser and Seller or their respective successors and assigns as permitted hereunder. Nothing contained in this Agreement shall under any circumstances whatsoever be deemed or construed, or be interpreted, as making any third party (including, without limitation, Broker or any Tenant) a beneficiary of any term or provision of this Agreement or any instrument or document delivered pursuant hereto, and Purchaser and Seller expressly reject any such intent, construction or interpretation of this Agreement.

Section 17.15  Limitation of Liability.   In no event whatsoever shall Seller’s liability (if any) under this Agreement and the Closing documents (including any such liability for attorney’s fees and expenses) exceed, in the aggregate, an amount equal to the Purchase Price. In addition, in no event whatsoever shall recourse be had or liability asserted against any of Seller’s partners, members, shareholders, employees, agents, directors, officers or other owners of Seller or their respective constituent partners. Seller’s direct and indirect shareholders, partners, members, beneficiaries and owners and their respective trustees, officers, directors, employees, agents and security holders, assume no personal liability for any obligations entered into on behalf of Seller under this Agreement and the Closing documents.

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IN WITNESS WHEREOF, Seller and Purchaser have respectively executed this Agreement to be effective as of the date first above written.

PURCHASER:
KBS CAPITAL ADVISORS LLC,
a Delaware limited liability company
By:	/s/ Charles J. Schreiber, Jr.
	Charles J. Schreiber, Jr.
	Chief Executive Officer

S-1

SELLER:
HINES VAF UB PLAZA, L.P.
By:	Hines VAF UB Plaza GP LLC,
	its general partner
	By:	Hines VAF UB Plaza Mezz, L.P.,
		its sole member
		By:	Hines VAF UB Plaza GP2 LLC,
			its general partner
			By:	Hines U.S. Office Value Added Fund, L.P.,
				its sole member
				By:	Hines U.S. Office Value Added Fund LLC,
					its general partner
					By:	Hines Interests Limited Partnership,
						its managing member
						By:	Hines Holdings, Inc.,
							its general partner
							By:	/s/ David J. Congdon
								David J. Congdon
								Senior Vice President

S-1

EX-10.62

Exhibit 10.62

FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (this “First Amendment”) is made as of the 20th day of August, 2010, by and between HINES VAF UB PLAZA, L.P., a Delaware limited partnership (“Seller”), and KBSII 445 SOUTH FIGUEROA, LLC (“Purchaser”). In consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:

RECITALS

A. Seller and Purchaser are parties to that certain Agreement of Sale and Purchase dated as of August 16, 2010 (the “Agreement”). All initially-capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement unless the context clearly indicates otherwise.

B. The Agreement was assigned to Purchaser pursuant to an Assignment and Assumption of Agreement dated August     , 2010, by and between KBS Capital Advisors LLC, as assignor, and Purchaser, as assignee.

C. Seller and Purchaser have agreed to modify the terms of the Agreement as set forth in this First Amendment.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intended to be legally bound, Seller and Purchaser agree as follows:

1. Recitals. The Recitals set forth above are hereby incorporated herein by reference as if the same were fully set forth herein.

2. Estoppel Certificates.

(a) Purchaser hereby approves for all purposes of the Agreement (including, without limitation, Section 7.2) the estoppel certificates executed and delivered to Purchaser on or prior to the date of this First Amendment by the Tenants listed on Schedule 1 attached hereto.

(b) Seller and Purchaser agree that, notwithstanding anything stated to the contrary in Section 7.2 of the Agreement or elsewhere in the Agreement, it shall be a condition to Closing that Seller obtain and deliver to Purchaser from (x) the Major Tenant an executed estoppel certificate in the form of that attached hereto as Exhibit D-2 without any changes, and attached to which shall be the lease and lease amendments described in Schedule 2 attached hereto, and (y) Tenants leasing space in the Improvements which, when added to the space leased by the Major Tenant, aggregates at least 80% of the leased space within the Improvements, executed estoppel certificates with no material modifications from the forms attached to that certain email date-stamped as of                      and approved by Purchaser (“General Estoppel Certificates”); provided, however, with respect to the General Estoppel Certificates (i) the deletion of Paragraph 14 of such estoppel certificate (regarding renewal, expansion and termination options), or the modification thereof to the extent not inconsistent with the applicable Tenant Lease, will not be deemed a material modification which would cause

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such tenant estoppel certificate to fail to satisfy the requirements for an acceptable estoppel certificate under this Paragraph 2(b); and (ii) if Purchaser does not, within three (3) Business Days following Purchaser’s receipt of any Tenant estoppel certificate, deliver written notice to Seller of any specific objections to such estoppel certificate modified by such Tenant and submitted to Purchaser, such revised form of estoppel certificate shall be deemed approved by Purchaser subject to the receipt by Purchaser of the final executed estoppel certificate in such deemed approved form. For purposes of this Paragraph 2(b), the following, if made to any General Estoppel Certificate shall be deemed to be a material modification of such estoppel certificate: (A) the disclosure by such Tenant of a default by the landlord under such Tenant Lease; (B) the disclosure of additional amounts due to such Tenant in Paragraph 11 of such estoppel certificate for which Seller does not agree to provide a credit against the Purchase Price to Purchaser as a condition to Closing; (C) a modification to the rent amounts due under such Tenant Lease as set forth in Paragraph 12 of such estoppel certificate; or (D) a modification to the termination date of such Tenant Lease as set forth in Paragraph 7 of such estoppel certificate. Notwithstanding anything contained herein or in the Agreement to the contrary, in no event shall Seller’s failure to obtain such estoppel certificates in accordance with the provisions of this Paragraph 2(b) constitute a default by Seller under the Agreement, as amended hereby.

3. Energy Supply Agreement and Parking Lease Agreement Estoppels. Seller and Purchaser agree that it shall be a condition to Closing that Seller obtain and deliver to Purchaser from (x) Trigen-LA Energy Corporation, and joined by Thermal North America, Inc., as guarantor, an executed estoppel certificate substantially in the form attached hereto as Exhibit E without any material modifications, and (y) from the owner of that certain real property commonly known as the World Trade Center, located at 350 South Figueroa Street, Los Angeles, California, and that certain parking garage facility located thereon, an executed estoppel certificate substantially in the form attached hereto as Exhibit F without any material modifications. For purposes of this Paragraph 3, the disclosure of a Seller default under either such estoppel certificate shall be deemed to be a material modification of such estoppel certificate unless such default can be cured by the payment of a monetary sum and Purchaser receives a credit as a condition to Closing in the amount of such monetary sum. Notwithstanding anything contained herein or in the Agreement to the contrary, in no event shall Seller’s failure to obtain such estoppel certificates in accordance with the provisions of this Paragraph 3 constitute a default by Seller under the Agreement, as amended hereby.

4. Co-Insurance and Reinsurance. In accordance with Section 4.10(b) of the Agreement, this First Amendment shall serve as Purchaser’s written proposal to Seller for co-insurance and reinsurance with respect to the Title Policy to be issued at Closing. The Title Company shall insure 50% of the Purchase Price and Commonwealth Land Title Insurance Company shall insure 50% of the Purchase Price. Reinsurance, if any, with respect to the Title Company’s portion shall be with Fidelity National Title Insurance Company, and reinsurance, if any, with respect to Commonwealth Land Title Insurance Company’s portion shall be with a title company selected by Purchaser in Purchaser’s sole discretion. Seller hereby acknowledges its approval of Purchaser’s written proposal for co-insurance and reinsurance as provided in Section 4.10(b) of the Agreement.

5. Leasing Commission. Seller hereby acknowledges and agrees that, notwithstanding anything to the contrary in the Agreement, the leasing commissions shown on

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the attached Exhibit G shall be paid by Seller prior to the Closing Date and as a condition to Closing, along with the delivery of evidence reasonably satisfactory to the Purchaser prior to the Closing Date (and as a condition to Closing) that such commissions have been paid.

6. Contractor’s Certificate. In accordance with Section 10.8 of the Agreement, Seller and Purchaser have agreed upon the form of contractor’s certificate for each contractor under the Construction Contracts, which form of each contractor’s certificate is attached hereto as Exhibit O-1, Exhibit O-2, and Exhibit O-3. Notwithstanding anything stated to the contrary in the Agreement, to the extent a contactor’s certificate is required to be delivered in connection with the Closing pursuant to the provisions of Section 10.8 of the Agreement, the form of contractor’s certificate(s) that shall be used are the forms attached hereto as Exhibits O-1, O-2 and O-3.

7. Exhibit K. Exhibit K to the Agreement is deleted in its entirety and the Exhibit K attached to this First Amendment is substituted therefor as if originally attached to the Agreement as Exhibit K.

8. Assignment and Assumption of Purchase Agreement. In accordance with Section 15.1 of the Agreement, this First Amendment shall serve as notification to Seller of the assignment of the Agreement to Buyer, and Seller hereby acknowledges that the provisions set forth in Section 15.1 of the Agreement has been satisfied.

9. Ciudad LA, LLC. Concurrently with Closing, and as a condition precedent to Closing, Purchaser shall be entitled to a credit towards the Purchase Price in the amount of Thirty Thousand Dollars ($30,000) to cover repair costs associated with the kitchen floor water infiltration issue within the Ciudad LA, LLC space.

10. Effectiveness of Agreement. Except as modified by this First Amendment, all the terms of the Agreement shall remain unchanged and in full force and effect.

11. Counterparts. This First Amendment may be executed in counterparts, and all counterparts together shall be construed as one document.

12. Telecopied Signatures. A counterpart of this First Amendment that is signed by one party to this First Amendment and telecopied to the other party to this First Amendment or its counsel (i) shall have the same effect as an original signed counterpart of this First Amendment, and (ii) shall be conclusive proof, admissible in judicial proceedings, of such party’s execution of this First Amendment.

13. Successors and Assigns. All of the terms and conditions of this First Amendment shall apply to benefit and bind the successors and assigns of the respective parties.

IN WITNESS WHEREOF, Seller and Purchaser have entered into this First Amendment to Agreement of Sale and Purchase as of the date first above stated.

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“SELLER”
HINES VAF UB PLAZA, L.P.
By:	Hines VAF UB Plaza GP LLC,
	its general partner
	By:	Hines VAF UB Plaza Mezz, L.P.,
		its sole member
		By:	Hines VAF UB Plaza GP2 LLC,
			its general partner
			By:	Hines U.S. Office Value Added Fund, L.P.,
				its sole member
				By:	Hines U.S. Office Value Added Fund LLC,
					its general partner
					By:	Hines Interests Limited Partnership,
						its managing member
						By:	Hines Holdings, Inc.,
							its general partner
							By:	/s/ David J. Congdon
								David J. Congdon
								Senior Vice President

S-1

“PURCHASER”
KBSII 445 SOUTH FIGUEROA, LLC, a Delaware limited liability company
By:	KBSII REIT ACQUISITION XV, LLC,
	a Delaware limited liability company, its sole member
	By:	KBS REIT PROPERTIES II, LLC,
		a Delaware limited liability company, its sole member
		By:	KBS LIMITED PARTNERSHIP II,
			a Delaware limited partnership, its sole member
			By:	KBS REAL ESTATE INVESTMENT TRUST II, INC.,
				a Maryland corporation, general partner
				By:	/s/ Charles J. Schreiber, Jr.
					Charles J. Schreiber, Jr.
					Chief Executive Officer

EX-10.63

Exhibit 10.63

SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (this “Second Amendment”) is made as of the 15th day of September, 2010, by and between HINES VAF UB PLAZA, L.P., a Delaware limited partnership (“Seller”), and KBSII 445 SOUTH FIGUEROA, LLC (“Purchaser”). In consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:

RECITALS

A. Seller and Purchaser are parties to that certain Agreement of Sale and Purchase dated as of August 16, 2010 (the “Original Agreement”).

B. The Original Agreement was amended by that certain First Amendment to Agreement of Sale and Purchase, dated as of August 20, 2010 (the “First Amendment”, and together with the Original Agreement, the “Agreement”). All initially-capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement unless the context clearly indicates otherwise.

C. Seller and Purchaser have agreed to modify the terms of the Agreement as set forth in this First Amendment.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intended to be legally bound, Seller and Purchaser agree as follows:

1. Recitals. The Recitals set forth above are hereby incorporated herein by reference as if the same were fully set forth herein.

2. Ciudad LA, LLC. The last sentence of Paragraph 9 of the First Amendment is hereby amended to delete “Thirty Thousand Dollars ($30,000)” and substitute “Twenty-One Thousand Fourteen Dollars ($21,014)” therefor.

3. Letter of Credit Transfer. With respect to any Tenant Deposits in the form of a letter of credit, if an executed original (including the guaranty of any signatures thereon) of the documentation required to enable any such letter of credit to be assigned to Purchaser is not delivered to Purchaser as of the Closing Date in accordance with Section 10.3(h), Seller shall deliver same to Purchaser within five (5) Business Days after the Closing Date.

4. Effectiveness of Agreement. Except as modified by this Second Amendment, all the terms of the Agreement shall remain unchanged and in full force and effect. All references in the Agreement to “this Agreement” shall hereafter refer to the Agreement as amended hereby.

5. Counterparts. This Second Amendment may be executed in counterparts, and all counterparts together shall be construed as one document.

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6. Telecopied or Electronic Signatures. A counterpart of this Second Amendment that is signed by one party to this Second Amendment and telecopied or sent via electronic mail to the other party to this Second Amendment or its counsel (i) shall have the same effect as an original signed counterpart of this Second Amendment, and (ii) shall be conclusive proof, admissible in judicial proceedings, of such party’s execution of this Second Amendment.

7. Successors and Assigns. All of the terms and conditions of this Second Amendment shall apply to benefit and bind the successors and assigns of the respective parties.

IN WITNESS WHEREOF, Seller and Purchaser have entered into this Second Amendment to Agreement of Sale and Purchase as of the date first above stated.

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2

“SELLER”
HINES VAF UB PLAZA, L.P.
By:	Hines VAF UB Plaza GP LLC,
	its general partner
	By:	Hines VAF UB Plaza Mezz, L.P.,
		its sole member
		By:	Hines VAF UB Plaza GP2 LLC,
			its general partner
			By:	Hines U.S. Office Value Added Fund, L.P.,
				its sole member
				By:	Hines U.S. Office Value Added Fund LLC,
					its general partner
					By:	Hines Interests Limited Partnership,
						its managing member
						By:	Hines Holdings, Inc.,
							its general partner
							By:	/s/ David J. Congdon
								David J. Congdon
								Senior Vice President

S-1

“PURCHASER”
KBSII 445 SOUTH FIGUEROA, LLC, a Delaware limited liability company
By:	KBSII REIT ACQUISITION XV, LLC, a Delaware limited liability company, its sole member
	By:	KBS REIT PROPERTIES II, LLC, a Delaware limited liability company, its sole member
		By:	KBS LIMITED PARTNERSHIP II, a Delaware limited partnership, its sole member
			By:	KBS REAL ESTATE INVESTMENT TRUST II, INC., a Maryland corporation, general partner
				By:	/s/ Charles J. Schreiber, Jr.
					Charles J. Schreiber, Jr.
					Chief Executive Officer

S-2

EX-10.64

Exhibit 10.64

ASSIGNMENT AND ASSUMPTION OF PURCHASE AGREEMENT

This Assignment and Assumption of Purchase Agreement (“Assignment”) is entered into between KBS CAPITAL ADVISORS LLC, a Delaware limited liability company (“Assignor”), and KBSII 445 SOUTH FIGUEROA, LLC, a Delaware limited liability company (“Assignee”), as of August 19, 2010 (“Effective Date”).

RECITALS

A. Pursuant to the terms of that certain Agreement of Sale and Purchase effective as of August 16, 2010, by and between HINES VAF UB PLAZA, L.P., a Delaware limited partnership, as seller, and Assignor, as buyer (the “Purchase Agreement”), Assignor agreed to acquire the Property (as such term is defined in the Purchase Agreement) commonly referred to as Union Bank Plaza, Los Angeles, California.

B. Assignor desires to assign, without recourse, representation or warranty, all of its rights, benefits, liabilities and obligations arising under the Purchase Agreement (and related documents) to Assignee, and Assignee desires to assume all of said rights, benefits, liabilities and obligations.

NOW, THEREFORE, in consideration of the foregoing promises, the mutual undertakings of the parties set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows:

1. Recitals. The above recitals are incorporated herein by reference.

2. Assignment and Assumption. Assignor hereby transfers, assigns and conveys, without recourse, representation or warranty, express or implied, all of Assignor’s rights, interests, liabilities and obligations in and to the Property, and all of Assignor’s rights, interests, liabilities and obligations under the Purchase Agreement (and related documents) to acquire same to Assignee. Assignee hereby assumes all such rights, interests, liabilities and obligations, and joins in all representations, warranties, releases, and indemnities, of Assignor under the Purchase Agreement (and related documents) relating to such Property and the Purchase Agreement (and related documents) assigned to it above.

3. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the parties’ successors and assigns.

4. Attorneys’ Fees. In the event any party institutes any action or proceeding against the other party with regard to this Assignment, the prevailing party of such action shall be entitled to recover from the nonprevailing party (in addition to all other remedies provided by law) its attorneys’ fees and costs incurred in such action or proceeding.

5. Release Under Purchase Agreement. In accordance with Section 15.1 of the Purchase Agreement, Assignor shall not be released from its obligations under the Purchase Agreement.

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6. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmission. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto.

[Signatures to Follow]

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Executed as of the date set forth above.

ASSIGNOR:
KBS CAPITAL ADVISORS LLC, a Delaware limited liability company
By:	/s/ Charles J. Schreiber, Jr.
Name:	Charles J. Schreiber, Jr.
Title:	Chief Executive Officer

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S-1

ASSIGNEE:
KBSII 445 SOUTH FIGUEROA, LLC, a Delaware limited liability company
By:	KBSII REIT ACQUISITION XV, LLC, a Delaware limited liability company, its sole member
	By:	KBS REIT PROPERTIES II, LLC, a Delaware limited liability company, its sole member
		By:	KBS LIMITED PARTNERSHIP II, a Delaware limited partnership, its sole member
			By:	KBS REAL ESTATE INVESTMENT TRUST II, INC., a Maryland corporation, general partner
				By:	/s/ Charles J. Schreiber, Jr.
					Charles J. Schreiber, Jr.
					Chief Executive Officer

S-2

EX-21.1

Exhibit 21.1

Direct and Indirect Subsidiaries of KBS Real Estate Investment Trust II, Inc.

KBS Limited Partnership II

KBS Debt Holdings II, LLC

KBS Debt Holdings II X, LLC

KBS REIT Holdings II LLC

KBS REIT Properties II, LLC

KBS REIT II Finance LLC

KBS TRS Services, LLC

KBS II Securities LLC

KBSII 100-200 Campus Drive, LLC

KBSII 300-600 Campus Drive, LLC

KBSII 300 North LaSalle, LLC

KBSII 350 Plumeria, LLC

KBSII 445 South Figueroa, LLC

KBSII 2500 Regent Boulevard, LLC

KBSII Crescent VIII, LLC

KBSII Hartman Business Center, LLC

KBSII Horizon Tech Center, LLC

KBSII Mountain View, LLC

KBSII One Main Place, LLC

KBSII Pierre LaClede Center, LLC

KBSII Plano Business Park, LLC

KBSII REIT Acquisition I, LLC

KBSII REIT Acquisition II, LLC

KBSII REIT Acquisition III, LLC

KBSII REIT Acquisition IV, LLC

KBSII REIT Acquisition V, LLC

KBSII REIT Acquisition VI, LLC

KBSII REIT Acquisition VII, LLC

KBSII REIT Acquisition VIII, LLC

KBSII REIT Acquisition IX, LLC

KBSII REIT Acquisition X, LLC

KBSII REIT Acquisition XI, LLC

KBSII REIT Acquisition XII, LLC

KBSII REIT Acquisition XIII, LLC

KBSII REIT Acquisition XIV, LLC

KBSII REIT Acquisition XV, LLC

KBSII Torrey Reserve West, LLC

KBSII Willow Oaks, LLC

CA Capital Management Services, LLC

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” in the Post-Effective Amendment No. 10 to the Registration Statement (Form S-11 No. 333-146341) and related Prospectus of KBS Real Estate Investment Trust II, Inc. for the registration of 280,000,000 shares of its common stock and to the incorporation by reference therein of (i) our report dated March 23, 2010 with respect to consolidated financial statements and schedule of KBS Real Estate Investment Trust II, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2009, filed with the Securities and Exchange Commission; (ii) our report dated September 30, 2008 with respect to the statement of revenues over certain operating expenses of Mountain View Corporate Center included in its Current Report (Form 8-K) for the year ended December 31, 2007, filed with the Securities and Exchange Commission; (iii) our report dated October 14, 2008 with respect to the statement of revenues over certain operating expenses of Campus Drive Buildings included in its Current Report (Form 8-K) for the year ended December 31, 2007, filed with the Securities and Exchange Commission; (iv) our report dated October 16, 2009 with respect to the statement of revenues over certain operating expenses of the Willow Oaks Corporate Center included in its Current Report (Form 8-K) for the year ended December 31, 2008, filed with the Securities and Exchange Commission; (v) our report dated March 25, 2010 with respect to the statement of revenues over certain operating expenses of Pierre Laclede Center included in its Current Report (Form 8-K) for the year ended December 31, 2009, filed with the Securities and Exchange Commission; (vi) our report dated March 25, 2010 with respect to the statement of revenues over certain operating expenses of One Main Place included in its Current Report (Form 8-K) for the year ended December 31, 2009, filed with the Securities and Exchange Commission; and, (vii) our report dated September 27, 2010 with respect to the statement of revenues over certain operating expenses of 300 N. LaSalle Building included in its Current Report (Form 8-K) for the year ended December 31, 2009, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Irvine, California

October 6, 2010