KBS Real Estate Investment Trust II, Inc. (Form: 10-K, Received: 03/13/2019 17:22:13)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-K

______________________________________________________

(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-53649

______________________________________________________

KBS REAL ESTATE INVESTMENT TRUST II, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________



Maryland		26-0658752
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
800 Newport Center Drive, Suite 700 Newport Beach, California		92660
(Address of Principal Executive Offices)		(Zip Code)

(949) 417-6500

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class		Name of Each Exchange on Which Registered
None		None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value per share

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Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment of this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes o No x

There is no established market for the Registrant’s shares of common stock. On December 8, 2017, the board of directors of the Registrant approved an estimated value per share of the Registrant’s common stock of $4.89 (unaudited) based on the estimated value of the Registrant’s assets less the estimated value of the Registrant’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017. For a full description of the methodologies used to value the Registrant’s assets and liabilities in connection with the calculation of the estimated value per share as of December 8, 2017, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017. On December 3, 2018, the board of directors of the Registrant approved an estimated value per share of the Registrant’s common stock of $4.95 (unaudited) based on the estimated value of the Registrant’s assets less the estimated value of the Registrant’s liabilities, divided by the number of shares outstanding, all as of September 30, 2018. For a full description of the methodologies used to value the Registrant’s assets and liabilities in connection with the calculation of the estimated value per share as of December 3, 2018, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” in this Annual Report on Form 10-K.

There were approximately 187,139,594 shares of common stock held by non-affiliates as of June 30, 2018, the last business day of the Registrant’s most recently completed second fiscal quarter.

As of March 8, 2019 , there were 186,291,847 outstanding shares of common stock of the Registrant.

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TABLE OF CONTENTS



PART I			4
	ITEM 1.	BUSINESS	4
	ITEM 1A.	RISK FACTORS	10
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	31
	ITEM 2.	PROPERTIES	31
	ITEM 3.	LEGAL PROCEEDINGS	33
	ITEM 4.	MINE SAFETY DISCLOSURES	33
PART II			34
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	34
	ITEM 6.	SELECTED FINANCIAL DATA	44
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	45
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	59
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	60
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	60
	ITEM 9A.	CONTROLS AND PROCEDURES	60
	ITEM 9B.	OTHER INFORMATION	60
PART III			61
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	61
	ITEM 11.	EXECUTIVE COMPENSATION	66
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	67
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	68
	ITEM14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	73
PART IV			74
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	74
	ITEM 16.	FORM 10-K SUMMARY	79

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

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FORWARD-LOOKING STATEMENTS

Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS Real Estate Investment Trust II, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

•

All of our executive officers and 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, the entity that acted as our dealer manager and/or 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-sponsored programs and KBS-advised investors and conflicts in allocating time among us and these other programs and investors. These conflicts could result in unanticipated actions.


•	We pay substantial fees to and expenses of our advisor and its affiliates. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase the risk of loss to our stockholders.

•

We have used proceeds from financings, when necessary, to fund a portion of our distributions during our operational stage. We currently expect that our distributions will generally be paid from cash flow from operations and funds from operations from current or prior periods, except with respect to distributions paid from the net proceeds from the sale of real estate. We can give no assurance regarding the timing, amount or source of future distributions.

•

We depend on tenants for the revenue generated by our real estate investments and, accordingly, the revenue generated by our real estate investments is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in occupancy (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 investments in real estate 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 our stockholders. Revenues from our properties could decrease. Such events would make it more difficult for us to meet our debt service obligations and limit our ability to pay distributions to our stockholders.


•	Disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to implement our business strategy and generate returns to our stockholders.

•

Our portfolio loan facility bears interest at a variable rate of 145 basis points over one-month LIBOR, and we may incur additional variable rate debt in the future. The interest and related payments will vary with the movement of LIBOR or other indexes. Increases in one-month LIBOR or other indexes would increase the amount of our debt payments and could limit our ability to pay distributions to our stockholders.

•

Our share redemption program provides only for redemptions sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program document, and, together with redemptions sought in connection with a stockholder’s death, “Special Redemptions”). The dollar amounts available for such redemptions are determined by the board of directors and may be reviewed and adjusted from time to time. Additionally, redemptions are further subject to limitations described in our share redemption program. We currently do not expect to have funds available for ordinary redemptions in the future.

•

Since we have terminated our dividend reinvestment plan, we may have to use a greater proportion of our cash flow from operations and proceeds from the sales of real estate properties to meet cash requirements for general corporate purposes, including, but not limited to, capital expenditures, tenant improvement costs and leasing costs related to our real estate properties; reserves required by financings of our real estate properties; the repayment of debt; and Special Redemptions under our share redemption program. This may reduce cash available for distributions.

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•

During the year ended December 31, 2018 , we sold three office buildings that were part of an eight-building office campus and received the repayment on one real estate loan receivable. During the year ended December 31, 2017 , we sold two office properties. As a result of our disposition activity, our general and administrative expenses, which are not directly related to the size of our portfolio, have increased as a percentage of our cash flow from operations and will continue to increase to the extent we sell additional assets.

•

Although the Special Committee (defined below) engaged a financial advisor to assist us and the Special Committee with the exploration of strategic alternatives for us, we are not obligated to enter into any particular transaction or any transaction at all. While we anticipate that our exploration of strategic alternatives and marketing of some of our remaining assets for sale will result in additional stockholder liquidity, there is no assurance that this will be the case, nor can we give assurance that it will provide a return to stockholders that equals or exceeds our estimated value per share. We do not expect to provide additional updates regarding our review of strategic alternatives until such time, if any, that we are prepared to announce a material transaction or to conclude the strategic review.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of this Annual Report on Form 10-K.

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PART I

ITEM 1. BUSINESS

Overview

KBS Real Estate Investment Trust II, Inc. (the “Company”) was formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008 and it intends to continue to operate in such a manner. The Company invested in a diverse portfolio of real estate and real estate-related investments. As used herein, the terms “we,” “our” and “us” refer to the Company and as required by context, KBS Limited Partnership II, a Delaware limited partnership (the “Operating Partnership”), and their subsidiaries. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is managed by KBS Capital Advisors LLC (“KBS Capital Advisors”), our external advisor, pursuant to an advisory agreement. KBS Capital Advisors conducts our operations and manages our portfolio of real estate investments. Our advisor owns 20,000 shares of our common stock. We have no paid employees.

On September 27, 2007, we filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 280,000,000 shares of common stock for sale to the public, of which 200,000,000 shares were registered in our primary offering and 80,000,000 shares were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on December 31, 2010. We sold 182,681,633 shares of common stock in the primary offering for gross offering proceeds of $1.8 billion . We terminated the offering under our dividend reinvestment plan effective May 29, 2014. We sold 30,903,504 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $298.2 million . Also as of December 31, 2018 , we had redeemed 27,140,343 of the shares sold in our offering for $251.7 million .

As of December 31, 2018 , we owned eight office properties and an office campus consisting of five office buildings.

On January 27, 2016, our board of directors formed a special committee (the “Special Committee”) composed of all of our independent directors to explore the availability of strategic alternatives involving us. As part of the process of exploring strategic alternatives, on February 23, 2016, the Special Committee engaged Evercore Group L.L.C. (“Evercore”) to act as our financial advisor and to assist us and the Special Committee with this process. Under the terms of the engagement, Evercore provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Although the Special Committee engaged Evercore to assist us and the Special Committee with the exploration of strategic alternatives for us, we are not obligated to enter into any particular transaction or any transaction at all.

The Special Committee determined that it would be in our best interest and the best interest of our stockholders to market some of our assets for sale while it continues to explore strategic alternatives for us. Based on the results of this sales effort, the board of directors may conclude that it would be in our best interest and the best interest of our stockholders to sell additional assets and, depending on the scope of the proposed asset sales, thereafter to adopt a plan of liquidation that would involve the sale of our remaining assets. In the event of such a determination, the proposed plan of liquidation would be presented to our stockholders for approval. While we anticipate that our exploration of strategic alternatives and marketing of some of our remaining assets for sale will result in additional stockholder liquidity, there is no assurance that this will be the case, nor can we give assurance that it will provide a return to stockholders that equals or exceeds our estimated value per share.

Our charter requires that we seek stockholder approval of our liquidation if our shares of common stock are not listed on a national securities exchange by March 31, 2018, unless a majority of our independent directors determines that liquidation is not then in the best interest of our stockholders. On March 12, 2019, the conflicts committee unanimously determined to postpone approval of our liquidation while the Special Committee continues to explore strategic alternatives for us. Our charter requires that the conflicts committee revisit the issue of liquidation at least annually.

Our focus in 2019 is to: continue to strategically sell assets and consider special distributions to stockholders; negotiate lease renewals or new leases that facilitate the sales process and enhance property stability for prospective buyers; complete capital projects, such as renovations or amenity enhancements, to attract quality buyers; and finalize our assessment of strategic alternatives.

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Objectives and Strategies

Our primary investment objectives are:


•	to provide our stockholders with attractive and stable cash distributions; and


•	to preserve and return our stockholders’ capital contributions.

We have sought and will seek to achieve these objectives by managing our portfolio of real estate investments, which we acquired using a combination of equity raised in our initial public offering and debt financing.

Real Estate Portfolio

Real Estate Investments

We made investments in core properties, which are generally lower risk, existing properties with at least 80% occupancy and minimal near-term lease rollover. We diversified our portfolio by investment size, investment type, investment risk and geographic region. As of December 31, 2018 , our portfolio of real estate properties was composed of eight office properties and an office campus consisting of five office buildings encompassing 4.6 million rentable square feet.

We originally intended to hold our core properties for four to seven years. However, economic and market conditions have influenced and may continue to influence us to hold our investments for different periods of time, and, as discussed above, the Special Committee is currently exploring the availability of strategic alternatives for us.

KBS Capital Advisors periodically performs a hold-sell analysis on each asset in our portfolio in order to determine a reasonable time to sell the asset and generate a strong return for our stockholders. Periodic reviews of each asset focus on the remaining available value enhancement opportunities for the asset, the demand for the asset in the marketplace, market conditions and our overall portfolio objectives to determine if the sale of the asset, whether via an individual sale or as part of a portfolio sale or merger, would generate a favorable return to our stockholders.

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The following charts illustrate the geographic diversification of our real estate investments based on total leased square feet and total annualized base rent as of December 31, 2018 :

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⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

We have a stable tenant base and we have tried to diversify our tenant base in order to limit exposure to any one tenant or industry. As of December 31, 2018 , our portfolio of real estate properties was 76% occupied. Three tenants leasing space in our portfolio of real estate properties represented more than 10% of our total annualized base rent. See Item 2, “Properties — Concentration of Credit Risks.”

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Our top ten tenants leasing space in our portfolio of real estate properties represented approximately 53.5% of our total annualized base rent as of December 31, 2018 . The chart below illustrates the diversity of tenant industries in our portfolio of real estate properties based on total annualized base rent as of December 31, 2018 :

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⁽²⁾ “Other Professional Services” includes professional services from several industries that are each individually less than 6% of total.

⁽³⁾ “Other” includes any industry less than 2% of total.

As of December 31, 2018 , our highest tenant industry concentrations (greater than 10% of annualized base rent) of our real estate portfolio were as follows:



Industry	Number of Tenants	Annualized Base Rent ⁽¹⁾ (in thousands)		Percentage of Annualized Base Rent
Finance	32	$	26,807	25.3	%
Legal Services	32	14,711		13.9	%
Mining, Oil & Gas Extraction	3	13,711		12.9	%
Educational Services	1	11,728		11.1	%
		$	66,957	63.2	%

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The total cost of our real estate portfolio as of December 31, 2018 was $1.4 billion.

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Financing Objectives

We financed the majority of our real estate investments with a combination of the proceeds we received from our initial public offering and debt. We used debt financing to increase the amount available for investment and to increase overall investment yields to us and our stockholders. As of December 31, 2018 , the weighted-average interest rate on our debt was 3.8%.

We borrow funds at both fixed and variable rates; as of December 31, 2018 , we had $41.9 million and $375.0 million of fixed and variable rate debt outstanding, respectively. As of December 31, 2018 , the interest rate of our fixed debt was 3.5% and the interest rate of our variable debt was 3.8%. The interest rate represents the actual interest rate in effect as of December 31, 2018 , using interest rate indices as of December 31, 2018 , where applicable.

The following is a schedule of maturities, including principal amortization payments, for all of our notes payable outstanding as of December 31, 2018 (in thousands):



2019	$	1,304
2020	415,564
	$	416,868

We plan to exercise our extension options available under our loan agreements, if applicable, or pay off or refinance the related notes payable prior to their maturity dates.

We limit our total liabilities to 75% of the cost (before deducting depreciation and other noncash reserves) of all of our tangible assets; however, we may exceed that limit if the majority of the conflicts committee approves each borrowing in excess of this 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. We did not exceed this limitation on borrowings during any quarter of 2018. As of December 31, 2018 , our borrowings and other liabilities were approximately 33% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets, respectively.

Economic Dependency

We are dependent on our advisor for certain services that are essential to us, including the management of the daily operations of our real estate investment portfolio; the disposition of real estate investments; and other general and administrative responsibilities. In the event that our advisor is unable to provide any of these services, we will be required to obtain such services from other sources.

Competitive Market Factors

We face competition from various entities for prospective tenants and to retain our current tenants, 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. As a result of their greater resources, those entities may have more flexibility than we do in their ability to offer rental concessions to attract and retain tenants. This could put pressure on our ability to maintain or raise rents and could adversely affect our ability to attract or retain tenants. As a result, our financial condition, results of operations, cash flow, ability to satisfy our debt service obligations and ability to pay distributions to our stockholders may be adversely affected.

We also face competition from many of the types of entities referenced above regarding the disposition of properties. These entities may possess properties in similar locations and/or of the same property types as ours and may be attempting to dispose of these properties at the same time we are attempting to dispose of some of our properties, providing potential purchasers with a larger number of properties from which to choose and potentially decreasing the sales price for such properties. Additionally, these entities may be willing to accept a lower return on their individual investments, which could further reduce the sales price of such properties. This competition could decrease the sales proceeds we receive for properties that we sell, assuming we are able to sell such properties, which could adversely affect our cash flows and the overall return for our stockholders.

Although we believe that we are well-positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively.

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Compliance with Federal, State and Local Environmental Law

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 properties or restrictions on the manner in which properties 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 damage. The cost 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 our cash available for distribution to our stockholders.

All of our properties were subject to Phase I environmental assessments prior to the time they were acquired. Some of our properties are subject to potential environmental liabilities arising primarily from historic activities at or in the vicinity of the properties. Based on our environmental diligence and assessments of our properties and our purchase of pollution and remediation legal liability insurance with respect to some of our properties, we do not believe that environmental conditions at our properties are likely to have a material adverse effect on our operations.

Industry Segments

We invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments. Our real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. As of December 31, 2018 , we aggregated our investments in real estate properties into one reportable business segment.

Employees

We have no paid employees. The employees of our advisor and its affiliates provide management, disposition, advisory and certain administrative services for us.

Principal Executive Office

Our principal executive offices are located at 800 Newport Center Drive, Suite 700, Newport Beach, CA 92660. Our telephone number, general facsimile number and website address are (949) 417-6500, (949) 417-6501 and www.kbsreitii.com , respectively.

Available Information

Access to copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other filings with the SEC, including amendments to such filings, may be obtained free of charge from the following website, www.kbsreitii.com , or through the SEC’s website, www.sec.gov . These filings are available promptly after we file them with, or furnish them to, the SEC.

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ITEM 1A.	RISK FACTORS

The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements. 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, they will likely sell them at a substantial discount to the estimated value per share.

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, our stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase standards. Any sale must comply with applicable state and federal securities laws. Our charter prohibits the ownership of more than 9.8% of our stock by any person, unless exempted by our board of directors, which may inhibit large investors from purchasing our shares.

On May 15, 2014, our board of directors amended and restated our share redemption program to provide only for redemptions sought in connection with a Special Redemption. Such Special Redemptions are subject to an annual dollar limitation. On December 3, 2018, our board of directors approved an annual dollar limitation of $10.0 million in the aggregate for the calendar year 2019 (subject to review and adjustment during the year by the board of directors), and further subject to the limitations described in the share redemption program.

We do not currently expect to have funds available for ordinary redemptions in the future. Thus, until further notice, and except with respect to Special Redemptions, stockholders will not be able to sell any of their shares back to us pursuant to our share redemption program. In addition, even if we were to resume ordinary redemptions, our share redemption program includes numerous restrictions that would limit a stockholder’s ability to sell his or her shares. In its sole discretion, our board of directors may amend, suspend or terminate our share redemption program upon ten business days’ notice, and we may increase or decrease the funding available for the redemption of shares under the program upon ten business days’ notice to stockholders.

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 estimated value per share. It is also likely that our shares would not be accepted as the primary collateral for a loan.

We face significant competition for tenants and in the disposition of our assets, which may limit our ability pay distributions to stockholders or reduce the value of an investment in us.

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Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates and commercial real estate values and our ability to refinance or secure debt financing, service future debt obligations, or pay distributions to our stockholders.

We relied on debt financing to finance our real estate properties and we may have difficulty refinancing some of our debt obligations prior to or at maturity or we may not be able to refinance these obligations at terms as favorable as the terms of our existing indebtedness. We also may be unable to obtain additional debt financing on attractive terms or at all. If we are not able to refinance our existing indebtedness on attractive terms at the various maturity dates, we may be forced to dispose of some of our assets. Volatile market conditions and a challenging global macro-economic environment may interfere with the implementation of our business strategy and/or force us to modify it.

Disruptions in the financial markets and uncertain economic conditions could adversely affect the values of our investments. Any disruption to the debt and capital markets could result in fewer buyers seeking to acquire commercial properties and possible increases in capitalization rates and lower property values. Furthermore, any decline in 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, which 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; and/or


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

All of these factors could reduce our stockholders’ return and decrease the value of an investment in us.

Because we depend 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.

We depend on our advisor to manage our operations and our portfolio of assets. Our advisor depends upon the fees and other compensation that it receives from us, KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”), KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”), KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”) and any future KBS-sponsored programs that it advises in connection with the purchase, management and sale of assets to conduct its operations. Any adverse changes to our relationship with, or the financial condition of, our advisor and its affiliates could hinder their ability to successfully manage our operations and our portfolio of 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.

Our organizational documents permit us, to the extent permitted by Maryland law, to pay distributions from any source. If we fund distributions from financings or sources other than our cash flow from operations, the overall return to our stockholders may be reduced. To date, we have funded total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with cash flow from operations, debt financing, proceeds from the payoff or sale of our real estate loans receivable and proceeds from the sales of real estate properties. Other than distributions paid from the sale of assets, we currently expect that our distributions will generally be paid from cash flow from operations and funds from operations from current or prior periods. If we fund distributions from borrowings, our interest expense and other financing costs, as well as the repayment of such borrowings, will reduce our earnings and cash flow from operations available for distribution in future periods. If we fund distributions from the sale of assets, this will affect our ability to generate cash flow from operations in future periods. In addition, 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. There is no limit on the amount of distributions we may fund from sources other than from cash flow from operations. We can give no assurance regarding the timing, amount or source of future distributions. For the year ended December 31, 2018 , we paid aggregate distributions of $46.3 million , all of which were paid in cash.

Funds from operations and cash flow from operations during the year ended December 31, 2018 were $53.8 million and $56.4 million , respectively. We funded our total distributions paid with our current period cash flow from operations. For a reconciliation of funds from operations to net income, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations and Modified Funds from Operations.”

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Our real estate properties generate cash flow in the form of rental revenues and tenant reimbursements. As a result of our recent dispositions, our cash flow from operations has decreased. Our general and administrative expenses are not directly related to the size of our portfolio and thus will not decrease proportionately. As a result, our general and administrative expenses as a percentage of cash flow from operations has increased and, depending on the amount of assets we sell in the future, this increase could become more significant.

The loss of or the inability to retain or obtain key real estate and debt finance professionals at our advisor could delay or hinder implementation of our investment management and disposition strategies, which could limit our ability to pay 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 and Charles J. Schreiber, Jr., each of whom would be difficult to replace. Neither we nor our advisor nor its affiliates have employment agreements with these individuals and they may not remain associated with us, our advisor or its affiliates. If any of these persons were to cease their association with us, our advisor or its affiliates, we may be unable to find suitable replacements and our operating results could suffer as a result. 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 have established 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 tenants in such regions. We may be unsuccessful in maintaining 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 management and disposition strategies could be delayed or hindered, and the value of our stockholders’ investments 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 our independent directors if they negligently cause us to incur losses.

Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the company’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter provides that none of our independent directors 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 face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

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A security breach or other significant disruption involving our IT networks and related systems could:


•	disrupt the proper functioning of our networks and systems and therefore our operations;


•	result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines;


•	result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;


•	result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes;


•	require significant management attention and resources to remedy any damages that result;


•	subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or


•	damage our reputation among our stockholders.

Any or all of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.

We can give no assurances regarding any particular transaction in connection with the exploration of strategic alternatives and the marketing of some of our assets for sale.

Although the Special Committee engaged Evercore to assist us and the Special Committee with the exploration of strategic alternatives for us, we are not obligated to enter into any particular transaction or any transaction at all. The Special Committee determined that it would be in our best interest and the best interest of our stockholders to market some of our assets for sale while it continues to explore strategic alternatives for us. Based on the results of this sales effort, the board of directors may conclude that it would be in our best interest and the best interest of our stockholders to sell additional assets and, depending on the scope of the proposed asset sales, thereafter to adopt a plan of liquidation that would involve the sale of our remaining assets. In the event of such a determination, the proposed plan of liquidation would be presented to our stockholders for approval. While we anticipate that our exploration of strategic alternatives and marketing of some of our remaining assets for sale will result in additional stockholder liquidity, there is no assurance that this will be the case, nor can we give assurance that it will provide a return to stockholders that equals or exceeds our estimated value per share.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland shall be the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders with respect to our company, our directors, our officers or our employees (we note we currently have no employees). This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable for disputes with us or our directors, officers or employees, which may discourage meritorious claims from being asserted against us and our directors, officers and employees. Alternatively, if a court were to find this provision of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. We adopted this provision because we believe it makes it less likely that we will be forced to incur the expense of defending duplicative actions in multiple forums and less likely that plaintiffs’ attorneys will be able to employ such litigation to coerce us into otherwise unjustified settlements, and we believe the risk of a court declining to enforce this provision is remote, as the General Assembly of Maryland has specifically amended the Maryland General Corporation Law to authorize the adoption of such provisions.

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Risks Related to Conflicts of Interest

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

All of our executive officers and 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 KBS Capital Advisors, our advisor, KBS Capital Markets Group LLC (“KBS Capital Markets Group”), the entity that acted as the dealer manager for our primary offering, and/or other KBS-affiliated 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 its affiliates. 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;


•	sales of properties and other investments, which entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees; 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 and would terminate the asset management fee.

In addition, the fees our advisor receives in connection with the management of our 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.

KBS Capital Advisors faces conflicts of interest relating to the leasing and disposition of properties and such conflicts may not be resolved in our favor, which could limit our ability to pay distributions to our stockholders and reduce our stockholders’ overall investment return.

We and other KBS-sponsored programs and KBS-advised investors rely on our sponsor, KBS Holdings LLC, and other key real estate professionals at our advisor, including Messrs. Bren, Hall, McMillan and Schreiber, to supervise the property management and leasing of properties. If the KBS team of real estate professionals directs creditworthy prospective tenants to properties owned by another KBS-sponsored program or KBS-advised investor when it 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.

In addition, we and other KBS-sponsored programs and KBS-advised investors rely on our sponsor and other key real estate professionals at our advisor to sell our properties. These KBS-sponsored programs and KBS-advised investors may possess properties in similar locations and/or of the same property types as ours and may be attempting to sell these properties at the same time we are attempting to sell some of our properties. If our advisor directs potential purchasers to properties owned by another KBS-sponsored program or KBS-advised investor when it could direct such purchasers to our properties, we may be unable to sell some or all of our properties at the time or at the price we otherwise would, which could limit our ability to pay distributions and reduce our stockholders’ overall investment return.

Our sponsor, our officers, our advisor and the real estate, debt finance, management and accounting professionals assembled by our advisor face competing demands on their time and this may cause our operations and our stockholders’ investment to suffer.

We rely on our sponsor, our officers, our advisor and the real estate, debt finance, management and accounting professionals that our advisor retains, including Messrs. Bren, Hall, McMillan, Schreiber and Jeffrey K. Waldvogel and Ms. Stacie K. Yamane, to provide services to us for the day-to-day operation of our business. KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT are also advised by KBS Capital Advisors and rely on our sponsor and many of the same real estate, debt finance, management and accounting professionals, as will future KBS–sponsored programs and KBS-advised investors. Further, our officers and directors are also officers and/or directors of some or all of the other public KBS–sponsored programs. Messrs. Bren, Schreiber and Waldvogel and Ms. Yamane are executive officers of KBS REIT III and KBS Growth & Income REIT. Messrs. Hall, McMillan and Waldvogel and Ms. Yamane are executive officers of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II. Messrs. Bren, Schreiber and Waldvogel and Ms. Yamane are executive officers of KBS Realty Advisors and its affiliates, the advisors of other KBS–sponsored programs and the investment advisors to KBS-advised investors.

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As a result of their interests in other KBS-sponsored programs, their obligations to KBS-advised investors and the fact that they engage in and will continue to engage in other business activities on behalf of themselves and others, Messrs. Bren, Hall, McMillan, Schreiber and Waldvogel and Ms. Yamane face conflicts of interest in allocating their time among us, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT, KBS Capital Advisors, other KBS-sponsored programs and KBS-advised investors, as well as other business activities in which they are involved. In addition, our advisor and KBS Realty Advisors and their affiliates share many of the same key 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 these events occur, the returns on our investments, and the value of our stockholders’ investment, may decline.

All of our executive officers and 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, which could hinder our ability to implement our business strategy and to generate returns to our stockholders.

All of our executive officers and 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 and other KBS-affiliated entities. Through KBS-affiliated entities, some of these persons also serve as the investment advisors to KBS-advised investors and, through KBS Capital Advisors and KBS Realty Advisors, these persons serve as the advisor to KBS Strategic Opportunity REIT, KBS REIT III, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT and other KBS-sponsored programs. As a result, they owe fiduciary duties to each of these entities, their stockholders, members and limited partners and their 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 leasing opportunities. Further, Messrs. Bren, Hall, McMillan and Schreiber and existing and future KBS-sponsored programs and KBS-advised investors generally are not and will not be 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. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to pay distributions to our stockholders and to maintain or increase the value of our assets.

Our board of directors’ loyalties to KBS REIT III, KBS Growth & Income REIT 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 III and two of our directors are also directors of KBS Growth & Income REIT. The loyalties of our directors serving on the boards of directors of KBS REIT III and KBS Growth & Income REIT or possibly on the boards of directors of future KBS-sponsored programs, may influence the judgment of our board of directors when considering issues for us that also may affect other KBS-sponsored programs, such as the following:

•

We could enter into transactions with other KBS-sponsored programs, such as property sales or financing arrangements. Such transactions might entitle our advisor or its affiliates to fees and other compensation from both parties to the transaction. For example, property sales to other KBS-sponsored programs might entitle our advisor or its affiliates to acquisition fees in connection with its services to the purchaser in addition to disposition and other fees that we might pay to our advisor in connection with such transaction. Decisions of our board, the conflicts committee or the Special Committee regarding the terms of those transactions may be influenced by our board’s or the conflicts committee’s loyalties to such other KBS-sponsored programs.


•	A decision of the board, the conflicts committee or the Special 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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Like us, KBS REIT III compensates each independent director with an annual retainer of $135,000, as well as compensation for attending meetings as follows: (i) each member of the audit committee and conflicts committee is paid $10,000 annually for service on such committees (except that the chair of each of the audit committee and conflicts committee is paid $20,000 annually for service as the chair of such committees), (ii) after the tenth board of directors meeting of each calendar year, each independent director is paid (a) $2,500 in cash for each in-person board of directors meeting attended for the remainder of the calendar year and (b) $2,000 in cash for each teleconference board of directors meeting attended for the remainder of the calendar year, (iii) after the tenth audit committee meeting of each calendar year, each member of the audit committee is paid (a) $2,500 in cash for each in-person audit committee meeting attended for the remainder of the calendar year and (b) $2,000 in cash for each teleconference audit committee meeting attended for the remainder of the calendar year (except that the audit committee chair is paid $3,000 for each in-person and teleconference audit committee meeting attended after the tenth audit committee meeting of each calendar year, for the remainder of each calendar year), and (iv) after the tenth conflicts committee meeting of each calendar year, each member of the conflicts committee is paid (a) $2,500 in cash for each in-person conflicts committee meeting attended for the remainder of the calendar year and (b) $2,000 in cash for each teleconference conflicts committee meeting attended for the remainder of the calendar year (except that the conflicts committee chair is paid $3,000 for each in-person and teleconference conflicts committee meeting attended after the tenth conflicts committee meeting of each calendar year, for the remainder of each calendar year).

In addition, we pay independent directors for attending other committee meetings as follows: each independent director is paid $2,000 in cash for each in-person and teleconference committee meeting attended (except that the committee chair is paid $3,000 for each in-person and teleconference committee meeting attended).

Like us, KBS REIT III reimburses directors for reasonable out-of-pocket expenses incurred in connection with attendance at board of directors meetings and committee meetings.

Risks Related to Our Corporate Structure

Ownership limitations may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

In order for us to qualify as a REIT for each taxable year, no more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of any calendar year. “Individuals” for this purpose include natural persons, and some entities such as private foundations. To preserve our REIT qualification, our charter generally prohibits any person from directly or indirectly owning more than 9.8% in value of our capital stock. This ownership limitation could have the effect of delaying, deferring or preventing a takeover or other transaction including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets), in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.

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.

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, 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.

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Our share redemption program only provides for Special Redemptions. We currently do not expect to have funds available for ordinary redemptions in the future.

Our share redemption program only provides for Special Redemptions. Such Special Redemptions are subject to an annual dollar limitation. On December 3, 2018, our board of directors approved an annual dollar limitation of $10.0 million in the aggregate for the calendar year 2019 (subject to review and adjustment during the year by the board of directors), and further subject to the limitations described in the share redemption program. Based on historical redemption activity, we believe the $10.0 million redemption limitation for the calendar year 2019 will be sufficient for Special Redemptions. During each calendar year, the annual dollar limitation for the share redemption program will be reviewed and may be adjusted from time to time.

We currently do not expect to have funds available for ordinary redemptions in the future. Thus, until further notice, and except with respect to Special Redemptions, stockholders will not be able to sell any of their shares back to us pursuant to our share redemption program. In addition, even if we were to resume ordinary redemptions, our share redemption program includes numerous restrictions that would limit a stockholder’s ability to sell his or her shares, including that 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. In its sole discretion, our board of directors may amend, suspend or terminate our share redemption program upon ten business days’ notice, and we may increase or decrease the funding available for the redemption of shares under the program upon ten business days’ notice to stockholders.

Pursuant to our share redemption program, the redemption price per share for eligible redemptions is equal to the estimated value per share. On December 3, 2018, our board of directors approved an estimated value per share of our common stock of $4.95 (unaudited) based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares outstanding, all as of September 30, 2018. Therefore, commencing with the December 31, 2018 redemption date, the redemption price for all shares eligible for redemption is $4.95 (unaudited) per share. For a full description of the methodologies and assumptions used to value our assets and liabilities in connection with the calculation of the estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”

The estimated value per share of our common stock may not reflect the value that stockholders will receive for their investment and does not take into account how developments subsequent to the valuation date related to individual assets, the financial or real estate markets or other events may have increased or decreased the value of our portfolio.

On December 3, 2018, our board of directors approved an estimated value per share of our common stock of $4.95 (unaudited) based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares outstanding, all as of September 30, 2018. We provided this estimated value per share to assist broker-dealers that participated in our now-terminated initial public offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers (“NASD”) Conduct Rule 2340, as required by the Financial Industry Regulatory Authority (“FINRA”). This valuation was performed in accordance with the provisions of and also to comply with Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs , issued by the Institute for Portfolio Alternatives (formerly known as the Investment Program Association) (“IPA”) in April 2013 (the “IPA Valuation Guidelines”). The estimated value per share was based on the recommendation and valuation performed by our advisor. We engaged CBRE, Inc. (“CBRE”) an independent, third-party valuation firm, to provide appraisals for our nine real estate properties.

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As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties using different assumptions and estimates could derive a different estimated value per share of our common stock, and this difference could be significant. The estimated value per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to U.S. generally accepted accounting principles (“GAAP”), nor does it represent a liquidation value of our assets and liabilities or the price at which our shares of common stock would trade on a national securities exchange. The estimated value per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated value per share also did not take into account estimated disposition costs and fees for real estate properties that were not under contract to sell, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of debt. We have generally incurred disposition costs and fees related to the sale of each real estate property since inception of 1.7% to 4.4% of the gross sales price less concessions and credits, with the weighted average being approximately 2.4%. If this range of disposition costs and fees was applied to the estimated value of our real estate properties, which does not include these costs and fees in the appraised values, the resulting impact on the estimated value per share would be a decrease of $0.12 to $0.30 per share. Accordingly, with respect to the estimated value per share, we can give no assurance that:


•	a stockholder would be able to resell his or her shares at this estimated value per share;


•	a stockholder would ultimately realize distributions per share equal to our estimated value per share upon liquidation of our assets and settlement of our liabilities or a sale of our company;


•	our shares of common stock would trade at the estimated value per share on a national securities exchange;


•	an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or


•	the methodology used to calculate our estimated value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.

For a full description of the methodologies and assumptions used to value our assets and liabilities in connection with the calculation of the estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.” We currently expect to utilize our advisor and/or an independent valuation firm to update the estimated value per share no later than December 2019.

In addition, the value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets and due to other factors. As such, the estimated value per share does not take into account developments in our portfolio since December 3, 2018, including:


•	potential future asset sales at values different from those used in the determination of estimated value per share as well as any impairment charges related to these or other assets as a result of changes in the expected hold period, or the estimated cash flows for or future expenses related to these assets;


•	any increases or decreases in value of any of our real estate investments;


•	any disruptions in the real estate and financial markets or general economic conditions;


•	any unforeseen capital expenditure requirements; or


•	any inability to meet our existing debt service obligations, or to repay or refinance such obligations on attractive terms or at all at or prior to maturity.

Our stockholders’ 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. Our board may elect to (i) sell additional shares in future public offerings, (ii) issue equity interests in private offerings, or (iii) issue shares to our advisor, or its successors or assigns, in payment of an outstanding obligation. To the extent we issue additional equity interests, our stockholders’ 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 stockholders may also experience dilution in the book value and fair value of their shares and in the earnings and distributions per share.

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

In addition to disposition fees we may pay to our advisor in connection with the disposition of our assets, we may also pay other significant fees during our liquidation stage. Although most of the fees expected to be paid during our liquidation stage are contingent on our stockholders first receiving agreed-upon investment returns, the investment-return thresholds may be reduced with the approval of our conflicts committee and subject to the other limitations in our charter.

Therefore, these fees increase the risk that the cash available for distribution to common stockholders upon a liquidation of our portfolio would be less than stockholders paid for our shares, after taking into account any special distributions or liquidating distributions received by our stockholders. These substantial fees and other payments also increase the risk that our stockholders will not be able to resell their shares at a profit.

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 negotiations. 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, asset sales 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 flow or decline in value, or both, which would limit our ability to pay distributions to our stockholders and could reduce the value of our stockholders’ investment in us.

Although we are not currently 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.

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General Risks Related to Investments in Real Estate

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

Our operating results and the performance of our properties are subject to the risks typically associated with real estate, any of which could decrease the value of our investments and could weaken our operating results, including:


•	downturns in national, regional and local economic conditions;


•	competition from other office buildings;


•	adverse local conditions, such as oversupply or reduction in demand for office 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 interest rates and the availability of permanent mortgage financing, which may render the sale of a property difficult or unattractive;


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


•	natural disasters such as hurricanes, earthquakes and floods;


•	acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;


•	the potential for uninsured or underinsured property losses; 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 flow 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 in us.

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

Since breaking escrow in June 2008, we made acquisitions of real estate and real estate-related assets based on an underwriting analysis with respect to each asset and how the asset fits into our portfolio. If our assets do not perform as expected we may have less cash flow from operations available to fund distributions and stockholders’ returns may be reduced.

A significant percentage of our assets is invested in the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Union Bank Plaza and Corporate Technology Centre and the value of our stockholders’ investment in us will fluctuate with the performance of these investments.

The 100 & 200 Campus Drive Buildings represented 11.9% of our total assets and represented approximately 13.2% of our total annualized base rent as of December 31, 2018. The 300-600 Campus Drive Buildings represented 12.1% of our total assets and represented approximately 16.8% of our total annualized base rent as of December 31, 2018. Union Bank Plaza represented approximately 13.6% of our total assets and represented approximately 19.0% of our total annualized base rent as of December 31, 2018. Corporate Technology Centre represented approximately 11.6% of our total assets and represented approximately 0% of our total annualized base rent as of December 31, 2018. The lease for the single tenant that occupied Corporate Technology Centre expired on October 31, 2018. As of March 12, 2019, we are in the process of renovating and rebranding this property, and the property is currently vacant. We can give no assurance that we will be successful in our strategy to renovate and re-lease Corporate Technology Centre. If we are not successful in our strategy to renovate and re-lease this property, our operating results will suffer and the resale value of the property will be diminished.

The geographic concentration of our portfolio makes us particularly susceptible to adverse economic developments in the Florham Park, New Jersey, Los Angeles and San Jose real estate markets, respectively. Any adverse economic or real estate developments in these markets, 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 pay distributions to our stockholders.

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Because of the concentration of a significant portion of our assets in two geographic areas, any adverse economic, real estate or business conditions in these areas could affect our operating results and our ability to make distributions to our stockholders.

As of December 31, 2018 , our real estate properties in California and New Jersey represented 25.2% and 24.0% of our total assets, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse economic developments in the California and New Jersey real estate markets. Any adverse economic or real estate developments in these markets, 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 pay distributions to stockholders.

Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties and adversely affect our cash flow and ability to pay distributions to our stockholders.

A property may incur vacancies either by the expiration and non-renewal 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 for distribution to our 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 in the resale value of a property could also reduce the value of our stockholders’ investment in us. See the discussion of Corporate Technology Centre above under “A significant percentage of our assets is invested in the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Union Bank Plaza and Corporate Technology Centre and the value of our stockholders’ investment in us will fluctuate with the performance of these investments.”

We depend on tenants for our revenue generated by our real estate investments and, accordingly, our ability to pay distributions to our stockholders is partially dependent upon the success and economic viability of our tenants and our ability to retain and attract tenants. Non-renewals, terminations or lease defaults could reduce our net income and limit our ability to pay distributions to our stockholders.

The success of our real estate investments materially depends upon the financial stability of the tenants leasing the properties we own. The inability of a single major tenant or a significant number of smaller tenants to meet their rental obligations would significantly lower our net income. A non-renewal after the expiration of a lease term, termination or default by a tenant on its lease payments to us 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-leasing 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 only be able to renew their leases on terms that are less favorable to us than the terms of their initial leases. When tenants exercise early termination rights, our cash flow and earnings will be adversely affected to the extent that we are unable to generate an equivalent amount of net rental income by leasing the vacated space to new third party tenants.

Further, some of our properties 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. If a tenant does not renew a lease or terminates or defaults on a lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss.

See the discussion of Corporate Technology Centre above under “A significant percentage of our assets is invested in the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Union Bank Plaza and Corporate Technology Centre and the value of our stockholders’ investment in us will fluctuate with the performance of these investments.”

The bankruptcy or insolvency of our tenants or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.

Any bankruptcy filings by or relating to any of our tenants could bar us from collecting pre-bankruptcy debts from that tenant, unless we receive an order permitting us to do so from the bankruptcy court. A tenant bankruptcy could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold against a bankrupt entity may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may recover substantially less than the full value of any unsecured claims, which would harm our financial condition.

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Our inability to sell a property at the time and on the terms we want could limit our ability to pay cash distributions to our stockholders and could reduce the value of our stockholders’ investment in us.

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, limit our ability to pay distributions to our stockholders and reduce the value of our stockholders’ investment in us.

Costs imposed pursuant to laws and governmental regulations may reduce our net income and our cash available for distribution 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 pay distributions to our stockholders and may reduce the value of our stockholders’ investment.

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 our cash 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 damage. 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 our cash available for distribution to our stockholders. All of our properties were subject to Phase I environmental assessments prior to the time they were acquired.

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

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended (the “Disabilities Act”). 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 distribution to our stockholders.

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

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 policies relating to such events 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 will reduce the value of our stockholders’ investment. In addition, other than any working capital reserve or other reserves we may establish, we have limited sources 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 our stockholders.

Terrorist attacks and other acts of violence or war may affect the markets in which we 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. We have invested in major metropolitan markets. Insurance risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims or 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 refinancing 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 Associated with Debt Financing

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

We obtain lines of credit and long-term financing secured by our properties and other assets. We have acquired many of our 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 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). However, we can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms or at all.

If there is a shortfall between the cash flow generated by a mortgaged property and the cash flow needed to service mortgage debt on that property, then the amount of cash available for distribution to our 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 have given and may give full or partial guarantees to lenders of mortgage or other 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 all or a part of the debt or other amounts related to the debt if it is not paid by such entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a mortgage secured by a single property could affect mortgages secured by other properties.

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High mortgage rates or changes in underwriting standards may make it difficult for us to refinance properties, which could reduce our cash flow from operations and the amount of cash available for distribution to our stockholders.

We may be unable to refinance part or all of our mortgage debt when it becomes due or we may be unable to refinance mortgage debt 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.

Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to pay 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 into which we enter may contain covenants that limit our ability to further mortgage a property or that prohibit us from discontinuing insurance coverage or replacing our advisor. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives and limit our ability to pay distributions to our stockholders.

Increases in interest rates and changes to the LIBOR settling process could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders.

As of December 31, 2018 , we had total outstanding debt of approximately $416.9 million , including approximately $375.0 million of debt subject to variable interest rates, and we may incur additional indebtedness in the future. Interest we pay reduces our cash available for distributions. Since we have incurred and may continue to incur variable rate debt, increases in interest rates raise our interest costs, which reduces our cash flows and our ability to make distributions to you. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to sell one or more of our properties at times which may not permit realization of the maximum return on such investments.

Additionally, we pay interest under our portfolio loan facility based on the London Interbank Offered Rate (“LIBOR”). In July 2017, the Financial Conduct Authority announced that by the end of 2021, LIBOR would be replaced with a more reliable alternative, due to LIBOR rate manipulation and the resulting fines assessed on several major financial institutions over the past several years. It is unclear whether new methods of calculating LIBOR will be established, such that LIBOR may continue to exist after 2021. At this time, we do not know what changes will be made by the Financial Conduct Authority, or how the changes to or replacement of LIBOR will affect the interest we pay on our debt instruments. Additionally, there is no guarantee that a transition from LIBOR to an alternative rate will not result in financial market disruptions, significant increases in benchmark interest rates or borrowing costs, any of which may have an adverse effect on us.

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

We limit our total liabilities to 75% of the cost (before deducting depreciation and other noncash reserves) of our tangible assets; however, we may exceed this limit if the majority of the conflicts committee approves each borrowing in excess of this 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. As of December 31, 2018 , our borrowings and other liabilities were approximately 33% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets, respectively. 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 to our stockholders and could result in a decline in the value of our stockholders’ investment in us.

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Federal Income Tax Risks

Failure to qualify as a REIT would reduce our net earnings available for 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 Internal Revenue 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 (a maximum rate of 35% applies through 2017 and 21% for subsequent years). In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for 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 pay distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

Failure to qualify as a REIT would subject us to federal income tax, which would reduce the cash available for distribution to our stockholders.

We believe that we have operated and will continue to operate in a manner that will allow us to continue to qualify as a REIT for federal income tax purposes commencing with the taxable year ended December 31, 2008. However, the federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis. Accordingly, we cannot be certain that we will be successful in operating so we can remain qualified as a REIT. While we intend to continue to operate so that we will 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 that we will so qualify for any particular year. If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we would be required to pay federal income tax on our taxable income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would decrease the amount of our income available for distribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for certain statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders. Unless our failure to qualify as a REIT were excused under federal tax laws, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to federal, state, local or other tax liabilities that reduce our cash flow and our ability to pay 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 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 avoid the 100% tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable 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 or the sale met certain “safe harbor” requirements under the Internal Revenue Code.

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

We generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order for federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed taxable income. We intend to pay distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

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 pay distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirements 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 business 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 pay 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 reduce the value of our stockholders’ investment.

If our operating partnership fails to maintain its status as a partnership for federal income tax purposes, its income would be subject to taxation and our REIT status would be terminated.

We intend to maintain the status of our operating partnership as a partnership for federal income tax purposes. However, if the Internal Revenue Service were to successfully challenge the status of our operating partnership as a partnership, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that our operating partnership could make to us. This would also result in our losing REIT status and becoming subject to a corporate level tax on our own income. This would substantially reduce our cash available to pay distributions and the return on your investment. In addition, if any of the entities through which our operating partnership owns its properties, in whole or in part, loses its characterization as a partnership for federal income tax purposes, the underlying entity would become subject to taxation as a corporation, thereby reducing distributions to our operating partnership and jeopardizing our ability to maintain REIT status.

Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.

If (i) all or a portion of our assets are subject to the rules relating to taxable mortgage pools, (ii) we are a “pension-held REIT,” (iii) a tax-exempt stockholder has incurred debt to purchase or hold our common stock, or (iv) the residual Real Estate Mortgage Investment Conduit interests, or REMICs, we buy (if any) generate “excess inclusion income,” then a portion of the distributions to and, in the case of a stockholder described in clause (iii), gains realized on the sale of common stock by such tax-exempt stockholder may be subject to federal income tax as unrelated business taxable income under the Internal Revenue Code.

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The tax on prohibited transactions will limit our ability to engage in transactions 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 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, even though the sales 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.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and residential and commercial mortgage-backed securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% (25% for taxable years before 2018) of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries and no more than 25% of the value of our total assets can be represented by “nonqualified publicly offered REIT debt instruments.” If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Liquidation of assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we intend to elect and qualify to be taxed as a REIT, we may not elect to be treated as a REIT or may terminate our REIT election if we determine that qualifying as a REIT is no longer in our best interests. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.

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Changes recently made to the U.S. tax laws could have a negative impact on our business.

The President signed a tax reform bill into law on December 22, 2017 (the “Tax Cuts and Jobs Act”). Among other things, the Tax Cuts and Jobs Act:


•	Reduces the corporate income tax rate from 35% to 21% (including with respect to our taxable REIT subsidiary);


•	Reduces the rate of U.S. federal withholding tax on distributions made to non-U.S. stockholders by a REIT that are attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;


•	If elected, allows an immediate 100% deduction of the cost of certain capital asset investments (generally excluding real estate assets), subject to a phase-down of the deduction percentage over time;

•

Changes the recovery periods for certain real property and building improvements (for example, to 15 years for qualified improvement property under the modified accelerated cost recovery system if a technical correction is passed, and to 30 years (previously 40 years) for residential real property and 20 years (previously 40 years) for qualified improvement property under the alternative depreciation system);


•	Restricts the deductibility of interest expense by businesses (generally, to 30% of the business’ adjusted taxable income) except, among others, real property businesses electing out of such restriction; we have not yet determined whether we and/or our subsidiaries can and/or will make such an election;


•	Requires the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above;


•	Restricts the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property;


•	Permanently repeals the “technical termination” rule for partnerships, meaning sales or exchanges of the interests in a partnership will be less likely to, among other things, terminate the taxable year of, and restart the depreciable lives of assets held by, such partnership for tax purposes;


•	Requires accrual method taxpayers to take certain amounts in income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement prepared under GAAP, which, with respect to certain leases, could accelerate the inclusion of rental income;


•	Eliminates the federal corporate alternative minimum tax;


•	Reduces the highest marginal income tax rate for individuals to 37% from 39.6% (excluding, in each case, the 3.8% Medicare tax on net investment income);

•

Generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income), generally resulting in a maximum effective federal income tax rate applicable to such dividends of 29.6% compared to 37% (excluding, in each case, the 3.8% Medicare tax on net investment income); and


•	Limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).

Many of the provisions in the Tax Cuts and Jobs Act, in particular those affecting individual taxpayers, expire at the end of 2025.

As a result of the changes to U.S. federal tax laws implemented by the Tax Cuts and Jobs Act, our taxable income and the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, could change. As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders annually.

The Tax Cuts and Jobs Act is a complex revision to the U.S. federal income tax laws with various impacts on different categories of taxpayers and industries, and will require subsequent rulemaking and interpretation in a number of areas. The long-term impact of the Tax Cuts and Jobs Act on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this time. Furthermore, the Tax Cuts and Jobs Act may negatively impact certain of our tenants’ operating results, financial condition, and future business plans. The Tax Cuts and Jobs Act may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding. There can be no assurance that the Tax Cuts and Jobs Act will not negatively impact our operating results, financial condition, and future business operations.

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Dividends payable by REITs do not qualify for the reduced tax rates.

In general, the maximum tax rate for dividends payable to domestic stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, are generally not eligible for this reduced rate; provided individuals may be able to deduct 20% of income received as ordinary REIT dividends, thus reducing the maximum effective federal income tax rate on such dividend. While this tax treatment does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts or estates to perceive investments in REITs to be relatively less attractive than investments in stock of non‑REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock.

Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.

Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

The taxation of distributions to our stockholders can be complex; however, distributions that we make to our stockholders generally will be taxable as ordinary income, which may reduce your anticipated return from an investment in us.

Distributions that we make to our taxable stockholders to the extent of our current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our distributions may (i) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, (ii) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from non-REIT corporations, if any, or (iii) constitute a return of capital generally to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital distribution is not taxable, but has the effect of reducing the basis of a stockholder’s investment in our common stock.

Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon the disposition of our shares.

Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as “effectively connected” with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, capital gain distributions attributable to sales or exchanges of “U.S. real property interests,” or USRPIs, generally (subject to certain exceptions for “qualified foreign pension funds” and certain “qualified shareholders”) will be taxed to a non-U.S. stockholder (other than a qualified foreign pension plan, entities wholly owned by a qualified foreign pension plan and certain publicly traded foreign entities) as if such gain were effectively connected with a U.S. trade or business unless FIRPTA provides an exemption. However, a capital gain dividend will not be treated as effectively connected income if (i) the 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 (ii) the non-U.S. stockholder does not own more than 10% of the class of our stock at any time during the one-year period ending on the date the distribution is received. We do not anticipate that our shares will be “regularly traded” on an established securities market for the foreseeable future, and therefore, this exception is not expected to apply.

Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA (subject to specific FIRPTA exemptions for certain non-U.S. stockholders). Our common stock will not constitute a USRPI so long as we are a “domestically-controlled qualified investment entity.” A domestically-controlled qualified investment entity includes a REIT if at all times during a specified testing period, less than 50% in value of such REIT’s stock is held directly or indirectly by non-U.S. stockholders. We believe, but cannot assure you, that we will be a domestically-controlled qualified investment entity.

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Even if we do not qualify as a domestically-controlled qualified investment entity at the time a non-U.S. stockholder sells or exchanges our common stock, gain arising from such a sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (a) our common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and (b) such non-U.S. stockholder owned, actually and constructively, 10% or less of our common stock at any time during the five-year period ending on the date of the sale. However, it is not anticipated that our common stock will be “regularly traded” on an established market. We encourage you to consult your tax advisor to determine the tax consequences applicable to you if you are a non-U.S. stockholder.

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.

Retirement Plan Risks

If the fiduciary of an employee benefit plan subject to ERISA (such as a profit sharing, Section 401(k) or pension plan) or an owner of a retirement arrangement subject to Section 4975 of the Internal Revenue Code (such as an individual retirement account (“IRA”)) 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 penalties and other sanctions.

There are special considerations that apply to employee benefit plans subject to the Employee Retirement Income Security Act (“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 have invested in our shares. Fiduciaries, IRA owners and other benefit plan investors that have invested 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 an unacceptable amount of “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 per share for our common stock annually. We can make no claim whether such estimated value per share 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 stock. 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. For information regarding our estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities - Market Information” of this Annual Report on Form 10-K.

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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, including liability for investment losses. 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 addition, the investment transaction must be undone. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified as a tax-exempt account and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in our common stock.

If our assets are deemed to be plan assets, we and our advisor may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.

In some circumstances where an ERISA plan holds an interest in an entity, the assets of the entity are deemed to be ERISA plan assets unless an exception applies. This is known as the “look-through rule.” Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA or Section 4975 of the Internal Revenue Code, may be applicable, and there may be liability under these and other provisions of ERISA and the Internal Revenue Code. We believe that our assets should not be treated as plan assets because the shares should qualify as “publicly-offered securities” that are exempt from the look-through rules under applicable Treasury Regulations. We note, however, that because certain limitations are imposed upon the transferability of shares so that we may qualify as a REIT, and perhaps for other reasons, it is possible that this exemption may not apply. If that is the case, and if we or our advisor are exposed to liability under ERISA or the Internal Revenue Code, our performance and results of operations could be adversely affected. Stockholders should consult with their legal and other advisors concerning the impact of ERISA and the Internal Revenue Code on their investment and our performance.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

We have no unresolved staff comments.


ITEM 2.	PROPERTIES

As of December 31, 2018 , our portfolio of real estate consisted of eight office properties and an office campus consisting of five office buildings, encompassing in the aggregate 4.6 million rentable square feet. The total cost of our portfolio of real estate was $1.4 billion. As of December 31, 2018 , our portfolio of real estate was approximately 76% occupied, the annualized base rent was $106.1 million and the average annualized base rent per square foot of our portfolio of real estate was $30.86. The weighted-average remaining lease term of our portfolio of real estate (excluding options to extend) was 6.0 years.

As of December 31, 2018 , four properties represented more than 10% of our total assets:



Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) ⁽¹⁾		Average Annualized Base Rent per sq. ft. ⁽²⁾		Occupancy		Weighted Average Remaining Lease Term
Union Bank Plaza	Los Angeles, CA	627,334	$	157,590	13.6	%	$	20,115	$	43.42	74	%	3.1 years
300-600 Campus Drive Buildings	Florham Park, NJ	578,424	140,009		12.1	%	17,865		33.63		92	%	9.3 years
100 & 200 Campus Drive Buildings	Florham Park, NJ	590,458	137,646		11.9	%	14,002		30.68		77	%	6.2 years
Corporate Technology Centre ⁽³⁾	San Jose, CA	415,700	134,359		11.6	%	—		—		—	%	—

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⁽²⁾ Average annualized base rent per square foot is calculated as the annualized base rent divided by the leased square feet.

⁽³⁾ The lease for the single tenant who occupied Corporate Technology Centre expired on October 31, 2018. As of March 12, 2019, we are in the process of renovating and rebranding this property, and the property is currently vacant.

For a discussion of our real estate portfolio, see Part I, Item 1, “Business” of this Annual Report on Form 10-K.

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Portfolio Lease Expirations

The following table sets forth a schedule of expiring leases for our portfolio of real estate by rentable square footage and by annualized base rent as of December 31, 2018 :



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	$	719	0.7	%	74,639	2.2	%
2019	34	7,643		7.2	%	273,234	7.9	%
2020	34	6,614		6.2	%	219,166	6.4	%
2021	17	3,916		3.7	%	188,646	5.5	%
2022	24	23,492		22.1	%	618,376	18.0	%
2023	20	16,660		15.7	%	632,829	18.4	%
2024	19	6,017		5.7	%	175,536	5.1	%
2025	5	3,911		3.7	%	132,197	3.8	%
2026	7	3,748		3.5	%	113,640	3.3	%
2027	5	3,437		3.2	%	105,863	3.1	%
2028	4	4,846		4.6	%	141,565	4.1	%
Thereafter ⁽²⁾	8	25,091		23.7	%	762,026	22.2	%
Total	189	$	106,094	100.0	%	3,437,717	100.0	%

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⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , adjusted to straight‑line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

⁽²⁾ Represents leases expiring from 2029 through 2033.

For more information with respect to our tenants, see Part I, Item 1, “Business” of this Annual Report on Form 10-K.

Concentration of Credit Risks

As of December 31, 2018 , we had a concentration of credit risk related to the following tenant leases that represented more than 10% of our annualized base rent:



					Annualized Base Rent Statistics
Tenant	Property	Tenant Industry	Square Feet	% of Portfolio (Net Rentable Sq. Ft.)	Annualized Base Rent (in thousands) ⁽¹⁾		% of Portfolio Annualized Base Rent	Annualized Base Rent per Sq. Ft.		Lease Expiration
Union Bank	Union Bank Plaza	Finance	295,563	8.6%	$	13,687	12.9%	$	46.31	01/31/2022 ⁽²⁾⁽³⁾
The University of Phoenix	Fountainhead Plaza	Educational Services	445,957	13.0%	11,728		11.1%	26.30		08/31/2023 ⁽⁴⁾
Anadarko Petroleum Corporation	Granite Tower	Mining, Oil & Gas Extraction	360,584	10.5%	11,174		10.5%	30.99		04/30/2021 / 04/30/2033 ⁽⁵⁾

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⁽²⁾ Represents the expiration date of the lease as of December 31, 2018 and does not take into account any tenant renewal options. Pursuant to a lease amendment that we entered into with Union Bank on December 31, 2017, Union Bank surrendered 15,829 rentable square feet of its total rentable square footage on March 31, 2018 and 31,320 rentable square feet of its total rentable square footage on June 30, 2018. In addition, Union Bank also surrendered 321 parking area passes on March 31, 2018. During the year ended December 31, 2018, we received $11.4 million of lease termination fees from Union Bank, of which $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statement of operations for the year ended December 31, 2018, respectively, and $8.5 million was deferred as of December 31, 2018 and included in other liabilities on the accompanying consolidated balance sheet.

⁽³⁾ Union Bank has two options to extend the term 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 premises or (ii) no less than 200,000 rentable square feet consisting of full floors only plus either all or none of both the retail and vault space.

⁽⁴⁾ The University of Phoenix has two options to extend the term of this lease for five years per option term.

⁽⁵⁾ Of the 360,584 rentable square feet occupied by the tenant, a total of 64,841 rentable square feet will expire on April 30, 2021 and the remainder will expire on April 30, 2033. Anadarko Petroleum Corporation has an option to terminate all or a portion of its leased space effective April 30, 2028 or April 30, 2030.

No other tenant accounted for more than 10% of annualized base rent.

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ITEM 3.	LEGAL PROCEEDINGS

From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition. Nor are we aware of any such legal proceedings contemplated by government authorities.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

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PART II


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stockholder Information

As of March 8, 2019 , we had approximately 186.3 million shares of common stock outstanding held by a total of approximately 46,300 stockholders. The number of stockholders is based on the records of DST Systems, Inc., which serves as our transfer agent.

Market Information

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, our stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase requirements. Any sale must comply with applicable state and federal securities laws. In addition, our charter prohibits the ownership of more than 9.8% of our stock by a single person, unless exempted by our board of directors. Consequently, there is the risk that our stockholders may not be able to sell their shares at a time or price acceptable to them.

We provide an estimated value per share to assist broker-dealers that participated in our initial public offering in meeting their customer account statement reporting obligations under NASD Conduct Rule 2340 as required by FINRA. This valuation was performed in accordance with the provisions of and also to comply with the IPA Valuation Guidelines. For this purpose, we estimated the value of the shares of our common stock as $4.95 (unaudited) per share as of December 31, 2018. This estimated value per share is based on our board of directors’ approval on December 3, 2018 of an estimated value per share of our common stock of $4.95 (unaudited) based on the estimated value of our assets less the estimated value of our liabilities, or net asset value, divided by the number of shares outstanding, all as of September 30, 2018. There were no material changes between September 30, 2018 and December 3, 2018 that impacted the overall estimated value per share.

The conflicts committee, composed solely of all of our independent directors, is responsible for the oversight of the valuation process used to determine the estimated value per share of our common stock, including the review and approval of the valuation and appraisal processes and methodologies used to determine our estimated value per share, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices and the reasonableness of the assumptions used in the valuations and appraisals. The estimated value per share was based upon the recommendation and valuation prepared by our advisor. Our advisor’s valuation of our nine real estate properties held as of September 30, 2018 was based on appraisals (the “Appraised Properties”) performed by CBRE, Inc. (“CBRE”), an independent third-party valuation firm. CBRE prepared appraisal reports, summarizing key inputs and assumptions, for each of the Appraised Properties. Our advisor performed valuations with respect to our cash, other assets, mortgage debt and other liabilities. The methodologies and assumptions used to determine the estimated value of our assets and the estimated value of our liabilities are described further below.

Our advisor used the appraised values of the Appraised Properties, together with our advisor’s estimated value of each of our other assets and our liabilities, to calculate and recommend an estimated value per share of our common stock. Based on (i) the conflicts committee’s receipt and review of our advisor’s valuation report, including our advisor’s summary of the appraisal reports for the Appraised Properties prepared by CBRE and our advisor’s estimated value of each of our other assets and our liabilities, (ii) the conflicts committee’s review of the reasonableness of our estimated value per share resulting from our advisor’s valuation process, and (iii) other factors considered by the conflicts committee and the conflicts committee’s own extensive knowledge of our assets and liabilities, the conflicts committee concluded that the estimated value per share proposed by our advisor was reasonable and recommended to our board of directors that it adopt $4.95 (unaudited) as the estimated value per share of our common stock. The board of directors unanimously agreed to accept the recommendation of the conflicts committee and approved $4.95 (unaudited) as the estimated value per share of our common stock, which determination is ultimately and solely the responsibility of the board of directors.

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The table below sets forth the calculation of our estimated value per share as of December 3, 2018, as well as the calculation of our prior estimated value per share as of December 8, 2017:



	December 3, 2018 Estimated Value per Share			December 8, 2017 Estimated Value per Share ⁽¹⁾			Change in Estimated Value per Share
Real estate properties ⁽²⁾	$	6.77		$	7.28		$	(0.51	)
Real estate-related investment	—			0.07			(0.07		)
Cash	0.43			0.40			0.03
Other assets	0.10			0.04			0.06
Mortgage debt ⁽³⁾	(2.23		)	(2.76		)	0.53
Other liabilities	(0.12		)	(0.14		)	0.02
Estimated value per share	$	4.95		$	4.89		$	0.06
Estimated enterprise value premium	None assumed			None assumed			None assumed
Total estimated value per share	$	4.95		$	4.89		$	0.06

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⁽¹⁾ The December 8, 2017 estimated value per share was based upon the recommendation and valuation of our advisor. Our advisor’s valuation of our ten real estate properties was based on appraisals of nine of our real estate properties performed by CBRE and the sales price less disposition costs and fees of one property sold subsequent to September 30, 2017. Our advisor performed valuations of our real estate-related investment, cash, other assets, mortgage debt and other liabilities. For more information relating to the December 8, 2017 estimated value per share and the assumptions and methodologies used by CBRE and our advisor, see our Current Report on Form 8-K filed with the SEC on December 11, 2017.

⁽²⁾ The decrease in the estimated value of real estate properties per share was primarily due to dispositions of real estate properties subsequent to September 30, 2017.

⁽³⁾ The decrease in the estimated value of mortgage debt per share was primarily due to loan repayments in connection with the dispositions of real estate properties subsequent to September 30, 2017.

The increase in our estimated value per share from the previous estimate was primarily due to the items noted in the table below, which reflect the significant contributors to the increase in the estimated value per share from $4.89 (unaudited) to $4.95 (unaudited). The changes are not equal to the change in values of each asset and liability group presented in the table above due to dispositions, debt repayments and other factors, which caused the value of certain asset or liability groups to change with no impact to our fair value of equity or the overall estimated value per share.



	Calculation of Estimated Value per Share
December 8, 2017 estimated value per share	$	4.89
Changes to estimated value per share
Real estate
Real estate properties	0.19
Selling costs related to properties sold	(0.03		)
Capital expenditures on real estate	(0.18		)
Total change related to real estate	(0.02		)
Operating cash flows in excess of monthly distributions declared ⁽¹⁾	0.11
Notes payable	(0.01		)
Other changes, net	(0.02		)
Total change in estimated value per share	$	0.06
December 3, 2018 estimated value per share	$	4.95

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⁽¹⁾ Operating cash flow reflects modified funds from operations (“MFFO”) adjusted to add back the amortization of deferred financing costs. We compute MFFO in accordance with the definition included in the practice guideline issued by the IPA in November 2010.

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Our estimated value per share takes into consideration any potential liability related to a subordinated participation in cash flows our advisor is entitled to upon meeting certain stockholder return thresholds in accordance with the advisory agreement. For purposes of determining the estimated value per share, our advisor calculated the potential liability related to this incentive fee based on a hypothetical liquidation of the assets and liabilities at their estimated fair values, after considering the impact of any potential closing costs and fees related to the disposition of real estate properties, and determined that there would be no liability related to the subordinated participation in cash flows.

As of December 3, 2018, we had no potentially dilutive securities outstanding that would impact the estimated value per share of our common stock.

Methodology

Our goal for the valuation was to arrive at a reasonable and supportable estimated value per share, using a process that was designed to be in compliance with the IPA Valuation Guidelines and using what we and our advisor deemed to be appropriate valuation methodologies and assumptions. The following is a summary of the valuation and appraisal methodologies, assumptions and estimates used to value our assets and liabilities:

Real Estate

Independent Valuation Firm: CBRE ⁽¹⁾ was selected by our advisor and approved by our conflicts committee and board of directors to appraise the Appraised Properties. CBRE is not affiliated with us or our advisor. The compensation we paid to CBRE was based on the scope of work and not on the appraised values of the Appraised Properties. The appraisals were performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practice, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation, as well as the requirements of the state where each real property is located. Each appraisal was reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). The use of the reports is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

CBRE collected all reasonably available material information that it deemed relevant in appraising the Appraised Properties. CBRE obtained property-level information from our advisor, including (i) property historical and projected operating revenues and expenses; (ii) property lease agreements; and (iii) information regarding recent or planned capital expenditures. CBRE reviewed and relied in part on the property-level information provided by our advisor and considered this information in light of its knowledge of each property’s specific market conditions.

_____________________

⁽¹⁾ CBRE is actively engaged in the business of appraising commercial real estate properties similar to those we own in connection with public securities offerings, private placements, business combinations and similar transactions. We engaged CBRE to deliver appraisal reports relating to the Appraised Properties and CBRE received fees upon the delivery of such reports. In addition, we have agreed to indemnify CBRE against certain liabilities arising out of this engagement. CBRE is an affiliate of CBRE Group, Inc., a parent holding company of affiliated companies that are engaged in the ordinary course of business in many areas related to commercial real estate and related services. In the two years prior to December 3, 2018, CBRE and its affiliates provided a number of commercial real estate, appraisal, valuation and financial advisory services for us and our affiliates and have received fees in connection with such services. CBRE and its affiliates may from time to time in the future perform other commercial real estate, appraisal, valuation and financial advisory services for us and our affiliates in transactions related to the properties that are the subjects of the appraisals, so long as such other services do not adversely affect the independence of the applicable CBRE appraiser as certified in the applicable appraisal report.

In the ordinary course of its business, CBRE and its affiliates, directors and officers may structure and effect transactions for their own accounts or for the accounts of their customers in commercial real estate assets of the same kind and in the same markets as our assets.

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In conducting its investigation and analyses, CBRE took into account customary and accepted financial and commercial procedures and considerations as it deemed relevant. Although CBRE reviewed information supplied or otherwise made available by us or our advisor for reasonableness, it assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party and did not independently verify any such information. With respect to operating or financial forecasts and other information and data provided to or otherwise reviewed by or discussed with CBRE, CBRE assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of our management and/or our advisor. CBRE relied on us to advise it promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.

In performing its analyses, CBRE made numerous other assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its and our control, as well as certain factual matters. For example, unless specifically informed to the contrary, CBRE assumed that we had clear and marketable title to the Appraised Properties, that no title defects existed, that any improvements were made in accordance with law, that no hazardous materials were present or had been present previously, that no deed restrictions existed, and that no changes to zoning ordinances or regulations governing use, density or shape were pending or being considered. Furthermore, CBRE’s analyses, opinions and conclusions were necessarily based upon market, economic, financial and other circumstances and conditions existing as of or prior to the date of the appraisal, and any material change in such circumstances and conditions may affect CBRE’s analyses and conclusions. CBRE’s appraisal reports contain other assumptions, qualifications and limitations that qualify the analyses, opinions and conclusions set forth therein. Furthermore, the prices at which the Appraised Properties may actually be sold could differ from their appraised values.

Although CBRE considered any comments to its appraisal reports received from us or our advisor, the final appraised values of the Appraised Properties were determined by CBRE. The appraisal reports for the Appraised Properties are addressed solely to us to assist our advisor in calculating and recommending an updated estimated value per share of our common stock. The appraisal reports are not addressed to the public and may not be relied upon by any other person to establish an estimated value per share of our common stock and do not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing its appraisal reports, CBRE did not solicit third-party indications of interest for the Appraised Properties. In preparing its appraisal reports, CBRE also did not, and was not requested to, solicit third-party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of us. While CBRE was responsible for providing appraisals for the Appraised Properties, CBRE was not responsible for, did not calculate, and did not participate in, the determination of the estimated value per share of our common stock.

The foregoing is a summary of the standard assumptions, qualifications and limitations that generally apply to CBRE’s appraisal reports. All of the CBRE appraisal reports, including the analyses, opinions and conclusions set forth in such reports, are qualified by the assumptions, qualifications and limitations set forth in the respective appraisal reports.

Real Estate Valuation

As of September 30, 2018, we owned nine real estate properties (consisting of eight office properties and an office campus consisting of five office buildings). CBRE appraised each of the Appraised Properties using various methodologies including the direct capitalization approach, discounted cash flow analyses and sales comparison approach and relied primarily on 10-year discounted cash flow analyses for the final appraisal of each of the Appraised Properties. CBRE calculated the discounted cash flow value of the Appraised Properties using property-level cash flow estimates, terminal capitalization rates and discount rates that fall within ranges it believes would be used by similar investors to value the Appraised Properties based on recent comparable market transactions adjusted for unique property and market-specific factors.

The total appraised value of the Appraised Properties as of September 30, 2018 was $1.265 billion. The total cost basis of these properties as of September 30, 2018 was $1.492 billion. This amount includes the purchase price of $1.320 billion, $154.7 million in capital expenditures, leasing commissions and tenant improvements since inception and $17.7 million of acquisition fees and expenses. The estimated value of our nine real estate properties as of September 30, 2018 compared to the total purchase price of these properties plus subsequent capital expenditures, leasing commissions and tenant improvements and acquisition fees and expenses through September 30, 2018, results in an overall decrease in the value of the real estate properties of approximately 15.23%.

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The following table summarizes the key assumptions that CBRE used in the 10-year discounted cash flow models to arrive at the appraised values for the Appraised Properties:



	Range in Values	Weighted-Average Basis
Terminal capitalization rate	5.75% to 8.75%	7.07%
Discount rate	7.00% to 9.50%	8.09%
Net operating income compounded annual growth rate ⁽¹⁾	(0.82)% to 23.19%	5.23%

_____________________

⁽¹⁾ The net operating income compounded annual growth rates (“CAGRs”) reflect both the contractual and market rents and reimbursements (in cases where the contractual lease period is less than the valuation period of the property) net of expenses over the valuation period. The range of CAGRs shown is the constant annual rate at which the net operating income is projected to grow to reach the net operating income in the final year of the hold period for each of the properties. The high-end range in values reflects the lease up of a property with significant vacancy and that was 51% leased as of September 30, 2018.

While we believe that CBRE’s assumptions and inputs are reasonable, a change in these assumptions and inputs would significantly impact the appraised value of the Appraised Properties and thus, our estimated value per share. The table below illustrates the impact on the estimated value per share if the terminal capitalization rates or discount rates CBRE used to appraise the Appraised Properties were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on our estimated value per share if the terminal capitalization rates or discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:



	Increase (Decrease) on the Estimated Value per Share due to
	Decrease of 25 basis points		Increase of 25 basis points			Decrease of 5%		Increase of 5%
Terminal capitalization rates	$	0.16	$	(0.15	)	$	0.22	$	(0.20	)
Discount rates	0.15		(0.15		)	0.24		(0.23		)

Finally, each 1% change in the appraised value of the Appraised Properties would result in a change of $0.07 to the estimated value per share, assuming all other factors remain unchanged.

Notes Payable

The estimated values of our notes payable are equal to the GAAP fair values disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2018. The estimated value of our notes payable does not equal the book value of the loans in accordance with GAAP. The GAAP fair values of our notes payable were determined using a discounted cash flow analysis. The discounted cash flow analysis was based on projected cash flow over the remaining loan terms, including extensions we expect to exercise, and on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio and type of collateral.

As of September 30, 2018, the GAAP fair value and carrying value (excluding unamortized deferred financing costs of $2.0 million) of our notes payable were $416.3 million and $417.2 million, respectively. The weighted-average discount rate applied to the future estimated debt payments was approximately 4.32%. Our notes payable have a weighted-average remaining term of 1.5 years. The table below illustrates the impact on our estimated value per share if the discount rates were adjusted by 25 basis points, assuming all other factors remain unchanged, with respect to our notes payable. Additionally, the table below illustrates the impact on the estimated value per share if the discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:



	Increase (Decrease) on the Estimated Value per Share due to
	Decrease of 25 basis points		Increase of 25 basis points			Decrease of 5%		Increase of 5%
Discount rates	$	0.01	$	(0.01	)	$	0.01	$	(0.01	)

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Other Assets and Liabilities

The carrying values of a majority of our other assets and liabilities are considered to equal their fair value due to their short maturities or liquid nature. Certain balances, such as straight-line rent receivables, lease intangible assets and liabilities, capital expenditures payable, deferred financing costs, unamortized lease commissions and unamortized lease incentives, have been eliminated for the purpose of the valuation due to the fact that the values of those balances were already considered in the valuation of the related asset or liability. Our advisor has also excluded redeemable common stock, as temporary equity does not represent a true liability to us and the shares that this amount represents are included in our total outstanding shares of common stock for purposes of calculating the estimated value per share of our common stock.

Limitations of the Estimated Value Per Share

As mentioned above, we are providing this estimated value per share to assist broker-dealers that participated in our now-terminated initial public offering in meeting their customer account statement reporting obligations. This valuation was performed in accordance with the provisions of and also to comply with the IPA Valuation Guidelines. The estimated value per share set forth above first appeared on the December 31, 2018 customer account statements that were mailed in January 2019. As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated value per share of our common stock, and this difference could be significant. The estimated value per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP.

Accordingly, with respect to the estimated value per share, we can give no assurance that:


•	a stockholder would be able to resell his or her shares at this estimated value per share;


•	a stockholder would ultimately realize distributions per share equal to our estimated value per share upon liquidation of our assets and settlement of our liabilities or a sale of our company;


•	our shares of common stock would trade at the estimated value per share on a national securities exchange;


•	an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or


•	the methodology used to calculate our estimated value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.

Further, the estimated value per share as of December 3, 2018 is based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares outstanding, all as of September 30, 2018. The value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets and due to other factors. The estimated value per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated value per share did not take into account estimated disposition costs and fees for real estate properties that were not under contract to sell, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of debt. We have generally incurred disposition costs and fees related to the sale of each real estate property since inception of 1.7% to 4.4% of the gross sales price less concessions and credits, with the weighted average being approximately 2.4%. If this range of disposition costs and fees was applied to the estimated value of our real estate properties, which does not include these costs and fees in the appraised values, the resulting impact on the estimated value per share would be a decrease of $0.12 to $0.30 per share. We currently expect to utilize our advisor and/or an independent valuation firm to update the estimated value per share no later than December 2019.

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Historical Estimated Values per Share

The historical reported estimated values per share of our common stock approved by our board of directors are set forth below:



Estimated Value per Share	Effective Date of Valuation	Filing with the Securities and Exchange Commission
$4.89	December 8, 2017	Current Report on Form 8-K, filed December 11, 2017
$5.49	December 14, 2016	Current Report on Form 8-K, filed December 15, 2016
$5.62	December 8, 2015	Current Report on Form 8-K, filed December 9, 2015
$5.86	December 4, 2014	Current Report on Form 8-K, filed December 4, 2014
$6.05 ⁽¹⁾	September 22, 2014	Current Report on Form 8-K, filed September 23, 2014
$10.29	December 18, 2013	Current Report on Form 8-K, filed December 19, 2013
$10.29	December 18, 2012	Current Report on Form 8-K, filed December 19, 2012
$10.11	December 19, 2011	Current Report on Form 8-K, filed December 21, 2011

_____________________

⁽¹⁾ The estimated value per share of $6.05 resulted, in part, from the payment of a special distribution of $4.50 per share of common stock to stockholders of record as of September 15, 2014. Excluding the impact of the special distribution, our estimated value per share of common stock would have been $10.55 as of September 22, 2014. Our board of directors declared special distributions in the amount of $3.75, $0.30 and $0.45 per share on the outstanding shares of our common stock on July 8, 2014, August 5, 2014 and August 29, 2014, respectively, for an aggregate amount of $4.50 per share of common stock, to all stockholders of record as of the close of business on September 15, 2014. These special distributions were paid on September 23, 2014 and were funded from our proceeds from the disposition of nine real estate properties between May 2014 and August 2014 as well as cash on hand resulting primarily from the repayment or sale of five real estate loans receivable during 2013 and 2014.

Distribution Information

During the year ended December 31, 2018, we sold three office buildings that were part of an eight-building office campus and received the repayment on one real estate loan receivable. During the year ended December 31, 2017, we sold two office properties. During the year ended December 31, 2016, we sold one office/flex property. Our cash flow from operations has decreased and will continue to decrease as a result of our disposition activity, and we have adjusted our distribution policy with respect to the amount of monthly distribution payments to take into account our disposition activity and current real estate investments. We may continue to make additional strategic asset sales as opportunities become available in the market and may further adjust our distribution policy as a result. Our focus in 2019 is to: continue to strategically sell assets and consider paying special distributions to stockholders; negotiate lease renewals or new leases that facilitate the sales process and enhance property stability for prospective buyers; complete capital projects, such as renovations or amenity enhancements, to attract quality buyers; and finalize our assessment of strategic alternatives. Any future special distributions we make from the proceeds of future dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2019.

Our operating performance and ability to pay distributions from our cash flow from operations and/or the disposition of our assets cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements,” Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “ — Results of Operations” herein. Those factors include: the future operating performance of our investments in the existing real estate and financial environment; the success and economic viability of our tenants; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on our variable rate debt obligation; our ability to successfully dispose of additional assets; and the sources and amounts of cash we have available for distributions.

Our board has the authority under our organizational documents, to the extent permitted by Maryland law, to pay distributions from any source. Our board of directors has not pre-established a percentage range of return for distributions to stockholders or a minimum distribution level, and our charter does not require that we pay distributions to our stockholders. The rate will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant.

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We have elected to be taxed as a REIT under the Internal Revenue Code and have operated as such beginning with our taxable year ended December 31, 2008. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income (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). 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.

Distributions declared per common share were $0.245 and $0.274 in the aggregate for the years ended December 31, 2018 and 2017, respectively. Distributions per common share were based on a monthly record date for each month during the period commencing January 2017 through December 2018.

Distributions declared during 2018 and 2017, aggregated by quarter, are as follows (dollars in thousands, except per share amounts):



	2018
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	11,309	$	11,420	$	11,523	$	11,502	$	45,754
Total Per Share Distribution	$	0.060	$	0.061	$	0.062	$	0.062	$	0.245
	2017
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	12,770	$	12,896	$	13,013	$	12,993	$	51,672
Total Per Share Distribution	$	0.068	$	0.068	$	0.069	$	0.069	$	0.274

The tax composition of our distributions declared for the years ended December 31, 2018 and 2017 was as follows:



	2018		2017
Ordinary Income	64	%	36	%
Capital Gain	34	%	4	%
Return of Capital	2	%	60	%
Total	100	%	100	%

For more information with respect to our distributions paid, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Distributions.”

On December 3, 2018, our board of directors authorized a January 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on January 18, 2019, which we paid on February 4, 2019. On January 22, 2019, our board of directors authorized a February 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on February 18, 2019, which we paid on March 1, 2019. On March 12, 2019, our board of directors authorized a March 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on March 18, 2019, which we expect to pay in April 2019, and an April 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on April 18, 2019, which we expect to pay in May 2019. Other than special distributions, distributions are generally paid on or about the first business day of the following month.

Unregistered Sales of Equity Securities

During the fiscal year ended December 31, 2018 , we did not sell any equity securities that were not registered under the Securities Act of 1933.

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Share Redemption Program

•

During each calendar year, Special Redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to our stockholders. 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 Securities and Exchange Commission or (b) in a separate mailing to the stockholders. On December 6, 2017, the board of directors approved the dollar amount limitation for Special Redemptions for calendar year 2018 of $10.0 million in the aggregate. On December 3, 2018, our board of directors approved the same annual dollar limitation of $10.0 million in the aggregate for the calendar year 2019 (subject to review and adjustment during the year by the board of directors), and further subject to the limitations described in the share redemption program.


•	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 General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

If we cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in our share redemption program, then we will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in our currently effective, or our most recently effective, registration statement as such registration statement has been amended or supplemented, then we would redeem all of such stockholder’s shares.

Upon a transfer of shares, any pending redemption requests with respect to such transferred shares will be canceled as of the date the transfer is accepted by us. Stockholders wishing to continue to have a redemption request related to any transferred shares considered by us must resubmit their redemption request.

Pursuant to the share redemption program, redemptions made in connection with Special Redemptions are made at a price per share equal to the most recent estimated value per share of our common stock as of the applicable redemption date. We do not currently expect to have funds available for ordinary redemptions in the future.

On December 8, 2017, our board of directors approved an estimated value per share of our common stock of $4.89 (unaudited) based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and was effective through the November 2018 redemption date. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the December 2017 estimated value per share, see our Current Report on Form 8-K, filed with the SEC on December 11, 2017.

On December 3, 2018, our board of directors approved an estimated value per share of our common stock of $4.95 (unaudited) based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2018. The change in the redemption price became effective for the December 2018 redemption date, which was December 31, 2018, and will be effective until the estimated value per share is updated. We expect to utilize our advisor and/or an independent valuation firm to update the estimated value per share no later than December 2019. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”

On December 3, 2018, our board of directors amended and restated the share redemption program to provide that we may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to our stockholders. 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 our stockholders.

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The only redemptions we made under our share redemption program during the year ended December 31, 2018 were those that qualified as, and met the requirements for, Special Redemptions under our share redemption program, and we fulfilled all redemption requests that qualified as Special Redemptions under our share redemption program. We funded redemptions during the year ended December 31, 2018 with existing cash on hand. During the year ended December 31, 2018, we redeemed shares pursuant to our share redemption program as follows:



Month	Total Number of Shares Redeemed ⁽¹⁾	Average Price Paid Per Share ⁽²⁾		Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2018	97,178	$	4.89	⁽³⁾
February 2018	55,218	$	4.89	⁽³⁾
March 2018	108,696	$	4.89	⁽³⁾
April 2018	52,009	$	4.89	⁽³⁾
May 2018	89,704	$	4.89	⁽³⁾
June 2018	101,223	$	4.89	⁽³⁾
July 2018	218,634	$	4.89	⁽³⁾
August 2018	134,241	$	4.89	⁽³⁾
September 2018	63,740	$	4.89	⁽³⁾
October 2018	73,501	$	4.89	⁽³⁾
November 2018	101,543	$	4.89	⁽³⁾
December 2018	105,821	$	4.95	⁽³⁾
Total	1,201,508

_____________________

⁽¹⁾ We announced the adoption and commencement of the program on April 8, 2008. We announced amendments to the program on May 13, 2009 (which amendment became effective on June 12, 2009), on March 11, 2011 (which amendment became effective on April 10, 2011), on May 18, 2012 (which amendment became effective on June 17, 2012), on June 29, 2012 (which amendment became effective on July 29, 2012), on October 18, 2012 (which amendment became effective on November 17, 2012), on March 8, 2013 (which amendment became effective on April 7, 2013), on October 17, 2013 (which amendment became effective on November 16, 2013), on May 19, 2014 (which amendment became effective on June 18, 2014) and on December 7, 2018 (which amendment became effective on January 6, 2019).

⁽²⁾ During the year ended December 31, 2018, shares eligible for redemption were redeemed at the prices set forth above.

⁽³⁾ We limit the dollar value of shares that may be redeemed under the share redemption program as described above. During the year ended December 31, 2018 , we redeemed $5.9 million of shares of common stock. For the year ended December 31, 2018 , we fulfilled all redemption requests received in good order and eligible for redemption through the December 2018 redemption date. On December 3, 2018, our board of directors approved an annual dollar limitation for Special Redemptions of $10.0 million in the aggregate for the calendar year 2019. Based on the redemption limitations in our share redemption program and redemptions through February 28, 2019, we may redeem up to $9.1 million of shares in connection with Special Redemptions for the remainder of 2019.

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ITEM 6.	SELECTED FINANCIAL DATA

The following selected financial data as of and for the years ended December 31, 2018 , 2017 , 2016 , 2015 and 2014 should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (in thousands, except share and per share amounts):



	As of December 31,
	2018		2017		2016		2015		2014
Balance Sheet Data
Total real estate and real estate-related investments, net	$	954,207	$	1,044,792	$	1,139,815	$	1,192,512	$	1,389,608
Total assets	1,157,017		1,225,110		1,286,780		1,364,530		1,654,323
Total notes payable, net	415,208		502,299		523,771		546,077		787,418
Total liabilities	485,543		530,528		559,873		596,600		844,796
Redeemable common stock	10,000		10,000		10,000		10,000		10,000
Total stockholders’ equity	661,474		684,582		716,907		757,930		799,527



	For the Years Ended December 31,
	2018			2017			2016			2015			2014
Operating Data
Total revenues	$	142,215		$	149,459		$	155,456		$	165,295		$	279,400
Income from continuing operations ⁽¹⁾	28,528			25,114			16,747			18,377			445,507
Income from continuing operations per common share - basic and diluted ⁽¹⁾	0.15			0.13			0.09			0.10			2.33
Net income	28,528			25,114			16,747			18,377			445,507
Net income per common share, basic and diluted	0.15			0.13			0.09			0.10			2.33
Other Data
Cash flows provided by operations	56,423			52,845			54,392			42,189			67,226
Cash flows provided by investing activities	73,334			65,923			2,940			157,128			1,657,313
Cash flows used in financing activities	(140,713		)	(80,134		)	(82,116		)	(306,598		)	(1,719,670		)
Distributions declared	45,754			51,672			53,140			55,737			966,916
Distributions declared per common share ⁽²⁾	0.245			0.274			0.281			0.293			5.066
Weighted -average number of common shares outstanding, basic and diluted	187,133,703			188,235,450			189,111,086			190,227,577			191,346,949
Reconciliation of funds from operations ⁽³⁾
Net income	$	28,528		$	25,114		$	16,747		$	18,377		$	445,507
Depreciation of real estate assets	36,024			36,271			36,770			33,235			40,408
Amortization of lease-related costs	14,178			17,776			21,998			23,036			37,580
Impairment charge on real estate	—			—			—			23,082			15,601
Gain on sales of real estate, net	(24,884		)	(17,486		)	(9,093		)	(27,421		)	(441,640		)
Loss on sale of marketable securities	—			—			—			—			331
FFO	$	53,846		$	61,675		$	66,422		$	70,309		$	97,787

_____________________

⁽¹⁾ Amounts include certain properties in continuing operations that were sold as of December 31, 2018 in accordance with ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) . See Note 6. “Real Estate Sales,” for more information on the Company's real estate sold as of December 31, 2018.

⁽²⁾ For more information related to distributions declared per common share for the years ended December 31, 2018 and 2017, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Distribution Information.”

⁽³⁾ We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO represents net income, excluding 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), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, 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. 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.

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. Accordingly, FFO should not be considered as an alternative to net income as an indicator of our operating performance.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the “Selected Financial Data” above and our accompanying consolidated financial statements and the notes thereto. Also see “Forward-Looking Statements” preceding Part I and Part I, Item 1A, “Risk Factors.”

Overview

We were formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008 and we intend to continue to operate in such a manner. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is managed by our advisor, KBS Capital Advisors LLC, pursuant to an advisory agreement. KBS Capital Advisors conducts our operations and manages our portfolio of real estate investments. Our advisor owns 20,000 shares of our common stock. We have no paid employees.

We invested in a diverse portfolio of real estate and real estate-related investments. As of December 31, 2018 , we owned eight office properties and an office campus consisting of five office buildings.

On September 27, 2007, we filed a registration statement on Form S-11 with the SEC to offer a maximum of 280,000,000 shares of common stock for sale to the public, of which 200,000,000 shares were registered in our primary offering and 80,000,000 shares were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on December 31, 2010. We sold 182,681,633 shares of common stock in our primary offering for gross offering proceeds of $1.8 billion. We terminated the offering under our dividend reinvestment plan effective May 29, 2014. We sold 30,903,504 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $298.2 million . Also as of December 31, 2018 , we had redeemed 27,140,343 shares sold in our offering for $251.7 million .

On January 27, 2016, our board of directors formed the Special Committee composed of all of our independent directors to explore the availability of strategic alternatives involving us. As part of the process of exploring strategic alternatives, on February 23, 2016, the Special Committee engaged Evercore to act as our financial advisor and to assist us and the Special Committee with this process. Under the terms of the engagement, Evercore provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Although the Special Committee engaged Evercore to assist us and the Special Committee with the exploration of strategic alternatives for us, we are not obligated to enter into any particular transaction or any transaction at all.

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Market Outlook – Real Estate and Real Estate Finance Markets

Volatility in global financial markets and changing political environments can cause fluctuations in the performance of the U.S. commercial real estate markets. Possible future declines in rental rates, slower or potentially negative net absorption of leased space and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, may result in decreases in cash flows from investment properties. Increases in the cost of financing due to higher interest rates may cause difficulty in refinancing debt obligations prior to or at maturity or at terms as favorable as the terms of existing indebtedness. Further, increases in interest rates would increase the amount of our debt payments under our portfolio loan facility. Market conditions can change quickly, potentially negatively impacting the value of real estate investments. Management continuously reviews our investment and debt financing strategies to optimize our portfolio and the cost of our debt exposure.

Liquidity and Capital Resources

Our principal demands for funds during the short- and long-term are and will be for: the payment of operating expenses, capital expenditures and general and administrative expenses; payments under debt obligations; Special Redemptions of common stock pursuant to our share redemption program; and payments of distributions to stockholders. We intend to use our cash on hand, cash flow generated by our real estate properties, proceeds from debt financing and proceeds from the sale of real estate properties as our primary sources of immediate and long-term liquidity.

Our share redemption program provides only for Special Redemptions. During each calendar year, such Special Redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to our stockholders. Special Redemptions are made at a price per share equal to the most recent estimated value per share of our common stock as of the applicable redemption date. We currently do not expect to make ordinary redemptions in the future. On December 3, 2018, our board of directors approved an annual dollar limitation of $10.0 million in the aggregate for the calendar year 2019 for Special Redemptions (subject to review and adjustment during the year by the board of directors), and further subject to the limitations described in the share redemption program.

Our investments in real estate generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flow from operations from our real estate investments is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures. As of December 31, 2018 , our real estate properties were 76% occupied and our bad debt reserve was less than 1% of annualized base rent.

For the year ended December 31, 2018 , our cash needs for capital expenditures and the payment of debt obligations were met with cash on hand and proceeds from debt refinancing. Operating cash needs during the same period were met with cash flow generated by our real estate and real estate-related investments. We paid distributions to our stockholders during the year ended December 31, 2018 using current period cash flow from operations. We believe that our cash on hand, cash flow from operations, availability under our credit facility and proceeds from the sales of real estate properties will be sufficient to meet our liquidity needs for the foreseeable future.

Our cash flow from operations has decreased and will continue to decrease in future periods as a result of our disposition activity, and we have adjusted our distribution policy with respect to the amount of monthly distribution payments to take into account our disposition activity and current real estate investments. We may continue to make additional strategic asset sales as opportunities become available in the market and may further adjust our distribution policy as a result. Any future special distributions we make from the proceeds of dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2019.

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Cash Flows from Operating Activities

As of December 31, 2018 , we owned eight office properties and an office campus consisting of five office buildings. During the year ended December 31, 2018 , net cash provided by operating activities was $56.4 million , compared to $52.8 million during the year ended December 31, 2017 . The increase in net cash provided by operating activities was primarily due to lease termination fees received in 2018. We anticipate cash flows from operating activities to decrease in the future as a result of additional asset sales.

Cash Flows from Investing Activities

Net cash provided by investing activities was $73.3 million for the year ended December 31, 2018 and consisted of the following:


•	$94.0 million of net proceeds from the sale of three office buildings that were part of an eight-building office campus;


•	$34.6 million used for improvements to real estate; and


•	$13.9 million of cash received from the repayment of our real estate loan receivable.

Cash Flows from Financing Activities

During the year ended December 31, 2018 , net cash used in financing activities was $140.7 million and consisted of the following:


•	$375.0 million of proceeds from notes payable;


•	$460.8 million of principal payments on notes payable;


•	$46.2 million of cash used for distributions;


•	$5.9 million of cash used for redemptions of common stock; and


•	$2.8 million of payments of deferred financing costs.

In addition to using our capital resources to meet our debt service obligations, for capital expenditures and for operating costs, we use our capital resources to make certain payments to our advisor. We paid our advisor fees in connection with the acquisition and origination of our assets and pay our advisor fees in connection with the management and disposition of our assets and for certain costs incurred by our advisor in providing services to us. Among the fees payable to our advisor is an asset management fee. With respect to investments in real estate, we pay our advisor a monthly asset management fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition fees and expenses related thereto. With respect to investments in loans and any investments other than real estate, we paid our advisor a monthly asset management fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount paid or allocated to acquire or fund the loan or other investment (which amount included any portion of the investment that was debt financed and was inclusive of acquisition or origination fees and expenses related thereto) 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. We also continue to reimburse our advisor and our dealer manager for certain stockholder services.

As of December 31, 2018 , we had $57.7 million of cash and cash equivalents and up to $125.0 million available for future disbursements under one credit facility, subject to certain conditions and restrictions set forth in the loan agreement, to meet our operational and capital needs.

In order to execute our investment strategy, we primarily utilized secured debt to finance a portion of our investment portfolio. Management remains vigilant in monitoring the risks inherent with the use of debt in our portfolio and is taking actions to ensure that these risks, including refinance and interest rate risks, are properly balanced with the benefit of using leverage. We limit our total liabilities to 75% of the cost (before deducting depreciation and 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 such 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. As of December 31, 2018 , our borrowings and other liabilities were approximately 33% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets, respectively.

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Contractual Commitments and Contingencies

The following is a summary of our contractual obligations as of December 31, 2018 (in thousands):



			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		2019		2020
Outstanding debt obligations ⁽¹⁾	$	416,868	$	1,304	$	415,564
Interest payments on outstanding debt obligations ⁽²⁾	19,637		15,692		3,945

_____________________

⁽¹⁾ Amounts include principal payments only.

⁽²⁾ Projected interest payments are based on the outstanding principal amounts, maturity dates and interest rates in effect as of December 31, 2018 (consisting of the contractual interest rate). We incurred interest expense of $16.3 million, excluding amortization of deferred financing costs of $1.3 million and debt refinancing costs of $0.3 million during the year ended December 31, 2018 .

Results of Operations

Overview

As of December 31, 2017 , we owned eight office properties, an office campus consisting of eight office buildings and one real estate loan receivable. Subsequent to December 31, 2017 , we sold three office buildings that were part of an eight-building office campus and received the repayment on one real estate loan receivable. As a result, as of December 31, 2018 , we owned eight office properties and an office campus consisting of five office buildings. The results of operations presented for the years ended December 31, 2018 and 2017 are not directly comparable due to the dispositions of real estate properties and the payoff of our real estate loan receivable. In general, we expect income and expenses to decrease in future periods due to disposition activity.

Comparison of the year ended December 31, 2018 versus the year ended December 31, 2017

The following table provides summary information about our results of operations for the years ended December 31, 2018 and 2017 (dollar amounts in thousands):



	Years Ended December 31,					Increase (Decrease)			Percentage Change		$ Change Due to Dispositions ⁽¹⁾			$ Change Due to Properties Held Throughout Both Periods ⁽²⁾
	2018			2017		Increase (Decrease)			Percentage Change		$ Change Due to Dispositions ⁽¹⁾
Rental income	$	121,813		$	127,521	$	(5,708	)	(4	)%	$	(8,119	)	$	2,411
Tenant reimbursements	12,636			13,641		(1,005		)	(7	)%	(1,985		)	980
Interest income from real estate loans receivable	434			1,060		(626		)	(59	)%	(626		)	—
Other operating income	7,332			7,237		95			1	%	(18		)	113
Operating, maintenance, and management costs	35,246			34,719		527			2	%	(1,695		)	2,222
Real estate taxes and insurance	19,268			19,816		(548		)	(3	)%	(1,744		)	1,196
Asset management fees to affiliate	10,894			11,617		(723		)	(6	)%	(919		)	196
General and administrative expenses	6,024			4,541		1,483			33	%	n/a			n/a
Depreciation and amortization	50,202			54,047		(3,845		)	(7	)%	(2,616		)	(1,229		)
Interest expense	17,884			17,466		418			2	%	(1,678		)	2,096
Other interest income	1,159			375		784			209	%	n/a			n/a
Loss from extinguishment of debt	(212		)	—		(212		)	(100	)%	(212		)	—
Gain on sale of real estate, net	24,884			17,486		7,398			42	%	7,398			—

_____________________

⁽¹⁾ Represents the dollar amount increase (decrease) for the year ended December 31, 2018 compared to the year ended December 31, 2017 related to real estate and real estate-related investments disposed of on or after January 1, 2017.

⁽²⁾ Represents the dollar amount increase (decrease) for the year ended December 31, 2018 compared to the year ended December 31, 2017 related to real estate investments owned by us throughout both periods presented.

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Rental income and tenant reimbursements decreased from $141.2 million for the year ended December 31, 2017 to $134.4 million for the year ended December 31, 2018 , primarily due to the disposition of real estate properties subsequent to January 1, 2017 and an overall decrease in portfolio occupancy of 8% related to real estate held throughout both periods, partially offset by an aggregate increase in average annualized base rent per square foot of 1.2% related to real estate held throughout both periods, a net increase in rental income and tenant reimbursements due to restoration fees received from a tenant and higher operating and property tax recoveries at real estate properties held throughout both periods. Overall, we expect rental income and tenant reimbursements to decrease in future periods due to anticipated dispositions of real estate properties. For the years ended December 31, 2018 and 2017 , rental income and tenant reimbursements from our real estate properties sold were $2.6 million and $12.7 million, respectively.

Interest income from our real estate loan receivable, recognized using the interest method, decreased from $1.1 million for the year ended December 31, 2017 to $0.4 million for the year ended December 31, 2018 due to the payoff of our last real estate loan receivable on June 1, 2018.

Operating, maintenance and management costs increased from $34.7 million for the year ended December 31, 2017 to $35.2 million for the year ended December 31, 2018 , primarily due to an increase in snow removal expenses related to our properties located in the northeastern regions of the United States and an increase in utility costs and repair and maintenance costs for properties held throughout both periods, offset by a decrease due to the sale of real estate properties subsequent to January 1, 2017. We expect operating, maintenance and management costs to decrease in future periods due to anticipated dispositions of real estate properties, offset by general increases due to inflation. For the years ended December 31, 2018 and 2017 , operating, maintenance and management costs from our real estate properties sold were $0.1 million and $1.8 million , respectively.

Real estate taxes and insurance decreased from $19.8 million for the year ended December 31, 2017 to $19.3 million for the year ended December 31, 2018 , primarily due to the disposition of real estate properties subsequent to January 1, 2017, offset by an increase in property tax expenses of $1.3 million at a property held throughout both periods due to a change in the arrangement whereby the tenant reimbursed us for property tax expenses during the year ended December 31, 2018 instead of the tenant paying the property tax bill directly. We expect real estate taxes and insurance to decrease in future periods due to anticipated dispositions of real estate properties, partially offset by increases due to higher property tax assessed values. For the years ended December 31, 2018 and 2017 , real estate taxes and insurance from our real estate properties sold were $0.3 million and $2.0 million , respectively.

Asset management fees with respect to our real estate and real estate-related investments decreased from $11.6 million for the year ended December 31, 2017 to $10.9 million for the year ended December 31, 2018 , primarily due to the disposition of real estate properties and payoff of our real estate loan receivable subsequent to January 1, 2017, offset by an increase in asset management fees for properties held throughout both periods due to an increase in capital improvements. All asset management fees incurred as of December 31, 2018 have been paid. We expect asset management fees to decrease in future periods due to anticipated dispositions of real estate properties, partially offset by increases in capital improvements. For the years ended December 31, 2018 and 2017 , asset management fees from our real estate properties sold and payoff of our last real estate loan receivable were $0.2 million and $1.1 million, respectively.

General and administrative expenses increased from $4.5 million for the year ended December 31, 2017 to $6.0 million for the year ended December 31, 2018 . This increase was primarily due to professional fees incurred related to the Special Committee’s engagement of Evercore to act as our financial advisor during the year ended December 31, 2018 . We did not incur such costs during the year ended December 31, 2017 .

Depreciation and amortization decreased from $54.0 million for the year ended December 31, 2017 to $50.2 million for the year ended December 31, 2018 due to the disposition of real estate properties subsequent to January 1, 2017 and as a result of lease expirations related to properties held throughout both periods, partially offset by an increase in depreciation and amortization relating to Union Bank’s partial early lease termination and the building improvements placed in service during 2018 at Willow Oaks. We expect depreciation and amortization to decrease in future periods due to anticipated dispositions of real estate properties and an overall decrease in amortization of tenant origination costs related to lease expirations. For the years ended December 31, 2018 and 2017 , depreciation and amortization from our real estate properties sold were $0.7 million and $3.3 million , respectively.

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Interest expense increased from $17.5 million for the year ended December 31, 2017 to $17.9 million for the year ended December 31, 2018 . Included in interest expense for the year ended December 31, 2018 was $1.3 million of amortization of deferred financing costs and $0.3 million of debt refinancing costs. Included in interest expense for the year ended December 31, 2017 was $1.1 million of amortization of deferred financing costs. During the year ended December 31, 2017 , we recorded $0.1 million of unrealized gain on interest rate swaps. The increase in interest expense is primarily due to the increase in one-month LIBOR and its impact on interest expense related to our variable rate debt, partially offset by an overall decrease in our total debt outstanding due to loan repayments in connection with the disposition of real estate properties subsequent to January 1, 2017. In general, we expect interest expense to decrease in future periods due to debt repayments related to anticipated asset sales, which may be offset by certain fees and costs that may be incurred due to the prepayment of certain loans. Our interest expense in future periods will also vary based on fluctuations in one-month LIBOR (for our variable rate debt) and our level of future borrowings, which will depend on the availability and cost of debt financing, draws on our credit facility and any debt repayments we make. For the years ended December 31, 2018 and 2017 , interest expense from the loans secured by our real estate properties sold was $0.6 million and $2.3 million , respectively.

Other interest income increased from $0.4 million for the year ended December 31, 2017 to $1.2 million for the year ended December 31, 2018 due to the increase in the average cash balance in our investment accounts and increase in interest rates earned on our cash equivalents. We expect other interest income to vary in future periods to the extent we have cash on hand and based on fluctuations in interest rates.

We recognized a gain on sale of real estate of $24.9 million related to the disposition of three office buildings that were part of an eight-building office campus during the year ended December 31, 2018 . During the year ended December 31, 2017 , we recognized a gain on sale of real estate of $17.5 million related to the sale of two real estate properties.

Comparison of the year ended December 31, 2017 versus the year ended December 31, 2016

The following table provides summary information about our results of operations for the years ended December 31, 2017 and 2016 (dollar amounts in thousands):



	Years Ended December 31,				Increase (Decrease)			Percentage Change		$ Change Due to Dispositions ⁽¹⁾			$ Change Due to Properties or Loans Held Throughout Both Periods ⁽²⁾
	2017		2016		Increase (Decrease)			Percentage Change		$ Change Due to Dispositions ⁽¹⁾
Rental income	$	127,521	$	133,408	$	(5,887	)	(4	)%	$	(4,722	)	$	(1,165	)
Tenant reimbursements	13,641		14,108		(467		)	(3	)%	(692		)	225
Interest income from real estate loans receivable	1,060		1,075		(15		)	(1	)%	—			(15		)
Other operating income	7,237		6,865		372			5	%	3			369
Operating, maintenance, and management costs	34,719		34,603		116			—	%	(718		)	834
Real estate taxes and insurance	19,816		20,128		(312		)	(2	)%	(704		)	392
Asset management fees to affiliate	11,617		11,811		(194		)	(2	)%	(354		)	160
General and administrative expenses	4,541		6,370		(1,829		)	(29	)%	n/a			n/a
Depreciation and amortization	54,047		58,768		(4,721		)	(8	)%	(3,078		)	(1,643		)
Interest expense	17,466		16,651		815			5	%	(783		)	1,598
Other interest income	375		529		(154		)	(29	)%	n/a			n/a
Gain on sale of real estate, net	17,486		9,093		8,393			92	%	8,393			—

_____________________

⁽¹⁾ Represents the dollar amount increase (decrease) for the year ended December 31, 2017 compared to the year ended December 31, 2016 related to real estate and real estate-related investments disposed of on or after January 1, 2016.

⁽²⁾ Represents the dollar amount increase (decrease) for the year ended December 31, 2017 compared to the year ended December 31, 2016 related to real estate and real estate-related investments owned by us throughout both periods presented.

Rental income and tenant reimbursements decreased from $147.5 million for the year ended December 31, 2016 to $141.2 million for the year ended December 31, 2017, primarily due to the sale of three real estate properties subsequent to January 1, 2016 and an early lease termination during the year ended December 31, 2016 in a property held throughout both periods, partially offset by an aggregate increase in average annualized base rent per square foot of 0.5% related to real estate held for investment and an increase in tenant reimbursements related to a property held throughout both periods. For the years ended December 31, 2017 and 2016, rental income and tenant reimbursements from our real estate properties sold were $5.2 million and $10.6 million, respectively.

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Interest income from our real estate loan receivable, recognized using the interest method, remained consistent at $1.1 million during the years ended December 31, 2017 and 2016.

Other operating income increased from $6.9 million for the year ended December 31, 2016 to $7.2 million for the year ended December 31, 2017, primarily due to an increase in parking revenues for properties held throughout both periods. For the years ended December 31, 2017 and 2016, other operating income from our real estate properties sold was $18,000 and $15,000, respectively.

Operating, maintenance and management costs increased slightly from $34.6 million for the year ended December 31, 2016 to $34.7 million for the year ended December 31, 2017 primarily due to an increase in contract security, on-site wages and benefits and reimbursable parking expenses for properties held throughout both periods, partially offset by a decrease in operating, maintenance and management costs due to the sale of three real estate properties subsequent to January 1, 2016. For the years ended December 31, 2017 and 2016, operating, maintenance and management costs from our real estate properties sold were $1.5 million and $2.3 million, respectively.

Real estate taxes and insurance decreased from $20.1 million for the year ended December 31, 2016 to $19.8 million for the year ended December 31, 2017. This decrease was primarily due to the sale of three real estate properties subsequent to January 1, 2016, partially offset by higher property tax assessed values for properties held throughout both periods. For the years ended December 31, 2017 and 2016, real estate taxes and insurance from our real estate properties sold were $0.9 million and $1.6 million, respectively.

Asset management fees with respect to our real estate and real estate-related investments decreased from $11.8 million for the year ended December 31, 2016 to $11.6 million for the year ended December 31, 2017, primarily due to the sale of three real estate properties subsequent to January 1, 2016 offset by higher asset management fees as a result of improvements made to properties held throughout both periods. All asset management fees incurred as of December 31, 2017 have been paid. For the years ended December 31, 2017 and 2016, asset management fees from our real estate properties sold were $0.5 million and $0.8 million, respectively.

General and administrative expenses decreased from $6.4 million for the year ended December 31, 2016 to $4.5 million for the year ended December 31, 2017. This decrease was primarily due to professional fees incurred related to the Special Committee’s engagement of Evercore to act as our financial advisor and legal fees related to the assessment of strategic alternatives during the year ended December 31, 2016. We did not incur such costs during the year ended December 31, 2017.

Depreciation and amortization decreased from $58.8 million for the year ended December 31, 2016 to $54.0 million for the year ended December 31, 2017 due to the sale of three real estate properties subsequent to January 1, 2016 and as a result of lease terminations and lease expirations related to properties held throughout both periods. For the years ended December 31, 2017 and 2016, depreciation and amortization from our real estate properties sold were $0.9 million and $4.0 million, respectively.

Interest expense increased from $16.7 million for the year ended December 31, 2016 to $17.5 million for the year ended December 31, 2017. The increase in interest expense is primarily due to higher one-month LIBOR related to our existing notes payable for properties held throughout both periods, partially offset by an overall decrease in our total debt outstanding due to loan repayments in connection with the sale of three real estate properties subsequent to January 1, 2016. Included in interest expense is the amortization of deferred financing costs of $1.8 million and $1.1 million for the years ended December 31, 2016 and 2017, respectively. Also included in interest expense during the year ended December 31, 2016 was $0.2 million of termination fees related to the payoff of a loan secured by one office/flex property sold during the year ended December 31, 2016. During the years ended December 31, 2017 and 2016, we recorded $0.1 million and $0.5 million of unrealized gain on interest rate swaps, respectively. For the years ended December 31, 2017 and 2016, interest expense from the loans secured by our real estate properties sold was $0.6 million and $1.4 million, respectively.

We recognized a gain on sale of real estate of $17.5 million related to the sale of two real estate properties during the year ended December 31, 2017. During the year ended December 31, 2016, we recognized a gain on sale of real estate of $9.1 million related to the disposition of one office/flex property.

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Funds from Operations and Modified Funds from Operations

We believe that FFO is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current NAREIT definition. FFO represents net income, excluding 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), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, 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. 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 provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. As a result, our management also uses modified funds from operations (“MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above and below market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the Institute for Portfolio Alternatives (formerly known as the Investment Program Association) (“IPA”) in November 2010 as interpreted by management. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.

We believe that MFFO is helpful as a measure of ongoing operating performance because it excludes non-operating items included in FFO. MFFO excludes non-cash items such as straight-line rental revenue. Additionally, we believe that MFFO provides investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance. MFFO provides comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies. MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.

FFO and MFFO are non-GAAP financial measures and do 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 and MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO and MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO and MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO and MFFO, in addition to net income and cash flows from operating activities as defined by GAAP, are meaningful supplemental performance measures; however, neither FFO nor MFFO reflects adjustments for the operations of properties and real estate-related investments sold, held for sale or repaid during the periods presented. During periods of significant disposition activity, FFO and MFFO are much more limited measures of future performance and dividend sustainability. In connection with our presentation of FFO and MFFO, we are providing information related to the proportion of MFFO related to properties sold and real estate-related investments repaid as of December 31, 2018 .

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Although MFFO includes other adjustments, the exclusion of straight-line rent, the amortization of above- and below-market leases, the amortization of discounts and closing costs, termination fees on derivative instruments, unrealized gains and losses on derivative instruments and loss from extinguishment of debt are the most significant adjustments for the periods presented. We have excluded these items based on the following economic considerations:

•

Adjustments for straight-line rent. These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease. We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period;

•

Amortization of above- and below-market leases. Similar to depreciation and amortization of real estate assets and lease related costs that are excluded from FFO, GAAP implicitly assumes that the value of intangible lease assets and liabilities diminishes predictably over time and requires that these charges be recognized currently in revenue. Since real estate values and market lease rates in the aggregate have historically risen or fallen with local market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the realized economics of the real estate;

•

Amortization of discounts and closing costs. Discounts and closing costs related to debt investments are amortized over the term of the loan as an adjustment to interest income. This application results in income recognition that is different than the underlying contractual terms of the debt investments. We have excluded the amortization of discounts and closing costs related to our debt investments in our calculation of MFFO to more appropriately reflect the economic impact of our debt investments, as discounts will not be economically recognized until the loan is repaid and closing costs are essentially the same as acquisition fees and expenses on real estate. We believe excluding these items provides investors with a useful supplemental metric that directly addresses core operating performance;


•	Termination fees on derivative instruments. Termination fees on derivative instruments are included in interest expense. Although these amounts reduce net income, we exclude them from MFFO to more appropriately reflect the ongoing impact of our interest rate swap agreements;

•

Unrealized gains and losses on derivative instruments. These adjustments include unrealized gains (losses) from mark-to-market adjustments on interest rate swaps and losses due to hedge ineffectiveness. The change in fair value of interest rate swaps not designated as a hedge and the change in fair value of the ineffective portion of interest rate swaps are non-cash adjustments recognized directly in earnings and are included in interest expense. We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the economic impact of our interest rate swap agreements; and

•

Loss from extinguishment of debt. A loss from extinguishment of debt, which includes prepayment fees related to the extinguishment of debt, represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement. We have excluded the loss from extinguishment of debt in our calculation of MFFO because these losses do not impact the current operating performance of our investments and do not provide an indication of future operating performance.

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Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculation of MFFO, for the years ended December 31, 2018 , 2017 and 2016 , respectively (in thousands). No conclusions or comparisons should be made from the presentation of these periods.



	For the Years Ended December 31,
	2018			2017			2016
Net income	$	28,528		$	25,114		$	16,747
Depreciation of real estate assets	36,024			36,271			36,770
Amortization of lease-related costs	14,178			17,776			21,998
Gain on sale of real estate, net	(24,884		)	(17,486		)	(9,093		)
FFO	53,846			61,675			66,422
Straight-line rent and amortization of above- and below-market leases	4,863			(102		)	(6,075		)
Amortization of discounts and closing costs	3			4			3
Termination fees on derivative instruments	—			—			156
Unrealized gains on derivative instruments	—			(101		)	(478		)
Loss from extinguishment of debt	212			—			—
MFFO	$	58,924		$	61,476		$	60,028

Our calculation of MFFO above includes amounts related to the operations of three real estate properties that were sold, three office buildings that were part of an eight-building office campus that were sold and one real estate loan receivable that was paid off between January 1, 2016 and December 31, 2018 . Please refer to the table below with respect to the proportion of MFFO related to real estate properties sold or the real estate-related investment paid off as of December 31, 2018 (in thousands).



	For the Years Ended December 31,
	2018		2017		2016
MFFO by component:
Assets held for investment	$	57,593	$	54,546	$	49,105
Real estate properties sold	947		5,972		9,952
Real estate loans receivable paid off	384		958		971
MFFO	$	58,924	$	61,476	$	60,028

FFO and MFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs.

Distributions

Distributions declared, distributions paid and cash flow from operations were as follows during 2018 (in thousands, except per share amounts):



Period	Distributions Declared ⁽¹⁾		Distributions Declared Per Share ⁽¹⁾		Distributions Paid ⁽²⁾		Cash Flow From Operations
First Quarter 2018	$	11,309	$	0.060	$	11,791	$	17,328
Second Quarter 2018	11,420		0.061		11,551		21,565
Third Quarter 2018	11,523		0.062		11,532		11,698
Fourth Quarter 2018	11,502		0.062		11,382		5,832
	$	45,754	$	0.245	$	46,256	$	56,423

_____________________

⁽¹⁾ Assumes each share was issued and outstanding each day that was a record date for distributions during the periods presented.

⁽²⁾ Other than special distributions, distributions generally are paid on a monthly basis, on or about the first business day of the following month.

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For the year ended December 31, 2018 , we paid aggregate distributions of $46.3 million, all of which were paid in cash. FFO and cash flow from operations for the year ended December 31, 2018 were $53.8 million and $56.4 million , respectively. We funded our total distributions paid with our current period cash flow from operations. For purposes of determining the source of our distributions paid, we assume first that we use cash flow from operations from the relevant periods to fund distribution payments. See the reconciliation of FFO to net income above.

Over the long term, we expect that our distributions will generally be paid from cash flow from operations, FFO from current or prior periods and proceeds from sales of our assets.

During the year ended December 31, 2018 , we sold three office buildings that were part of an eight-building office campus and received the repayment on one real estate loan receivable. During the year ended December 31, 2017 , we sold two office properties, and during the year ended December 31, 2016, we sold one office/flex property. Our cash flow from operations has decreased and will continue to decrease as a result of our disposition activity, and we have adjusted our distribution policy with respect to the amount of monthly distribution payments to take into account our disposition activity and current real estate investments. We may continue to make additional strategic asset sales as opportunities become available in the market and may further adjust our distribution policy as a result. Any future special distributions we make from the proceeds of dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2019.

Our operating performance and ability to pay distributions from our cash flow from operations and/or the disposition of our assets cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements,” Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.” Those factors include: the future operating performance of our investments in the existing real estate and financial environment; the success and economic viability of our tenants; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on our variable rate debt obligation; our ability to successfully dispose of additional assets; and the sources and amounts of cash we have available for distributions.

Critical Accounting Policies

Below is a discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

Revenue Recognition

Real Estate

We recognize minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is reasonably assured and record amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or by us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that a tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:


•	whether the lease stipulates how a tenant improvement allowance may be spent;


•	whether the amount of a tenant improvement allowance is in excess of market rates;


•	whether the tenant or landlord retains legal title to the improvements at the end of the lease term;


•	whether the tenant improvements are unique to the tenant or general-purpose in nature; and


•	whether the tenant improvements are expected to have any residual value at the end of the lease.

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We record property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

We make estimates of the collectibility of our tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. We specifically analyze accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, we make estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, we will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Effective January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of our adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. We elected to apply this standard only to contracts that were not completed as of January 1, 2018.

Based on our evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at our properties. The recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 were $1.9 million and were included in tenant reimbursements on the accompanying statements of operations.

Sales of Real Estate

Prior to January 1, 2018, gains on real estate sold were recognized using the full accrual method at closing when collectibility of the sales price was reasonably assured, we were not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. Gain on sales of real estate may have been deferred in whole or in part until the requirements for gain recognition had been met.

Effective January 1, 2018, we adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, our sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20.

ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if we determine we do not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, we would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer.

Real Estate

Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. We consider the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant’s lease term or expected useful life. We anticipate the estimated useful lives of our assets by class to be generally as follows:



Buildings	25-40 years
Building improvements	10-25 years
Tenant improvements	Shorter of lease term or expected useful life
Tenant origination and absorption costs	Remaining term of related leases, including below-market renewal periods

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Impairment of Real Estate and Related Intangible Assets and Liabilities

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, we assess the recoverability by estimating whether we will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, we do not believe that we will be able to recover the carrying value of the real estate and related intangible assets and liabilities, we would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities.

Projecting future cash flows involves estimating expected future operating income and expenses related to the real estate and its related intangible assets and liabilities as well as market and other trends. Using inappropriate assumptions to estimate cash flows could result in incorrect fair values of the real estate and its related intangible assets and liabilities and could result in the overstatement of the carrying values of our real estate and related intangible assets and liabilities and an overstatement of our net income.

Real Estate Held for Sale

We generally consider real estate to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate held for sale” and “assets related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Notes payable and other liabilities related to real estate held for sale are classified as “notes payable related to real estate held for sale” and “liabilities related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Real estate classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties and related gains on sales of properties that were disposed of or classified as held for sale in the ordinary course of business during the years ended December 31, 2018, 2017 and 2016 are included in continuing operations on the consolidated statements of operations.

Change in a Plan to Sell

When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value, or estimated fair value less estimated costs to sell. Changes in the market may compel us to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment.

Fair Value Measurements

Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:


•	Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;


•	Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and


•	Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

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When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, we measure fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

We consider the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with our estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

We consider the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code. To continue to qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders (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). As a REIT, we generally will not be subject to federal income tax on income that we distribute as dividends to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT.

Subsequent Events

We evaluate subsequent events up until the date the consolidated financial statements are issued.

Distributions Paid

On January 2, 2019, we paid distributions of $3.9 million , which related to distributions declared for December 2018 in the amount of $0.02076575 per share of common stock to stockholders of record as of the close of business on December 19, 2018. On February 4, 2019, we paid distributions of $3.8 million , which related to distributions declared for January 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on January 18, 2019. On March 1, 2019, we paid distributions of $3.8 million , which related to distributions declared for February 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on February 18, 2019.

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Distributions Authorized

On March 12, 2019, our board of directors authorized a March 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on March 18, 2019, which we expect to pay in April 2019, and an April 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on April 18, 2019, which we expect to pay in May 2019.


ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity, to fund the financing and refinancing of our real estate investment portfolio and to fund our operations. 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.

The table below summarizes the outstanding principal balance, the interest rate and fair value of our notes payable based on the maturity dates, all as of December 31, 2018 (dollars in thousands):



	Maturity Date					Total Book Value			Fair Value
	2019		2020			Total Book Value			Fair Value
Liabilities
Notes payable, principal outstanding
Fixed Rate	$	—	$	41,868		$	41,868		$	41,451
Interest rate	—		3.5		%	3.5		%
Variable Rate	$	—	$	375,000		$	375,000		$	374,712
Effective interest rate ⁽¹⁾	—		3.8		%	3.8		%

_____________________

⁽¹⁾ The effective interest rate represents the actual interest rate in effect as of December 31, 2018 , using interest rate indices as of December 31, 2018 , where applicable.

We borrow funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future payments on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. As of December 31, 2018 , the fair value of our fixed rate debt was $41.5 million and the outstanding principal balance of our fixed rate debt was $41.9 million . The fair value estimate of our fixed rate debt is calculated 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 as of December 31, 2018 . With respect to our fixed rate instruments, 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 ongoing operations.

Conversely, movements in interest rates on our variable rate debt 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 variable rate instruments. As of December 31, 2018 , we were exposed to market risks related to fluctuations in interest rates on $375.0 million of variable rate debt outstanding. Based on interest rates as of December 31, 2018 , if interest rates were 100 basis points higher or lower during the 12 months ending December 31, 2019, interest expense on our variable rate debt would increase or decrease by $3.8 million.

For a discussion of the interest rate risks related to the current capital and credit markets, see Part I, Item 1A, “Risk Factors.”

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ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to Financial Statements at page F-1 of this report.


ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


ITEM 9A.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

In connection with the preparation of our Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018 . In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on its assessment, our management believes that, as of December 31, 2018 , our internal control over financial reporting was effective based on those criteria. There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B.	OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

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



Name	Position(s)	Age *
Peter M. Bren	President and Director	85
Charles J. Schreiber, Jr.	Chairman of the Board, Chief Executive Officer and Director	67
Jeffrey K. Waldvogel	Chief Financial Officer, Treasurer and Secretary	41
Stacie K. Yamane	Chief Accounting Officer and Assistant Secretary	54
Barbara R. Cambon	Independent Director	65
Jeffrey A. Dritley	Independent Director	61
Stuart A. Gabriel, Ph.D.	Independent Director	65

_____________________

* As of March 1, 2019.

Peter M. Bren is our President, a position he has held since August 2007, and one of our directors, a position he has held since February 2019. He is also Chairman and President of our advisor and President of KBS REIT III, positions he has held for these entities since October 2004 and January 2010, respectively. In July 2018, Mr. Bren was elected as a director of KBS REIT III. Mr. Bren is President and a director of KBS Growth & Income REIT, positions he has held since January 2015 and July 2017, respectively. Mr. Bren was President and a director of KBS Legacy Partners Apartment REIT, positions held from August 2009 and July 2009, respectively, until its liquidation in December 2018. Mr. Bren was also President of KBS REIT I, a position he held from June 2005 until its liquidation in December 2018. 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 is the sole owner of our advisor and the entity that acted as our dealer manager. KBS Holdings is a sponsor of our company and is or was a sponsor of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, which were formed in 2007, 2005, 2009, 2008, 2009, 2013 and 2015, respectively.

Mr. Bren is Chairman and President of KBS Realty Advisors LLC and is a principal of Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities are registered as investment advisers with the SEC. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. As of December 31, 2018, KBS Realty Advisors, together with KBS affiliates, including our advisor, had been involved in the investment in or management of approximately $25.9 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, institutional and sovereign wealth funds, and the investors in us, KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT.

Mr. Bren oversees all aspects of our advisor’s and KBS Realty Advisors’ operations, including the acquisition, management and disposition of individual investments and portfolios of investments for KBS-sponsored programs and KBS-advised investors. He also directs all facets of our advisor’s and KBS Realty Advisors’ business activities and is responsible for investor relationships.

Mr. Bren has been involved in real estate development, management, acquisition, disposition and financing for more than 40 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 30 years. Prior to taking his current positions as Chairman and President of our advisor and KBS Realty Advisors, he served as the President of The Bren Company, was a Senior Partner of Lincoln Property Company and was President of Lincoln Property Company, Europe. Mr. Bren is a member of the UCLA Anderson School of Management Board of Advisors and is a founding member of the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management.

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The board of directors has concluded that Mr. Bren is qualified to serve as one of our directors for reasons including his extensive industry and leadership experience. With more than 40 years of experience in real estate development, management, acquisition, disposition and financing and more than 30 years of experience with the acquisition, origination, management, disposition and financing of real estate-related debt investments, Mr. Bren has the depth and breadth of experience to implement our business strategy. As our President and a principal of our advisor, Mr. Bren is well-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; as President and a director of KBS REIT III and KBS Growth & Income REIT; as a former President and director of KBS Legacy Partners Apartment REIT; and as a former President of KBS REIT I, Mr. Bren brings to the board demonstrated management and leadership ability.

Charles J. Schreiber, Jr. is our Chairman of the Board, our Chief Executive Officer and one of our directors, positions he has held since August 2007, August 2007 and July 2007, respectively. He is also the Chief Executive Officer of our advisor and Chairman of the Board, Chief Executive Officer and a director of KBS Growth & Income REIT, positions he has held for these entities since October 2004 and January 2015, respectively. Mr. Schreiber is Chairman of the Board, Chief Executive Officer and a director of KBS REIT III, positions he has held since January 2010, January 2010 and December 2009, respectively. Mr. Schreiber was Chief Executive Officer and a director of KBS REIT I from June 2005 until its liquidation in December 2018. 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 is the sole owner of our advisor and the entity that acted as our dealer manager. KBS Holdings is a sponsor of our company and is or was a sponsor of KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, which were formed in 2007, 2005, 2009, 2008, 2009, 2013 and 2015, respectively.

Mr. Schreiber is the Chief Executive Officer of KBS Realty Advisors LLC and is a principal of Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities are registered as investment advisers with the SEC. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. As of December 31, 2018, KBS Realty Advisors, together with KBS affiliates, including our advisor, had been involved in the investment in or management of approximately $25.9 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, institutional and sovereign wealth funds, and the investors in us, KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT.

Mr. Schreiber oversees all aspects of our advisor’s and KBS Realty Advisors’ operations, including the acquisition, management and disposition of individual investments and portfolios of investments for KBS-sponsored programs and KBS-advised investors. He also directs all facets of our advisor’s and KBS Realty Advisors’ business activities and is responsible for investor relationships.

Mr. Schreiber has been involved in real estate development, management, acquisition, disposition and financing for more than 40 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 30 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.

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. Mr. Schreiber also serves as a member of the Executive Committee for the Public Non-Listed REIT Council for the National Association of Real Estate Investment Trusts. He is also a member of the National Council of Real Estate Investment Fiduciaries. Mr. Schreiber has served as a member of the board of directors and executive committee of The Irvine Company since August 2016, and since December 2016, Mr. Schreiber has served on the Board of Trustees of The Irvine Company.

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The board of directors has concluded that Mr. Schreiber is qualified to serve as a director, Chairman of the Board and as our Chief Executive Officer for reasons including his extensive industry and leadership experience. With more than 40 years of experience in real estate development, management, acquisition and disposition and more than 30 years of experience with the acquisition, origination, management, disposition and financing of real estate-related debt investments, he 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 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, as Chief Executive Officer, Chairman of the Board and a director of KBS REIT III and KBS Growth & Income REIT, as a director and trustee of The Irvine Company and as former Chief Excecutive Officer, Chairman of the Board and a director of KBS REIT I, Mr. Schreiber brings to the board of directors demonstrated management and leadership ability.

Jeffrey K. Waldvogel is our Chief Financial Officer, a position he has held since June 2015. In August 2018, he was also elected our Treasurer and Secretary. He is also the Chief Financial Officer of our advisor and KBS REIT III, positions he has held for each of these entities since June 2015. In July 2018, Mr. Waldvogel was elected the Treasurer and Secretary of KBS REIT III. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Growth & Income REIT, positions he has held since June 2015, April 2017 and April 2017, respectively. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II, positions he has held for these entities since June 2015. He was Chief Financial Officer of KBS REIT I and KBS Legacy Partners Apartment REIT from June 2015 until their respective liquidations in December 2018.

Mr. Waldvogel has been employed by an affiliate of our advisor since November 2010. With respect to the KBS-sponsored REITs advised by our advisor, he served as the Director of Finance and Reporting from July 2012 to June 2015 and as the VP Controller Technical Accounting from November 2010 to July 2012. In these roles Mr. Waldvogel was responsible for overseeing internal and external financial reporting, valuation analysis, financial analysis, REIT compliance, debt compliance and reporting, and technical accounting.

Prior to joining an affiliate of our advisor in 2010, Mr. Waldvogel was an audit senior manager at Ernst & Young LLP. During his eight years at Ernst & Young LLP, where he worked from October 2002 to October 2010, Mr. Waldvogel performed or supervised various auditing engagements, including the audit of financial statements presented in accordance with GAAP, as well as financial statements prepared on a tax basis. These auditing engagements were for clients in a variety of industries, with a significant focus on clients in the real estate industry.

In April 2002, Mr. Waldvogel received a Master of Accountancy Degree and Bachelor of Science from Brigham Young University in Provo, Utah. Mr. Waldvogel is a Certified Public Accountant (California).

Stacie K. Yamane is our Chief Accounting Officer, a position she has held since October 2008. In August 2018, she was also elected our Assistant Secretary. From July 2007 to December 2008, Ms. Yamane served as our Chief Financial Officer and from July 2007 to October 2008, she served as our Controller. Ms. Yamane is also the Chief Accounting Officer, Portfolio Accounting of our advisor and Chief Accounting Officer of KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, positions she has held for these entities since October 2008, January 2010, August 2009, February 2013 and January 2015, respectively. From August 2009 until its liquidation in December 2018, she served as Chief Accounting Office of KBS Legacy Partners Apartment REIT; from October 2008 until its liquidation in December 2018, she served as Chief Accounting Officer of KBS REIT I. From October 2004 to October 2008, Ms. Yamane served as Fund Controller of our advisor; from June 2005 to December 2008, she served as Chief Financial Officer of KBS REIT I and from June 2005 to October 2008, she served as Controller of KBS REIT I.

Ms. Yamane also 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, from 2004 through 2015, Ms. Yamane was responsible for client accounting/reporting for two real estate portfolios. These portfolios consisted of industrial, office and retail properties as well as land parcels. Ms. Yamane worked 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 assisted in the supervision and management of KBS Realty Advisors’ accounting department.

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Prior to joining an affiliate of KBS Realty Advisors in 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 in accordance with GAAP, 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 with various KBS-affiliated entities and Kenneth Leventhal & Company give her almost 30 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).

Barbara R. Cambon is one of our independent directors and is the chair of the conflicts committee and the chair of the Special Committee, positions she has held since March 2008, March 2008 and January 2016, respectively. Ms. Cambon is also an independent director and chair of the conflicts committee of KBS REIT III, positions she has held since September 2010. She was also an independent director, chair of the conflicts committee and chair of the special committee of KBS REIT I, positions she held from June 2005, June 2005, and January 2016, respectively, until KBS REIT I’s liquidation in December 2018. From April 2009 to December 2010, she served as Chief Operating Officer of Premium One Asset Management LLC, a company whose business focuses on providing investment management services to investors. From October 2003 to October 2009, she 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 provided asset management services to an institutional partnership investment in residential real estate development. She has been involved in the real estate investment business for over 30 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 its Chief Operating Officer. Prior to joining Colony Capital 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 Policy Advisory Board of the University of San Diego Burnham-Moores Center for Real Estate. Ms. Cambon previously served on the board of directors of Neighborhood National Bancorp, Amstar Advisers and BioMed Realty Trust, Inc. 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.

The board of directors has concluded that Ms. Cambon is qualified to serve as an independent director and as the chair of the conflicts committee for reasons including her expertise in real estate investment and management. Ms. Cambon’s over 30 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 former 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 as a director and chair of the conflicts committee of KBS REIT III and as a former director of KBS REIT I, Neighborhood National Bancorp, Amstar Advisers and BioMed Realty Trust, Inc., gives her additional perspective and insight into large public companies such as ours.

Jeffrey A. Dritley is one of our independent directors, a position he has held since October 2017. He is also an independent director of KBS REIT III, a position he has held since October 2017. Mr. Dritley is Founder and Managing Partner of Kearny Real Estate Company. Kearny, headquartered in Los Angeles, is a partnership of experienced real estate professionals active in the acquisition, entitlement, repositioning, development, leasing, management and disposition of large, complex commercial projects in Southern California. Since 1993, Kearny has been involved in approximately $4.4 billion of projects including the acquisition and work-out of approximately $2.3 billion of distressed real estate debt.

From 1993 to 2001, Mr. Dritley served as a Managing Director of Morgan Stanley, where he was responsible for the Morgan Stanley Real Estate Fund’s (“MSREF”) West Coast operations and was a member of the global investment committee. During his tenure, MSREF was involved in over $3 billion of transactions, including significant acquisitions, refinancings and work-outs. From 1986 to 1993, Mr. Dritley was employed by The Koll Company, a major real estate development company in the western United States. From 1979 to 1984, Mr. Dritley was employed by Peat, Marwick, Mitchell in Kansas City and New York City.

Mr. Dritley has 30 years of experience in the real estate industry. His experience has ranged from the acquisition, entitlement, development and redevelopment of over 14 million square feet of properties in Southern California, to creating and managing an organization with over 100 employees in the United States, Europe and Asia focused on buying and restructuring non-performing loans.

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From 2009 to 2016 Mr. Dritley served as a director, chairman of the compensation committee and member of the investment committee of Bixby Land Company, a private REIT with assets exceeding $1 billion, and from 2008 to 2016, he served as a Senior Advisor to Trigate Property Partners, a real estate private equity firm that manages a partnership with CalSTRS. He also has been active in several professional organizations, including the Los Angeles County Economic Development Corporation, for which he served on the Executive Committee, the Urban Land Institute and the Los Angeles Chapter of NAIOP, of which he is a past president. His community involvement included serving on the board of the Neighborhood Youth Association in Venice, California and volunteering his time for youth sports and Boy Scouts. Mr. Dritley is a Certified Public Accountant and holds a Bachelor’s Degree in Business Administration from the University of Missouri and an MBA from Harvard Business School.

The board of directors has concluded that Mr. Dritley is qualified to serve as an independent director for reasons including his expertise in real estate acquisition, restructuring and disposition. His over 30 years of experience in the real estate industry gives him significant experience that will be of great benefit to our company and make him well-positioned to advise the board of directors with respect to potential investment, restructuring and disposition opportunities. As Founder and Managing Partner of Kearny Real Estate Company, Mr. Dritley has encountered the myriad of practical, operational and other challenges that face large real estate companies like ours. Further, in the course of serving on the board of directors of Bixby Land Company and as a Senior Advisor to Trigate Property Partners, Mr. Dritley has developed strong leadership and consensus building skills that are a valuable asset to the board of directors. In addition, as a Certified Public Accountant, he possesses valuable expertise in evaluating the financial and operational results of companies such as ours.

Stuart A. Gabriel, Ph.D. is one of our independent directors and is chair of the audit committee, a position he has held since March 2008 and August 2018, respectively. Professor Gabriel is also an independent director and the chair of the audit committee of KBS REIT III, positions he has held since September 2010 and August 2018, respectively. Professor Gabriel was an independent director of KBS REIT I from June 2005 until its liquidation in December 2018. Since June 2007, Professor Gabriel has served as Director of the Richard S. Ziman Center for Real Estate and Professor of Finance and Arden Realty Chair at the UCLA Anderson School of Management. 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. He received a number of awards at UCLA and USC for outstanding graduate teaching. In 2004, he was elected President of the American Real Estate and Urban Economics Association. Professor Gabriel serves on the editorial boards of seven academic journals. He is also a Fellow of the Homer Hoyt Institute for Advanced Real Estate Studies. Since March 2016, Professor Gabriel has served on the board of directors of KB Home and is a member of its audit committee. Professor Gabriel has published extensively on the 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. Professor Gabriel serves as a consultant to numerous corporate and governmental entities. From 1986 through 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.

The board of directors has concluded that Professor Gabriel is qualified to serve as an independent director 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 the board of directors. 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 KBS REIT III and KB Home and as a former director of KBS REIT I, he also has an understanding of the requirements of serving on a public company board.

Corporate Governance

The Audit Committee

Our board of directors has established an audit committee. The audit committee’s function is to assist the board of directors in fulfilling its responsibilities by overseeing (i) our accounting and financial reporting processes, (ii) the integrity of our financial statements, (iii) our independent registered public accounting firm’s qualifications, performance and independence, and (iv) the performance of our internal audit function. The audit committee fulfills these responsibilities primarily by carrying out the activities enumerated in the audit committee charter. The audit committee updated and revised the audit committee charter in August 2016. The audit committee charter is available on our website at www.kbsreitii.com .

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The members of the audit committee are Jeffrey A. Dritley and Stuart A. Gabriel, Ph.D.(chair). The board of directors has determined that all of the members of the audit committee are “independent” as defined by the New York Stock Exchange. All of the members of the audit committee have significant financial and/or accounting experience, and the board of directors has determined that all of the members of the audit committee satisfy the SEC’s requirements for an “audit committee financial expert.”

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct and Ethics can be found at www.kbsreitii.com .


ITEM 11.	EXECUTIVE COMPENSATION

Compensation of Executive Officers

Our conflicts committee, which is composed of all of our independent directors, discharges our board of directors’ responsibilities relating to the compensation of our executives. However, we currently do not have any paid employees and our executive officers do not receive any compensation directly from us for services rendered to us. Our executive officers are officers and/or employees of, or hold an indirect ownership interest in, our advisor and/or its affiliates, and our executive officers are compensated by these entities, in part, for their services to us or our subsidiaries. See Part III, Item 13, “Certain Relationships and Related Transactions and Director Independence — Report of the Conflicts Committee — Certain Transactions with Related Persons” for a discussion of the fees paid to our advisor and its affiliates.

Compensation of Directors

If a director is also one of our executive officers, we do not pay any compensation to that person for services rendered as a director. The amount and form of compensation payable to our independent directors for their service to us is determined by the conflicts committee, based upon recommendations from our advisor. Two of our executive officers, Messrs. Bren and Schreiber, manage and control our advisor, and through our advisor, they are involved in recommending the compensation to be paid to our independent directors.

In order to attract and retain qualified individuals to serve as independent directors and in conjunction with the search for an independent director candidate to fill a vacancy on our board of directors at the time, the conflicts committee engaged Pearl Meyer, an independent executive compensation consultant, to conduct a review and make recommendations to the conflicts committee relating to the committee’s review of the compensation to be paid to independent directors. The conflicts committee instructed Pearl Meyer to identify a peer group of companies to determine how our independent director compensation compared to this group, to provide an analysis of the compensation paid to the independent directors of the peer group and paid to each of our independent directors and then to advise the conflicts committee with respect to such analysis. Pearl Meyer did not provide any additional services to us or the conflicts committee. Pearl Meyer was also engaged by the conflicts committee of an entity affiliated with us to provide the same analysis and advice with respect to the compensation of its independent directors. Based on consultation with and the study presented by Pearl Meyer and the recommendations contained therein, the conflicts committee’s own review of the Pearl Meyer study and the recommendation of our advisor, the conflicts committee approved a revised compensation structure for our independent directors on October 31, 2017.

We have provided below certain information regarding compensation earned by or paid to our directors during fiscal year 2018.



Name	Fees Earned or Paid in Cash in 2018		All Other Compensation		Total
Barbara R. Cambon	$	163,726	$	—	$	163,726
Jeffrey A. Dritley	157,000		—		157,000
Stuart A. Gabriel, Ph.D.	167,000		—		167,000
Peter M. Bren ⁽¹⁾⁽²⁾	—		—		—
Peter McMillan III ⁽³⁾	—		—		—
Charles J. Schreiber, Jr. ⁽¹⁾	—		—		—

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⁽¹⁾ Directors who are also our executive officers do not receive compensation for services rendered as a director.

⁽²⁾ Mr. Bren was elected to the board of directors on February 26, 2019.

⁽³⁾ Mr. McMillan’s term as a director ended on February 26, 2019.

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Cash Compensation

We compensate each of our independent directors with an annual retainer of $135,000. In addition, we pay our independent directors for attending board of directors, audit committee, conflicts committee and Special Committee meetings as follows:


•	each member of the audit committee and conflicts committee is paid $10,000 annually for service on such committees (except that the chair of each of the audit committee and conflicts committee is paid $20,000 annually for service as the chair of such committees);


•	after the tenth board of directors meeting of each calendar year, each independent director is paid (i) $2,500 in cash for each in-person board of directors meeting attended for the remainder of the calendar year and (ii) $2,000 in cash for each teleconference board of directors meeting attended for the remainder of the calendar year;

•

after the tenth audit committee meeting of each calendar year, each member of the audit committee is paid (i) $2,500 in cash for each in-person audit committee meeting attended for the remainder of the calendar year and (ii) $2,000 in cash for each teleconference audit committee meeting attended for the remainder of the calendar year (except that the audit committee chair is paid $3,000 for each in-person and teleconference audit committee meeting attended after the tenth audit committee meeting of each calendar year, for the remainder of each calendar year);

•

after the tenth conflicts committee meeting of each calendar year, each member of the conflicts committee is paid (i) $2,500 in cash for each in-person conflicts committee meeting attended for the remainder of the calendar year and (ii) $2,000 in cash for each teleconference conflicts committee meeting attended for the remainder of the calendar year (except that the conflicts committee chair is paid $3,000 for each in-person and teleconference conflicts committee meeting attended after the tenth conflicts committee meeting of each calendar year, for the remainder of each calendar year); and


•	each member of the Special Committee is paid $2,000 in cash for each in-person and teleconference Special Committee meeting attended (except that the Special Committee chair is paid $3,000 for each in-person and teleconference Special Committee meeting attended).

All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at board of directors meetings and committee meetings.


ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Stock Ownership

The following table shows, as of March 1, 2019, the amount of our common stock beneficially owned (unless otherwise indicated) by (1) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (2) our directors, (3) our executive officers, and (4) all of our directors and executive officers as a group.



Name and Address of Beneficial Owner ⁽¹⁾	Amount and Nature of Beneficial Ownership ⁽²⁾	Percentage of all Outstanding Shares
KBS Capital Advisors LLC	20,000 ⁽³⁾	*
Peter M. Bren, President and Director	20,000 ⁽³⁾	*
Charles J. Schreiber, Jr., Chairman of the Board, Chief Executive Officer and Director	20,000 ⁽³⁾	*
Jeffrey K. Waldvogel, Chief Financial Officer, Treasurer and Secretary	—	—
Stacie K. Yamane, Chief Accounting Officer and Assistant Secretary	—	—
Barbara R. Cambon, Independent Director	—	—
Jeffrey A. Dritley, Independent Director	—	—
Stuart A. Gabriel, Ph.D., Independent Director	2,680	—
All executive officers and directors as a group	22,680 ⁽³⁾	*

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* Less than 1% of the outstanding common stock.

⁽¹⁾ The address of each named beneficial owner is 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.

⁽²⁾ None of the shares is pledged as security.

⁽³⁾ Includes 20,000 shares owned by KBS Capital Advisors, which is indirectly owned and controlled by Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr.

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ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Director Independence

A majority of our board of directors, Messrs. Dritley and Gabriel and Ms. Cambon, meet the independence criteria as specified in our charter, as set forth on Appendix A attached hereto. In addition, and although our shares are not listed for trading on any national securities exchange, two of our directors, all of the members of the audit committee, a majority of the conflicts committee and a majority of the Special Committee are “independent” as defined by the New York Stock Exchange. The board of directors has affirmatively determined that Jeffrey A. Dritley and Stuart A. Gabriel, Ph.D. each satisfies the New York Stock Exchange independence standards. On June 13, 2018, an affiliate of our advisor offered Ms. Cambon the positions of chief executive officer and chief investment officer of the external manager of a to-be-launched KBS-sponsored fund. On June 14, 2018, Ms. Cambon verbally accepted the offer, subject to mutual agreement of written documentation of all terms. Until Ms. Cambon’s official appointment as chief executive officer and chief investment officer of the external manager, Ms. Cambon will continue to meet the independent director criteria as specified in our charter. As a result of her acceptance of this offer, our board of directors determined that Ms. Cambon was no longer “independent” as defined under the rules of the New York Stock Exchange, and Ms. Cambon resigned from the audit committee in July 2018. In addition, Ms. Cambon has agreed to recuse herself from the review, deliberation and approval of all matters that could raise a potential conflict of interest.

In determining that Professor Gabriel is independent under the New York Stock Exchange independence standards, the board of directors considered that (i) Peter M. Bren, one of our executive officers and directors, is a member of the UCLA Anderson School of Management Board of Advisors and is a founding member of the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management, (ii) Professor Gabriel is a Director of the Richard S. Ziman Center for Real Estate and Professor of Finance and Arden Realty Chair at the UCLA Anderson School of Management and (iii) in March 2012, Mr. Bren pledged a gift of $1.25 million to the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management. The contribution by Mr. Bren was made over five years in the amount of $250,000 per year. In addition, the board of directors considered that in 2017 Mr. Bren made an additional contribution to the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management in the amount of $250,000. Because these contributions were made to a tax exempt entity and the contributions did not exceed $250,000 in any year, the board of directors determined that these contributions were not material and Professor Gabriel met the New York Stock Exchange independence standards.

Report of the Conflicts Committee

Review of Our Policies

The conflicts committee has reviewed our policies and determined that they are in the best interest of our stockholders. Set forth below is a discussion of the basis for that determination.

Portfolio Management, Disposition and Distribution Policies. On January 27, 2016, our board of directors formed the Special Committee composed of all of our independent directors to explore the availability of strategic alternatives involving us. As part of the process of exploring strategic alternatives, on February 23, 2016, the Special Committee engaged Evercore to act as our financial advisor and to assist us and the Special Committee with this process. Under the terms of the engagement, Evercore provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Although the Special Committee engaged Evercore to assist us and the Special Committee with the exploration of strategic alternatives for us, we are not obligated to enter into any particular transaction or any transaction at all.

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We originally intended to hold our core properties for four to seven years. However, economic and market conditions have influenced and may continue to influence us to hold our investments for different periods of time and, as discussed above, the Special Committee is currently exploring the availability of strategic alternatives for us.

During the year ended December 31, 2018, we sold three office buildings that were part of an eight-building office campus and received the repayment on one real estate loan receivable. Since inception, we have sold 20 properties and three office buildings that were part of an eight-building office campus and we have sold or received principal repayments on eight real estate loans receivable.

As discussed above, we may continue to make additional strategic asset sales as opportunities become available in the market and, from time to time, may declare special distributions to our stockholders that would be funded with the net proceeds from those asset sales or from cash flow from other sources. Any future special distributions we make from the proceeds of future dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2019.

Over the long term, we expect that our distributions will generally be paid from cash flow from operations and FFO from current or prior periods and the net proceeds from the sales of our real estate properties. Our cash flow from operations has decreased and will continue to decrease as a result of our disposition activity, and we have adjusted, and may further adjust, our distribution policy with respect to the amount of monthly distribution payments to take into account our disposition activity and current real estate investments.

Our operating performance and ability to pay distributions from our cash flow from operations and/or the disposition of our assets cannot be accurately predicted and may deteriorate in the future due to numerous factors, including: the future operating performance of our investments in the existing real estate and the financial environment; the success and economic viability of our tenants; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on our variable rate debt obligation; our ability to successfully dispose of additional assets; and the sources and amounts of cash we have available for distributions.

Distributions declared per common share were $0.245 in the aggregate for the year ended December 31, 2018. Distributions declared per common share assumes each share was issued and outstanding at each record date for distributions. Distributions per common share were based on a monthly record date for each month during the period commencing January 2018 through December 2018.

Acquisition and Investment Policies. We do not expect to make new acquisitions of real estate or real estate-related investments in the future. We invested in a diverse portfolio of real estate and real estate-related investments. As of January 31, 2019, we owned eight office properties and an office campus consisting of five office buildings. See “ —Portfolio Management, Disposition and Distribution Policies” above.

Borrowing Policies. In order to execute our investment strategy, we primarily utilized secured debt to finance a portion of our investment portfolio. Management remains vigilant in monitoring the risks inherent with the use of debt in our portfolio and is taking actions to ensure that these risks, including refinance and interest rate risks, are properly balanced with the benefit of using leverage. We limit our total liabilities to 75% of the cost (before deducting depreciation and 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 this 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. As of January 31, 2019, our borrowings and other liabilities were approximately 33% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets, respectively.

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Policy Regarding Working Capital Reserves . We establish an annual budget for capital requirements and working capital reserves that we update periodically during the year. We may use cash on hand, proceeds from asset sales, debt proceeds and cash flow from operations to meet our needs for working capital for the upcoming year and to build a moderate level of cash reserves.

Policies Regarding Operating Expenses. Under our charter, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expenses for the four fiscal quarters ended December 31, 2018 did not exceed the charter-imposed limitation. For the four consecutive quarters ended December 31, 2018, total operating expenses represented approximately 1.2% of our average invested assets and approximately 31.1% of net income.

Policy Regarding Transactions with Related Persons. Our charter requires the conflicts committee to review and approve all transactions between us and our advisor, any of our officers or directors or any of their affiliates. Prior to entering into a transaction with a related party, a majority of the conflicts committee must conclude that the transaction is fair and reasonable to us. In addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Compliance Officer, currently our advisor’s Chief Audit Executive, via the Ethics Hotline or directly to the audit committee chair, as appropriate.

Certain Transactions with Related Persons. The conflicts committee has reviewed the material transactions between our affiliates and us since the beginning of 2018 as well as any such currently proposed material transactions. Set forth below is a description of such transactions and the conflicts committee’s report on their fairness.

We have entered into agreements with certain affiliates pursuant to which they provide services to us. Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. control and indirectly own KBS Holdings LLC, our sponsor. KBS Holdings is the sole owner of KBS Capital Advisors, our advisor, and KBS Capital Markets Group, the entity that acted as our dealer manager. Messrs. Bren and Schreiber are also two of our executive officers. 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.

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Our Relationship with KBS Capital Advisors. Since our inception, our advisor has provided day-to-day management of our business. Among the services that are provided or have been provided by our advisor under the terms of the advisory agreement are the following:


•	finding, presenting and recommending to us real estate 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 and acquisitions;


•	arranging for financing and refinancing of our 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 our 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 in and supervising the performance of our agents, including our registrar and transfer agent; and


•	performing any other services reasonably requested by us.

Our advisor is subject to the supervision of the board of directors and only has such authority as we may delegate to it as our agent. The advisory agreement has a one-year term expiring May 21, 2019, subject to an unlimited number of successive one-year renewals upon the mutual consent of the parties. From January 1, 2018 through the most recent date practicable, which was January 31, 2019, we compensated our advisor as set forth below.

With respect to investments in real estate, we pay our advisor a monthly asset management fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition fees and expenses related thereto. 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 estate, we paid our advisor a monthly asset management fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount paid or allocated to acquire or fund the loan or other investment (which amount included any portion of the investment that was debt financed and was inclusive of acquisition or origination fees and expenses related thereto) 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. Asset management fees from January 1, 2018 through January 31, 2019 totaled approximately $11.8 million, of which $0.9 million was payable as of January 31, 2019.

Under the advisory agreement, our advisor and its affiliates have the right to seek reimbursement from us for all costs and expenses they incur in connection with their provision of services to us, including our allocable share of our advisor’s overhead, such as rent, employee costs, utilities, accounting software and cybersecurity costs. We reimburse our advisor for our allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to us. In the future, our advisor may seek reimbursement for additional employee costs. However, we will not reimburse our 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 and benefits our advisor or its affiliates may pay to our executive officers. From January 1, 2018 through January 31, 2019, we incurred $404,000 of operating expenses reimbursable to our advisor, including $270,000 of employee costs, of which $78,000 was payable as of January 31, 2019. We also reimburse our advisor for certain of our direct costs incurred from third parties that were initially paid by our advisor on our behalf.

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For substantial assistance in connection with the sale of properties or other investments, we 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 aggregate disposition fees paid to our advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price. From January 1, 2018 through January 31, 2019, we incurred $1.0 million of disposition fees, all of which had been paid as of January 31, 2019.

From January 1, 2018 through January 31, 2019, our advisor reimbursed us $0.1 million for property insurance rebates.

The conflicts committee considers our relationship with our advisor during 2018 to be fair. The conflicts committee believes that the amounts payable to our advisor under the advisory agreement are similar to those paid by other publicly offered, unlisted, externally advised REITs and that this compensation is necessary in order for our advisor to provide the desired level of services to us and our stockholders.

Our Relationship with KBS Capital Markets Group. We have entered into a fee reimbursement agreement (the “AIP Reimbursement Agreement”) with our dealer manager pursuant to which we agreed to reimburse our dealer manager for certain fees and expenses it incurs for administering our participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of our stockholders serviced through the platform. From January 1, 2018 through January 31, 2019, we incurred $92,000 of costs and expenses related to the AIP Reimbursement Agreement, of which $28,000 was payable as of January 31, 2019.

The conflicts committee believes that this arrangement with KBS Capital Markets Group is fair.

Our Relationship with other KBS-Affiliated Entities. On January 6, 2014, we, together with KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, our dealer manager, our advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by our advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. In June 2015, KBS Growth & Income REIT was added to the insurance program at terms similar to those described above. In June 2018, we renewed our participation in the program. The program is effective through June 30, 2019. At renewal, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Legacy Partners Apartment REIT elected to cease participation in the program and obtained separate insurance coverage. KBS REIT I elected to cease participation in the program at the June 2017 renewal and obtained separate insurance coverage.

The conflicts committee believes this arrangement is fair.

During the year ended December 31, 2018 and from January 1, 2019 through January 31, 2019, no other transactions occurred between us and KBS REIT I (which liquidated in December 2018), KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT (which liquidated in December 2018), KBS Strategic Opportunity REIT II, KBS Growth & Income REIT, our advisor, our dealer manager or other KBS-affiliated entities.

The conflicts committee has determined that the policies set forth in this Report of the Conflicts Committee are in the best interests of our stockholders because they provide us with the highest likelihood of achieving our investment objectives.



March 12, 2019		The Conflicts Committee of the Board of Directors: Barbara R. Cambon (chair), Jeffrey A. Dritley and Stuart A. Gabriel, Ph.D.

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ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Registered Public Accounting Firm

During the year ended December 31, 2018 , Ernst & Young LLP served as our independent registered public accounting firm and provided certain tax and other services. Ernst & Young has served as our independent registered public accounting firm since our formation.

Pre-Approval Policies

In order to ensure that the provision of such services does not impair the independent registered public accounting firm’s independence, the audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent registered public accounting firm, as well as all permitted non-audit services. In determining whether or not to pre-approve services, the audit committee considers whether the service is a permissible service under the rules and regulations promulgated by the SEC. The audit committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by our independent registered public accounting firm, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

For the years ended December 31, 2018 and 2017 , all services rendered by Ernst & Young were pre-approved in accordance with the policies and procedures described above.

Principal Independent Registered Public Accounting Firm Fees

The audit committee reviewed the audit and non-audit services performed by Ernst & Young, as well as the fees charged by Ernst & Young for such services. In its review of the non-audit service fees, the audit committee considered whether the provision of such services is compatible with maintaining the independence of Ernst & Young. The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements by Ernst & Young for the years ended December 31, 2018 and 2017 , are set forth in the table below.



	2018		2017
Audit fees	$	527,500	$	519,500
Audit-related fees	—		—
Tax fees	89,865		102,120
All other fees	1,412		285
Total	$	618,777	$	621,905

For purposes of the preceding table, Ernst & Young’s professional fees are classified as follows:

•

Audit fees - These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by Ernst & Young in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

•

Audit-related fees - These are fees for assurance and related services that traditionally are performed by independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews and consultation concerning financial accounting and reporting standards.

•

Tax fees - These are fees for all professional services performed by professional staff in our independent registered public accounting firm’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.


•	All other fees - These are fees for any services not included in the above-described categories.

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PART IV


ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statement Schedules

See the Index to Financial Statements at page F-1 of this report.

The following financial statement schedule is included herein at pages F-31 through F-32 of this report:

Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization

(b) Exhibits



Ex.		Description

3.1		Second Articles of Amendment and Restatement 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, filed May 28, 2008

3.2		Fourth Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed September 22, 2016

4.1		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, filed February 19, 2008

10.1		Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank of California, N.A., dated as of October 8, 2008, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.2		First Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank of California, N.A., dated as of November 17, 2008, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.3		Second Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank, N.A., dated as of July 10, 2009, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.4		Commencement Letter for Second Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank, N.A., dated as of August 21, 2009, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.5		Third Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank, N.A., dated as of April 14, 2010, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.6		Fourth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between Hines VAF UB Plaza, L.P. and Union Bank, N.A., dated as of August 10, 2010, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, filed November 12, 2014

10.7		Fifth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated as of October 31, 2010, incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 16, 2016

10.8		Sixth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated as of February 15, 2011, incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 16, 2016

10.9		Seventh Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated as of November 14, 2012, incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 16, 2016

10.10		Eighth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated as of May 30, 2014, incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 16, 2016

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Ex.		Description

10.11		Ninth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated as of August 30, 2017

10.12		Letter Agreement, related to the Union Bank Plaza Mortgage Loan, by and among the Company, Wells Fargo Bank, National Association and People’s United Bank, National Association, dated as of December 21, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed March 8, 2018

10.13		Tenth Amendment to Office/Retail Lease (relating to Union Bank Plaza), by and between KBSII 445 South Figueroa, LLC and Union Bank, N.A., dated December 31, 2017

10.14		Loan Agreement related to the Portfolio Loan Facility, by and among KBSII 100-200 Campus Drive, LLC, KBSII 300-600 Campus Drive, LLC, KBSII Willow Oaks, LLC, KBSII Pierre Laclede Center, LLC, KBSII 445 South Figueroa, LLC, KBSII Emerald View, LLC, KBSII Granite Tower, LLC, and KBSII Fountainhead, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.15		Guaranty Agreement related to the Portfolio Loan Facility, by KBS REIT Properties II, LLC, in favor of Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.16		Promissory Note related to the Portfolio Loan Facility, by and among KBSII 100-200 Campus Drive, LLC, KBSII 300-600 Campus Drive, LLC, KBSII Willow Oaks, LLC, KBSII Pierre Laclede Center, LLC, KBSII 445 South Figueroa, LLC, KBSII Emerald View, LLC, KBSII Granite Tower, LLC, and KBSII Fountainhead, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.17		Mortgage, Assignment, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII 100-200 Campus Drive, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.18		Mortgage, Assignment, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII 300-600 Campus Drive, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.19		Mortgage, Assignment, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII Emerald View, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.20		Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII Fountainhead, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.21		Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII Granite Tower, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.22		Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII 445 South Figueroa, LLC and Bank of America, N.A., dated as of March 29, 2018, incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.23		Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII Pierre LaClede Center, LLC and Bank of America, N.A., dated as of March 29, 2018, , incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

10.24		Credit Line Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing related to the Portfolio Loan Facility, by and between KBSII Willow Oaks, LLC and Bank of America, N.A., dated as of March 29, 2018, , incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed May 9, 2018

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Ex.		Description

10.25		Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated May 21, 2018, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed May 21, 2018

10.26		Fountainhead Corporate Park Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated June 29, 2009

10.27		Consent by Landlord to First Amendment to Sub-SubLease, by and between KBSII Fountainhead, LLC, Western International University, Inc. and Tiya Academy LLC, dated July 29, 2009

10.28		First Amendment to Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated August 11, 2009

10.29		Second Amendment to Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated November 2, 2009

10.30		Third Amendment to Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated February 19, 2010

10.31		Fourth Amendment to Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated March 11, 2011

10.32		Agreement, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated July 29, 2011

10.33		Fifth Amendment to Lease, by and between US Real Estate Limited Partnership and The University of Phoenix, Inc., dated August 3, 2011

10.34		Sixth Amendment to Lease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated December 22, 2011

10.35		Seventh Amendment to Lease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated June 1, 2012

10.36		Landlord Consent to Sublease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated November 20, 2013

10.37		Eighth Amendment to Lease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated June 1, 2012

10.38		Ninth Amendment to Lease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated April 18, 2018

10.39		Tenth Amendment to Lease, by and between KBSII Fountainhead, LLC and The University of Phoenix, Inc., dated January 2, 2019

10.40		Agreement of Lease (relating to Denver Place Plaza Tower), by and between Amerimar Realty Management Co.-Colorado, Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated July 30, 2002

10.41		First Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated September 10, 2002

10.42		Second Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated July 23, 2004

10.43		Third Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated November 1, 2004

10.44		Fourth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated December 31, 2004

10.45		Fifth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated April 20, 2005

10.46		Sixth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated May 18, 2005

10.47		Seventh Amendment to Lease (relating to Denver Place Plaza Tower), by and between Denver-Stellar Associates Limited Partnership and Western Gas Resources, Inc., dated July 15, 2005

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Ex.		Description

10.48		Eighth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Western Gas Resources, Inc., dated November 15, 2005

10.49		Ninth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Anadarko Petroleum Corporation, dated February 16, 2007

10.50		Tenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Anadarko Petroleum Corporation, dated September 11, 2007

10.51		Eleventh Amendment to Lease (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Anadarko Petroleum Corporation, dated November 9, 2007

10.52		Twelfth Amendment to Lease (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Anadarko Petroleum Corporation, dated March 3, 2008

10.53		Temporary Lease Agreement (relating to Denver Place Plaza Tower), by and between Cumberland Office Park, LLC and Anadarko Petroleum Corporation, dated April 28, 2008

10.54		Thirteenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between KBSII Granite Tower, LLC and Anadarko Petroleum Company, dated October 6, 2011

10.55		Fourteenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between KBSII Granite Tower, LLC and Anadarko Petroleum Corporation, dated November 13, 2012

10.56		Fifteenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between KBSII Granite Tower, LLC and Anadarko Petroleum Corporation, dated June 5, 2013

10.57		Sixteenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between KBSII Granite Tower, LLC and Anadarko Petroleum Corporation, dated August 17, 2015

10.58		Seventeenth Amendment to Lease (relating to Denver Place Plaza Tower), by and between KBSII Granite Tower, LLC and Anadarko Petroleum Corporation, dated December 19, 2018

21.1		Subsidiaries of the Company

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1		Eighth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed May 19, 2014

99.2		Ninth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed December 7, 2018

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Table of Contents

Appendix A

Capitalized terms used herein shall have the meaning set forth in our charter.

Independent Directors . The directors of the Corporation who are not associated and have not been associated within the last two years, directly or indirectly, with the Sponsor or Advisor of the Corporation.


(a)	A director shall be deemed to be associated with the Sponsor or Advisor if he or she:


(i)	owns an interest in the Sponsor, Advisor or any of their Affiliates;


(ii)	is employed by the Sponsor, Advisor or any of their Affiliates;


(iii)	is an officer or director of the Sponsor, Advisor or any of their Affiliates;


(iv)	performs services, other than as a director, for the Corporation;


(v)	is a director for more than three REITs organized by the Sponsor or advised by the Advisor; or


(vi)	has any material business or professional relationship with the Sponsor, Advisor or any of their Affiliates.


(b)	Consistent with (a)(v) above, serving as an independent director of or receiving independent director fees from or owning an interest in a REIT or other real estate program organized by the Sponsor or advised or managed by the Advisor or its Affiliates shall not, by itself, cause a director to be deemed associated with the Sponsor or the Advisor.

(c)

For purposes of determining whether or not a business or professional relationship is material pursuant to (a)(vi) above, the annual gross revenue derived by the director from the Sponsor, Advisor and their Affiliates (excluding fees for serving as an independent director of the Corporation or other REIT or real estate program organized or advised or managed by the Advisor or its Affiliates) shall be deemed material per se if it exceeds 5% of the director’s:


(i)	annual gross revenue, derived from all sources, during either of the last two years; or


(ii)	net worth, on a fair market value basis.


(d)	An indirect relationship shall include circumstances in which a director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law is or has been associated with the Sponsor, Advisor any of their Affiliates or the Corporation.

Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2018, 2017 and 2016	F-4
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016	F-5
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2018, 2017 and 2016	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016	F-7
Notes to Consolidated Financial Statements	F-8

Financial Statement Schedule
Schedule III ─ Real Estate Assets and Accumulated Depreciation and Amortization	F-31

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

KBS Real Estate Investment Trust II, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of KBS Real Estate Investment Trust II, Inc. (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a), Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2007.

Irvine, California

March 13, 2019

F-2

Table of Contents

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)



	December 31,
	2018			2017
Assets
Real estate:
Land	$	158,036		$	158,036
Buildings and improvements	938,607			918,587
Tenant origination and absorption costs	31,295			53,901
Total real estate held for investment, cost	1,127,938			1,130,524
Less accumulated depreciation and amortization	(173,731		)	(166,372		)
Total real estate held for investment, net	954,207			964,152
Real estate held for sale, net	—			66,717
Total real estate, net	954,207			1,030,869
Real estate loan receivable, net	—			13,923
Total real estate and real estate-related investments, net	954,207			1,044,792
Cash and cash equivalents	57,730			81,017
Restricted cash	17,957			5,626
Rents and other receivables, net	94,044			59,872
Above-market leases, net	224			2,118
Assets related to real estate held for sale	—			2,927
Prepaid expenses and other assets	32,855			28,758
Total assets	$	1,157,017		$	1,225,110
Liabilities and stockholders’ equity
Notes payable:
Notes payable, net	$	415,208		$	407,719
Notes payable related to real estate held for sale, net	—			94,580
Total notes payable, net	415,208			502,299
Accounts payable and accrued liabilities	48,903			13,166
Due to affiliate	55			84
Distributions payable	3,874			4,376
Below-market leases, net	314			984
Liabilities related to real estate held for sale	—			320
Other liabilities	17,189			9,299
Total liabilities	485,543			530,528
Commitments and contingencies (Note 12)
Redeemable common stock	10,000			10,000
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $.01 par value; 1,000,000,000 shares authorized, 186,464,794 and 187,666,302 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively	1,865			1,877
Additional paid-in capital	1,667,897			1,673,767
Cumulative distributions in excess of net income	(1,008,288		)	(991,062		)
Total stockholders’ equity	661,474			684,582
Total liabilities and stockholders’ equity	$	1,157,017		$	1,225,110

See accompanying notes to consolidated financial statements.

F-3

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)



	Years Ended December 31,
	2018			2017		2016
Revenues:
Rental income	$	121,813		$	127,521	$	133,408
Tenant reimbursements	12,636			13,641		14,108
Interest income from real estate loans receivable	434			1,060		1,075
Other operating income	7,332			7,237		6,865
Total revenues	142,215			149,459		155,456
Expenses:
Operating, maintenance, and management	35,246			34,719		34,603
Real estate taxes and insurance	19,268			19,816		20,128
Asset management fees to affiliate	10,894			11,617		11,811
General and administrative expenses	6,024			4,541		6,370
Depreciation and amortization	50,202			54,047		58,768
Interest expense	17,884			17,466		16,651
Total expenses	139,518			142,206		148,331
Other income:
Other interest income	1,159			375		529
Loss from extinguishment of debt	(212		)	—		—
Gain on sales of real estate	24,884			17,486		9,093
Total other income	25,831			17,861		9,622
Net income	$	28,528		$	25,114	$	16,747
Net income per common share	$	0.15		$	0.13	$	0.09
Weighted-average number of common shares outstanding, basic and diluted	187,133,703			188,235,450		189,111,086

See accompanying notes to consolidated financial statements.

F-4

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)



	Years Ended December 31,
	2018		2017		2016
Net income	$	28,528	$	25,114	$	16,747
Other comprehensive income:
Reclassification of realized losses recognized on interest rate swaps (effective portion)	—		—		60
Total other comprehensive income	—		—		60
Total comprehensive income	$	28,528	$	25,114	$	16,807

See accompanying notes to consolidated financial statements.

F-5

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(dollars in thousands)



						Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Common Stock
	Shares		Amounts
Balance, December 31, 2015	189,556,185		$	1,895		$	1,684,206		$	(928,111	)	$	(60	)	$	757,930
Net income	—		—			—			16,747			—			16,747
Other comprehensive income	—		—			—			—			60			60
Redemptions of common stock	(836,233	)	(8		)	(4,682		)	—			—			(4,690		)
Distributions declared	—		—			—			(53,140		)	—			(53,140		)
Balance, December 31, 2016	188,719,952		$	1,887		$	1,679,524		$	(964,504	)	$	—		$	716,907
Net income	—		—			—			25,114			—			25,114
Redemptions of common stock	(1,053,650	)	(10		)	(5,757		)	—			—			(5,767		)
Distributions declared	—		—			—			(51,672		)	—			(51,672		)
Balance, December 31, 2017	187,666,302		$	1,877		$	1,673,767		$	(991,062	)	$	—		$	684,582
Net income	—		—			—			28,528			—			28,528
Redemptions of common stock	(1,201,508	)	(12		)	(5,870		)	—			—			(5,882		)
Distributions declared	—		—			—			(45,754		)	—			(45,754		)
Balance, December 31, 2018	186,464,794		$	1,865		$	1,667,897		$	(1,008,288	)	$	—		$	661,474

See accompanying notes to consolidated financial statements.

F-6

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Years Ended December 31,
	2018			2017			2016
Cash Flows from Operating Activities:
Net income	$	28,528		$	25,114		$	16,747
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,202			54,047			58,768
Noncash interest income on real estate-related investments	3			4			3
Deferred rent	3,717			(864		)	(6,528		)
Bad debt expense	371			515			258
Amortization of above- and below-market leases, net	1,037			762			453
Amortization of deferred financing costs	1,272			1,106			1,748
Unrealized gain on derivative instruments	—			(101		)	(478		)
Loss from extinguishment of debt	212			—			—
Gain on sale of real estate, net	(24,884		)	(17,486		)	(9,093		)
Changes in operating assets and liabilities:
Rents and other receivables	(38,367		)	(2,610		)	(2,441		)
Prepaid expenses and other assets	(8,186		)	(2,635		)	(5,837		)
Accounts payable and accrued liabilities	34,657			(4,203		)	(154		)
Due to affiliate	(29		)	43			(8		)
Other liabilities	7,890			(847		)	954
Net cash provided by operating activities	56,423			52,845			54,392
Cash Flows from Investing Activities:
Proceeds from sale of real estate	94,015			83,410			41,210
Improvements to real estate	(34,601		)	(17,639		)	(38,398		)
Principal repayments on real estate loans receivable	13,920			152			128
Net cash provided by investing activities	73,334			65,923			2,940
Cash Flows from Financing Activities:
Proceeds from notes payable	375,000			—			17,000
Principal payments on notes payable	(460,765		)	(21,663		)	(40,175		)
Payments of deferred financing costs	(2,810		)	(915		)	(879		)
Payments to redeem common stock	(5,882		)	(5,767		)	(4,690		)
Distributions paid to common stockholders	(46,256		)	(51,789		)	(53,372		)
Net cash used in financing activities	(140,713		)	(80,134		)	(82,116		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(10,956		)	38,634			(24,784		)
Cash, cash equivalents and restricted cash, beginning of period	86,643			48,009			72,793
Cash, cash equivalents and restricted cash, end of period	$	75,687		$	86,643		$	48,009
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	16,686		$	16,314		$	15,411
Supplemental Disclosure of Noncash Investing and Financing Activities:
Increase in accrued improvements to real estate	$	1,080		$	—		$	—

See accompanying notes to consolidated financial statements.

F-7

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018


1.	ORGANIZATION

KBS Real Estate Investment Trust II, Inc. (the “Company”) was formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008. The Company conducts its business primarily through KBS Limited Partnership II, a Delaware limited partnership formed on August 23, 2007 (the “Operating Partnership”), and its subsidiaries. The Company is the sole general partner of and directly owns a 0.1% partnership interest in the Operating Partnership. The Company’s wholly-owned subsidiary, KBS REIT Holdings II LLC, a Delaware limited liability company formed on August 23, 2007 (“KBS REIT Holdings II”), owns the remaining 99.9% partnership interest in the Operating Partnership and is its sole limited partner.

The Company invested in a diverse portfolio of real estate and real estate-related investments. As of December 31, 2018 , the Company owned eight office properties and an office campus consisting of five office buildings.

Subject to certain restrictions and limitations, the business of the Company is managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on May 21, 2018 (the “Advisory Agreement”). The Advisory Agreement may be renewed for an unlimited number of one -year periods upon the mutual consent of the Advisor and the Company. Either party may terminate the Advisory Agreement upon 60 days’ written notice. The Advisor owns 20,000 shares of the Company’s common stock.

Upon commencing its initial public offering (the “Offering”), the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, to serve as the dealer manager of the Offering. The Company ceased offering shares of common stock in its primary offering on December 31, 2010 and terminated its primary offering on March 22, 2011. The Company terminated its dividend reinvestment plan effective May 29, 2014.

The Company sold 182,681,633 shares of common stock in its primary offering for gross offering proceeds of $1.8 billion . The Company sold 30,903,504 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $298.2 million . Also as of December 31, 2018 , the Company had redeemed 27,140,343 shares sold in the Offering for $251.7 million .


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Reclassifications

Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the year ended December 31, 2018 , the Company sold three office buildings that were part of an eight -building office campus. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented.

F-8

Table of Contents

KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Revenue Recognition

Real Estate

The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that a tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:


•	whether the lease stipulates how a tenant improvement allowance may be spent;


•	whether the amount of a tenant improvement allowance is in excess of market rates;


•	whether the tenant or landlord retains legal title to the improvements at the end of the lease term;


•	whether the tenant improvements are unique to the tenant or general-purpose in nature; and


•	whether the tenant improvements are expected to have any residual value at the end of the lease.

The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

The Company recognizes a gain on sales of real estate upon the closing of a transaction with the purchaser. Gains on real estate sold are recognized using the full accrual method when collectibility of the sales price is reasonably assured, the Company is not obligated to perform additional activities that may be considered significant, the initial investment from the buyer is sufficient and other profit recognition criteria have been satisfied. Gain on sales of real estate may be deferred in whole or in part until the requirements for gain recognition have been met.

Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018.

Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. The recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 were $1.9 million and were included in tenant reimbursements on the accompanying statements of operations.

F-9

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Sales of Real Estate

Prior to January 1, 2018, gains on real estate sold were recognized using the full accrual method at closing when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. Gain on sales of real estate may have been deferred in whole or in part until the requirements for gain recognition had been met.

Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20.

ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer.

Real Estate Loan Receivable

Interest income on the Company’s real estate loan receivable was recognized on an accrual basis over the life of the investment using the interest method. Direct loan origination fees and origination or acquisition costs, as well as acquisition premiums or discounts, were amortized over the term of the loan as an adjustment to interest income.

Cash and Cash Equivalents

The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income.

Real Estate

Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant’s lease term or expected useful life. The Company anticipates the estimated useful lives of its assets by class to be generally as follows:



Buildings	25-40 years
Building improvements	10-25 years
Tenant improvements	Shorter of lease term or expected useful life
Tenant origination and absorption costs	Remaining term of related leases, including below-market renewal periods

Impairment of Real Estate and Related Intangible Assets and Liabilities

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Projecting future cash flows involves estimating expected future operating income and expenses related to the real estate and its related intangible assets and liabilities as well as market and other trends. Using inappropriate assumptions to estimate cash flows could result in incorrect fair values of the real estate and its related intangible assets and liabilities and could result in the overstatement of the carrying values of the Company’s real estate and related intangible assets and liabilities and an overstatement of the Company’s net income.

Real Estate Held for Sale

The Company generally considers real estate to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate held for sale” and “assets related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Notes payable and other liabilities related to real estate held for sale are classified as “notes payable related to real estate held for sale” and “liabilities related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Real estate classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties and related gains on sales of properties that were disposed of or classified as held for sale in the ordinary course of business during the years ended December 31, 2018, 2017 and 2016 are included in continuing operations on the Company’s consolidated statements of operations.

Change in a Plan to Sell

When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value or estimated fair value less estimated costs to sell. Changes in the market may compel the Company to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment.

Real Estate Loan Receivable

The Company’s real estate loan receivable was recorded at amortized cost, net of loan loss reserves (if any), and evaluated for impairment at each balance sheet date. The amortized cost of a real estate loan receivable is the outstanding unpaid principal balance, net of unamortized acquisition premiums or discounts and unamortized costs and fees directly associated with the origination or acquisition of the loan.

As of December 31, 2018 , the Company did not own any real estate loans receivable. The Company’s real estate loan receivable was paid off in full on June 1, 2018. The Company did not record any impairment losses related to the real estate loan receivable during the years ended December 31, 2018 , 2017 and 2016 .

Cash and Cash Equivalents

The Company considers all short-term (with an original maturity of three months or less), highly-liquid investments utilized as part of the Company’s cash-management activities to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2018 . The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Restricted Cash

Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for capital improvements and replacements.

Rents and Other Receivables

The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents. The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates.

Derivative Instruments

The Company may enter into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income (loss) and consolidated statements of stockholders’ equity. The changes in fair value for derivative instruments that are not designated as a hedge or that do not meet the hedge accounting criteria are recorded as a component of interest expense in the accompanying consolidated statements of operations.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:


•	Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;


•	Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and


•	Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Redeemable Common Stock

The Company has a share redemption program pursuant to which stockholders may sell their shares to the Company only in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program and, together with redemptions sought in connection with a stockholder’s death, “Special Redemptions”). Such redemptions are subject to the limitations described in the share redemption program document, including:

•

During each calendar year, Special Redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to the Company’s stockholders. 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 SEC or (b) in a separate mailing to its stockholders. The dollar limitation for calendar year 2018 was $10.0 million . On December 3, 2018, the Company’s board of directors approved the same annual dollar amount limitation for Special Redemptions for calendar year 2019 of $10.0 million in the aggregate, as may be reviewed and adjusted from time to time by the board of directors.


•	During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.


•	The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

If the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the Company’s share redemption program, then it will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currently effective, or its most recently effective, registration statement as such registration statement has been amended or supplemented, then the Company would redeem all of such stockholder’s shares.

Pursuant to the share redemption program, redemptions made in connection with Special Redemptions are made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. The Company does not currently expect to have funds available for ordinary redemptions in the future.

On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.89 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and was effective through the November 2018 redemption date.

On December 3, 2018, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.95 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2018. The change in the redemption price became effective for the December 2018 redemption date, which was December 31, 2018, and will be effective until the estimated value per share is updated.

On December 3, 2018, the Company’s board of directors amended and restated the share redemption program to provide that the Company may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to its stockholders. The Company may provide this notice by including such information in a (a) Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) separate mailing to its stockholders. There were no other material changes made to the share redemption program. The amended and restated share redemption program was effective on January 6, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

The Company records amounts that are redeemable under the share redemption program as redeemable common stock in the accompanying consolidated balance sheets because the shares are mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. Pursuant to the share redemption program, effective for redemptions on or after June 18, 2014, the maximum amount redeemable under the Company’s share redemption program is limited to an annual dollar amount determined by Company’s board of directors, as described above. However, because the amounts that can be redeemed in future periods are determinable and only contingent on an event that is likely to occur (e.g., the passage of time), the Company presents the amounts available for future redemptions in future periods as redeemable common stock in the accompanying consolidated balance sheets.

The Company classifies financial instruments that represent a mandatory obligation of the Company to redeem shares as liabilities. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to redeem shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values.

For the year ended December 31, 2018 , the Company redeemed 1,201,508 shares sold in the Offering for $5.9 million , which represented all redemption requests received in good order and eligible for redemption as Special Redemptions under the share redemption program through the December 2018 redemption date.

Related Party Transactions

The Company has entered into the Advisory Agreement with the Advisor. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the management of the Company’s investments, among other services, and the disposition of investments, as well as reimbursement of certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Company has entered into a fee reimbursement agreement (the “AIP Reimbursement Agreement”) with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform (“AIP Platform”) with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), which liquidated in December 2018; KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”); KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”); KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”), which liquidated in December 2018; KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”); and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”).

The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement.

Operating Expenses

Under the Advisory Agreement, the Advisor has the right to seek reimbursement from the Company for all costs and expenses it incurs in connection with the provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, accounting software and cybersecurity costs. Commencing July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. In the future, the Advisor may seek reimbursement for additional employee costs. The Company will not reimburse the Advisor for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries and benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on the Company’s behalf.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Asset Management Fee

With respect to investments in real estate, the Company pays the Advisor a monthly asset management fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition fees and expenses related thereto. In the case of investments made through joint ventures, the asset management fee will be determined based on the Company’s proportionate share of the underlying investment.

With respect to investments in loans and any investments other than real estate, the Company paid the Advisor a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount paid or allocated to acquire or fund the loan or other investment (which amount included any portion of the investment that was debt financed and was inclusive of acquisition or origination fees and expenses related thereto) 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.

With respect to an investment that has suffered an impairment in value, reduction in cash flow or other negative circumstances, such investment may either be excluded from the calculation of the asset management fee described above or included in such calculation at a reduced value that is recommended by the Advisor and the Company’s management and then approved by a majority of the Company’s independent directors, and this change in the fee will be applicable to an investment upon the earlier to occur of the date on which (i) such investment is sold, (ii) such investment is surrendered to a person other than the Company, its direct or indirect wholly owned subsidiary or a joint venture or partnership in which the Company has an interest, (iii) the Advisor determines that it will no longer pursue collection or other remedies related to such investment, or (iv) the Advisor recommends a revised fee arrangement with respect to such investment. As of December 31, 2018 , the Company has not determined to calculate the asset management fee at an adjusted value for any investments or to exclude any investments from the calculation of the asset management fee.

Disposition Fee

For substantial assistance in connection with the sale of properties or other investments, the Company pays the 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 Advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (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). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT.

The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for all open tax years through December 31, 2018 . As of December 31, 2018 , returns for the calendar years 2014 through 2017 remain subject to examination by major tax jurisdictions.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the years ended December 31, 2018 , 2017 and 2016 , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Distributions declared per common share were $0.245 , $0.274 and $0.281 in the aggregate for the years ended December 31, 2018, 2017 and 2016, respectively. Distributions per common share were based on a monthly record date for each month during the period commencing January 2016 through December 2018. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during this period.

Segments

The Company invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. Beginning with the reporting period commencing on January 1, 2016, the Company aggregated its investments into one reportable business segment. The Company considered both quantitative and qualitative thresholds and determined that its investment in a real estate loan receivable did not constitute a reportable segment. Prior to the reporting period commencing on January 1, 2016, the Company had identified two reportable business segments based on its investment types: real estate and real estate-related. The Company’s investment in a real estate-related investment was paid off in full on June 1, 2018.

Square Footage, Occupancy and Other Measures

Square footage, occupancy, number of tenants and other similar measures, including annualized base rent and annualized base rent per square foot, used to describe real estate and real estate-related investments included in these Notes to the Consolidated Financial Statements are presented on an unaudited basis.

Recently Issued Accounting Standards Update

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. ASU No. 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Upon its adoption of ASU No. 2016-02 on January 1, 2019, the Company adopted the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company 1) did not reassess whether any expired or existing contracts are or contain leases, 2) did not reassess the lease classification for any expired or existing lease, and 3) did not reassess initial direct costs for any existing leases. The Company did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, the Company adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the current lease accounting standards of Topic 840 are or contain a lease under Topic 842.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”), which provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon its adoption of the lease accounting standard under Topic 842, the Company adopted this practical expedient, specifically related to its tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as 1) the timing and pattern of transfer of the nonlease components and associated lease components are the same and 2) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance will be accounted for as rental income on the Company’s statement of operations beginning January 1, 2019. In addition, ASU No. 2018-11, provides an additional optional transition method to allow entities to apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease accounting standard will continue to be reported under the current lease accounting standards of Topic 840. The Company adopted this transition method upon its adoption of the lease accounting standard of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU No. 2018-20”), which permits lessors, as an accounting policy election, to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs and instead to account for these costs as if they were lessee costs. In addition, ASU No. 2018-20 requires lessors to 1) exclude lessor costs paid directly by lessees to third parties on the lessor’s behalf from variable payments and 2) include lessor costs that are reimbursed by the lessee in the measurement of variable lease revenue and the associated expense. The amendments also clarify that lessors are required to allocate the variable payments to the lease and non-lease components and follow the recognition guidance in Topic 842 for the lease component and other applicable guidance, such as ASC 606, for the non-lease component. The Company made the accounting policy election related to sales taxes upon adoption of the lease accounting standard of Topic 842 on January 1, 2019.

The Company created an inventory of its leases where the Company may be a lessee to assess the potential impact to the Company’s financial statements. The adoption of the new lease accounting standard did not have a material impact to the Company’s financial statements on January 1, 2019. Beginning January 1, 2019, the Company, as a lessor, will record legal costs incurred to negotiate an operating lease as an expense, classified as operating, maintenance, and management on the Company’s consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842. In addition, the Company will account for new leases, including modifications of existing leases, entered into on and after January 1, 2019 under the new lease accounting standard under Topic 842 and follow the related presentation and disclosure requirements for reporting periods subsequent to January 1, 2019.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”). ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. ASU No. 2016-13 also amends the impairment model for available-for-sale securities. An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. ASU No. 2016-13 also requires new disclosures. For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available-for-sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurements. In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU No. 2018-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its financial statements, but does not expect the adoption of ASU No. 2018-13 to have a material impact on its financial statements.


3.	REAL ESTATE HELD FOR INVESTMENT

As of December 31, 2018 , the Company’s portfolio of real estate held for investment was composed of eight office properties and an office campus consisting of five office buildings, encompassing in the aggregate approximately 4.6 million rentable square feet. As of December 31, 2018 , the Company’s real estate portfolio was 76% occupied. The following table summarizes the Company’s real estate portfolio as of December 31, 2018 (in thousands):



Property	Date Acquired	City	State	Property Type	Total Real Estate at Cost		Accumulated Depreciation and Amortization			Total Real Estate, Net
100 & 200 Campus Drive Buildings	09/09/2008	Florham Park	NJ	Office	$	154,098	$	(16,452	)	$	137,646
300-600 Campus Drive Buildings	10/10/2008	Florham Park	NJ	Office	161,668		(21,659		)	140,009
Willow Oaks Corporate Center	08/26/2009	Fairfax	VA	Office	110,160		(22,111		)	88,049
Pierre Laclede Center	02/04/2010	Clayton	MO	Office	82,490		(13,729		)	68,761
Union Bank Plaza	09/15/2010	Los Angeles	CA	Office	185,864		(28,274		)	157,590
Emerald View at Vista Center	12/09/2010	West Palm Beach	FL	Office	29,080		(5,177		)	23,903
Granite Tower	12/16/2010	Denver	CO	Office	137,932		(30,172		)	107,760
Fountainhead Plaza	09/13/2011	Tempe	AZ	Office	119,383		(23,253		)	96,130
Corporate Technology Centre	03/28/2013	San Jose	CA	Office	147,263		(12,904		)	134,359
					$	1,127,938	$	(173,731	)	$	954,207

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

As of December 31, 2018 , the following properties represented more than 10% of the Company’s total assets:



Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) ⁽¹⁾		Average Annualized Base Rent per sq. ft.		Occupancy
Union Bank Plaza	Los Angeles, CA	627,334	$	157,590	13.6	%	$	20,115	$	43.42	74	%
300-600 Campus Drive Buildings	Florham Park, NJ	578,424	140,009		12.1	%	17,865		33.63		92	%
100 & 200 Campus Drive Buildings	Florham Park, NJ	590,458	137,646		11.9	%	14,002		30.68		77	%
Corporate Technology Centre ⁽²⁾	San Jose, CA	415,700	134,359		11.6	%	—		—		—	%

_____________________

⁽²⁾ The lease for the single tenant who occupied Corporate Technology Centre expired on October 31, 2018.

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2018 , the leases had remaining terms, excluding options to extend, of up to 14.3 years with a weighted-average remaining term of 6.0 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or part of the leased premises after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $2.5 million and $2.6 million as of December 31, 2018 and 2017 , respectively.

During the years ended December 31, 2018 , 2017 and 2016 , the Company recognized deferred rent from tenants, net of lease incentive amortization, of $(3.7) million , $0.9 million and $6.5 million , respectively. As of December 31, 2018 and 2017 , the cumulative deferred rent balance was $88.5 million and $57.6 million , respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $42.3 million and $9.5 million of unamortized lease incentives as of December 31, 2018 and 2017 , respectively. As of December 31, 2018 and 2017 , lease incentive payable was $35.2 million and $1.8 million , respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets.

As of December 31, 2018 , the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands):



2019	$	105,587
2020	102,432
2021	99,375
2022	81,295
2023	68,880
Thereafter	296,863
	$	754,432

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

As of December 31, 2018 , the Company had approximately 180 tenants over a diverse range of industries and geographic areas. The Company’s 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
Finance	32	$	26,807	25.3	%
Legal Services	32	14,711		13.9	%
Mining, Oil & Gas Extraction	3	13,711		12.9	%
Educational Services	1	11,728		11.1	%
		$	66,957	63.2	%

_____________________

No other tenant industries accounted for more than 10% of annualized base rent. The Company had not identified any material tenant credit issues as of December 31, 2018 . During the years ended December 31, 2018 , 2017 and 2016 , the Company recorded bad debt expense of $0.4 million , $0.5 million and $0.3 million , respectively. As of December 31, 2018 , the Company had a bad debt expense reserve of approximately $0.1 million , which represented less than 1% of its annualized base rent.

As of December 31, 2018 , the Company had a concentration of credit risk related to the following tenant leases that represented more than 10% of the Company’s annualized base rent:



					Annualized Base Rent Statistics
Tenant	Property	Tenant Industry	Square Feet	% of Portfolio (Net Rentable Sq. Ft.)	Annualized Base Rent (in thousands) ⁽¹⁾		% of Portfolio Annualized Base Rent	Annualized Base Rent per Sq. Ft.		Lease Expiration
Union Bank	Union Bank Plaza	Finance	295,563	8.6%	$	13,687	12.9%	$	46.31	01/31/2022 ⁽²⁾⁽³⁾
The University of Phoenix	Fountainhead Plaza	Educational Services	445,957	13.0%	11,728		11.1%	26.30		08/31/2023 ⁽⁴⁾
Anadarko Petroleum Corporation	Granite Tower	Mining, Oil & Gas Extraction	360,584	10.5%	11,174		10.5%	30.99		04/30/2021 / 04/30/2033 ⁽⁵⁾

_____________________

⁽²⁾ Represents the expiration date of the lease as of December 31, 2018 and does not take into account any tenant renewal options. Pursuant to a lease amendment that the Company entered into with Union Bank on December 31, 2017, Union Bank surrendered 15,829 rentable square feet of its total rentable square footage on March 31, 2018 and 31,320 rentable square feet of its total rentable square footage on June 30, 2018. In addition, Union Bank also surrendered 321 parking area passes on March 31, 2018. During the year ended December 31, 2018 , the Company received $11.4 million of lease termination fees from Union Bank, of which $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statements of operations for the year ended December 31, 2018 , respectively, and $8.5 million was deferred as of December 31, 2018 and included in other liabilities on the accompanying consolidated balance sheets.

⁽⁴⁾ The University of Phoenix has two options to extend the term of this lease for five years per option term.

No other tenant accounted for more than 10% of annualized base rent.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Geographic Concentration Risk

As of December 31, 2018 , the Company’s net investments in real estate in California and New Jersey represented 25.2% and 24.0% of the Company’s total assets, respectively. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California and New Jersey real estate markets. Any adverse economic or real estate developments in these markets, 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 the Company’s operating results and its ability to make distributions to stockholders.


4.	TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

As of December 31, 2018 and 2017 , the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):



	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	2018			2017			2018			2017			2018			2017
Cost	$	31,295		$	53,901		$	835		$	13,650		$	(2,696	)	$	(6,703	)
Accumulated amortization	(17,215		)	(33,042		)	(611		)	(11,532		)	2,382			5,719
Net amount	$	14,080		$	20,859		$	224		$	2,118		$	(314	)	$	(984	)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the years ended December 31, 2018 , 2017 and 2016 were as follows (in thousands):



	Tenant Origination and Absorption Costs									Above-Market Lease Assets									Below-Market Lease Liabilities
	For the Years Ended December 31,									For the Years Ended December 31,									For the Years Ended December 31,
	2018			2017			2016			2018			2017			2016			2018		2017		2016
Amortization	$	(6,928	)	$	(9,412	)	$	(12,499	)	$	(1,894	)	$	(2,348	)	$	(3,129	)	$	857	$	1,586	$	2,676

The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2018 will be amortized for the years ending December 31 as follows (in thousands):



	Tenant Origination and Absorption Costs			Above-Market Lease Assets			Below-Market Lease Liabilities
2019	$	(3,641	)	$	(74	)	$	150
2020	(3,447		)	(74		)	82
2021	(3,443		)	(74		)	78
2022	(2,171		)	(2		)	4
2023	(1,370		)	—			—
Thereafter	(8		)	—			—
	$	(14,080	)	$	(224	)	$	314
Weighted-Average Remaining Amortization Period	4.1 years			3.0 years			2.5 years

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018


5.	REAL ESTATE LOAN RECEIVABLE

As of December 31, 2017 , the Company, through an indirect wholly owned subsidiary, had originated the following real estate loan receivable, which was paid off in full on June 1, 2018 (dollars in thousands):

Loan Name

Location of Related Property or Collateral

Date Acquired/ Originated

Property Type

Loan Type

Outstanding Principal Balance as of

December 31, 2018

Book Value

as of

December 31, 2018 ⁽¹⁾

Book Value

as of

December 31, 2017 ⁽¹⁾

Contractual Interest Rate

Annualized Effective Interest Rate

Maturity Date

Sheraton Charlotte Airport Hotel First Mortgage

Charlotte, North Carolina

07/11/2011

Hotel

Mortgage

—

13,923

⁽²⁾

_____________________

⁽¹⁾ Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs.

⁽²⁾ On June 1, 2018, the borrower under the Sheraton Charlotte Airport Hotel First Mortgage paid off the entire principal balance due to the Company. The Sheraton Charlotte Airport Hotel First Mortgage had a maturity date of August 1, 2018. The Sheraton Charlotte Airport Hotel First Mortgage bore interest at a fixed rate of 7.5% .

The following summarizes the activity related to the real estate loan receivable for the year ended December 31, 2018 (in thousands):



Real estate loan receivable - December 31, 2017	$	13,923
Principal repayments received on the real estate loan receivable	(13,920		)
Amortization of closing costs and origination fees on the real estate loan receivable	(3		)
Real estate loan receivable - December 31, 2018	$	—

For the years ended December 31, 2018 , 2017 and 2016 , interest income from the real estate loan receivable consisted of the following (in thousands):



	For the Years Ended December 31,
	2018			2017			2016
Contractual interest income	$	437		$	1,064		$	1,078
Amortization of closing costs and origination fees	(3		)	(4		)	(3		)
Interest income from real estate loan receivable	$	434		$	1,060		$	1,075

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018


6.	REAL ESTATE SALES

In accordance with ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU No. 2014-08”), results of operations from properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations.

During the year ended December 31, 2018 , the Company sold three office buildings that were part of an eight -building office campus. During the year ended December 31, 2017 , the Company sold two office properties. During the year ended December 31, 2016 , the Company disposed of one office/flex property. The results of operations for the properties sold during the year s ended December 31, 2018 , 2017 and 2016 are included in continuing operations on the Company’s consolidated statements of operations. As of December 31, 2018 , the Company did not have any real estate properties held for sale. The following table summarizes certain revenue and expenses related to the Company’s real estate properties that were sold during the years ended December 31, 2018 , 2017 and 2016 , which were included in continuing operations (in thousands):



	Years Ended December 31,
	2018		2017		2016
Revenues
Rental income	$	2,254	$	10,373	$	14,343
Tenant reimbursements	377		2,362		2,999
Other operating income	—		18		15
Total revenues	2,631		12,753		17,357
Expenses
Operating, maintenance, and management	130		1,825		2,529
Real estate taxes and insurance	261		2,005		2,704
Asset management fees to affiliate	222		1,088		806
General and administrative expenses	28		30		104
Depreciation and amortization	720		3,336		3,962
Interest expense	588		2,266		3,057
Total expenses	$	1,949	$	10,550	$	13,162

The following summary presents the major components of assets and liabilities related to real estate held for sale as of December 31, 2017 (in thousands). No real estate properties were held for sale as of December 31, 2018 .



	December 31, 2018		December 31, 2017
Assets related to real estate held for sale
Total real estate, at cost	$	—	$	76,921
Accumulated depreciation and amortization	—		(10,204		)
Real estate held for sale, net	—		66,717
Other assets	—		2,927
Total assets related to real estate held for sale	$	—	$	69,644
Liabilities related to real estate held for sale
Total notes payable, net	—		94,580
Other liabilities	—		320
Total liabilities related to real estate held for sale	$	—	$	94,900

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018


7.	NOTES PAYABLE

As of December 31, 2018 and 2017 , the Company’s notes payable, including notes payable related to real estate held for sale as of December 31, 2017 , consisted of the following (dollars in thousands):



	Book Value as of December 31, 2018			Book Value as of December 31, 2017			Contractual Interest Rate as of December 31, 2018 ⁽¹⁾	Effective Interest Rate as of December 31, 2018 ⁽¹⁾	Payment Type	Maturity Date ⁽²⁾
Amended and Restated Portfolio Revolving Loan Facility ⁽³⁾	$	—		$	52,638		⁽³⁾	⁽³⁾	⁽³⁾	⁽³⁾
Union Bank Plaza Mortgage Loan ⁽³⁾	—			105,000			⁽³⁾	⁽³⁾	⁽³⁾	⁽³⁾
Portfolio Mortgage Loan #1 ⁽³⁾	—			59,651			⁽³⁾	⁽³⁾	⁽³⁾	⁽³⁾
Portfolio Mortgage Loan #3 ⁽³⁾	—			54,000			⁽³⁾	⁽³⁾	⁽³⁾	⁽³⁾
Corporate Technology Centre Mortgage Loan ⁽⁴⁾	41,868			138,219			3.50%	3.5%	Principal & Interest	04/01/2020
300-600 Campus Drive Revolving Loan ⁽³⁾	—			93,125			⁽³⁾	⁽³⁾	⁽³⁾	⁽³⁾
Portfolio Loan Facility ⁽⁵⁾	375,000			—			One-month LIBOR + 1.45%	3.8%	Interest Only	03/29/2020
Total notes payable principal outstanding	$	416,868		$	502,633
Deferred financing costs, net	(1,660		)	(334		)
Total notes payable, net	$	415,208		$	502,299

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2018 . Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2018 , using interest rate indices as of December 31, 2018 , where applicable.

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of December 31, 2018 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown.

⁽³⁾ On of March 29, 2018, the Company paid off the outstanding balances under these loans with proceeds from the Portfolio Loan Facility. See footnote (5) below.

⁽⁴⁾ In connection with the sales of three of the eight buildings at Corporate Technology Centre during the year ended December 31, 2018 , the Company made a partial paydown on the Corporate Technology Centre Mortgage Loan. The Company is required to reserve for the annual charges for real estate taxes by making monthly deposits to an account held by the lender, subject to certain terms and conditions contained in the loan documents.

⁽⁵⁾ On March 29, 2018, the Company, through indirect wholly owned subsidiaries, entered into a loan facility (the “Portfolio Loan Facility”) for an amount of up to $500.0 million , of which $375.0 million is term debt and $125.0 million is revolving debt. The Portfolio Loan Facility was used to pay off the Amended and Restated Portfolio Revolving Loan Facility, the Union Bank Plaza Mortgage Loan, Portfolio Mortgage Loan #1, Portfolio Mortgage Loan #3 and the 300-600 Campus Drive Revolving Loan. The Portfolio Loan Facility is secured by the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Willow Oaks Corporate Center, Pierre Laclede Center, Union Bank Plaza, Emerald View at Vista Center, Granite Tower and Fountainhead Plaza. As of December 31, 2018 , $375.0 million of term debt of the Portfolio Loan Facility was outstanding and $125.0 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents.

During the years ended December 31, 2018 , 2017 and 2016 , the Company incurred $17.9 million , $17.5 million and $16.7 million of interest expense, respectively. As of December 31, 2018 and 2017 , $1.3 million and $1.4 million , respectively, of interest expense were payable. Included in interest expense for the years ended December 31, 2018 , 2017 and 2016 were $1.3 million , $1.1 million and $1.8 million of amortization of deferred financing costs, respectively. Also included in interest expense for the year ended December 31, 2018 was $0.3 million of debt refinancing costs. During the year ended December 31, 2017 , the Company recorded a reduction to interest expense of $10,000 as a result of the Company’s interest rate swap agreements. Interest expense incurred as a result of the Company’s interest rate swap agreements was $0.5 million for the year ended December 31, 2016 .

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2018 (in thousands):



2019	$	1,304
2020	415,564
	$	416,868

Certain of the Company’s notes payable contain financial debt covenants. As of December 31, 2018 , the Company was in compliance with these debt covenants.


8.	DERIVATIVE INSTRUMENTS

The Company may enter into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. As of June 1, 2017, all of the Company’s interest rate swaps had expired.

The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income (loss) and as other comprehensive income in the accompanying consolidated statements of stockholders’ equity. Amounts in other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The change in fair value of the ineffective portion is recognized directly in earnings. With respect to swap agreements that were terminated for which it remains probable that the original hedged forecasted transactions (i.e., LIBOR-based debt service payments) will occur, the loss related to the termination of these swap agreements is included in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction. The change in fair value of a derivative instrument that is not designated as a cash flow hedge is recorded as interest expense in the accompanying consolidated statements of operations. The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands):



	For the Years Ended December 31,
	2018		2017			2016
Derivatives designated as hedging instruments ⁽¹⁾
Amount of loss recognized on interest rate swaps (effective portion)	$	—	$	—		$	60
	—		—			60
Derivatives not designated as hedging instruments
Realized loss recognized on interest rate swaps	—		91			791
Unrealized gain on interest rate swaps	—		(101		)	(478		)
Losses related to swap terminations	—		—			156
	—		(10		)	469
Increase (decrease) in interest expense as a result of derivatives	$	—	$	(10	)	$	529

_____________________

⁽¹⁾ All of the Company’s interest rate swap agreements were initially designated as cash flow hedges. During 2014, the Company dedesignated all of its interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales, and therefore, certain hedged forecasted transactions were no longer probable beyond the projected asset sale date.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018


9.	FAIR VALUE DISCLOSURES


•	Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;


•	Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and


•	Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value:

Cash and cash equivalents, restricted cash, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items.

Real estate loan receivable: The Company’s real estate loan receivable is presented in the accompanying consolidated balance sheets at its amortized cost net of recorded loan loss reserves (if applicable) and not at fair value. The fair value of the real estate loan receivable was estimated using an internal valuation model that considered the expected cash flows for the loan, underlying collateral value (for collateral-dependent loans) and 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. The Company classifies these inputs as Level 3 inputs.

Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

The following were the face values, carrying amounts and fair values of the Company’s real estate loan receivable and notes payable as of December 31, 2018 and 2017 , which carrying amounts do not generally approximate the fair values (in thousands):



	December 31, 2018						December 31, 2017
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial assets:
Real estate loan receivable	$	—	$	—	$	—	$	13,921	$	13,923	$	13,960
Financial liabilities:
Notes payable	$	416,868	$	415,208	$	416,163	$	502,633	$	502,299	$	500,683

Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.


10.	RELATED PARTY TRANSACTIONS

The Company has entered into the Advisory Agreement with the Advisor. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the management of the Company’s investments, among other services, and the disposition of investments, as well as reimbursement of certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the Depository Trust & Clearing Corporation Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS REIT I (which liquidated in December 2018), KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT (which liquidated in December 2018), KBS Strategic Opportunity REIT II and KBS Growth & Income REIT.

On January 6, 2014, the Company, together with KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. In June 2015, KBS Growth & Income REIT was added to the insurance program at terms similar to those described above. In June 2018, the Company renewed its participation in the program. The program is effective through June 30, 2019. At renewal, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Legacy Partners Apartment REIT elected to cease participation in the program and obtained separate insurance coverage. KBS REIT I elected to cease participation in the program at the June 2017 renewal and obtained separate insurance coverage.

During the years ended December 31, 2018 , 2017 and 2016 , no other business transactions occurred between the Company and KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT, the Advisor, the Dealer Manager or other KBS-affiliated entities.

F-28

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2018 , 2017 and 2016 , respectively, and any related amounts payable as of December 31, 2018 and 2017 (in thousands):



	Incurred Years Ended December 31,						Payable as of December 31,
	2018		2017		2016		2018		2017
Expensed
Asset management fees	$	10,894	$	11,617	$	11,811	$	—	$	—
Reimbursement of operating expenses ⁽¹⁾	373		238		288		55		84
Disposition fees ⁽²⁾	972		865		423		—		—
	$	12,239	$	12,720	$	12,522	$	55	$	84

_____________________

⁽¹⁾ Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $244,000 , $213,000 and $204,000 for the years ended December 31, 2018 , 2017 and 2016 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2018 , 2017 and 2016 . The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

⁽²⁾ Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations.

During each of the years ended December 31, 2018 and 2017 , the Advisor reimbursed the Company $0.1 million for property insurance rebates.


11.	SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts):



	2018
	First Quarter			Second Quarter		Third Quarter			Fourth Quarter
Revenues	$	35,676		$	34,622	$	32,682		$	39,235
Net (loss) income	(979		)	26,374		(454		)	3,587
Net (loss) income per common share, basic and diluted	(0.01		)	0.14		—			0.02
Distributions declared per common share	0.060			0.061		0.062			0.062



	2017
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Revenues	$	38,351	$	37,968	$	36,144	$	36,996
Net income	2,778		10,354		899		11,083
Net income per common share, basic and diluted	0.01		0.05		—		0.07
Distributions declared per common share	0.068		0.068		0.069		0.069

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2018


12.	COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company is dependent on the Advisor for certain services that are essential to the Company, including the disposition of real estate investments; management of the daily operations of the Company’s real estate investment portfolio; and other general and administrative responsibilities. In the event the Advisor is unable to provide any of these services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Compliance with existing environmental laws is not expected to have a material adverse effect on the Company’s financial condition and results of operations as of December 31, 2018 .

Legal Matters

From time to time, the Company is party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.


13.	SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Distributions Paid

On January 2, 2019, the Company paid distributions of $3.9 million , which related to distributions declared for December 2018 in the amount of $0.02076575 per share of common stock to stockholders of record as of the close of business on December 19, 2018. On February 4, 2019, the Company paid distributions of $3.8 million , which related to distributions declared for January 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on January 18, 2019. On March 1, 2019, the Company paid distributions of $3.8 million , which related to distributions declared for February 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on February 18, 2019.

Distributions Authorized

On March 12, 2019, the Company’s board of directors authorized a March 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on March 18, 2019, which the Company expects to pay in April 2019, and an April 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on April 18, 2019, which the Company expects to pay in May 2019.

F-30

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

SCHEDULE III

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION

December 31, 2018

(dollar amounts in thousands)



					Initial Cost to Company									Gross Amount at which Carried at Close of Period
Description	Location	Ownership Percent	Encumbrances		Land		Building and Improvements ⁽¹⁾		Total		Cost Capitalized Subsequent to Acquisition ⁽²⁾			Land		Building and Improvements ⁽¹⁾		Total ⁽³⁾		Accumulated Depreciation and Amortization			Original Date of Construction	Date Acquired
100 & 200 Campus Drive Buildings	Florham Park, NJ	100%	⁽⁴⁾		$	10,700	$	188,509	$	199,209	$	(45,111	)	$	9,461	$	144,637	$	154,098	$	(16,452	)	1988/1989	09/09/2008
300-600 Campus Drive Buildings	Florham Park, NJ	100%	⁽⁴⁾		9,717		185,445		195,162		(33,494		)	9,121		152,547		161,668		(21,659		)	1997/1999	10/10/2008
Willow Oaks Corporate Center	Fairfax, VA	100%	⁽⁴⁾		25,300		87,802		113,102		(2,942		)	25,300		84,860		110,160		(22,111		)	1986/1989/2003	08/26/2009
Pierre Laclede Center	Clayton, MO	100%	⁽⁴⁾		15,200		61,507		76,707		5,783			15,200		67,290		82,490		(13,729		)	1964/1970	02/04/2010
Union Bank Plaza	Los Angeles, CA	100%	⁽⁴⁾		24,000		190,232		214,232		(28,368		)	24,000		161,864		185,864		(28,274		)	1967	09/15/2010
Emerald View at Vista Center	West Palm Beach, FL	100%	⁽⁴⁾		5,300		28,455		33,755		(4,675		)	5,300		23,780		29,080		(5,177		)	2007	12/09/2010
Granite Tower	Denver, CO	100%	⁽⁴⁾		8,850		141,438		150,288		(12,356		)	8,850		129,082		137,932		(30,172		)	1983	12/16/2010
Fountainhead Plaza	Tempe, AZ	100%	⁽⁴⁾		12,300		123,700		136,000		(16,617		)	12,300		107,083		119,383		(23,253		)	2011	09/13/2011
Corporate Technology Centre	San Jose, CA	100%	$	41,868	48,505		102,894		151,399		(4,136		)	48,504		98,759		147,263		(12,904		)	1999/2001	03/28/2013
		TOTAL			$	159,872	$	1,109,982	$	1,269,854	$	(141,916	)	$	158,036	$	969,902	$	1,127,938	$	(173,731	)

____________________

⁽¹⁾ Building and improvements includes tenant origination and absorption costs.

⁽²⁾ Costs capitalized subsequent to acquisition is net of impairments and write-offs of fully depreciated/amortized assets.

⁽³⁾ The aggregate cost of real estate for federal income tax purposes was $1.4 billion (unaudited) as of December 31, 2018 .

⁽⁴⁾ These properties are security for the Portfolio Loan Facility, which had an outstanding principal balance of $375.0 million as of December 31, 2018 .

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KBS REAL ESTATE INVESTMENT TRUST II, INC.

SCHEDULE III

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (CONTINUED)

December 31, 2018

(in thousands)



	2018			2017			2016
Real Estate
Balance at the beginning of the year	$	1,207,445		$	1,275,847		$	1,291,762
Improvements	35,681			16,616			30,664
Write-off of fully depreciated and fully amortized assets	(38,035		)	(13,095		)	(9,862		)
Impairments	—			—			—
Sales	(77,153		)	(71,923		)	(36,717		)
Balance at the end of the year	$	1,127,938		$	1,207,445		$	1,275,847

Accumulated depreciation and amortization
Balance at the beginning of the year	$	176,576		$	150,111		$	113,460
Depreciation and amortization expense	46,043			50,079			54,831
Write-off of fully depreciated and fully amortized assets	(38,035		)	(13,095		)	(9,862		)
Impairments	—			—			—
Sales	(10,853		)	(10,519		)	(8,318		)
Balance at the end of the year	$	173,731		$	176,576		$	150,111

F-32

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ITEM 16.	FORM 10-K SUMMARY

None.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newport Beach, State of California, on March 13, 2019.



	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
		(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



Name	Title	Date

/s/ CHARLES J. SCHREIBER, JR.	Chairman of the Board, Chief Executive Officer and Director (principal executive officer)	March 13, 2019
Charles J. Schreiber, Jr.
/s/ JEFFREY K. WALDVOGEL	Chief Financial Officer, Treasurer and Secretary (principal financial officer)	March 13, 2019
Jeffrey K. Waldvogel
/s/ PETER M. BREN	President and Director	March 13, 2019
Peter M. Bren
/s/ STACIE K. YAMANE	Chief Accounting Officer and Assistant Secretary (principal accounting officer)	March 13, 2019
Stacie K. Yamane
/s/ BARBARA R. CAMBON	Director	March 13, 2019
Barbara R. Cambon
/s/ JEFFREY A. DRITLEY	Director	March 13, 2019
Jeffrey A. Dritley
/s/ STUART A. GABRIEL, PH.D.	Director	March 13, 2019
Stuart A. Gabriel, Ph.D.

Exhibit 10.11

NINTH AMENDMENT TO OFFICE/RETAIL LEASE

This NINTH AMENDMENT TO O FF I CE/RETA I L LEASE (this " Ninth Amendment " ) is dated for reference purposes only effective as of August 30 , 2017 (the " Effective Date " or " ED " ), by and between KBSII 445 SOUTH FIGUEROA, LLC , a Delaware limited liability company (" Landlord "), and MUFG UNION BANK, N . A., a national banking association, formerly known as Union Bank, N.A. and Union Bank of California, N.A. (" Tenant ").

RECITALS:

A. Hines VAF UB Plaza, L.P., a Delaware limited partnership, as landlord (the " Original Landlord "), and Tenant, as tenant, entered into that certain Office/Retail Lease dated as of October 8, 2008 (the " Original Lease "), pursuant to which Landlord leased to Tenant and Tenant leased from Landlord that certain space as more particularly described in the Lease (the " Original Premises ") in that certain building located at 445 South Figueroa Street, Los Angeles, California 90071 (the " Building ").

B. Original Landlord and Tenant entered into that certain First Amendment to Office/Retail Lease dated as of November 17, 2008 (the " First Amendment "), pursuant to which the parties (i) expanded the Original Premises to include the 28th Floor Expansion Space, and (ii) otherwise modified the terms of the Original Lease, all as more particularly described in the First Amendment.

C. Original Landlord and Tenant entered into that certain Second Amendment to Office/Retail Lease dated as of July 10, 2009 (the " Second Amendment "), pursuant to which the parties (i) expanded the Original Premises and the 28th Floor Expansion Space to include the Second Amendment Expansion Space, and (ii) otherwise modified the terms of the Original Lease and the First Amendment, all as more particularly described in the Second Amendment.

D. Original Landlord and Tenant entered into that certain Third Amendment to Office/Retail Lease dated as of April 14, 2010 (the " Third Amendment "), pursuant to which the parties modified certain of the terms of the Original Lease, the First Amendment and the Second Amendment, all as more particularly described in the Third Amendment.

E. Original Landlord and Tenant entered into that certain Fourth Amendment to Office/Retail Lease dated as of August 10, 2010 (the " Fourth Amendment "), pursuant to which the parties (i) expanded the Original Premises, the 28th Floor Expansion Space and the Second Amendment Expansion Space to include the 35th Floor Expansion Space, and (ii) otherwise modified the terms of the Original Lease, the First Amendment, the Second Amendment and the Third Amendment, all as more particularly described in the Fourth Amendment.

F. Landlord and Tenant entered into that certain Fifth Amendment to Office/Retail Lease dated as of October 31, 2010 (the " Fifth Amendment "), pursuant to which the parties modified certain of the terms of the Original Lease, the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, all as more particularly described in the Fifth Amendment.

G. Landlord and Tenant entered into that certain Sixth Amendment to Office/Retail Lease dated as of February 15, 2011 (the " Sixth Amendment "), pursuant to which the parties converted certain visitor parking spaces into reserved parking spaces, all as more particularly described in the Sixth Amendment.

H. Landlord and Tenant entered into that certain Seventh Amendment to Office/Retail Lease dated as of November 14, 2012 (the " Seventh Amendment "), pursuant to which the parties (i) expanded

the Existing Premises to include the 34th Floor Expansion Space, and (ii) otherwise modified the terms of the Original Lease, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment, all as more particularly described in the Seventh Amendment.

I. Landlord and Tenant entered into that certain Eighth Amendment to Office/Retail Lease dated as of June 14, 2014 (the " Eighth Amendment "), pursuant to which the parties (i) expanded the Existing Premises by 24,475 rentable square feet to include that certain space containing approximately16,354 rentable square feet known as Suite 2700 and comprising the entire rentable area of the twenty-seventh (27th) floor of the Building, and that certain space containing approximately 8,121 rentable square feet known as Suite 2600 on the twenty-sixth (26th) floor of the Building, and (ii) otherwise modified the terms of the Original Lease, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, all as more particularly described in the Eighth Amendment.

J. The Original Lease, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment, Seventh Amendment and the Eighth Amendment are collectively referred to herein as the " Lease " The Original Premises, 28th Floor Expansion Space, Second Amendment Expansion Space, 35th Floor Expansion Space, 34th Floor Expansion Space, Suite 2600 Expansion Space and Suite 2700 Expansion Space are sometimes collectively referred to herein as the " Existing Premises " Landlord is the successor-in-interest to Original Landlord as " Landlord " under the Lease.

K. Capitalized terms which are used in this Ninth Amendment without definition have the meanings given to them in the Lease.

L. Tenant timely and properly exercised its Termination Option pursuant to that certain letter dated January 31, 2016 delivered by Tenant to Landlord in accordance with the terms and conditions of Section 2.4 of the Original Lease to terminate the Lease as to the portion of the Original Premises consisting of the entire eighteenth (18 ^th ) floor of the Building and the entire twenty-first (21 ^st floor of the Building. Accordingly, the parties desire to memorialize Tenant's agreement to surrender to Landlord a portion of the Original Premises consisting of approximately 15,546 rentable square feet commonly known as Suite 1800 and comprising the entire rentable area of the eighteenth (18 ^th ) floor of the Building, and approximately 16,400 rentable square feet commonly known as Suite 2100 and comprising the entire rentable area of the twenty-first (21 ^st ) floor of the Building (collectively, the " Reduction Space ") (the Existing Premises, less the Reduction Space, is referred to herein as the " Retained Premises "), and that the Lease be appropriately amended.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements contained in this Ninth Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

1. Reduction of Premises . Tenant has surrendered the Reduction Space to Landlord as of April 30, 2017 (the " Reduction Date "). Accordingly, commencing retroactively from and after the Reduction Date and following Tenant's delivery of the Termination Consideration (defined below), the Reduction Space shall be deemed surrendered by Tenant to Landlord, the Lease as amended hereby (the " Amended Lease ") shall be deemed terminated with respect to the Reduction Space (except as to those provisions which expressly survive termination of the Lease), and the " Premises " , as defined in the Lease, shall be deemed to mean the Retained Premises. In addition, the parties hereby acknowledge and

agree that a of the Redl1ction Date ; the Original Premises shall consist of approximately 285 , 563 rentable square feet (pursuant to 1996 BOMA) . As conside r ation for Landlord's agreement to accept Tenant's surrender of t h e Reduction pace , and in accordance with Section 2.4 of the Original Lease , prior to the Reduction Date, Tenant shall pay to Landlord One Hundred Ninety-Three Thousand Eighty-Nine and 00/100 Dollars ($193,089.00) (the " Termination Consideration "). Notwithstanding therefore going, in-lieu of delivering the Termination Consideration directly to Landlord, Landlord shall apply a portion of the Unused Tenant Improvement Allowance in the amount of $193,089.00 against the Termination Consideration . Landlord agrees that it has inspected the Reduction Space and agrees to accept the Reduction Space in i ts as is condition. The parties acknowledge and agree that in lieu of Tenant s obligat i on to r e m ove a fan coil unit on the 18th floor of the Building, Tenant shall pay to Landlord the amount of Eig ht Hundred Fifty Dollars ($850.00) (" Fan Coil Removal Cost "), which Fan Coil Removal Cost s h all be deducted from the Credit Payment (as defined below) paid to Tenant.

2. Base Rent for the Original Premises . Prior to and through the Reduction Date, Tenant has paid monthly installments of Base Rent for the portion of the Original Premises that excludes the Storage Space in accordance with Section 8.2(a) of the Summary of Basic Lease Information of the Original Lease. Commencing retroactively as of May 1, 2017, Tenant shall pay monthly installments of Base Rent for the Original Premises (as contracted to eliminate the Reduction Space) that excludes the Storage Space in accordance with the following schedule:



Portion of Extended Term	Annual Base Rent	Monthly Installments of Base Rent	Annual Rental Rate per Rentable Square Foot
5/1/17 - 1/31/18	$12,589,711.26	$1,049,142.61	$44.97
2/1/18 - 1/31/19	$12,906,063.80	$1,075,505.32	$46.10
2/1/19 - 1/31/20	$13,228,015.5	$1,102,334.63	$47.25
2/1/20 - 1/31/21	$13,558,365.94	$1,129,863.83	$48.43
2/1/21 - 1/31/22	$13,897,115.12	$1,158,092.93	$49.64

3. Tenant's Share of Direct Expenses for the Original Premises . Effective as of the Reduction Date, Tenant's Share of Direct Expenses for the Original Premises shall be reduced to 46.08% (i.e., 279,958 rentable square feet in the portion of the Original Premises [as contracted to eliminate the Reduction Space] which is other than the Storage Space/607 ,517 rentable square feet in the Building [excluding the existing retail portion of the Real Property located outside the retail/office tower portion of the Building], as determined pursuant to Section 1.2 of the Original Lease). Tenant shall continue to pay Tenant's Share of Direct Expenses for the portions of the Premises other than the Original Premises (as contracted to eliminate the Reduction Space) in accordance with the terms and conditions of the Amended Lease.

4. Parking . Effective as of the Reduction Date, Tenant's obligation to rent and pay parking charges for Building Parking Area Passes shall be reduced by ninety-five (95) Building Parking Area Passes, such that thereafter Tenant shall have the right to use and the obligation to pay for five hundred sixty-one 561 Building Parking Area Passes for the Retained Premises, in accordance with the terms of the Amended Lease, which Building Parking Area Passes shall consist of one hundred eleven (111) non-executive reserved parking passes, and four hundred fifty (450) unreserved parking passes.

5. Application of Unused Tenant Improvement Allowance . Landlord and Tenant hereby agree that Tenant has not used Eight Million One Hundred Seventy-Five Thousand Sixty Hundred Fifty-Seven and 50/100 Dollars ($8,175,657.50) of the Tenant Improvement Allowance (the " Unused TI Allowance "), and notwithstanding anything in the Lease to the contrary, pursuant to Section 2.4.2 of

Exhibit "B" of the Original Lease, Landlord shall make a one-time cash payment to Tenant of fifty percent (50%) of the Unused TI Allowance in the amount of Four Million Eighty-Seven Thousand Eight Hundred Twenty-Eight and 75/100 Dollars ($4,087,828.75) (the " Credit Payment "), which Credit Payment shall be made to Tenant within thirty (30) days following full execution of this Ninth Amendment. Tenant hereby waives its right to apply any portion of the Unused TI Allowance, except as provided in Section 1 above, against the cost to complete New Tenant Improvements in the Retained Premises. Further, Tenant hereby acknowledges and agrees that Tenant shall have no right to submit any additional Monthly Draw Requests, notwithstanding that Tenant otherwise would have the right to submit Monthly Draw Requests to Landlord by January 31, 2017 under the terms and conditions of Section 2.4.1of Exhibit "B" of the Original Lease, but for Tenant's election to apply fifty percent (50%) of the Unused TI Allowance as a credit against Base Rent.

6. Condition of the Retained Premises . Tenant acknowledges that it is presently in possession of the Retained Premises and is fully aware of the condition of the Retained Premises, and Landlord shall not be obligated to refurbish or improve the Retained Premises or to otherwise fund improvements for the Retained Premises in any manner whatsoever in conjunction with this Ninth Amendment, and Tenant hereby accepts the Retained Premises in its "AS-IS" condition. Pursuant to Section 1938 of the California Civil Code, Landlord hereby advises Tenant that as of the date of this Ninth Amendment neither the Retained Premises nor the Building has undergone inspection by a Certified Access Specialist. Tenant further acknowledges that except as expressly provided in the Lease and this Amendment, neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Retained Premises, the improvements, refurbishments, or alterations therein, if any, or the Building, or with respect to the functionality thereof or the suitability of any of the foregoing for the conduct of Tenant's business and that all representations and warranties of Landlord, if any, are as set forth in the Lease and this Amendment. Provided, however, notwithstanding the foregoing, Landlord shall continue to perform its repair and maintenance obligations with respect to the Retained Premises as required by the Lease.

7. Brokers . Landlord and Tenant each hereby represents and warrants to the other that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Ninth Amendment, and that it knows of no real estate broker or agent who is entitled to a commission in connection with this Ninth Amendment. Landlord and Tenant shall indemnify, defend and hold the other harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments and costs and expenses (including, without limitation, reasonable attorneys' fees) with respect to any leasing commission, compensation or fees claimed by any broker or agent in connection with this Ninth Amendment or its negotiation by reason of any act of the indemnifying party.

8. Authority . Each signatory of this Ninth Amendment on behalf of Tenant and Landlord represents hereby that he or she has the authority to execute and deliver the same on behalf of the party hereto for which such signatory is acting .

9. No Other Modification . Landlord and Tenant agree that except as otherwise specifically modified in this Ninth Amendment, the Lease has not been modified, supplemented, amended, or otherwise changed in any way and the Lease remains in full force and effect between the parties hereto as modified by this Ninth Amendment. To the extent of any inconsistency between the terms and conditions of the Lease and the terms and conditions of this Ninth Amendment, the terms and conditions of this Ninth Amendment shall apply and govern the parties. This Ninth Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same Amendment.

10. Notices . All notices to be provided to Tenant pursuant to the lease shall be delivered to the following address:

MUFG Union Bank, N.A.

c/o CBRE, Inc.

Attention: Portfolio Services

6055 Primacy Parkway, Suite 300

Memphis, TN 38119

With copies to:

MUFG Union Bank, N.A.

Office of the General Counsel

350 California Street, 7 ^th Floor

San Francisco, CA 9410

MUFG Union Bank, N.A.

Corporate Real Estate/MC H-1RE

350 California Street, Mezzanine

San Francisco, CA 94104

Attn: Real Estate Manager

11. SDN List . Landlord and Tenant each hereby represent and warrant that neither party nor any officer, director, employee, partner, member or other principal of such party is listed as a Specially Designated National and Blocked Person (" SDN ") on the list of such persons and entities issued by the U.S. Treasury Office of Foreign Assets Control (" OFAC ").

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have executed this Ninth Amendment as of the date set forth above.

TENANT:

MUFG UNION BANK, N.A.,

a national banking association


By:	/s/ Larry W. Lawrence

Name: Larry W. Lawrence

Title: Director

LANDLORD:

KBSII 445 SOUTH FIGUEROA, LLC,

a Delaware limited liability company,


By:	KBS Capital Advisors, LLC, a

Delaware limited liability company,

its authorized agent


By:	/s/ Tim Helgeson

Name: Tim Helgeson

Title: Senior Vice President

9/5/17

Exhibit 10.13

TENTH AMENDMENT TO OFFICE/RETAIL LEASE

This TENTH AMENDMENT TO O FF I CE/RETA I L LEASE (this " Tenth Amendment " ) is dated for reference purposes only effective as of December 31 , 2017 (the " Effective Date " or " ED " ), by and between KBSII 445 SOUTH FIGUEROA, LLC , a Delaware limited liability company (" Landlord "), and MUFG UNION BANK, N . A., a national banking association, formerly known as Union Bank, N.A. and Union Bank of California, N.A. (" Tenant ").

RECITALS:

H. Landlord and Tenant entered into that certain Seventh Amendment to Office/Retail Lease dated as of November 14, 2012 (the " Seventh Amendment "), pursuant to which the parties (i) expanded the Existing Premises to include the 34th Floor Expansion Space, and (ii) otherwise modified the terms of the Original Lease, the First Amendment, the Second Amendment, the Third Amendment, the Fourth

Amendment, the Fifth Amendment and the Sixth Amendment, all as more particularly described in the Seventh Amendment.

J. Landlord and Tenant entered into that certain Ninth Amendment to Office/Retail Lease dated as of August 30, 2017 (the " Ninth Amendment "), pursuant to which the parties (i) reduced a portion of the Premises by approximately 15,546 rentable square feet commonly known as Suite 1800 and comprising the entire rentable area of the eighteenth (18th) floor of the Building, and approximately 16,400 rentable square feet commonly known as Suite 2100 and comprising the entire rentable area of the twenty-first (21st) floor of the Building, and (ii) otherwise modified the terms of the Original Lease, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, all as more particularly described in the Eighth Amendment.

K. The Original Lease, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment, Seventh Amendment, Eighth Amendment and the Ninth Amendment are collectively referred to herein as the " Lease " The Original Premises, 28th Floor Expansion Space, Second Amendment Expansion Space, 35th Floor Expansion Space, 34th Floor Expansion Space, Suite 2600 Expansion Space and Suite 2700 Expansion Space are sometimes collectively referred to herein as the " Existing Premises " Landlord is the successor-in-interest to Original Landlord as " Landlord " under the Lease.

L. Capitalized terms which are used in this Ninth Amendment without definition have the meanings given to them in the Lease.

M. Tenant desires to surrender to Landlord a portion of the Existing Premises, and the parties desire to memorialize Tenant's agreement to surrender to Landlord a portion of the Existing Premises , consisting of: (i) the entire fifth (5 ^th ) floor of the Building consisting of approximately 15,660 rentable square feet (the " Fifth Floor Premises "), (ii) the entire sixth (6 ^th ) floor of the Building consisting of approximately 15,660 rentable square feet (the " Sixth Floor Premises "), and (iii) the entire seventeenth (17 ^th ) floor of the Building consisting of approximately 15,829 rentable square feet (the " Seventh Floor Premises "), consisting of approximately 47,149 rentable square feet in the aggregate (collectively, the " Reduction Space ") (the Existing Premises, less the Reduction Space, is referred to herein as the " Retained Premises "), and that the Lease be appropriately amended.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements contained in this Tenth Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

1. Reduction of Premises . Tenant shall vacate and surrender the Seventh Floor Premises (the Seventeenth Floor Premises shall be referred to as the " First Reduction Space ") to Landlord no later than March 31, 2018 (the " First Reduction Date "). Tenant shall vacate and surrender

the Fifth Floor Premises and the Sixth Floor Premises (the Fifth Floor Premises and the Sixth Floor Premises shall be collectively referred to as the " Second Reduction Space ") to Landlord no later than June 30, 2018 (the " Second Reduction Space "). Accordingly, commencing from and after the applicable Reduction Date and following Tenant's delivery of the applicable Termination Consideration (defined below), the applicable Reduction Space shall be deemed surrendered by Tenant to Landlord, the Lease as amended hereby (the " Amended Lease ") shall be deemed terminated with respect to the applicable Reduction Space (except as to those provisions which expressly survive termination of the Lease), and the " Premises ", as defined in the Lease, shall be deemed to mean the Retained Premises. As consideration for Landlord's agreement to accept Tenant's surrender of the Reduction Space, Tenant shall pay to Landlord a total of Seven Million Four Hundred Seventy Two Thousand Two Hundred Ninety-Eight and 90/100 Dollars ($7,472,298.90) (The " Termination Consideration "). The Termination Consideration shall be payable in two (2) installments, the first being due no later than March 1, 2018 in the amount of Two Million Six Hundred Seventeen Thousand Six Hundred Eighty Seven and 21/100 Dollars ($2,617,687.21) and the second installment being due no later than May 31, 2018 in the amount of Four Million Eight Hundred Fifty-Four Thousand Six Hundred Eleven and 69/100 Dollars ($4,854,611.69).

2. Surrender of Reduction Space . Tenant shall vacate the First Reduction Space and Second Reduction Space (collectively, " Reduction Space ") and surrender and deliver exclusive possession of the Reduction Space to Landlord on or before the applicable Reduction Date in broom clean condition and in accordance with Article 15 of the Lease, but otherwise in its "AS IS, WHERE IS, WITH ALL FAULTS," condition. However, notwithstanding anything in the Lease to the contrary, if upon Tenant's surrender of the Reduction Space there shall inadvertently remain in the Reduction Space any computer servers, desktop stations, laptops, paper files or other important, personal property which could reasonably be expected to contain customer information (collectively, the " Protected Items "), such Protected Items shall not become the property of, or be disposed of by, Landlord pursuant to the Lease; unless Landlord shall have provided at least five (5) business days' written notice to Tenant that such Protected Items remain in the Premises and grant Tenant access for Tenant to retrieve the Protected Items. In addition, and notwithstanding anything in the Lease to the contrary, Tenant shall not be obligated to remove any vertical cabling within the Second Reduction Space

3. Base Rent for the Original Premises . Prior to the First Reduction Date, Tenant shall pay Base Rent for the Original Premises that excludes the Storage Space in accordance with the terms and conditions of the Lease. In addition, Tenant shall continue to pay Base Rent for the portion of the Premises located on the twentieth (20 ^th ), twenty-sixth (26 ^th ), twenty-seventh (27 ^th ) and twenty-eighth (28 ^th ) floors of the Building in accordance with the terms and conditions of the Lease. Commencing on the First Reduction Date and continuing until the date immediately preceding the Second Reduction Space, Tenant shall pay monthly installments of Base Rent for the Original Premises (as contracted to eliminate the First Reduction Space) that excludes the Storage Space (consisting of storage space on the B-1 and B-2 levels and 39th floor of the Building, containing 5,605 rentable square feet in the aggregate) in accordance with the following schedule, which schedule is calculated based on the Original Premises that excludes the Storage Space consisting of approximately 264,129 rentable square feet:

Commencing on the Second Reduction Date, Tenant shall pay monthly installments of Base Rent for the Original Premises (as contracted to eliminate the First Reduction Space and the Second Reduction Space) that excludes the Storage Space in accordance with the following schedule, which schedule is calculated based on the Original Premises that excludes the Storage Space consisting of approximately 232,809 rentable square feet:



Period	Annual Base Rent	Monthly Installments of Base Rent	Annual Rental Rate per Rentable Square Foot
7/1/18 - 1/31/19	$10,732,494.90	$894,374.58	$46.10
2/1/19 - 1/31/20	$11,000,225.25	$916,685.44	$47.25
2/1/20 - 1/31/21	$11,274,939.87	$939,578.32	$48.43
2/1/21 - 1/31/22	$11,556,638.76	$963,053.23	$49.64

4. Tenant's Share of Direct Expenses for the Original Premises . Effective as of the First Reduction Date, Tenant's Share of Direct Expenses for the Original Premises shall be reduced to 43.40% based on the Original Premises, less the First Reduction Space, consisting of approximately 269,734rentable square feet and the Building consisting of approximately 607,517 rentable square feet. Effective as of the Second Reduction Date, Tenant's Share of Direct Expenses for the Original Premises shall be reduced to 39.24% based on the Retained Premises consisting of approximately 238,414 rentable square feet and the Building consisting of approximately 607,517 rentable square feet. Tenant shall continue to pay Tenant's Share of Direct Expenses for the portions of the Premises in accordance with the terms and conditions of the Amended Lease.

5. Parking . Effective as of the First Reduction Date, Tenant's obligation to rent and pay parking charges for Building Parking Area Passes shall be reduced by three hundred twenty-one (321) Building Parking Area Passes, such that thereafter Tenant shall have the right to use and the obligation to pay for two hundred forty (240) Building Parking Area Passes for the Retained Premises, in accordance with the terms of the Amended Lease, which Building Parking Area Passes shall consist of twenty (20) non-executive reserved parking passes, and two hundred twenty (220) unreserved parking passes. As consideration for Landlord's agreement to accept Tenant's surrender of a portion of Tenant's Building Parking Area Passes in accordance with this Section 4, Tenant shall pay to Landlord Three Million Eight Hundred Eighty-Six Thousand Two Hundred Sixty-Three and 95/100 Dollars ($3,886,263.95) (the " Parking Pass Termination Consideration ") no later than thirty (30) days prior to the First Reduction Date.

6. Condition of the Retained Premises . Tenant acknowledges that it is presently in possession of the Retained Premises and is fully aware of the condition of the Retained Premises, and Landlord shall not be obligated to refurbish or improve the Retained Premises or to otherwise fund improvements for the Retained Premises in any manner whatsoever in conjunction with this Tenth Amendment, and Tenant hereby accepts the Retained Premises in its "AS-IS" condition. Pursuant to Section 1938 of the California Civil Code, Landlord hereby advises Tenant that as of the date of this Tenth Amendment neither the Retained Premises nor the Building has undergone inspection by a Certified Access Specialist. Further, pursuant to Section 1938 of the California Civil Code, Landlord notifies Tenant of the following: "A Certified Access Specialist (CASp) can inspect the Premises and determine whether the Premises comply with all of the applicable construction-related accessibility standards under state law. Although California state law does not require a CASp inspection of the Premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the Premises for the occupancy or potential occupancy of the Jessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of any such CASp inspection, the payment of the costs and fees for the CASp inspection and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Premises." Therefore and notwithstanding anything to the contrary contained in the Amended Lease, Landlord and Tenant agree that (a) Tenant may, at its option and at its sole cost, cause a CASp to inspect the Premises and determine whether the Premises complies with all of the applicable construction-related accessibility standards under California law, (b) the parties shall mutually coordinate and

reasonably approve of the timing of any such CASp inspection so that Landlord may, at its option, have a representative present during such inspection, and (c) Landlord's and Tenant's responsibility for the cost of any repairs necessary to correct violations of construction-related accessibility standards within the Premises or the Building shall be determined in accordance with the applicable provisions of the Lease. Tenant further acknowledges that except as expressly provided in the Lease and this Amendment, neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Retained Premises, the improvements, refurbishments, or alterations therein, if any, or the Building, or with respect to the functionality thereof or the suitability of any of the foregoing for the conduct of Tenant's business and that all representations and warranties of Landlord, if any, are as set forth in the Lease and this Amendment. Provided, however, notwithstanding the foregoing, Landlord shall continue to perform its repair and maintenance obligations with respect to the Retained Premises as required by the Lease.

7. Brokers . Landlord and Tenant each hereby represents and warrants to the other that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Tenth Amendment, and that it knows of no real estate broker or agent who is entitled to a commission in connection with this Tenth Amendment. Landlord and Tenant shall indemnify, defend and hold the other harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments and costs and expenses (including, without limitation, reasonable attorneys' fees) with respect to any leasing commission, compensation or fees claimed by any broker or agent in connection with this Tenth Amendment or its negotiation by reason of any act of the indemnifying party.

9. No Other Modification . Landlord and Tenant agree that except as otherwise specifically modified in this Tenth Amendment, the Lease has not been modified, supplemented, amended, or otherwise changed in any way and the Lease remains in full force and effect between the parties hereto as modified by this Tenth Amendment. To the extent of any inconsistency between the terms and conditions of the Lease and the terms and conditions of this Tenth Amendment, the terms and conditions of this Tenth Amendment shall apply and govern the parties. This Tenth Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same Amendment.

10. SDN List . Landlord and Tenant each hereby represent and warrant that neither party nor any officer, director, employee, partner, member or other principal of such party is listed as a Specially Designated National and Blocked Person (" SDN ") on the list of such persons and entities issued by the U.S. Treasury Office of Foreign Assets Control (" OFAC ").

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have executed this Tenth Amendment as of the date set forth above.

TENANT:

MUFG UNION BANK, N.A.,

a national banking association


By:	/s/ Larry W. Lawrence

Name: Larry W. Lawrence

Title: Director

LANDLORD:

KBSII 445 SOUTH FIGUEROA, LLC,

a Delaware limited liability company,


By:	KBS Capital Advisors, LLC, a

Delaware limited liability company,

its authorized agent


By:	/s/ Tim Helgeson

Name: Tim Helgeson

Title: Senior Vice President

Exhibit 10.26

FOUNTAINHEAD CORPORATE PARK LEASE

by and between

US REAL ESTATE LIMITED PARTNERSHIP,

a Texas limited partnership,

as Landlord

and

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation,

as Tenant

dated

June 29 , 2009

TABLE OF CONTENTS



				Page

1.	BASIC LEASE TERMS			1
2.	PREMISES			4
3.	TERM			4
4.	RENT			4
		a.	Base Rent	4
		b.	Rent Adjustment	4
		c.	Expense	4
5.	FIRST MONTH'S RENT			7
6.	CONTEST OF TAXES			7
7.	USE OF PREMISES AND PROJECT FACILITIES			7
8.	EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE			8
	8.1	DEFINITIONS		8
	8.2	PROHIBITIONS		11
	8.3	INDEMNIFY		11
	8.4	OBLIGATION TO REMEDIATE		12
	8.5	RIGHT TO INSPECT		13
	8.6	NOTIFICATION		13
	8.7	SURRENDER OF PREMISES		14
	8.8	ASSIGNMENT AND SUBLETTING		14
	8.9	SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION		15
9.	SIGNAGE			15
10.	PERSONAL PROPERTY TAXES			15
11.	PARKING			15
12.	UTILITIES			16
13.	MAINTENANCE			16
14.	ALTERATIONS			16
15.	RELEASE AND INDEMNIFY			18
16.	INSURANCE			19
	16.1	TENANT'S INSURANCE		19
	16.2	ADDITIONAL INSURANCE PROVISIONS		20

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TABLE OF CONTENTS

(continued)



				Page

	16.3	LOSS OF USE, BUSINESS INTERRUPTION AND PERSONAL PROPERTY INSURANCE		21
	16.4	UNEARNED PREMIUMS		21
	16.5	LANDLORD'S INSURANCE		22
	16.6	WAIVER OF SUBROGATION		23
17.	DESTRUCTION			23
	17.1	DESTRUCTION AND RESTORATION		23
	17.2	TERMINATION OPTION IN CONNECTION WITH CASUALTY		25
	17.3	CONFLICT		27
18.	CONDEMNATION			27
		a.	Definitions	27
		b.	Obligations to be Governed by Lease	27
		c.	Total or Partial Taking	27
		d.	See Exhibit "K," R-12	27
19.	ASSIGNMENT OR SUBLEASE			28
	19.1	GENERAL RULES		28
	19.2	WITHHOLDING CONSENT		29
20.	DEFAULT			30
21.	LANDLORD'S REMEDIES			31
22.	ENTRY ON PREMISES			33
23.	SUBORDINATION			34
24.	NOTICE			35
25.	WAIVER			35
26.	SURRENDER OF PREMISES; HOLDING OVER			35
27.	LIMITATION OF LIABILITY			36
28.	COMPLIANCE WITH LEGAL REQUIREMENTS			36
		a.	Compliance with Law	36
		b.	Landlord's Obligations	37
29.	MISCELLANEOUS PROVISIONS			37
		a.	Time of Essence	37

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TABLE OF CONTENTS

(continued)



				Page

		b.	Successor	37
		c.	Landlord's Consent	37
		d.	Commissions	37
		e.	Other Charges	37
		f.	Landlord's Successors	38
		g.	Interpretation	38
30.	SUBDIVISION			38
31.	INTENTIONALLY OMITTED			38
32.	OPTION TO EXTEND			38
33.	TITLE/CONSTRUCTION CONTINGENCY			38
34.	CONSTRUCTION			38
35.	MEMORANDUM OF LEASE			38
36	ADDITIONAL TERMS			39

LIST OF EXHIBITS:
Exhibit A			The Premises
Exhibit B			Site Plan of Project
Exhibit C			Intentionally Omitted
Exhibit D			Tenant Signage
Exhibit E			Intentionally Omitted
Exhibit F			Hazardous Materials Disclosure Certificate
Exhibit G			Work Letter Agreement
Exhibit H			Guaranty
Exhibit I			Project Rules and Regulations
Exhibit I-1			Parkings Rules and Regulations
Exhibit J			Form of Lease Subordination Agreement
Exhibit K			UOP Lease Rider
Exhibit L			Memorandum of Lease

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FOUNTAINHEAD CORPORATE PARK

LEASE


1.	BASIC LEASE TERMS


a.	DATE OF LEASE: June 29 , 2009


b.	TENANT: THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation.

Address of the Premises: 1625 Fountainhead Parkway, Tempe, Arizona 85282 referred to as " Office A " and 1601 Fountainhead Parkway, Tempe, Arizona 85282 referred to as " Office B ," each as shown on Exhibit "A ," and with the improvements constructed thereon, each, a " Building " and collectively, the " Buildings ." Tenant is leasing the Premises for administrative offices, classrooms and related purposes serving Tenant's employees, guests and students.

Address (For Notices): The University of Phoenix, Inc.,

c/o Apollo Development Corp.,

4025 S. Riverpoint Parkway

MS:CF-K604

Phoenix, Arizona, 85040

Attention: William J. Swirtz

WITH COPY TO:

Apollo Group, Inc.

c/o Apollo Legal Services

4025 S. Riverpoint Parkway

MS:CF-K612

Phoenix, Arizona 85040

Attention: Robbyn A. Salganick, Esq.,

Corporate Counsel

or to such other place as Tenant may from time to time designate by notice to Landlord pursuant to the notice provisions herein.


c.	LANDLORD: US REAL ESTATE LIMITED PARTNERSIDP, a Texas limited partnership.

Address for notices and payment of rent: US Real Estate Limited Partnership, 9830 Colonnade Blvd., Ste. 600, San Antonio, Texas 78230-2239, Attn: Portfolio Management, or to such other place as Landlord may from time to time designate by notice to Tenant. In the event of a Landlord's Default notice shall also be sent to:

US Real Estate Limited Partnership

9830 Colonnade Blvd., Ste. 600

San Antonio, TX 78230-2239

Attention: Portfolio Management

WITH COPY TO:

PHA/FOUNTAINHEAD, L.L.C.

c/o Metro Commercial Properties

1500 N. Priest Drive, Suite ID02

Tempe,Arizona,85281


d.	TENANT'S USE OF PREMISES: Tenant will use the Premises for administrative offices, educational and related purposes serving Tenant's employees, guests and students. Tenant shall also have the exclusive right to operate an educational facility within the Project, and Landlord shall take commercially reasonable actions necessary to preserve and protect said exclusive right.


e.	PREMISES: The Premises Area located within the space leased by Tenant and identified in Section 1b above ( See Exhibit "A" ).


f.	PREMISES AREA: 439,070 rentable square feet, to be adjusted to an "As-Built" measurement determined, as set forth in Exhibit "K" , R-1. The Premises Area will be comprised of the gross square footage of the Buildings.


g.	PROJECT: The commercial office development, including the land and parking structure, known as 1625 Fountainhead Parkway and 1601 Fountainhead Parkway (See Exhibit "B" ).


h.	INTENTIONALLY DELETED.


i.	TERM OF LEASE: The term (and rental payments) shall commence on the Commencement Date as set forth in Exhibit "G ." The anticipated Commencement Date for Office A is November 1, 2011 and for Office Bi s June 1 , 2011. The Lease shall expire at 11:59 p.m. Arizona time on the day preceding the thirteenth (13th) anniversary of the Commencement Date for Office A.

Number of Months: 144 Months from later of the Commencement Date for Office A or Office B


j.	INITIAL BASE MONTHLY RENT: At the agreed upon initial rate of $23.03/RSF/Year, the initial Base Monthly Rent will be $842,648.51 per month plus applicable taxes, Triple Net, as defined herein to be adjusted as set forth in Exhibit "K" , R-1.


k.	RENT ADJUSTMENT:

The adjustment provisions of Section 4.b apply as follows, to be adjusted as set forth in Exhibit "K" , R-1:

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Effective Date of Rent Increase*		New Base Monthly Rent
Months: 01 - 12		$842,648.51 per month ($23.03/RSF/Year), plus applicable taxes
Months: 13 - 24		$863,714.72 per month ($23.61/RSF/Year), plus appl. taxes
Months: 25 - 36		$885,307.59 per month ($24.20/RSF/Year), plus appl. taxes
Months: 37 - 48		$907,440.28 per month ($24.80/RSF/Year), plus appl. taxes
Months: 49 - 60		$930,126.29 per month ($25.42/RSF/Year), plus appl. taxes
Months: 61 - 72		$953,379.44 per month ($26.06/RSF/Year), plus appl. taxes
Months: 73 - 84		$977,213.93 per month ($26.71/RSF/Year), plus appl. taxes
Months: 85 - 96		$1,001,644.28 per month ($27.38/RSF/Y ear), plus appl. taxes
Months: 97 - 108		$1,026,685.38 per month ($28.06/RSF/Year), plus appl. taxes
Months: 109 - 120		$1,052,352.52 per month ($28.76/RSF/Year), plus appl. taxes
Months: 121 - 132		$1,078,661.33 per month ($29.48/RSF/Y ear), plus appl. taxes
Months: 133 - 144		$1,105,627.87 per month ($30.22/RSF/Year), plus appl. taxes

* Month 01 shall be deemed to have occurred on the Commencement Date for Office A. Between the Commencement Date for Office B and the occurrence of Month 01, Base Monthly Rent shall be $23.03/RSF/Year for the rentable square footage of Office B.


l.	RENEWAL OPTIONS:

Tenant shall be provided with two (2) renewal options for five (5) years each at ninety-five percent (95%) of the then current market rate for comparable space in comparable buildings in the same geographic submarket.


m.	INTENTIONALLY DELETED.


n.	PREPAID RENT: $0.00


o.	SECURITY DEPOSIT: None


p.	BROKER: Patrick H. Althoff, Inc.


q.	GUARANTOR(S): Apollo Group, Inc.


r.	INITIAL RENT: $842,648.51, plus applicable taxes, for each of the first twelve (12) months of the Lease term, to be adjusted as set forth in Exhibit "K" , R-1.


s.	INTENTIONALLY DELETED.

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t.	ADDITIONAL EXHIBITS AND SCHEDULES: Additional exhibits lettered A through L are attached hereto and made a part hereof.


2.	PREMISES . Landlord leases to Tenant the premises described in Section 1 and in Exhibit "A" (the " Premises "), located in the development described on Exhibit "B" (the " Project "). The leased area shall be measured as set forth in Exhibit "K" , R-1.


3.	TERM . The term of this Lease is for the period set forth in Section 1 , commencing on the Commencement Date, as such term is defined in the Work Letter Agreement attached hereto as Exhibit "G ." Exhibit "G" shall govern the implications of failure of the Commencement Date to occur on or before December 31, 2011.


4.	RENT


a.	Base Rent. Tenant shall pay Landlord monthly base rent in the initial amount in Section 1 which shall be payable monthly in advance on the first day of each and every calendar month (" Base Monthly Rent "); provided, however, the first month's rent and any partial month's rent is due and payable upon execution of this Lease.

For purposes of Section 467 of the Internal Revenue Code, the parties to this Lease hereby agree to allocate the stated rents, provided herein, to the periods which correspond to the actual rent payments as provided under the terms and conditions of this agreement.


b.	Rent Adjustment.

Step Increase. The Base Monthly Rent shall be increased periodically by 2.5% as set forth in Section 1 .k.


c.	Expenses. The purpose of this Section 4.c is to ensure that Tenant bears all Expenses related to the use, maintenance, repair or replacement, utilities, taxes, and insurance of the Project. Accordingly, beginning on the Commencement Date, Tenant shall pay to Landlord the costs of the Expenses related to the Project.


1)	Expense Defined. Subject to the provisions of Exhibit "K," R-3, the term "Expenses" shall mean all costs and expenses of the operation, maintenance, repair or replacement, utilities, taxes and insurance of the Project, including without limitation, the following costs:


(a)	All supplies, materials, labor, equipment, and utilities used in or related to the operation and maintenance of the Project;


(b)	All maintenance, management, common area janitorial, accounting, insurance, and service agreement costs related to the Project;

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(c)

All maintenance, replacement and repair costs relating to the areas within or around the Project, including, without limitation, air conditioning systems, sidewalks, landscaping, service areas, driveways, parking areas (including resurfacing and restriping parking areas), walkways, building exteriors (including painting), signs and directories, repairing and replacing roofs, walls, etc., as well as maintenance of the access roadway to the Project through the adjacent property.

(d)

Amortization (along with commercially reasonable financing charges) of capital improvements (amortized over the useful life of said improvements) made to the Project which may be required by any governmental authority or which will improve the operating efficiency of the Project (provided, however, that the amount of such amortization for improvements not mandated by governmental authority shall not exceed in any year the amount of costs reasonably determined by Landlord to have been saved by the expenditure either through the reduction or minimization of increases which would have otherwise occurred).

(e)

Real Property Taxes including all taxes, assessments (general and special) and other impositions or charges which may be taxed, charged, levied, assessed or imposed upon all or any portion of or in relation to the Project or any portion thereof, any leasehold estate in the Premises or measured by rent from the Premises including any increase caused by the transfer, sale or encumbrance of the Project or any portion thereof. "Real Property Taxes" shall also include any form of assessment, levy, penalty, charge or tax (other than estate, inheritance, net income, succession, transfer or franchise taxes) imposed by any authority having a direct or indirect power to tax or charge, including, without limitation, any city, county, state federal or any improvement or other district, whether such tax is (1) determined by the value of the Project or the rent or other sums payable under this Lease; (2) upon or with respect to any legal or equitable interest of Landlord in the Project or any part thereof; (3) upon this transaction or any document to which Tenant is a party creating a transfer in any interest in the Project; (4) in lieu of or as a direct substitute in whole or in part of or in addition to any real property taxes on the Project; (5) based on any parking spaces or parking facilities provided in the Project; or (6) in consideration for services, such as police protection, fire protection, street, sidewalk and roadway maintenance, refuse removal or other services that may be provided by any governmental or quasi-governmental agency from time to time which were formerly provided without charge or with less charge to property owners or occupants.

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2)	Annual Estimate of Expenses. At the commencement of the Lease Landlord shall estimate the Expenses for the coming year.

Monthly Payment of Expenses. Subject to the provisions of Exhibit "K," R-3, Tenant shall pay to Landlord, as additional rent, such estimated expenses in monthly installments of one twelfth (1/12) beginning on Lease Commencement, and one-twelfth (1/12) on the first day of each succeeding calendar month. As soon as practical following each calendar year, Landlord shall prepare an accounting of actual Expenses incurred during the prior calendar year. If the additional rent paid by Tenant under this Section 4.c.3 during the preceding calendar year was less than the actual amount of the Expenses, Landlord shall so notify Tenant and Tenant shall pay such amount to Landlord within 30 days of receipt of such notice. Such amount shall be deemed to have accrued during the prior calendar year and shall be due and payable from Tenant even though the term of this Lease has expired or this Lease has been terminated prior to Tenant's receipt of this notice, subject to the provisions of Exhibit "K," R-4. Tenant shall have ninety (90) days from receipt of such notice to contest the amount due; failure to so notify Landlord shall represent final determination of the amount of the Expenses. If Tenant's payments were greater than the actual amount, then such ove1payment shall be credited by Landlord to and abate an equal amount of rent due under this Section 4c3 ; provided that if the Lease has expired or terminated and no rent or other expense is due and payable by Tenant to Landlord under this Lease, any such overpayment shall be refunded to Tenant at the same time that Landlord issues its statement of accounting to Tenant.

Rent Without Offset and Late Charge. All rent shall be paid by Tenant to Landlord monthly in advance on the fast day of every calendar month, at the address shown in Section 1, or such other place as Landlord may designate in writing from time to time. All rent shall be paid without prior demand or notice and without any deduction or offset whatsoever except as otherwise provided for herein. Except as may othe1wise be set forth herein, all rent shall be paid in lawful currency of the United States of America. Proration of rent due for any partial month shall be calculated by dividing the number of days in the month for which rent is due by the actual number of days in that month and multiplying by the applicable monthly rate. Tenant acknowledges that late payment by Tenant to Landlord of any rent or other sums due under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such cost being extremely difficult and impractical to ascertain. Such costs include, without limitation, processing and accounting charges and late charges that may be imposed on Landlord by the terms of any encumbrance or note secured by the Premises. Therefore, if any rent or other sum due from Tenant is not received when due, Tenant shall pay to landlord an additional sum equal to ten (10%) percent of such overdue

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payment, subject to the provisions of Exhibit "K," R-5. Landlord and Tenant hereby agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of any such late payment and that the late charge is in addition to any and all remedies available to Landlord and that the assessment and/or collection of the late charges shall not be deemed a waiver of any other default. Additionally, all such delinquent rent or other sums, shall bear interest at the rate of twelve (12%) percent per annum, subject to the provisions of Exhibit "K," R-5. If the interest rate specified in this Lease is higher than the rate permitted by law, the interest rate is hereby decreased to the maximum legal interest rate permitted by law. Any payments of any kind returned for insufficient funds will be subject to an additional $25.00 charge. Should a second payment be returned, Tenant agrees to make all future payments by cashier's check, money order, or certified check.


5.	FIRST MONTH'S RENT. Upon the execution of this Lease, Tenant shall pay to Landlord the prepaid rent set forth in Section 1 if applicable, and if Tenant is not in default of any provisions of this Lease, such prepaid rent shall be applied toward the rent due for the fast month of the term.

CONTEST OF TAXES. Tenant, at its own cost and expense, may, if it shall in good faith so desire, contest by appropriate proceedings, to obtain a reduction in the assessed valuation of the Premises for tax purposes. In any such event, if Landlord agrees, at the request of Tenant, to join with Tenant at Tenant's expense in said proceedings and Landlord agrees to sign and deliver such papers and instruments as may be necessary to prosecute such proceedings, Tenant shall have the right to contest the amount of any such tax. Any tax savings realized as a result thereof shall be allocated to reduce Expenses. Notwithstanding the foregoing, Landlord reserves the exclusive right to contest taxes in the final two (2) years of the term of this Lease.

USE OF PREMISES AND PROJECT FACILITIES. Tenant shall use the Premises solely for the purposes set forth in Section 1 and for no other purpose without obtaining the prior written consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned, so long as the proposed use is (i) lawful and in conformance with zoning requirements, (ii) does not increase the potential for fire hazard, use of hazardous materials, insurance premiums, or other operating costs, and (iii) complies with the rules and regulations. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or with respect to the suitability of the Premises or the Project for the conduct of Tenant's business, nor has Landlord agreed to unde1iake any modification, alteration or improvement to the Premises or the Project, except as provided in writing in this Lease. Tenant shall promptly comply with all laws, ordinances, orders and regulations affecting the Premises and the Project, including, without limitation, Exhibit "I," and any other rules and regulations that may be attached to this Lease and to any reasonable modifications to these rules and regulations as Landlord may adopt from time to time. Tenant shall not knowingly do or permit anything to be done in or about the Premises or bring or keep anything in the Premises that will in any way increase the premiums paid by Landlord on

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its insurance related to the Project. Tenant will not perform any act or carry on any practices that could result in damage to the Project. If sound insulation is required to muffle noise produced by Tenant on the Premises, Tenant at its own cost shall provide all necessary insulation. Subject to the provisions of Exhibit "K," R-8, Tenant shall not do anything on the Premises which will overload any existing parking or service to the Premises. Pets and/or animals of any type, other than seeing eye dogs, shall not be kept on the Premises.


8.	EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE.


8.1	DEFINITIONS.


A.	" Hazardous Material " means any substance, whether solid, liquid or gaseous in nature:


(i)	the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law, or

(ii)

which is or becomes defined as a "hazardous waste", "hazardous substance", pollutant or contaminant under any federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. section 9601 et seq.) and/or the Resource Conservation and Recovery Act (42 U.S.C. section 5101 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. section 1801 et seq.), the Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.), the Clean Air Act (42 U.S.C. section 7401 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. section 2601 et seq.), and the Occupational Safety and Health Act (29 U.S.C. section 651 et seq.), as these laws have been amended or supplemented; or


(iii)	which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous or is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, the State of Arizona or any political subdivision thereof; or


(iv)	the presence of which on the Project causes or threatens to cause a nuisance upon the Project or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Project; or


(v)	the presence of which on adjacent prope1ties could constitute a trespass by Tenant; or

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(vi)	without limitation which contains gasoline, diesel fuel or other petroleum hydrocarbons; or


(vii)	without limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam insulation; or


(viii)	without limitation which contains radon gas.


B.	" Environmental Requirements " means all applicable present and future:


(i)	statutes, regulations, rule, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items (including, but not limited to those pertaining to reporting, licensing, permitting, investigations and remediation), of all Governmental Agencies; and

(ii)

all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment, including, without limitation, all requirements pertaining to emissions, discharges, releases, or threatened releases of Hazardous Materials or chemical substances into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials or chemical substances.

" Environmental Damages " means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses (including the expense of investigation and defense of any claim, whether or not such claim is ultimately defeated, or the amount of any good faith settlement or judgment arising from any such claim) of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable (including without limitation reasonable attorneys' fees and disbursements and consultants' fees) any of which are incurred at any time as a result of the existence of Hazardous Material upon, about, or beneath the Project or migrating or threatening to migrate from the Project, or the existence of a violation of Environmental Requirements pe1taining to the Project and the activities thereon. Environmental Damages include, without limitation:

(i)

damages for personal injury or injury to prope1ty or natural resources occurring upon or off of the Project, including, without limitation, foreseeable business losses including lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest, penalties and damages arising from claims brought by or on behalf of employees of Tenant or Landlord (with respect to which each party waives any right to raise as a defense against the other any immunity to which

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it may be entitled under any industrial or worker's compensation laws);

(ii)

reasonable fees, costs or expenses incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any Government Agency or reasonably necessary to make full economic use of the Project or any other property in a manner consistent with its current use or otherwise expended in connection with such conditions, and including without limitation any reasonable attorneys' fees, costs and expenses incurred in enforcing the provisions of this Lease or collecting any sums due hereunder;


(iii)	liability to any third person or Governmental Agency to indemnify such person or Governmental Agency for costs expended in connection with the items referenced in subparagraph (ii) above; and


(iv)	diminution in the fair market value of the Project and/or Tenant's leasehold interest therein, including, without limitation, any reduction in fair market rental value or life expectancy of the Project or the improvements located thereon or the restriction on the use of or adverse impact on the marketing of the Project or any portion thereof.


D.	" Governmental Agency " means all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, states, counties, cities and political subdivisions thereof.


E.	The " Tenant Group " means Tenant, Tenant's successors, assignees, guarantors, officers, directors, agents, employees, invitees, Permittees or other parties under the supervision or control of Tenant or entering the Project during the term of this Lease with the permission or knowledge of Tenant other than members of the Landlord Group.


F.	The " Landlord Group " means Landlord, Landlord's successors, assigns, officers, directors, employees, or other parties under the supervision or control of Landlord or entering the Project during the term of this Lease with the permission or knowledge of Landlord other than members of the Tenant Group.

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8.2	PROHIBITIONS

Other than commercially reasonable quantities of general office supplies in quantity and type to be considered as "de minimus" amounts of Hazardous Materials, and provided Tenant's use of Hazardous Materials complies with all Environmental Requirements, Tenant's use of Hazardous Materials has been disclosed to Landlord on Exhibit "F" attached hereto and is acknowledged by Landlord to be incidental to Tenant's operation of its business. Tenant shall not cause, permit or suffer any Hazardous Material to be brought upon, treated, kept, stored, disposed of, discharged, released, produced, manufactured, generated, refined or used upon, about or beneath the Project by the Tenant Group, without the prior written consent of Landlord. From time to time during the term of this Lease, Tenant may request Landlord's approval of Tenant's use of other Hazardous Materials, which approval may be withheld in Landlord's sole discretion. Tenant shall, prior to the Commencement Date, provide to Landlord all "community right to know" plans or disclosures and/or emergency response plans which Tenant is required to supply to local governmental agencies pursuant to any Environmental Requirements.


B.	Neither Tenant nor Landlord shall cause or permit the commission by the Tenant Group or the Landlord Group, as the case may be, of a violation of any Environmental Requirements upon, about or beneath the Property.

Neither Tenant ·nor Landlord shall create, cause to be created, allow nor permit the Tenant Group or Landlord Group to create any lien, security interest or other charge or encumbrance of any kind with respect to the Project, including without limitation, any lien imposed pursuant to section 107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1)) or any similar state statute.


D.	Tenant shall not install, operate or maintain any above or below grade tank, sump, pit, pond, lagoon or other storage or treatment vessel or devise on the Property, without Landlord's prior written consent, which consent may be withheld in Landlord's sole discretion.


8.3	INDEMNITY.


A.	In addition to indemnity provision in Section 15 of this Lease, Tenant and Landlord and their successors, assigns and guarantors, agree to indemnify, defend, reimburse and hold harmless:


(i)	the other party to this Lease, and


(ii)	the directors, officers, shareholders, employees, partners, agents, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees, heirs, devisees, successors, assigns and invitees of such persons,

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from and against any and all Environmental Damages which exist as a result of the activities and negligence of the Tenant Group or the Landlord Group, as the case may be, during Tenant's occupancy of the Project which exist as a result of the breach of any warranty or covenant or the inaccuracy of any representation contained in this Lease, or by either party's remediation of the Property or failure to meet its remediation obligations contained in this Lease.

In the event either Tenant or Landlord suffer Environmental Damages arising during or after the Lease Term (as such may be extended) from or in connection with the presence of Hazardous Materials in or on the Premises or the Project not subject to indemnification pursuant to Section 8.3.A , both parties agree to cooperate with the other in any investigation or claim against third parties causing such Hazardous Materials to be in or on the Premises or the Project, as the case may be.

The obligations contained in this Section 8 shall include, but not be limited to, the burden and expense of defending all claims, suits and administrative proceedings, even if such claims, suits or proceedings are groundless, false or fraudulent, and conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and all judgments, penalties, consequential damages or other sums due against such indemnified persons. Either party, at its sole expense, may employ additional counsel of its choice to associate with the other party's selected counsel.

Either party shall have the right, but not the obligation, to join and participate in, and control, if it so elects, any legal proceedings or actions initiated in connection with the other party's activities. Landlord may also negotiate, defend, approve and appeal any action take or issued by any applicable governmental authority with regard to contamination of the Project by a Hazardous Material.


E.	The obligations of either party under this paragraph shall not be affected by any investigation by or on behalf of the other party, or by any information which said party may have or obtain with respect thereto.


8.4	OBLIGATION TO REMEDIATE.

In addition to the obligation of each party to indemnify the other pursuant to this Lease, each party shall, upon approval and demand of the other party, at its sole cost and expense and using contractors approved by the demanding party, promptly take all actions to remediate the Project which are required by any Governmental Agency, which remediation is necessitated from the presence upon, about or beneath the Project, at any time during or upon termination of this Lease, of a Hazardous Material or a violation of Environmental Requirements, existing as a result of the activities or negligence of either the Tenant Group or Landlord

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Group, as the case may be. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Project, the preparation of any feasibility studies, reports or remedial plans, and the performance of any cleanup, remediation, containment, operation, maintenance, monitoring or restoration work, whether on or off the Project, which shall be performed in a manner approved by both parties. The remediating party shall take all actions necessary to restore the Project to the condition existing prior to the introduction of Hazardous Material upon, about or beneath the Project, notwithstanding any lesser standard of remediation allowable under applicable law or governmental policies.


8.5	RIGHT TO INSPECT.

Subject to the provisions of Exhibit "K," R-15, Landlord shall have the right in its sole and absolute discretion, but not the duty, to enter and conduct an inspection of the Premises, at any reasonable time to determine whether Tenant is complying with the terms of this Section 8 , including but not limited to the compliance of the Premises and the activities thereon with Environmental Requirements and the existence of Environmental Damages as a result of the condition of the Premises or surrounding properties and activities thereon. Landlord shall have the right, but not the duty, to retain any independent professional consultant (the " Consultant ") to enter the Premises to conduct such an inspection or to review any report prepared by or for Tenant concerning such compliance. The cost of the Consultant shall be paid by Landlord unless such investigation discloses a violation of any Environmental Requirement by the Tenant Group or the existence of a Hazardous Material on the Premises or the Project caused by the activities or negligence of the Tenant Group (other than Hazardous Materials used in compliance with all Environmental Requirements and previously approved by Landlord), in which case Tenant shall pay the cost of the Consultant. Subject to reasonable advance written notice and during normal business hours, Tenant hereby grants to Landlord, and the agents, employees, consultants and contractors of Landlord the right to enter the Premises and to perfo1m such tests on the Property as are reasonably necessary to conduct such reviews and investigations. Landlord shall use its best efforts to minimize interference with the business of Tenant.


8.6	NOTIFICATION.

If either party shall become aware of or receive notice or other communication concerning any actual, alleged, suspected or threatened violation of Environmental Requirements, or liability for Environmental Damages in connection with the Project or past or present activities of any person thereon, including, but not limited to, notice or other communication concerning any actual or threatened investigation, inquiry, lawsuit, claim, citation, directive, summons, proceeding, complaint, notice, order, writ, or injunction, relating to same, then said party shall notify the other party in writing within ten (10) business days of the receipt of such notice or communication and shall provide

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said other with copies of any documents evidencing same. Receipt of such notice shall not be deemed to create any obligation on the part of Landlord or Tenant to defend or otherwise respond to any such notification. As used in this Lease, the term "business days" means every day of the week, except Saturdays, Sundays and official holidays in the state of Arizona.

If requested by Landlord, Tenant shall disclose to Landlord the names and amounts of all Hazardous Materials other than general office supplies referred to in Section 8.2 , which were used, generated, treated, handled, stored or disposed of on the Project or which Tenant intends to use, generate, treat, handle, store or dispose of on the Project. The foregoing in no way shall limit the necessity for Tenant obtaining Landlord's consent pursuant to Section 8.2 of this Lease.


8.7	SURRENDER OF PREMISES.

In the ninety (90) days prior to the expiration or termination of the Lease Term, and for up to ninety (90) days after Tenant fully surrenders possession of the Premises, Landlord may have an environmental assessment of the Premises performed in accordance with Section 8.5 of this Lease. Tenant shall perform, at its sole cost and expense, any cleanup or remedial work reasonably recommended by the Consultant which is necessary to remove, mitigate or remediate any Hazardous Materials and/or contaminations (other than Hazardous Materials used in compliance with all Environmental Requirements and previously approved by Landlord) of the Project caused by the activities or negligence of the Tenant Group; provided that if Tenant disagrees with Consultant's findings, Tenant shall have the right to hire a second independent professional consultant (" Tenant's Consultant ") to conduct an inspection at Tenant's sole expense. If Tenant's Consultant's findings differ from Consultant's findings, Consultant and Tenant's Consultant shall meet to agree upon the findings and what removal, mitigation or remediation is necessary.


8.8	ASSIGNMENT AND SUBLETTING.

In the event the Lease provides that Tenant may assign the Lease or sublet the Property subject to Landlord's consent and/or certain other conditions, and if the proposed assignee's or sublessee's activities in or about the Property involve the use, handling, storage or disposal of any Hazardous Materials other than those used by Tenant and in quantities and processes similar to Tenant's uses in compliance with the Lease, (i) it shall be reasonable for Landlord to withhold its consent to such assignment or sublease in light of the risk of contamination posed by such activities and/or (ii) Landlord may impose an additional condition to such assignment or sublease which requires Tenant to reasonably establish that such assignee's or sublessee's activities pose no materially greater risk of contamination to the Property than do Tenant's permitted activities in view of the (a) quantities used by such assignee or sublessee, (b) the precautions against a release of Hazardous Materials such assignee or sublessee agrees to implement, (c) such assignee's or sublessee's financial condition as it relates to its ability to

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fund a major clean-up and (d) such assignee's or sublessee's policy and historical record respecting its willingness to respond to the clean up of a release of Hazardous Materials. Landlord shall also have its approval rights as set forth in Section 19 .


8.9	SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.

Either party's breach of any of its covenants or obligations under this Lease shall constitute a material default under the Lease. The obligations of the patties hereunder survive the expiration or earlier termination of the Lease without any limitation, and shall constitute obligations that are independent and severable from other covenants and obligations to pay rent or other sums due under the Lease.

SIGNAGE. All initial signage shall comply with (i) Tenant's Sign Rendering attached as Exhibit "D'' and (ii) all codes, ordinances, statutes, mies, and regulations of all governmental authorities having jurisdiction over such signage. Obtaining governmental approvals for Tenant's Sign Rendering shall be the obligation of Tenant, at Tenant's expense. All costs of Tenant signage shall be borne by Tenant. Tenant shall place no window covering (e.g., shades, blinds, curtains, drapes, screens, paper, cardboard, or tinting materials), stickers, signs, lettering, banners or advertising or display material on or near exterior windows or doors if such materials are visible from the exterior of the Premises, without (i) Landlord's prior written consent, not to be unreasonably delayed, withheld or denied and (ii) any governmental approvals necessary in connection therewith. Similarly, Tenant may not install any alarm boxes, foil protection tape or other security equipment on the Premises without Landlord's prior written consent, not to be unreasonably delayed, withheld or denied. Any material violating this provision may be destroyed by Landlord without compensation to Tenant. Tenant shall have the signage rights on the Buildings and in the Project as set forth in Exhibit "K," R-9, subject to compliance with all codes, ordinances, statutes, mies, and regulations of all governmental authorities having jurisdiction over such signage. Landlord may not place any other signage on a Building without Tenant's prior written consent, which consent shall not be unreasonably withheld. The parties hereby agree and acknowledge that Landlord may place customary signage on the Buildings during the construction phase through the Commencement Date, subject to Tenant's reasonable approval of such signage to the extent the same references Tenant's name or that of Tenant's parent corporation.


10.	PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes, assessments, license fees and public charges levied, assessed or imposed upon its business operations as well as upon all trade fixtures, leasehold improvements, merchandise and other personal property in or about the Premises.


11.	PARKING. Subject to the provisions of Exhibit "K," R-8, Landlord shall provide to Tenant a total of 4.5 unreserved parking spaces per 1,000 square feet of Premises Area at no cost, and for the term of the Lease and any extension thereof In addition, Tenant shall be authorized to use additional parking spaces within the Project to the extent available.

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12.

UTILITIES. Landlord shall install improvements necessary to provide the Premises with all heat, light, power, electricity, telephone, HVAC and other services set fo1ih in the Tenant Improvement Plans. Tenant shall pay for all heat, light, power, electricity, telephone or other service metered, chargeable or provided to the Premises. Landlord reserves the right to install separate meters for any such utility and to charge Tenant for the cost of such installation. There shall be no additional Landlord-imposed charge for any after hours HVAC usage by Tenant in the Premises.

13.

MAINTENANCE. Landlord shall maintain, in good condition, the structural parts of the Premises, which shall include only the foundations, bearing and exterior walls (excluding glass), subflooring and roof (excluding skylights), the unexposed electrical, plumbing and sewerage systems, including those portions of the systems lying outside the Premises, gutters and down spouts on the Buildings and any common areas within the Project and the heating, ventilating and air conditioning systems servicing the Premises; provided, however, the cost of all such maintenance shall be considered "Expenses" for purposes of Section 4.c and that Landlord shall be responsible for replacement of exterior glass and skylights, unless same was damaged due to Tenant's negligence. If Landlord fails to maintain the Premises and remedy any condition of which Tenant provides Landlord written notice in a timely fashion not to exceed the cure periods set forth in Exhibit "K," R-14, and Tenant is deprived of use of the Premises as a result thereof, the rent shall be abated or adjusted, as the case may be, in proportion to that time during which, and to that portion of the Premises of which, Tenant shall be deprived as a result thereof. Except as provided above, Tenant shall maintain and repair the Premises in good condition, including, without limitation, maintaining and repairing all walls, lights, entrances, floors, ceilings, interior and exterior doors, exterior and interior windows and fixtures and interior plumbing as well as any uninsured damage caused by Tenant, its agents, employees or invitees. Tenant shall provide, at its sole cost and expense, janitorial services for the Premises. Upon expiration or termination of this Lease, Tenant shall surrender the Premises to Landlord in the same condition as existed at the commencement of the term, except for reasonable wear and tear or damage caused by fire or other casualty; provided that except as otherwise provided in this Lease, Tenant shall leave the power panels, electrical distributions systems, lighting fixtures, air conditioning, window coverings, carpets, ceilings and plumbing on the Premises and in the same operating condition as received by Tenant, except for reasonable wear and tear or damage caused by fire or other casualty.

14.

ALTERATIONS. Tenant shall not make any alterations to the Project other than alterations to the Premises, which alterations shall be subject to the provisions of Exhibit "K," R-10 and this Section 14 . Tenant shall not make any alterations to the Premises without Landlord's prior written consent, which approval shall not be unreasonably withheld, delayed or conditioned. By means of example, reasonable grounds for Landlord to reject a request to alter the Premises shall include, without limitation, where such alteration would, in Landlord's reasonable opinion, (a) have an adverse impact on the outside appearance of the Building(s) or the Project, (b) adversely impact the structural integrity of the Building(s), (c) create a hazard or increase the likelihood of claims against the owner of the Building(s) or the Project, (d) diminish the value of the Building(s), (e) materially affect the HVAC, electrical, plumbing,

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mechanical or life safety systems serving the affected Building or any other portion of the Premises, or (f) adversely impact the Landlord's rights under this Lease. If Landlord gives its consent to such alterations, Landlord may post notices in accordance with the laws of the state in which the Premises are located. Any alterations made shall remain on and be surrendered with the Premises upon expiration or termination of this Lease, except that Landlord may, at the time any alteration is proposed, elect by written notice to Tenant to require such alteration to be removed when the Premises are surrendered. If Landlord so elects, Landlord shall notify Tenant, in writing, of items that need to be removed and at its own cost, Tenant shall restore the Premises to the condition designated by Landlord in its election, before the last day of the term or within 30 days after notice of its election is given, whichever is later. If Tenant fails to complete that removal or fails to repair any damage that the removal of any alteration causes or fails to restore the Premises to the condition designated by Landlord, Landlord may do so and may charge the cost of doing so to Tenant.

Should Landlord consent in writing to Tenant's alteration of the Premises, Tenant shall contract with a contractor approved by Landlord in Landlord's reasonable discretion for the construction of such alterations, shall secure all appropriate governmental approvals and permits, and shall complete such alterations with due diligence in compliance with plans and specifications approved by Landlord in Landlord's reasonable discretion. Landlord's approval of the plans, specifications and working drawings for any alterations shall create no responsibility or liability on Landlord's part for their completeness, design sufficiency, or degree of compliance with legal requirements. Tenant must do all work with respect to any alteration in a good and workmanlike manner and diligently prosecute it to completion to the end that the Premises shall at all times be a complete unit except during the period of work. Within thirty (30) days after Landlord's written request, Tenant shall deliver to Landlord a diskette with a PDF version of the drawings for all alterations that Tenant made subsequent to its previous submission of drawings to Landlord in accordance with the terms of this Section.

Upon completion of each alteration, Tenant shall deliver to Landlord evidence of payment of the costs incurred in the making of the alteration, contractors' affidavits and full and final waivers of all liens for labor, services or materials. If Tenant makes any alteration in excess of $50,000.00, Tenant shall carry, or cause its contractors to carry, "Builder's All Risk" insurance in an amount Landlord reasonably approves covering the construction of the alteration and all materials, equipment and supplies that will become a part of the alteration. The insurance Tenant maintains in accordance with this Section must (i) name Landlord and its mortgagee as additional insureds, (ii) specifically cover the liability of Tenant arising under Section 16 below, (iii) be issued by an insurance company which is reasonably acceptable to Landlord and qualified to do business in the state in which the Premises are located, (iv) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and non contributing with any insurance requirement of Tenant, and (v) provide that the insurer may not cancel the insurance or materially change its coverage until it has given written notice of the intended cancellation or coverage change to Landlord and to any mortgagee of Landlord, with respect to which Landlord has furnished to Tenant a notice address, at least thirty (30) days in advance of the effective date of that action. Tenant shall also

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require that each contractor, subcontractor and supplier, before it begins work on the Premises, to provide the coverages specified for Tenant's insurance in Section 16 hereof unless Landlord agrees in writing to any lesser or different coverage. Tenant shall deliver to Landlord not less than ten (10) days prior to the commencement of any alteration ce1tified copies of the policies of insurance conforming to the foregoing.

Tenant shall install and maintain waterproofing materials around any penetrations of the roof of a Building which are made during the installation, maintenance, repair, replacement or removal of any alterations (including, without limitation, any signs installed by Tenant), and shall provide waterproofing certification with respect to all such penetrations from a roofing contractor reasonably acceptable to Landlord so that Landlord is assured that such penetrations do not void, limit or reduce any roof warranty in effect from time to time. Tenant agrees that it will engage the roofing contractor that issued any roof warranty to perform any work associated with the installation, maintenance, repair, replacement or removal of the any roof-mounted alterations, if required to do so in order to avoid compromising the warranty so long as the cost of such roofing contractor is commercially reasonable; provided, however, that if Tenant elects not to utilize the roofing contractor that issued the roof warranty, the alternative roofing contractor must be approved by Landlord in Landlord's reasonable discretion and Tenant and, to the extent the utilization of the alternative roofing contractor compromises the existing warranty, Tenant shall procure, at Tenant's expense and for the benefit of Landlord, a comparable roof warranty. If any repair to any Building that Landlord is obligated to perform necessitates the moving or relocation of any roof-mounted alterations or any other equipment or material placed on the roof of such Building by Tenant or any Tenant-Related Party, such moving or relocation shall be performed at Tenant's expense unless such expenses are otherwise reimbursable pursuant to any applicable warranty. In no event will Tenant or any Tenant-Related Party install any alteration or place any other equipment or materials on the roof of a Building if the weight thereof (together with the weight of any such items previously installed or placed thereon) would exceed the weight-load capacity of such roof "Tenant-Related Party" shall include the direct and indirect constituent partners, directors, officers, agents, servants, employees, licensees, contractors, and other invitees of (i) Tenant, (ii) any assignee of the leasehold estate created by this Lease, or (iii) any sublessee of all or any portion of the Premises.

15.

RELEASE AND INDEMNITY. Tenant shall indemnify, defend and hold Landlord harmless from all damages arising out of: (i) the use or occupancy or manner of use or occupancy of the Premises by Tenant or any Tenant-Related Parties; (ii) any activity, work or thing done, pe1mitted or suffered by Tenant or any Tenant-Related Parties in or about the Premises or the Project; (iii) any acts, omissions or negligence of Tenant or any Tenant-Related Parties; (iv) any breach, violation or nonperformance by Tenant or any Tenant-Related Parties of any term, covenant or provision of this Lease or any Applicable Law (as defined in Exhibit "K," R-19); and (v) any injury or damage to the person or property or Tenant, or any Tenant-Related Parties or any other person entering upon the Premises under the express or implied invitation of Tenant (in each case, other than damages proximately caused by Landlord). If Landlord is named or joined as a defendant in any suit brought in connection with a claim with respect to which Tenant

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has indemnified Landlord in accordance with the foregoing terms of this Section, Tenant shall pay to Landlord its reasonable costs and expenses reasonably incurred in that suit, including without limitation, court costs and fees for the professional services of appraisers, accountants, attorneys and expert witnesses. Landlord shall indemnify, defend and hold tenant harmless from all damages arising out of any damage to any person, other than Tenant and Tenant-Related Parties, or property, arising out of or proximately caused by activities in or management and operation of those portions of the Project outside of the Premises Area, by the Landlord Group, or the Landlord Group's use thereof (other than damages proximately caused by Tenant or a Tenant-Related Party), or Landlord's breach of any term of this Lease. If Tenant is named or joined as a defendant in any suit brought in connection with a claim with respect to which Landlord has indemnified Tenant in accordance with the foregoing terms of this Section, Landlord shall pay to Tenant its reasonable costs and expenses reasonably incurred in that suit, including without limitation, court costs and fees for the professional services of appraisers, accountants, attorneys and expert witnesses. The terms of this Section shall survive the expiration or earlier termination of this Lease.


16.	INSURANCE.


16.1	TENANT'S INSURANCE.

During the term of this Lease, Tenant, at its sole cost and expense, shall also obtain and continuously maintain in full force and effect the following insurance coverage (subject to reasonable deductible amounts as provided in Section 16.2 hereof):

Occurrence form ISO Standard Commercial General Liability Insurance against any loss, liability or damage on, about or relating to the Premises, or any portion thereof, including, without limitation, bodily injury, property damage, personal injury and contractual liability coverage with limits of not less than Five Million and No/100 Dollars ($5,000,000.00) combined single limit, per occurrence, and not less than Five Million and No/100 Dollars ($5,000,000.00) in the aggregate, on an occurrence basis. Such insurance shall specifically insure (by contractual liability wording or endorsement) Tenant's obligations under this Lease including, without limitation, Tenant's obligation under Section 15 of this Lease. The limits of coverage required herein may be provided by a combination of a primary and excess policies.


B.	Commercial automobile liability insurance covering all owned, not-owned and hired vehicles with combined limits of not less than One Million and No/100 Dollars ($1,000,000.00) per accident.


C.	Employers' liability insurance with limits of not less than One Million and No/100 Dollars ($1,000,000.00).


D.	Workmen's compensation insurance with respect to all areas of operations with not less than statutory limits.

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E.	Umbrella insurance with limits of not less than Twenty Five Million and No/100 Dollars ($25,000,000.00) per occurrence and not less than Twenty-Five Million and No/100 Dollars ($25,000,000.00) in the aggregate in excess of the underlying coverages listed in Section 16.1.A - D above.


F.	Business Income/Extra Expense Insurance at limits sufficient to cover One Hundred percent (100%) of the period of indemnity not less than twelve (12) months from time of loss. Such insurance shall name Landlord as loss payee solely with respect to Rent payable to or for the benefit of Landlord as its interest appears under this Lease.

Such other insurance and in such amounts as may from time to time be commercially reasonably required by Landlord, against other insurable hazards which at the time are commonly insured against in the case of premises and/or buildings or improvements similar in construction, design, general location, use and occupancy to those on or appurtenant to the Premises. Certificates of insurance with appropriate endorsements, shall be provided to Landlord.

The insurance set forth in this Section 16.1 shall be maintained by Tenant at not less than the limits set forth herein until commercially reasonably required to be changed from time to time by Landlord, in writing, whereupon Tenant covenants to obtain and maintain thereafter such protection in the amount or amounts so required by Landlord. Landlord will require different coverages or increased limits only to the extent that such coverages and limits are commercially reasonable and customary.


16.2	ADDITIONAL INSURANCE PROVISIONS.

All policies of insurance required by Section 16.1 shall be primary, shall (other than for workmen's compensation insurance) name Landlord as an additional named insured, shall be obtained and maintained from and with reputable and financially sound insurance companies authorized to issue such insurance in the state in which the Premises are located, shall at all times be subject to only such deductible amounts as may be reasonably acceptable to Landlord and shall provide that the proceeds thereof shall be payable to Landlord and Tenant, as their interests may appear, and if Landlord so requests shall also be payable to any contract purchaser of the Premises and/or any interest holder, as the interest of such purchaser or holder appears, pursuant to a standard named insured or mortgagee clause. A deductible amount of $100,000.00 or less is acceptable to Landlord; however, higher deductibles may be utilized upon the prior written approval of both Landlord and Tenant. All insurance coverages required as herein set fo1th shall be obtained at the sole cost and expense of Tenant and all deductibles, premium payments, self-insured retentions or claims fees shall be assumed by Tenant. Tenant shall not, on Tenant's own initiative or pursuant to request or requirement of any third party, take out separate insurance concurrent in form or contributing in the event of loss with that required in Section 16.1 hereof, unless Landlord is named therein as an additional insured with loss payable. Tenant shall

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immediately notify Landlord whenever any such separate insurance is taken out and shall deliver to Landlord original certificates evidencing the same. Notwithstanding the foregoing, at such times as Tenant and Guarantor, on a combined basis, have a tangible net worth reasonably determined by Landlord to exceed $100,000,000.00, Tenant shall have the right to carry the coverages required hereunder via a program of self-insurance or in the form of a blanket policy for the risks and in the minimum amounts specified herein.

Each policy required under Section 16.1 shall have attached thereto (a) an endorsement that such policy shall not be canceled or materially changed without at least thirty (30) days' prior written notice to Landlord, and (b) an endorsement to the effect that the insurance as to the interest of Landlord shall not be invalidated by any act or neglect of Landlord or Tenant. All policies of insurance shall be written by companies with a rating of not less than "A" and financial size of not less than Class VIII in the current "Bests Insurance Reports" (or if such ratings are not available reasonably satisfactory to Landlord) and licensed in the state in which the Premises are located. Such certificates of insurance shall be in a form reasonably acceptable to Landlord, shall be delivered to Landlord upon commencement of the term and prior to expiration of such policy, new ce1tificates of insurance, shall be delivered to Landlord not less than ten (10) days prior to the expiration of the then current policy term.

All insurance required to be provided by Tenant under this Lease shall release Landlord from any claims for damage to any person or the Premises and the Project, and to Tenant's fixtures, personal property, improvements and alterations in or on the Premises or the Project, caused by or resulting from risks insured against under any insurance policy carried by Tenant in force at the time of such damage, except for those damages for which Tenant is not required to indemnify Landlord pursuant to Section 15 above.


16.3	LOSS OF USE, BUSINESS INTERRUPTION AND PERSONAL PROPERTY INSURANCE.

Tenant shall maintain insurance coverage (including loss of use and business interruption coverage) upon Tenant's business and upon all personal property of Tenant or the personal property of others kept, stored or maintained on the Premises against loss or damage by fire, windstorm or other casualties or causes, including, without limitation interruption of services or utilities to the Premises, for such amount as Tenant may desire, and Tenant agrees that such policies shall contain a waiver of subrogation clause as to Landlord.


16.4	UNEARNED PREMIUMS.

Upon expiration of the term of this Lease, the unearned premiums upon any insurance policies or certificates thereof lodged with Landlord by Tenant shall, subject to the provisions of Section 21 hereof, be payable to Tenant, provided that Tenant shall not then be in default in keeping, observing or performing the terms and conditions of this Lease.

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16.5	LANDLORD'S INSURANCE.

At all times during the Lease Term Landlord will carry and maintain:

Policies of insurance covering the real property and improvements constructed, installed or located on the Premises against (a) loss or damage by fire; (b) loss or damage from such other risks or hazards now or hereafter embraced by an " Extended Coverage Endorsement ," including, but not limited to, windstorm, hail, explosion, vandalism, riot and civil commotion, damage from vehicles, smoke damage, water damage and debris removal; (c) loss for flood if the Premises are in a designated flood or flood insurance area; (d) loss for damage by earthquake if the Premises are located in an earthquake-prone area; (e) loss from so-called explosion, collapse and underground hazards; (f) abatement or loss of rental by reason of the covered losses as described herein for a period of not less than sixteen (16) months; and (g) loss or damage from such other risks or hazards of a similar or dissimilar nature which are now or may hereafter be customarily insured against with respect to improvements similar in construction, design, general location, use and occupancy to the improvements. At all times, such insurance coverage shall be in an amount equal to 100% of the then " full replacement cost " of the Improvements. "Full Replacement Cost" shall be interpreted to mean the cost of replacing the improvements without deduction for depreciation or wear and tear, and it shall include a reasonable sum for architectural, engineering, legal, administrative and supervisory fees connected with the restoration or replacement of the improvements in the event of damage thereto or destruction thereof. If a sprinkler system shall be located in the improvements, sprinkler leakage insurance shall be procured and continuously maintained by Landlord. If either Building contains a boiler or other pressure vessel or pressure pipes boiler and pressure vessel (including, but not limited to, pressure pipes, steam pipes and condensation return pipes), boiler and pressure vessel insurance coverage shall be procured and maintained by Landlord.

Comprehensive Boiler and Machine1y Insurance on any of the equipment or any other equipment on or in the Premises, in an amount not less than Five Million and No/100 Dollars ($5,000,000.00) per accident for damage to property. Such Boiler and Machinery policy or the All-Risk policy required in Section 16.6.a shall include at least Three Million and No/100 Dollars ($3,000,000.00) per incidence for Off-Premises Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up Expense.


C.	Building Ordinance and Demolition coverage with a limit of not less that $100,000.

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Commercial General Liability Insurance utilizing ISO form CG000l (or the equivalent) in an amount not less than $1,000,000 per occurrence, $1,000,000 Personal Injury and Advertising Injury, $1,000,000 Products and Completed Operations Aggregate and $2,000,000 General Aggregate. There shall be no exclusions deleting or limited the above coverages from the CG000l Form. Coverage shall include, but shall not be limited to coverage for bodily injury, loss of life or property damage occurring in or about the Buildings and on any portion of the streets and sidewalks adjacent thereto or anywhere in or about the Premises. Tenant, its related or affiliated entities, parents, subsidiaries, partnerships, joint ventures, limited liability companies, trusts, and assigns, of every tier, and their respective directors, officers, partners, agents, employees, volunteers, members, trustees and shareholders shall be named as additional insureds.

The parties hereby expressly agree that all insurance required to be maintained by Landlord pursuant to the terms of this Lease shall be included as Expenses covered by Section 4.c .


16.6	WAIVER OF SUBROGATION.

Landlord and Tenant each hereby waive any and all rights of recove1y against the other or against the officers, directors, partners, and shareholders of the other, on account of loss or damage occasioned to such waiving party or its prope1ty or any property of others under its control to the extent that such loss or damage is insured under the insurance required to be maintained pursuant to this Lease. Both Landlord and Tenant shall cause to be inse1ted in the policy or policies of insurance required by Sections 14 and 16 a so called "Waiver of Subrogation Clause" as to the other unless such policy or policies contain such a clause or its equivalent.


17.	DESTRUCTION.


17.1	DESTRUCTION AND RESTORATION.

Tenant covenants and agrees that in case of damage to or destruction of a Building after the Commencement Date, by fire or otherwise (a " Casualty "), Tenant will promptly give Landlord written notice (" Tenant Casualty Notice ") of such damage or destruction upon the occurrence thereof and specify in such notice, in reasonable detail, the extent thereof. Within thirty (30) days of Landlord's receipt of the Tenant Casualty Notice, Landlord agrees to notify Tenant in writing (the " Landlord Casualty Notice ") as to whether the Casualty is a Minor Destruction or a Major Destruction, as such terms are defined below.


B.	Minor Destruction . In the event the Casualty is of a nature that the Building can be repaired within one hundred and eighty (180) days, Landlord shall provide Tenant with notice of Landlord's intent to repair said damages as a Minor Destruction provided that such repair can be

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made within one hundred eighty (180) days under the applicable laws and regulations of the state, federal, county and municipal authorities then in force (such event being referred to as a " Minor Destruction "). Any such casualty shall be considered a Minor Destruction without regard to the percentage of the Premises damaged. In the event of a Minor Destruction, this Lease shall remain in full force and effect except that Tenant shall be entitled to a reduction in Base Monthly Rent payable hereunder in proportion to the portion of the Premises which is rendered unusable by Tenant in the conduct of its business during the period of time the portion of the Premises is unusable. Landlord agrees to commence repairs with respect to a Minor Destruction within sixty (60) days of Landlord's receipt of the Tenant Casualty Notice and to use commercially reasonable efforts to complete such repairs within one hundred and eighty (180) days of its receipt of the Tenant Casualty Notice. In the event Landlord has not used commercially reasonable diligence in completing said repairs within, subject to Tenant Delay and Construction Force Majeure (as such terms are defined in Exhibit "G" ), one hundred and eighty (180) days of receipt of the Tenant Casualty Notice or such longer period of time as is reasonable under the circumstances though in no event more than two hundred and forty (240) days, then Tenant may elect to complete said repairs and offset the reasonable out of pocket costs incurred by Tenant in effecting said repairs against amounts due and payable pursuant to this Lease.

Major Destruction . If the Landlord Casualty Notice reflects that Landlord has deemed a Casualty not of a nature that it can be restored within one hundred eighty (180) days (a " Major Destruction "), Landlord shall have not longer than two hundred and forty (240) days from the date Landlord received the Tenant Casualty Notice within which to make a written election as to whether to restore the Premises. In the event of a Major Destruction, this Lease shall remain in full force and effect except that Tenant shall be entitled to a reduction in Base Monthly Rent payable hereunder in proportion to the portion of the Premises which is rendered unusable by Tenant in the conduct of its business during the period of time the portion of the Premises is unusable. Landlord, shall, except as otherwise provided in Section 17.2 below, promptly restore, repair, replace and rebuild the same to at least as good an order and condition that the same were in prior to the Casualty, with such changes or alterations (made in conformity with Section 14 hereof) as may be reasonably acceptable to Tenant or required by legal requirements. Such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of the Premises, or any portion thereof, pending completion thereof are sometimes hereinafter referred to as the " Restoration ." Notwithstanding anything herein to the contrary, neither Landlord nor Tenant may terminate this Lease in the event of a Casualty, except as set forth in Section 17.2 below.

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17.2	TERMINATION OPTION IN CONNECTION WITH CASUALTY.

By Tenant. So long as no Event of Default shall have occurred and is then continuing and provided such damages or Casualty is not the consequence of the gross negligence or willful misconduct of Tenant or a Tenant-Related Party, Tenant may terminate the Lease with respect to the Building subject to the Casualty upon delivery of (a " Casualty Termination Notice ") of its intention to terminate this Lease pursuant to this Section 17.2 on a date (the " Casualty Termination Date ") which is a date specified by Tenant which is not less than sixty (60) days nor more than ninety (90) days after the giving of such Casualty Termination Notice should any of the following occur:


(i)	In the event a Major Destruction has occurred and Landlord has not, within two hundred and forty (240) days from Landlord's receipt of the Tenant Casualty Notice, given notice of its election to restore the Building(s) subject to the Casualty.


(ii)	In the event a Major Destruction has occurred and Landlord elected to restore the Building(s) subject to the Casualty, but failed, subject to Tenant Delay and Construction Force Majeure (as such terms are defined in Exhibit "G" ), to complete said Restoration within eighteen (18) months from the date of its written notice to restore the Casualty.

(iii)

In the event of the occurrence, during the last year of the term of the Lease, of any Casualty as a result of which (i) a Building has been rendered unsuitable for continued use and occupancy by Tenant and (ii) the costs of Restoration are reasonably determined to exceed twenty-five percent (25%) of the then current fair market value of such Building as reasonably determined by Landlord (and provided to Tenant) within thirty (30) days after the Casualty.

In the event Tenant properly and timely executes and delivers the Casualty Termination Notice, Landlord shall not be obligated to rebuild, restore or repair the Building, the Lease shall be modified to cease and come to an end on the Casualty Termination Date for the Building subject to said Casualty but continue in full force and effect with respect to the other Building. Upon such a termination with respect to one Building, the term of the Lease for the Building subject to the Casualty shall end as if the date of termination were the date originally specified for expiration of the Lease while the Lease will continue with respect to the Building not subject to the Casualty, with the Rent revised to reflect the Premises Area at such time continuing to be subject to the Lease.


B.	By Landlord. Landlord may terminate the Lease with respect to the Building subject to the Casualty upon delivery of a Casualty Termination

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Notice of its intention to terminate this Lease pursuant to this Section 17.2 on a Casualty Termination Date which is a date specified by Landlord which is not less than sixty (60) days nor more than ninety (90) days after the giving of such Casualty Termination Notice under the following circumstances:

(i)

In the event a Major Destruction has occurred and Landlord elects, within two hundred and forty (240) days from Landlord's receipt of the Tenant Casualty Notice, not to restore the Building because (x) the net insurance proceeds made available to Landlord (by the insurance carrier and any party the beneficiary of a deed of trust on the Project securing acquisition and/or construction financing for the Project holding) for the Restoration, plus $2,000,000 to be contributed for such Restoration costs by Landlord, are insufficient to complete the Restoration or (y) the remaining term of the Lease is for less than five (5) years unless Tenant at such time agrees in writing to exercise one of its renewal options set forth in Section l.1, to the extent one remains unused. With respect to (y) above, in the event Tenant has no renewal options remaining at the time of the Casualty Termination Notice, Tenant may nevertheless elect to extend the Lease such that the remaining term of the Lease is extended to five (5) years, with rent payable for any years of extension being subject to rent escalation as is in place at the time of its election to extend the term.

(ii)

In the event of the occurrence, during the last year of the term of the Lease, of any Casualty as a result of which (x) a Building has been rendered unsuitable for continued use and occupancy by Tenant and (y) the costs of Restoration are reasonably determined to exceed twenty-five percent (25%) of the then current fair market value of such Building as reasonably determined by Landlord (and provided to Tenant) within thirty (30) days after the Casualty, then, Landlord shall have the right and option to elect to terminate this Lease, but only with respect to said Building.

In the event Landlord properly and timely executes and delivers the Casualty Termination Notice, Landlord shall not be obligated to rebuild, restore or repair the Building, the Lease shall be modified to cease and come to an end on the Casualty Termination Date for the Building subject to said Casualty but continue in full force and effect with respect to the other Building. Upon such a termination with respect to one Building, the term of the Lease for the Building subject to the Casualty shall end as if the date of termination were the date originally specified for expiration of the Lease while the Lease will continue with respect to the Building not subject to the Casualty, with the Rent revised to reflect the Premises Area at such time continuing to be subject to the Lease.

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17.3	CONFLICT.

Landlord and Tenant acknowledge and agree that the provisions of this Section 17 are the result of arms' length negotiations between Landlord and Tenant and that in the event of any conflict between the provisions of this Section 17 and any statutory or common law rights of termination which may arise by reason of any partial or total destruction of the Premises, including the provisions of A.RS. § 33-343, the provisions of this Section 17 shall prevail.


18.	CONDEMNATION.

Definitions . The following definitions shall apply. (1) " Condemnation " means (a) the exercise of any governmental power of eminent domain, whether by legal proceedings or otherwise by condemnor and (b) the voluntary sale or transfer by Landlord to any condemnor either under threat of condemnation or while legal proceedings for condemnation ai·e proceeding; (2) " Date of Taking " means the date the condemnor has right to possession of the property being condemned; (3) " Award " means all compensation, sums or anything of value awarded, paid or received on a total or partial condemnation; and (4) " Condemnor " means any public or quasi-public authority, or private corporation or individual, having power of condemnation.


b.	Obligations to be Governed by Lease . If during the term of the Lease there is any taking of all or any part of the Premises or the Project, the rights and obligations of the parties shall be determined pursuant to this Lease.

Total or Partial Taking . If the Premises are totally taken by condemnation, this Lease shall terminate on the date of taking. If any portion of the Premises is taken by condemnation, this Lease shall remain in effect, except that Tenant can elect to terminate this Lease if the remaining portion of the Premises is rendered unsuitable for Tenant's continued use of Premises. If Tenant elects to terminate this Lease, Tenant must exercise its right to terminate by giving notice to Landlord within 30 days after the nature and extent of the taking have been finally determined. If Tenant elects to te1minate this Lease, Tenant shall also notify Landlord of the date of termination, which date shall not be earlier than 30 days nor later than 90 days after Tenant has notified Landlord of its election to terminate; except that this Lease shall terminate on the date of taking if the date of taking falls on a date before the date of termination as designated by Tenant. If any portion of the Premises is taken by condemnation and this Lease remains in full force and effect, on the date of taking the rent shall be reduced by an amount in the same ratio as the total number of square feet in the Premises taken bears to the total number of square feet in the Premises immediately before the date of taking.


d.	See Exhibit "K," R-12.

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19.	ASSIGNMENT OR SUBEASE.


19.1	GENERAL RULES.

Subject to the provisions of Exhibit "K," R-13, Tenant shall not (i) assign or encumber its interest in this Lease or the Premises or (ii) sublease all or any part of the Premises or allow any other person or entity (except Tenant's authorized representatives, employees, invitees or guests) to occupy or use any part of the Premises without first obtaining Landlord's consent, which consent shall not be unreasonably withheld, delayed or conditioned. Any assignment, encumbrance or sublease without Landlord's written consent shall be voidable and at Landlord's election, shall constitute a default. If Tenant is a partnership, a withdrawal or change, voluntary, involuntary or by operation of law of any partner, or the dissolution of the partnership, shall be deemed a voluntary assignment. If Tenant consists of more than one person, a purported assignment, voluntary or involuntary or by operation of law from one person to the other shall be deemed a voluntary assignment. If Tenant is a corporation, any dissolution, merger, consolidation or other reorganization of Tenant, or sale or other transfer of a controlling percentage of the capital stock of Tenant, or the sale of at least 50% of the value of the assets of Tenant shall be deemed a voluntary assignment. The phrase "controlling percentage" means ownership of and right to vote stock possessing at least 50% of the total combined voting power of all classes of Tenant's capital stock issued, outstanding and entitled to vote for election of directors. This Section 19 shall not apply to a corporation, the stock of which is traded through an exchange or over the counter. Fifty (50%) percent of the net rent received by Tenant from its subtenants in excess of the rent payable by Tenant to Landlord under this Lease, after first deducting Tenant's reasonable costs associated with arranging for a sublease or assignment, shall be paid to Landlord, or any sums to be paid by an assignee to Tenant in consideration of the assignment of this Lease shall be paid to Landlord. If Tenant requests Landlord to consent to a proposed assignment or subletting, Tenant shall give Landlord not less than sixty (60) days to consider the request prior to the date that is the earlier of the date the proposed assignee or sublessee occupies the any portion of the Premises or signs an agreement with Tenant to do the same. No interest of Tenant in this Lease shall be assignable by involuntary assignment through operation of law (including without limitation the transfer of this Lease by testacy or intestacy). Each of the following acts shall be considered an involuntary assignment: (a) if Tenant is or becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a partnership or consists of more than one person or entity, if any partner of the partnership or the person or entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors; or (b) if a Writ of attachment or execution is levied on this Lease; or if in any proceeding or action to which Tenant is a party, a receiver is appointed with authority to take possession of the Premises. An involuntary assignment shall constitute a default by Tenant and Landlord shall have the right to elect to terminate this Lease, in which case this Lease shall not be treated as an asset of Tenant.

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19.2	WITHHOLDING CONSENT.

Landlord shall be deemed to have reasonably withheld its consent to any proposed transfer unless all of the following conditions have been established to Landlord's reasonable satisfaction:


a.	The proposed transferee has sufficient financial ability to discharge its obligations under this Lease and the proposed agreement of transfer as determined by Landlord's criteria for selecting Building tenants.


b.	The proposed transfer shall not, in Landlord's reasonable judgment, cause physical harm to the Building or harm to the reputation of the Building that would result in an impairment of Landlord's ability to lease space in the Building or a diminution in the rental value of space in the Building.


c.	The proposed use of the Premises by the proposed transferee will be a use permitted under this Lease and not prohibited by the Rules and Regulations, and will not violate any restrictive covenants or exclusive use provisions applicable to Landlord.


d.	The proposed transferee has substantial experience in the type of business it plans to conduct at the Premises.


e.	The proposed transferee shall not be any person or entity who shall at that time be a tenant, subtenant, or other occupant of any part of the Building, or who dealt with Landlord or Landlord's agent (directly or through a broker) as to space in the Building during the six (6) months immediately preceding Tenant's request for Landlord's consent.

The proposed use of the Premises by the proposed transferee will not require Landlord to incur costs in connection with material alterations or additions to the Premises or the Building to comply with applicable law or governmental requirements and will not negatively affect insurance requirements or involve the introduction of materials to the Premises that are not in compliance with the Environmental Laws.


g.	Any mortgagee of the Building will consent to the proposed transfer if such consent is required under the relevant mortgage documents.

Except as approved by Landlord, the proposed use of the Premises will not materially increase the operating costs for the Building or the burden on the Building services, or generate additional foot traffic, elevator usage, parking areas usage, or security concerns in the Building, or create an increased possibility that the comfort or safety, or both, of Landlord and the other occupants of the Building will be compromised or reduced.


i.	The proposed transfer shall not be, and shall not be affiliated with, anyone with whom Landlord or any of its affiliates has had adverse dealings.

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j.	The proposed transfer will not cause a violation of another lease for space in the Building or give an occupant of the Building a right to cancel its lease.


k.	There shall be no default by Tenant, beyond any applicable grace period, under any of the terms, covenants, and conditions of this Lease at the time that Landlord's consent to a transfer is requested and on the date of the commencement of the term of the proposed transfer.


l.	If the transfer is an assignment, the proposed assignee will assume in writing all of the obligations of Tenant under this Lease.

Tenant acknowledges that the foregoing is not intended to be an exclusive list of the reasons for which Landlord may reasonably withhold its consent to a proposed transfer.


20.	DEFAULT. The occurrence of any of the following shall constitute a default by Tenant:


A.	Tenant's failure to pay in full any Rent or any other charge required by virtue of the terms of this Lease when due hereunder and such failure continues for a period of ten (10) business days following written notice from Landlord, regardless of the reason for such failure.


B.	Tenant's failure to observe or perform any provision, covenant or condition of this Lease (except for those provisions, covenants or conditions referred in Sections 20.a, 20.c, 20.d, 20.e and 20.f ), after receipt of notice and opportunity to cure, as set forth in Exhibit "K," R-14.


C.	Tenant's failure to timely maintain or cause to be maintained, any insurance required to be maintained under Section 16 hereof and such failure continues for five (5) days, or the failure of Tenant to furnish Landlord with certificates of any required under Section 16 and such failure continues for five (5) days.


D.	The material breach or failure of any representation or warranty made by Tenant hereunder after receipt of notice and opportunity to cure, as set forth in Exhibit "K," R-14, though in no event shall such cure period for a breach pursuant to this Section 20.D exceed thirty (30) days.


E.	A transfer of all or any portion of the Premises by Tenant except as permitted by the terms of Section 19 hereof after receipt of notice and opportunity to cure, as set forth in Exhibit "K," R-14, though in no event shall such cure period for a breach pursuant to this Section 20.E exceed thirty (30) days.


F.	Tenant's general assignment for the benefit of creditors, or the filing by or against Tenant of any proceeding under an insolvency or bankruptcy law, unless in the case of a proceeding filed against Tenant the case is dismissed within sixty (60) days, or the appointment of a trustee or receiver to take possession of all or substantially all of the assets of

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Tenant, unless possession is restored to Tenant within sixty (60) days, or any execution or other judicially authorized seizure of all or substantially all of Tenant's assets located upon the Premises or of Tenant's interest in this Lease, unless the seizure is discharged within sixty (60) days.


G.	An event of default occurs under the terms of the Guaranty (the "Guaranty") of even date herewith executed by Guarantor relating to this Lease or the Guaranty shall cease to be in full force and effect.


21.	LANDLORD'S REMEDIES. Upon the occurrence of any Lease default by Tenant, Landlord has, in addition to any other remedies available to Landlord at law or in equity, the option to pursue without any further notice or demand whatsoever any one or more of the following remedies, each of which will be cumulative and non-exclusive:

Notice of Election . Landlord shall have the right at its election, then or at any time while such Lease default shall continue, to give written notice of Landlord's election to terminate this Lease on the date specified in such notice. Upon the giving of such notice, the term of the Lease and the estate hereby granted shall automatically expire and terminate at midnight on the date set out in such notice as fully and completely and with the same effect as if such date were the date herein fixed for the expiration of the term of the Lease Term, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable as hereinafter provided.

Re-enter and Repossess . If a Lease default shall have happened and be continuing, Landlord shall have the immediate right (but shall not be obligated), whether or not the term of the Lease shall have been terminated, to terminate Tenant's right to possession of the Premises and to re-enter and repossess the Premises by summary proceedings, ejectment or in any manner Landlord determines to be necessary or desirable and the right to remove all persons and property therefrom other than those persons and their property then subject to a non-disturbance and attornment agreement with Landlord. To the extent permitted by law, Landlord shall incur no liability by reason of any such re-entry, repossession or removal. No such re-entry or repossession of the Premises shall be construed as an election by Landlord to terminate the term of the Lease unless a notice of such election is given to Tenant pursuant to Section 21.a , or unless such termination is decreed by a court of competent jurisdiction.

Rights After Re-entry and Repossession . At any time or from time to time after the re-entry and repossession of the Premises pursuant to Section 21.b , whether or not the te1m of the Lease shall have been terminated pursuant to Section 21.a , Landlord may (but shall to obligated to) relet the Premises (or any portion thereof) for the account of Tenant or Landlord in the name of Tenant or Landlord or otherwise, without notice to Tenant, for such term or terms and on such conditions and for such uses

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in each instance as Landlord, in its reasonable discretion, may dete1mine. Landlord may collect and receive any rents payable by reason of such reletting and apply the amounts so collected to any sums due Landlord by Tenant, but any amount so collected by Landlord in excess of sums due to Landlord by Tenant shall belong to and may be retained by Landlord. Landlord shall not be liable for any failure to relet the Premises or for any failure to collect any rent due upon such reletting.

Survival of Liability. No expiration or termination of the term of the Lease pursuant to Section 21.a , by operation of law or othe1wise, no re entry and repossession of the Premises pursuant to Section 21.b or otherwise, and no reletting of the Premises pursuant to Section 21.c or otherwise, shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, assignment, re entry, repossession or reletting.

Lease Terminated. In the event Landlord elects to terminate this Lease pursuant to Section 21.a above by reason of the occurrence of a default, Landlord shall be entitled to recover from Tenant, and Tenant will pay to Landlord on demand, as and for liquidated and agreed final damages and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to (1) the worth of the unpaid rent that had been earned at the time of termination of Tenant's right to possession; plus (2) the worth of the amount of the unpaid rent that would have been earned after the date of termination of Tenant's right to possession less the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (3) any other amount, including but not limited to, expenses incurred to relet the premises, court, attorney and collection costs, necessary to compensate Landlord for all detriment caused by Tenant's default. "The Worth," as used for Item 21.e.(1) in this Section 21.e is to be computed by allowing interest at the rate of 12% per annum. If the interest rate specified in this Lease is higher than the rate permitted by law, the interest rate is hereby decreased to the maximum legal interest rate permitted by law. The Worth is used for Item 21.e.(2) in this Section is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of termination of Tenant's right of possession.


F.	Cumulative Remedies. No right or remedy hereunder shall be exclusive of any other right or remedy, but shall be cumulative and in addition to any other right or remedy hereunder or now or hereafter existing.


G.	No Waiver of Remedies. Failure to insist upon the strict performance of any provision hereof or to exercise any option, right, power or remedy contained herein shall not constitute a waiver or relinquishment thereof for the future.

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H.	Application of Funds. Landlord may apply any sums otherwise payable to Tenant under the terms of this Lease to any Rent then due and payable hereunder; if no Rent is then due and payable, then so long as the Lease default continues Landlord may withhold such sums to be applied to Rent accruing thereafter.

Landlord's Right to Cure Default. If Tenant fails to perform any of its obligations arising under the terms of this Lease within a reasonable time after Landlord delivers notice to Tenant that Tenant is delinquent in respect of that performance, Landlord may, but is not obligated to, make any payment or perform any act on Tenant's part in order to satisfy the obligation with respect to which Tenant is delinquent without waiving its rights arising by reason of Tenant's default and without releasing Tenant from its obligations.

Payments by Tenant. Tenant shall pay to Landlord within five (5) days after Landlord's delivery to Tenant of its statements the amount of the expenditures Landlord made and the expenses Landlord incurred in connection with Landlord's rectification of Tenant's defaults in accordance with the provisions of Section 21.i . Tenant's obligations under this Section 21.j will survive the Lease Termination Date.

Efforts to Relet. For the purposes of this Section 21 , Tenant's right to possession will not be terminated by Landlord's efforts to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by the appointment of a receiver to protect Landlord's interests. The foregoing enumeration is not exhaustive, but merely illustrative of acts that Landlord may perform without terminating Tenant's right to possession. Landlord will have no obligation to relet the Premises other than as may be imposed by applicable legal requirements but if Landlord chooses or is required to attempt to relet the Premises, Landlord may do so on such terms and conditions as Landlord in its sole, good faith judgment deems acceptable. In any proceedings to enforce this Lease, Landlord will be presumed to have used commercially reasonable efforts to relet the Premises if Landlord is required to do so, and Tenant will bear the burden of proof to establish othe1wise. For the purpose of any such reletting Landlord is authorized to decorate or to make any repairs, changes, alterations or additions in or to the Premises as may be necessary or desirable. Landlord reserves the right, however (x) to refuse to lease all or portions of the Premises to any potential tenant that does not meet Landlord's standards and criteria for leasing other comparable space, and (y) to reconfigure the Premises and lease only portions thereof or lease all or part of the Premises in combination with other space. In no event shall Tenant's Net Obligations be less than zero.


22.	ENTRY ON PREMISES. Subject to the provisions of Exhibit "K," R-15, Landlord and its authorized representatives shall have the right to enter the Premises upon prior written

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consent during normal business hours except in the case of an emergency for any of the following purposes: (a) to determine whether the Premises are in good condition and whether Tenant is complying with its obligations under this Lease; (b) to do any necessary maintenance and to make any restoration to the Premises or the Project that Landlord has the right or obligation to perform; (c) to post "for sale" signs at any time during the term, to post "for rent" or "for lease" signs during the last 180 days of the term, or during any period while Tenant is in default; (d) to show the Premises to prospective brokers, agents, buyers, tenants or persons interested in leasing or purchasing the Premises, as appropriate; or (e) to repair, maintain or improve the Project and to erect scaffolding and protective barricades around and about the Premises but not so as to prevent entry to the Premises and to do any other act or thing necessary for the safety or preservation of the Premises or the Project. Landlord shall not be liable in any manner for any inconvenience, disturbance, loss of business, nuisance or other damage arising out of Landlord' s entry onto the Premises as provided in this Section 22 , except as set forth in Exhibit "K," R-15. Tenant shall not be entitled to an abatement or reduction of rent if Landlord exercises any rights reserved in this Section 22 , except as set forth in Exhibit "K," R-15. Landlord shall conduct his activities on the Premises as provided herein in a manner that will cause the least inconvenience, annoyance or disturbance to Tenant. For each of these purposes, Landlord shall at all times have and retain a key with which to unlock all the doors in, upon and about the Premises, excluding Tenant's vaults and safes. Tenant shall not alter any lock or install a new or additional lock or bolt on any door of the Premises without prior written consent of Landlord. If Landlord gives its consent, Tenant shall furnish Landlord with a key for any such lock.

23.

SUBORDINATION. Subject to the provisions of Exhibit "K," R-16, and at the election of Landlord or any mortgagee or any beneficiary of a Deed of Trust with a lien on the Project or any ground lessor with respect to the Project, this Lease shall be subject and subordinate at all times to (a) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Project, and (b) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which the Project, ground leases or underlying leases, or Landlord's interest or estate in any of said items is specified as security. Subject to the provisions of Exhibit "K," R-16, in the event that any ground lease or underlying lease terminates for any reason or any mortgage or Deed of Trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become Tenant of the successor in interest to Landlord, at the option of such successor in interest. Subject to the provisions of Exhibit "K," R-16, Tenant covenants and agrees to execute and deliver, upon demand by Landlord and in the form requested by Landlord any additional documents evidencing the priority or subordination of this Lease with respect to any such ground lease or underlying leases or the lien of any such mortgage or Deed of Trust.

Tenant, within twenty (20) days from notice from Landlord, shall execute and deliver to Landlord, in recordable form, certificates stating that this Lease is not in default, is unmodified and in full force and effect or noting any objections thereto, or in full force and effect as modified, and stating the modifications. This certificate should also state the amount of current monthly rent, the dates to which rent has been paid in advance, and the amount of any security deposit and prepaid rent. Failure to deliver this certificate to

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Landlord within twenty (20) days shall be conclusive upon Tenant that this Lease is in full force and effect and has not been modified except as may be represented by Landlord.

24.

NOTICE. Any notice, demand, request, consent, approval or communication desired by either party or required to be given, shall be in writing and served either personally or sent by prepaid certified first class mail, addressed as set forth in Section 1 and to any Lender with which Tenant has entered into a Subordination, Non-Disturbance and Attornment Agreement. Either party may change its address by notification to the other party. Notice shall be deemed to be effective when notice is received or upon proof of refusal to accept service thereof.

25.

WANER. No delay or omission in the exercise of any right or remedy by Landlord or Tenant shall impair such right or remedy or be construed as a waiver. No act or conduct of Landlord, including without limitation, acceptance of the keys to the Premises, shall constitute an acceptance of the surrender of the Premises by Tenant before the expiration of the term. Only written notice from Landlord to Tenant shall constitute acceptance of the surrender of the Premises and accomplish termination of the Lease. Either party's consent to or approval of any act by such consent or approval shall not be deemed to waive or render unnecessary such party's consent to or approval of any subsequent act requiring same. Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of the Lease.

26.

SURRENDER OF PREMISES; HOLDING OVER. Upon expiration of the term, Tenant shall surrender to Landlord the Premises and all Tenant Improvements and alterations in good condition, except for ordinary wear and tear, casualty damage and alterations Tenant has the right or is obligated to remove under the provisions of Section 14 herein. Tenant shall remove all personal property from the Premises, and shall perform all restoration made necessary by the removal of any alterations or Tenant's personal property before the expiration of the term, including for example, restoring all wall surfaces to their condition prior to the commencement of this Lease. Landlord can elect to retain or dispose of in any manner Tenant's personal property not removed from the Premises by Tenant prior to the expiration of the term. Tenant waives all claims against Landlord for any damage to Tenant resulting from Landlord's retention or disposition of Tenant's personal property. Tenant shall be liable to Landlord for Landlord's reasonable costs for storage, removal or disposal of Tenant's personal property. If Tenant, with Landlord's consent, remains in possession of the Premises after expiration or termination of the term, or after the date in any notice given by Landlord to Tenant terminating this Lease, such possession by Tenant shall be deemed to be a month to-month tenancy terminable on written 30 day notice at any time by either party. All provisions of this Lease, except those pertaining to term and rent, shall apply to the month-to-month tenancy. Tenant shall, for the initial ninety (90) days, pay monthly rent in an amount equal to 125% of Rent for the last full calendar month during the regular term plus 100% of said last month's estimate of the Expenses pursuant to Section 4.c.3. If Tenant remains without consent past the initial ninety (90) days following the end of the Term of the Lease, Landlord shall receive rent in an amount equal to 150% of rent for

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the last full month plus 100% at said last month's expenses pursuant to Section 4.c.3 plus all damages and reasonable costs associated with the unauthorized occupancy and forcible eviction process.


27.	LIMITATION OF LIABILITY. In consideration of the benefits accruing hereunder, Tenant agrees that, in the event of any actual or alleged failure, breach or default of this Lease by Landlord, if Landlord is a limited liability company or corporation and provided that Landlord maintains equity in the Project and/or other assets valued at a minimum of $500,000.00:


a.	The sole and exclusive remedy shall be against the limited liability company or corporation, as the case may be, and its assets;


b.	No member, shareholder, officer, director, or manager of Landlord shall be sued or named as a party in any suit or action;


c.	No service of process shall be made against any member, shareholder, officer, director, or manager of Landlord;


d.	No member, shareholder, officer, director, or manager of Landlord shall be required to answer or otherwise plead to any service or process;


e.	No judgment may be taken against any member, shareholder, officer, director, or manager of Landlord;


f.	Any judgment taken against any member, shareholder, officer, director, or manager of Landlord shall be vacated and set aside at any time without hearing;


g.	No writ of execution will ever be levied against the assets of any member, shareholder, officer, director, or manager of Landlord;


h.	These covenants and agreements are enforceable both by Landlord and also by any member, shareholder, officer, director, or manager of Landlord.

Tenant agrees that each of the foregoing provisions shall be applicable to any covenant or agreement either expressly contained in this Lease or imposed by statute or at common law.


28.	COMPLIANCE WITH LEGAL REQUIREMENTS.

Compliance with Law . Tenant shall comply at its expense with Applicable Laws that impose any duty or requirement relating to the use, occupation or alteration by Tenant of the Premises. Tenant will promptly notify Landlord of any notice of an alleged violation of a legal requirement applicable to the Premises that Tenant receives. If a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants now or subsequently imposes on Landlord or Tenant any standard or regulation, Tenant

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shall comply promptly with that standard or regulation at its sole cost and expense. The judgment of any court of competent jurisdiction or Tenant's admission in any judicial action that Tenant has violated any of those governmental measures with respect to which it has an obligation to comply under the terms of Section 7 and this Section 28 , regardless of whether Landlord is a patty to that action, will be conclusive of that fact as between Landlord and Tenant.


b.	Landlord's Obligations . Except to the extent of Tenant's obligation under Section 28.a above and with respect to specific requirements due to Tenant's specific use of the Premises, Landlord shall be responsible for compliance with Applicable Laws with respect to the Project and the Premises.


29.	MISCELLANEOUS PROVISIONS.


a.	Time of Essence . Time is of the essence of each provision of this Lease.


b.	Successor . This Lease shall be binding on and inure to the benefit of the parties and their successors, except as provided in Section 19 herein.


c.	Landlord's Consent . See Exhibit "K" R-24.


d.	Commissions . Each party represents that it has not had dealings with any real estate broker, finder or other person with respect to this Lease in any manner, except for the broker identified in Section 1 , who shall be compensated by Landlord.

Other Charges . If either party becomes a party to any litigation concerning this Lease, the Premises or the Project, by reason of any act or omission of the other party or such party's authorized representatives, said patty shall be liable for reasonable attorney's fees and court costs incurred by the other party in the litigation. If any suit, action, arbitration or other proceeding, including, without limitation, an appellate proceeding ("proceeding(s)") is instituted in connection with any controversy, dispute, default or breach arising out of this Lease, the prevailing party shall be entitled to recover, from the losing or defaulting party, all reasonable fees, costs and expenses (including the reasonable fees and expenses of attorneys, paralegals and witnesses) incurred in connection with the prosecution or defense of such proceeding, whether or not the proceeding is prosecuted to a final judgment or determination; provides, however, if there is no clear prevailing party, such fees, costs and expenses shall be borne as determined by the finder of fact.

If either party commences any litigation against the other party or files an appeal of a decision arising out of or in connection with the Lease, the prevailing party shall be entitled to recover from the other party reasonable attorney's fees and cost of suit. If Landlord employs a collection agency to recover delinquent charges, Tenant agrees to pay all reasonable collection agency and reasonable

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attorneys' fees charged to Landlord in addition to rent, late charges, interest and other sums payable under this Lease.


f.	Landlord's Successors. If in the event of a sale or conveyance by Landlord of the Project, the same shall operate to release Landlord from any liability under this Lease, and in such event Landlord's successor in interest shall be solely responsible for all obligations of Landlord under this Lease.

Interpretation. This Lease shall be construed and interpreted in accordance with the laws of the state in which the premises are located. This Lease constitutes the entire agreement between the parties with respect to the Premises and the Project, except for such guarantees or modifications as may be executed in writing by the parties from time to time. When required by the context of this Lease, the singular shall include the plural, and the masculine shall include the feminine and/or neuter. "Party" shall mean Landlord or Tenant. If more than one person or entity constitutes Landlord or Tenant, the obligations imposed upon that party shall be joint and several. The enforceability, invalidity or illegality of any provision shall not render the other provisions unenforceable, invalid or illegal.


30.	SUBDIVISION. Landlord shall not, without Tenant's approval, effect or cause to be effected a legal subdivision of the real property constituting the Project such that additional buildings other than the Buildings may be constructed on the Project to accommodate other tenants or occupants except where such usage is for landscaping and/or property management of the Project.


31.	INTENTIONALLY OMITTED.

32.

OPTION TO EXTEND. Notwithstanding anything to the contrary set forth in this Lease, provided Tenant is not in default, Tenant shall have the option to renew the Lease for two (2) consecutive five (5) year periods at 95% of the then current market rate, as set forth in Exhibit "K," R-18. Tenant must give Landlord written notice of Tenant's intent to exercise the each renewal option not less than twelve (12) months and not more than fifteen (15) months before the expiration of the then current portion of the term of the Lease. All other terms and conditions of the Lease would remain in effect for any renewal term.

33.

TITLE/CONSTRUCTION CONTINGENCY. Landlord and Tenant both acknowledge that this Lease is subject to and conditioned upon Landlord acquiring title to the land upon which the Project will be constructed on or before August 30, 2009. If for any reason Landlord is unable to acquire title to the land on or before August 30, 2009, this Lease shall become null and void and neither party shall have any obligation to the other with regard to this Lease.


34.	CONSTRUCTION. Landlord shall construct the Project in accordance with the Work Letter attached as Exhibit "G."


35.	MEMORANDUM OF LEASE. Concurrently with the execution of this Lease, Landlord and Tenant shall execute a Memorandum of Lease in the form of Exhibit "L"

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(the " Memorandum "). The Memorandum shall be recorded with respect to the Project concurrently with Landlord's acquisition of title to the land upon which the Project will be constructed. After the occurrence of the Commencement Date for the entire Premises, upon the request of either party, Landlord and Tenant shall execute and record an amendment and restatement of the Memorandum by which the Commencement Date shall be specifically set forth.


36.	ADDITIONAL TERMS. Exhibit "K" - "The Rider" attached hereto is by this reference incorporated into and made a part of this Lease. In the event of any inconsistency or conflict between the terms of the main body of this Lease and the terms set forth in Exhibit "K" hereto, the terms of Exhibit "K" shall control.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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EXECUTED BY LANDLORD this 29th day of June , 2009.

US REAL ESTATE LIMITED PARTNERSHIP,

a Texas limited partnership

By: /s/ Glen E. Mitts

Glen E. Mitts

Title: Executive Managing Director

By: /s/ Authorized Signatory

Authorized Signatory

Title: Executive Managing Director

EXECUTED BY TENANT this 26 day of June , 2009.

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona Corporation.

By: /s/ William J. Swirtz

William J. Swirtz

Title: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Brian L. Swartz

Title: Senior VP Finance Chief Accounting Officer

[Signature Page to Lease]

EXHIBIT "A"

THE PREMISES

EXHIBIT "A"

LOT 7A, OF FOUNTAINHEAD LOT 7, A REPLAT OF LOT 7 FOUNTAINHEAD CORPORATE PARK - AMENDED, ACCORDING TO THE PLAT OF SAID SUBDIVISION RECORDED IN BOOK 864 OF MAPS, PAGE 8 OF THE RECORDS OF MARICOPA COUNTY, ARIZONA.

EXCEPT THAT PORTION THAT WAS CONVEYED IN INSTRUMENT RECORDED AS 2008-1071568 OF OFFICIAL RECORDS MORE PARTICULARLY DESCRIBED AS FOLLOWS:

THAT PORTION OF LOT 7A, FOUNTAINHEAD LOT 7 REPLAT, ACCORDING TO BOOK 864, PAGE 8, RECORDS OF MARICOPA COUNTY, ARIZONA, LOCATED IN THE NORTHEAST QUARTER (NE1/4) OF SECTION 29, TOWNSHIP 1 NORTH, RANGE 4 EAST, GILA AND SALT RIVER MERIDIAN, MARICOPA COUNTY, ARIZONA, DESCRIBED AS FOLLOWS:

COMMENCING AT A 3/8 IRON BAR 1 FOOT BELOW GROUND TAGGED RLS 42014 MARKING THE CENTER OF SAID SECTION 29, BEING SOUTH 89 DEGREES 40 MINUTES 03 SECONDS WEST 2676.43 FEET FROM A CITY OF TEMPE (COT) BRASS CAP IN HAND HOLE LABELED GDAC 64022-1 MARKING THE EAST QUARTER CORNER OF SAID SECTION 29;

THENCE ALONG THE EAST-WEST MID-SECTION LINE OF SAID SECTION 29, NORTH 89 DEGREES 40 MINUTES 03 SECONDS EAST 799.18 FEET TO THE EXITING EASTERLY RIGHT OF WAY LINE OF INTERSTATE HIGHWAY 10 (PHOENIX -CASA GRANDE HIGHWAY);

THENCE ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE, NORTH 0 DEGREES 35 MINUTES 19 SECONDS EAST 201.01 FEET;

THENCE CONTINUING ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE, FROM A LOCAL TANGENT BEARING OF NORTH 1 DEGREE 00 MINUTES 23 SECONDS WEST, ALONG A CURVE TO THE LEFT, HAVING A RADIUS OF 3969.72 FEET, A LENGTH OF 354.65 FEET TO THE SOUTHWEST CORNER OF SAID LOT 7A AND THE POINT OF BEGINNING;

THENCE CONTINUING ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE ALSO BEING THE WESTERLY LINE OF SAID LOT 7A, FROM A LOCAL TANGENT BEARING OF NORTH 06 DEGREES 07 MINUTES 31 SECONDS WEST ALONG SAID CURVE TO THE LEFT, HAVING A RADIUS OF 3969.72 FEET, A LENGTH OF 186.29 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE OF LOT 7A, NORTH 89 DEGREES 37 MINUTES 35 SECONDS EAST 101.07 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE, FROM A LOCAL TANGENT BEARING OF NORTH 8 DEGREES 36 MINUTES 18 SECONDS WEST, ALONG A CURVE TO THE LEFT, HAVING A RADIUS OF 4069.72 FEET, A LENGTH OF 200.40 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE, NORTH 89 DEGREES 38 MINUTES 42 SECONDS EAST 13.02 FEET;

THENCE FROM A LOCAL TANGENT BEARING OF SOUTH 11 DEGREES 22 MINUTES 44 SECONDS EAST, ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 4082.72 FEET, A LENGTH OF 386.66 FEET TO THE SOUTHERLY LINE OF SAID LOT 7A;

THENCE ALONG SAID SOUTHERLY LINE, SOUTH 89 DEGREES 40 MINUTES 03 SECONDS WEST 113.25 FEET TO THE POINT OF BEGINNING.

EXHIBIT "B"

SEE ATTACHED SITE PLAN OF PROJECT

EXHIBIT "C"

INTENTIONALLY OMITTED

EXHIBIT "D"

TENANT SIGNAGE

FOUNTAINHEAD COPORATE PARK

Tenant' signage on the Building as set forth in Exhibit "K," R-9, shall generally be as set forth in the rendering attached hereto and shall comply with all applicable governmental codes and ordinances. Any material modifications to such signage prior to installation or subsequent thereto shall be subject to Landlord's approval, such approval not be unreasonably withheld, conditioned or delayed.

EXHIBIT "E"

INTENTIONALLY OMITTED

EXHIBIT "F"

HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

Other than commercially reasonable quantities of general office, educational and classroom supplies and materials, Tenant shall not use, keep or store any Hazardous Materials on or about the Premises or the Project.

EXHIBIT "G"

WORK LETTER AGREEMENT


LANDORD:	US REAL ESTATE LIMITED PARTNERSHIP, a Texas

limited partnership


TENANT:	THE UNIVERSITY OF PHOENIX, INC., an Arizona

corporation


DATE:	June 29 , 2009

RECITALS

A. Concu1Tently with the execution of this Work Letter Agreement (the "Work Letter"), Landlord and Tenant have entered into a lease (the "Lease") covering certain leased premises (the "Premises") in the buildings to be constructed in accordance with this Work Letter located at 1625 Fountainhead Parkway, Tempe, Arizona 85282 ("Office A") and 1601 Fountainhead Parkway, Tempe, Arizona 85282 ("Office B") (each, a "Building" and collectively the "Buildings"), as more particularly described in the Lease. Capitalized terms used but not defined herein shall have the meanings set forth in the Lease.

B. To induce Tenant to enter into the Lease (which is hereby incorporated by reference to the extent that the provisions of the Lease apply hereto) and in consideration of the mutual covenants hereinafter contained, Landlord and Tenant hereby agree as follows:

AGREEMENT


1.	Base Buildings.

Landlord will construct the Buildings referenced above in accordance with (i) all applicable laws, mies, regulations, ordinances, governmental and quasi-governmental laws and local codes including, without limitation, O.S.H.A. mies and regulations, the Americans with Disabilities Act (" ADA ") and/or any comparable state statutes (" Applicable Laws "); (ii) all private covenants, conditions and restrictions affecting the Building ("Deed Restrictions"), if any; and (iii) in accordance with the approved Final Base Plans as they may be modified from time to time by change orders as set forth in Paragraph 7. Each " Base Building " will include all base, shell and core improvements and all improvements to the common areas of the Buildings, all as more specifically set forth in Schedule 1 to this Work Letter. The Base Buildings shall be constructed for LEED ce11ification.


b.	The total cost of construction of the Base Buildings (the "Base Costs") is anticipated to be Fifty-Eight Million Eight Hundred Twenty Five Thousand Seven Hundred Thi11y Eight and No/100 U.S. Dollars ($58,825,738.00) (the " Base Improvement Allowance "). Landlord shall

bear the responsibility for Base Costs in excess of the Base Improvement Allowance except as set forth in Paragraphs 3, 4, 5 and 7.


2.	Tenant Improvements.


a.	" Tenant Improvements " shall include all work to be done within the Premises other than the Base Building as set forth in Schedule 1 to this Work Letter in accordance with the standards and finishes set forth in Schedule 2 to this Work Letter.

Landlord will cause to be furnished an allowance in an amount equal to Thirty-Five and No/100 Dollars ($35.00) per rentable square foot of the Rentable Area contained within the Premises (the " TI Improvement Allowance "), to be applied against the total costs of the Tenant Improvements (the " TI Costs "). To the extent the TI Costs incurred (or reasonably expected to be incurred) exceed the TI Improvement Allowance, less any costs associated with a Landlord-initiated Change Order unless such Landlord-initiated Change Order is directly related to a change required by governmental authorities due to the Tenant's specific usage of the Building (such excess, the " Excess TI Costs "), Tenant must pay such overage to Landlord as payment for such work is due and payable to the General Contractor, subject to a ten percent (10%) holdback of the overage until all punch list items have been completed.


3.	Parties' Responsibilities.

Landlord's Responsibilities. Landlord will be responsible for the preparation of plans and construction drawings for the Base Buildings and will submit same to Tenant for approval as provided in Paragraphs 4 and 5 below. Landlord will be responsible for providing Tenant with all information, documents and plans (including plans and construction drawings for the Base Building) for Tenant's architect to use in preparing space plans and working drawings for the Tenant Improvements, and Landlord shall be responsible for any costs or delays caused if such information, documents and plans to be provided by Landlord are not accurate and complete. Upon approval of all plans by both parties, Landlord will construct the Base Building and the Tenant Improvements. Landlord will be responsible for ensuring that all of the work done both to construct and prepare the Base Building and to construct and prepare the Premises shall be done in a good and workmanlike manner in compliance with all Applicable Laws and Deed Restrictions (if any), and in accordance with the Plans and Specifications as they may be modified from time to time by change orders as set forth in Paragraph 7 and construction schedules. All Tenant Improvements will be done to the standards and using the materials and finishes set forth in the Final TI Plans and/or in Schedule 2 to this Work Letter, as applicable. Landlord shall use commercially reasonable efforts to secure completion of all work

in a timely manner so that Tenant is able to occupy the Premises in Office B on or before June 1, 2011 (the " Office B Scheduled Delive1y Date ") and the Premises in Office A on or before November 1, 2011 (the " Office A Scheduled Delivery Date ") (each, a "Scheduled Delivery Date" and collectively, the " Scheduled Delive1y Dates ").

Tenant's Responsibilities. Tenant shall be responsible for the preparation and approval of preliminary space plans and specifications for the Tenant Improvements in sufficient detail (" Space Plans ") so as to enable Landlord to estimate the TI Costs. Tenant shall be responsible for the preparation and approval of the final construction drawings and specifications for the Tenant Improvements (" Working Drawings ") and for any costs or delays caused if such information, documents and plans are not accurate and complete. Tenant shall also be responsible for the review and approval of the Base Building Plans and the Tenant Improvement Plans as provided in Paragraph 5 below, and for the payment of (i) the excess of the Base Costs over the Base Improvement Allowance to the extent due to Tenant-initiated changes to the Preliminary Building Plans under Paragraph 4.a or Tenant-initiated Change Orders under Paragraph 7.b, and (ii) any Excess TI Costs.

Mutual Cooperation. The parties agree to work together and to cooperate reasonably with one another so as to facilitate the completion of the Base Buildings and of all Tenant Improvements in accordance with the te1ms of this Work Letter. In connection with exercising its review and approval rights under any provision of this Work better, Landlord or Tenant, as the case may be (the " Reviewing Party "), must act in good faith, with due diligence, and in a commercially reasonable manner. Upon the Reviewing Party's receipt of any submission from the other party (the " Submitting Party "), the Reviewing Party shall review the submission and shall give the Submitting Party notice of the Reviewing Party's approval or disapproval and the reasons for any disapproval. The Reviewing Party must deliver that notice promptly, but in no event later than ten (10) Business Days after the date of its receipt of the submission. The Reviewing Party's right to disapprove any submission is limited to those elements of the submission: (i) that do not confirm substantially to matters previously approved; or (ii) that are new elements not previously presented; or (iii) that depict matters that are violations of the Lease or Applicable Laws, or (iv) as othe1wise specifically set forth below. If the Reviewing Party disapproves of the submission within the time period specified above, the Submitting Party may alter its submission to satisfy the Reviewing Party's objections and make a re-submission to the Reviewing Party within five (5) Business Days after the date of the Submitting Party's receipt of the notice of disapproval. Any re submission will be subject to review and approval by the Reviewing Party in accordance with the procedures described in this Paragraph 3.c. for an original submission except that the time period for review and response by

the Reviewing Party will be five (5) Business Days rather than ten (10) Business Days. The Reviewing Party's failure to give the Submitting Party notice of approval or disapproval within ten (I0) Business Days after its receipt of a submission or within five (5) Business Days after its receipt of a re-submission will constitute approval of the submission or re submission, as the case may be.


4.	Base Building Plans.

Landlord and Tenant acknowledge that attached as Schedule 3 hereto are preliminary plans and specifications for the Base Building (the " Baseline Plans "). No later than two hundred forty (240) days following the date of the Lease, Landlord shall provide to Tenant initial plans and construction drawings for the completion of the Base Buildings (" Preliminary Building Plans "), which Preliminary Building Plans shall not deviate from the Baseline Plans in any way that would have a material impact on Tenant's intended use and occupancy of the Premises. The Preliminary Buildings Plans may, but need not be, permitted by applicable governmental authorities at the time of delivery to Tenant.

Tenant shall review the same and notify Landlord in writing of either its approval of the Preliminary Building Plans or of any modifications that Tenant may reasonably require for its intended use and .occupancy of the Premises. Landlord shall make any such required modifications at no cost to Tenant so long as such changes (x) do not cause, and are not reasonably expected by Landlord to cause, the Base Costs to exceed the Base Improvement Allowance or (y) are necessary due to a deviation from the Baseline Plans that will have a material impact on Tenant's intended use and occupancy of the Premises. The costs of changes to the Baseline Plans required for compliance with Applicable Laws shall be borne by Landlord, provided, however, that if a change is attributable not to an office building in general but due to Tenant's specific intended use of the Building, the cost of any such change shall be borne by Tenant.

So long as any such Tenant request does not cause, and is not reasonably expected by Landlord to cause, the Base Costs to exceed the Base Improvement Allowance or if such changes are necessary to resolve any deviation between the Baseline Plans and the Preliminary Building Plans or if such changes are intended to prevent a material impact on Tenant's intended use and occupancy of the Premises, Landlord will not unreasonably withhold or delay its approval of Tenant's requested changes. If Landlord objects to any modifications required by Tenant in the Preliminary Building Plans which modifications are not required to resolve a deviation from the Baseline Plans that will have a material impact on Tenant's intended use and occupancy of the Premises, the parties shall promptly confer to resolve all issues related to the Preliminary Building Plans. In the event Tenant requests a change to the

Preliminary Building Plans that causes, or is reasonably expected to cause, the Base Costs to exceed the Base Improvement Allowance and such changes are not necessary to resolve a deviation from the Baseline Plans, Landlord may condition its approval of such change on Tenant's agreement to pay for the Excess Base Costs relating to such change. If Landlord has so conditioned its approval to a change on Tenant's agreement to pay the Excess Base Costs, Tenant may (x) withdraw its change request or (y) agree to pay the amount of the Excess Base Cost relating to the change request in accordance with Paragraph 2.b.


b.	Once approved by both Landlord and Tenant, the Prelimina1y Building Plans, as modified prior to mutual approval, shall be deemed the " Base Building Plans ." Reference to " Base Building Plans " shall refer to such plans as amended pursuant to the terms of this Work Letter.


5.	Tenant Improvement Plans.

Within forty-five (45) days after the date the parties agree upon and approve the Base Building Plans, Tenant shall cause its architect to prepare Space Plans for the Premises and submit the Space Plans to Landlord for approval. If Landlord objecls to any elements of the Space Plans or the work contemplated thereby, the parties shall promptly confer to resolve all issues related to the Space Plans and the Tenant Improvements, provided, however, Landlord will not unreasonably withhold its approval of the Space Plans. Landlord may reasonably withhold its approval of the Space Plans if Landlord reasonably believes that Tenant Improvements as set forth in the Space Plans would (a) have an adverse impact on the outside appearance of the Building(s) or the Project, (b) adversely impact the structural integrity of the Building(s), (c) create a hazard or increase the likelihood of claims against the owner of the Building(s) or the Project, (d) diminish the value of the Building(s), (e) materially and adversely affect the HVAC, electrical, plumbing, mechanical or life safety systems serving the affected Building or any other portion of the Premises, or (f) the Space Plans would require changes to the Base Building as set forth in the Base Building Plans and Tenant refuses to agree to pay for said changes.

Within ninety (90) days after approval, or deemed approval, of the Space Plans by both parties, Tenant shall cause its architect to prepare final Working Drawings, shall review and approve such Working Drawings, and shall submit the same to Landlord for approval, which approval will not unreasonably withheld. Landlord may reasonably withhold its approval of the Working Drawings if Landlord reasonably believes the deviations between the Space Plans and the Working Drawings would (a) have an adverse impact on the outside appearance of the Building(s) or the Project, (b) adversely impact the structural integrity of the Building(s), (c) create a hazard or increase the likelihood of claims against the owner of

the Building(s) or the Project, (d) diminish the value of the Building(s), (e) materially and adversely affect the HVAC, electrical, plumbing, mechanical or life safety systems serving the affected Building or any other portion of the Premises, or (f) the Working Drawings would require changes to the Base Building as set forth in the Base Building Plans and Tenant refuses to agree to pay for said changes. The costs of any changes required to be made to the Base Building Plans due to differences between the Working Drawings and the Space Plans shall be borne by Tenant. If Tenant objects to any modifications requested by Landlord to the Working Drawings, the parties shall promptly confer to resolve all issues related thereto. Once so approved by both parties, the Working Drawings shall be referred to collectively herein as the " Tenant Improvement Plans ." Reference to " Tenant Improvement Plans " shall refer to such plans as amended pursuant to the terms of the Work Letter.

Once approved by both parties, the Tenant Improvement Plans shall not be changed without Landlord's and Tenant's prior written consent. If any material change is necessary in the Tenant Improvement Plans due to requirements of any Applicable Laws, Landlord shall consult with Tenant to develop an approach to meeting any such requirements that is acceptable to Tenant. Any Excess TI Costs attributable to changes in Applicable Laws prior to Substantial Completion shall be borne by Tenant.


d.	If Landlord requests material rev1s10ns to a submission that are not specifically considered to be reasonable under the conditions set forth in Paragraph 5.a or 5.b then Tenant may terminate the Lease upon not less than fifteen (15) Business Days prior written notice. Upon termination, neither patty shall have any further obligation hereunder.


6.	Selection of Contractor/Final Budget.

Not later than ten (10) days after approval of the Tenant Improvement Plans by both patties, Landlord shall select a general contractor for the construction of the Base Building and a general contractor for the construction Tenant Improvements, in each case who is a licensed contractor qualified to handle a project of this scope and complexity and capable of securing appropriate bonding and insurance (each, and collectively as the context dictates, the " General Contractor "). Landlord and Tenant shall endeavor to utilize one general contractor for both the Base Buildings and the Tenant Improvements but shall not be obligated to do so. Landlord's notice of selection of General Contractor shall include the profit and overhead percentage for both the Base Building at1d the Tenant Improvements and the cost of general conditions for both the Base Building and Tenant Improvements as proposed by the General Contractor. Tenant shall thereafter have the right to approve Landlord's final selection of the General Contractor, such approval not to be

unreasonably withheld, conditioned, or delayed. Tenant shall not be considered to be unreasonable in disapproving a General Contractor if the cost of general conditions and the profit and overhead of the General Contractor are in excess of reasonable costs for such items in the same general market as the Project or if the profit and overhead for the Tenant Improvements (as a percentage of the total costs) exceeds the profit and overhead for the Base Building. Notwithstanding Paragraph 3.d., a failure by Tenant to affirmatively approve or disapprove the Contractor selected by Landlord within ten (I 0) business days of receipt of notice of Landlord's selection shall be deemed to be an approval of said General Contractor. If Tenant reasonably disapproves a General Contractor, Tenant may elect to negotiate with the General Contractor and Landlord to reduce the profit and overhead and/or general conditions amount. If the parties are unable to reach an agreement with respect to Landlord's selected General Contractor within fifteen (15) days of the commencement of negotiations between Tenant, General Contractor and Landlord and if Landlord is unwilling to select a different General Contractor for the construction of the Tenant Improvements the parties shall resolve the dispute regarding the General Contractor under Paragraph 11 below. Landlord shall cause General Contractor to secure a minimum of three (3) bids for each subcontractor in each major trade. Landlord shall promptly submit the bids to Tenant and Tenant and Landlord shall thereafter mutually select the subcontractors for the performance of the Tenant Improvements. General Contractor shall comply with the insurance requirements in Schedule 4.

As the Preliminary Building Plans, Base Building Plans, Working Drawings, and Tenant Improvement Plans are refined during the completion of each successive set of said plans, Landlord, its architect(s), and the General Contractor shall provide value engineering services in an effort to maintain (x) the Base Costs to an amount no greater than the Base Improvement Allowance and (y) a budget for the Tenant Improvements no greater than the Tenant Improvement Allowance (the " TI Budget ") (the Base Improvement Allowance and TI Budget together referred to as the " Final Project Budget "). The Final Project Budget shall include the costs of documentation, certification, and registration of the Base Building with respect to the LEED ce1tification.

Value Engineering on Base Buildings. Landlord may, by providing written notice to Tenant within five (5) business days after its receipt of the proposed Final Project Budget, elect to have the parties work with together with the General Contractor on value enginee1ing approaches to reduce the proposed Base Costs (" Value Engineering " or the " Value Engineering process "). The Value Engineering process shall not exceed ten (10) business days (the " Value Engineering Period ") from the date of Landlord's request to perform Value Engineering. Landlord shall, and shall cause its project architect and the General Contractor to, use best and

most diligent commercially reasonable efforts to respect the basic design of the Base Buildings and the materials to be used in construction while addressing the budget concerns of Landlord during the Value Engineering Period. At the end of the Value Engineering Period, after best and diligent commercially reasonable efforts by Landlord, the project's architect, the General Contractor, and Tenant to reduce the proposed Base Costs, then, so long as such revisions do not adversely impact Tenant's proposed use and occupancy of the Premises in any material manner, the Base Building Plans (as refined during the Value Engineering Period) shall be deemed to be the " Final Base Plans ." If revisions to the Base Building Plans through Value Engineering will materially and adversely impact Tenant's proposed use and occupancy of the Premises, Tenant must approve such revisions.

Value Engineering on Tenant Improvements. Tenant may, by providing written notice to Landlord, within five (5) business days after Tenant's receipt of the proposed Final Project Budget, elect to have the parties work together with General Contractor on Value Engineering to reduce the proposed TI Costs. Landlord shall, and shall cause its project architect and the General Contractor and Tenant shall and shall cause its architect to use best and most diligent commercially reasonable efforts to respect the basic design of the Tenant Improvements and the materials to be used in construction while addressing the budget concerns of the parties during the Value Engineering Period. At the end of the Value Engineering Period, after best and diligent commercially reasonable efforts by the parties, the project's architect, Tenant's architect and the General Contractor to reduce the proposed Tl Costs, the Tenant Improvement Plans (as refined during the Value Engineering Period) shall be deemed to be the " Final TI Plans " and submitted to Tenant for approval. The parties acknowledge that the Value Engineering Process may not be successful in achieving any cost savings. Collectively, the Final Base Plans and the Final TI Plans are referred to hereinafter the " Plans and Specifications ."

Landlord will endeavor to provide Tenant with the benefit of consolidated bidding of both Base Buildings and Tenant Improvement items wherever applicable and/or feasible so as to reduce Base Costs and TI Costs by taking advantage of volume and other benefits, economies of scale and discounts accorded to Landlord by General Contractor. The foregoing shall not, however, constitute a representation, covenant, or guarantee that any such savings will in fact be achieved.


7.	Change Orders.


a.	Landlord reserves the right to make changes and modifications to the Plans and Specifications from time to time. If the proposed change (i) will not cause Substantial Completion of either Building to be delayed to a date which is after the then applicable Scheduled Delivery Date for such

Building, (ii) will not cause a change to the Final TI Plans, and (iii) is not a material downgrade from or scope change to the Final Base Plans as they then exist, Landlord may implement such change without obtaining Tenant's consent (but Landlord shall promptly notify Tenant of such change prior to making such change, with such notice to be accompanied by a copy of the pertinent Change Order [or other evidence of such change] and reasonable support for Landlord's determination that such change satisfies the criteria set out in this sentence). If the proposed change does not satisfy the criteria set forth in the preceding sentence, Tenant approval shall be required prior to implementation of such proposed change. Tenant may not unreasonably withhold, condition or delay its approval of any such proposed change to the Final Base Plans and Tenant shall cause Tenant's architect to revise the Final TI Plans, at Landlord's cost, to comply with the revisions to the Final Base Plans. Tenant must approve, which approval may be withheld in its sole and absolute discretion, any change in the Final TI Plans initiated by Landlord. If Landlord initiates a change in the Plans and Specifications, Landlord shall be responsible for any actual increase in the cost of the construction of said improvements caused by such change and such costs shall not be considered to be Excess TI Costs and any increase in the Base Costs shall be considered to be a commensurate increase in the Base Improvement Allowance.

Tenant reserves the right to make written requests for changes to the Final TI Plans. If the proposed change to the Final TI Plans (i) will not cause Substantial Completion of either Building to be delayed to a date which is after the then applicable Scheduled Delive1y Date for such Building, and (ii) is not a material downgrade from or scope change to the Final TI Plans as they then exist, Landlord will not unreasonably withhold, condition or delay its approval of such change. If the proposed change does not satisfy the criteria set forth in the preceding sentence, Landlord may, in its discretion, decline to approve such proposed change. If Tenant initiates a change in the Final TI Plans, the cost associated therewith will be considered an Excess TI Cost, provided Tenant approves said Excess TI Cost in advance and in writing.

Before implementing any change to the Plans and Specifications, Landlord will submit to Tenant, in the form of a proposed Change Order, a statement of the Change Order Cost that will occur by virtue of that change and a statement of the terms and conditions under which Landlord will undertake to implement the proposed change, including, without limitation, the effect that implementation of the proposed change will have on the Scheduled Delive1y Date of the Buildings. Subject to General Contractor's having responded to Landlord's pricing query in a timely manner, Landlord must make its sub1nission within ten (10) Business Days after Tenant's submission of the requested change to Landlord or simultaneously with Landlord's submission of a requested change to

Tenant. Notwithstanding Paragraph 3.c, within ten (I 0) Business Days after Landlord's submission to Tenant, Tenant must elect by written notice to Landlord either to forego the design change contemplated in the Change Order if requested by Tenant or to disapprove the design change contemplated in the Change Order if requested by Landlord or to pay the Change Order Cost if requested by Tenant or approve the Change Order if requested by Landlord. Until Tenant signs that proposed Change Order, Landlord has neither the obligation nor authority to proceed to implement the proposed change. Each fully-executed Change Order will become part of the Plans and Specifications.


d.	Except as expressly provided above, the parties shall authorize all changes by signing Change Orders and, upon the signing of a Change Order, Landlord shall cause the General Contractor to prosecute the changes in accordance with the requirements of that Change Order.


8.	Construction.

Commencement and Process. Landlord shall cause the General Contractor to commence construction of the Buildings as soon as reasonably practical upon the closing of financing for the construction of the Buildings. The delivery of Landlord's notice to proceed to the General Contractor and site excavation activity shall constitute the commencement of construction for purposes of the foregoing requirement. Landlord shall cause the General Contractor to diligently prosecute the construction of the Buildings following commencement of construction pursuant to the terms of the Construction Contract.

Schedule. Landlord shall use its commercially reasonable effo1is to cause the General Contractor to Substantially Complete the construction of the Buildings and tender possession of the Buildings to Tenant on or before the respective Scheduled Delivery Dates; provided, however, failure to achieve Substantial Completion on or before the Scheduled Delivery Dates shall neither effect the validity of this Lease nor the obligations of Tenant under this Lease, except as set forth in Paragraph 8.c of this Work Letter.

Failure to Meet Schedule. In the event Office B is not Substantially Completed on or before July 31, 2011, Base Rent for Office B shall abate for one day for each day between August 1, 2011 and the date Office B is Substantially Complete, subject to Tenant Delay and Construction Force Majeure (either, an " Excused Delay "). In the event Office A is not Substantially Completed on or before December 31, 2011, Base Rent for Office A shall abate for one day for each day between January 1, 2012 and the date Office A is Substantially Complete, subject to Excused Delay. In addition, if the Commencement Date for the entire Premises does not occur on or before June 30, 2013, subject to Tenant Delay, Tenant may

elect to terminate this Lease by delivering written notice to Landlord at any time prior to the date the Premises are Substantially Completed. Upon such termination, neither party sha11 have any obligation to the other with regard to the Lease or the Work Letter.

The term " Tenant Delay " means any delay in the completion of the Base Building and/or the Tenant Improvements caused by (a) Tenant's or Tenants architect's failure to act or provide the responses described in this Work Letter within the time specified; (b) any Changes Orders initiated by Tenant; (c) Tenant's delay in making payment for any construction costs for which Tenant is responsible hereunder; (d) delay in Landlord's completion of the Base Building or Tenant Improvements through any negligence, gross negligence, or willful misconduct of Tenant, its employees, agents, contractors or representatives, or (d) any other delay caused by Tenant, its employees, agents, contractors or representatives. The term " Construction Force Majeure " means any unexpected event beyond the reasonable control of the party affected thereby, including, without limitation, acts of the public enemy, government restraint, unavailability of materials or any public utility service, strikes, civil riots, floods, hurricanes, tornadoes, earthquakes and other severe weather conditions or acts of God, but excluding events involving the financing of the Project. If any period of Tenant Delay causes a delay in the Commencement Date for a Building, Tenant sha11 pay to Landlord within ten (10) days of Landlord's written notice to Tenant per diem Base Monthly Rent for each day of such Tenant Delay.

Miscellaneous. Notwithstanding anything herein to the contrary, to the extent, and solely to the extent, Landlord secures and receives liquidated damages from the General Contractor under the Construction Contract directly related to a delay in the Substantial Completion of a Building, Landlord agrees to provide Tenant with that portion of any such liquidated damages received by Landlord which exceeds the costs, expenses or damages (actual, consequential or otherwise) incurred by Landlord as a result of such delay.

Construction Standards. The Base Buildings and Tenant Improvements shall comply in all respects with the fo11owing: (i) Applicable Laws, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) building material manufacturer's specifications; and (iii) the Base Building and Tenant Improvement Plans. Landlord shall obtain (or cause the General Contractor to obtain) and pay for all necessary licenses, permits and certificates of occupancy required both for the Base Building and the Premises. All work sha11 be done in a good and workmanlike manner using quality materials and finishes as specified in said plans or as specified in Schedules 1 and 2 to this Work Letter as appropriate.

Warranties. The Base Building and the Tenant Improvements shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. The construction contracts entered into by Landlord in connection with this Work Letter shall provide that each contractor and each subcontractor shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after the earlier to occur of (i) completion of the work performed by such contractor or subcontractors and (ii) the Commencement Date of the Lease. The correction of defects in such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements and/or the Premises that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or workmanship of or with respect to the work shall be contained in each contract or subcontract, which contracts shall be written such that all guarantees and warranties and all other rights and remedies at law, in equity or by contract with respect to the work performed and the contractor's or subcontractor's obligations shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and shall be directly enforceable by either. Landlord covenants to give to Tenant any assignment or other assurances which may be necessary to effect such rights of direct enforcement.


9.	Completion/Punch-List.

Substantial Completion. Each Building shall be deemed " Substantially Complete " or to have achieved " Substantial Completion " upon the substantial completion of the Base Building and the Tenant Improvements in accordance with the Plans and Specifications subject only to the completion of minor punch-list items that will not interfere with Tenant's use and occupancy of the Premises for Tenant's permitted use under the Lease. Upon substantial completion of the Tenant Improvements, Landlord shall notify Tenant in writing and, within ten (10) business days of Tenant's receipt of such notice, Landlord and Tenant shall conduct a "walk through" inspection of the Premises and prepare a punch-list of known or apparent deficiencies or incomplete work required to be corrected or completed by Landlord pursuant to the Plans and Specifications. Landlord, at Landlord's sole cost and expense, shall cause all punch-list items to be repaired or completed as soon as possible, but in no event later than thirty (30) days following the walk through inspection. If Landlord fails to complete any of the punch-list items within such 30- day period, then Tenant, in addition to its other rights and remedies under the Lease, after giving ten (I 0) business days written notice to Landlord, shall have the right, but not the obligation, to cause such punch-list items to be completed, with the cost thereof plus ten percent (10%) for Tenant's overhead and supervision to be deducted from the next installment(s) of

rent or other amounts payable by Tenant under the Lease. Latent or hidden defects shall he brought to Landlord's attention promptly upon Tenant's becoming aware of such defects. Landlord, at Landlord's (or General Contractor's where applicable) sole cost and expense, shall promptly cause such defects to be repaired following receipt of notice thereof, and Tenant shall have the same rights with respect thereto as set forth herein for all other punch-list items.

Commencement Date. The term " Commencement Date " shall mean the date when all of the following have occurred with respect to a Building: (i) all of the Base Building and Tenant Improvements for the Building to be constructed by Landlord have been Substantially Completed, (ii) a certificate of occupancy and/or a conditional use permit (not subject to restrictions which would materially limit Tenant's use and operation of the Building) or other such document has been issued for the Building by the applicable governing authority, if required, (iii) the Building has been delivered to Tenant as evidenced by delive1y of the keys, and (iv) in the case of Office B, the pm·king structure has been completed.

Landlord shall provide Tenant with access to a Building prior to the Commencement Date for that Building for purposes of installing its fixtures and equipment, preparing the Building for Tenant's use and occupancy, or for any other purpose permitted by Landlord, provided that (1) such access is in compliance with Applicable Laws, (2) Tenant shall not unreasonably interfere with the work to be performed by Landlord in the Building, and (3) that all provisions of the Lease, other than the provisions for payment of any rent or additional rent for the Building, shall apply during such early occupancy period. Tenant or a Tenant Related Party (as such term is defined in the Lease) may exercise this privilege only if (i) Tenant or such Tenant-Related Party ensures that its employees and contractors and those of its agents do not interfere with construction of the Building, (ii) Tenant or such Tenant-Related Party takes such reasonable protective precautions or measures as Landlord and/or the General Contractor may reasonably request, given the state of construction of the Building at the time of such entry, and (iii) Tenant or such Tenant-Related Party signs a liability waiver in such form as required by the General Contractor's or Landlord's insurer, if required by such insurer with such form to be reasonably acceptable to Tenant, the General Contractor and/or Landlord's insurer.

If the Tenant Improvements for a Building are substantially completed prior to the Commencement Date for a Building, Tenant shall be allowed to use and occupy that Building prior to the Commencement Date for that Building, and Tenant shall be subject to all of the provisions of this Lease during any such early occupancy period except, where the use and occupancy is not for Tenant's intended ongoing use for the Building, the provisions concerning Base Rent which shall commence on the

Commencement Date for the Building and the Commencement Date for the Building shall be the date otherwise provided in the Lease for commencement, rather than the date of early occupancy. Tenant's obligation to pay the additional rent related to Expenses shall begin as of Tenant's occupancy of all or any portion of the Premises.

Notwithstanding that the Commencement Date for a Building has not have occun-ed, in the event Tenant or a Tenant-Related Patty occupies space (other than common areas) within the Building for the Tenant's intended use for the space during the term of the Lease, Monthly Base Rent shall be payable to Landlord with respect to such space, provided, however, that in the event Tenant and/or Tenant-Related Parties occupy more than 50% of the space within a Building for Tenant's intended use for the space during the te1m of the Lease (excluding common areas), the Monthly Base Rent for the entire Building shall be due and payable.

The requirement, if any, for securing a Ce1tificate of Occupancy for a Building may be satisfied by securing a tempora1y or conditional certificate of occupancy so long as (i) the condition of the Building, in the absence of those items of construction that the General Contractor must complete as a condition to the issuance of a final, unconditional certificate of occupancy therefor, is reasonably adequate for the conduct of Tenant's business therein and (ii) the ongoing construction activity that shall be necessary in order for issuance of a final, unconditional ce1tificate of occupancy therefor will not materially, adversely affect the conduct of Tenant's business therein. If Landlord or General Contractor is delayed in Substantially Completing a Building as a result of the occurrence of any Tenant Delay, then, for purposes of dete1mining the Commencement Date for payment of Rent, the date of Substantial Completion shall be deemed to be the day that the Building would have been Substantially Completed absent such Tenant Delay(s). Nothing set forth in this Paragraph shall relieve Landlord of the obligation to obtain a certificate of occupancy within a reasonable time following the Substantial Completion of a Building or the Tenant Improvements.


10.	Representatives and Notices. Landlord and Tenant each appoint the following individuals to act as their respective representatives in all matters covered by this Work Letter:

Tenant's Representative:

William Swirtz

The Apollo Group, Inc.

4025 South Riverpoint Parkway

Phoenix, AZ 85040

MS:CF-K604

Phone No. (602) 557-1714

Fax No. (602) 557-1085

Landlord's Representative (either):

Rob Sult

US Real Estate Limited Partnership

9830 Colonnade Blvd., Ste. 600

San Antonio, TX 78230-2239

Phone No. (210) 641-8485

Fax No. (210) 641-8425

Gary Newman

US Real Estate Limited Partnership

9830 Colonnade Blvd., Ste. 600

San Antonio, TX 78230-2239

Phone No. (210) 913-0202

All inquiries, requests, instructions and authorizations and other communications with respect to the matters covered by this Work Letter will be submitted to the Landlord's Representative or Tenant's Representative, as the case may be. Each party may change its representative under this Work Letter at any time upon three (3) days prior written notice to the other party. Notices will be given in accordance with the notice provisions set forth in the Lease.

11.

Arbitration. Any claim, dispute or other matter in controversy which (x) is either (I) for less than $250,000.00, or (II) pertains to the selection of the General Contractor, and (y) cannot be resolved privately, and (z) concerns any matter covered by this Work Letter ("Dispute") shall be resolved exclusively by arbitration administered by the American Arbitration Association ("AAA") in the city where the Building is located or the closest city in which the AAA maintains an office. Arbitrations shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq., and administered under the AAA Commercial Arbitration Rule in effect on the date the Dispute is submitted to arbitration, except that the arbitrator shall be an architect experienced in base building or tenant improvement plans and construction or an experienced base building or tenant improvement construction contractor, in each case as appropriate to the matter in dispute, and, in either case, such arbitrators will be licensed or ce1tified to practice in their respective fields by the State in which the Building is located. If the parties cannot agree on a mutually acceptable single arbitrator from the one or more lists submitted by the AAA, the AAA shall designate a minimum of three (3) persons, who, in its opinion, meet the crite1ia set forth herein. Each patty shall be entitled to strike one of such designees on a peremptory basis, indicating its order of preference with respect to the remaining designees, and the selection of the arbitrator shall be made from among such designees not so stricken by either party in accordance with their indicated order of mutual preference. The arbitrator shall base the arbitration award on accepted design and construction industry customs and practices, applicable law and judicial precedent and, unless both parties agree othe1wise, shall include in such award the findings of fact and conclusions of law or industry practice upon which the award is based. Judgment on the award rendered by the arbitrator may be entered in any court having

jurisdiction thereof. The prevailing party in the arbitration shall be entitled to reasonable attorneys' fees and expenses inc1med in the resolution of said Dispute.


12.	Miscellaneous.


a.	If the costs to construct the Tenant Improvements are less than the TI Improvement Allowance, the difference shall be applied to the initial installment(s) of Base Monthly Rent Tenant is obligated to pay Landlord upon the later of the Commencement Date for Office A or Office B.


b.	Any default under the terms of this Work Letter shall be construed as a default under the Lease, provided, however, that any periods for performance herein shall supersede notice and cure periods as set forth in the Lease.

Except as set forth in Paragraph 9(b), during the period of construction of the Tenant Improvements and Tenant's move into the Premises, Tenant and Tenant's agents shall not be charged, directly or indirectly, for parking, restrooms, HVAC usage, electricity, water, elevator usage, loading dock usage, freight elevator usage, security, or similar services, provided, that Tenant's obligation to pay the additional rent related to Expenses shall begin as of the Tenant's occupancy of all or any portion of the Premises.


d.	Immediately prior to the delivery of the Premises to Tenant, Landlord shall remove all rubbish and debris therefrom and thoroughly clean the Premises.


e.	In the event of any conflict between the provisions of this Work Letter and the provisions of the Lease, the provisions of this Work Letter shall govern.

{Remainder of this page intentionally left blank.}

IN WITNESS WHEREOF, this Work Letter is executed as of the date first above written.

THE UNIVERSITY OF PHOENIX,

INC., an Arizona corporation

By: /s/ William J. Swirtz

William J. Swirtz

Its: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Brian L. Swartz

Its: Senior VP Financial Officer Chief Accounting Officer

"Tenant"

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ Glen E. Mitts

Glen E. Mitts

Its: Executive Managing Director

"Landlord"

Schedule 1

Base Building

APOLLO DEVELOPMENT REQUIREMENTS

FOR BASE BUILDING CONSTRUCTION

FOR UNIVERSITY OF PHOENIX

Landlord at its sole cost and expense shall include as part of the building shell all necessary elements and fees as part of the shell development:


1.	Complete site improvements, including, without limitation, trash enclosures, parking, landscaping, site grading, drainage and compaction, driveways, fire lanes, site utilities extended into the building, site directional signage, site lighting, sidewalks, and any all required necessary to comply with Applicable Laws, including, without limitation, all ADA requirements.


2.	A six level parking structure to accommodate approximately 1,885 cars of the approximately 2,055 cars accommodated in this development including code required handicapped spaces. Parking structure is provided with its own electrical service entrance section and emergency generator serving the emergency distribution switch boards for elevator and emergency lighting per code.


3.	Complete construction of the shell building, including, without limitation, the following:


a.	Complete structural system, including concrete floors at and above grade;


b.	Complete exterior building skin and roofing;


c.	Complete shell building automatic fire sprinkler system with the sprinkler heads turned up;


d.	Complete operational stairs and elevators;


e.	Complete, full operational toilet rooms at the core areas as shown in Schedule 3 ;


f.	All common areas including without limitation, first floor lobbies, janitorial, electrical and mechanical spaces, first floor exiting corridors, etc. Excluded from this definition are the Upper Floor lobby finishes, which shall be paid for out of the Tenant Finish Allowance;


g.	Building exterior entrance security system;


h.	Emergency lighting, electrical and communication systems for elevators;


i.	Fire alarm system as required by code;


j.	Electric drinking fountains at the core areas;;


k.	Complete exterior window glazing system;


l.	Complete exterior wall and roof insulation system;


m.	Stairs, doors and all components of the egress system meeting or exceeding current requirements of all applicable ordinances and codes, or made to comply with Tenant's space plan at Tenant's sole expense;


n.	Complete ADA compliance;


o.	Base building should accommodate a ceiling height of 9'-0" above finished floor (A.F.F.), expecting First Floor Lobbies which shall be 10'.


4.	All agency or jurisdictional costs for permits and fees for the shell buildings, including Base building plan check and permit fees, development fees, taxes, utility hook-up costs and fees, including submittal and coordination required to obtain approvals.


5.	All architectural, engineering fees and costs, including soils engineering, civil surveys, offsite engineering, landscape architecture, traffic engineering, legal costs associated with permitting and all building design engineering such as mechanical, structural and electrical engineering. Expense costs, including travel and printing associated with obtaining permits and approvals.


6.	Base Building will also include the following services, matters and improvements to the Premises as a part of Landlord's shell construction costs:

Electrical: All electrical power to operate the lighting and HVAC systems including a 5,500 Amp Electrical Service on the ten story building and a 3,000 Amp Electrical Service on the six story building, all at 480 / 277 volt three-phased power. Power to be distributed to electric rooms through buss duct risers with connection to power of all house panels and transformers and all major core pieces of HVAC equipment. The buildings will each be equipped with an emergency generator servicing the emergency distribution switch board. Panel boards for house power shall be located as required to provide 480/277 volt power and 120/208 volt power in panels providing circuit breakers for 20 Amp circuits and spaces for future 20 Amp single pole circuit breakers to meet all house power needs. Electrical power to serve tenant space shall originate from buss riser(s) in the electric room on each floor and include distribution panels, raceways, conductors, fixtures and devices under the Tenant Improvement scope of work.

Telecommunications Access: Provide all conduit raceways to the minimum point of presence (MPOP) on the first floor of each building and conduit raceways and penetrations to allow cabling to telecommunications rooms on each floor. Furnish and install terminal mounting boards (TMBs) at each room for telecommunication punch-down blocks and service equipment (furnished and installed by others) and provide house 120/208 power in telecommunication rooms for service equipment power needs.


c.	Heating, Ventilation and Air Conditioning (HVAC): HVAC cooling system shall consist of a separate chilled water system for the ten story and the six story buildings. The system for each building shall include chillers, cooling towers, primary chilled water pumps, secondary water

pumps, condenser water pumps and a plate and frame heat exchanger and expansion tank. Base building HVAC system includes two (2) each Variable Air Volume air handlers on each floor of the office buildings with all medium and low pressure duct distribution, devices and diffusers to be provided under the Tenant Improvement scope of work. Outside air will be provide per code via make up air units and ducted to Variable Air Volume air handlers included in the Base building, located on each floor of each building and to the fan coils, air handlers and exhaust system serving the common areas including lobby, elevator equipment rooms, core area restrooms. System capacity will provide a system that will provide code minimum fresh air make-up and be able to maintain the space between 72 degrees Fahrenheit and 76 degrees Fahrenheit year round based on the ASHRAE Standard 62 ventilation default requirements for general office occupant loads of 5 per 1,000 square feet. System will permit operation at a minimum energy level and within parameters defined by the "Comfort Chart" shown in the latest edition of ASHRAE Standard 55, "Thermal Environmental Conditions for Human Occupancy."


7.	Hazardous Materials. The Base Building shall be free of all Hazardous Materials when delivered for occupancy. "Hazardous Materials" shall mean any material, waste, substance, pollutant or contaminant which could pose a risk of injury or threat of health or the environment.

The Base Buildings will be constructed using a combination of pre-cast concrete panels, reflective glass, painted metal panels and clear anodized aluminum. The material palette for the Base Buildings will be comprised of the following:


1.	Pre-Cast Concrete Panels with integral colored concrete, to match Dunn Edwards DE6242 Wells Grey LRV 43


2.	1" Insulated Glass, to match Versalux Blue 2000T Subdued Silver Reflectance


3.	Metal Panels, painted to match ATAS 70 Clear


4.	Clear Anodized Aluminum, to match Arcadia #11/Clear AC-2.

Schedule 2

Tenant Improvement Standards

APOLLO DEVELOPMENT

GREEN TENANT IMPROVEMENT STANDARDS

FOR THE

UNIVERSITY OF PHOENIX

The buildings/spaces acquired or leased by the University of Phoenix will be constructed into professional Campuses and Student Resource Centers. This outline specification highlights a summary of some of the University of Phoenix requirements. These standards incorporate green-build principals to help minimize the environmental impact of our current and future developments. This strategy applies to all Apollo Group companies and subsidiaries. Some of the items listed in the following document do not apply to all locations.


Ø	Landlord to provide Apollo Development with existing shell building plan in electronic format (AutoCAD).


Ø	Landlord to provide Apollo Development with the samples or specifications of the existing finishes (standard doors, window coverings, common area wall and flooring finishes)


Ø	Student Resource Centers operate 7 days a week. Classroom operations are 5 days a week.


Ø	Landlord to ensure in tenant space no noticeable noise or vibration from the building mechanical equipment above industry standards at any time.


Ø	For the uses described in the lease the Landlord is to ensure the mechanical and electrical systems to have sufficient capacity to serve tenant operation.

DIVISIONS



I.	INTERIOR AND DEMISING PARTITIONS
II.	DOORS
III.	HARDWARE
IV.	PAINT
V.	FLOOR COVERING
VI.	ACOUSTICAL CEILING
VII.	INTERIOR SIGNAGE



VIII.	APPLIANCES
IX.	MILLWORK
X.	MODULAR FURNITURE SYSTEM
XI.	HVAC / PLUMBING
XII.	ELECTRICAL, TELEPHONE AND DATA
XIII.	LIGHT FIXTURE SPECIFICATIONS
XIV.	MISCELLANEOUS REQUIREMENTS
XV.	CONSTRUCTION WASTE MANAGEMENT
XVI.	GENERAL NOTES


I.	INTERIOR AND DEMISING PARTITIONS

Unless noted otherwise, all other partition to be constructed using 3 5/8", 25 gauge studs at 16" O.C with 5/8" gypsum board each side, taped, sanded, primed, textured and painted. Extend wall to 6" above the ceiling grid. Sound insulate wall with 3 1/2" recycled cotton sound batt insulation and seal bottom of wall to floor slab using acoustical caulking continuous both side. If LEED certification is required, provide product literature with percentages of post-consumer and pre-consumer recycled content, and cost of material.


B.	All partitions separating Vocational Rooms from other grid. Sound insulate wall with 3-1/2" sound batt insulation and seal bottom of wall to floor slab using acoustical caulking continuous both sides.


C.	Partitions within the Vocational room (i.e. closet, storage, etc.) shall stop at the lay-in ceiling, without insulation.


D.	One-how- fire rated corridor/hallway partitions to be full height or tunnel conforming to local code requirements. See Architectural drawings for additional information including stud gauge.


E.	Drywall finish to be "smooth finish". Light orange peel finish is acceptable upon approval by Architect and Apollo Development.


F.	Provide 20 gauge flat stock backing for accessories (i.e., marker boards, flat screen monitors, and miscellaneous equipment).


G.	In Voice/Data/Server rooms provide fire resistive plywood (provide CD Plywood where allowed by code) on two walls to 8'-0" A.F.F. full length of wall.

Provide a full height sound insulated demising partition between space occupied by the University of Phoenix and all other tenant spaces. This demising partition is to be constructed to structure above with 3-1/2" recycled cotton sound batt insulation. Studs to be 3-5/8" 25 gauge at 16" on center with 5/8" gypsum board each side, taped, sanded, primed, textured and painted. Seal around all penetrations above the

ceiling using drywall tape and mud or resilient caulking. Seal bottom of wall to floor slab using acoustical caulking continuous both sides. Seal joint between top of wall and structure above using resilient caulking (Fire caulk at fire and smoke walls as required by local codes).


II.	DOORS


A.	All door finishes shall match building standard door finishes (if no building standards refer to finish index for type and finish). Landlord to provide samples of building standard door finish to Apollo Development for approval.


B.	Vocational Rooms, Study/Reading Offices, Faculty Office, Interview Offices and Vending rooms: 3'-0" x 8'-0" x 1-3/4", solid core 5 ply veneer door with matching hardwood edge, stain grade pre-finished, with 22" wide x full height sidelight (safety glass) with UL label, where required by code, in frame integral with door frame. Welded hollow metal frame (throughout unless noted otherwise).


C.	Student Resource Center: One (1) pair 3'-0" x 8'-0" x 1-3/4" solid core 5 ply veneer door with matching hardwood edge, stain grade pre-finished and single lite. Welded hollow metal frame. (Alternate: Glass storefront, "Herculite" type where noted). See Architectural Drawings for desired type.


D.	Administrative Offices and Break room: 3'-0" x 8'-0" x 1-3/4", solid core 5 ply veneer door with matching hardwood edge, stain grade pre-finished, with 16" wide x full height sidelight (safety glass) with UL label, where required by code, in frame integral with door frame. Welded hollow metal frame (throughout unless noted otherwise).

Other Areas: 3'-0" x 8'-0" x 1-3/4", solid core 5 ply veneer door with matching hardwood edge, stain grade pre-furnished. Provide wood doors that are certified by the Forest Stewardship (FSC) and provide documentation of the FSC chain of custody number. Wood doors shall be free of added urea formaldehyde resins. Provide product data on location of manufacture and of raw materials sources. Welded hollow metal frame


F.	Provide rubber sound bumpers at jamb conditions (typical throughout all areas)


G.	Provide gypsum board with recycled content. Provide product information showing percentages of post-consumer and pre-consumer recycled content, and product cost. IF LEED certification is required, provide product data on location of manufacture and of raw materials sources.


III.	HARDWARE


A.	Vocational Rooms, Administrative Offices and Student Resource Office: Lever cylinder lockset, 1 1/2 pair, 4 1/2 x 4 1/2 ball bearing butt hinges, 1 each door

closer, 1 each door stop, 1 each strike and 3 each silencers. (Lockset for each Vocational/Computer room).


B.	Interview Offices, Vending room, Study/Reading Offices, and Break room: Lever cylinder passage set, 1 1/2" pair, 4 1/2" x 4 1/2" ball bearing butt hinges. 1 each doors stop. 1 each strike and 3 each silencers for offices.


C.	Main Entry Door. Paired door hardware set, lever cylinder lockset with dummy trim, 1 1/2" pair, 4 1/2" x 4 1/2" ball bearing butt hinges each leaf, 1 each dustproof strike, 1 set automatic flush bolts and 2-door closer (per UBC, IBC 1003.3.1.8 or prevailing code).

Faculty Office, Admin Areas and Voice/Data/Server rooms: Unican lever Ll000 series (push button combination lock) with key override, 1 1/2 pair, 4 1/2 x 4 1/2 ball bearing butt hinges, 1 each door closer, 1 each door stop, 1 each strike and 3 each silencers. An electronic security system may be provided by the Tenant in lieu of the Unican Lever system, verify this use with Apollo Development on a per project basis.


E.	Janitor and Storage rooms: Schlage #AL80PD-SPA Lever cylinder lockset, 1 1/2 pair, 4 1/2 x 4 1/2 ball bearing butt hinges, 1 each door closer, 1 each door stop, 1 each strike and 3 each silencers.


F.	Install closer on doors which swing out into corridors/hallways and all doors adjacent to rated corridor/hallway.


G.	All panic hardware to be concealed panic hardware (at assembly occupancies).


H.	All Hardware must meet ADA guidelines.

Lockset: Schlage, Al-series, Saturn Design. Commercial grade 2, or building standard.

Closers: Fully Hydraulic, ANSI grade 1 & to have 3 valves with slim-line cover. ADA compliant


IV.	PAINT

All walls to receive one (1) coat primer and three (3) coats of latex paint, egg-shell finish. Apollo Development specified paint, no substitutions (see finish index). Paints shall not exceed the VOC content limits established in Green Seal Standard GS-11, Paints First Edition, May 20, 1993, namely: 50 g/1 Flats; 150 g/1 Non-Flats. If LEED certification is required, provide paint product data showing VOC content.


B.	Gypsum board ceilings to receive one (1) coat primer and two (2) coats of latex paint. Apollo Development specified paint, no substitutions (see finish index).


C.	Metal surfaces (extinguisher cabinets, etc.) to be semi-gloss paint (40 to 65% sheen) to match adjacent wall surface unless noted otherwise. Anti-corrosive and anti-rust paints applied to interior ferrous metal substrates shall not exceed the VOC content limit of 250 g/L. If LEED certification is required, provide paint product data showing voe content.


D.	Hollow metal door frames to be semi-gloss paint (40 to 65% sheen) black paint.


E.	E. Provide clear 1" x 1" x 8' high comer guards on all exterior comers. "TUFPRO # 12580" or equal.


F.	Painted open ceiling alternate see plans for paint specifications.


V.	FLOOR COVERING


A.	Break room, Vending room, storage rooms, copy room and Voice/Data/Server rooms to receive Linoleum resilient flooring tiles. Use manufacturers recommended adhesive with a VOC content of 50 g/L or less. See finish index.

Carpet - University of Phoenix custom carpet tile specifications. Carpet systems shall meet the following standards: Carpets shall meet CRI green Label Plus; carpet cushions shall meet CRI green Label shall meet CRI Green Label; carpet adhesive shall have a VOC content of 50 g/L or less. Provide carpet with recycled content and provide product literature documenting percentages of post-consumer and pre≠ consumer recycled content, and cost of material. If LEED certification is required, provide product data on location of manufacture and of raw materials sources.


1.	Color: To be selected from custom color selections by Apollo Development.


2.	Purchasing: Contact Pete Weidner for product distribution.


3.	Price: $17.89 per yard - F.O.B. (freight on board) Georgia


4.	Carpet Tile to be installed utilizing the quarter tum installation method see plans for details.


5.	Lead Time: Allow 4-6 weeks for product delivery

Contact:

Re: Source Flooring Consultants Pete Weidner

Phone: 602-256-2862 ext. 210

Mobile: 602-989-8804

Fax: 602-256-2988

peter.weidner@resource.arizona.com


C.	Refer to finish index for transition strip color and manufacturer.


D.	Base to be 4" coved rubber base rolled goods at all carpeted areas.


E.	Ceramic tile base to be 4" at all ceramic tiled areas in restrooms. Base to contain a minimum of 10% recycled post-industrial recycled content.


F.	Provide ceramic tile with recycled content. Provide product literature with percentages of post-consumer recycled content, and cost of material. Provide product data on location of manufacture and or raw materials sources. Ceramic tile base to be 4" at all ceramic tiled areas. See finish index.


VI.	ACOUSTICAL CEILINGS


A.	Ceiling grid to be Armstrong "Prelude XL" 15/16" exposed tee - 24" x 24" grid, white finish.


B.	If LEED certification is required, provide product data for ceiling tiles documenting percentages of post-consumer and pre-consumer recycled content, and cost of materials. Provide product data on location of manufacture and of raw materials sources. Ceiling tiles at all areas to be Armstrong "Dune - Fine Texture" #1774 angled regular - 24" x 24" x 5/8" tiles.


C.	Ceiling heights to be 9'-0" A.F.F. minimum, 12'-0" AFF preferred. Other ceiling heights require approval of Apollo Development.


D.	An alternate open ceiling with a paint finish may be a design element in the project depending on shell building conditions, overall site HVAC design, and building covenants. Use of this option to be determined during the architectural diligence process.


VII.	INTERIOR SIGNAGE


A.	Interior signage and marketing graphics will be furnished and installed by University of Phoenix, except signage required on all shell building doors and walls.


B.	Maximum Occupancy signage as required by the jurisdiction shall be provided by the General Contractor and shall match the University of Phoenix tenant signage.


VIII.	APPLIANCES

NOTE: All appliances to be provided by the contractor. Appliances shall be energy star rated.


A.	Refrigerator (FRONT OFFICE)

General Electric Energy Star - #GSCS3PGXSS

22.7 cu. ft. - Side-By-Side with Factory Icemaker Dispenser

35-3/4w X 29-1/4d X 69-3/4h

Requires 36-1/2" wide space 70-3/4" high minimum


B.	Refrigerator (BREAK ROOM)

General Electric Energy Star - #GSCF3PGXBB

22.7 cu. ft. - Side-By-Side with Factory Icemaker Dispenser

35-3/4w X 29-l/4d X 69-3/4h

Requires 36-1/2" wide space 70-3/4" high minimum


C.	Microwave - (BREAK ROOM & VENDING ROM)

General Electric Energy Star - #JE 1160 WD

1.1 cu. ft.

21-l/4wX 11-7/8hX 15-7/8d


D.	Garbage Disposal (BREAK ROOM)

General Electric Energy Star - #GFC 720 F

3/4 HP - 120 V / 60 HZ/ 6.0 A


E.	Double Compartment Sink plus Faucet (FRONT OFFICE)

Elkay Stainless Steel Sink

LRAD 3319

33w X 19.5L x 6"d

Fisher Commercial Grade Faucet

#FIS 3315

Gooseneck, with wrist blades.


F.	Single Compartment Sink plus Faucet (BREAK ROOM)

Elkay Stainless Steel Sink

LRAD 2521

21.25w X 25L x 6"d

Fisher Commercial Grade Faucet

#FIS 3315

Gooseneck, with wrist blades.


G.	Instantaneous Water Heater (BREAK ROOM AND FRONT OFFICE)

Chronomite Instataneous Water Heater - Model # M-l 5L


IX.	MILLWORK


A.	Reception desk millwork is fabricated and installed by the tenant. General Contractor is responsible for coordination and installation of Electrical outlet and data if they apply. Electrical subcontractor to provide final connections to furniture.


B.	Break room, Copy room, Vending room and Coffee Bar millwork if it applies to be designed by Architect, fabricated and installed by the General Contractor. General Contractor to install millwork after the install of the rised floor if it applies.


C.	General contractor is responsible for coordination and installation of plumbing fixtures and final electrical hook-up if they apply.


D.	Composite wood & agrifiber products shall contain no added urea-formaldehyde resins. If LEED certification is required, provide product data documenting that product are free of urea-formaldehyde resins. Provide wood products that include FSC certified wood material, and LEED certification is required; provide documentation including FSC chain of custody and cost of material.

NOTE:

Millwork Contractor to field verify all dimensions prior to fabrication and coordinate sizes of all equipment and appliances. The Tenant Improvement General Contractor is to submit three (3) copies of cabinetry and millwork shop drawings to the Architect for approval prior to fabrication. A maximum of two (2) original copies will be returned to the General Contractor. No submittal will be reviewed by Architect unless first reviewed by the General Contractor and affixed with their stamp and comments.


X.	MODULAR SYSTEMS - This section is for reference only.


A.	Systems furniture is an 8 wire, 4 circuit system, unless noted other wise. Furniture furnished and installed by University of Phoenix.


B.	Electrical connections and voice/data ports are to be provided in walls, in floor boxes and / or above ceilings to service the powered panels for the furniture system.

NOTE:

A separate J-box is required at each location for electrical and voice/data. Coordinate location of junction boxes with Apollo Development. General Contractor's electrician is responsible for final connections of the electrical services to modular systems furniture. Electrician is to provide all necessary materials to make final connections between systems furniture and J-boxes at the completion of the project. Furniture system will provide proprietary direct connect poles and whips that connect to the modular panels.


XI.	HVAC / PLUMBING


A.	Install sound boot on return Air Grilles to minimize sound transfer at Vocational rooms and Administrative Offices.


B.	Voice/Data/Server rooms to have separate air conditioning unit, with thermostat to be located within room, to maintain maximum 75 degrees, minimum 65 degrees, 7 days a week 24 hours a day. Minimum capacity 1-ton, verify with Apollo Development. This unit should be self contained and not dependent, on prime building system or towers for operation.


C.	Individual mechanical units to be located away from the Vocational Rooms and isolated/insulated for vibration and sound. Return air grilles are to be located near the door.


D.	Enclosed Break Room to have exhaust fan in addition to normal air conditioning where ceiling space is used as return air plenum.


E.	Volume dampers to be provided in each branch duct outlet/ inlet as far away from outlet / inlet as possible.


F.	System to be comfort balanced to ensure proper operation.


G.	Provide fire / smoke dampers at penetrations through fire resistive construction as required by code.


H.	Ceiling diffusers to have 4-way distribution or circular distribution on open ceiling systems.


I.	The design, installation and operating performance criteria is to be as listed above and to further comply with the latest edition of the ASHRAE Standard 55 "Thermal Environmental Conditions for Human Occupancy."


J.	The total outside air supply to the building, measured in cubic feet per minute (CFM), shall be in accordance with current state and local building code requirements.


K.	Noise Limitation: The operation of the HVAC equipment, in conjunction with Tenant's Improvements, shall not generate noise criterion levels exceeding NC35 within the Leased Premises.


L.	Provide smoke detectors and/or fire/smoke dampers in ductwork and/or at mechanical units as required by code.


M.	1/2" copper water line in Vending Room and Break Room with angle stop and shut off valve at +18" A.F.F.


XII.	ELECTRIC, TELEPHONE AND DATA


A.	Each Vocational Room to have provided in the wall one (1) 4-plex outlet and one (1) blank J-box with pull string to ceiling space for voice/data ports. Provide 12" away from end of the marker board. See details.


B.	All electrical outlets and voice/data ports to be@+18" A.F.F. unless noted otherwise. Voice/data ports shall have 1" EMT conduit, stubbed to accessible ceiling, box/mud ring and pull string. Boxes and mud rings to accommodate single gang, modular phone/data wall plate.


C.	Each Vocational Room to have one (1) ceiling mounted duplex outlet and one(1) data port for ceiling mounted projection equipment. Equipment provided and installed by tenant.


D.	Each Vocational Room to be switched independently from all other rooms. Rooms with multiple entries shall have 3-way switches at each entry.


E.	Lighting for Vocational Rooms to be controlled by two (2) 3-way switches at each control location for light fixtures. One (1) switch will control all in the rear row of lighting in the room. The second switch will control the balance of fixtures at the center and front of the room. See details.


F.	Night lights or emergency lights in Vocational Rooms shall be located at the doors.


G.	Provide light switches adjacent to marker board opposite the door for controlling Vocational Room lights on instructor side of room (3-way with switches mounted by door).


H.	For reception desks provide two - four square boxes connected to one (1) 3/4 conduit for power and two 1" conduits for voice/data each depending on the size of the desk. See details.


I.	Voice/Data/Server rooms shall have three (3) dedicated isolated ground circuit 20 amp duplex. Two (2) outlets@ +78" A.F.F. and one (1) 20 amp dedicated outlet @+18" A.F.F. adjacent to racks. Refer to plans and detail for location.


J.	Voice/Data/Server rooms provide a 2 gang J-box @ +18" A.F.F. for a 30 amp isolated ground NEMA #L5-30P receptacle for the UPS System.


K.	Voice/Data/Server rooms to have one (1) 20 amp duplex outlet for each adjacent wall @+18" A.F.F.


L.	Voice/Data/Server rooms provide a TMGB bus grounding bar (20"x 4") @ +82"

A.F.F. with #6 copper ground wire connected to the building steel and main electrical panel grounding system. If main electrical panel ground is unreachable, install new ground rod in voice/data/server room or use copper cold water line. Provide two (2) 2" conduit sleeves to above ceiling and through floor deck to walls. If code requires dedicated conduits for all voice/data outlets, then provide (1) dedicated 2" conduit between voice/data/server rooms on each floor and (1) dedicated 2" conduit to main Telco room of building.


M.	Flat screen TV monitors and support brackets are provided and installed by Tenant, Contractor to provide power, data and backing. See details.


N.	Provide junction boxes above the lay-in ceiling for Open Office areas served by power poles. Power poles are part of modular systems furniture provided by University of Phoenix. Contractor's electrician is responsible for final connections of power poles and modular systems furniture. Electrician is to provide all necessary

materials to make final connections between power poles and J-boxes. Coordinate power pole locations and capacities with Apollo Development.


O.	Provide junction boxes in walls at Open Office areas for systems furniture provided by UOP. Contractor's electrician is responsible for final connections of services by direct connect to modular systems furniture. Electrician is to provide all necessary materials to make final connections between systems furniture and J-boxes. Coordinate locations and capacities with Apollo Development.


P.	System furniture J-boxes are to be 8-wire, 4-circuit unless noted otherwise. Referred to permitted construction drawings for final circuit distribution.


Q.	A Voice/Data/Server room shall be located on each floor of the building where the University of Phoenix is located; unless otherwise specified.


R.	General Contractor shall ensure that all subcontractors are provided with a complete set of architectural drawings. Special attention shall be paid to the dimensions on the power and data plans and all UOP standards.


S.	Floor boxes with outlets and data jacks to be Wiremode series Model #4FFATC with black trim ring. Provide device panels for two (2) duplex outlets, one (1) voice/data adapter and one (1) blank plate. Furniture whips may be used in lieu of outlets in some hard wire locations.


T.	An alternate 2" raised flooring system coordinated by the General Contractor may be used based on need, building standards or covenants, and plan configuration of the space. A UL-rated modular wiring system will provide under floor power distribution to most work areas, and allow for under floor data cabling of most areas. Design will be included in the TI electrical drawings.


U.	Provide (2) power J-Boxes with (1) 20-Amp circuits each above the ceiling in each Classroom as identified. Power poles to classroom tables by Tenant, Flex conduit whips to the poles and connection to J-Boxes by General Contractor.


V.	If the building requires a Lighting Control Panel use Watt Stopper, LP8S-8-l 15.


W.	Provide and install NEC diconnect for U of P Signage. Verify exact location(s) prior to installation with Apollo Development.


XIII.	LIGHT FIXTURE SPECIFICATIONS


A.	2' x 4' Recessed Lighting Fixture - Volumetric fixture with 2 lamps.

Lithonia/Volumetric RT5 Series

2RT5-28T5-MVOLT-GEB95-LPM835P

FP28/835/ECO Lamp Type

B. 2' x 4' Recessed Emergency Lighting Fixture to be similar to above except one lamp shall have 1400 lumen battery backup pack.

Lithonia/Volumetric RT5 Series

2RT5-28T5-MVOLT-GEB95-LPM835P-EL14

FP28/835/ECO Lamp Type


C.	2' x 2' Recessed Lighting Fixture - Volumetric fixture with 2 lamps.

Lithonia/Volumetric RT5 Series

2RT5-14T5-MVOLT-GEB10PS-LP835

FPl4/835 Lamp Type

D. 2' x 2' Recessed Emergency Lighting Fixture to be similar to above except one lamp shall have 1400 lumen battery backup pack.

Lithonia/Volumetric RT5 Series

2RT5-14T5-MVOLT-GEB10PS-LP835-EL14

FP14/835 Lamp Type


E.	Fluorescent Wall Sconce. Typical at all Corridors and Hallways. Install top of hallway sconces 1' -6" below acoustical ceiling.

Peerlite Cerra Wall- (2) T-5 High Output Lamps with Dust Cover

#CRW7-2-54T5HO-WHR-FTN-R4-277-GEB10-Pl5l 396-3-SCT-DU-LP835


F.	Fluorescent Down Light - Hard Ceiling Applications

Lithonia/Gotham

AFV 26TRT 6AR MVOLT - Warm White Lamp Cover


G.	Fluorescent Down Light - Hard Ceiling Applications to be similar to above except supply with 700 lumen emergency battery pack in addition to electronic ballast

Lithonia/Gotham

AFV 26TRT 6AR MVOLT ELR- Warm White Lamp Color


H.	2' x 2' Recessed Emergency Light Fixture with crystalline lenses to be used only in conjunction with wall sconces. Operates only with loss of power.

Lithonia

2-GT8-2-U316-Al2125

An Alternate Unistrut suspended version of this fixture will be used in open ceiling applications. See Apollo Development for specifications.


J.	1' x 4' Direct/Indirect Troffer with 'MDR' diffuser and (2) electronic ballasts. Bottom of fixture shall be mounted at 9'-0" A.F.F.

Finelite Series 12-ID

S12-ID-WCB-4'-2T8-DC-91W-TDO-120-FA-FE

K. 1' x 4' Direct/Indirect Troffer with 'MOR' diffuser and (2) electronic ballasts to be similar to above except with 1200 lumen emergency battery pack in addition to electronic ballast. Bottom of fixture shall be mounted at 9'-0" A.F.F.

Finelite Series 12-ID

Sl2-ID-WCB-4'-2T8-DC-91W-TDO-120-FA-FE-EMB

L. 6' diameter circular track with adjustable 'Micro Spot R' track heads. Provide (2) 300W XFMRS and mount remotely in accessible ceiling space. Provide additional mounting accessories as required. Bottom of fixture shall be mounted at 9'-0" A.F.F.

Translite Sonoma

BTS-505-AL

TSQ600

MIR-S-BTC-ST-AL

M. Low Voltage Decorative Pendant at Coffee Bar with Matte Chrome Finish and 2" Kiss Mono-Point Ceiling Canopy. White Glass. Bottom of fixture to be at 6'- 8" above finished floor.

Bruck Zara Down

50WMR16120V

P. Exit sign, edge lit, with 90 minute battery backup pack, green letters on clear background as follows:

Lithonia: Precise

LRP JGC 120/277 EL N

NOTE:

Verify voltage - based on individual building requirements. Provide 277 volt general lighting when available within the building. If lead-time on Lithonia light fixtures affect project schedule, equivalent light fixtures may be submitted for approval


XIV.	MISCELLANEOUS REQUIREMENTS

NOTE ON SUBMITTALS:

The Tenant Improvement Contractor is to send three (3) copies of shop drawings of the following work to the Architect and Apollo Development for approval prior to fabrication: Operable wall system, including structural support plans, calculations and finish. No Submittal will be reviewed by the Architect unless first reviewed by the General Contractor and affixed with their stamp and comments. Refer to Section XVI for more information. Wall system to be installed by a product de certified Contractor.


A.	Voice/Data/Server Room - A secured interior room for housing data and telephone system, LAN and WAN cabling and connections, and termination's of all cabling for both voice and data. Specifications are as follows:

1. 8'-0" x 4'-0" sheets of fire retardant treated plywood (Use CD plywood where allowed by code), 3/4" thick. Set plywood 8' high x full length of 2 walls.

2. Access to equipment room to be restricted to technical personnel only with Unican LI 000 (push button combination lock). Tenant may substitute an electronic security system in place of the Unican Lock.


B.	Operable partition at Double Vocational room. "HUFCOR" 600 Series Model 632 - Pair Panel System Closure Method: Lever Closure

Track and Support System: Unispan Aluminum and steel self supporting system

Note: Sway bracing as required by code is to be provided by contractor. Minimum 3500 psi concrete required for operable partition system installation.

Bottom Seals: 2" Manual

Panel Acoustical rating: 49 STC. Hanging Weight: 8.9 (lbs/sf)

Panel Skin/ Facing: Gypsum Board Panel & Trim Finish On Drawings

Contact:

HUFCOR / Arizona Inc.

Larry Kirkpatrick

Phone:480-464-4437

Fax: 480-464-1232

lkirkpatrick@hufcoraz.com


C.	Marker Boards

1. One(1) POLYVISION-Series 100 seamless marker board per Vocational room. Fully assembled.

a. 4'-0" x 16'-0" A-1 # 100 continuous marker board.

b. Continuous chalk tray.

c. Continuous cork display rail

d. Two (2) map hooks.

e. High gloss porcelain on Ω"particleboard with aluminum backing sheet

f. Color: White #61OOH surface.

g. Lead-time: 4-6 Weeks.

Contact:

POLYVISION Corporation

Phone: 877-777-4446

National Phone: 800-620-7659

Georgia Phone: 678-542-3100

www.polyvision.com

Contact the local distributor for more information.


D.	Projection Screens - Motorized (All Vocational Rooms - U.N.O.)

1. Recessed, motorized projection screens to be furnished and installed above the ceiling at the center of the teaching wall at all Vocational Rooms and Double Vocational Rooms. Operating switch for motorized screen to be located on the teaching wall adjacent to the light switches. Verify proper operation after installation.

2. Model "Envoy" by Draper Inc. - 84" x 84" AV Format

3. Motorized screen with automatic ceiling closure and motor-in-roller. Matte white borderless screen with 84"x84" viewing surface. (Equal products by Dalite also acceptable).

Contact:

Randy Reece CSI

Regional Sales Manager

Arizona, HI, So.Cal, So. NV

1309 W. Valencia Drive Suite G

Fullerton, CA 92833

Tel: 714-447-4383

Mobile: 714-308-9343

Fax: 714-773-0643

rreece@draperinc.com


E.	Flat Screen Monitor (schedule monitor/directory): Refer to plans for location and quantity. Monitor and bracket are provided and installed by tenant. Power, data boxes, and backing by General Contractor.


F.	Mini-blinds - Building standard window treatment if no building standards provide Commercial Hunter Douglas 2" aluminum horizontal blinds at all exterior windows. Color 205 Fawn.

Contact:

Hunter Douglas Contract

12400 Stowe Drive

Poway, CA 92064

Phone: 800-964-2580

Fax: 800-205-9819

Keith Burgess ext. #7311 (Eastern/Mideast)

Christopher Hagen ext. #7312 (Southern/Central)

David Cover est. #7313 (Western/Mountain/Upper Midwest)


XV.	CONSTRUCTION WASTE MANAGEMENT

The Owner has determined that this Project shall generate the least amount of waste possible. Of the inevitable waste that is generated, as many of the waste materials as feasibly possible shall be re-used, salvaged or recycled. Contractor is required to retain

the services of a licensed and permitted recycling company to conduct these activities and provide Owner with a Construction Waste Management Plan prior to the commencement of the project.

The Owner has determined that a minimum of ____________ (50%, 75% by weight) shall be diverted from the landfill. Therefore, all construction waste shall be sent to a licensed and permitted Material Recovery Facility (MRF) (said evidence of licensing and permitting to be submitted to Owner) for processing and diversion. Evidence of receipt of the materials in the form of monthly reports from the MRF operator of incoming and outgoing material and diversion rate shall be submitted to the Owner and an end of project summary shall be provided by the recycling company to the Owner (or Contractor).


XVI.	GENERAL NOTES


A.	Submittals are required on Millwork. All other products are per plans and specifications. General Contractor is responsible for contacting the specified vendors for longer lead items and contracting with local distributors as needed.


B.	All submittals by the General Contractor to the Architect or University of Phoenix require that the General Contractor review the submittal first and affix their approval stamp. All submittals not reviewed and stamped by the general contractor will be returned to the General Contractor without review.


C.	All data conduits and boxes with pull strings are to be provided by the General Contractor.


D.	All Voice/Data wiring will be handled by Apollo Development under a separate contract.


E.	All sealants must meet SCAQMD Rule #1168 requirements. A table of requirements for different applications is located within the LEED CI Reference Guide.

END OF DOCUMENT

Schedule 3

Baseline Plans

Schedule 4

Insurance Requirements

For purposes of this Schedule 4 , "Indemnified Parties" means Landlord, Tenant, and with respect to each, its parent, subsidiary and affiliated companies, and their respective direct or indirect constituent shareholders and partners, directors, officers, agents, servants and employees, and the directors, officers, agents, servants and employees of their respective direct or indirect constituent shareholders and partners. "Interest Holder" means the holder of any note, mortgage or deed of trust now or hereafter relating to Landlord's estate in all or any portion of the Premises.

I. General Contractor's Insurance

A. Before commencement of performance of any portion of the construction work, General Contractor will obtain insurance coverages of the types described in this Section I with insurers licensed to do business in the state where the Premises are located which insurers are reasonably acceptable to Landlord, Tenant and Interest Holders and under forms of policies reasonably satisfactory to Landlord, Tenant and Interest Holders; and General Contractor will continuously maintain such coverages in effect for the applicable periods herein provided.

B. Also, before commencement of performance of any portion of the construction work, General Contractor will furnish to Landlord, Tenant and Interest Holders a certificate or certificates of insurance on an ACORD form and/or policies and endorsements executed in duplicate by the insurance companies evidencing the insurance coverages required to be obtained by General Contractor under this Section I. Such certificates of insurance, policies and endorsements will specify the insured status of the requirements of this Schedule 4 . Such certificates of insurance will state that Landlord, Tenant and Interest Holders will be notified in writing thirty (30) days prior to cancellation, material change in coverage and/or limits, or non-renewal of insurance. A renewal certificate, policy or endorsement will be provided to Landlord at least fifteen (15) days prior to the expiration of any expiring insurance policy previously furnished. Certificates, policies and endorsements which are not reasonably acceptable to Landlord, Tenant or Interest Holders will be returned for resubmission by General Contractor. All policies with the exception of workers' compensation will name Landlord, Tenant and Interest Holders as an additional insured for General Contractor's ongoing and completed operations and will be primary and noncontributing with Landlord's and Tenant's policies.

C. General Contractor will procure and maintain the following insurance coverages in accordance with the terms of this Schedule 4 :

a. workers' compensation and employers' liability insurance, providing statutory coverage as required in the state where the Premises are located for all

persons employed by General Contractor in connection with the performance of the construction work (and including coverage under the U.S. Longshormen's and Harborworker's Act), and affording thirty (30) days notice of cancellation or nonrenewal to Landlord, Tenant and Interest Holders. The minimum limits required for the employers' liability insurance are as follows:

Bodily Injury by Accident- $1,000,000 each accident

Bodily Injury by Disease- $1,000,000 policy limit

Bodily Injury by Disease- $1,000,000 each employee

The policy will include a waiver of subrogation in favor of the Indemnified Parties.

B. commercial general liability insurance written on an occurrence basis in a form not less than that of the current Standard ISO policy, naming General Contractor as the named insured, insuring against liability for bodily injury or death and/or property damage occurring in, upon or about the Premises or any street, drive, sidewalk, curb or passageway adjacent thereto, in an amount not less than $2,000,000 combined single limit per occurrence and in the aggregate, such insurance to include but not be limited to the following specific protections:


a.	premises and operations coverage with explosion, collapse and underground exclusion deleted, if applicable;


b.	owners and contractors protective coverage;


c.	products and completed operations coverage;


d.	blanket contractual coverage;


e.	personal injury coverage;


f.	broad form property damage liability coverage;


g.	an endorsement naming the Indemnified Parties as additional insureds; and


h.	an endorsement affording thirty (30) days notice to Landlord, Tenant and Interest Holders in event of cancellation, nonrenewal or material reduction in coverage.

C. business auto liability insurance covering all owned, non-owned and hired or borrowed vehicles used in connection with the performance of the construction work, insuring against liability for bodily injury and death and/or property damage in an amount not less than $1,000,000 combined single limit per occurrence and in the aggregate, with an endorsement affording thirty (30) days

notice to Landlord, Tenant and Interest Holders in event of cancellation, nonrenewal or material reduction in coverage, and an endorsement naming the Indemnified Parties as additional insureds.

D. excess or umbrella liability insurance, written on an occurrence basis, naming General Contractor as the named insured, in an amount not less than $30,000,000.00 per occurrence and in the aggregate for bodily injury or death or property damage, with an endorsement naming the Indemnified Parties as additional insureds, and an endorsement affording thirty (30) days notice to Landlord, Tenant and Interest Holders in the event of cancellation, nonrenewal or material reduction in coverage. Such policy will be written on an excess basis above the coverages required under items 1 through 3 of this Subsection I.C (specifically listing such underlying policies).

E. "all risk" coverage insuring General Contractor's personal property during the performance of the construction work.

F. All Risk Builder's Risk insurance, from an insurance carrier on a full replacement basis and with notice requirements subject to the reasonable approval of Landlord and Tenant, which will name Landlord and Tenant as named insureds. Landlord will provide a certificate of such insurance to Landlord and Tenant which will set forth such information concerning such policy as Landlord or Tenant may reasonably request.

D. General Contractor will continuously maintain in force during the course of performance of the construction work all of the foregoing insurance coverages until Substantial Completion of the construction work, except as may otherwise be expressly provided in the Contract Documents with respect to occupancy prior to Substantial Completion; and provided further, however that the products and completed operations liability coverage required under item 2 of Subsection I.C and the endorsement required under Subsection III.A hereof providing that such insurance is primary and non-contributing as respects the Indemnified Parties and that any insurance carried by the Indemnified Parties is excess and noncontributing, will be maintained in force until three (3) years following Substantial Completion.

II. General .


a.	Landlord, Tenant and General Contractor will waive all rights against each other and the subcontractors, sub-contractors, agents and employees of each other, for damages caused by fire or other perils to the extent covered by the property insurance obtained, or which was required to be obtained, by any of them or any other property insurance applicable to the construction work.


b.	Landlord will purchase and maintain boiler and machinery insurance, as well as coverage for the existing building and contents, if any. Such

insurance will name Tenant, General Contractor and its subcontractors as additional insured.

III. General Provisions

A. Each policy of insurance required to be maintained under this Schedule 4 will contain an appropriate waiver of subrogation endorsement and will also be endorsed to provide that such policy is primary and that any other insurance of any insured or additional insured named thereunder with respect to matters covered by such policy will be excess and non-contributing, subject to the policy terms and conditions and further subject to the extent of the indemnity requirements of the Construction Contract.

B. General Contractor will require each of its subcontractors to maintain insurance coverage similar to that required by this Schedule 4 with reasonable limits.

EXHIBIT "H"

LEASE GUARANTY

[see attached]

LEASE GUARANTY

THIS LEASE GUARANTY (the " Guaranty '') is given this 29th day of June ,2009 by APOLLO GROUP, INC., an Arizona corporation (" Guarantor "), with respect to that certain Agreement of Lease, dated of even date herewith (the " Lease "), executed by US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership, as Landlord, and The University of Phoenix, Inc., an Arizona corporation, as Tenant, for space in the building located at the SEC of I-10 and Broadway Rd., Tempe, Arizona, 85282.

1. For good and valuable consideration, Guarantor hereby absolutely and unconditionally guaranties to Landlord, and to its successors and assigns, the performance of each and all of the terms, covenants and conditions of the Lease contained therein to be kept and performed by Tenant during the initial term of the Lease and any renewal term, including the payment of all rentals and other charges accruing pursuant to the Lease.

2. Neither the Guarantor's obligation to make payment or render performance in accordance with the terms of this Guaranty nor any remedy for the enforcement hereof shall be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Tenant or its estate in bankruptcy or of any remedy for the enforcement thereof, resulting from the operation of any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or agency.

3. Except as provided herein, Guarantor hereby waives notice of any demand by Landlord, any notice of default in the payment of rent or any other amounts contained or reserved in the Lease, or any other notice of default under the Lease. Guarantor expressly agrees that the validity of this Guaranty and the obligations of Guarantor shall in no way be terminated, affected or impaired by reason of any waiver by Landlord, or its successors or assigns, or failure to enforce any of the terms, covenants or conditions of the Lease or this Guaranty, or the granting of any indulgence or extension of time to Tenant, all of which may be given or done without notice to Guarantor.

4. This Guaranty shall extend to any assignee or successor to Landlord and shall be binding upon the Guarantor, its successors and assigns.

5. Guarantor agrees that Landlord may extend the time for performance or otherwise modify or alter the Lease; provided, however, that no such modification or alteration that extends the term, increases the rent or otherwise increases Tenant's obligations under the Lease shall be effective against Guarantor without Guarantor's prior written consent.

6. Landlord shall provide written notice to Guarantor of any default by Tenant under the Lease and shall provide to Guarantor the same period of time that Tenant has to cure such default prior to enforcing or attempting to enforce this Guaranty against Guarantor. Landlord hereby agrees to recognize and accept any cure by

Guarantor of any default by Tenant under the Sublease so long as such cure is achieved within the period of time required thereunder.

7. This Guaranty is of a continuing nature and may not be canceled by the Guarantor for so long as the Lease or any extensions or renewals thereof are in force and effect or for so long as Tenant is in occupancy of the premises mentioned in said Lease. Landlord shall not be obligated or required to exhaust its remedies against Tenant as a condition precedent to its collection under this Guaranty. This instrument of Guaranty shall be construed as a guaranty of payment and performance rather than as a guaranty of collection. In addition this Guaranty shall remain in full force and effect after termination of the Lease so long as any of Tenant's obligations thereunder remain due and payable.

8. The Guarantor makes the following representations and warranties, which shall survive the execution and delivery of this Guaranty:


(a)	The Guarantor has the power and authority to execute, deliver and carry out the terms and provisions of this Guaranty and has duly authorized, executed and delivered the same.


(b)	No consent or approval of, or exemption by, any governmental or public body or authority is required to authorize, or is required in connection with the execution, delivery and performance of, this Guaranty or of any of the instruments or agreements herein referred to, or the taking of any action hereby contemplated.

9. Guarantor consents, without affecting its liability to Landlord hereunder, that Landlord may, without notice to or further consent of Guarantor, upon such terms as Landlord may deem advisable:


(a)	sell, exchange, release, surrender, and in any manner and in any order realize upon or otherwise deal with any prope1iy at any time pledged or mortgaged to secure Tenant's obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof, or


(b)	resort to Guarantor for payment of any Tenant's Obligations, whether or not Landlord shall have resorted to any property securing any of Tenant's Obligations or any obligation of Guarantor or shall have proceeded against Tenant or any other party primarily or secondarily liable on any of Tenant's Obligations.

10. Guarantor covenants and agrees that it shall not be released from the obligations of this Guaranty, nor shall such obligations be diminished or otherwise affected by (a) any extension of time or other indulgence granted to Tenant or by a waiver with respect to Tenant's Obligations or any of them, (b) any assignment of the Lease or any subletting of all or any portion of the premises, or (c) any other act or

omission of Landlord other than a written waiver by Landlord specifically modifying or terminating this Guaranty.

11. No delay on the part of Landlord in the exercise of any right or remedy as to either Tenant or as to Guarantor shall operate as a waiver thereof, and no final or partial exercise by Landlord of any right or remedy shall preclude other or further exercises thereof or the exercises of any other right or remedy.

12. The validity of this Guaranty and the obligations of Guarantor hereunder shall not be terminated, affected or impaired by reason of any action which Landlord may take or fail to take against Tenant nor by reason of any waiver of, or failure to enforce, any of the rights or remedies reserved to Landlord in the Lease, or otherwise, nor by reason of the bankruptcy, insolvency or inability to pay debts as they mature of Tenant and whether or not the term of the Lease shall terminate by reason of said bankruptcy, insolvency, or inability to pay debts as they mature.

13. No invalidity, irregularity or unenforceability of all or any part of the Lease or of any security thereof, shall affect, impair or constitute a defense to this Guaranty. This Guaranty is a direct and primary obligation of the Guarantor, and Guarantor's obligations hereunder are not as a surety.

14. If and to the extent that the Guarantor makes any payment to Landlord pursuant to or in respect of this Guaranty, any claim which the Guarantor may have against Landlord by reason thereof shall be subject and subordinate to the prior payment in full of all of Tenant's Obligations.

15. All requests, demands, or other communications pursuant hereto shall be in writing addressed as follows: (i) US Real Estate Limited Partnership, 9830 Colonnade Blvd. Ste. 600, San Antonio, Texas 78230-2239, Attn: Portfolio Management, if to Landlord, with a copy to Metro Commercial Properties, 1500 N. Priest Drive, Suite 1D02, Tempe, Arizona, 85281 and (ii) Apollo Development Corporation, 4025 South Riverpoint Parkway, Phoenix, Arizona, 85040, Attn: William J. Swirtz, with a copy to Apollo Group, Inc., Apollo Legal Services, 4025 South Riverpoint Parkway, Phoenix, Arizona, 85040, Attn: Robbyn A. Salganick, Esq., Corporate Counsel, if to the Guarantor. All notices shall be sent by certified mail, return receipt requested.

16. Miscellaneous.


(a)	This Guaranty shall be binding upon Guarantor, its successor and assigns.


(b)	This Guaranty shall be governed by the laws of the State of Arizona.


(c)	In the event of any controversy, claim, dispute or action relating to this Guaranty, the prevailing party shall be entitled to recover reasonable attorneys' fees and expenses in addition to all other

available remedies. "Prevailing party'' shall mean the party which obtains substantially the relief sought by it in the controversy.


(d)	This Guaranty may be amended only by written agreement signed by Landlord and Guarantor.


(e)	All previous negotiations and agreements by and between the parties and their agents with respect to this transaction are merged into this Guaranty which completely sets forth the obligations of the parties.


(f)	If any provisions of this Guaranty or of any document contemplated hereby shall be invalid, such invalid provision shall be severable, and such invalidity shall not impair the validity of any other provision of this Guaranty or of any document contemplated hereby.


(g)	If two or more persons are executing this Guaranty as Guarantors, they shall be jointly and severally liable under the terms hereof

APOLLO GROUP, INC., an Arizona

corporation

By: /s/ William J. Swirtz

William J. Swirtz

Its: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Brian L. Swartz

Its: Senior VP Finance Chief Accounting Officer

"Guarantor"

STATE OF ARIZONA )

)ss.

COUNTY OF MARICOPA )

The foregoing instrument was acknowledged before me on this 26 day of June , 2009, by William J. Swirtz , the Authorized Officer of Apollo Group, Inc. an Arizona corporation, on behalf of the corporation.

/s/ Ashley N. Zaitz

Notary Public

My Commission Expires:

7/24/2013

STATE OF ARIZONA )

)ss.

COUNTY OF MARICOPA )

The foregoing instrument was acknowledged before me on this 26 day of June , 2009, by Brian L. Swirtz , the Authorized Officer of Apollo Group, Inc. an Arizona corporation, on behalf of the corporation.

/s/ Joy Lynn Rae

Notary Public

My Commission Expires:

9/19/2012

EXHIBIT "I"

ATTACHED TO AND MADE A PART OF LEASE

RULES AND REGULATIONS OF THE PROJECT

1. The sidewalks, entrances, passages, if any, shall not be obstructed or used for any purpose other than ingress and egress. The passages, entrances, and roof are not for the use of the general public, and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Landlord, subject to adherence to law, shall be prejudicial to the safety, character, reputation or interests of the Project and its tenants, provided that nothing herein contained shall be construed to prevent such access by persons with whom tenants normally deal in the ordinary course of their business, unless such persons are engaged in illegal activities. No tenant and no employees of any tenant shall go upon the roof of a Building without the written consent of Landlord.

2. No awnings or other projections shall be attached to the outside walls of a Building without the prior written consent of Landlord. No hanging planters, television sets or other objects shall be attached to or suspended from ceilings without the prior written consent of Landlord. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door, without the prior written consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned. Except as otherwise specifically approved by Landlord, all electrical ceiling fixtures hung in offices or spaces along the perimeter of a Building must be fluorescent, of a quality, type, design and bulb color reasonably approved by Landlord.

3. No sign, advertisement or notice shall be exhibited, painted or affixed by any tenant on any part of, or so as to be seen from the outside of, a tenant's premises or a Building without the prior written consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned. In the event of the violation of the foregoing by any tenant, Landlord may remove same without any liability, and may charge the expense incurred in such removal to the tenant violating this rule. Interior signs on doors and walls and shall be of a size, color, location and style reasonably acceptable to Landlord.

4. No tenant shall mark, paint, drill into, or in any way deface any part of its premises or a Building. No boring, cutting or stringing of wires or laying of linoleum or other similar floor coverings shall be permitted except with the prior written consent of Landlord and as Landlord may direct.

5. No bicycles, vehicles, or animals of any kind shall be brought into or kept in or about any tenant's premises and no cooking shall be done or permitted by any tenant in its premises except that the preparation of coffee, tea, hot chocolate and similar items for the tenant and its employees and business visitors shall be permitted. No tenant shall cause or permit any unusual or objectionable odors to escape from its premises.

6. No tenant shall occupy or permit any portion of its premises to be for the manufacture or sale of liquor, narcotics or tobacco in any form, or as a medical office, or as a barber shop, manicure shop or employment agency. No tenant's premises shall be used for lodging or sleeping or for any immoral or illegal purposes.

7. No tenant shall make, or permit to be made, disturbing noises, sounds or vibrations, or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio, phonograph or other unusual noise.

8. No tenant shall at any time bring or keep upon its premises any inflammable, combustible or explosive fluid, chemical or substance. No tenant shall do or permit anything to be done in its premises, or bring or keep anything therein, which shall in any way increase the rate of fire insurance on the Project or on the property kept therein, or conflict with the regulations of the fire department or the fire laws, or with any insurance policy upon the Project or any part thereof, or with any rules and ordinances established by the local health authority or other governmental authority.

9. No additional locks or bolts of any kind shall be placed upon any of the doors or windows by any tenant, nor shall any changes be made in existing locks or the mechanisms thereof. Each tenant must, upon the termination of its tenancy, restore to Landlord all keys of stores, offices, and toilet rooms, whether furnished to or otherwise procured by tenant, and in the event of the loss of any keys so furnished, such tenant shall pay to Landlord the cost of replacing the same or of changing the lock or locks opened by such lost key if Landlord shall deem it necessary to make such a change.

10. All removals, or the carrying in or out of any safes, freight, furniture, or bulky matter of any description must take place during the hours which Landlord may establish from time to time. Landlord reserves the right to inspect all safes, freight or other bulky articles to be brought into a Building. Landlord reserves the right to prohibit or impose conditions upon the installation of heavy objects which might overload Building floors.

11. Landlord shall have the right to prohibit any advertising by any tenant which, in Landlord's opinion, tends to impair the reputation or desirability of the Project. Upon written notice from Landlord, any tenant shall refrain from or discontinue such advertising.

12. Any persons employed by any tenant to do janitorial work, shall, while in the Project and outside of the tenant's premises, be subject to and under the control and direction of the manager of the Project (but not as an agent or servant of said manager or of Landlord, and the tenant shall be responsible for all acts of such persons).

13. All doors opening into public corridors or lobbies shall be kept closed, except when in use for ingress and egress.

14. No air conditioning unit or other similar apparatus shall be installed or used by any tenant without the written consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned.

15. There shall not be used in any space, either by tenants or others, any hand trucks except those equipped with rubber tires and side guards.

16. Landlord will direct electricians as to where and how telephone or telegraph wires are to be introduced. No boring or cutting for wires or string of wires will be allowed without written consent of Landlord. The location of telephones, call boxes and other office equipment affixed to premises shall be subject to the reasonable approval of Landlord.

17. All parking areas, pedestrian walkways, and other public areas forming a part of the Project shall be under the sole and absolute control of Landlord with the exclusive right to regulate and control these areas. Tenant agrees to conform to the rules and regulations that may be established by Landlord for those areas from time to time. The Parking Rules and Regulations attached hereto as Exhibit "I-1" form a part hereof and are subject to change at the sole discretion of Landlord.

18. Landlord shall have the right, exercisable without notice and without liability to Tenant, to change the name and street address of a Building.

19. Landlord shall have the right to control and operate the public portions of the Project, and the public facilities, as well as facilities furnished for the common use of the tenants, in such manner as it deems best for the benefit of the tenants generally.

20. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into halls, passageways or other public places in a Building shall not be covered or obstructed by any tenant, nor shall any bottles, parcels or other articles be placed on the window sills. Tenant shall see that the windows, transoms and doors of the premises are closed and securely locked before leaving a Building and must observe strict care not to leave windows open when it rains. Tenant shall exercise extraordinary care and caution that all water faucets or water apparatus are entirely shut off before tenant or tenant's employees leave a Building, and that all electricity, gas or air shall likewise be carefully shut off, as to prevent waste or damage. Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by closing drapes when the sun's rays fall directly on the windows of the Premises.

21. The scheduling of tenant move-ins shall be subject to the reasonable discretion of Landlord.

22. The term "personal goods or services vendors" as used herein means personal who periodically enter a Building for the purpose of selling goods or services to a tenant, other than goods or services which are used by the tenant only for the purpose of conducting its business on the Premises. "Personal goods or services" include, but are not limited to, drinking water and other beverages, food, barbering services, and shoe shining services. Landlord reserves the right to prohibit personal goods and services vendors from access to a Building except upon such reasonable terms and conditions, including, but not limited to, the payment of a reasonable fee and provision for insurance coverage, as are related to the safety, care and cleanliness of a Building, the preservation of good order therein, and the relief of any financial or other burden on Landlord occasioned by the presence of such vendors or the sale by them of personal goods or services to the Tenant or its employees. If necessary for the accomplishment

of these purposes, Landlord may exclude a particular vendor entirely or limit the number of vendors who may be present at any one time in a Building. The provisions of this rule shall not apply to anyone using the Premises in accordance with Exhibit K, Rl3, of the Rider to the Lease.

23. Landlord may at any time revoke, supplement or modify these Rules and Regulations, or any portion thereof, whenever in Landlord's sole opinion such changes are required for the care, cleanliness, safety or preservation of good order in the Project. All such changes shall be effective five (5) days after delivery to tenant of written notice thereof, except in the event of emergency, in which event they shall be effective immediately upon notice to tenant.

24. Tenant shall not place, install or operate on the Premises or in any part of the Project, any engine, stove, or machinery, or conduct mechanical operations or cook thereon or therein, or place or use in or about the Premises any explosives, gasoline, kerosene, oil, acids, caustics, or any other inflammable, explosive, or hazardous material without the prior written consent of Landlord.

25. Landlord will not be responsible for any lost or stolen personal property, equipment, money, or jewelry from the Premises or from public rooms, regardless of whether such less occurs when the areas is locked against entry.

26. No birds or animals (other than handicap assistive animals) shall be brought onto the Project, and no bicycles or vehicles shall be brought into or kept in a Building.

27. No draperies, shutters, or window coverings shall be installed on exterior windows or on windows or doors facing public corridors without Landlord's prior written approval.

28. Employees of Landlord shall not receive or carry message for or to any tenant or other occupant on the Project, nor shall they contract to render free or paid services to any tenant or any tenant's agents, employees, or invitees; if any of Landlord's employees perform any such services, such employees shall be deemed the agent of the tenant for whom the services are being performed, regardless of whether or how payment is arranged for services, and Landlord is expressly relieve from any and all liability for any injury to persons or damage to property (or any other damages) in connection with any such services.

29. Tenant will keep all areas within the "Project" clean and free of debris.

EXHIBIT "I-1"

PARKING RULES AND REGULATIONS

Subject to Exhibit "K," R-8 and so long as the Lease to which this Exhibit"I-1" is attached remains in effect, and so long as the parking rules and regulation adopted by Landlord are not violated, Tenant or persons designated by Tenant shall be entitled on a non-exclusive basis to use parking spaces in the Project parking structure (if any) and on surface parking. Landlord expressly reserves the right to re-designate parking areas and to modify the parking facilities for other uses or to any extent.

A condition of any parking shall be compliance by the parker with parking facilities rules and regulations, and amendments thereto, including any sticker or other identification system established by Landlord. Landlord reserves the right to impose parking charges except as provided in Section 11 of the Lease, on Tenant and Tenant's employees for any parking now or hereafter available. The following Parking Rules and Regulations are in effect until notice is given to Tenant of any change. Landlord reserves the right to modify and/or adopt such other reasonable and nondiscriminatory rules and regulations for the parking facilities as it deems necessary for the operation of the parking facilities. Landlord may refuse to permit any person who violates the within rules to park in the parking facilities, and any violation hereof shall subject the car to removal at the owner's cost. In either of said events the sticker of any other form of identification supplied by Landlord shall be returned to Landlord.

1. Hours for the parking facility shall be 6:00 a.m. to 2:30 a.m.

2. Cars must be parked entirely within the stall lines painted on the floor or pavement.

3. All directional signs and arrows must be observed.

4. The speed limit shall be five (5) miles per hour.

5. Parking is prohibited:


(a)	in areas not striped for parking


(b)	in aisles


(c)	where "no parking" signs are posted


(d)	on ramps


(e)	in cross hatched areas


(f)	in such other areas as may be reasonably designated by Landlord.

6. Parking facilities managers or attendants are not authorized to make or allow any exception to these Parking Rules and Regulations.

7. Every parker is required to park and lock his own car. All responsibility for damage to cars or persons is assumed by the parker and Landlord and/or its agent shall have no liability whatsoever in connection therewith.

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8. Spaces rented to persons are for the express purpose of parking one automobile per space. Washing, waxing, cleaning or servicing of any vehicle by the customer and/or his agents is prohibited.

9. Tenant shall acquaint all persons to whom Tenant assigns parking spaces with these Parking Rules and Regulations.

10. Tenant and Tenant-Related Parties will use the parking facilities within the Project solely for the purpose of parking passenger model cars, small vans and small trucks and will comply in all respects with any mies and regulations that may be promulgated by Landlord from time to time with respect to the Project. Tenant will ensure that any vehicle parked in any of the Project will be kept in proper repair and will not leak excessive amounts of oil or grease or any amount of gasoline. If any of the parking facilities within the Project are at any time used: (i) for any purpose other than parking as provided above; or (ii) in any way or manner reasonably objectionable to Landlord; Landlord may take such steps as are reasonable to enforce these Parking Rules and Regulations as they relate to parties utilizing the parking facilities and/or consider such a default under the Lease (subject to the notice and cure periods set forth in Exhibit "K," R-14).

11. If the parking facilities within the Project are damaged or destroyed, or if the use thereof is limited or prohibited by any governmental authority, or Force Majeure, Tenant's inability to use the parking facilities will not subject Landlord or any operator of the parking facilities to any liability to Tenant and will not relieve Tenant of any of its obligations under the Lease and the Lease will remain in full force and effect provided:


(i)	Landlord provides reasonably acceptable alternative parking within an adjacent property;


(ii)	Landlord provides reasonably acceptable alternative parking in a property not adjacent but within reasonable walking distance to the Premises and so long as such interference with such parking does not continue for greater than sixty (60) days, thereafter, Rent will abate until parking within the parking facilities has been restored; and


(iii)	Landlord provides reasonably acceptable alternative parking in a property not within reasonable walking distance to the Premises and so long as such interference with such parking does not continue for greater than ten (10) Business Days, thereafter, Rent will abate until parking within the parking facilities has been restored.

If the parking facilities are damaged or destroyed, Tenant agrees to provide Landlord with a Tenant Casualty Notice. Landlord must then, within thirty (30) days of receiving said Tenant Casualty Notice, provide Tenant with a Landlord Casualty Notice indicating whether the Casualty to the parking structure is deemed a Minor Destruction or a Major Destruction.

With the exceptions of (x) Base Monthly Rent, which shall be treated as set forth in (i) - (iii) above, (y) the period during which Landlord must elect to restore a Major Destruction for the parking facilities which shall be one hundred twenty (120) days in lieu of two hundred and

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forty (240) days (unless a Major Destruction has occurred to a Building as well, in which case the period for election shall remain two hundred and forty (240) days for both the Building and the parking facilities), and (z) the period in which Landlord can effect the restoration of a Major Destruction of the parking facilities, which shall be twelve (12) months in lieu of eighteen (18), the rights and obligations of the Landlord and Tenant following a Casualty to the parking facilities shall be the same as each party's rights and obligations were the Casualty to have occurred to the Premises as set forth in Section 17 of the Lease. That is to say, by way of example, that Landlord shall have one hundred and eighty (180) days, subject to extension as set forth in Section 17.1.B , to restore a Minor Destruction of the parking facilities. In the event Landlord has failed to effect a Restoration following a Major Destruction of the parking facilities within twelve (12) months of Landlord's election to restore the parking facilities, subject to Tenant Delay and Construction Force Majeure (as defined in Exhibit "G" ), Tenant may terminate the Lease as set forth in Section 17.

Tenant will pay to Landlord upon demand, and Tenant indemnifies Landlord against, any and all loss or damage to the parking facilities, or any equipment, fixtures, or signs used in connection with the parking facilities and any adjoining buildings or structures caused by Tenant or any Tenant-Related Patties. "Force Majeure" shall mean, for purposes of this Lease, any unexpected event beyond the reasonable control of the party affected thereby, including, without limitation, acts of the public enemy, government restraint, unavailability of materials or any public utility service, strikes, civil riots, floods, hurricanes, tornadoes, earthquakes and other severe weather conditions or acts of God.

12. Tenant agrees to indemnify, defend, protect and hold Landlord harmless from and against any and all claims, losses, damages, demands, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) asserted or arising with respect to or in connection with the removal of any such automobile(s) as aforesaid. Landlord shall not be liable for any claims, losses, damages, expenses or demands with respect to any vehicles of Tenant, its customers or visitors that are parked in the Project, except for such loss or damage as may be caused solely by Landlord's gross negligence or willful misconduct, and, Tenant agrees to indemnify, defend, protect and hold Landlord harmless from and against any such claim, loss, damage, demand, cost or expense (including, without limitation, reasonable attorneys' fees and expenses), except for such loss or damage as may be caused solely by Landlord's gross negligence or willful misconduct.


13.	Tenant has no right to assign or sublicense any of its parking rights in the Project, except as part of an approved or permitted assignment or sublease of the Lease; however, Tenant may allocate parking spaces among its employees.

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EXHIBIT "J"

LEASE SUBORDINATION, NON-DISTURBANCE

OF POSSESSION AND ATTORNMENT AGREEMENT

This Lease Subordination, Non-Disturbance of Possession , and Attornment Agreement (" Agreement ") is made as of the ______ day of _________, 20____, among (hereinafter called " Lender "), US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership, with its principal office at 9830 Colonnade Blvd. Ste. 600, San Antonio, Texas 78230-2239, Attn: Portfolio Management (" Landlord " or " Borrower ") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation, having a place of business at 4025 South Riverpoint Parkway, Phoenix, Arizona, 85040 (" Tenant ").

INTRODUCTORY PROVISIONS

The Lender is relying on this Agreement as an inducement in making and maintaining a loan (the " Loan ") secured by among other things, a Deed of Trust, Assignment, Security Agreement and Fixture Filing, dated or to be dated as of ____________ (the " Deed of Trust ") located within Fountainhead Business Park in Tempe, Arizona and described on Exhibit A attached hereto (" Property ").

Tenant is the tenant under that lease (" Lease ") dated __________, 2009, made with Landlord, covering certain premises (" Premises ") at the Property as more particularly described in the Lease.

Lender requires, as a condition to the making and maintaining of the Loan, that the Deed of Trust be and remain superior to the Lease and that its rights under the assignment of rents in the Deed of Trust be recognized.

Tenant requires as a condition to the Lease being subordinate to the Deed of Trust that its rights under the Lease be recognized.

Lender, Landlord, and Tenant desire to their understanding with respect to the Deed of Trust and the Lease.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained herein, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, and with the understanding by Tenant that Lender shall rely hereon in making and maintaining the Loan, Lender, Landlord, and Tenant agree as follows:

1. Subordination . The Lease and the rights of Tenant thereunder are subordinate and inferior to the Deed of Trust and any amendment, renewal, substitution, extension or replacement thereof and each advance made thereunder as though the Deed of Trust, and each such amendment, renewal, substitution, extension or replacement were executed and recorded, and the advance made, before the execution of the lease.



Lease Subordination, Non-Disturbance of Possession and Attornment Agreement	Page 1

2. Non-Disturbance . So long as Tenant is not in default (beyond any period expressed in the Lease within which Tenant may cure such default) in the payment of rent or in the performance or observance of any of the terms, covenants or conditions of the Lease on Tenant's part to be performed or observed, (a) Tenant's occupancy of the Premises and Tenant's rights tinder the Lease shall not be disturbed by Lender in the exercise of any of its rights under the Deed of Trust during the term of the Lease, or any extension or renewal thereof made in accordance with the terms of the Lease and all rights granted to Tenant under the Lease shall remain in full force and effect, and (b) Lender will not join Tenant as a party defendant in any action or proceeding for the purpose of terminating Tenant's interest and estate under the Lease because of any default under the Deed of Trust, and (c) Tenant's duties will not be modified in any way without Tenant's prior written consent.

3. Attornment and Certificates . In the event Lender succeeds to the interest of Borrower as Landlord under the Lease, or if the Property or the Premises are sold pursuant to the power of sale under the Deed of Trust , Tenant shall attorn to Lender, or a purchaser upon any such foreclosure sale, and shall recognize Lender, or such purchase, thereafter as Landlord under the Lease. Such attornment shall be effective and self-operative without the execution of any further instrument. Tenant agrees, however, to execute and deliver at any time and from time to time, upon the request of any holder(s) of any of the indebtedness or other obligations secured by the Deed of Trust, or upon request of any such purchaser, (a) any instrument or certificate which, in the reasonable judgment of such holder(s), or such purchaser, may be necessary or appropriate in any such foreclosure proceeding or otherwise to evidence such attornment, and (b) an instrument or certificate regarding the status of the Lease, consisting of statements, if hue (and if not true, specifying in what respect, (i) that the Lease is in full force and effect, (ii) the date through which rentals have been paid, (iii) the duration and date of commencement of the term of the Lease, (iv) the nature of any amendments or modifications to the Lease, (v) that no default, or state of facts, which with the passage of time, or notice, or both, would constitute a default, exists on the part of either party to the Lease, and (vi) the dates on which payments of additional rent, if any, are due under the Lease.

4. Limitations . If Lender exercises any of its rights under the Deed of Trust, or if Lender shall succeed to the interest of Landlord under the Lease in any manner, or if any purchaser acquires the Property, or the Premises, upon or after any foreclosure of the Deed of Trust, or any deed in lieu thereof, Lender or such purchaser, as the case may be, shall have the same remedies by entry, action or otherwise in the event of any default by Tenant (beyond any period expressed in the Lease within which Tenant may cure such default) in the payment of rent or in the performance or observance of any of the terms, covenants and conditions of the Lease on Tenant's part to be paid, performed or observed that Landlord had or would have had if Lender or such purchaser had not succeeded to the interest of the present Landlord. From and after any such attornment, Lender or such purchaser shall be bound to Tenant under all the terms, covenants and conditions of the Lease, and Tenant shall, from and after such attornment to Lender, or to such purchaser, have the same remedies against Lender, or such purchaser, for the breach of an agreement contained in the lease that Tenant might have had under the Lease against Landlord, if Lender or such purchase had not succeeded to the interest of Landlord. Provided, however , that Lender or such purchaser shall only be bound during the period of its ownership, and that in the case of the exercise by Lender or its rights under the Deed of Trust, or a foreclosure, or deed in lieu of foreclosure, all Tenant claims shall be satisfied only out of the



Lease Subordination, Non-Disturbance of Possession and Attornment Agreement	Page 2

interest, if any, of Lender, or such purchaser, in the Property, and Lender and such purchaser shall not be (a) liable for any act or omission of any prior Landlord (including Landlord) unless same constitutes a default under the Lease, which continues after Lender's acquisition of the Property; or (b) subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord); or (c) bound by any rent or additional rent which Tenant might have paid for more than the then current rental period to any prior landlord (including Landlord); or (d) bound by any amendment or modification of the lease, or any consent to any assignment or sublet, made without Lender's prior written consent; or (e) bound by or responsible for any security deposit not actually received by lender; or (f) liable for or incur any obligation with respect to any breach of warranties or representations of any nature tinder the Lease or otherwise including without limitation any warranties or representations respecting use, compliance with zoning, landlord's title, landlord's authority, habitability and/or fitness for any purpose or possessions.

5. Rights Reserved . Nothing herein contained is intended, nor shall it be construed, to abridge or adversely affect any right or remedy of: (a) Landlord under the Lease, or any subsequent Landlord, against Tenant in the event of any default by Tenant (beyond any period expressed in the lease within which Tenant may cure such default) in the payment of rent or in the performance or observance of any of the terms, covenants or conditions of the Lease on Tenant's part to be performed or observed; or (b) Tenant under the Lease against the original or any prior Landlord in the event of any default by the original Landlord to pursue claims against such original or prior Landlord whether or not such claim is barred against Lender or a subsequent purchaser.

6. Notice and Right to Cure . Tenant agrees to provide Lender with a copy of each notice of default given to Landlord under the Lease, at the same time as such notice of default is given to Landlord, and that in the event of any default by Landlord under the Lease, Tenant will take no action to terminate the Lease (a) if the default is not curable by Lender (so long as the default does not violate any applicable laws and/or interfere with Tenant's use and occupation of the Premises), or (b) if the default is curable by Lender, unless the default remains uncured for a period of thirty (30) days after written notice thereof shall have been given, postage prepaid, to Landlord at Landlord's address and to Lender at the address provided in Section 7 below; provided, however , that if any such default is such that it reasonably cannot be cured within such thirty (30) day period, such period shall be extended for such additional period of time as shall be reasonably necessary (including, without limitation, a reasonable period of time to obtain possession of the Property and to foreclose the Deed of Trust), if Lender gives Tenant written notice within such thirty (30) day period of Lender's election to undertake the cure of the default and if curative action (including, without limitation, action to obtain possession and foreclose) is instituted within a reasonable period of time and is thereafter diligently pursued, provided that the default is cured no later than the later of (i) ninety (90) days from the date of Lender's notice or (ii) such amount of time as is permitted to Landlord under the terms of the Lease to cure said default. Lender shall have no obligation to cure any default under the Lease.



Lease Subordination, Non-Disturbance of Possession and Attornment Agreement	Page 3

7. Notices . Any notice or communication required or permitted hereunder shall be in writing, and shall be given or delivered; (a) by United States mail, register or certified, postage fully prepaid, return receipt requested, or (b) by recognized courier service or recognized overnight delivery service; and in any event addressed to the party for which it is intended at its address set forth below:

or such other address as such party may have previously specified by notice given or delivered in accordance with the foregoing. Any such notice shall be deemed to have been given and received on the date delivered or tendered for delivery during normal business hours as herein provided.

8. No Oral Change . This Agreement may not be modified orally or in any manner than by an agreement in writing signed by the parties hereto or their respective successors in interest.

9. Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective heirs, personal representatives, successors and assigns, and any purchaser or purchasers at foreclosure of the Property or any portion thereof, and their respective heirs, personal representatives, successors and assigns.

10. Payment of Rent To Lender . Tenant acknowledges that it has notice that the Lease and the rent and all sums due thereunder have been assigned to Lender as part of the security for the Obligations secured by the Deed of Trust. In the event Lender notifies Tenant of a default tinder the Loan and demands that Tenant pay its rent and all other sums due under the Lease to Lender, Tenant agrees that it will honor such demand and pay its rent and all other sums due under the Lease to Lender, or Lender's designated agent, until otherwise notified in writing by Lender. Borrower unconditionally authorizes and directs Tenant to make rental payments directly to Lender following receipt of such notice and further agrees that Tenant may rely upon such notice without any obligation to further inquire as to whether or not any default exists under the Deed of Trust, and the Borrower shall have no right or claim against Tenant for or by reason of any payments of rent or other charges made by Tenant to Lender following receipt of such notice.

11. Intentionally Omitted .

12. Captions . Captions and headings of sections are not part of this Agreement and shall not be deemed to affect the meaning or construction of any of the provisions of this Agreement.

13. Counterparts . This Agreement may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.



Lease Subordination, Non-Disturbance of Possession and Attornment Agreement	Page 4

14. Governing Law . This Agreement shall be governed by and construed m accordance with the laws of the State of Arizona.

15. Parties Bound . The provisions of this Agreement shall be binding upon and inure to the benefit of Tenant, Lender and Borrower and their respective successors and assigns; provided, however, reference to successors and assigns of Tenant shall not constitute a consent by Landlord or Borrower to an assignment or sublet by Tenant, but has reference only to those instances in which such consent is not required pursuant to the Lease or for which such consent has been given.

[Remainder of page intentionally left blank. Signature page(s) to follow.]



Lease Subordination, Non-Disturbance of Possession and Attornment Agreement	Page 5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

TENANT:

THE UNIVERSITY OF PHOENIX, INC., an

Arizona Corporation

By: _______________________________________

Name: _____________________________________

Title: ______________________________________

STATE OF ARIZONA §

COUNTY OF MARICOPA §

The foregoing instrument was acknowledged before me this _______ day of _______________, 20___, by _____________________________________________, ____________ of THE UNIVERSITY OF PHOENIX, an Arizona corporation, on behalf of the corporation.

IN WITNESS WHEREOF, I hereto set my hand and official seal.

___________________________________________

NOTARY PUBLIC

My commission expires: _______________________

(Signature page to Lease Subordination, Non-Disturbance of Possession and Attornment Agreement)

LENDER:

By: _______________________________________

Name: _____________________________________

Title: ______________________________________

STATE OF ____________ §

COUNTY OF ______________ §

IN WITNESS WHEREOF, I hereto set my hand and official seal.

___________________________________________

NOTARY PUBLIC

My commission expires: _______________________

(Signature page to Lease Subordination, Non-Disturbance of Possession and Attornment Agreement)

US Real Estate Limited Partnership, a Texas limited partnership, Landlord under the Lease, and Borrower under the Deed of Trust and the other Loan Documents, agrees for itself and its successors and assigns that:

1. The above agreement does not (a) constitute a waiver by Lender of any of its rights under the Deed of Trust or any of the other Loan Documents; or (b) in any way release Borrower from its obligations to comply with the terms, provisions, conditions, covenants and agreements and clauses of the Deed of Trust and other Loan Documents;

2. The provisions of the Deed of Trust remain in full force and effect and must be complied with by Borrower;

3. Tenant shall have the right to rely on any notice or request from Lender, which directs Tenant to pay rent to Lender without any obligation to inquire as to whether or not a default exists and notwithstanding any notice from or claim of Borrower to the contrary. Borrower shall have no right or claim against Tenant for rent paid to Lender after Lender so notifies Tenant to make payment of rent to Lender; and

4. The Borrower shall be bound by all of the terms, conditions and provisions of the foregoing Agreement in all respects.

Executed and delivered as of the _______ day of _______________________, 20____.

____________________________, a________________

By: ___________________________________________

Name: _________________________________________

Title: __________________________________________

Date Executed by Borrower: _______________________

(Landlord Signature Page to Lease SNDA)

STATE OF _____________ §

COUNTY OF ___________ §

The foregoing instrument was acknowledged before me this _______ day of _______________, 20___, by _____________________________________________, ____________ of US Real Estate Limited Partnership, a Texas limited partnership on behalf of said partnership.

IN WITNESS WHEREOF, I hereto set my hand and official seal.

___________________________________________

NOTARY PUBLIC

My commission expires: _______________________

(Landlord Signature Page to Lease SNDA)

GUARANTOR'S CONSENT

The undersigned, a guarantor of Tenant's obligations under the Lease (a " Guarantor "), consents to Tenant's execution, delivery and performance of the foregoing Agreement. From and after any attornment pursuant to the foregoing Agreement, that certain Lease Guaranty dated ______________ (the " Guaranty ") executed by Guarantor in favor of US Real Estate Limited Partnership, shall automatically benefit and be enforceable by Lender with respect to Tenant's obligations under the Lease as affected by the foregoing Agreement. Lender's rights under the Guaranty shall not be subject of any defense, offset, claim, counterclaim, reduction or abatement of any kind resulting from any act, omission or waiver by Landlord for which Lender would, pursuant to the foregoing Agreement, not be liable or answerable after attornment. The foregoing does not limit any waivers or other provisions contained in the Guaranty.

GUARANTOR:

APOLLO GROUP, INC., an Arizona corporation

By: __________________________________________

Name: ________________________________________

Title: _________________________________________

Dated: ________________________________________

(Guarantor's Consent)

Exhibit A

LEGAL DESCRIPTION OF PROPERTY

EXHIBIT "K"

UNIVERSTY OF PHOENIX LEASE RIDER

FOUNTAINHEAD CORPORATE PARK LEASE

(Tempe, Arizona)

R-1 Leased Area Determination

The rentable area of the Premises shall equal the gross area of the Buildings and shall be determined in accordance with "American National Standard ANSI/BOMA Z65.l-1996: Standard Method for Measuring Floor Area in Office Buildings" issued by the Building Owners and Managers Association International (" BOMA Standard ") prior to a Commencement Date for a Building. The initial calculation shall be done by Landlord's architect and the final measurement shall be confirmed and certified by Tenant's architect. In the event that the final measurement for a Building using the BOMA Standard differs from the Premises Area of such Building set forth in Section 1 of the Lease, the rentable area of that Building and the Base Monthly Rent shall be adjusted appropriately and the parties shall execute an amendment to this Lease reflecting said adjustment.

R-2 Intentionally Omitted

R-3 Expense Exclusions

Expenses shall not include the following:

(1) Any costs or expenses for which Landlord is reimbursed or indemnified (whether by an insurer, condemnor, tenant or otherwise);

(2) Overhead and administrative costs of Landlord not directly incurred in the operation and maintenance of the Project;

(3) Depreciation or amortization of the Project or its contents or components (except as set forth in Section 4.c.1.d ;

(4) Capital expenditures except as provided in Section 4.c.1.d ;

(5) Expenses for the preparation of space or other work which Landlord performs or causes to be performed for any tenant or prospective tenant of the Project;

(6) Expenses for repairs or other work which is caused by fire, windstorm, casualty or any other insurable occurrence, including costs subject to Landlord's insurance deductible;

(7) Expenses incurred in leasing or obtaining new tenants or retaining existing tenants, including leasing commission, legal expenses, advertising, entertaining or promotion;

(8) Interest, amortization or other costs, including legal fees, associated with any mortgage, loan or refinancing of the Project (other than Tenant's leasehold interest), transfer or

recordation taxes and other charges in connection with the transfer of ownership in the Project (other than Tenant's leasehold interest), land trust fees, and rental due under any ground lease relating to the property on which the Project is located;

(9) Expenses incurred for any necessary replacement of any item to the extent that it is covered under warranty, and the cost of correcting defects in the original construction of the Base Buildings (as defined in E xhibit "G") ; provided, however, that (i) repairs resulting from ordinary wear and tear shall not be deemed to be defects (with any disagreement as to whether a repair results from ordinary wear and tear or a construction defect being resolved pursuant to arbitration as set forth in Paragraph 11 of Exhibit "G" ), (ii) the costs of maintenance contracts which cover the warrantied repair may be included as Expenses, and (iii) it being expressly understood that the cost of correcting defects in the original construction of the Tenant Improvements (as defined in Exhibit "G" ) may, to the extent such repair constitutes a maintenance responsibility of Landlord herein, be included in Expenses;

(10) The cost of any item or service which Tenant separately reimburses Landlord or pays to third parties, or which Landlord provides selectively to one or more tenants of the Project, other than Tenant, whether or not Landlord is reimbursed by such other tenant(s). This category shall include the actual cost of any special electrical, heating, ventilation or air conditions required by any tenant that exceeds normal building standards or is required during times other than the standard business hours stated in this Lease;

(11) Accounting and legal fees relating to the ownership, construction, leasing, sale or relating to any litigation in any way involving the Project and any common areas or to the enforcement of the terms of any lease;

(12) Any interest or penalty incurred due to the late payment of any operating expense and/or Real Property Tax, but only if such late payment by Landlord or its agents is not the reasonable result of Tenant's action or inaction;

(13) The cost of correcting any applicable building or fire code violations(s) or violations of any other applicable law relating to the project, of any common areas, and/or the cost of any penalty or fine incurred for noncompliance with the same in each case as of the Commencement Date but only to the extent that the same is attributable to Tenant's specific use and occupancy of the Premises, and any costs incurred to test, survey, clean up, contain, abate or remove any environmental or Hazardous Material or materials, including asbestos containing materials from the Project or any common areas or to remedy any breach or violation of any Environmental Requirement in each case to the extent not the responsibility of Tenant pursuant to the terms of the Lease;

(14) Any personal property taxes of Landlord for equipment or items not used directly in the operation or maintenance of the Project, nor connected therewith and the amount of any taxes otherwise paid by Tenant directly including all taxes referred to in Sections l.j. and 1.k. of the Lease;

(15) Any expense that is not specifically enumerated and accounted for as a Project Expense in Landlord's expense statement and/or budget pertaining to the operation and

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administration of the Project or any common areas (including payroll and payroll-related expenses associated with administration and clerical personnel, general office expenses, and expenses for travel, entertainment, gifts, dues, subscriptions, memberships, tuition, seminars, errors and omissions insurance, automobile allowances, charitable or political donations and professional fees of any kind), and provided that management fees in any year shall not exceed an amount equal to four percent (4%) of the gross rental revenue received for that period. In no event shall the payroll, payroll related and other expenses related to any employees of Landlord above the Project Manager or equivalent operational level or not working full-time on the management or operation of the Project be included in Expenses, provided that such expenses of part-time workers may be included if equitably allocated to reflect actual time spent on the Project;

(16) Any items the presence of which will artificially inflate Expenses in any year because they are unique, extraordinary or one-time expenses not directly related to the operation of the project, excluding special tax assessments and increases in taxes due to governmental modifications (e.g., to split tax rolls);

(17) Any costs or expenses for sculpture, paintings, or other works of art, including costs incurred with respect to the purchase, ownership, leasing, repair, and/or maintenance of such works of art, in each case other than such items as are requested by Tenant;

(18) The cost of overtime or other expenses to Landlord in performing work expressly provided in this Lease to be borne at Landlord's expense, unless incurred as a result of Tenant;

(19) All expenses directly resulting from the gross negligence or willful misconduct of Landlord, its agents, servants or other employees;

(20) All bad debt loss, rent loss, or reserve for bad debt or rent loss;

(21) Payroll and payroll related expenses for any employees in commercial concessions operated by Landlord;

(22) Any expenditures made more than eighteen (18) months prior to submission of demand;

(23) Any management or operating costs demonstrably and materially in excess of similar costs incurred by reasonable and prudent landlords of comparable buildings in the Tempe, Arizona, metropolitan area or any amount paid to an entity related to Landlord which demonstrably and materially exceed the amount that would have been paid for comparable goods or services in an arms-length transaction between unrelated parties in said market; and

(24) Expenses incurred in any calendar year and not included in a statement of accounting prepared by Landlord prior to the end of the following calendar year; provided however, that if Landlord could not be aware of specific Expenses, such Expenses may be included in the first statement of accounting delivered after Landlord becomes aware of such Expenses.

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R-4	Tenant's Audit Rights

Landlord shall maintain books and records of all Expenses and shall permit Tenant to audit Landlord's statements for any annual period so long as (i) written notice of such audit is provided to Landlord within ninety (90) days of Tenant's receipt of the accounting required by Section 4.c.3 and (ii) such audit is completed within sixty (60) days of Tenant's intent to audit notice. If Tenant elects to audit such books and records, Landlord shall reasonably cooperate with Tenant and any deficiency or overpayment disclosed by such audit shall be promptly paid or refunded as the case may be. If Tenant retains a third party to conduct such audit, such third patty must be a certified public accountant from an accounting firm reasonably acceptable to Landlord. Tenant may not have such review performed on a contingency fee basis. If any such audit discloses that the Expenses reflected on Landlord's statement were overstated by more than five percent (5%) of the actual Expenses for the subject year, Landlord shall reimburse Tenant for the reasonable costs of such audits, not to exceed $1,000.00. The results of any such audit shall be held in strict confidence by Tenant and its representatives. If Landlord disputes the audit, both parties shall within twenty (20) days agree upon a neutral third party certified public accountant whose determination shall be binding upon both parties, the cost of which shall be split evenly between Landlord and Tenant.


R-5	Notice-Late Fees/Default Interest

Notwithstanding anything to the contrary herein, Landlord shall give written notice of nonpayment, provided, however, this obligation shall be limited to two (2) times in any calendar year for purposes of imposing interest and penalties only . Landlord shall give Tenant ten (10) business days to cure the non-payment of rent and fees. If Landlord has not received full payment of outstanding balances after the ten (10) business days have passed, Landlord may apply interest and penalties to outstanding balances per Section 4.c.4 of the Lease.


R-6	Modification to Project

The entrance and exit to the Premises and the Project will not be modified, reconfigured, or altered in any manner that would materially and permanently affect access to or the appearance and design of the Premises and/or materially and adversely affect Tenant's use of the Premises without Tenant's prior written consent (which consent shall not be unreasonably withheld by Tenant), nor will any modifications, reconfigurations or alterations be taken by Landlord with respect to the Project, the effect of which would be to materially and permanently interfere with Tenant's business operation in or diminish the use and enjoyment of the Premises for the purposes intended.


R-7	Rules and Regulations (See Basic Lease Exhibit I-Rules and Regulations)


R-8	Parking

(a) Landlord acknowledges that use of the parking areas currently available for the Project is necessarily in order for Tenant to operate its business on the Premises.

(b) Landlord shall not modify, reconfigure or restripe the parking area so as to reduce the aggregate number of parking spaces available to Tenant below a number equal to 4.5 spaces

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per 1,000 square feet of rentable space in the Premises. Landlord acknowledges that any failure to supply such parking in accordance with this Lease shall constitute an event of default hereunder.

R-9 Intentionally Deleted


R-10	Alterations

(a) Minor Decorating Permitted . Tenant shall be permitted to hang pictures and shelving and perform other similar minor decorating activities and to perform non-structural alterations not exceeding an aggregate of $50,000 during any calendar year, which alterations do not require the acquisition of a building permit without securing Landlord's prior consent, provided that Tenant complies with all pertinent building code, fire, safety and other such governmental regulations and that Tenant does not take any action which could in any way interfere with the structural, mechanical, electrical, maintenance, HVAC or plumbing systems of the Project. Tenant agrees that Landlord may supervise the movement of materials in and out of the Project with respect to any activities done under this provision.

(b) Mechanics Liens . In the event that a mechanics lien is filed against the Premises or the Project for work claimed to have been furnished to Tenant, Tenant shall either see that such lien is discharged within thirty (30) days following Tenant's receipt of notice thereof or Tenant shall post a bond to assure the payment of said lien with Landlord in an amount and form reasonably satisfactory to Landlord.


R-11	Intentionally Omitted


R-12	Condemnation

Tenant shall have the right to pursue a claim in the condemnation proceeding for any relocation award to which it may be entitled or for any furniture, trade fixtures or other fixtures which Tenant is entitled to remove at the termination of the Lease and which are subject to the Taking, for the unamortized cost of any improvements paid for by Tenant and for any relocation or other business disruption loss Tenant incurs as a result of such Taking. If Tenant's access to the Premises is taken as a result of the condemnation, the Lease shall terminate upon the effective date of the taking unless the parties agree otherwise.


R-13	Assignment/Sublease to Affiliate; Release; Use of Space by Others

(a) Sublease. No sublessee will have any rights directly against Landlord, nor will the sublease create or impose any obligation or liability of Landlord in favor of such sublessee. No sublessee will have any right to exercise any of Tenant's rights or options under the Lease. At any time that a Lease default exists under Section 20 , Landlord will have the absolute right to collect the rentals under the sublease directly from the sublessee and apply same to the payment of Rent, and Tenant hereby stipulates and agrees that the sublessee (a) shall receive full credit against its obligations under the sublease for all sums so paid to Landlord, and (b) shall be entitled and is hereby directed to rely upon a written notice from Landlord that the rentals under the sublease are payable to Landlord. It is understood and agreed, however, that Landlord's

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exercise of such right shall not release or diminish Tenant's obligations under the Lease except to the extent of funds actually received by Landlord.

(b) Transfer to an Affiliate . Notwithstanding any provision in this Lease to the contrary, Tenant shall have the right to assign this Lease or sublet all or a portion of the Premises without Landlord's consent to any corporation or business entity which controls, is controlled by or is under common control with Tenant, or to a corporation or other business entity resulting from a merger or consolidation with Tenant, or to any person or entity which controls, is controlled by or is under common control with Tenant, or to a corporation or other business entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires substantially all of the assets of Tenant's businesses as a going concern (" Affiliate "), provided that in the case of an assignment, the assignee assumes in full the obligations of Tenant under this Lease and that the use of the Premises remains unchanged. Tenant shall also have the right to provide space in the Premises from time to time (i) to business entities or other organizations for purpose of conducting education programs and/or meetings, and (ii) to concessionaires or independent contractors who provide services directly related to Tenant's use (such as bookstore and food/beverage service operations) and serving Tenant's staff, guests and students, and such use of the Premises shall not constitute an assignment, sublease or other transfer by Tenant hereunder. Landlord's consent to any transfer under this provision shall not be unreasonably withheld, delayed or conditioned.

(c) Other Transfers . Except as provided in Section 19 and this R-13, Tenant shall not make any transfer of its interest in the Premises without Landlord's express prior written consent, which consent may not be unreasonably withheld or delayed.

(d) Effect of Transfer . In the event that Tenant proposes to assign or sublease to an assignee or subtenant whose net worth is comparable to or greater than that of Tenant or Guarantor as of the date this Lease was executed (including an Affiliate), and Landlord consents to such assignment or sublease in writing, based on the assignee's or subtenant's net worth and the nature of the assignee's or subtenant's use and compatibility with the Project, Tenant and Guarantor shall be released from all liability occurring from and after the effective date of the assignment or sublease with respect to the portion of the Premises subject to such assignment or subletting, and such release shall be documented in Landlord's consent. Except as otherwise provided in this R-13(d), no transfer of any portion of Tenant's interest in the Premises will relieve Tenant or Guarantor from liability under the Lease or the Guaranty, and each transferee will be bound by all of the terms and provisions of this Lease. In the event of any conflict between the terms of this Lease and the terms of the agreement between Tenant and any transferee, the terms of this Lease shall control. Any violation by a transferee of the terms and conditions of this Lease shall constitute a default hereunder, subject to the notice and right to cure provisions of Section 20 , for which Tenant shall be fully liable. Each transferee shall be obligated to obtain Landlord's consent to any action as to which Tenant is obligated to obtain such consent under this Lease, including, without limitation, consent to any proposed alterations.

(e) Subsequent Subleases or Transfers . No sublessee or transferee will make any further sublease or transfer of an interest in the Premises without the express prior written consent of Landlord in accordance with Section 19 and this R-13. No consent by Landlord to

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any transfer of an interest in the Premises shall constitute a consent to any further or future transfer of an interest in the Premises.

(f) Submission of Information . If Tenant requests Landlord's consent to a specific assignment or subletting, Tenant will submit in writing to Landlord: (i) the name and address of the proposed assignee or subtenant; (ii) a counterpart of the proposed agreement of assignment or sublease; (iii) reasonably satisfactory information as to the nature and character of the business of the proposed assignee or subtenant, and as to the nature of its proposed use of the space; (iv) banking, financial or other credit information reasonably sufficient to enable Landlord to determine the financial responsibility and character of the proposed assignee or subtenant; (v) executed estoppel certificates from Tenant; and (vi) any other information reasonably requested by Landlord.


R-14	Mutual Default/Notice/Cure

Notwithstanding anything to the contrary elsewhere in this Lease, the parties shall each receive written notice and an opportunity to cure any failure to perform any obligation under the Lease (other than a default pursuant to Sections 20.a, 20.c, 20.d, 20.e, and 20.f of the Lease) prior to being considered in a default status and being subject to the imposition of penalties or other remedial actions. Wherever the term "default" is used herein it shall be defined as either patty's continued failure to perform its obligation in accordance with the terms of this Lease after written notice thereof from the non-defaulting patty and the passage of an appropriate period of time within which to have commenced and completed the cure of such failure to perform. Appropriate cure periods are as follows:

Monetary Defaults - Ten (10) business days

Non-Monetary Defaults - Thirty (30) days provided that if the defaulting party is proceeding in good faith and with due diligence to complete the cure of a non-monetary performance failure which cannot reasonably be cured within 30 days, such party will not be held in default for not completing such cure within 30 days so long as such party diligently proceeds to complete such cure promptly and fully.


R-15	Landlord's Access to the Premises

Landlord shall have access to the Premises for the purposes described in Sections 8.5 and 22 provided that (i) Landlord's activities hereunder will not unreasonably interfere with or adversely affect Tenant's use of the Premises, (ii) Landlord provides reasonable advance notice of any entry to the Premises, except in the case of emergency, and (iii) nothing will be done hereunder that would permanently alter the aesthetics or the utility of the Premises for Tenant's permitted use without Tenant's prior written consent. In entering the Premises, Landlord shall use all efforts to minimize any interference with or disruption of Tenant's operations. Notwithstanding anything in this Lease to the contrary, if Landlord's entry onto the Premises interferes with Tenant and such interference causes a material adverse impact on Tenant's operations at, use or enjoyment of the Premises and such impact continues beyond fifty-eight (48) hours, Tenant shall be entitled to an equitable abatement of rent for such period of time as the interference continues.

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If such interference continues beyond one hundred twenty (120) days, and Landlord's failure to remedy such interference within thirty (30) days.


R-16	Subordination and Non-Disturbance

As of the date of the Lease, Landlord does not own the fee interest in the Project. In the event that as of the Commencement Date there exists a mortgage or deed of trust recorded against the Premises, then prior to the Commencement Date and as a condition to the effectiveness of Tenant's obligations under this Lease (but not Tenant's obligations pursuant to the Work Letter Agreement attached as Exhibit "G" hereto), Landlord will deliver to Tenant a commercially reasonable non-disturbance agreement executed by such superior lienholder agreeing in substance that, so long as Tenant is not in default under the terms of this Lease, its tenancy and all of its rights hereunder will not be disturbed throughout the term of this Lease and any extensions thereof, which agreement shall be substantially in the form of Exhibit "J." If Tenant is required to subordinate its interests under the Lease to the lien of any mortgage or deed of trust or to any lien holder in the future, Tenant's obligation to subordinate its interests is conditioned upon any such lien holder or prospective lien holder providing Tenant with a commercially reasonable non-disturbance agreement in the form attached hereto as Exhibit "J" which, in substance, agrees that so long as Tenant is not in default under the terms of this Lease, its tenancy for the use and purposes herein described and all rights granted to Tenant hereunder will not be disturbed and will remain in full force and effect throughout the term of this Lease and any extensions thereof. Tenant's duties and obligations hereunder will not be modified in any way without Tenant's prior written consent.


R-17	Intentionally Deleted.


R-18	Determination of Current Market Rate

The current market rental rate, and other terms and conditions (" Current Market Rate ") necessary to establish the rent when Tenant is exercising a renewal option shall be determined as follows:

(a) "Current Market Rate" shall be defined as the bona fide rates, terms and conditions currently being offered in "rum's length" transactions to prospective tenants for comparable space of similar size, location and improvements in the Project, and recognizing that there shall be no brokerage fees in the transaction. If no comparable space is available in the Project for this comparison, rates and terms then being offered for comparable space m comparable buildings in the Tempe, Arizona, metropolitan area will be used.

(b) Landlord shall notify Tenant in writing of the Current Market Rate within fifteen (15) business days following receipt of Tenant's renewal notice. If Tenant disagrees with the proposed Current Market Rate, then within fifteen (15) business days after receipt of such market rate notice, Tenant shall appoint a Qualified Agent as defined in subsection (e) and give written notice thereof to Landlord. If Tenant fails to timely notify Landlord in writing of its acceptance of the proposed Current Market Rate or of its appointment of a Qualified Agent, Tenant shall be deemed to have accepted the Current Market Rate, and Landlord will prepare an appropriate amendment to the Lease.

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(c) If Tenant appoints a Qualified Agent under subsection (b), then within fifteen (15) business days thereafter, Landlord shall appoint its Qualified Agent.

(d) Within ten (10) business days after Landlord appoints a Qualified Agent, each party's Qualified Agent shall meet with the parties and each other and review the Premises and the Buildings and give notice to each party of his/her opinion of the Current Market Rate for the Premises for the option term in question. If the two Qualified Agents agree on the Current Market Rate, that rate shall be used as the Current Market Rate for Tenant's rent for the option term. If the two Qualified Agents do not agree on the Current Market Rate and the parties do not agree on how to resolve the dispute within ten (10) business days of the two Qualified Agents giving notice of their opinions of the Current Market Rate, the two Qualified Agents will select a third Qualified Agent, who is in no manner affiliated or associated with either of the other Qualified Agents. The third Qualified Agent will select one or the other of the two opinions of Current Market Rate submitted by the other Qualified Agents within ten (10) days after being appointed by the other two Qualified Agents. The third Qualified Agent shall have no authority to modify either opinion of Current Market Rate and must select one or the other opinion "as is", which will establish the Current Market Rate for the option term in question.

(e) For the purposes of this provision, "Qualified Agent" means a real estate broker or salesperson licensed by the State of Arizona with at least ten (10) years of office leasing experience in the Phoenix, Arizona metropolitan area who has not worked for either party or its affiliates within two (2) years prior to the time in question, and who so states in writing an agreement to serve hereunder. Each party will pay the reasonable fees of the Qualified Agent appointed by it, provided however, that if a third Qualified Agent is appointed, Landlord and Tenant will each pay one-half of the fees of the third Qualified Agent. Either party may enforce the procedures set forth in this provision in any manner permitted by law or equity.


R-19	Landlord Representations and Warranties

Landlord hereby represents and warrants to Tenant as follows:

(a) The cw-rent zoning for the Land and Project in which the Premises ai-e located will allow Tenant to use the Premises for the permitted uses set forth in this Lease, provided, however, such zoning contains limitations on the amount of the Premises which may be used for classrooms.

(b) As of the Commencement Date, the Project (inclusive of the Premises but excluding those portions of the Premises designed by Tenant and/or Tenant-Related Patties and signage) is in compliance with all applicable laws, rules, regulations, ordinances and local codes, including, without limitation, O.S.H.A. rules and regulations governing asbestos and asbestos containing materials and, unless otherwise approved by Tenant in the construction of the Premises, the Americans with Disabilities Act and/or any comparable state statute (" Applicable Laws "). The Project is also in compliance with all private covenants, conditions and restrictions affecting the Project (the " Deed Restrictions "), copies of which have been given to Tenant. The Deed Restrictions do not conflict with terms of this Lease.

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(c) Except as otherwise disclosed to Tenant in writing, to Landlord's knowledge, Landlord has not received any written notice from a governmental entity of a claim that the Property does not comply with all laws.

(d) Except as otherwise disclosed to Tenant in writing, to the best of Landlord's knowledge, there is no existing condemnation action with respect to the Property, which would materially affect the use and operation of the Property.

(e) To Landlord's knowledge, except as disclosed in that certain environmental report prepared by EFI Global, Inc. and dated March 20, 2009, except for Hazardous Substances used in the ordinary course of constructing, operating and maintaining an office building, the Project does not and shall not contain any Hazardous Substances as of the date hereof and as of the Commencement Date.

(f) Tenant's parking rights granted herein are not in violation of any applicable laws.

(g) Landlord will not record against the Project or the Premises, or otherwise subject the Project or the Premises to, any restrictions, agreements, encumbrances, liens, easements or rights which could or would (i) prevent or impair the use of the Premises for the purposes permitted in this Lease or (ii) conflict with or diminish the rights herein granted to Tenant.

(h) Any individual executing this Lease on behalf of Landlord is authorized to do so by requisite action of the appropriate board, partnership, or other entity, as the case may be. Upon the date Landlord acquires the Project, Landlord shall have good and marketable fee simple title to the Project, including the Premises, with full right and authority to grant the estate demised herein and to execute and perform all of the terms and conditions of this Lease.


R-20	Hours of Operation

Landlord acknowledges that some or all of the classes to be taught by Tenant on the Premises may occur (i) after 5:30 p.m. on weekdays and (ii) during daytime hours on weekends. The Premises shall be available to Tenant and its students, instructors and other guests and employees during such hours and Landlord agrees that access to the Premises shall not be limited or impeded during the hours of Tenant's operation. Any janitorial or other services provided by Landlord shall not interfere with Tenant's use of the Premises during such hours.


R-21	Services and Utilities

All services to be provided by Landlord and the management and operation of the Project shall be at or above a level consistent with that customarily provided to tenants of comparable buildings in the Tempe, Arizona, metropolitan area. All utility and other services to and for the Premises, including, without limitation, HVAC services, will be available twenty-four (24) hours a day, seven (7) days a week other than (1) during reasonable periods for customary maintenance, which will not be scheduled between 5:00 p.m. and 10:00 p.m. on weekdays and between 8:00 a.m. and 1:00 p.m. on Saturdays with respect to the classroom portions of the Premises whenever possible and (2) where such services are only generally available for procurement during normal business hours.

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Tenant shall have the right, but not the obligation, to procure the services of security guards for the Project at Tenant's sole cost. Such security guards shall be stationed on the Premises but shall be permitted to enter the Common Areas, including the parking areas, in connection with assisting students and generally safeguarding the Project.

Tenant shall be solely responsible for arranging and paying for all utilities (including, without limitation, electrical power, natural gas, water, waste water drainage, storm sewer drainage and telephone service) and, except for the obligations of Landlord under Section 12 of the Lease, all other services or amenities that Tenant requires or desires to be furnished to the Premises from and after the Commencement Date for its occupancy, use and enjoyment thereof. Tenant will contract with the suppliers or vendors of all such utilities, services and amenities, and will make all payments therefor directly to the supplier or vendor.

Without limiting the generality of Section 4.c , Landlord will have no responsibility or liability for the interruption or cessation of any utility, service or amenity to the Premises, nor shall any such interruption or cessation entitle Tenant to any abatement of Rent or be deemed to constitute a constructive eviction of Tenant. Notwithstanding the foregoing, if an interruption of utilities or services is directly within the control of Landlord, and (i) such interruption of utilities or services shall continue for two (2) business days after written notice from Tenant to Landlord; (ii) such interruption of utilities or services shall render any portion of the Premises unusable for the normal conduct of Tenant's business and Tenant, in fact, ceases to use and occupy such portion of the Premises for the normal conduct of its business; and (iii) the restoration of such utilities or services is within the control of Landlord, then Base Rent payable hereunder with respect to such portion of the Premises rendered unusable for the normal conduct of Tenant's business and which Tenant, in fact, ceases to use and occupy, shall be abated after the expiration of such two (2) business day period, (in the event such utilities or services are not then restored), and continue until such time that the utilities or services are restored. The foregoing remedy shall be Tenant's sole and exclusive remedy for any such interruption of services or utilities by Landlord unless such interruption of services or utilities is caused by the gross negligence or willful misconduct of Landlord in which event Tenant shall have all rights and remedies against Landlord under this Lease in addition to such abatement.


R-22	Landlord Defaults/Tenants Rights

Subject to the provisions contained in the Lease, if Landlord fails to perform any of its material obligations or breaches any of its covenants contained in the Lease, and (unless another time limit is elsewhere in this Lease specifically provided) the (i) default continues for a period of thirty (30) days after written demand for performance is given by Tenant, or, (ii) if the default is of such a character as to require more than thirty (30) days to cure and Landlord shall fail to commence said cure promptly and use reasonable diligence in working to complete such cure as quickly as reasonably possible and such default has a material impact on Tenant's use of the Premises, then Tenant may, in addition to any other remedies provided in this Lease, at law or in equity (including the right to sue for damages, an injunction or specific performance), do any one or more of the following, collectively or individually, concurrently or separately, in any order and as often as necessary: (a) elect to make such payments and cure such defaults on behalf of Landlord and, in connection therewith, do all work and make all payments deemed necessarily or appropriate by Tenant, including payment of costs including reasonable attorneys' fees and

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charges in connection with any legal action which may have been commenced or threatened and subject to interest at the default rate of interest set forth in Section 4.c.4 from the date of Tenant's notice, and all sums so expended by Tenant shall, at Tenant's option, be offset against future rentals due hereunder or reimbursed to Tenant by Landlord on demand, or (b) provide notice to Landlord of Tenant's intent to terminate this Lease should Landlord not cure such condition within thirty (30) days after written demand for performance is given by Tenant pursuant to the provisions above or, if the default is of such a character as to require more than thirty (30) days to cure, should Landlord shall fail to commence said cure promptly and use reasonable diligence in working to complete such cure as quickly as reasonably possible. The exercise of the termination rights granted Tenant hereunder shall not waive any default by Landlord or limit any other remedies Tenant may have in law or equity.


R-23	Dispute Resolution

The parties agree to cooperate and negotiate in good faith to resolve any disputes under this Lease. All disputes other than those relating to the payment of rent, which cannot be resolved privately, may be submitted by either party for non-binding mediation on terms and conditions agreed to by both Landlord and Tenant.


R-24	Intentionally Omitted


R-25	Intentionally Omitted


R-26	Quiet Enjoyment

So long as Tenant is not in default under the terms and conditions of this Lease, Tenant shall be entitled to peaceably maintain possession of and quietly enjoy the Premises and all of the rights granted hereunder for the duration of the Lease term and any extensions thereof


R-27	Miscellaneous

(a) Any individual executing this Lease on behalf of either patty is authorized to do so by requisite action of the appropriate board, partnership, or other entity, as the case may be. Upon written request from Tenant, Landlord will deliver to Tenant a copy of the resolution or other document evidencing such authority. Landlord has good and marketable fee simple title to the Project, including the Premises, with full right and authority to grant the estate demised herein and to execute and perform all of the terms and conditions of this Lease. Upon written request from Tenant, Landlord will provide copies of documents evidencing said ownership.

(b) Following the date of this Lease, Landlord will not record against the Project or the Premises, or otherwise subject the Project or the Premises to any restrictions, agreements, encumbrances, liens, easements or rights which could or would (i) prevent or materially impair the use of the Premises for the purposes permitted in this Lease or (ii) materially conflict with or diminish the rights herein granted to Tenant.

(c) Tenant shall be permitted to install and use food and beverage vending machines, refrigerators and a properly shielded microwave oven on the Premises for the benefit of Tenant's

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employees, customers and guest provided that, in so doing, Tenant does not create any offensive odors..

{Remainder of this page intentionally left blank}

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EXHIBIT "L"

MEMORANDUM OF LEASE

[see attached]

WHEN RECORDED RETURN TO:

The University of Phoenix, Inc.

4025 S. Riverpoint Parkway

Phoenix, Arizona 85040

MEMORANDUM OF LEASE

This is a Memorandum of that certain Lease Agreement dated June 29 , 2009, as amended (the " Lease ") by and between US Real Estate Limited Partnership, a Texas limited partnership (" Landlord ") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (" Tenant "), with respect to 1601 and 1625 Fountainhead Parkway, Tempe, Arizona 85282 (the " Premises ") located on the real property legally described on Exhibit A (the " Project ") for a term of approximately 144 months commencing in accordance with the terms of the Lease, with two (2) five (5) year options to extend the term.

Subject to the terms of the Lease, Tenant shall have the exclusive right to operate an educational facility within the Project for the term of the Lease. The foregoing limitation shall not, however, (i) apply to parties to whom Tenant has assigned or subleased all or any portion of the Premises or (ii) be deemed to prohibit incidental training conducted by a business within the Project. Further, the exclusive right granted to Tenant to operate an educational facility within the Project shall terminate if Tenant, by virtue of a change in ownership, assignment, or business plan change, no longer maintains education as its core business for two hundred seventy (270) consecutive days.

In addition, Tenant shall have the non-exclusive right to use 4.5 parking spaces per 1,000 square feet of the Premises in the Project for the entire term of the Lease at no cost to Tenant.

Complete and executed duplicate agreements of the Lease containing all of the agreements, terms, covenants and conditions are available in the offices of Landlord and Tenant as follows:

Landlord: US Real Estate Limited Partnership

9830 Colonnade Blvd., Ste. 600

San Antonio, TX 78230-2239

Attention: Portfolio Management

Tenant: The University of Phoenix, Inc.

c/o Apollo Development Corp.

4025 South Riverpoint Parkway

MS:CF-K604

Phoenix, Arizona 85040

Attn: Mr. William J. Swirtz

IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease effective as of the 6th , day of July , 2009.

LANDLORD:

US REAL ESTATE LIMITED PARTNERSHIP

By: /s/ Glen E Mitts

Name: Glen E. Mitts

Its: Executive Managing Director

TENANT:

THE UNIVERSITY OF PHOENIX, INC.

By: /s/ William J. Swirtz

Name: William J. Swirtz

Its: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Name: Brian L. Swartz

Its: Senior VP Finance Chief Accounting Officer

STATE OF TEXAS )

COUNTY OF BEXAR )

This instrument was acknowledged before me on this 6th day of July , 2009, by Glen E. Mitts as Exec. Managing Director of US Real Estate Limited Partnership on behalf of said limited partnership .

/s/ Melissa A. Roscoe

Notary Public, State of Texas

My Commission Expires: 1-11-2012

STATE OF ARIZONA )

COUNTY OF MARICOPA )

This instrument was acknowledged before me on this 26 day of June , 2009, by William J. Swirtz, Brian Swartz , as Authorized Officer of T HE UNIVERSITY OF PHOENIX, INC. , on behalf of said corporation.

/s/ Ashley Zaitz

Notary Public, State of Arizona

My Commission Expires: 7/24/2013

EXHIBIT "A"

EXCEPT THAT PORTION THAT WAS CONVEYED IN INSTRUMENT RECORDED AS 2008-1071568 OF OFFICIAL RECORDS MORE PARTICULARLY DESCRIBED AS FOLLOWS:

THENCE ALONG SAID EXISTING EASTERLY RIGHT OF WAY LINE, NORTH 0 DEGREES 35 MINUTES 19 SECONDS EAST 201.01 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE OF LOT 7A, NORTH 89 DEGREES 37 MINUTES 35 SECONDS EAST 101.07 FEET;

THENCE CONTINUING ALONG SAID WESTERLY LINE, NORTH 89 DEGREES 38 MINUTES 42 SECONDS EAST 13.02 FEET;

THENCE ALONG SAID SOUTHERLY LINE, SOUTH 89 DEGREES 40 MINUTES 03 SECONDS WEST 113.25 FEET TO THE POINT OF BEGINNING.

Page 7

Exhibit 10.27

CONSENT BY LANDLORD TO FIRST AMENDMENT TO SUB-SUBLEASE

The undersigned, KBSII FOUNTAINHEAD, LLC, a Delaware limited liability company (" Landlord "), successor in interest to US Real Estate Limited Partnership (" Original Landlord "), as the current owner of all of the landlord's/lessor's right, title and interest in and to that certain lease agreement (as heretofore amended, the " Lease "), dated July 29, 2009, originally entered into by and between Original Landlord, as landlord/lessor, and THE UNIVERSITY OF PHOENIX, INC., as tenant/lessee (the " Master Sublessor "), for certain premises (" Premises ") located at (i) 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the " 1601 F ountainhead Building ") and (ii) 1625 Fountainhead Parkway, Tempe, Arizona 85282 (the " 1625 Founta i nhead Building ''), hereby consents to WESTERN INTERNATIONAL UNIVERSITY, INC., an Arizona corporation (the " Sublessor "), as subtenant of Ma s ter Sublessor pursuant to that certain Sublea s e dated August 3l , 2012 , as amended (the " Ma s ter Sublease ") pursuant to which Sublessor sublease a portion of the Premises (the " Sublea s ed Premises ") from Master Sublessor, to enter into that certain First Amendment to Sub-Sublease and License (the " Sub Sublease Agreement ''), subletting a portion of the Subleased Premises as more particularly described therein (the " Sub-Subleased. Premises "), to TIYA ACADEMY, LLC, a South Carolina limited liability company d/b/a The Iron Yard (formerly known as TIYA Phoenix, LLC) (" Sublessee "), upon and subject to the express understandings and conditions that:


1.	Landlord neither approves nor disapproves the terms, conditions and agreements contained in the Master Sublease or the Sub-Sublease Agreement and assumes no liability or obligation of any kind whatsoever on account of anything contained in the Master Sublease or the Sub Sublease Agreement.


2.	By executing this Consent by Landlord to Sub-Sublease (" Consent "), Landlord shall not be deemed to have waived any rights under the Lease nor shall Landlord be deemed to have waived the Master Sublessor' s, Sublessor's or Sublessee's obligations to obtain any required consents under the Lease (other than consent to the Sub-Sublease Agreement itself).


3.	Sublessor and Sublessee shall each be liable for any and all of Master Sublessor' s obligations (past and future) under and as set forth in the Lease with respect to the Subleased Premises and Sub-Subleased Premises, including without limitation, the duty to perform all of the obligations of the "Tenant" under the Lease with respect to the Subleased Premises and Sub-Subleased Premises.

Master Sublessor shall be and continue to remain liable for (a) the payment of any and all rental amounts payable under the Lease (including any additional rent), any and all adjustments to rent, any and all parking fees and other related charges, and any and all other payments required to be made by the tenant/lessee under the Lease, all as set forth in the Lease, and (b) the full and prompt performance of all of the obligations of the tenant / lessee under and as set forth in the Lease.


5.	Simultaneously with its execution of this Consent, Master Sublessor shall pay to Landlord the actual cost of Landlord's legal fees in connection with this Consent.


6.	Nothing contained in the Sublease Agreement or Sub-Sublease Agreement shall be taken or construed to in any way modify, alter, waive or affect any of the terms, covenants or conditions contained in the Lease.


7.	There shall be no further subletting or assignment of all or any portion of the Premises demised under the Lease except in accordance with the terms and conditions of the Lease.

[SIGNATURE PAGE TO FOLLOW]

SIGNATURE PAGE TO CONSENT BY LANDLORD TO FIRST AMENDMENT TO SUB-SUBLEASE BY AN D B . ITW EEN KBSI! FOUNTA I N HEA D , LLC, AS LANDLORD ,

T H E UNIVERSITY OF PHO EN I X LLC AS MASTER S U BLESSOR , W ES T E RN I NT ERNATIO NAL UN1VERSITY, AS SUB LESSOR

TIYA ACADEMY, LLC, AS SUBLESSEE

IN WITNESS WHEREOF, Landlord, Master Sublessor, Sublessor and Sublessee have executed this Consent to be effective as of the ____ day of ____________, 2016, and this Consent shall be effective only if executed by Landlord, Master Sublessor, Sublessor and Sublessee.

LANDLORD :

KBSRII FOUNTAINHEAD, LLC,

a Delaware limited liability company


By:	KBS Capital Advisors, LLC, a Delaware

limited liability company,

as agent

By: /s/ Tim Helgeson

Name: Tim Helgeson

Its: SVP

Date: February 9 , 2016

MASTER SUBLESSOR :

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: ______________________

Name: ___________________

Its: ______________________

Date: _______________, 2016

[Signature Page Continues]

SUBLESSOR :

WESTERN INTERNATIONAL UNIVERSITY,

an Arizona corporation

By: ______________________

Name: ___________________

Its: ______________________

Date: _______________, 2016

SUBLESSEE :

TIYA ACADEMY, LLC,

a South Carolina limited liability company d/b/a

The Iron Yard

By: ______________________

Name: ___________________

Its: ______________________

Date: _______________, 2016

Exhibit 10.28

FIRST AMENDMENT TO LEASE

This FIRST AMENDMENT TO LEASE (this "Amendment") is made this 11th day of August, 2009 (the "Effective Date"), by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (''Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Lease Agreement dated June 29 , 2009 (the "Lease") by which Tenant leased from Landlord approximately 439,070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the "Buildings") and that certain Work Letter Agreement executed by Landlord and Tenant dated of even date with the Lease (the "Work Letter").

B. The parties now wish to amend the Lease and the Work Letter as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments .

(a) The first paragraph of Section 1.1(i) is deleted in its entirety and replaced with the following:

TERM OF LEASE: The term (and rental payments) shall commence on the Commencement Date as set forth in Exhibit "G ." The anticipated Commencement Date for Office A is December 1, 2011 and for Office B is July 1, 2011. The Lease shall expire at 11:59 p.m. Arizona time on the day preceding the thirteenth (13th) anniversary of the Commencement Date for Office A.

(b) The second sentence of Section 3 is deleted in its entirety and replaced with the following:

Exhibit "G" shall govern the implications of failure of the Commencement Date to occur on or before July 31, 2013.

Landlord and Tenant both acknowledge that this Lease is subject to and conditioned upon Landlord acquiring title to the land upon which the Project will be constructed on or before September 30, 2009. If for any reason Landlord is unable to acquire title to the land on or before September 30, 2009, this Lease shall become null and void and neither party shall have any obligation to the other with regard to this Lease.

3. Work Letter Amendments .

(a) The sixth sentence of Paragraph 3(a) of the Work Letter is deleted in its entirety and replaced with the following:

Landlord shall use commercially reasonable efforts to secure completion of all work in a timely manner so that Tenant is able to occupy the Premises in Office B on or before July 1, 2011 (the " Office B Scheduled Delivery Date ") and the Premises in Office A on or before December 1, 2011 (the " Office A Scheduled Delivery Date ") (each, a " Scheduled Delivery Date " and collectively, the " Scheduled Delivery Dates ").

(b) The first paragraph of Paragraph 8(c) of the Work Letter is deleted in its entirety and replaced with the following:

In the event Office B is not Substantially Completed on or before August 31, 2011, Base Rent for Office B shall abate for one day for each day between September 1, 2011 and the date Office B is Substantially Complete, subject to Tenant Delay and Construction Force Majeure (either, an " Excused Delay "). In the event Office A is not Substantially Completed on or before January 31, 2012, Base Rent for Office A shall abate for one day for each day between February 1, 2012 and the date Office A is Substantially Complete, subject to Excused Delay. In addition, if the Commencement Date for the entire Premises does not occur on or before July 31, 2013, subject to Tenant Delay, Tenant may elect to terminate this Lease by delivering written notice to Landlord at any time prior to the date the Premises are Substantially Completed. Upon such termination, neither party shall have any obligation to the other with regard to the Lease or the Work Letter

4. Ratification . Landlord and Tenant each hereby reaffirm its rights and obligations under the Lease and Work Letter as modified by this Amendment. In the event of a conflict or ambiguity between the Lease or Work Letter and this Amendment, the terms and provisions of this Amendment shall control.

5. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ James E. Loyd

Name: James E. Loyd

Title: Executive Managing Director

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ William J. Swirtz

Name: William J. Swirtz

Title: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Name: Brian L. Swartz

Title: Senior VP Financial Officer and Treasurer

Exhibit 10.29

SECOND AMENDMENT TO LEASE

This SECOND AMENDMENT TO LEASE (this "Amendment") is made this 2nd day of November , 2009 (the "Effective Date"), by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (''Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Lease Agreement dated June 29 , 2009, as amended by that certain First Amendment to Lease dated August 11, 2009 (collectively the "Lease") by which Tenant leased from Landlord approximately 439,070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the "Buildings").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments . Section 1.1(i) is deleted in its entirety and replaced with the following:

TERM OF LEASE: The term (and rental payments) shall commence on the Commencement Date as set forth in Exhibit "G. " The anticipated Commencement Date for Office A is December 1, 2011 and for Office B is July 1, 2011. The Lease shall expire at 11:59 p.m. Arizona time on the day preceding the twelfth (12th) anniversary of the later of (I) the Commencement Date for Office A, and (II) the Commencement Date for Office B.

Number of Months: 144 Months from later of the Commencement Date for Office A or Office B.

3. Ratification . Landlord and Tenant each hereby reaffirm its rights and obligations under the Lease and Work Letter as modified by this Amendment. In the event of a conflict or ambiguity between the Lease or Work Letter and this Amendment, the terms and provisions of this Amendment shall control.

4. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ Bruce C. Petersen

Name: Bruce C. Petersen

Title: Executive Managing Director

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ William J. Swirtz

Name: William J. Swirtz

Title: President of Apollo Development and Authorized Officer

By: /s/ Brian L. Swartz

Name: Brian L. Swartz

Title: Senior VP Financial Officer and Treasurer

Exhibit 10.30

THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO LEASE (this "Amendment") is made this 19 ^th day of February, 2010 (the "Effective Date"), by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (''Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Lease Agreement dated June 29 , 2009, as amended by that certain First Amendment to Lease dated August 11, 2009 and that certain Second Amendment to Lease dated November 2, 2009 (as so amended, the "Lease") pursuant to which Tenant leased from Landlord approximately 439,070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the "Buildings").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Work Letter Amendment . Schedule I to the Work Letter Agreement is hereby amended, restated, and replaced in its entirety with Schedule I as set forth in Exhibit A hereto, which exhibit is hereby incorporated herein by reference.

4. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership


By:	USAA Real Estate Company, a

Delaware corporation, its general

partner

By: /s/ Robert L. Sult, Jr.

Name: Robert L. Sult, Jr.

Title: Managing Director

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ William J. Swirtz

Name: William J. Swirtz

Title: President of Apollo Development and Authorized Officer

By: _______________________

Name: _____________________

Title: ______________________

EXHIBIT A

Schedule 1

Base Building

APOLLO DEVELOPMENT REQUIREMENTS

FOR BASE BUILDING CONSTRUCTION

FOR UNIVERSITY OF PHOENIX

Landlord at its sole cost and expense shall include as part of the building shell all necessary elements and fees as part of the shell development:


1.	Complete site improvements, including, without limitation, trash enclosures, parking, landscaping, site grading, drainage and compaction, driveways, fire lanes, site utilities extended into the building, site directional signage, site lighting, sidewalks, and any and all required necessary to comply with Applicable Laws, including, without limitation, all ADA requirements.

A six level parking structure to accommodate approximately 1,885 cars of the approximately 2,055 cars accommodated in this development including code required handicapped spaces. The parking structure is provided with its own electrical service entrance section with an emergency generator powered from the 6-story building serving the emergency distribution switch boards for elevator and emergency lighting per code.


3.	Complete construction of the shell building, including, without limitation, the following:


a.	Complete structural system, including concrete floors at il1ld above grade;


b.	Complete exterior building skin and roofing;


c.	Complete shell building automatic fire sprinkler system with the sprinkler heads turned up;


d.	Complete operational stairs and elevators;


e.	Complete, fully operational toilet rooms at the core areas as shown in Schedule 3;


f.	All common areas including without limitation, first floor lobbies, janitorial, electrical and mechanical spaces, first floor exiting corridors, etc. Excluded from this definition are the Upper Floor lobby finishes, which shall be paid for out of the Tenant Finish Allowance;


g.	Building exterior entrance security system;


h.	Emergency lighting, electrical and communication systems for elevators;


i.	Fire alarm system as required by code;


j.	Electric drinking fountains at the core areas;


k.	Complete exterior window glazing system;


I.	Complete exterior wall and roof insulation system;


a.	Stairs, doors and all components of the egress system meeting or exceeding current requirements of all applicable ordinances and codes, or made to comply with Tenant's space plan at Tenant's sole expense;


b.	Complete ADA compliance;


c.	Base building should accommodate a ceiling height of 9' -0" above finished floor (A.F.F.), excepting First Floor Lobbies which shall be 10'.


4.	All agency or jurisdictional costs for permits and fees for the shell buildings, including Base building plan check and permit fees, development fees, taxes, utility hook-up costs and fees, including submittal and coordination required to obtain approvals.


5.	All architectural, engineering fees and costs, including soils engineering, civil surveys, offsite engineering, landscape architecture, traffic engineering, legal costs associated with permitting and

11152941.1

all building design engineering such as mechanical, structural and electrical engineering. Expense costs, including travel and printing associated with obtaining permits and approvals.


6.	Base Building will also include the following services, matters and improvements to the Premises as a part of Landlord's shell construction costs:

Electrical: All electrical power to operate the lighting and HVAC systems including two (2) 3,000 Amp Electrical Services on the ten story building and a 3,600 Amp Electrical Service on the six story building, all at 480 / 277 volt three-phased power. Power to be distributed to electric rooms through buss duct risers with connection to power of all house panels and transformers and all major core pieces of HVAC equipment. The buildings will each be equipped with an emergency generator servicing the emergency distribution switch board. Panel boards for house power shall be located as required to provide 480/277 volt power and 120/208 volt power in panels providing circuit breakers for 20 Amp circuits and spaces for futnre 20 Amp single pole circuit breakers to meet all house power needs, Electrical power to serve tenant space shall originate from buss riser(s) in the electric room on each floor and include distribution panels, raceways, conductors, fixtnres and devices under the Tenant Improvement scope of work.

Telecommunications Access: Provide all conduit raceways to the minimum point of presence (MPOP) on the first floor of each building and conduit raceways and penetrations to allow for cabling to telecommunications rooms on each floor. Furnish and install terminal mounting boards (TMBs) at each room for telecommunication punch down blocks and service equipment (furnished and installed by others) and provide house 120/208 power in telecommunication rooms for service equipment power needs.

Heating, Ventilation and Air Conditioning (HVAC): HVAC cooling system shall consist of a separate chilled water system for the ten story and the six story buildings. The system for each building shall include chillers, cooling towers, primary chilled water pumps, condenser water pumps and a plate and frame heat exchanger and expansion tank. Base building HVAC system includes a Variable Air Volume air handler on each floor of the office buildings with all medium and low pressure duct distribution, devices and diffusers to be provided under the Tenant Improvement scope of work. Outside air will be provide per code via make up air units and ducted to Variable Air Volume air handlers included in the Base building, located on each floor of each building and to the fan coils, air handlers and exhaust system serving the common areas including lobby, elevator equipment rooms, core area restrooms. System capacity will provide a system that will provide code minimum fresh air make-up and be able to maintain the space between 72 degrees Fahrenheit and 76 degrees Fahrenheit year round based on the ASHRAE Standard 62 ventilation default reqnirements for general office occupant loads of 5 per 1,000 square feet. System will permit operation at a minimum energy level and within parameters defined by the "Comfort Chart" shown in the latest edition of ASHRAE Standard 55, "Thermal Environmental Conditions for Human Occupancy."


7.	Hazardous Materials. The Base Building shall be free of all Hazardous Materials when delivered for occupancy. "Hazardous Materials" shall mean any material, waste, substance, pollutant or contaminant which could pose a risk of injury or threat of health or the environment.

The Base Buildings will be constructed using a combination of pre-cast concrete panels, reflective glass, painted metal panels and clear anodized aluminum The material palette for the Base Buildings will be comprised of the following:

11152941.1


1.	Pre-Cast Concrete Panels with integral colored concrete, to match Dunn Edwards DE6242 Wells Grey LRV 43


2.	1" Insulated Glass, to match Versalux Blue 2000T Subdued Silver Reflectance


3.	Metal Panels, painted to match ATAS 70 Clear


4.	Clear Anodized Aluminum, to match Arcadia#! I/Clear AC-2.

11152941.1

Exhibit 10.31

FOURTH AMENDMENT TO LEASE

This FOURTH AMENDMENT TO LEASE (this "Amendment") is made this 11th day of March, 2011 (the "Effective Date"), by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (''Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Lease Agreement dated June 29, 2009, as amended by that certain First Amendment to Lease dated August 11, 2009, that certain Second Amendment to Lease dated November 2, 2009, and that certain Third Amendment to Lease dated February 19, 2010 (as so amended, the "Lease") pursuant to which Tenant leased from Landlord approximately 439,070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the "Buildings").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments.

(a) The first paragraph of Section 1.1(i) is deleted in its entirety and replaced with the following:

TERM OF LEASE: The term (and rental payments) shall commence on the respective Commencement Date (as defined in the Work Letter) for each of Office A and Office B. The anticipated Commencement Date for Office A is September 1, 2011 and for Office B is June 1, 2011 (each an "Anticipated Commencement Date"). The Lease shall expire at 11:59 p.m. Arizona time on the twelfth (12 ^th ) anniversary of the later of the Commencement Date for Office A or Office B.

Number of Months: One hundred forty-four months from the later of the Commencement Date for Office A or Office B.

As soon as reasonably practicable following the occurence of the Effective Completion Date (as defined below) for both Office A and Office B, Landlord and Tenant will execute a certificate in the form attached as Exhibit "M" specifying, among other things, the expiration date for the Lease and the Commencement Date and first date of Base Monthly Rent payment for both Office A and Office B.

(b) A new Exhibit "M" is added in the form attached to this Amendment.

3. Work Letter Amendment .

(a) This sixth sentence of Paragraph 3(a) of the Work Letter is deleted in its entirety

Lease - Fourth Amendment

and replaced with the following:

Landlord shall use commercially reasonable efforts to cause the Effective Completion Date to occur for a Building on or before the Anticipated Commencement Date for such Building.

(b) The second sentence of Section 7(a) is deleted in its entirety and replaced with the following:

If the proposed change (i) will not cause the Effective Completion Date of either Building to be delayed to a date which is after the applicable Anticipated Commencement Date for such Building, (ii) will not cause a change to the Final TI Plans, and (iii) is not a material downgrade from or scope change without obtaining Tenant's consent (but Landlord shall promptly notify Tenant of such change prior to making such change, with such notice to be accompanied by a copy of the pertinent Change Order [or other evidence of such change] and reasonable support for Landlord's determination that such change satisfies the criteria set out in this sentence).

If the proposed change to the Final TI Plans (i) will not cause the Effective Completion Date of either Building to be delayed to a date which is after the applicable Anticipated Commencement Date for such Building, and (ii) is not a material downgrade from or scope change to the Final TI Plans as they then exist, Landlord will not unreasonably withhold, condition or delay its approval of such change.

(d) The first sentence of Section 7(c) is deleted in its entirety and replaced with the following:

(e) Paragraph 8(b) of the Work Letter is deleted in its entirety and replaced with the following:

Schedule . Landlord shall use its commercially reasonable efforts to cause the General Contractor to Substantially Complete the construction of the Buildings on or before the respective Anticipated Commencement Date for each Building; provided, however, failure to achieve Substantial Completion

Lease - Fourth Amendment

on or before the Anticipated Commencement Date for each Building shall neither affect the validity of this Lease nor the obligations of Tenant under this Lease, except as set forth in Paragraph 8.c of this Work Letter.

(f) The first paragraph of Paragraph 8(c) of the Work Letter is deleted in its entirety and replaced with the following:

If the Effective Completion Date for both Buildings has not occurred on or before July 31, 2013, subject to Tenant Delay Tenant may elect to terminate this Lease by delivering written notice to Landlord at any time prior to the occurrence of the Effective Completion Date for both Buildings. Upon such termination, neither party shall have any obligation to the other with regard to the Lease or the Work Letter.

(g) The last sentence of the second paragraph of Paragraph 8(c) of the Work Letter is deleted in its entirety and replaced with the following:

If any period of Tenant Delay causes a delay in any component required to occur for an Effective Completion Date to be achieved for a Building and such delay extends the Effective Completion Date beyond the Anticipated Commencement Date for such Building, Tenant shall pay to Landlord within fifteen (15) days of Landlord's written notice to Tenant per diem Base Monthly Rent for each day of such Tenant Delay.

(h) Paragraph 9(b) of the Work Letter is deleted in its entirety and replaced with the following:

Commencement Date . The term " Commencement Date " for a Building shall mean the latest of all the following for each such Building: (i) all of the Base Building and Tenant Improvements for the Building to be constructed by Landlord have been Substantially Completed, (ii) a certificate of occupancy and/or a conditional use permit (not subject to restrictions which would materially limit Tenant's use and operation of the Building) or other such document has been issued for the Building by the applicable governing authority, if required, (iii) the Building has been delivered to Tenant as evidenced b deliver of the keys to Tenant to allow Tenant to begin its installation of its fixtures, equipment, and electrical connections, (iv) in the case of Office B, the parking structure has been completed, and (v) the Anticipated Commencement Date has occurred for such Building. For purposes of the Work Letter and the Lease, the term " Effective Completion Date " for a Building shall mean the date that (i) through (iv) have occurred for such Building.

Landlord shall, by the applicable Commencement Date for either Office A or Office B, provide access to Office A or Office B to allow Tenant to install its fixtures and equipment and prepare the Building for Tenant's use and occupancy, or for any other purposes permitted by Landlord provided that all provisions of the Lease are applicable on such date.

Lease - Fourth Amendment

(i) Paragraph 9(c) is deleted in its entirety and replaced with the following:

The requirement, if any, for securing a Certificate of Occupancy for a Base Building or Tenant Improvements may be satisfied by securing a temporary or conditional certificate of occupancy so long as (i) the condition of the Base Building for the Tenant Improvements, in the absence of those items of construction that the General Contractor must complete as a condition to the issuance of a final, unconditional certificate of occupancy therefor, is reasonably adequate for the conduct of Tenant's business therein and (ii) the ongoing construction activity that shall be necessary in order for issuance of a final, unconditional certificate of occupancy therefor will not materially, adversely affect the conduct of Tenant's business therein. Nothing set forth in this Paragraph shall relieve Landlord of the obligation to obtain a certificate of occupancy within a reasonable time following the Substantial Completion of the Base Building or the Tenant Improvements. Notwithstanding the foregoing, Landlord and Tenant acknowledge that Tenant has planned to complete its installation of fixtures, equipment and electrical after the Commencement Dates for Office A and Office B.

(j) Landlord and Tenant agree that the Base Building Plans as described on Schedule 1 attached hereto shall be considered for all purposes as the "Base Building Plans" under the Work Letter.

(k) Landlord and Tenant agree that the Tenant Improvement Plans as described on Schedule 2 attached hereto shall be considered on the date hereof as the "Tenant Improvement Plans" under the Work Letter.

5. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

Lease - Fourth Amendment

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ Bruce C. Peterson

Name: Bruce C. Petersen

Title: Executive Managing Director

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Brian L. Swartz

Name: Brian L. Swartz

Title: Vice President & Assistant Treasurer

3/9/11

By: /s/ Joseph C. D'Amico

Name: Joseph C. D'Amico

Title: Chairman, VP & Assistant Secretary

3/9/11

Lease - Fourth Amendment

EXHIBIT "M"

RENT COMMENCEMENT DATE CERTIFICATE

This Rent Commencement Date Certificate is executed to be effective as of ________________, 20___, by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord") and THE UNIVERSTIY OF PHOENIX, INC., an Arizona corporation ("Tenant") with respect to that certain Fountainhead Corporate Park Lease dated June 29, 2009, as amended by that certain First Amendment to Lease dated August 11, 2009, that certain Second Amendment to Lease dated November 2, 2009, that certain Third Amendment to Lease dated February 19, 2010, and that certain Fourth Amendment to Lease dated February ___, 2011 (as so amended, the "Lease").

Landlord and Tenant hereby certify as follows:

1. The Lease represents the entire agreement between Landlord and Tenant as to the Premises.

2. The Commencement Date for Office A is _____________ and the Commencement Date for Office B is ______________________. The Term commenced or shall commence and rental payments commenced or shall commence for both Office A and Office B on such dates, respectively. The expiration date for the Lease is _________________.

3. The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided above.

4. Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect to the Premises except as follows: ______________________________.

5. No Rent has been paid more than thirty (30) days in advance of the date on which it became due except as expressly required under the terms of the Lease and no security has been deposited with Landlord except as provided in the Lease.

6. To the best of the undersigned's knowledge and belief, as of the date of this certificate, there are no existing defenses or offsets that Tenant has, which preclude Landlord's enforcement of the Lease, except as provided in Exhibit 1.

7. All monthly installments of Base Monthly Rent have been paid through _____________________.

8. The initial monthly installment of Base Monthly Rent is $___________.

The undersigned acknowledge that this Rent Commencement Date Certificate may be delivered to Landlord's mortgagee, prospective mortgagee, or prospective purchaser, or their successors or assigns, and further acknowledge and recognize that, if that delivery occurs, that mortgagee, prospective mortgagee, or prospective purchaser, or their successors or assigns, will be relying upon the statements contained in this Rent Commencement Date Certificate in making the loan or acquiring the Premises, and in accepting an assignment of the Lease as collateral security, and that receipt by it of this Rent Commencement Date Certificate is a condition of making the loan or acquisition of the Premises.

Lease - Fourth Amendment

IN WITNESS WHEREOF , Landlord and Tenant have each executed this Rent Commencement Date Certificate on the dates first written above.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: _____________________________

Name: ___________________________

Title: ____________________________

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: _____________________________

Name: ___________________________

Title: ____________________________

Lease - Fourth Amendment

SCHEDULE 1

BASE BUILDING PLANS

[Insert sheet list]

Lease - Fourth Amendment

SCHEDULE 2

TENANT IMPROVEMENT PLANS

[Insert sheet list]

Lease - Fourth Amendment

Exhibit 10.32

AGREEMENT

This Agreement (the " Agreement ") is made this 29th day of July, 2011 by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership (" Landlord ") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corpo rati on (" Tenant ").

RECITALS

A. Landlord and Tenant entered into that certain Fountainhead Office Park Lease dated June 29, 2009, as amended by that certain First Amendment to Lease dated August 11, 2009, that certain Second Amendment to Lease dated November 2, 2009, that certain Third Amendment to Lease dated February 19, 2010, and that certain Fourth Amendment to Lease dated March 11, 2011 (as so amended, the " Lease ") pursuant to which Tenant leased from Landlord approximately 439,070 rentable square feet (the " Premises ") located at 1625 Fountainhead Parkway and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (the " Buildings "). Capitalized terms used but not otherwise defined herein shall have the meaning for such term as is set forth in the Lease.

B. Landlord and SUNDT CONSTRUCTION, INC., an Arizona corporation (" General Contractor ") are parties to a construction contract dated April 7, 2010 with respect to construction of the Buildings and certain tenant improvements all as more particularly described therein (as amended, the " Construction Contract ").

C. Whereas certain tenant improvement materials, as more particularly inventoried on Exhibit A hereto (the "Materials"), have been procured by General Contractor in connection with, and pursuant to the Construction Contract but have not, at the direction of Tenant, been incorporated into the Tenant Improvements as of the date hereof. In lieu of incorporating the Materials into Tenant improvements which have been delayed at the request and direction of Tenant, Tenant has opted to store the ma t erials within a limited access storage area in one of the Buildings pending later usage in the build out of the Premises.

AGREEMENT

1. Materials . Tenant acknowledges that all items prov i ded on the inventory list attached as Exhibit A , have been delivered to the limited access storage area within the Premises located on the 9 ^th Floor of the Building designated 1625 Fountainhead Parkway. The Materials are currently intended by Tenant for incorporation into the currently unimproved floors of the Premises.

2. No Offset or Credit in Event of Loss or Failure to Utilize . Tenant acknow l edges (i) that the Materials have been procured in connection with the build-out of Tenant improvements under the Construction Contract, the Work Letter , and the Lease and (ii) that the costs of the Materials ar e to be included in the TI Costs, irrespective of whether the Materials are used in ultimate build out of the Premises. Accordingly, Tenant is not

13381334.4

entitled to receive any offset or credit under the Construction Contract, Work Letter, or Lease with respect to the Materials.

3. Risk of Loss . Except to the extent of the gross negligence or willful misconduct of Landlord or General Contractor or any of their respective representatives, agents, employees, contractors, subcontractors, guests, licenses or invitees (" Related Parties "), beg i nning effective Sep t ember 1, 2011 the risk of loss or damage to (i) the Materials, and to (ii)third parties relating to the storage of the Materials shall be borne by Tenant.

4. Indemnity . Except to the extent of the gross negligence or willful misconduct of Landlord or General Contractor or any of their Re l ated Parties, Tenant agrees to indemnify and hold Landlord and Genera l Contractor harm l ess from and against each and every claim, l oss, cost, damage and expe n se, including reasonable attorneys' fees, arising out of or in connection with any accident, cla i m, injury, or damage related to storage of the Materials within the Premises occurring on or after September l, 2011.

5. Succ essors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6. Fees and Costs . If any suit, action, arbitration or other proceeding, including, without limitation, an appellate proceeding, is instituted in connection with any controversy, dispute, default or breach arising out of this Agreement, the prevailing or non-defau l ting party shal l be entit l ed to recover from the losing or defaulting party al l reasonable fees, costs and expenses (including the reasonable fees and expenses of attorneys, paralegals and witnesses) incurred in connection with the prosecution or defense of such proceeding, whether or not the proceeding is prosecuted to a final judgment or determination; provided , however , if there is no c l ear prevailing party, such fees, costs and expenses shall be borne as determined by the applicable fact finder .

7. Counterparts . This Agreement may be signed in any numbe r of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

8. Choice of Law . This Agreement shall be construed in accordance with the laws of the State of Arizona.

13381334.4

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ James K. Hardin.

Name: James K. Hardin

Title: Assistant General Counsel,

USAA Real Estate Company, a Delaware corporation

its general partner

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Colette Temmink

Name: Colette Temmink

Title: VP, Real Estate & Facilities

13381334.4

EXHIBIT "A"

MATERIALS

[SEE ATTACHED]

13381334.4

Exhibit 10.33

FIFTH AMENDMENT TO LEASE

This FIFTH AMENDMENT TO LEASE (this "Amendmen t" ) is made this 3rd day of August, 2011 (the " Effective Date"), by and between US REAL ESTATE LIMITED PARTNERSHIP, a Texas limited partnership ( " La nd l o rd") and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Fountainhead Office Park Lease dated June 29, 2009, as amended by that certain First Amendment to Lease da t ed August 11 , 2009, that certain Second Amendment to Lease dated November 2, 2009, that certain Third Amendment to Lease dated February 19, 2010, and that certain Fourth Amendment to Lease, dated March 11, 2011 (as so amended , the "Lease") pursuant to wh i ch Tenant leased from Landlord approximately 439 , 070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway 85282 ("Office A") and 1601 Fountainhead Parkway, Tempe , Arizona 85282 ( " Offi c e 8"; and collectively , with Office A, the "Buildings").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments .

(a) Notwithstanding anything to the contrary contained in th e Lease ! Landlord and Tenant acknowledge and agree that Tenant shall be ent i tled to receive a credit against Base Monthly Rent payable by Tenant to Landlord under the Lease in the amount of One Million and No/100 Dollars ($1,000 , 000.00) ("Rent Credit"), which Rent Credit shall be applied against Base Monthly Rent payable by Tenant to Landlord under the Lease with respect to Building A for the two (2) months immediately following the da t e as o f wh i ch: (a) Tenant ' s P resident and certain senior executives physically occupy Building A for the purpose of conducting Tenant's business in Bu i lding A it being intended by Tenant that Building A shall be treated by Tenant as Tenant's headquarters as of the Effective Commencement Date for Building A; and (b) a public announcement is made b y Tenant in connection with the matters identified in Section 2(a) abo v e .

(b) Tenant's addresses for notice purposes under the Lease are hereby deleted in their entirety and replaced with the following:




If to Tenant:		The University of Phoenix, Inc.
		c/o Apollo Group, Inc.
		4025 South Riverpoint Parkway Phoenix, Arizona 85040
		Mailstop: CF-K205
		Attn: Colette Temmink, Vice President, Apollo Real Estate & Facilities

With Copies to:		Apollo Group, Inc.
		c/o Apollo Legal Department
		4025 South Riverpoint Parkway
		Phoenix, Arizona 85040
		Mailstop: CF-K612
		Attn: Corporate Counsel, Real Estate

3. Confidentiality . Landlord hereby acknowledges and agrees that the terms and conditions of the Lease, as modified by this Amendment, are confidential and may not be disclosed by Landlord to any third parties (except for Landlord's attorneys, tax advisors, financial consultants or as may be required by Applicable Laws or as may be necessary to enforce the terms of the Lease, as amended hereby) without the prior written consent of Tenant, which consent may be granted or withheld in Tenant's sole discretion; provided , that , Landlord shall have the right to disclose the terms and cond i tions the Lease, as modified by this Amendment , to prospective purchasers of all or any portion of the Project , including either or both of Building A or Building B (each, a "Prospective Purchase r") so long as prior to the date as of which Landlord discloses the terms and conditions of this Lease, as modified by this Amendment, to any Prospective Purchaser, such Prospective Purchaser enters into a non-disclosure agreement in favor of Tenant in form and substance satisfactory to Tenant, in its sole and absolute discretion , pursuant to the terms of which such Prospective Purchaser agrees to keep the terms and conditions of the Lease, as modified by this Amendment, confidential.

4. Brokerage . Landlo r d and Tenant each represent and warrant to the other that neither has dealt with any real estate broker or agent in connection with this Amendment or its nego t iation. Landlord and Tenant each agree to indemnify , defend and hold the other harmless for , from and against any cost, expense or liability (including attorneys' fees) for any compensation, commission or fees claimed by any real estate broker or agent in connection with this Amendment or its negotiation as a result of the action of the indemnifying party .

5. Fees and Costs . If any suit, action , arbit r ation or o t her proceed i ng, including, without limitation, an appellate proceeding, is instituted in connection with any contro v ersy , d i spute , default or breach arising out of this Amendment, the prevailing or non-defaulting party shall be entitled to recover from the losing or defaulting party all reasonable fees, costs and expenses (including the reasonable fees and expenses of attorneys, paralegals and witnesses) incurred in connect i on with the prosecution or defense of such proceeding, whether or not the proceeding is prosecuted to a final judgment or determination; provided, however , if there is no clear prevailing party , s u ch fees , costs and expenses shall be borne as determined by the applicable fact finder .

6. Successors and Assigns . This Amendment shall be b i nding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

7. Ratification . Landlord and Tenant each hereby reaffirm its rights and obligations under the Lease as modified by this Amendment. In the event of a conflict or ambiguity between the Lease and this Amendment, the terms and provisions of this Amendment shall control.

8. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

US REAL ESTATE LIMITED,

PARTNERSHIP, a Texas limited

partnership

By: /s/ Leonard J. O'Donnell

Name: Leonard J. O'Donnell

Title: President

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Colette Temmink

Name: Colette Temmink

Title: VP. Real Estate & Facilities

Exhibit 10.34

SIXTH AMENDMENT TO LEASE

This SIXTH AMENDMENT TO LEASE (this "Amendment") is made this 22nd day of December, 2011 (the "Effective Date"), by and between KBSII FOUNTAINHEAD, LLC aware limited liability company ("Landlord"), and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Fountainhead Office Park Lease dated June 29, 2009, as amended by that certain First Amendment to Lease dated August 11, 2009, that certain Second Amendment to Lease dated November 2, 2009, that certain Third Amendment to Lease dated February 19, 2010, that certain Fourth Amendment to Lease, dated March 11, 2011, and that certain Fifth Amendment to Lease dated August 3, 2011 (as so amended, the "Lease") pursuant to which Tenant leased from Landlord approximately 439,070 rentable square feet (the "Premises") located at 1625 Fountainhead Parkway 85282 ("Office A") and 1601 Fountainhead Parkway, Tempe, Arizona 85282 ("Office B"; and collectively, with Office A, the "Buildings").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments . Landlord acknowledges and agrees that, notwithstanding anything to the contrary contained in the Lease, Tenant shall have the right to improve and utilize a portion of the first floor of Office A as a cafeteria (the "Café") and a portion of the first floor of Office B as a health club (the "Health Club"), the general plans for which are attached hereto and incorporated herein by this reference as Exhibit "A" and Exhibit "B" respectively, and that, in accordance with the terms of Section R-13(b)(ii) of Exhibit "K" to the Lease, Tenant shall have the right to engage third party independent contractors to operate the Café and/or the Health Club.

3. Brokerage . Landlord and Tenant each represent and warrant to the other that neither has dealt with any real estate broker or agent in connection with this Amendment or its negotiation. Landlord and Tenant each agree to indemnify, defend and hold the other harmless for, from and against any cost, expense or liability (including attorneys' fees) for any compensation, commission or fees claimed by any real estate broker or agent in connection with this Amendment or its negotiation as a result of the action of the indemnifying party.

4. Fees and Costs . If any suit, action, arbitration or other proceeding, including, without limitation, an appellate proceeding, is instituted in connection with any controversy, dispute, default or breach arising out of this Amendment, the prevailing or non-defaulting party shall be entitled to recover from the losing or defaulting party all reasonable fees, costs and expenses (including the reasonable fees and expenses of attorneys, paralegals and witnesses) incurred in connection with the prosecution or defense of such proceeding, whether or not the proceeding is prosecuted to a final judgment or determination; provided , however , if there is no clear prevailing party, such fees, costs and expenses shall be borne as determined by the applicable fact finder.

5. Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6. Ratification . Landlord and Tenant each hereby reaffirm its rights and obligations under the Lease as modified by this Amendment. In the event of a conflict or ambiguity between the Lease and this Amendment, the terms and provisions of this Amendment shall control.

7. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

KBSII FOUNTAINHEAD, LLC, a

Delaware limited liability company


By:	KBS Capital Advisors, LLC, a

Delaware limited liability company,

its authorized agent

By: /s/ Brent Carroll

Name: Brent Carroll

Its: Senior Vice President

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Colette Temmink

Name: Colette Temmink

Title: VP. Real Estate & Facilities

Exhibit "A"

Café Plans

[see attached]

Exhibit "B"

Health Club Plans

[see attached]

Exhibit 10.35

SEVENTH AMENDMENT TO LEASE

This SEVENTH AMENDMENT TO LEASE (this "Amendment") is made effective as of June 1, 2012 (the "Effective Date"), by and between KBSII FOUNTAINHEAD, LLC, a Delaware limited liability company ("Landlord"), and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation ("Tenant").

RECITALS

A. Landlord and Tenant are parties to that certain Fountainhead Office Park Lease, dated June 29, 2009, as amended by that certain First Amendment to Lease, dated August 11, 2009, that certain Second Amendment to Lease, dated November 2, 2009, that certain Third Amendment to Lease, dated February 19, 2010, that certain Fourth Amendment to Lease, dated March 11, 2011, that certain Fifth Amendment to Lease, dated August 3, 2011 (the "Fifth Amendment"), and that certain Sixth Amendment to Lease, dated December 22, 2011 (as so amended, the "Lease") pursuant to which Landlord leases to Tenant and Tenant leases from Landlord certain real property and improvements thereon located at 1625 Fountainhead Parkway, Tempe, Arizona 85282 and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (collectively, the "Premises").

B. The parties now wish to amend the Lease as of the Effective Date subject to and on the terms and conditions set forth below.

AMENDMENT

1. Defined Terms . Terms in this Amendment shall have the same meaning as such terms have in the Lease and Work Letter unless otherwise noted in this Amendment.

2. Lease Amendments .

(a) Section l(f) of the Lease is hereby deleted in its entirety and replaced with the following:


"(f)	PREMISES AREA: Four Hundred Forty-Five Thousand Nine Hundred Fifty-Seven (445,957) rentable square feet."

(b) Section l(j) of the Lease is hereby deleted in its entirety.


"(k)	BASE MONTHLY RENT



Months	Base Monthly Rent *

6/1/11-8/31/11	$323,212.62
9/1/11-8/31/12	$855,865.81



9/1/12-8/31/13	$877,262.46
9/1/13-8/31/14	$899,194.02
9/1/14-8/31/15	$921,673.87
9/1/15-8/31/16	$944,715.71
9/1/16-8/31/17	$968,333.61
9/1/17-8/31/18	$992,541.95
9/1/18-8/31/19	$1,017,355.50
9/1/19-8/31/20	$1,042,789.38
9/1/20-8/31/21	$1,068,859.12
9/1/21-8/31/22	$1,095,580.60
9/1/22-8/31/23	$1,122,970.11

*plus applicable taxes

(d) Section l(r) of the Lease is hereby deleted in its entirety.

(e) Landlord and Tenant acknowledge and agree that: (i) the Premises has been re-measured in accordance with the terms of Section R-1 of Exhibit "K" to the Lease and the parties accept and confirm the Premises Area as set forth in Paragraph 2(a) above; (ii) based on the calculation of the rentable square footage of the Premises Area in accordance with the terms of the Lease, in accordance with the terms of Section 2(b) of the Work Letter, Tenant is entitled to an additional amount of Two Hundred Forty-One Thousand Forty-Five and No/100 Dollars ($241,045.00) as TI Improvement Allowance (the "Remaining Tenant Allowance" ); and (iii) Tenant shall be entitled to apply the Remaining Tenant Allowance against either: (1) the cost of any improvements made by Tenant to the Premises; or (2) Base Monthly Rent payable by Tenant to Landlord under the Lease.

(f) Landlord and Tenant acknowledge and agree that: (i) Tenant has satisfied the terms and conditions of Section 2(a) of the Fifth Amendment in their entirety; (ii) as a result of the adjustment to the rentable square footage of the Premises Area, Tenant owes Landlord back Base Monthly Rent in the amount of $136,936.36 for the months of June 1, 2011 through May 1, 2012 (the "Back Rent" ); (iii) the Rent Credit shall be reduced by the Back Rent and such reduced amount shall be referred to herein as the Reduced Rent Credit; (iv) Tenant shall be entitled to apply the Reduced Rent Credit against Base Monthly Rent payable by Tenant to Landlord under the Lease for June 2012 and July 2012; and (v) following the date as of which Tenant shall have applied the Reduced Rent Credit against Base Monthly Rent payable by Tenant to Landlord under the Lease in accordance with the terms of Paragraph 2(f)(v) above, Landlord shall have satisfied its obligation under Paragraph 2(a) of the Fifth Amendment to provide Tenant with a One Million Dollar ($1,000,000.00) rent credit.

(g) Landlord and Tenant acknowledge and agree that, notwithstanding anything to the contrary contained in the Lease, including, without limitation, the provisions of Section 13 of the Lease, the respective obligations of Landlord and Tenant relating to the matters specifically identified on Exhibit "A" attached hereto and incorporated herein by this reference shall be as set forth on such Exhibit "A ".

Notwithstanding the foregoing, if Tenant fails to maintain and repair any element of the Premises which is denoted as "Tenant Responsibility" on Exhibit "A" attached hereto (other than Janitorial Services which shall remain Tenant's obligation in all events) in a first class manner as reasonably determined by Landlord, then, except as otherwise provided below, if Tenant shall fail to correct such deficient repair or maintenance within ten (10) business days following receipt of written demand from Landlord specifying the deficient repair or maintenance (" Landlord's Notice "), Landlord may enter upon the Premises and make such repairs and/or maintenance, and may thereupon assume responsibility for the continued maintenance and repair of such Tenant Responsibility item(s) for the duration of the Lease, with the reasonable costs of such maintenance and repairs performed by Landlord to be included in Expenses in accordance with the Lease. Notwithstanding the foregoing, if the nature of such deficient repair or maintenance is such that the correction takes longer than ten (10) business days following receipt of Landlord's Notice, Landlord shall not have the rights set forth above if Tenant is using commercially reasonable and diligent efforts to correct such deficient repair or maintenance and actually corrects such deficient repair or maintenance within a reasonable time following receipt of Landlord's Notice.

4. Fees and Costs. If any suit, action, arbitration or other proceeding, including, without limitation, an appellate proceeding, is instituted in connection with any controversy, dispute, default or breach arising out of this Amendment, the prevailing or non-defaulting party shall be entitled to recover from the losing or defaulting party all reasonable fees, costs and expenses (including the reasonable fees and expenses of attorneys, paralegals and witnesses) incurred in connection with the prosecution or defense of such proceeding, whether or not the proceeding is prosecuted to a final judgment or determination; provided , however , if there is no clear prevailing party, such fees, costs and expenses shall be borne as determined by the applicable fact finder.

5. Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

7. Counterparts . This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Landlord and Tenant have each executed this Amendment on the dates written below their names.

LANDLORD:

KBSII FOUNTAINHEAD, LLC, a

Delaware limited liability company


By:	KBS Capital Advisors, LLC, a

Delaware limited liability company,

its authorized agent

By: /s/ Brent Carroll

Name: Brent Carroll 8/1/12

Its: Senior Vice President

TENANT:

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Colette Temmink

Name: Colette Temmink

Title: VP. Real Estate & Facilities

7/16/12

Exhibit "A"

[see attached]

Exhibit 10.36

LANDLORD CONSENT TO SUBLEASE

This LANDLORD CONSENT TO SUBLEASE (this "Consent") is made and entered into as of November 20, 2013, by and among KBSII FOUNTAINHEAD, LLC, a Delaware limited liability company ("Landlord"), and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation ("Tenant"), with reference to the facts set forth in the Recitals below.

RECITALS :

A. Landlord and Tenant are parties to that certain Fountainhead Corporate Park Lease dated June 29, 2009 (the "Original Lease"), by and between Landlord and Tenant, as amended by that certain First Amendment to Lease dated August 11, 2009, that certain Second Amendment to Lease dated November 2, 2009, that certain Third Amendment to Lease dated February 19, 2010, that certain Fourth Amendment to Lease dated March 11, 2011, that certain Fifth Amendment to Lease dated August 3, 2011, that certain Sixth Amendment to Lease dated December 22, 2011, and by that certain Seventh Amendment to Lease dated June 1, 2012 (collectively, the "Prior Amendments"). The Original Lease, as amended by the Prior Amendments, is hereinafter referred to as the "Lease" . Pursuant to the Lease, Tenant leases from Landlord parking spaces on the fifth (5 ^th ) and sixth (6 ^th ) floors of the parking garage located at 1625 Fountainhead Parkway, Tempe, Arizona (the "Parking Spaces").

B. Tenant desires to sublease to Tempe Fountainhead Corporate, LLC, a Delaware limited liability company ("Subtenant"), not more one hundred fifty (150) of Tenant's parking spaces (the "Sublease Spaces"), pursuant to the provisions of that certain Temporary Parking License Agreement between Tenant and Subtenant dated as of November 18, 2013 (the "Sublease"), a copy of which is attached hereto as Exhibit "A" .

C. Tenant desires to obtain Landlord's consent to the Sublease, and Landlord desires to grant consent to the Sublease, under the terms and conditions set forth herein.

D. Capitalized terms not defined herein have the meanings given to such terms in the Lease.

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements contained in this Consent and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord, Tenant and Subtenant hereby agree as follows:

AGREEMENT :

1. Consent . Landlord hereby consents to the Sublease by Tenant to Subtenant of the Sublease Spaces on the following terms and conditions (which terms and conditions are hereby approved by Landlord and Tenant by virtue of their execution of this Consent):

A. Landlord's consent is not intended, and shall not be construed (i) to modify or otherwise affect any of the provisions of the Lease, or to release Tenant from any of its obligations and duties under the Lease, (ii) as a waiver of any of Landlord's rights under the

Lease, (iii) as an authorization or a consent by Landlord to any assignment of the interest of Tenant in the Lease or to the further subleasing of the Premises or the Sublease Spaces, or (iv) as binding or obligating Landlord in any manner whatsoever with respect to any of the covenants, undertakings, representations, warranties or agreements contained in the Sublease between Tenant and Subtenant, notwithstanding anything to the contrary contained therein.

B. It is a condition to Landlord's consent to the Sublease that: (i) Subtenant's use of the Sublease Spaces and the Sublease will be subject and subordinate to the Lease and to all mortgages which are secured, in whole or in part, by the Premises; (ii) in the event Tenant is in default under the Lease beyond any applicable notice and cure periods set forth in the Lease, Landlord may enforce the provisions of the Sublease directly against Subtenant; (iii) in the event of termination of the Lease for any reason whatsoever, including, without limitation, a voluntary surrender by Tenant, or any default by Tenant, or in the event of any re-entry or repossession of the Premises by Landlord, Landlord may, at its option, either (a) terminate the Sublease and Subtenant's use of the Sublease Spaces, or (b) take over all of the right, title and interest of Tenant, as sublessor, under the Sublease, in which case the Subtenant will attorn to Landlord, but that nevertheless Landlord will not (1) be liable for any previous act or omission of Tenant under the Sublease, (2) be subject to any defense or offset previously accrued in favor of the Subtenant against Tenant, or (3) be bound by any previous prepayment by Subtenant of more than one month's rent, (iv) Subtenant shall name Landlord as an additional insured on all policies of commercial general liability insurance maintained by Subtenant with respect to the Sublease Spaces; and (v) the Sublease shall not be modified without Landlord's prior written consent and any modification without such consent shall be null and void. Tenant acknowledges and agrees that the effectiveness of this Consent is expressly conditioned upon Tenant's payment of the nonrefundable fee and attorney's fees to Landlord.

C. Subtenant's address for notices with respect to the Sublease Spaces is as follows:

Tempe Fountainhead Corporate, LLC

c/o CBRE, Inc.

1620 W. Fountainhead Parkway, Suite 210

Tempe, AZ 85282

D. Tenant and Subtenant expressly acknowledge that the forwarding of this Consent to Tenant and Subtenant by Landlord is not an express or implied approval of the Sublease. Landlord, in its sole discretion, retains the right to disapprove of the Sublease until such time as this Consent has been signed by all of the parties hereto.

2. Condition of Sublease Spaces . Tenant and Subtenant further acknowledge that except as expressly provided in the Lease and this Consent, neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Sublease Spaces or with respect to the functionality thereof or the suitability of any of the foregoing for the conduct of Tenant's and Subtenant's business and that all representations and warranties of Landlord, if any, are as set forth in the Lease and this Consent.

3. Reaffirmation of Lease . Tenant represents and warrants that to its actual knowledge (i) the Lease is in full force and effect; (ii) the Lease has not been assigned, encumbered, modified, extended or supplemented except as otherwise set forth herein; (iii) Tenant knows of no defense or counterclaim to the enforcement of the Lease; (iv) Tenant is not entitled to any reduction, offset or abatement of the rent payable under the Lease; and (v) Landlord is not in default of any of its obligations or covenants, and has not breached any of its representations or warranties under the Lease.

4. Notices . All notices provided by Tenant and Subtenant to Landlord pursuant to the Lease shall be sent to the following addresses:

KBSII Fountainhead, LLC

c/o CB Richard Ellis

313 Camelback Road, Suite 325

Phoenix, Arizona 85016

Attn: Lease Administrator

5. Brokers . Tenant and Subtenant represent and warrant to Landlord that they are not aware of any brokers or finders, representing any of the parties, who may claim a fee or commission in connection with the consummation of the transactions contemplated by this Sublease. If any claims for brokers' or finders' fees in connection with the transactions contemplated by this Sublease arise, then Tenant and Subtenant, jointly and severally, agree to indemnify, protect, hold harmless and defend Landlord (with counsel satisfactory to Landlord) from and against any such claims if they shall be based upon any statement, representation or agreement made by Tenant or Subtenant.

6. Authority . Each signatory of this Consent on behalf of Tenant and Subtenant represents hereby that he or she has the authority to execute and deliver the same on behalf of the party hereto for which such signatory is acting.

7. No Other Modification . Landlord and Tenant agree that except as otherwise specifically modified in this Consent, the Lease has not been modified, supplemented, amended, or otherwise changed in any way and the Lease remains in full force and effect between the parties hereto as modified by this Consent. To the extent of any inconsistency between the terms and conditions of the Lease and the terms and conditions of this Consent, the terms and conditions of this Consent shall apply and govern the parties. This Consent may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. The parties hereto agree that the signature of any party transmitted by facsimile or email shall have binding effect as though such signature were delivered as an original.

[NO FURTHER TEXT ON PAGE; SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have executed this Consent as of the date first set forth above.



LANDLORD: KBSII FOUNTAINHEAD, LLC. a Delaware limited liability company

	By:	KBS Capital Advisors LLC, a Delaware limited liability company, its authorized agent By: /s/ Brent C. Carroll Name: Brent C. Carroll Title: SVP



TENANT:		SUBTENANT:

THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation By: /s/ Beth Gambaro Name: Beth Gambaro Title: Senior Director of Facilities		TEMPE FOUNTAINHEAD CORPORATE, LLC, a Delaware limited liability company By: /s/ Authorized Signatory Name: Authorized Signatory Title: Investment Director, Asset Management

Exhibit 10.37

EIGHTH AMENDMENT TO LEASE

This Eighth Amendment to Lease (this '' Eighth Amendment ") is made and entered into by and between KBSII FOUNTAINHEAD LLC , a Delaware limited liability company (" Landlord "), as successor-in-interest to US Real Estate Limited partnership (" Original Landlord "), and THE UNIVERSITY OF PHOENIX, INC. , an Arizona corporation (" Tenant "), effective as of August 18, 2017 (the " Effective Date ").

WITNESSETH

WHEREAS, Landlord and Tenant are parties to that certain Fountainhead Corporate Park Lease dated June 29, 2009 originally entered by and between Original Landlord and Tenant (the " Original Lease "), as amended by (i) that certain First Amendment to Lease dated August 11, :2009 (the " First Amendment "), (ii) that certain Second Amendment to Lease dated November l, 2009 (the " Second Amendment "), (iii) that certain Third Amendment to Lease dated February 19, 2010 (the " Third Amendment "), (iv) that certain Fourth Amendment to Lease dated March 11, 2011 (the " Fourth Amendment "), (v) that certain Fifth Amendment to Lease dated August 3, 2011 (the " Fifth Amendment "), (vi) that certain Sixth Amendment to Lease dated December 22,, 2011 (the '' Sixth Amendment "), and (vii) that certain Seventh Amendment to Lease dated June I, 2012 (the '' Seventh Amendment; " the Original Lease, as so amended, being the " Lease "), pursuant to which Tenant is currently leasing from Landlord certain real property and improvements located at 1625 Fountainhead Parkway, Tempe, Arizona 85282 and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (collectively, the " Premises ");

WHEREAS, pursuant to that certain Consent, Recognition, Non-Disturbance and Attornment Agreement of Landlord dated September 11, 2014 (the " Original Concentrix Consent ") by and between Landlord, Tenant and Concentrix Corporation ('' Concentrix "), as amended by that certain First Amendment to Consent, Recognition, Non-Disturbance and Attornment Agreement of Landlord dated March 3, 2015 (the " First Amendment Concentrix Consent ") (such consent document, as amended, being the " Concentrix Consent "), Landlord consented to Tenant subleasing a portion cif the Premises to Concentrix;

WHEREAS, pursuant to the Original Concentrix Consent, Tenant posted a letter of credit dated September 15, 2014 issued by JP Morgan Chase Bank, N.A. (the " Letter of Credit ") to secure the performance of certain obligations under the Lease as more particularly set forth in the Concentrix Consent;

WHEREAS, pursuant to the First Amendment to Concentrix Consent, the Original Letter of Credit was amended by Amendment No. 1, dated January 28, 2015 (the " First Amendment to Letter of Credit "),

WHEREAS, the Original Letter of Credit, as amended by the First Amendment, was further amended by that certain Amendment No. 2, dated June 22, 2016 (the " Second Amendment to Letter of Credit "; and together with the Letter of Credit and the First Amendment to Letter of Credit collectively, the " Original Letter of Credit "),

WHEREAS, the Original Letter of Credit was subsequently replaced with a new letter of credit, dated January 20, 2017, issued by Bank of the West, a California banking corporation (" BOTW ") (the " Existing Letter of Credit ");

WHEREAS, in connection with Tenant's request for consent to that certain Sublease Agreement, dated August 18, 2017, by and between Tenant and BOTW relating to a portion of the Premises (the " BOTW Sublease "), Landlord and Tenant are entering into this amendment in order to modify the requirements relating to the Existing Letter of Credit as well as provide for Tenant 'to furnish a Surety Bond (as defined in Section 3 below) to further secure certain obligations to Landlord under the Lease as more particularly set forth in the Surety Bond;

WHEREAS, the BOTW Sublease is contingent upon Landlord, BOTW and Tenant executing a Consent, Recognition, Non-Disturbance and Attornment Agreement of Master Lessor with respect to the BOTW Sublease (the " BOTW Consent '') which is currently being negotiated;

WHEREAS, Landlord and Tenant desire to amend the Lease all as more particularly provided hereinbelow;

NOW, THEREFORE, pursuant to the foregoing, and in consideration of the mutual covenants and agreements contained in the Lease and herein, Landlord and Tenant hereby agree that the Lease is hereby modified and amended as set forth below:

1. Defined Terms . All capitalized terms used herein shall have the same meaning as defined in the Lease and Concentrix Consent, as applicable, unless otherwise defined in this Eighth Amendment.

2. New Letter of Credit .

(a) New Letter of Credit Amount . As of the Effective Date of this Eighth Amendment, the Existing Letter of Credit is currently in the amount of $10,300,000.00 (the " Existing Letter of Credit Amount "). The Existing Letter of Credit Amount is scheduled to reduce each year in accordance with a reduction schedule set forth in Paragraph 4 of the First Amendment Concentrix Consent. Tenant is requesting that Landlord consent to the BOTW Sublease, and in connection therewith, that Landlord enter into the BOTW Consent. As consideration for Landlord agreeing to consent to the BOTW Sublease and to enter into the BOTW Consent, Tenant hereby agrees to cause BOTW or, at Tenant's option, another bank acceptable to Landlord in Landlord's reasonable discretion (the " New Letter of Credit Issuer "), within ten (10) business days following the date the BOTW Consent is fully executed, to issue and deposit with Landlord a new letter of credit replacing the Existing Letter of Credit in form acceptable to Landlord in its reasonable discretion, providing at a minimum the following (the '' New Letter of Credit "): (i) it shall terminate no sooner than thirty (30) days following the actual expiration date of the term of the Lease, or, if it shall terminate earlier, it will automatically renew or be replaced annually unless Landlord (the beneficiary thereof) is notified in writing by the New Letter of Credit Issuer at least thirty (30) days prior to the expiry date that it will not be renewed or replaced; (ii) it shall be irrevocable; (iii) it shall be transferable to any successor to Landlord's interest under this Lease; and (iv) it shall be in the amount of the Existing Letter of Credit Amount (the " New Letter of Credit Amount "); provided that ff Tenant is not then in default under the terms of the Lease past applicable notice and cure periods set forth in the Lease, the New Letter of Credit Amount shall reduce based on the following reduction schedule (which reduction schedule shall be in lieu of the reduction schedule set forth in Paragraph 4 of the First Amendment Concentrix Consent, which such reduction schedule shall be of no further force or effect):



New Letter of Credit Adjustment Date		New Amount of New Letter of Credit
August 31, 2020		$10,299,264.00



August 31, 2021		$7,060,028.00
August 31, 2022		$10,299,264.00

Landlord shall, concurrently with the issuance and deposit of the New Letter of Credit with Landlord, return the Existing Letter of Credit to Tenant. In the event the New Letter of Credit is not delivered within the aforementioned ten (10) business day period, then, except with the reimbursement obligation set forth in the next sentence, this Eighth Amendment and Landlord's consent to the BOTW Sublease shall be deemed null and void and Landlord shall have been deemed to reasonably withheld its consent to the BOTW Sublease. Notwithstanding the foregoing to the contrary, if the Eighth Amendment is deemed null and void either due to the failure to timely deliver the New Letter of Credit and/or Surety Bond (as set forth below), then Tenant shall be qbligated to reimburse Landlord, within thirty (30) days after receipt of a written invoice, for all of its actual out.of-pocket costs incurred in connection with this Eighth Amendment, the BOTW Consent, and the other related ancillary agreements contemplated therein. Such obligation to reimburse Landlord shall survive the expiration or cancellation of this Eighth Amendment.

(b) New Letter of Credit Period . Notwithstanding anything to the contrary in Paragraph 2.3 of the Original Concentrix Consent, Tenant shall be obligated to maintain the New Letter of Credit deposited with Landlord through the expiration of the term of the Lease (the " New Letter of Credit Period ") and Tenant shall be required to maintain the New Letter of Credit deposited with Landlord irrespective if Tenant's sublease with Concentrix is terminated or if Concentrix does not elect to enter into the Direct Lease Agreement with Landlord as contemplated in the Concentrix Consent.

(c) Purpose of New Letter of Credit . Tenant hereby acknowledges that the Existing Letter of Credit was originally delivered to Landlord as security for the limited purpose of securing the Rent Differential (as defined in Paragraph 2.2 of the Original Concentrix Consent). In consideration for Landlord agreeing to consent to the BOTW Sublease and to enter into the BOTW Consent, Tenant hereby acknowledges and agrees that the New Letter of Credit shall now be held by Landlord as security for all of Tenant's obligations under·the Lease, including, without limitation, for the payment of the Rent Differential as contemplated in the Concentrix Consent, any rent :differential which may occur if the Lease is terminated and as a result BOTW directly leases a portion of the Premises from Landlord as contemplated in the BOTW Consent, or for any other actual, reasonable damages arising from Tenant's default under the Lease past applicable notice and cure periods set forth in the Lease.

(d) New Letter of Credit Draw Triggering Events . Notwithstanding anything to the contrary contained in Paragraph 2.6 of the Original Concentrix Consent, Tenant hereby agrees that Landlord shall be permitted to draw upon the New Letter of Credit in the event any of the following events ("New Letter of Credit Draw Triggering Events") occur: (i) Tenant defaults past applicable notice and cure periods set forth in the Lease and Landlord sustains any damages or incurs any actual, reasonable· costs as a result thereof; (ii) there is any unpaid Rent Differential arising from any Direct Lease Agreement with Concentrix; or (iii) there is any rent differential as a result of the Lease being terminated and BOTW directly leasing a portion of the Premises from Landlord as contemplated in the BOTW Consent.

(e) Application of New Letter of Credit Proceeds Upon New Letter of Credit Draw Triggering Events . Notwithstanding anything to the contrary in Paragraph 2.6 of the Original Concentrix Consent, in the event Landlord draws upon the New Letter of Credit in accordance with the terms of Paragraph 2(d) above, then Landlord shall be permitted to apply or retain all or any part of the proceeds of the New Letter of Credit: (i) for the payment of any rent or any other sum that Tenant is or was required to pay under the Lease; (ii) for the payment of any other actual, reasonable amount which Landlord may spend or become obligated to spend by reason of Tenant's default under the Lease past applicable notice and cure periods set forth in the Lease; or (iii) to compensate Landlord for any other actual,, reasonable damages which Landlord may suffer by reason of Tenant's default under the Lease past applicable notice and cure periods set forth in the Lease, including, without limitation, costs and reasonable attorneys' fees incurred by Landlord to recover possession of the Premises following a default by Tenant under the Lease past applicable notice and cure periods set forth in the Lease, any Rent Differential arising from any Direct Lease Agreement with Concentrix, or any rent differential resulting from Lease being terminated and BOTW directly leasing a portion of the Premises from Landlord as contemplated in the BOTW Consent.

(f) Other New Letter of Credit Draw Events .

(i) New Letter of Credit Renewal . Notwithstanding anything to the contrary contained in Paragraph 2.3 of the Original Concentrix Consent, in the event that Landlord is notified in writing by the New Letter of Credit Issuer that the New Letter of Credit will not be renewed or replaced as required by the terms of Section 2(a)(i) above, and Tenant has not, at least twenty (20) days prior to the expiration of the New Letter of Credit (the " New Letter of Credit Replacement Deadline "), provided a replacement Letter of Credit to Landlord, with such replacement Letter of Credit satisfying the requirements of Section 2(a) above (the " Replacement Letter of Credit"), then Landlord shall have the right, exercisable at any time after the New Letter of Credit Replacement Deadline and prior to the date on which Tenant provides a Replacement Letter of Credit to Landlord, to draw the full amount of the New Letter of Credit and retain such amount during the New Letter of Credit Period in accordance with the terms and conditions of Section 2(f)(iii) below. In the event Landlord draws upon the New Letter of Credit after such New Letter of Credit Replacement Deadline and thereafter Tenant provides a Replacement Letter of Credit to Landlord, then Landlord shall promptly return any remaining unapplied balance of any proceeds of the New Letter of Credit to Tenant. In addition, to the extent not already refunded to Tenant, at the expiration of the New Letter of Credit Period, Landlord shall promptly return any remaining unapplied balance of any proceeds of the New Letter of Credit to Tenant.

(ii) Insolvency of New Letter of Credit Issuer . Notwithstanding anything to the contrary contained in Paragraph 2.4 of the Origina1 Concentrix Consent, if at any time during the term of the Lease the New Letter of Credit Issuer is declared insolvent, or is placed into receivership by the Federal Deposit Insurance Corporation or any other governmental or quasi governmental institution, or if there is a material adverse change in the financial or business condition of the New Letter of Credit Issuer from the Effective Date as reasonably determined by Landlord, then following written notice from Landlord, Tenant shall have ten (10) business days to replace the New Letter of Credit with a Replacement Letter of Credit. If Tenant does not replace the New Letter of Credit in accordance with the preceding sentence, then Landlord shall have the right to draw upon the New Letter of Credit and retain such amount as security during the New Letter

of Credit Period in accordance with the terms and conditions of Section 2(f)(iii) below. If Tenant thereafter causes a Replacement Letter of Credit to be issued; then, upon receipt of such Replacement Letter of Credit, Landlord shall promptly return any remaining unapplied balance of any proceeds of the New Letter of Credit to Tenant.

(iii) New Letter of Credit Proceeds . In the event Landlord has drawn down on the New Letter of Credit in accordance with either Section 2(f)(i) or Section 2(f)(ii) above (such Letter of Credit proceeds being hereinafter referred to as the " L/C Proceeds ") or Tenant has paid to Landlord a cash Security Deposit 'in accordance with Section 2(g) below, then Landlord hereby agrees that such L/C Proceeds or Security Deposit shall be held in a separate account and shall not be commingled with Landlord's other funds. Promptly following Tenant's 'Mitten request, Landlord shall provide Tenant with the name and address of the applicable financial institution where the L/C Proceeds or Security Deposit are being held, the account number with respect thereto and such other information as is reasonably required in order to confirm that the L/C Proceeds or Security Deposit, as applicable, are in fact being held in a separate account. In such event, the L/C Proceeds or Security Deposit, as applicable, shall be held as security for Tenant's obligations hereunder and shall not be deemed part of Landlord 's bankruptcy estate in the event Landlord files (or has an involuntary petition filed against it) for bankruptcy relief. In the event Landlord is holding such L/C Proceeds and/or Security Deposit, such L/C Proceeds and/or Security Deposit shall be subject to the same annual reduction schedule as set forth in Section 2(a) above. Accordingly, upon each New Letter of Credit Adjustment Date, Landlord shall refund to Tenant any portion then being held in excess of the applicable New Amount of Letter of Credit as of.each New Letter of Credit Adjustment Date. Promptly following any bankruptcy filing made by Landlord or any involuntary bankruptcy petition filed against Landlord, Landlord shall provide written notice to Tenant of such bankruptcy filing. In the event Landlord is holding either the L/C Proceeds and/or Security Deposit, then Tenant may elect in writing on a month to month basis to have a portion of such L/C Proceeds and/or Security Deposit applied to any obligations of Tenant to Landlord hereunder as and when they would become due hereunder. Notwithstanding the foregoing, in no event shall Tenant be permitted to apply portions of the Security Deposit and/or L/C Proceeds at any time that would result in the balance of such Security Deposit and/or L/C Proceeds falling below the New Amount of New Letter of Credit amount for the next occurring New Letter of Credit Adjustment Date in accordance with the reduction schedule set forth in Section 2(a) above.

(g) Security Deposit . At any time during which the New Letter of Credit is required to be maintained hereunder, Tenant shall have the right to substitute a cash security deposit (the " Security Deposit "), which Security Deposit shall be paid to Landlord and held in accordance with the terms of Section 2(f)(iii) above. The amount of such Security Deposit, if applicable, shall be subject to the same reductions applicable to the New Letter of Credit as of each New Letter of Credit Adjustment Date.

(h) Expiration of New Letter of Credit Period . Upon expiration of the New Letter of Credit Period, Landlord shall promptly return the New Letter of Credit or Security Deposit, if applicable, or any remaining unapplied balance of any proceeds thereof, to Tenant.

3. Surety Bond . As further consideration for and as a condition precedent to Landlord agreeing to consent to the BOTW Sublease and to enter into the BOTW Consent, Tenant hereby agrees to deliver to Landlord, within ten (10) business days following the date the BOTW Consent is fully

executed, a surety bond issued by a surety carrier acceptable to Landlord in its reasonable discretion (the " Surety ") in substantially the form as attached hereto,as Exhibit A (the " Surety Bond "). In the event that the Surety Bond is not delivered within such ten (10) business day period, then, except for the Tenant's reimbursement obligation set forth in Paragraph 2(a) above, this Eighth Amendment and Landlord's consent to the BOTW Sublease shall be deemed null and void and Landlord shall have been deemed to reasonably have withheld its consent to the BOTW Sublease. In the event the :financial rating of the Surety .is downgraded to an A.M. Best rating below A VII at any time during the term of the Lease, then, within thirty (30) days following receipt by Tenant of Landlord's written request, Tenant shall replace the Surety Bond with a new surety bond in substantially the same form as the Surety Bond issued by a new surety carrier acceptable to Landlord in its reasonable discretion.

4. Guaranty . APOLLO EDUCATION GROUP, INC. , an Arizona corporation formerly known as Apollo Group, Inc. (the " Guarantor "), executed that certain Guaranty dated as of June 29, 2009, in favor of Landlord under the Lease (the " Guaranty "), for the benefit of Tenant. The effectiveness of this Eighth Amendment shall be subject to and conditioned upon Guarantor joining in the execution of this Eighth Amendment, and such execution shall evidence only: (i) the consent of Guarantor to the terms and conditions of this Eighth Amendment; (ii) the agreement of Guarantor that the Guaranty is and shall remain in full force and effect following the execution of this Eighth Amendment; and (iii) the liability of Guarantor under the Guaranty shall extend to and cover all of the obligations of Tenant under the Lease, as amended by this Eighth Amendment.

5. Brokers . Landlord and Tenant each hereby represents and warrants to the other that it has had no dea1ing:s with any broker or agent in connection with the negotiation or execution of this Eighth Amendment, and Landlord and Tenant each hereby agrees to indemnify and hold the other harmless from and against any and all-costs, expenses or liability for commissions or other compensations or charges claimed by any broker or agent claiming to have represented the indemnifying party with respect to this Eighth Amendment or the transactions evidenced hereby.

6. Miscellaneous . With the exception of those terms and conditions specifically modified and amended herein, the herein referenced Lease shall remain in full force and effect in accordance with all their respective terms and conditions. In the event of any conflict between the terms and provisions of this Eighth Amendment and the terms and provisions of the Lease, the terms and provisions of this Eighth Amendment shall supersede and control.

7. Counterparts/Facsimile Signatures . This Eighth Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one agreement. To facilitate execution of this Eighth Amendment, the parties may execute and exchange facsimile counterparts of the signature pages and facsimile counterparts shall serve as originals.

8. BOTW Consent . If the BOTW Consent is not fully executed by Landlord, BOTW and Tenant on or before the thirtieth (30th) day following the Effective Date, then., except for Tenant's reimbursement obligation set forth in Paragraph 2(a) , this Eighth Amendment shall automatically terminate and be of no further force or effect.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Eighth Amendment on the dates set forth in the respective signature blocks below, to be effective for all purposes, however, as of the Effective Date.

LANDLORD :

KBSII FOUNTAINHEAD, LLC,

a Delaware limited liability company


By:	KBS Capital Advisors, LLC,

a Delaware limited liability company,

as agent


By:	/s/ Tim Helgeson

Tim Helgeson

Senior Vice President


Date:	August 18, 2017

TENANT :

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Byron Jones

Name: Byron Jones

Title: CFO

Date: August 18, 2017

JOINDER

APOLLO EDUCATION GROUP, INC. , an Arizona corporation, acting in its capacity as Guarantor, join in the execution of this Eighth Amendment to Lease for the purposes specified in Paragraph 4 of this Eighth Amendment to Lease.

GUARANTOR :

APOLLO EDUCATION GROUP, INC., an

Arizona corporation

By: /s/ Gregory J. Iverson

Name: Gregory J. Iverson

Title: SVP, CFO

Date: August 18, 2017

EXHIBIT A

Form of Surety Bond

FINANCIAL GUARANTEE BOND



		BOND NO:
		Effective Date:

KNOW ALL BY THESE PRESENTS:

That UNIVERSITY OF PHOENIX, INC. , an Arizona corporation, with a usual place of business at c/o Apollo Education Group, Inc., 4025 South Riverpoint Parkway, Phoenix, Arizona, Mail Stop: CF-K205, Attn: Lease Administrator (hereinafter " Principal ") and [_______________], a _______________ corporation organized under the Laws of the State of [___________] and authorized to transact the business of Surety in the State of [________________] (hereinafter " Surety "), are held and firmly bound unto KBSII FOUNTAINHEAD LLC , a Delaware limited liability company, or its successors or assigns (hereinafter " Obligee " ) in the penal sum of Five Million Dollars ($5,000,000.00), lawful money of the United States of America, to be paid to the said Obligee, or their successors or assigns, for which payment well and truly to be made, we and each of us do hereby bind ourselves, and each of our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.

THE CONDITION OF THE ABOVE OBLIGATION IS SUCH:

WHEREAS, the Principal and Obligee are parties to a Fountainhead Corporate Park Lease dated June 29, 2009, as amended from time to time (as so amended being the" Lease "), pursuant to which Principal leases certain premises from Obligee located at 1601 Fountainhead Parkway, Tempe, Arizona 85282 and 1625 Fountainhead Parkway, Tempe, Arizona 85282, and

WHEREAS, the Principal has deposited with Obligee a letter of credit (the " Letter of Credit ") and a provided to Obligee a corporate guaranty (the '' Guaranty ") in order to secure its performance under the Lease;

WHEREAS, for consideration provided by Obligee, the adequacy and sufficiency is hereby acknowledge, Principal has agreed to provide Obligee with this bond as further security for its performance under the Lease to secure payment per the term of the Lease and;

WHEREAS, in accordance with the terms of the Lease, this bond shall be held by the Obligee as financial security according to the terms of the Lease.

NOW, THEREFORE , in the event that Principal fully and completely performs all obligations of Tenant under the Lease for the remainder of the term of the Lease, then this Bond shall thereafter be null and void and of no further force or effect.

PROVIDED FURTHER , that this bond is executed by the Principal and Surety and accepted by the Obligee upon the following express conditions:

1. Subject to the last sentence of Paragraph 3 below, the liability of the Surety on this bond shall not exceed the sum of Five Million Dollars ($5,000,000.00) dollars in the aggregate (the "Original Bond Amount"); provided that if Principal is not in default under the terms of the Lease past applicable notice and cure periods set forth in the Lease, Obligee hereby agrees that the Original Bond Amount shall

be reduced based on the following reduction schedule (each reduced amount, as and when reduced, the " Applicable Bond Amount "):



Bond Amount Adjustment Date		Applicable Bond Amount

August 31, 2019		$3,029,210.00
August 31, 2020		$0.00

2. In the event of any default of the Principal herein, (1) in the payment of any amounts as and when due under the Lease (as the same may be amended from time to time) where such default continues beyond any applicable notice and cure periods set forth in the Lease, or (2) any voluntary or involuntary bankruptcy, insolvency or other proceeding commenced by or against Principal that is not discharged or withdrawn within ninety (90) days following filing (each, a "Default"),'the Surety shall be given written notice ("Damages Notice") by the Obligee of such Default by certified mail to the Surety at its office: at ____________________. Obligee's written notice shall provide an estimate of the actual, reasonable damages sustained (or which will be sustained) by Obligee as a result of such default by Principal (collectively, "Damages") and, within ten (10) business days after receipt of Obligee's written statement to Surety, Surety shall pay to Obligee the amount of such Damages; provided, however, subject to the last sentence of Paragraph 3 below, in no event shall the total Damages paid to Obligee exceed the amount of the Applicable Bond Amount as of the date of the Damages Notice. The obligations of Surety shall in no way be released, changes, modified or discharged as a result of any assignment or sublease or Principal's interest in the Lease.

3. Surety hereby acknow1edges and agrees that Obligee shall not be required to pursue Principal for any Default under the Lease or the guarantor under the Guaranty or apply the proceeds of the Letter of Credit. Obligee, in its sole discretion, shall be permitted to demand payment under this bond first, at its election, without being required to exhaust the Letter of Credit, Guaranty or any claim against the Principal. The obligation of the Surety is primary and independent of Principal's obligations under the Lease and may be enforced directly against the Surety independently of and without proceeding against the Principal or exhausting or pursuing any remedy against Principal or any other person or entity. The liability of Surety hereunder shall not be released or otherwise affected by (i) the release or discharge of Principal in any insolvency, bankruptcy, reorganization,,receivership, or other debtor relief proceeding involving Principal (collectively "proceeding for relief'); (ii) the impairment. limitation. or modification of the liability of Principal or the estate of Principal in any proceeding for relief, or of any remedy for the enforcement of Principal's liability under the Lease, resulting from the operation of any law relating to bankruptcy, insolvency, or similar proceeding or other law or from the decision in any court; (iii) the rejection or disaffirmance of the Lease in any proceeding for relief; or (iv) the cessation from any cause whatsoever of the liability of Principal. Surety agrees to pay all costs and expenses, including reasonable attorneys' fees, incurred by Obligee in enforcing the terms of this bond and such reimbursement of costs and expenses shall be in addition to the total Applicable Bond Amount.

4. Whereas, the Obligee has agreed to accept this Bond, this Bond shall be effective for the definite period of August __, 2017 to August __, 2018. The Bond may be extended, at the sole option of the Surety, by continuation certificate for additional periods from the expiry date hereof The Surety shall provide at least thirty (30) days prior written notice of its intent to non-renew prior to expiry date. In the event that the Surety delivers such Cancellation Notice and Tenant fails to replace this Bond with another Bond issued by a third party surety reasonably acceptable to Obligee, then it shall be deemed a Default under the Lease.

5. This bond is transferrable by Obligee to any successor-in-interest to Obligee under the Lease. This bond shall be governed by the laws of the State or Arizona.

6. This bond sets forth in full the terms of Surety's obligation to pay Obligee and such obligation shall not in any way be modified, amended or amplified by reference to any document or instrument referred to herein or in which this bond is referred to or to which this bond relates and any such reference shall not be deemed to incorporate herein by reference to any document or instrument. Surety's obligation herein are in no way contingent upon reimbursement with respect thereto.

SIGNED, SEALED, AND DATED this day of _______________, 2017.

PRINCIPAL

THE UNIVERSITY OF PHOENIX, INC.

an Arizona corporation

By: ______________________

Name: ____________________

Title: _____________________

SURETY

By: ______________________

, Attorney-in-Fact

Exhibit 10.38

NINTH AMENDMENT TO LEASE

This Ninth Amendment to Lease (this " Ninth Amendment ") is made and entered into by and between KBSII FOUNTAINHEAD LLC, a Delaware limited liability company (" Landlord "), as successor-in-interest to US Real Estate Limited Partnership (" Original Landlord "), and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation (" Tenant "), effective as of April_, 2018 (the " Effective Date ").

WITNESSETH

WHEREAS, Landlord and Tenant are parties to that certain Fountainhead Corporate Park Lease dated June 29, 2009 originally entered by and between Original Landlord and Tenant (the " Original Lease "), as amended by (i) that certain First Amendment to Lease dated August 11, 2009 (the " First Amendment "), (ii) that certain Second Amendment to Lease dated November 1, 2009 (the " Second Amendment "), (iii) that certain Third Amendment to Lease dated February 19, 2010 (the " Third Amendment "), (iv) that certain Fourth Amendment to Lease dated March 11, 2011 (the " Fourth Amendment "), (v) that certain Fifth Amendment to Lease dated August 3, 2011 (the " Fifth Amendmen t"), (vi) that certain Sixth Amendment to Lease dated December 22, 2011 (the " Sixth Amendment "), (vii) that certain Seventh Amendment to Lease dated June 1, 2012 (the " Seventh Amendment "), and (viii) that certain Eighth Amendment to Lease dated August 18, 2017 (the " Eighth Amendment ;" the Original Lease, as so amended, being the " Lease "), pursuant to which Tenant is currently leasing from Landlord certain real property and improvements located at 1625 Fountainhead Parkway, Tempe, Arizona 85282 and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (collectively, the " Premises ");

WHEREAS, Tenant and Bank of the West, a California banking corporation (" BOTW "), entered into a Sublease dated August 18, 2017 (" BOTW Sublease "), pursuant to which BOTW sublet a portion of the Premises from Tenant;

WHEREAS, in connection with Landlord's consent to the BOTW Sublease, Landlord and Tenant entered into the Eighth Amendment in order to modify the requirements relating to the letter of credit previously posted by Tenant as security and to require Tenant to furnish a Surety Bond (as defined in the Eighth Amendment) to further secure certain obligations to Landlord under the Lease as more particularly set forth in the Surety Bond;

WHEREAS, Tenant and BOTW are now seeking Landlord's consent to an amendment to the BOTW Sublease pursuant to which BOTW would expand the premises it is subleasing from Tenant (the " BOTW Sublease Amendment ");

WHEREAS, in connection with Landlord providing its consent to the contemplated BOTW Sublease Amendment, Landlord and Tenant are entering into this Ninth Amendment in order to modify the Existing Letter of Credit (as defined below) and also amend the Surety Bond (as defined in the Eighth Amendment);

WHEREAS, the BOTW Sublease Amendment is contingent upon Landlord, BOTW and Tenant executing a Second Amendment to Consent, Recognition, Non-Disturbance and Attornment Agreement of Master Lessor with respect to the amendment to the BOTW Sublease (the " BOTW Consent Amendment ") which is currently being negotiated;

WHEREAS, Landlord and Tenant desire to amend the Lease all as more particularly provided hereinbelow;

1. Defined Terms . All capitalized terms used herein shall have the same meaning as defined in the Lease, unless otherwise defined in this Ninth Amendment.

2. New Letter of Credit . As of the Effective Date of this Ninth Amendment, the Existing Letter of Credit is currently in the amount of $10,300,000.00 (the " Existing Letter of Credit Amount "). The Existing Letter of Credit Amount is scheduled to reduce in accordance with a reduction schedule set forth in Paragraph 2 of the Eighth Amendment. Tenant is requesting that Landlord consent to the BOTW Sublease Amendment, and in connection therewith, that Landlord enter into the BOTW Consent Amendment. As consideration for Landlord agreeing to consent to the BOTW Sublease Amendment and to enter into the BOTW Consent Amendment, Tenant hereby agrees to cause BOTW or, at Tenant's option, another bank acceptable to Landlord in Landlord's reasonable discretion (the " New Letter of Credit Issue r"), within fifteen (15) business days after the full execution of the BOTW Consent Amendment is fully executed, to issue and deposit with Landlord a new letter of credit replacing the Existing Letter of Credit in form acceptable to Landlord in its reasonable discretion, providing at a minimum the following (the " New Letter of Credit "): (i) it shall terminate no sooner than thirty (30) days following the actual expiration date of the term of the Lease, or, if it shall terminate earlier, it will automatically renew or be replaced annually unless Landlord (the beneficiary thereof) is notified in writing by the New Letter of Credit Issuer at least thirty (30) days prior to the expiry date that it will not be renewed or replaced; (ii) it shall be irrevocable; (iii) it shall be transferable to any successor to Landlord's interest under this Lease; and (iv) it shall be in the amount of the Existing Letter of Credit Amount (the " New Letter of Credit Amount "); provided that if Tenant is not then in default under the terms of the Lease past applicable notice and cure periods set forth in the Lease, the New Letter of Credit Amount shall reduce based on the following reduction schedule (which reduction schedule shall be in lieu of the reduction schedule set forth in Paragraph 2 of the Eighth Amendment, which such reduction schedule shall be of no further force or effect):



New Letter of Credit Adjustment Date		New Amount of New Letter of Credit
August 31, 2021		$7,330,748.00
August 31, 2022		$3,910,014.00

Landlord shall, concurrently with the issuance and deposit of the New Letter of Credit with Landlord, return the Existing Letter of Credit to Tenant. In the event the New Letter of Credit is not delivered within fifteen (15) business days after the full execution of the BOTW Consent Amendment, then Landlord's consent to the BOTW Sublease Amendment shall be deemed null and void and Landlord shall have been deemed to reasonably withheld its consent to the BOTW Sublease Amendment. Tenant shall be obligated to reimburse Landlord, within thirty (30) days after receipt of a written invoice, for all of its actual out-of-pocket costs incurred in connection with this Ninth Amendment, the BOTW Consent Amendment, and the other related ancillary agreements contemplated therein.

3. Surety Bond . As further consideration for and as a condition precedent to Landlord agreeing to consent to the BOTW Sublease Amendment and to enter into the BOTW Consent Amendment, Tenant hereby agrees to amend the Surety Bond previously delivered by Tenant in connection with the Eighth Amendment in order to modify the reduction of the Applicable Bond Amount set forth in such Surety Bond. Within fifteen (15) business days after the full execution of this Ninth Amendment, Tenant shall deliver to Landlord an amendment to the Surety Bond, in a form reasonably satisfactory to Landlord, providing that the reduction schedule for the Applicable Bond Amount shall be as follows:



Bond Amount Adjustment Date		Applicable Bond Amount



August 31, 2019		$385,000.00
August 31, 2020		$460,000.00
August 31, 2021		$0.00

4. Guaranty . APOLLO EDUCATION GROUP, INC., an Arizona corporation formerly known as Apollo Group, Inc. (the " Guarantor "), executed that certain Guaranty dated as of June 29, 2009, in favor of Landlord under the Lease (the " Guaranty "), for the benefit of Tenant. The effectiveness of this Ninth Amendment shall be subject to and conditioned upon Guarantor joining in the execution of this Ninth Amendment, and such execution shall evidence only: (i) the consent of Guarantor to the terms and conditions of this Ninth Amendment; (ii) the agreement of Guarantor that the Guaranty is and shall remain in full force and effect following the execution of this Ninth Amendment; and (iii) the liability of Guarantor under the Guaranty shall extend to and cover all of the obligations of Tenant under the Lease, as amended by this Ninth Amendment.

5. Brokers . Landlord and Tenant each hereby represents and warrants to the other that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Ninth Amendment, and Landlord and Tenant each hereby agrees to indemnify and hold the other harmless from and against any and all costs, expenses or liability for commissions or other compensations or charges claimed by any broker or agent claiming to have represented the indemnifying party with respect to this Ninth Amendment or the transactions evidenced hereby.

6. Miscellaneous . With the exception of those terms and conditions specifically modified and amended herein, the herein referenced Lease shall remain in full force and effect in accordance with all their respective terms and conditions. In the event of any conflict between the terms and provisions of this Ninth Amendment and the terms and provisions of the Lease, the terms and provisions of this Ninth Amendment shall supersede and control.

7. Counterparts/Facsimile Signatures . This Ninth Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one agreement. To facilitate execution of this Ninth Amendment, the parties may execute and exchange facsimile counterparts of the signature pages and facsimile counterparts shall serve as originals.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Ninth Amendment on the dates set forth in the respective signature blocks below, to be effective for all purposes, however, as of the Effective Date.

LANDLORD :

KBSII FOUNTAINHEAD, LLC,

a Delaware limited liability company


By:	KBS Capital Advisors, LLC,

a Delaware limited liability company,

as agent


By:	/s/ Tim Helgeson

Tim Helgeson

Senior Vice President


Date:	5/29 , 2018

TENANT :

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Byron Jones

Name: Byron Jones

Title: CFO

Date: 4/18 /2018

JOINDER

APOLLO EDUCATION GROUP, INC. , an Arizona corporation, acting in its capacity as Guarantor, join in the execution of this Ninth Amendment to Lease for the purposes specified in Paragraph 4 of this Ninth Amendment to Lease.

GUARANTOR :

APOLLO EDUCATION GROUP, INC., an

Arizona corporation

By: /s/ William Molina

Name: William Molina

Title: V.P., Tax

Date: 4/16 /2018

Exhibit 10.39

TENTH AMENDMENT TO LEASE

This Tenth Amendment to Lease (this " Tenth Amendment ") is made and entered into by and between KBSII FOUNTAINHEAD LLC, a Delaware limited liability company (" Landlord "), as successor-in-interest to US Real Estate Limited Partnership (" Original Landlord "), and THE UNIVERSITY OF PHOENIX, INC., an Arizona corporation ("Tenant"), effective as of January 2 , 2019 (the " Effective Date ").

WITNESSETH

WHEREAS, Landlord and Tenant are parties to that certain Fountainhead Corporate Park Lease dated June 29, 2009 originally entered by and between Original Landlord and Tenant (the " Original Lease "), as amended by (i) that certain First Amendment to Lease dated August 11, 2009 (the " First Amendment "), (ii) that certain Second Amendment to Lease dated November 1, 2009 (the " Second Amendment "), (iii) that certain Third Amendment to Lease dated February 19, 2010 (the " Third Amendment "), (iv) that certain Fourth Amendment to Lease dated March 11, 2011 (the "Fourth Amendment"), (v) that certain Fifth Amendment to Lease dated August 3, 2011 (the " Fifth Amendment "), (vi) that certain Sixth Amendment to Lease dated December 22, 2011 (the " Sixth Amendment "), (vii) that certain Seventh Amendment to Lease dated June 1, 2012 (the " Seventh Amendment "), (viii) that certain Eighth Amendment to Lease dated August 18, 2017 (the " Eighth Amendment "), and (ix) that certain Ninth Amendment to Lease dated April 2018 (the " Ninth Amendmen t;" the Original Lease, as so amended, being the " Lease "), pursuant to which Tenant is currently leasing from Landlord certain real property and improvements located at 1625 Fountainhead Parkway, Tempe, Arizona 85282 and 1601 Fountainhead Parkway, Tempe, Arizona 85282 (collectively, the " Premises ");

WHEREAS, pursuant to the Seventh Amendment, Tenant assumed certain repair and maintenance obligations of Landlord under the Lease; and

WHEREAS, Landlord and Tenant desire to amend the Lease to have the assumed repair and maintenance obligations revert to Landlord, all as more particularly provided below.

1. Defined Terms . All capitalized terms used herein shall have the same meaning as defined in the Lease, unless otherwise defined in this Tenth Amendment.

2. Reversion of Repair Obligations . Landlord and Tenant acknowledge and agree that, pursuant to Section 2(g) and Exhibit "A" of the Seventh Amendment, Tenant agreed to assume certain repair and maintenance obligations of Landlord under the Lease because Tenant was occupying both buildings at the project in which the Premises are located. However, Tenant has since subleased a significant portion of its Premises and now desires to have the repair and maintenance obligations it undertook under the Seventh Amendment to revert back as an obligation of Landlord. Accordingly, effective as of January 1, 2019, Section 2(g) and Exhibit "A" to the Seventh Amendment are hereby deleted, and Landlord and Tenant agree that Section 13 of the Original Lease shall control for all purposes with respect to determining the respective repair and maintenance obligations of Landlord

and Tenant. For the avoidance of doubt, from and after January 1, 2019, Tenant shall continue to be obligated to repair and maintain any systems, features, improvements, or the like within the Premises in accordance with Section 13 of the Original Lease, and Landlord shall be responsible for the repair and maintenance of the structural parts of the Premises, as more particularly set forth in Section 13 of the Original Lease (and the costs thereof shall be included as a component of "Expenses" for purposes of Section 4(c) of the Original Lease).

3. Guaranty . APOLLO EDUCATION GROUP, INC., an Arizona corporation formerly known as Apollo Group, Inc. (the "Guarantor"), executed that certain Guaranty dated as of June 29, 2009, in favor of Landlord under the Lease (the "Guaranty"), for the benefit of Tenant. The effectiveness of this Tenth Amendment shall be subject to and conditioned upon Guarantor joining in the execution of this Tenth Amendment, and such execution shall evidence only: (i) the consent of Guarantor to the terms and conditions of this Tenth Amendment; (ii) the agreement of Guarantor that the Guaranty is and shall remain in full force and effect following the execution of this Tenth Amendment; and (iii) the liability of Guarantor under the Guaranty shall extend to and cover all of the obligations of Tenant under the Lease, as amended by this Tenth Amendment.

4. Brokers . Tenant represents and warrants to Landlord that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Tenth Amendment, and Tenant hereby agrees to indemnify and hold Landlord harmless from and against any and all costs, expenses or liability for commissions or other compensations or charges claimed by any broker or agent claiming to have represented Tenant with respect to this Tenth Amendment or the transactions evidenced hereby.

5. OFAC Compliance . Tenant certifies, represents, warrants and covenants that: (i) it is not acting and will not act, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, "Specially Designated National and Blocked Person", or other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and (ii) it is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or nation. Tenant hereby agrees to defend (with counsel reasonably acceptable to Landlord), indemnify and hold harmless Landlord and its designated property management company, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, representatives, insurers and agents from and against any and all claims or damages arising from or related to any such breach of the foregoing certifications, representations, warranties and covenants

6. Miscellaneous . With the exception of those terms and conditions specifically modified and amended herein, the herein referenced Lease shall remain in full force and effect in accordance with all their respective terms and conditions. In the event of any conflict between the terms and provisions of this Tenth Amendment and the terms and provisions of the Lease, the terms and provisions of this Tenth Amendment shall supersede and control.

7. Counterparts/Facsimile Signatures . This Tenth Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one agreement. To facilitate execution of this Tenth Amendment, the parties may execute

and exchange facsimile counterparts of the signature pages and facsimile counterparts shall serve as originals.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Tenth Amendment on the dates set forth in the respective signature blocks below, to be effective for all purposes, however, as of the Effective Date.

LANDLORD :

KBSII FOUNTAINHEAD, LLC,

a Delaware limited liability company


By:	KBS Capital Advisors, LLC,

a Delaware limited liability company,

as agent


By:	/s/ Tim Helgeson

Tim Helgeson

Senior Vice President


Date:	January 2 , 2019

TENANT :

THE UNIVERSITY OF PHOENIX, INC.,

an Arizona corporation

By: /s/ Chris Lynne

Name: Chris Lynne

Title: Chief Financial Officer

Date: 12/20 /2018

JOINDER

APOLLO EDUCATION GROUP, INC. , an Arizona corporation, acting in its capacity as Guarantor, join in the execution of this Tenth Amendment to Lease for the purposes specified in Paragraph 3 of this Tenth Amendment to Lease.

GUARANTOR :

APOLLO EDUCATION GROUP, INC., an

Arizona corporation

By: /s/ William Molina

Name: William Molina

Title: V.P., Tax

Date: 12/18 /2018

Exhibit 10.40

DENVER PLACE PLAZA TOWER

AGREEMENT TO LEASE

BETWEEN

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP,

LANDLORD

AND

WESTERN GAS RESOURCES, INC.

TENANT

DENVER PLACE PLAZA TOWER

AGREEMENT OF LEASE

BETWEEN

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, LANDLORD

AND

WESTERN GAS RESOURCES, INC., TENANT

TABLE OF CONTENTS



			Page

1.	Term		1

2.	Base Rent		1

3.	Completion of Improvements		2
	(a)	Preliminary Information and Plans	2
	(b)	Tenant's Space Plans	2
	(c)	Tenant's Layout Plans	2
	(d)	Engineering Plans	3
	(e)	Completion by Tenant	3
	(f)	Payment for Tenant Work	4
	(g)	Delivery of Possession of Premises	4
	(h)	Computer Room	5

4.	Additional Rent		5
	(a)	Definitions	5
	(b)	Payment of Additional Rent	8
	(c)	Adjustment for Services Not Rendered	10
	(d)	Partial Year	10
	(e)	Disputes	10
	(f)	Place of Payment	10
	(g)	Tenant Texas	10
	(h)	Delay in Computation	11

5.	Use of Premises		11

6.	Condition of Premises		11

7.	Services		12
	(a)	Standard Services	12
	(b)	Additional Services	13
	(c)	Interruption of Services	15
	(d)	Access to Premises	16

8.	Alterations		17

9.	Liens		18

10.	Insurance and Waiver of Subrogation		18

11.	Fire or Casualty		19

12.	Waiver of Claims - Indemnification		20

13.	Nonwaiver		22

- i -



14.	Condemnation		22

15.	Assignment and Subletting		22

16.	Three (3) Month Extension Option and Holdover		25

17.	Estoppel Certificate		26

18.	Subordination		26

19.	Certain Rights Reserved by Landlord		27

20.	Rules and Regulations		28

21.	Remedies		28

22.	Expenses of Enforcement		31

23.	Covenant of Quiet Enjoyment		31

24.	Security Deposit		31

25.	Real Estate Broker		31

26.	Miscellaneous		32

	(a)	Rights Cumulative	32
	(b)	Captions and Usage	32
	(c)	Binding Effect	32
	(d)	Lease Contains All Terms	32
	(e)	Submission of Lease	32
	(f)	No Air Rights	32
	(g)	Business Days	33
	(h)	Landlord's Default	33
	(i)	Transfer of Landlord's Interest	33
	(j)	Recording: Short Form Memo	34
	(k)	Covenants and Conditions	34
	(l)	Application of Payments	34
	(m)	Landlord's Authority	34
	(n)	Governing Law: Partial Invalidity	34
	(o)	Hazardous Materials	34
	(p)	Americans With Disabilities Act	36
	(q)	Warranty Disclaimer	36
	(r)	Waiver of Trial by Jury	36
	(s)	Force Majeure	36
	(t)	List of Exhibits	36

27.	Telephone and Telecommunications Service		37

28.	Notices		38

29.	Time is of the Essence		39

Addendum
Exhibit A		Plan
Exhibit B		Rules and Regulations
Exhibit C		Lease Term Agreement
Exhibit D		Parking Agreement

- ii -



Exhibit E		Janitorial Specifications
Exhibit F		Landlord's Rules for General Contractors
Exhibit G		Existing Mortgages
Exhibit H-1		CGLIC SNDA Form
Exhibit H-2		SFI I SNDA Form
Exhibit H-3		Newpar SNDA Form
Exhibit I		Storage Lease Form
Exhibit J		Building Standard Materials
Exhibit K		Approved Subcontractors
Exhibit L		HVAC Specifications
Exhibit M		Description of Other Tenant's Rights
Exhibit N		Garage License Agreement (Generator)

- iii -

OFFICE LEASE

DENVER PLACE PLAZA TOWER

DENVER,COLORADO

AGREEMENT OF LEASE made as of the 30th day of July, 2002 (hereinafter referred to as the "Lease") between Amerimar Realty Management Co.-Colorado, as agent ("Agent") for DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as "Landlord") and WESTERN GAS RESOURCES, INC.. a Delaware corporation, whose address is 12200 North Pecos Street, Denver, Colorado 80234 (hereinafter referred to as "Tenant").

W I TN E S S E T H:

Landlord hereby leases to Tenant, and Tenant hereby accepts from Landlord, the premises (hereinafter referred to as the "Premises") deemed to consist of 81,189 square feet of rentable area, located on the ninth (9th) through the twelfth (12th) floors of that building known as Denver Place Plaza Tower (hereinafter referred to as the "Building") located at 1099 - 18th Street, Denver, Colorado, 80202, further described as Suite 1200 and which is depicted on the plan attached hereto as Exhibit A, subject to the covenants, terms, provisions and conditions of this Lease. The Building, the land upon which it is situated, all surrounding improvements, any garage or other related improvements and all common areas appurtenant to, associated with or servicing the Building are hereinafter called the "Real Property" or the "Property".

In consideration thereof, Landlord and Tenant covenant and agree as follows:

1. Term. The term of this Lease (the "Term") shall commence on that date (the "Commencement Date") which is the later of September 1, 2002 (the "Scheduled Commencement Date") or the first date that the Premises are made available to Tenant for commencement of construction of the Tenant Work (hereinafter defined) and, unless sooner terminated or renewed as provided herein, shall end, absolutely and without the need for notice from either party on the date ("Termination Date") that is the last day of the ninety-sixth (96th) complete calendar month following the Commencement Date. After the Commencement Date has occurred, Landlord and Tenant shall promptly execute and deliver to one another a lease term agreement in substantially the same form and content as Exhibit C (the "Lease Term Agreement") attached hereto prepared by Landlord correctly indicating the Commencement Date and Termination Date. The initial contemplated ninety six (96) month term of this Lease is sometimes hereinafter referred to as the "Original Term."

2. Base Rent. Except as modified by the Lease Term Agreement, the "Base Rent" to be paid hereunder shall be as follows:


(a)	The period of nine full months following the Commencement Date or until the Extended Rent Commencement Date defined in subparagraph 3(g):

Zero dollars ($0.00)


(b)	Balance of Term (months 10 through 96):

$1,653,819.96 per annum payable in monthly installments of $137,818.33

All payments of Base Rent shall be paid in advance on or before the first day of each calendar month during the Term, in the monthly installments provided above; provided, however, that Tenant shall pay the first full monthly installment of Base Rent, for a month in which a payment of Base Rent is due, in the amount of $137,818.33 (the "First Installment") at the time of execution of this Lease. In the event that Tenant exercises its option to terminate this Lease in accordance with the provisions of subparagraph 3(g), Landlord shall promptly refund the First Installment to Tenant. If the Term commences other than on the first day of a month, the Base Rent for the seventh month of the Term

shall be prorated, and the Base Rent for the portion of the month in which the obligation to pay Base Rent commences shall be paid on the first day of the seventh full calendar month of the Term.

3. Completion of Improvements.

(a) Preliminary Information and Plans . Landlord has heretofore delivered to Tenant for use by Tenant and Landlord's architect or engineer, such plan or plans and other information with respect to the Premises and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's Layout Plans. Receipt of all such information is hereby acknowledged by Tenant.

(b) Tenant's Space Plans . Tenant shall prepare and deliver to Landlord, at Tenant's expense, within five (5) business days after Tenant's receipt of a fully executed copy of this Lease, five (5) black line prints of architectural layout drawings (which shall be 1/8" scale) ("Tenant's Space Plans"), prepared by an architect licensed in the State of Colorado selected by Tenant and approved by Landlord in the exercise of its reasonable discretion (the "Architect") providing for Tenant's proposed layout for the construction and finishing of improvements to the Premises for Tenant's occupancy signed and sealed by the Architect. Tenant's Space Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed and that only may be disapproved by Landlord in the event the proposed Tenant Space Plans violate any governmental regulations or adversely affect the Building's structure or mechanical systems, and such plans shall be deemed modified to take account any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Within seven (7) business days after Landlord's receipt of Tenant's Space Plan, Landlord shall notify Tenant of its comments and changes to Tenant's Space Plans. (The date of Tenant's receipt of such notice is hereinafter referred to as the "TSP Notification Date").

(c) Tenant's Layout Plans . Tenant shall cause to be prepared at Tenant's expense and, not later than 12:00 noon (Denver time), on the sixth (6th) business day following the TSP Notification Date, shall deliver to Landlord one mylar and two black line prints of complete and final architectural working drawings (which shall be 1/8" scale), three copies of all specifications(including, equipment specifications) and two (2) non-copyrighted CADD disks, prepared by the Architect ("Tenant's Layout Plans") for the construction and finishing of the Premises for Tenant's occupancy. Tenant's Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by an architect licensed by and registered in the State of Colorado, (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements, and (v) provide for the use of Building standard materials (identified on Exhibit J attached hereto) for drywall, top track system, doors, door frames, hardware, window coverings and heating, ventilation and air conditioning system ("HVAC"). Tenant's Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed and that only may be disapproved by Landlord in the event that the proposed Tenant's Layout Plans violate any governmental regulations or adversely affect the Building's structure or mechanical systems, and such plans shall be deemed modified to take account any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant's Layout Plans are approved within seven (7) business days after their delivery to Landlord. (The date of Tenant's receipt of such notice is hereinafter referred to as the "TLP Notification Date"). Tenant's Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final Layout Plans". Concurrently with delivery of Tenant's Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the Premises respecting the matters which are the subject of this Paragraph 3 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 3; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's

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designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(d) Engineering Plans . Tenant shall cause to be prepared at Tenant's expense by Landlord's engineer, Hadji Engineering, in conjunction with the Architect, and, not later than ten (10) business days after the TLP Notification Date, shall deliver to Landlord mechanical, electrical and fire protection engineering drawings and specifications ("Tenant's Engineering Plans"), based on the Final Layout Plans. Tenant's Engineering Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed and which only may be disapproved by Landlord in the event that the proposed Tenant's Engineering Plans violate any governmental regulations or adversely affect the Building's structure or mechanical systems, and Tenant's Engineering Plans shall be deemed modified to take account of any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant's Engineering Plans are approved within seven (7) business days after their delivery to Landlord. Tenant's Engineering Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Engineering Plans".

(e) Completion by Tenant . Tenant shall cause the Tenant's Contractor (hereinafter defined) to improve the Premises in a diligent and good and workmanlike manner in accordance with the Final Layout Plans and the Engineering Plans ("Tenant Work") (such plans are hereinafter together called the "Construction Plans"). Landlord will reasonably cooperate with Tenant in making the following available to Tenant for completion of the Tenant Work: (i) the freight elevator, (ii) the Premises, and (ii) during non-Business Hours, all areas in or about the Building that are reasonably required by Tenant to complete the Tenant Work or that otherwise would be utilized by Landlord in the event that its general contractor were performing the Tenant Work. Tenant reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, provided that Landlord's approval of any substitution shall first be obtained (which approval shall not be unreasonably withheld or delayed, but disapproval may only be given if the substitution is not consistent with materials or components to be used in a first class building), and (ii) to make changes necessitated by conditions met in the course of construction, provided that Landlord's approval of any change shall first be obtained (which approval shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Construction Plans, but disapproval may only be given if the change would violate governmental regulations or adversely affect the Building's structure or mechanical systems). All Tenant Work must be performed in compliance with all of Landlord's then-current rules and regulations for construction in, on or around the Building, and all work must meet applicable Building standards for construction identified on Exhibit J attached hereto. Tenant shall enter into a contract (the "Construction Contract") for the completion of Tenant Work, and the general contractor so selected by Tenant is herein referred to as "Tenant's Contractor"). The Construction Contract shall: (i) be between Tenant and Tenant's Contractor, (ii) provide that Landlord shall be a third party beneficiary of any representations or warranties made to Tenant by Tenant's Contractor; (iii) provide that the Tenant Work shall be substantially completed on or before ninety (90) days after the date construction of the Tenant Work has commenced; (iv) provide that all electrical, mechanical and structural elements of the Tenant's Work shall be performed by one of Landlord's approved subcontractors consisting of those subcontractors listed on Exhibit K attached hereto; and (v) that all Tenant Work shall be completed in compliance with Landlord's standard rules and regulations governing general contractors, a copy of which is attached hereto as Exhibit F . Neither Landlord nor Tenant shall be paid any construction supervision fee. The scheduling for completion of Tenant's Work shall be coordinated with Landlord's construction manager Jean McDonald or, in her absence, Garth R. D. Tait. Tenant shall cause a representative of Tenant's Contractor and Architect to attend weekly status meetings with Landlord's representative at the Premises during completion of the Tenant Work as reasonably scheduled by Landlord. As used in this paragraph, Landlord Delay means any delay in substantial completion of the Tenant Work that is a result of any act, neglect, failure or omission of Landlord, its servants, employees, agents, representative or contractors. As used in this paragraph, Force Majeure Delay means any

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delay in substantial completion of the Tenant Work caused by strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond Tenant's control, provided that Tenant shall use reasonable efforts to promptly deliver written notice to Landlord of the occurrence of any Landlord Delay and/or Force Majeure Delay, and, in the event of Tenant's failure to notify Landlord, Tenant shall be deemed to have waived such Landlord Delay and/or Force Majeure Delay.

(f) Payment for Tenant Work . Tenant shall pay for all Tenant Work on or before the dates payments are due under the Construction Contract and/or any other contracts or agreements pertaining to the Tenant Work that are entered into by Tenant. Landlord shall provide an allowance for the payment of Tenant's out-of-pocket costs and expenses paid by Tenant to Tenant's Contractor, the Architect, material suppliers and/or other sources for the material, labor and services applied to the Tenant Work ("Tenant Costs") in an amount of up to Two Million Twenty-Nine Thousand Seven Hundred Twenty-Five and No/100 Dollars ($2,029,725.00) ("Construction Allowance"). Provided Tenant is not in default (beyond any applicable cure period) in the performance of its obligations under this Lease, Landlord shall pay the Construction Allowance directly to Tenant as follows: (i) twenty percent (20%) of the Tenant Costs not to exceed $405,945.00 within thirty (30) days after substantial completion of the Tenant Work; (ii) forty percent (40%) of the Tenant Costs not to exceed $811,890.00 on or before the first anniversary of the Commencement Date, and (iii) forty percent (40%) of the Tenant Costs not to exceed $811,890.00 on or before the second anniversary of the Commencement Date. Notwithstanding the foregoing, Landlord shall not be obligated to pay any portion of the Construction Allowance until ten (10) business days after Landlord has received reasonable evidence of Tenant's payment in full of all Tenant Costs, including, but not limited to copies of all invoices pertaining to the Tenant Work, and mechanic's lien waivers in form and content reasonably acceptable to Landlord executed by Tenant's Contractor, Architect and all subcontractors and suppliers performing any of the Tenant Work. In the event there are any claims in dispute pertaining to any Tenant Work, Landlord shall not be required to pay the Construction Allowance unless and until all claims in dispute have been bonded over to the reasonable satisfaction of Landlord. From time to time during the performance of the Tenant Work, Tenant may request that Landlord review and approve evidence of Tenant's payment of Tenant Costs, including without limitation review of invoices and mechanic's lien waivers, and in that event Landlord will promptly advise Tenant in writing of its approval or disapproval, and the specific reasons for any disapproval will be stated in Landlord's response. The Construction Allowance may only be used for Tenant Costs. Tenant shall be permitted to include within Tenant Costs up to $405,945 of out-of-pocket costs and expenses paid by Tenant for (i) space planning the Premises, (ii) installation of telecommunication and data cabling at the Premises, and (iii) moving Tenant's furniture, equipment and other personal property into the Premises.

(g) Delivery of Possession of Premises . Landlord shall cause the Premises to be delivered to Tenant for purposes of commencing the completion of the Tenant Work on or before the Scheduled Commencement Date. If Landlord shall, for any reason fail to make available to Tenant possession of the Premises on or before the Scheduled Commencement Date or any other date, Landlord shall not be subject to any liability for such failure. Under such circumstances, all of Tenant's rights and obligations hereunder with respect to the Premises, including, but not limited to, its obligations to pay the Base Rent, the Tax Adjustment and the Operating Expense Adjustment attributable to the Premises shall not commence until that date (the "Extended Rent Commencement Date") which is the first day following the expiration of nine (9) months after the Commencement Date, plus one (1) day for each day completion of the Tenant Work has been delayed solely due to either a Landlord Delay or Force Majeure Delay, and such failure to make available to Tenant possession of the Premises on or before the Commencement Date or any other date shall not in any other way affect the validity or continuance of this Lease, or the Term, or the obligations of Tenant hereunder. Such deferral of rent shall be Tenant's sole and exclusive right and remedy with respect to any such failure, except that in the event the Commencement Date has not occurred on or before March 1, 2003, then Tenant shall have the right to terminate this Lease provided written notice of Tenant's election to terminate is given to Landlord on or before March 15,

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2003; provided, however, that such dates shall be extended by one (1) day for each day after July 31, 2002, that this Lease is not executed and delivered by Tenant.

(h) Computer Room . In addition to the Construction Allowance, Landlord shall pay to Tenant the reasonable out-of-pocket costs incurred by Tenant to complete and install the following improvements to a computer room (the "Computer Room") not to exceed 1,000 square feet in rentable area to be located upon the Premises (collectively, the "Landlord Improvements"): (i) a 200 amp electrical service from the Building's electrical system with a separate meter to measure electrical service to the Computer Room, (ii) an FM 200 fire suppresent system for the Computer Room, including the canister (excluding, however, the initial charge), (iii) a two-hour rated fire enclosure, (iv) a twelve inch raised computer floor, (v) a 50 kilowatt uninterrupted power supply, (vi) Building standard lighting, and (vii) two (2) five ton air conditioning units with connection to the Building's condenser loop. Tenant shall cause the design, layout and specifications for the Computer Room, including Landlord Improvements to be included in the Tenant Space Plans, Tenant Layout Plans and Construction Plans. From time to time Tenant may submit copies of invoices to Landlord for work performed and material supplied in connection with the Computer Room, and Landlord will reimburse Tenant within fifteen (15) days after submission of the invoices and evidence of payment reasonably satisfactory to Landlord.

4. Additional Rent. In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay "Additional Rent," which is equal to the sum of the Expense Adjustment Amount, Tax Adjustment Amount, and Additional Services Charge (all as hereinafter defined) and any other charges noted in this Lease. The Base Rent and Additional Rent are sometimes herein collectively referred to as the "Rent." Unless otherwise specified, all amounts due under this lease as Additional Rent shall be payable in the same manner and at the same place as the Base Rent.

(a) Definitions . As used in this Paragraph 4, the terms:

(i) "Operating Expense Base Amount" shall mean the amount, on a per rentable square foot per annum basis, incurred by Landlord during the Calendar Year 2003 for Operating Expenses, as may be adjusted under the provisions of subparagraph 4(a)(vii).

(ii) "Tax Base Amount" shall mean the amount on a per rentable square foot per annum basis, incurred by Landlord during the Calendar Year 2003 for Taxes.

(iii) "Calendar Year" shall mean each calendar year in which any part of the Term falls, through and including the year in which the Term expires.

(iv) "Tenant's Proportionate Share" shall mean 15.8% being the percentage calculated by dividing 81,189 square feet, the rentable area of the Premises provided at the beginning of this Lease (sometimes hereinafter referred to as the "Original Premises"), by 514,000 square feet (being 95% of the rentable area of the office space in the Building); provided, however that in the event that 95% or more of the rentable area of the office space in the Building is occupied, then Tenant's Proportionate Share in determining Taxes shall mean 15% (being the percentage calculated by dividing 81,189 square feet by 541,000 square feet, which is 100% of the rentable area of the office space in the Building). Tenant's Proportionate Share in determining Taxes during any Calendar Year shall be the weighted average (on a per diem basis) of Tenant's Proportionate Share for such Calendar Year. The rentable area of the Premises has been calculated according to a method pursuant to which a portion of the common areas has been deemed included in the Premises.

(v) "Taxes" for any Calendar Year shall mean the Building's Proportionate Tax Share of all real estate taxes and assessments, special or otherwise, levied or assessed upon that parcel of land known as Lots 1 through 32 inclusive and adjacent vacated alley, block 95, East Denver Subdivision (the "Land") or the Building during such Calendar Year; provided, however, that if Landlord subdivides the Land so that the Building is located on its own tax lot (i.e., there are no other buildings on such tax

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lot), then (1) such separate tax lot shall be referred to as the "Building Tax Lot", and for each year that the Building Tax Lot is taxed separately from the remainder of the Land, the term "Taxes" shall mean all real estate taxes and assessments, special or otherwise, levied or assessed upon the Building Tax Lot or the Building during such Calendar Year. For purposes of this subparagraph "Buildings Proportionate Tax Share" for any Calendar Year shall mean the fraction the numerator of which is equal to the assessed valuation for the Building only for such Calendar Year and the denominator of which is equal to the sum of the assessed valuations for all buildings and improvements on the Land (including the Building) for such Calendar Year. Should the State of Colorado, or any political subdivision thereof, or any other governmental authority, impose a tax, assessment, charge or fee, which Landlord shall be required to pay, wholly or partially in substitution of any of the above Taxes, all such taxes, assessments fees or charges shall be deemed to constitute Taxes hereunder but shall be equitably computed and proportionately shared as if the Real Property and any other shared use real property referred to in this subparagraph was the only real property of Landlord. "Taxes'' shall also include all fees and costs, including reasonable attorneys' fees, appraisals and consultants' fees, incurred by Landlord in seeking to obtain a reduction of, or a limit on, any increase in any Taxes (regardless of whether any reduction or limitation is obtained), but Landlord will reasonably endeavor to use professionals who are compensated on the basis of a reasonable contingent fee. In the event that the Real Property shall be for any taxes or assessments assessed under the same assessment as other real property, the amount of such taxes or assessment to be included within Taxes shall be such portion thereof as Landlord fairly and equitably shall deem attributable thereto.

(vi) "Operating Expenses" shall mean all expenses, costs and disbursements (other than Taxes) of every kind and nature paid or incurred by or on behalf of Landlord in connection with the ownership, management, operation, maintenance and repair of the Property, other than those costs reimbursed to Landlord by other tenants in the Building (and, as allocated by Landlord, those paid or incurred in connection with the ownership, operation, maintenance, management and repair of any garage or other improvements the use of which is shared by the Building and one or more other buildings), except the following:

[A] Costs of alterations (including, without limitation, space planning and design costs) of any tenant's premises or leasable space in the Building;

[B] Payments on loans secured by mortgages or trust deeds on the Real Property;

[C] Costs of capital improvements, except that Operating Expenses shall include the costs as amortized over such number of years as Landlord may reasonably determine, with interest at the rate of 12% per annum on the unamortized amount, of any capital improvements which, (1) in Landlord's reasonable opinion, will have the effect of reducing any component cost included within Operating Expenses by an amount at least equal to the costs plus interest to be amortized over the then remaining Term, or (2) are made or installed to assure compliance with the Americans with Disabilities Act ("ADA") and/or all governmental laws, rules and regulations becoming effective after the date of this Lease, or (3) under generally applied real estate accounting practices (consistently applied) may be expensed or treated as deferred expenses (and the amortization and interest so determined for each Calendar Year shall be included in Operating Expenses for that Calendar Year); and

[D] Commissions, legal expenses and other costs attributable to negotiating leases or otherwise leasing space in the Building;

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[E] Advertising and promotional expenses except the reasonable costs incurred (x) for distributing a newsletter to tenants and occupants of the Complex (as hereinafter defined), (y) for one (1) holiday party per calendar year that is held for all of the tenants and occupants of the Complex and (z) for one (1) health fair per calendar year that is held for all tenants and occupants of the Complex;

[F] Costs and expenses incurred by Landlord in the enforcement of the terms of any tenant lease;

[G] Depreciation of the Building or any other improvement;

[H] Costs for which Landlord receives reimbursement from insurance, condemnation or others or for which Tenant or any other tenant or occupant of the Building pays third persons;

[I] Any expense, other than property management fees, representing an amount paid to a related corporation, entity, or person of Landlord or Agent which is in excess of the amount which would be paid in the absence of such relationship (provided, however, that Tenant acknowledges that Operating Expenses for any calendar year may include a management fee equal to five percent (5%) of the gross revenue collected during such calendar year for the Building and the parking garage located underneath the Building (the "Parking Garage"), even though such fee may exceed the management fee which would be incurred on a fair market basis if Landlord and the managing agent were not affiliated);

[J] Property management fees in excess of five percent (5%) of the gross revenue collected during any calendar year for the Building and the Parking Garage;

[K] Interest, fines, late payment charges or penalties payable due to the failure of Landlord to pay taxes, utilities or other charges in a timely manner;

[L] Costs or expenses of or any special services or equipment rendered or incurred for a tenant if the same are not rendered to Tenant;

[M] The cost of overtime or other expenses of Landlord in curing its defaults or violations under any lease of space in the Building or under any applicable law;

[N] Ground rent or similar payments to a ground lessor;

[O] Inheritance, estate, gift, transfer, succession, franchise and profits taxes on Landlord's business;

[P] Federal income taxes imposed on or measured by the income of Landlord from the operation of the Building, Parking Garage or any other concessions;

[Q] Expenses for correcting structural defects in the construction of the Building or Parking Garage (including latent defects) except that repairs and replacements to the extent resulting from ordinary wear and tear shall not be deemed defects for purposes of this subsection;

[R] Expenses incurred by Landlord to repair the Building or Parking Garage as a result of fire windstorm or other casualty or the exercise of eminent domain or condemnation;

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[S] Expenses relating to the investigation, location on or about the Property, response action, abatement or removal of any Hazardous Substance (hereinafter defined) from the Building, Parking Garage or other portion of the Property; that are currently known to be a Hazardous Substance;

[T] Compensation paid to clerks, attendants or other persons and other costs incurred in commercial concessions (such as a snack bar, restaurant or newsstand), if any, operated by Landlord or any subsidiary or affiliate of Landlord;

[U] Contributions to operating expense reserves;

[V] Contributions to charitable organizations;

[W] Costs incurred in removing the property of former tenants and/or other occupants of the Building;

[X] Expenses in excess of 100% of the actual amount of any Operating Expense;

[Y] Costs related to the operations of any restaurant or other retail space in the Building by Landlord or Agent unless the rentable square feet that comprises such space is included in the number of square feet in the Building specified in subparagraph 4(a)(iv) and only to the extent that such costs are equivalent on a square foot basis with costs reasonably expected to be incurred if the space were used for general office purposes; and

[Z] The costs of providing any above-standard janitorial services to any other occupant of the Building.

(vii) "Expense Adjustment Amount" shall mean Tenant's Proportionate Share of the amount by which the Operating Expenses incurred with respect to such Calendar Year exceed the Operating Expense Base Amount; provided, however, [A] that in determining the amount of Operating Expenses for each Calendar Year, if less than 95% of the rentable office area of the Building shall have been occupied at any time during such Calendar Year, Operating Expenses shall be deemed for such Calendar Year and for the Base Year to be in the amount reasonably determined by Landlord to be equal to that amount of like expenses which normally would be expected to be incurred had such occupancy been 95% throughout such Calendar Year and Base Year, and [B] that in determining the Expense Adjustment Amount the aggregate amount of Operating Expenses (excluding insurance premiums, utility costs and the cost of any governmentally required improvements) shall not exceed the amount of such Operating Expenses attributable to the Calendar Year 2003 by more than seven percent (7%) on annual compounded basis.

(viii) "Tax Adjustment Amount" shall mean Tenant's Proportionate Share of the amount by which the Taxes incurred with respect to such Calendar Year exceed the Tax Base Amount.

(ix) "Additional Services Charge" shall mean all expenses and disbursements that Landlord incurs in connection with the ownership, operation, and maintenance of the Premises, in addition to the services provided as standard to all premises in the Building, which Additional Services are more specifically described and defined in Paragraph 7 below.

(b) Payment of Additional Rent .

(i) Expense Adjustment . The Expense Adjustment Amount with respect to each Calendar Year after 2003 shall be paid in monthly installments, in advance on

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the first day of each calendar month during the course of such year, in amounts estimated by Landlord not more often than once per calendar year and communicated by written notice to Tenant. Landlord shall cause to be kept books and records showing Operating Expenses in accordance with generally accepted accounting principles. Within 240 days, following the close of each Calendar Year after December 31, 2004, Landlord shall cause the amount of the Expense Adjustment Amount for such Calendar Year to be computed based on Operating Expenses for such Calendar Year, and Landlord shall deliver to Tenant a statement of such amount including a reasonably detailed description of the items of Operating Expenses incurred; thereupon Tenant shall pay any deficiency as shown by such statement to Landlord within 30 days after receipt of such statement. If the total of the estimated monthly installments paid by Tenant during any Calendar Year exceed the actual Expense Adjustment Amount due from Tenant for such Calendar Year, then, at Landlord's option, such excess shall be either credited against any Rent then owed or next subsequently due by Tenant to Landlord or promptly refunded by Landlord. Notwithstanding any provision contained in this Lease to the contrary, Tenant shall not be obligated to pay any Expense Adjustment Amount for or during Calendar Years 2002 and 2003.

(ii) Tax Adjustment Amount . The Tax Adjustment Amount with respect to each Calendar Year after 2003 shall be paid in monthly installments, in an amount estimated from time to time by Landlord and communicated by written notice to Tenant. Within 240 days following the close of each Calendar Year after December 31, 2004, Landlord shall cause the amount of the Tax Adjustment Amount for such Calendar Year to be computed based on Taxes for such Calendar Year and Landlord shall deliver to Tenant a statement of such amount and Tenant shall pay any deficiency as shown by such statement to Landlord within 30 days after receipt of such statement. If the total of the estimated monthly installments paid by Tenant during any Calendar Year exceeds the actual Tax Adjustment Amount due from Tenant for such Calendar Year, then, at Landlord's option such excess shall be either credited against any Rent then owed or next subsequently due by Tenant to Landlord or promptly refunded by Landlord. The amount of any refund of Taxes received by Landlord shall be credited against Taxes for the year in which such refund is received. The amount of any refund of Taxes received by Landlord shall be credited against Taxes for the year in which such refund is received. In determining the amount of Taxes for any year, the amount of special assessments to be included shall be limited to the amount of the installment (plus any interest payable thereon) of such special assessment required to be paid during such year as if Landlord had elected to have such special assessment paid over the maximum period of time permitted by law; if the authority to whom such assessment is to be paid shall not permit such assessment to be paid in installments, the amount of such assessment shall be treated as being amortized over such number of calendar years, beginning with the Calendar Year in which the assessment is payable, as Landlord shall reasonably determine, with interest at the rate of 12% per annum on the unamortized amount, and such amortization and interest for each Calendar Year shall be included in Taxes for that Calendar Year. Notwithstanding any provision contained in this Lease to the contrary, Tenant shall not be obligated to pay any Tax Adjustment Amount for or during Calendar Years 2002 or 2003.

(iii) Additional Services Charge . The Additional Services Charge shall be paid in monthly installments, in arrears, on the first day of each calendar month during the course of such year, in amounts estimated from time to time by Landlord and communicated by written notice to Tenant. Following the close of each Calendar Year, Landlord shall cause the amount of the Additional Services Charge for such Calendar Year to be computed and Landlord shall deliver to Tenant a statement of such amount, whereupon Tenant shall pay any deficiency as shown by such statement to Landlord within 30 days after receipt of such statement. If the total of the estimated monthly installments paid by Tenant during any Calendar Year exceeds the actual Additional Services Charge due from Tenant for such Calendar Year, then, at

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Landlord's option, such excess shall be either credited against payments next due hereunder, if any, or promptly refunded by Landlord, provided Tenant is not then in default hereunder.

(c) Adjustment for Services Not Rendered . If Landlord shall not be furnishing any particular work or service (the cost of which, if furnished by Landlord would be included in Operating Expenses) to a tenant who undertakes to itself perform or obtain such work or service in lieu of the furnishing thereof by Landlord, Operating Expenses shall be deemed for purposes of this Paragraph 4 to be increased by an amount equal to the additional Operating Expenses, as reasonably determined by Landlord, which would have been incurred during such period if Landlord had at its own expense furnished such work or service to such tenant.

(d) Partial Year . If only part of any Calendar Year shall fall within the Term, the amounts computed as Additional Rent, with respect to such Calendar Year under the foregoing provisions of this Paragraph 4 shall be prorated in proportion to the portion of such Calendar Year falling within the Term, but the expiration or termination of this Lease prior to the end of such Calendar Year shall not either impair Tenant's obligation hereunder to pay or Landlord's obligation to refund such prorated portion of such Additional Rent with respect to that portion of such year falling within the Term.

(e) Disputes . Any statement furnished to Tenant by Landlord under the provisions of this Paragraph 4 shall constitute a final determination as between Landlord and Tenant as to the Rent set forth therein due from Tenant for the period represented thereby, unless Tenant, within 90 days after such statement is furnished, shall give a notice to Landlord that it disputes the correctness thereof, specifying in detail the basis for such assertion. Pending resolution of such dispute, Tenant shall pay all disputed amounts in accordance with the statement furnished by Landlord. Landlord agrees, upon prior written request, during normal business hours to make available for Tenant's inspection, at Landlord's offices in Denver, Colorado, Landlord's books and records which relate to any items in dispute, provided Tenant has paid all amounts billed to Tenant on account of the Additional Rent and all installments thereof, and all other rents and sums then and previously due under this Lease. Upon reasonable notice to Landlord, Tenant or its agents shall be entitled to audit the books and records of the Landlord which are relevant to computing any amounts Tenant is required to pay under this Lease and in the event it is determined that the Landlord has required Tenant to pay in excess of 105% of the correct amount the Tenant should have paid as the Expense Adjustment Amount, the Landlord agrees to reimburse the Tenant for reasonable costs incurred in the audit. In any event, Landlord shall refund the amount of any overcharge(s) within five (5) business days after receipt of notice from Tenant.

(f) Place of Payment . Tenant shall, without any demand therefor and without set-off except as expressly stated in this Lease, pay to DENVER-STELLAR ASSOCIATES LTD. PARTNERSHIP, AIR DEPARTMENT, DENVER, COLORADO 80256-0170, or to such other person or at such other place as Landlord may from time to time direct by notice given to Tenant, the Base Rent as well as all other sums which may become due by Tenant under this Lease. All such other sums shall be payable as Additional Rent.

(g) Tenant Taxes .

(a) Any provision hereof to the contrary notwithstanding, Tenant shall, upon demand from time to time, as Additional Rent, pay to Agent or, as Landlord may direct, to Landlord or to the tax collecting authority, the full amount of all taxes, levies, charges and assessments legally required or authorized to be collected by Landlord from Tenant or any subtenant or occupant of the Premises and all taxes, levies, charges and assessments required to be paid by Landlord (or imposed upon the Property) if not paid by or collected from Tenant or a subtenant or occupant of the Premises. Tenant hereby agrees to defend, indemnify and hold harmless Landlord from and against all loss, cost, liability and expenses (including counsel fees and costs of litigation) which Landlord may suffer, incur or be exposed to as a result of any assertion against Landlord of liability for any of the taxes referred to in this

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subparagraph(g), and from and against any penalties or interest relating thereto, which Tenant fails to pay pursuant hereto.

(b) Tenant shall timely pay when due all taxes, levies, charges and assessments which are required to be paid by Tenant with respect to Tenant's use or occupancy of the Premises or which are or could become a lien upon the personal property, trade fixtures, furniture or facilities of Tenant on the Premises. Tenant hereby agrees to defend, indemnify and hold harmless Landlord from and against all loss, cost, liability and expense (including, without limitation, counsel fees and costs of litigation) which Landlord may suffer or incur, or to which Landlord may be exposed, as a result of Tenant's failure to pay any of the foregoing.

(c) Within 15 days after each due date with respect to any taxes assessed against Tenant that are or could be a lien against the Property, Tenant shall deliver to Landlord official receipts for the payment thereof. If Tenant shall fail to present any of the receipts referred to in this subparagraph within the times set forth herein and within fifteen (15) days after Landlord gives Tenant a written demand to do so, Landlord shall have the right to pay the amounts of the taxes which Landlord reasonably determines would have been covered thereby, together with the full interest and penalties chargeable thereon in accordance with law, and Landlord shall, upon demand, be entitled to reimbursement for all of such payments together with interest at the "Lease Interest Rate" (defined in Paragraph 21 hereof).

(d) Tenant shall cause all of the personal property, trade fixtures, furniture and facilities of Tenant on the Premises, and all alterations, additions and improvements made by Tenant to' the Premises which for purposes of personal property taxes are treated as personal property (such as built-in cabinets, counters and partitions) to be assessed separately from Landlord's property, and, if they are not so separately assessed, Landlord shall be entitled to reimbursement, within 10 days after written demand made from time to time and accompanied by reasonable evidence that the taxes are being imposed upon property that is treated as personal property of the Tenant, for any tax payable by Landlord which is attributable to any of such items taxable as personal property.

(h) Delay in Computation. Delay of not more than 120 days in computation of the Expense Adjustment Amount, Tax Adjustment Amount, or Additional Services Charge shall not be deemed a default hereunder or a waiver of Landlord's right to collect any of such amounts.

5. Use of Premises. Tenant shall use and occupy the Premises solely as a general business office and for no other purpose.

6. Condition of Premises. Tenant's taking possession of the Premises or any portion thereof shall be conclusive evidence that the Premises or any such portion was in good order and satisfactory condition when Tenant took possession, subject to any latent defects in either the Building structure, or the Building's mechanical, plumbing, electrical and HVAC systems (collectively, the "Systems"). At the expiration or other termination of this Lease or of Tenant's right of possession, Tenant shall leave the Premises, and during the Term will keep the same, in good order and condition, ordinary wear and tear, damage by fire or other casualty alone excepted; and for that purpose, Tenant shall make all necessary repairs and replacements. Tenant shall give Landlord prompt notice of any damage to or accident upon the Premises and of any breakage or defects in the window glass, wiring or plumbing, heating, ventilating or cooling or electrical apparatus or systems on or serving the Premises. Tenant shall at the expiration or termination of this Lease or of Tenant's right of possession, also have had removed from the Premises all furniture, trade fixtures, office equipment and all other items of Tenant's property (including, without limitation, the items Tenant is required to remove pursuant to subparagraph 8(c) hereof) so that Landlord may again have and repossess the Premises. All such items not removed from the Premises at such expiration or termination, shall conclusively be deemed to have been abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord without notice to Tenant or any other party

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with an interest in such property and without any obligation to account therefor. Tenant shall pay Landlord all expenses incurred in connection with the disposition of such property, and if Landlord shall choose to store any such items, Landlord shall have no liability for the safekeeping thereof and such items may not be retrieved by Tenant or any other person except upon payment of such charges as may be imposed for the removal and storage. Tenant shall comply with all laws, rules, orders, ordinances and regulations at any time issued or in force by any lawful authority, applicable to the specific use of the Premises being made by Tenant or any other occupant (as opposed to a use of the Premises being made in general by all office tenants in the Building). Subject to paragraph 10(e), Tenant shall, upon demand, pay to Landlord the amount of any damages suffered or incurred by Landlord as a result of any injury to any part of the Property other than the Premises, done by Tenant or any subtenant or any agent, employee, contractor or invitee of Tenant or any subtenant, including, without limitation, damage done by the bringing or removal of furniture and other property. Tenant shall forthwith repair all damage done to the Premises by installation or removal of furniture and property by Tenant or any subtenant or by any agent, employee, contractor or invitee of Tenant or of any subtenant or, if Landlord shall so request, pay to Landlord the cost of such repair. Tenant shall not do or commit, or suffer or permit to be done or committed, any act or thing as a result of which any policy of insurance of any kind on or in connection with the Property shall become void or suspended, or any insurance risk on or in connection with the Building or any other portion of the Property shall (in the opinion of the insurer or any insurance organization) be rendered more hazardous or require payment of a greater premium; without limitation of any other rights and remedies of Landlord, Tenant shall pay as Additional Rent the amount of any increase of premiums for such insurance, resulting from any breach of this provision. Tenant shall leave the Premises in a reasonably tidy condition on all days upon which janitorial services are to be provided by Landlord. Landlord shall, at Landlord's expense, replace any glass broken in the Premises windows in the exterior walls of the Building, unless such glass is broken by Tenant, its servants, employees, agents, invitees, licensees or contractors, in which case Tenant shall, upon demand, pay the cost of replacement by Landlord. Tenant shall replace and pay for any other glass broken in or about the Premises.

7. Services.

(a) Standard Services . Landlord shall provide the following services on all days during the Term, except Sundays and holidays, unless otherwise stated:

(i) HVAC. HVAC as deemed appropriate by Landlord at a level consistent with those specifications set forth in Exhibit L attached hereto, from Monday through Friday within the period from 6:00 a.m. to 6:00 p.m. and on Saturday within the period from 8:00 a.m. to 1:00 p.m., holidays excepted (such periods of time are herein referred to as the "Business Hours"). Tenant, within ten days after its receipt of each bill therefor, will pay for all HVAC requested and furnished during any time other than Business Hours ("non-Business Hours") at rates to be established from time to time by Landlord; provided, however, Landlord and Tenant agree that during the Original Term the charge for non-Business Hours HVAC shall be $100.00 per hour, per floor activated, with a minimum charge of $300.00 per activation per floor. Landlord shall not be responsible for the failure of the HVAC system to provide normal comfort if such failure results from occupancy of the Premises by more than an average of one person for each 200 square feet of floor area or if Tenant uses heat-producing equipment or equipment the electrical load of which, when combined with the load of all lighting fixtures, exceeds 4 watts per square foot of floor area in any one room or area. Unless otherwise consented to by Landlord, window coverings shall be uniform in the Building and shall be closed when exterior office windows are exposed to the sun without regard to Tenant's specific use of the space or to the installation of any computers or data processing equipment. Landlord agrees to provide a written notice to Tenant if Tenant is in violation of the window covering requirements of this subparagraph. Tenant shall be provided, pursuant to the provisions of subparagraph 3(g), access to the Building's condenser water loop to provide up to five tons of free standing supplemental cooling units, subject to reasonable rules and restrictions implemented from time to time by Landlord.

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(ii) Electricity . Electrical energy for Building-standard lighting fixtures provided by Landlord and for the operation of desk-top office equipment shall be provided by Landlord twenty-four (24) hours a day, seven (7) days a week (except for temporary suspension of service to repair or maintain the electrical system and in the event of an emergency) , provided that (A) the connected electrical load of such equipment does not exceed an average of 4.0 watts per square foot of the Premises (including HVAC and lighting) and (B) the electricity so furnished for equipment uses will be at a nominal 120 volts and no electrical circuit for the supply of such use need have a current capacity exceeding 20 amperes. Tenant shall be permitted at its sole expense, and subject to rules and restrictions, reasonably implemented by Landlord from time to time to use of up to 200 amps from the Building's electrical system for the Computer Room. Landlord shall be solely responsible for the cost and expense of installing switches and transformer panels and separate meter to provide for such use. Tenant shall pay Landlord for all electrical service to the Computer Room within 30 days after delivery of each bill by Landlord therefor at such rates as shall be from time to time determined by Landlord, provided that the rates charged by Landlord shall not exceed Landlord's out-of-pocket cost (including without limitation, taxes, fuel adjustment charges, and other like charges regularly passed on to customers by public utility companies and transformer costs) of supplying such utilities as determined by Landlord using reasonable accounting methods.

(iii) Water . Ordinary water from the regular Building outlets for drinking, lavatory and toilet purposes.

(iv) Janitorial Services . Janitorial services in accordance with Exhibit E , including, without limitation, replacement of fluorescent bulbs in Building-standard lighting fixtures, Monday through Friday in and about the Premises (except holidays). If any material use made of the Premises after 6:00 p.m. shall, by reason of work force scheduling or security, overtime, union rules or otherwise, cause any increase in Landlord's cost for providing janitorial services, Tenant shall, as an Additional Services Charge, pay all bills for reimbursement of Landlord for such increase, within ten days after Tenant's receipt of such bill, or Landlord may bill Tenant for such services with other Additional Services. All janitorial services shall be performed solely at Landlord's direction without interference from Tenant.

(v) Passenger Elevator . Automatic passenger elevator service at all times.

(vi) Freight Elevator . Freight elevator services subject to reasonable scheduling by Landlord.

(b) Additional Services . The following services are being provided to the Premises in addition to the standard services described in subparagraph 7(a) above ("Additional Services"), and costs and expenses therefor incurred by Landlord will be charged directly to Tenant as an Additional Services charge and will not be included in the Operating Expenses for the Building:

(i) Excess Utility Use .

(A) After-Hours Utilities . In the event that Landlord, in Landlord's reasonable discretion, determines that Tenant's use of electricity exceeds the service to be provided under subparagraph 7(a) above or goes materially beyond Business Hours, Tenant shall pay, as an Additional Services Charge, such amounts for such excess or non-Business Hours use with other Additional Services as shall be required under this subparagraph 7(b)(i). In addition, if the Premises are used in a manner exceeding the aforementioned occupancy and electric load criteria or if such window covering requirement shall not be observed after Tenant's receipt of written notice from Landlord, or if heat-producing (excluding a reasonable quantity of typical office equipment) or controlled climate equipment is used, Tenant shall pay to

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Landlord, promptly upon billing, Landlord's additional costs of supplying air conditioning resulting from such causes, at the rates specified in this Lease. If due to use of the Premises in a manner exceeding the aforementioned occupancy and electrical load criteria, or due to the arrangement of partitioning, or the use of heat-producing or controlled climate equipment, or the distribution system within the Premises, impairment of normal operation of the HVAC system in the Premises results, necessitating changes in HVAC distribution system within the Premises, such changes may be made by Landlord upon request by Tenant at Tenant's sole cost and expense, provided that they can be accommodated by Landlord's systems. Tenant agrees at all times to cooperate fully with Landlord and to abide by all the reasonable regulations and requirements which Landlord may prescribe for the proper functioning and protection of the HVAC system, not inconsistent with Tenant's rights under the Lease. After Landlord has balanced the air-conditioning system for Tenant, if Tenant installs partitions, equipment, or fixtures requiring rebalancing of the system, Landlord, at Tenant's request and at Tenant's expense (which shall be charged as an Additional Services Charge payable upon demand) shall endeavor to do such· rebalancing. If Tenant's requirements for electricity or other utilities are in excess of those set forth in subparagraph 7(a), and if, in Landlord's reasonable judgment, Landlord's facilities are inadequate for such additional requirements and if electrical energy for such additional requirements is available to Landlord, Landlord, upon written request and at the sole cost and expense of Tenant, will furnish and install, or, at Landlord's sole discretion, permit Tenant to furnish and install, such additional wires, risers, conduits, feeders, cabling, or other pipelines or conduits and switchboards as reasonably may be required to supply such additional requirements of Tenant provided that (1) the same shall be permitted by applicable laws and insurance regulations; (2) in Landlord's sole judgment, the same are necessary and will not cause permanent damage or injury to the Building or the Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs or interfere with or disturb other tenants or occupants of the Building; (3) in Landlord's reasonable judgment, the same will not in any way diminish or adversely affect the utilities which Landlord deems should remain available for other tenants; and (4) Tenant, at Tenant's expense, shall, concurrently with the making of such written request, execute and deliver to Landlord Tenant's written undertaking, in form and substance satisfactory to Landlord, obligating Tenant to fully and promptly pay the entire cost and expense of so furnishing and installing any additional wires, risers, conduits, feeders, cabling, and other pipelines and conduits and switchboards as Additional Services.

(B) Measured Usage . In the event that Tenant's use of the Premises includes the use or installation of any machines, equipment, or devices in the Premises that do not constitute typical office equipment ("Non Standard Equipment") causing, in Landlord's reasonable determination, Tenant's use of electric service or other utilities provided to the Premises to exceed the service to be provided under subparagraph 7(a) above, or if there shall be at the Premises use of electricity during non-Business Hours or other utilities which Landlord believes may be material, Landlord shall install in the Premises or elsewhere, if Landlord shall so elect, or, if Tenant shall so request and if feasible in Landlord's reasonable judgment, one or more meters or other devices to measure the electricity or other utilities used by such computers or other equipment or fixtures or such other hours use; and Tenant shall pay Landlord for such electricity or other utilities as Additional Services within ten days after submission of each bill by Landlord therefor, or Landlord may bill Tenant for such services with other Additional Services, at such rates as shall be from time to time determined by Landlord, provided that the rates charged by Landlord shall not exceed Landlord's out-of-pocket cost (including, without limitation, taxes, fuel adjustment charges, and other like charges

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regularly passed on to customers by public utility companies and transformer costs) of supplying such electricity or other utilities as determined by Landlord using reasonable accounting methods; and the cost of obtaining and installing such meters or other devices shall be paid by Tenant to Landlord within ten days after submission of each bill by Landlord to Tenant therefor, or Landlord may bill Tenant for such services with other Additional Services.

(C) Estimated Usage . For any non-Business Hours use of electricity or other utilities determined by Landlord to be material, and for any use of electricity or other utilities which is determined by Landlord to be in excess of the service to be provided under subparagraph 7(a) above, and which is not actually measured, Tenant shall pay to Landlord, in monthly installments at the times prescribed for the monthly installments of the Base Rent, as Additional Services, amounts, as reasonably estimated by Landlord from time to time, which Tenant would be required to pay for such excess or non-Business Hours electrical or other utilities service if the same were actually measured as provided in subparagraph 7(b)(i)(B) above.

(ii) Landlord's Repair of Non-Standard Equipment . If Non-Standard Equipment located in the Premises requires maintenance or repair in excess of the amount provided to all tenants of the Building, Landlord will provide such excess services to Tenant within a reasonable amount of time after Tenant's request is made to the manager of the Building, provided that such excess services are available from the manager of the Building or the contractors already retained by the manager for the Building. Tenant will pay the cost of such excess services as Additional Services.

(iii) Excess Janitorial Services . If Tenant requires any janitorial or cleaning services in excess of the amounts provided by Landlord according to subparagraph 7(a)(iv) (such as cleaning services beyond normal office janitorial services for kitchens, computer rooms, or other special use areas and carpet cleaning), Landlord will provide such excess services to Tenant within a reasonable period after Tenant's request is made to the manager of the Building, provided that such excess services are available from Landlord's regular janitorial or cleaning contractor. Tenant will pay the cost of such excess services as Additional Services. Landlord will also provide, within a reasonable period after Tenant's request is made to the manager of the Building, or at Tenant's cost and to the extent available to Landlord, replacement of bulbs, tubes or ballasts in any Building non-standard lighting fixtures in the Premises. Tenant will pay the costs of such services as Additional Services.

(iv) Excess Services . If Tenant requires any work, service, or materials performed for, or facilities or materials furnished to Tenant, to a greater extent or in a manner more favorable to Tenant than those performed for or furnished to other tenants of the Building, including, but not limited to, supplying paper towels, restocking recycling containers, hanging pictures or whiteboards, providing extra keys to the Premises and any other work or services which relate to Tenant's use of the Premises, Landlord will provide such excess services to Tenant within a reasonable period after Tenant's request is made to the manager of the Building provided that such excess services are available from the manager of the Building, or the contractors already retained by the manager of the Building. Tenant will pay the cost of such excess services as Additional Services.

(c) Interruption of Services . Except as expressly provided otherwise in this Lease, Tenant agrees that Landlord shall not be liable for damages (by abatement of rent or otherwise) for failure to furnish or delay in furnishing any service, or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, renewals, or improvements, by any strike, lockout or other labor trouble not directed solely against Landlord or its Affiliates, by inability to secure fuel, by governmental laws, regulations or orders, by Landlord's compliance, in whole or in part with any government promulgated program (whether voluntary or mandatory), for conservation

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of energy by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any cause beyond Landlord's reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant's use and possession of the Premises or relieve Tenant from paying rent or performing any of its obligations under this Lease. Landlord's obligation to furnish services shall also be further conditioned upon the availability of adequate energy sources from the public utility companies then servicing the downtown Denver area. Landlord agrees to use reasonable efforts to restore any suspended service as soon as possible. Notwithstanding the foregoing provisions of this subparagraph 7(c), Base Rent and any applicable Expense Adjustment Amount and Tax Adjustment Amount shall be abated in the event of the disruption of services in accordance with the following provisions: (i) in the case of interruption of electrical power to the Premises resulting in a shutdown of Tenant's computers, antennas, telephones, or other office equipment, if such interruption continues for seven consecutive days and as a result Tenant is not using the Premises (or the affected portion), then the Base Rent and any applicable Expense Adjustment Amount and Tax Adjustment Amount for the Premises (or, if only a portion of the Premises is affected, prorated for such portion) shall be abated commencing on the first day following the seventh continuous day of such disruption until the service in question has been restored; (ii) in the case of the substantial failure of the water supply to the restroom or substantial failure of the HVAC system to the Premises or of any portion of the life safety system, and if such interruption continues for seven consecutive days without Landlord having provided reasonable substitute temporary services, and as a result Tenant is not using the Premises (or portion affected) then Base Rent for the Premises and any applicable Expense Adjustment Amount and Tax Adjustment Amount (or, if only a portion of the Premises is affected, for such portion) shall be abated commencing on the first day following the seventh consecutive day of such disruption until the service in question has been restored. Notwithstanding the foregoing, [A] in the event that more than seventy-five percent (75%) of any floor included in the Premises is not used as a result of the disruption, it shall be deemed that the entire floor is not used as a result of the disruption, but if more than fifty percent (50%) of any floor included in the Premises is not used as a result of the disruption and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that the entire floor is not used; and [B] and if more than seventy-five percent (75%) of the Premises is not used or deemed to be not used as a result of the disruption, then all of the Premises will be deemed not used as a result of the disruption. If the disruption renders more than seventy-five percent(75%) of the Premises untenantable (i) for over 90 consecutive days when Landlord has, within its reasonable control, the ability to provide such utility or service, or (ii) for over 180 consecutive days in all other cases, then Tenant may upon delivery of written notice to Landlord, terminate this Lease which termination shall be effective upon Tenant's vacation from the Premises on the date specified in the notice which date shall be within thirty (30) days after delivery Tenant's notice to terminate.

(d) Access to Premises . After the Commencement Date, subject to any Event of Force Majeure (hereinafter defined), Landlord shall provide Tenant with access to the Premises, the Parking Garage and, to the extent any of the Parking Spaces (hereinafter defined) are located in the Denver Place Parking Garage (hereinafter defined), the Denver Place Parking Garage twenty-four (24) hours a day, seven (7) days a week; provided, however, that (i) Landlord may temporarily restrict access to repair or maintain the Building or any Building systems (including, but not limited to, one 12-hour interruption each year for Building and systems maintenance), and (ii) Landlord may establish reasonable and non discriminatory regulations for the exercise of access to the Premises during non-Business Hours (as long as access is not unreasonably restricted during such hours), for the safety of the tenants or occupants of the Building or for the protection of the Building. In the event Tenant is precluded from access to the Premises for seven (7) consecutive days, and as a result Tenant is not using the Premises (or portion affected), then Base Rent and any applicable Expense Adjustment Amount and Tax Adjustment Amount for the Premises (or if only a portion of the Premises is affected, for such portion) shall be abated commencing on the first day following the seventh (7th) consecutive day of such preclusion until access has been restored. Notwithstanding the foregoing, [A] in the event that Tenant is precluded from access to more than seventy-five percent (75%) of any floor included in the Premises, it shall be deemed that Tenant is precluded from access to the entire floor, but Tenant is precluded

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from access to more than fifty percent (50%) of any floor included in the Premises and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that Tenant is precluded from access to the entire floor; and [B] if Tenant is precluded from access to more than seventy-five percent (75%) of the Premises, then it shall be deemed that Tenant is precluded from access to the entire Premises.

8. Alterations.

(a) Tenant shall not, without the prior written consent of Landlord (which consent shall not be unreasonably withheld, provided the Building's structure and mechanical systems are not adversely affected), make any alterations, improvements or additions to the Premises; provided, however, Tenant shall be permitted to replace floor and wall coverings and repaint walls within the Premises on the conditions that: (i) Tenant uses wall and floor covering materials at least comparable to Building standard materials in quality, manufacturer's warranty and fire and static rating, (ii) Tenant notifies Landlord in writing not less than three business days prior to the commencement of such work, and (iii) Tenant otherwise complies with the provisions of this Paragraph 8. Any such consented to alterations, improvements or additions to the Premises shall be completed at the sole cost and expense of Tenant, unless otherwise agreed to by Landlord as part of any consent thereto. If Landlord consents to any alterations, improvements or additions, it may impose such conditions with respect thereto as Landlord deems appropriate, including, without limitation, Landlord's approval of plans and specifications for the work (but Tenant shall not be entitled to rely upon such approval as evidencing that the plans and specifications are proper in any respect), use of Landlord's approved contractors to perform the work, insurance against liabilities which may arise out of such work, permits necessary for such work and as-built drawings upon completion of such work and the furnishing to Landlord of such security as is determined by Landlord to be appropriate for the proper completion of such work and its completion free of mechanics', materialmen's and similar liens or claims thereof. All work done by Tenant or its contractors shall be done in a first-class workmanlike manner, using only good grades of materials and without disturbing other tenants and shall comply with all insurance requirements and all applicable laws or ordinances and rules and regulations of governmental departments or agencies. Before proceeding with any such work, Tenant shall reimburse Landlord for Landlord's costs of Landlord's architects' review of Tenant's plans and specifications. Any work performed by or for Tenant shall be performed by competent workmen whose labor union affiliations are compatible with those of the workmen who may be employed in the Building by Landlord, its contractors or subcontractors, and Landlord shall have the right, at its option and its sole expense, to directly supervise the work, which supervision shall be for the protection of Landlord's interest only.

(b) If Tenant requests that Landlord, through its contractors, perform the work associated with any alteration, improvement or addition to the Premises, and Landlord agrees, in its sole discretion, to perform such work, Landlord shall provide Tenant with a tenant work order ("Tenant Work Order") describing the work to be performed by Landlord and stating the total cost to Tenant for the performance of the work. Upon Tenant's acceptance of such Tenant Work Order, the total cost for the work stated therein shall become a sum required to be paid under this Lease as Additional Rent. All work performed by Landlord under this subparagraph 8(b) shall be subject to the provisions of subparagraph 8(a).

(c) All alterations, additions or improvements made by Tenant and all fixtures attached to the Premises shall become the property of Landlord and remain at the Premises or, at Landlord's option that may be exercised only, if at all, at the time that Landlord grants its consent to Tenant's making the applicable alterations, additions or improvements, any or all of the foregoing shall be removed at the cost of Tenant before the expiration or sooner termination of this Lease and in such event Tenant shall repair all damage to the Premises caused by the installation or removal thereof; provided, however, that Tenant shall not be required to remove any of the Tenant Work or Landlord Improvements. Tenant shall not permit or suffer any signs advertisements or notices to be displayed, inscribed upon or affixed on any part of the outside or inside of the Premises, or in the Building, except as specifically

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permitted under Paragraph 33 of the Addendum. Landlord shall have the right to remove unauthorized signs at Tenant's expense.

9. Liens.

(a) Tenant shall not permit there to be filed against the Property or Landlord's interest therein or any part of either, and shall within twenty (20) days after Tenant has notice of the claim or lien, remove or have removed, any mechanics', or materialmen's or other lien, or claim thereof, filed by reason of work, labor, services or materials provided for or at the request of Tenant (other than work, labor, services or materials provided by Landlord) or any subtenant or occupant or for any contractor or subcontractor employed by Tenant or any subtenant or occupant, and shall exonerate, protect, defend and hold free and harmless Landlord against and from any and all such claims or liens. Without limitation of the foregoing, if any such claim or lien be filed that is not satisfied or bonded over within the twenty (20) day period, Landlord may, but shall not be obligated to, discharge it either by paying the amount claimed to be due in the claim or lien or by procuring the discharge of such lien or claim by deposit or by bonding proceedings. Any amount so paid by Landlord and all costs and expenses, including, without limitation, reasonable attorney's fees, in connection therewith, together with interest thereon at the Lease Interest Rate (hereinafter defined) from the respective dates of Landlord's making of the payments and incurring of the costs and expenses, shall constitute Additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.

(b) At least ten days before the commencement of any work ordered by Tenant on the Premises, including the Tenant Work, Tenant shall notify Landlord of the proposed work and of the names and addresses of the persons supplying labor and materials for the proposed work so that Landlord may avail itself of the provisions of statutes such as C.R.S.§38-22-105(2). During any such work on the Premises, Landlord, or its representatives, shall have the right to go upon and inspect the Premises at all reasonable times, and shall have the right to post and keep posted thereon notices such as those provided for by C.R.S.§38-22-105(2) or to take any action that Landlord may deem advisable to protect Landlord's interest in the Premises.

10. Insurance and Waiver of Subrogation.

(a) Tenant, at its sole cost, shall maintain with responsible insurance companies acceptable to Landlord and qualified to do business in Colorado, general comprehensive public liability insurance against claims for personal injury (including death) and property damage, arising from occurrences in, on and about the Premises, with coverage on an occurrence basis in all cases of not less than a combined single limit of $3,000,000.00 per occurrence. Landlord shall be designated a named insured in the policies for such insurance, which shall contain endorsements providing that the naming of more than one insured shall not operate to limit or void the coverage of any named insured relating to claims by another named insured.

(b) Tenant, at its sole cost, shall maintain with responsible insurance companies acceptable to Landlord and qualified to do business in Colorado, "All Risk" or equivalent insurance upon the Satellite Equipment (hereinafter defined), the Generator (as defined in Exhibit N ) and all personal property upon the Premises and all equipment, fixtures, additions, alterations and improvements and betterments installed by or for Tenant upon the Premises, including, without limitation, anything in the nature of a leasehold improvement, in an amount which is at least 80% of the full replacement cost thereof, which insurance shall name Landlord as a named insured and Landlord's mortgagees as mortgagees under a standard mortgagee clause. In the event of damage or destruction to any Satellite Equipment, the Generator or any leasehold improvements, Tenant shall use the proceeds of such insurance to repair or restore such Satellite Equipment, Generator or leasehold improvements. If this Lease shall be terminated pursuant to subparagraph 11(a) on account of damage by fire or other casualty to the Building or the Premises, Landlord shall be entitled to all of the insurance proceeds payable under the aforesaid insurance (but not with respect to the Satellite

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Equipment, the Generator and any movable or removable personal property) relating to the leasehold improvements to the Premises not to exceed, however, one hundred percent (100%) of the hard costs which would be incurred to replace such leasehold improvements; provided, however, that in the event that the Construction Allowance has not been repaid to Tenant in the entirety prior to such termination, then Landlord agrees to direct its insurer to pay such insurance proceeds to Tenant, to the extent of the unpaid Construction Allowance.

(c) Tenant shall, prior to the commencement of the Term, and at least 30 days prior to the expiration date of each policy, furnish to Landlord certificates evidencing the coverage required hereinabove in this Paragraph and the renewal thereof, which certificates shall state that such insurance coverage may not be materially changed or canceled without at least ten days prior written notice to Landlord and Landlord's mortgagee.

(d) Landlord shall maintain throughout the Term of the Lease with respect to the Building such insurance as follows:

(i) standard all-risk property insurance, covering the Building in amounts at least equal to eighty percent (80%) of the replacement cost of the Building;

(ii) employer's liability insurance with a minimum limit of $100,000.00 for bodily injury;

(iii) commercial general liability insurance and excess liability insurance over the insurance required in subparagraph 10(d)(ii) each with combined, minimum coverage of $3,000,000.00 per occurrence.

(e) Notwithstanding anything in this Lease to the contrary, Landlord and Tenant each hereby release the other, its officers, directors, partners, agents and employees (and Tenant hereby also releases Agent, its partners, officers, directors, agents and employees), to the extent of the coverage under insurance policies required to be obtained by the releasing party under this Lease, from any and all liability for any loss or damage which may be inflicted upon the property of such party, notwithstanding that such loss or damage shall have arisen out of the negligence or other misconduct of the other party, its partners, officers, directors, agents or employees; provided, however, that this release shall be effective only with respect to occurrences occurring during such time as the appropriate policy of insurance of the party so releasing shall not be effected by such release and the right of the insured to recover under the policy is not effected. Each party will cause its policy of insurance to contain a clause pursuant to which the insurance company waives subrogation or otherwise consents to a waiver of right of recovery against the other party and otherwise remains in effect.

11. Fire or Casualty.

(a) If the Premises, the Building (including machinery or equipment used in the operation of the Building) or the Parking Garage shall be damaged by fire or other casualty and if such damage does not render all or a substantial portion of the Premises, Building or Parking Garage, as applicable, untenantable, then Landlord shall repair and restore the same with reasonable promptness, subject to reasonable delays for insurance adjustments and delays caused by matters beyond Landlord's reasonable control. If any such damage renders all or a substantial portion of the Premises or Building untenantable, Landlord shall have the right to terminate this Lease (with appropriate prorations of rent being made for Tenant's possession subsequent to the date of such damage of those tenantable portions of the Premises) upon giving written notice to Tenant at any time within ninety (90) days after the date of such damage; and only if such notice is timely given, Landlord shall have no obligation to repair or restore. Except as otherwise provided herein, Landlord shall have no liability to Tenant, and Tenant shall not be entitled to terminate this Lease by virtue of any delays in completion of such repairs and restoration. Rent, however, shall abate on those portions of the Premise as are, from time to time, untenantable as a result of such damage. Notwithstanding the foregoing, (i) in the event that more than seventy-five percent (75%) of

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any floor included in the Premises is untenantable, it shall be deemed that the entire floor is untenantable, but if more than fifty percent (50%) of any floor is included in the Premises is untenantable and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that the entire floor is untenantable; and (ii) if more than seventy-five percent (75%) of the Premises is untenantable, then all of the Premises will be deemed untenantable. In the event Landlord does not elect to terminate this Lease pursuant to this subparagraph 11(a) and does not complete repairs or restoration within 210 days after such damage, except for delays of up to ninety (90) days caused by matters beyond Landlord's reasonable control, Tenant may terminate this Lease upon thirty (30) days prior written notice to Landlord.

(b) Notwithstanding anything to the contrary herein set forth, Landlord shall have no duty pursuant to this Paragraph 11 to repair or restore any portion of any alterations, additions or improvements in the Premises or the decorations thereto except to the extent that such alterations, additions, improvements and decorations were provided by Landlord at the beginning of the Term.

(c) Within ninety (90) days after any casualty to the Premises, Parking Garage or the Building, Landlord shall give written notice to Tenant of the determination by Landlord's architect o(the reasonably estimated period for completion of repairs. Tenant shall have the right to terminate this Lease by written notice delivered to Landlord within fifteen (15) days following receipt of Landlord's notice if such damage has been to the Premises or to a portion of the Building or Parking Garage which materially interferes with Tenant's use of the Premises or parking at or use of the Generator in the Parking Garage and it is estimated by Landlord that such repairs will take longer than 210 days after the date of the casualty to substantially complete. Unless this Lease is terminated by Landlord or Tenant in accordance with the terms of this Paragraph 11, Landlord shall proceed with due diligence to complete repair of the Premises, Parking Garage and the Building subject to delays of up to ninety (90) days caused by matters beyond Landlord's reasonable control.

12. Waiver of Claims - Indemnification.

(a) To the extent not prohibited by law, Landlord, Agent and their respective officers, directors, partners, agents, contractors, licensees, servants and employees (each (including Landlord), a "Landlord Related Party" and collectively, the "Landlord Related Parties") shall not be liable for, and it and they are hereby released by Tenant from all liability for, any damage either to person or property or resulting from the loss of use thereof or any other loss, or any death, sustained by Tenant or by other persons claiming through Tenant due to the Property and (to the extent any of the Parking Spaces are located within the Denver Place Parking Garage) the Denver Place Parking Garage or any part thereof or any appurtenances thereof becoming out of repair, or due to the happening of any accident or event in, on or about the Property and (to the extent any of the Parking Spaces are located within the Denver Place Parking Garage) the Denver Place Parking Garage, or due to any act or neglect of any tenant or occupant of the Building or of any other person, except to the extent such loss, damage, liability or obligation results from the negligence or willful misconduct of any Landlord Related Party, and except that with respect to occurrences in or the condition of the Premises or the Parking Garages, the foregoing reference to "negligence or misconduct" is changed to "gross negligence or willful misconduct" shall apply particularly, but not exclusively, to damage caused by gas, electricity, snow, frost, steam, sewage, sewer gas or odors, fire, water or by the bursting or leaking of pipes, faucets, sprinklers, plumbing fixtures and windows, whether or not such act or neglect occurred before, at or after the execution of this Lease, and whether the damage was due to any of the causes specifically enumerated above or to some other cause of an entirely different kind. Tenant further agrees that all personal property of Tenant upon the Premises, or upon loading docks, receiving and holding areas, or elsewhere in, on or about the Property and (to the extent any of the Parking Spaces are located within the Denver Place Parking Garage) the Denver Place Parking Garage, shall be at the risk of Tenant only, and that no Landlord Related Party shall be liable for any loss or damage thereto or theft thereof except for its negligence or willful misconduct, but if the personal property is located in the Premises or Parking Garages, the foregoing

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reference to "negligence or willful misconduct" is changed to "gross negligence or willful misconduct".

(b) Except to the extent caused by the gross negligence or willful misconduct of the Landlord Related Parties (but if the location of the conduct is outside of the Premises or the Parking Garages, then notwithstanding any other provision of this subparagraph (b) to the contrary, the foregoing reference to "gross negligence or willful misconduct" is changed to ''negligence or willful misconduct"), Tenant agrees to indemnify and save harmless, and upon request, defend the Landlord Related Parties against and from any and all claims by or on behalf of any person, arising out of or related to:

(i) Tenant's use or occupancy of the Premises or the conduct of its business, or any activity, work, or thing, permitted or suffered by Tenant, in, on or about the Premises, or any conduct of Tenant on the Property;

(ii) any occurrence in, on or about the Premises, but excluding any injury or damage outside of the Premises which is attributable to such occurrence in, on or about the Premises;

(iii) any breach or default on Tenant's part in the performance or observance of, or compliance with, any term, covenant or condition on Tenant's part to be performed pursuant to the terms of this Lease; or

(iv) any willful misconduct or gross negligence of Tenant or any subtenant, or any of their respective agents, contractors, servants, employees or licensees, whether or not the fault or negligence of Landlord, or of any other indemnitee or of the agents, contractors, servants, employees, invitees or licensees of Landlord or any Landlord Related Party, (whether or not occurring before or after the execution of this Lease), contributed thereto or was the cause thereof, and from and against all costs, counsel fees, expenses, penalties, fines and liabilities which Landlord or any other Landlord Related Party may suffer or incur in connection with any such claim and any action or proceeding brought with respect thereto. In the event that any action or proceeding shall be brought by reason of any such claim, against any party to be indemnified hereunder, Tenant covenants that Tenant, upon notice from such party and at Tenant's expense, shall resist and defend such action or proceeding by counsel reasonably satisfactory to such party.

(c) Except to the extent caused by the gross negligence or willful misconduct of Tenant, its partners, directors, officers, employees, servants, contractors and licensees (each (including Tenant) a "Tenant Related Party" and collectively, the "Tenant Related Parties"), Landlord agrees to indemnify and save harmless, and upon request, defend the Tenant Related Parties against and from any and all claims by or on behalf of any person, arising out of or related to:

(i) any occurrence in, on or about any portion of the Building other than the Premises, the Parking Garage, and (to the extent any of the Parking Spaces are located in the Denver Place Parking Garage) the Denver Place Parking Garage;

(ii) any willful misconduct or gross negligence of any Landlord Related Party, whether or not the fault or negligence of Tenant, or of any other indemnitee or of the agents, contractors, servants, employees, invitees or licensees of Tenant or any Tenant Related Party (whether or not occurring before or after the execution of this Lease), contributed thereto or was the cause thereof, and from and against all costs, counsel fees, expenses, penalties, fines and liabilities which Tenant or any other Tenant Related Party may suffer or incur in connection with any such claim and any action or proceeding brought with respect thereto. In the event that any action or proceeding shall be brought by reason of any such claim, against any party to be indemnified hereunder, Landlord covenants that Landlord, upon notice from such

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party and at Landlord's expense, shall resist and defend such action or proceeding by counsel reasonably satisfactory to such party.

(d) To the extent not prohibited by law, the Tenant Related Parties shall not be liable for, and it and they are hereby released by Landlord from all liability for, any damage either to person or property or resulting from the loss of use thereof or any other loss, or any death, sustained by Landlord or by other persons claiming through Landlord due to the Property (with the exception of the Premises) and (to the extent any of the Parking Spaces are located within the Denver Place Parking Garage) the Denver Place Parking Garage or any part thereof or any appurtenances thereof becoming out of repair, or due to the happening of any accident or event in, on or about the Property (with the exception of the Premises) and (to the extent any of the Parking Spaces are located within the Denver Place Parking Garage) the Denver Place Parking Garage, or due to any act or neglect of Landlord or any occupant of the Building or of any other person, except to the extent such loss, damage, liability or obligation results from the gross negligence or willful misconduct of any Tenant Related Party.

13. Nonwaiver. No waiver of any provision of this Lease shall be implied by any failure of either party to enforce any remedy on account of the violation of such provision, even if such violation be continued or repeated subsequently, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of moneys by Landlord or its agents from Tenant after the termination of this Lease shall in any way alter the length of the Term or of Tenant's right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Term or affect any notice given Tenant prior to the receipt of such moneys, it being agreed that after the service of notice or the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any rent due, and the payment and acceptance of payment of rent shall not waive or affect said notice, suit or judgment.

14. Condemnation. In the event that the whole of the Premises shall be lawfully condemned or taken for a public or quasi-public use, this Lease shall terminate as of the date that possession is to be surrendered to the condemner or taking authority. In the event that there shall be a lawful condemnation or taking for any public or quasi-public use of any part of the Building or Parking Garage, without there being condemned or taken all of the Premises, then, at the option of Landlord, exercisable by notice given to Tenant not later than 90 days after the date upon which Landlord receives notice of the taking or condemnation, this Lease shall terminate as of the date that possession of the Property taken is required to be surrendered to the condemner or taking authority. In the event that any condemnation or taking occurs that is described in the preceding sentence and that will materially interfere with Tenant's use of the Premises or parking for the Premises, then, at the option of Tenant, exercisable by notice given to Landlord not later than ninety (90) days after the date upon which Landlord gives written notice to Tenant of the taking or condemnation, this Lease shall terminate as of the date that possession of the Property taken is required to be surrendered to the condemner or taking authority. In the event of any such taking or condemnation of all or any part of the Premises or of all or any part of the Property, Tenant shall have no claim against Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of such taking or condemnation; and all rights of Tenant to damages therefor are hereby assigned by Tenant to Landlord and Tenant shall have no claim against Landlord or the condemner for the value of the unexpired term of this Lease. However, the foregoing provisions of this paragraph shall not be construed to deprive Tenant of the right to claim and receive payment from the condemner or taking authority for moving and related expenses as long as such claim or the payment thereof does not reduce the award which Landlord would otherwise be entitled to receive. In the event of any such taking or condemnation of part of the Premises, the Base Rent, the Tax Adjustment and the Operating Expense Adjustment shall be proportionately reduced from the date that possession is required to be surrendered to the condemner or taking authority.

15. Assignment and Subletting.

(a) Tenant shall not, without the prior written consent of Landlord (which shall not be unreasonably withheld, conditioned or delayed in the case of an assignment or

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subletting or mortgaging), (i) assign, convey or mortgage this Lease or any interest hereunder except to an Affiliate (hereinafter defined) who is not a Prohibited Entity (hereinafter defined); (ii) suffer to occur or permit to exist any assignment of this Lease to an entity which is not an Affiliate ("Non-Affiliate"), or any lien upon Tenant's interest hereunder, whether voluntarily, involuntarily or by operation of law; (iii) sublet the Premises or any part thereof to a Non-Affiliate, (iv) permit the use of the Premises by any parties other than Tenant, its Affiliates and their respective employees. Any such action on the part of Tenant without Landlord's consent, shall be void and of no effect. Landlord's consent to any assignment, subletting or transfer or any assignment, subletting or transfer permitted in this Paragraph 15, or Landlord's election to accept any assignee, subtenant or transferee as the tenant hereunder and to collect rent from such assignee, subtenant or transferee shall not release Tenant or any subsequent tenant from any covenant or obligation under this Lease. Landlord's consent to any assignment, subletting or other act or occurrence requiring Landlord's consent shall not constitute a waiver of Landlord's right to withhold its consent to any future assignment, subletting or act or occurrence requiring Landlord's consent. Without limitation of the circumstances in which Landlord's withholding of consent to an assignment or subletting shall not be unreasonable, it shall not be unreasonable for Landlord to withhold its consent if the reputation, financial responsibility, or business of the proposed assignee or subtenant is unsatisfactory to Landlord (in the exercise of Landlord's reasonable discretion), or if Landlord deems (in the exercise of Landlord's reasonable discretion) such business to be not consonant with that of other tenants in the Building, or if the intended use by the proposed assignee or subtenant conflicts with any commitment made by Landlord to any other tenant in the Building, or if in Landlord's reasonable judgment the assignment or subletting will have financial consequences material adverse to Landlord's interest, or if the proposed assignee or subtenant is a Prohibited Entity.

(b) At least fifteen (15) days prior to any proposed subletting or assignment to a Non-Affiliate, Tenant shall submit to Landlord a statement seeking Landlord's consent and containing the name and address of the proposed subtenant or assignee, the terms of the proposed sublease or assignment (including, without limitation, the date upon which the assignee or subtenant is to take possession) and such financial and other information with respect to the proposed assignee or subtenant as Landlord reasonably may request. Landlord shall indicate its consent or non-consent within ten (10) business days of its receipt of said statement. Tenant shall notify Landlord in writing of any subletting or assignment to an Affiliate, Tenant shall submit to Landlord a statement containing the name, address and affiliation of the proposed subtenant or assignee to the Tenant, the terms of the proposed sublease or assignment and financial and other information with respect to the proposed assignee or subtenant as Landlord may reasonably request.

(c) As a condition to Landlord's consent to any request or proposal by Tenant to sublet or assign any part of this Lease, Tenant shall pay a maximum of $500 of Landlord's out-of-pocket costs, including reasonable attorneys' fees, incurred by Landlord in connection with Landlord's investigation of any financial or other information of the proposed assignee or subtenant.

(d) In addition to withholding its consent, Landlord shall have the additional right, exercisable within such 10 day period, to terminate this Lease in the event Tenant seeks to assign this Lease or sublet substantially all of the Premises for substantially all of the remaining Term to a Non-Affiliate. Landlord may exercise such right to terminate by giving written notice to Tenant at any time prior to Landlord's written consent to such assignment or sublease. Notwithstanding the foregoing, if Landlord gives written notice of the exercise of such termination right, then Tenant may withdraw its request for the sublet or assignment and thereby nullify Landlord's termination, provided that Tenant must exercise such withdrawal right by giving written notice of such withdrawal to Landlord within seven (7) days after Tenant's receipt of Landlord's written exercise of its right to terminate. In the event that Landlord exercises such right to terminate, the termination shall be effective as of such date as Landlord may specify in its notice which shall not be later than the later of (i) the proposed date for possession by such Non-Affiliate assignee or subtenant, or (ii) ninety (90) days after the date of Landlord's notice of termination to Tenant.

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(e) If Landlord fails to exercise its termination right and its right to withhold its consent as set forth in the preceding subsections, Tenant shall pay to Landlord fifty percent (50%) of all profit derived by Tenant from the assignment or sublease ("Sublease Profit"). The Tenant shall not be required to pay any Sublease Profit derived by Tenant from an assignment or sublease with an Affiliate. In determining Sublease Profit the Tenant shall only be permitted to deduct (i) leasing commissions and brokerage fees paid by Tenant and (ii) any other reasonable out-of-pocket costs paid by Tenant and which are directly attributable to such assignment or sublease including, without limitation, advertising expenses, attorneys' fees, subtenant improvements costs and other subtenant inducements. Whenever requested by Landlord, Tenant shall furnish Landlord with a statement, certified by an authorized officer of Tenant as true, correct and complete, setting forth in detail the computation of profit (which computation shall be based upon generally accepted accounting principles), and Landlord, or its representatives, shall have access to the books, records and papers of Tenant in relation thereto, and to make copies thereof Any rent in excess of that paid by Tenant hereunder realized by reason of such assignment or sublease less the costs described above shall be deemed an item of such profit. Such percentage of Tenant's profits shall be paid to Landlord promptly by Tenant upon Tenant's receipt from time to time of periodic payments from such assignee or subtenant or at such other earlier time as Tenant shall realize its profits from such assignment or sublease.

(f) Landlord and Tenant further agree that Tenant shall not publish or otherwise disseminate any written advertising material in connection with any proposed assignment or sublease of all or any portion of the Premises (the "Advertising") without Landlord's prior written approval of the same, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that no Advertising shall contain any reference to the price to be charged in connection with any proposed assignment or sublease, unless such price is equal to or greater than seventy-five percent (75%) of the Base Rent (on a per rentable square foot basis) then payable by Tenant for that portion of the Premises which is the subject of the Advertising. Notwithstanding the foregoing provisions of this subparagraph 15(f), Tenant and its agents shall be permitted to verbally communicate such prices and to include such prices within written proposals to interested third parties.

(g) For the purposes of this Lease, the following terms shall have the following meanings:

(i) "Affiliate" shall mean [A] any person or entity which, directly or indirectly, controls Tenant or is controlled by Tenant or is under common control with Tenant, [B] any successor to Tenant by merger, consolidation or other operation of law, [C] any person or entity to whom all or substantially all of the assets of Tenant are conveyed or [D] any person or entity purchasing the business which Tenant conducts at the Premises.

(ii) "Prohibited Entity", unless otherwise agreed in writing by Landlord, shall mean [A] a governmental or a governmental subdivision, instrumentality or agency, [B] a school, college or university, [C] an employment, recruitment or temporary help service or agency, [D] a collection agency, [E] any entity or an affiliate thereof which has previously defaulted in the performance of its obligations under a lease concerning any portion of the Building or any building located within the Denver Place complex known and numbered as 999 - 18th Street, Denver, Colorado 80202 (collectively the "Complex"), or [F] any person, entity or affiliate of an entity with whom Landlord, or any affiliate of Landlord, is either currently negotiating or, within the six month period preceding Tenant's request for the assignment or sublease has negotiated to lease space in the Complex. An insurance agency (other than Alexander & Alexander, Inc.) shall be deemed to be a Prohibited Entity if such insurance agency (x) subleases or occupies any floor of the Building leased to or occupied by Alexander & Alexander Inc., (y) subleases or occupies any portion of the 29th through 31st floors of the Building or (z) subleases or occupies more than 12,000 square feet of rentable area in the Building.

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(h) Notwithstanding anything to the contrary contained herein, if Tenant, as a debtor-in-possession (the"DIP"), or a trustee for the estate in bankruptcy of Tenant (the "Trustee"), assumes this Lease and proposes to assign this Lease, or sublet the Premises (or any portion thereof), pursuant to the provisions of the Federal Bankruptcy Code, 11 U.S.C. Sections 101 et seq . (the "Bankruptcy Code") to any person, partnership, corporation or other entity (the "Proposed Assignee"), then such assumption of this Lease and any such assignment or sublease shall be subject to all of the following:

(i) If the rental agreed upon between the DIP or the Trustee, as the case may be, and the Proposed Assignee under any proposed assignment or sublease of the Premises (or any part thereof) is greater than the rental rate that Tenant must pay Landlord hereunder for that portion of the Premises that is subject to such proposed assignment or sublease, or if any consideration shall be received by the DIP or the Trustee, as the case may be, in connection with any such proposed assignment or sublease, then all such excess rental or such consideration shall be paid or delivered to Landlord, and shall not constitute property of the DIP, the Trustee, or of the estate of Tenant, as the case may be, within the meaning of the Bankruptcy Code; and

(ii) Any proposed assignment or sublease of this Lease by the DIP or the Trustee, as the case may be, pursuant to provisions of the Bankruptcy Code shall provide adequate assurance of future performance under this Lease by the Proposed Assignee, which adequate assurance shall include, as a minimum, the following: (i) any Proposed Assignee of the Lease shall deliver to Landlord a security deposit in an amount equal to at least three (3) monthly installments of Base Rent accruing under this Lease; (ii) any Proposed Assignee of the Lease shall provide to Landlord an unaudited financial statement, certified to be accurate by such Proposed Assignee or by an officer, director or partner thereof and dated no later than six (6) months prior to the effective date of such proposed assignment or sublease, which financial statement shall show, the Proposed Assignee to have a net worth equal to at least the Rent that shall accrue under this Lease for the next year of the Term; (iii) any Proposed Assignee shall pay all Rent not previously paid under this Lease including all payments which have been suspended, mitigated, nullified or reduced to a claim of any kind against Tenant or the Tenant's property, by operation of law or otherwise; and (iv) any Proposed Assignee shall assume Tenant's obligation to pay Landlord's attorneys' fees pursuant to the provisions of this Lease.

(i) Subparagraph 15(h) shall not apply to any assignment or sublease other than pursuant to the provisions of the Bankruptcy Code, nor shall it in any way limit Landlord's rights to damages or other relief in a proceeding under the Bankruptcy Code.

16. Three (3) Month Extension Option and Holdover.

(a) Tenant, with respect to the Original Term and each Renewal Term (hereinafter defined), shall have the options (each, a "3-Month Extension Option") to extend the Original Term and each of the Renewal Terms for an extension term of three (3) months (hereinafter referred to as "3-Month Extension Term"). Each 3-Month Extension Term shall commence on the day after the date upon which the Original Term or the then current Renewal Term, as the case may be, is due to expire and shall expire at 11:59 p.m. on the date three (3) months after the date upon which the Original Term or the then current Renewal Term (as the case may be) is due to expire. Each 3-Month Extension Term shall be upon the same covenants, terms and conditions as in this Lease for the Original Term or the then current Renewal Term, as the case may be, except that the rate of Base Rent during any 3-Month Extension Term shall be equal to 110% of the rate of Base Rent in effect during the Original Term or the then current Renewal Term (as the case may be). Tenant may exercise any 3- Month Extension Option by written notice to Landlord given not later than the date which is twelve (12) months prior to the expiration date of the Original Term or the then current Renewal Term (as the case may be).

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(b) If the Tenant or any person claiming through the Tenant shall retain possession of the Premises or any part thereof after the expiration or earlier termination of the term of this Lease and after the three-month Extension Term, and if Landlord shall consent to such continuation of possession, such possession shall be (unless the parties hereto shall otherwise have agreed in writing) deemed to be under a month-to-month tenancy which shall continue until either party shall notify the other in writing, at least thirty (30) days prior to the end of any calendar month, that the party giving such notice elects to terminate such tenancy at the end of such calendar month, in which event such tenancy shall so terminate. Anything contained in the foregoing provisions of this subparagraph to the contrary notwithstanding, the rental payable with respect to each such monthly period shall be 150% of the monthly Base Rent for each additional monthly period and 100% of the Tax Adjustment Amount and of the Expense Adjustment Amount (both calculated in accordance with the provisions of Paragraph 4 hereof) which would have been payable had this Lease been renewed until the end of the Calendar Year which includes such month on the terms and conditions in effect immediately prior to the expiration or termination of the term of this Lease; and such month-to-month tenancy with Landlord's consent shall be upon the same terms and subject to the same conditions as those which are set forth in this Lease except as aforesaid. If Tenant or any person claiming through Tenant shall retain possession of the Premises or any part thereof, after the expiration or earlier termination of the term or of Tenant's right of possession, and if such retention shall be without Landlord's consent, Tenant shall pay Landlord (i) for each month or portion thereof during which such possession continues, an amount equal to the rental to be paid for each month pursuant to the foregoing provisions of this subparagraph l6(b) when such possession is with Landlord's consent, plus all other sums which would have been payable hereunder had the term continued during such retention of possession and (ii) all other damages sustained by Landlord, whether direct or consequential, by reason of such retention of possession. During any such retention of possession without Landlord's consent, all of Tenant's obligations with respect to the use, occupancy and maintenance of the Premises shall continue. The provisions of this subparagraph 16(b) shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law or in equity and applicable to unlawful retention of possession or otherwise.

17. Estoppel Certificate. Tenant shall from time to time, within fifteen (15) days after Tenant's receipt of Landlord's request therefor, execute, acknowledge and deliver to Landlord a written instrument in recordable form (a) certifying (i) that this Lease is in full force and effect and has not been modified, supplemented or amended in any way (or, if there have been modifications, supplements or amendments thereto, that it is in full force and effect as modified, supplemented or amended, and stating such modifications, supplements and amendments) and that this Lease (as modified, supplemented or amended, as aforesaid) represents the entire agreement among Landlord and Tenant as to the Premises and the leasehold; (ii) the dates to which the Base Rent, Additional Rent and other charges arising hereunder have been paid, (iii) the amount of any prepaid rents or credits due to Tenant, if any; and (iv) that if applicable, Tenant has entered into occupancy of the Premises; and (b) stating, to the best knowledge of Tenant, whether or not all conditions under the Lease to be performed by Landlord prior to the date of such certificate have been satisfied and whether or not Landlord is then in default in the performance of any covenant, agreement or condition contained in this Lease and specifying, if any, each such unsatisfied condition and each such default; and (c) stating any other fact or certifying any other condition reasonably requested by Landlord, Landlord's Mortgagee (as defined below), or any prospective mortgagee or purchaser of the Property or of any interest therein.

18. Subordination.

(a) Landlord represents that, as of the date hereof, (i) there are no ground or underlying leases covering the whole or any portion of the Land or the Building, (ii) there are no mortgages or deeds of trust encumbering the Land or the Building or any part of either, other than the deeds of trust (the "Existing Mortgages") described in Exhibit G attached hereto and made a part hereof, and (iii) Connecticut General Life Insurance Company ("CGLIC"), SFI I, LLC ("SFI I") and Newpar, LLC ("Newpar"), and are the sole beneficiaries under the Existing Mortgages. Simultaneously with the execution of this Lease,

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Landlord shall obtain for and deliver to Tenant (i) a nondisturbance agreement, in recordable form and in the form attached hereto as Exhibit H-1 , executed by CGLIC, (ii) a nondisturbance agreement, in recordable form and in the form attached hereto as Exhibit H-2 , executed by SFI I, and (iii) a nondisturbance agreement in recordable form and in the form attached hereto as Exhibit H-3 executed by Newpar, but none of such agreements will diminish Tenant's rights of offset provided in subparagraph 26(h).

(b) Subject to the provisions of the next succeeding sentence of this subparagraph 18(b), Landlord shall have the right to render this Lease subject and subordinate to the lien of any deed of trust (each, a "future mortgage") that is executed after the date hereof and that covers or affects the Building or the Real Property or any part of either. Landlord hereby agrees that Tenant's subordination to any future mortgage shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement, in recordable form and in a form substantially similar to Exhibit H-1 (and which shall not diminish Tenant's rights of offset provided in subparagraph 26(h)), executed by the holder of any such future mortgage.

(c) If Landlord becomes lessee of premises of which the Premises are a part, Tenant agrees that, automatically and without the necessity of any further act but subject to Tenant's receipt of a reasonably satisfactory nondisturbance agreement from the master lessor, Tenant's possession shall be as a subtenant and shall be subordinate to the interest of Landlord's lessor, its heirs, personal representatives, successors and assigns (which lessor, its heirs, personal representatives, successors and assigns, or any of them, is hereinafter called "Paramount Lessor"), but notwithstanding the foregoing, if Landlord's tenancy shall terminate by expiration, by forfeiture or otherwise, then Tenant hereby agrees, upon request of Paramount Lessor, to attorn to Paramount Lessor, and to recognize such lessor as Tenant's landlord for the balance of the term of this lease and any extensions or renewals hereof Tenant shall execute, acknowledge and deliver, upon demand by Landlord or Paramount Lessor, such other instrument or instruments evidencing such subordination of Tenant's right, title and interest under this Lease to the interest of such lessor, and such other instrument or instruments of attornment, as shall be prescribed by such lessor.

19. Certain Rights Reserved by Landlord. Landlord shall have the following rights, each of which Landlord may exercise without notice to Tenant and, except for Landlord's gross negligence or willful misconduct, without liability to Tenant for damage or injury to property, person or business on account of the exercise thereof, and the exercise of any such rights shall not be deemed to constitute an eviction or disturbance of Tenant's use or possession of the Premises and shall not give rise to any claim for set-off or abatement of rent or any other claim:

(a) to change the Building's name or, only if required by the United States Postal Service, street address;

(b) to install, affix and maintain any and all signs on the exterior and on the interior of the Building subject to Tenant's signage rights under this Lease;

(c) to decorate or to make changes, repairs, alterations, additions, or improvements, whether structural or otherwise (including alterations in the configuration of any common areas and the elimination of any immaterial portion of common areas), in and about the Building and Property or any part thereof, and for such purposes to enter upon the Premises, and during the continuance of any of said work, to temporarily close doors, entry ways, public space and corridors in the Building and to interrupt or temporarily suspend services or use of facilities; but Landlord shall endeavor to perform any such work in or about the Premises so as to cause the minimum inconvenience to Tenant practicable under the circumstances;

(d) to designate and approve all window coverings used in the Building;

(e) to approve, disapprove or restrict the weight, size and location of safes, vaults and other heavy equipment and articles in and about the Premises and the Building so as not to exceed the live load per square foot of fifty (50) pounds designated by the structural

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engineers for the Building, and to require all such items and furniture and similar items to be moved into or out of the Building and Premises only at such times and in such manner as Landlord shall reasonably direct in writing. Tenant shall not install or operate machinery or any mechanical devices of a nature not directly related to Tenant's ordinary use of the Premises without the prior written consent of Landlord. Tenant's movements of property into or out of the Building or Premises and within the Building are entirely at the risk and responsibility of Tenant, and Landlord reserves the right to reasonably require permits before allowing any property to be moved into or out of the Building or Premises;

(f) to establish reasonable controls for the purpose of regulating all property and packages, both personal and otherwise, to be moved into or out of the Building and Premises and all persons using the Building after normal office hours;

(g) to reasonably regulate delivery and service of supplies in order to insure the cleanliness and security of the Premises and to avoid congestion of the loading docks, receiving areas and freight elevators;

(h) to show the Premises to prospective tenants at reasonable hours during the last twelve months of the Term and, if vacated or abandoned, to show the Premises at any time and to prepare the Premises for re-occupancy;

(i) to erect, use and maintain pipes, ducts, wiring and conduits, and appurtenances thereto, in and through the Premises at reasonable locations so as not to permanently interfere with Tenant's use and enjoyment of the Premises in any material respect; provided Landlord shall use all reasonable efforts to minimize the interruption of Tenant's use and enjoyment of the Premises and any work within the Premises shall, unless otherwise consented to by Tenant, be completed during non-Business Hours; and

(j) to enter the Premises at any reasonable time upon reasonable verbal notice to inspect the Premises.

20. Rules and Regulations. Tenant shall, and shall cause all of its subtenants and occupants, its and their agents, employees, invitees and licensees to, observe faithfully, and comply strictly with, the rules and regulations attached to this Lease as Exhibit B , as they may be reasonably supplemented and revised for all tenants generally by Landlord from time to time, and such other rules and regulations promulgated from time to time by Landlord, as in Landlord's reasonable judgment may be desirable for the safety, care and cleanliness of the Building and the Premises, or for the preservation of good order therein. Landlord shall not be liable to Tenant for violation of such rules and regulations by, or for Landlord's failure to enforce the same against, any other tenant, its subtenants and occupants and its and their agents, employees, invitees or licensees, nor shall any such violation or failure constitute, or be treated as contributing to, an eviction, actual or constructive, or affect Tenant's covenants and obligations hereunder, or allow Tenant to reduce, abate or offset the payment of any rent under this Lease. Notwithstanding the foregoing, Landlord will use reasonable efforts to enforce the rules and regulations in a nondiscriminatory manner against all tenants generally.

21. Remedies.

(a) If default shall be made in the payment of any rent or any installment thereof or in the payment of any other sum required to be paid by Tenant under this Lease or under the terms of any other agreement between Landlord and Tenant pertaining to the Premises, Building, Real Property or the Complex and such default shall continue for ten (10) days after written notice to Tenant, or if default shall be made in the observance or performance of any of the other agreements, covenants or conditions in this Lease (or in any other agreement between Landlord and Tenant) which Tenant is required to observe and perform and such default shall continue for thirty (30) days (fifteen (15) days in the event that the continuation of the default is a threat to property, life or insurance coverage pertaining to the Building) after written notice to Tenant unless such default is not reasonably capable of being cured within such thirty (30) day period (or fifteen (15) day period, if applicable), in which event there shall be a default if Tenant fails to commence such cure within thirty (30) days (or

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fifteen (15) days, if applicable) or thereafter fails to diligently pursue such cure to completion which shall in no event exceed ninety (90) days, or if the interest of Ten.ant in this Lease shall be levied on under execution or other legal process that is not released within ninety (90) days thereafter; or

(b) if Tenant is in default (after expiration of any applicable cure periods) in the performance of any of its obligations under that certain Lease Agreement of even date (the "Denver Place Lease") between Tenant, as tenant, and Landlord's affiliate, Denver Place Associates Limited Partnership ("DPA"), as landlord, pertaining to certain leased premises located on the fourteenth (14th) floor of that building known as Denver Place-North Tower, 999 - 18th Street, Denver, Colorado; or

(c) if Tenant becomes the subject of commencement of an involuntary case under the federal bankruptcy law as now or hereafter constituted, or there is filed a petition against Tenant seeking reorganization, arrangement, adjustment or composition of or in respect of Tenant under the federal bankruptcy law as now or hereafter constituted, or under any other applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or seeking the appointment of a receiver, liquidator or assignee, custodian, trustee, sequestrator (or similar official) of Tenant or any substantial part of its property, or seeking the winding-up or liquidation of its affairs and such involuntary case or petition is not dismissed within ninety days after the filing thereof, or if Tenant commences a voluntary case or institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it, under the Federal bankruptcy laws as now or hereafter constituted, or any other applicable Federal or state bankruptcy or insolvency or other similar law, or consents to the appointment of or taking possession by a receiver or liquidator or assignee, trustee, custodian, sequestrator (or other similar official) of Tenant or of any substantial part of its property, or makes any assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due or fails to generally pay its debts as they become due.

Landlord may treat the occurrence of any one or more of the foregoing events as a breach of this Lease, and thereupon at its option may, without notice or demand of any kind to Tenant or any other person, have any one or more of the following described remedies in addition to all other rights and remedies provided at law or in equity or elsewhere herein:

(i) At the option of Landlord, the whole balance of rent, charges and all other sums payable hereunder, whether or not payable as rent, for the entire balance of the Term herein reserved or agreed to be paid by Tenant, or any part of such rent, charges and other sums, less [A] the amount of any rent and other sums received by Landlord from the reletting of the Premises during the first year after Tenant's default after deducting (x) the reasonable costs and expenses of reentry, retaking, repossession, recovering and of reletting, (y) the reasonable cost and expense of redecorating and remodeling, and (z) the cost and expenses of making repairs and alterations to the Premises that are necessary for the purpose of such reletting and [B] the fair rental value of the Premises (as improved by any redecorating, remodeling, repairs and alterations) for the period commencing after the date of Tenant's default until what would have been the end of the term of the Lease had Tenant not defaulted, with all such sums payable hereunder being discounted to their present value at the rate of six percent (6%), and upon payment to Landlord of all amounts under this subparagraph 21(c)(i), the Lease shall terminate; and/or

(ii) Landlord, by giving written notice to Tenant, may terminate this Lease and the Term, in which event Landlord may immediately repossess the Premises by legal proceedings or otherwise without force; or

(iii) Landlord, by giving written notice to Tenant, may terminate Tenant's right of possession and may immediately repossess the Premises by legal proceedings or otherwise without force, without terminating this Lease.

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(iv) Except to the extent Landlord obtains a remedy under clause (i) above or clause (v) below, after reentry, retaking, repossessing or recovering of the Premises, whether or not Landlord has terminated this Lease, Landlord may, but shall be under no obligation to, except to the extent Landlord is required to mitigate its damages under Colorado law, relet the same or any portion thereof for such rent and upon such terms as shall be deemed advisable by Landlord; and whether or not the Premises are relet, Tenant shall be liable for any loss of rent for such period as would be the balance of the term of this Lease and any renewals thereof plus the reasonable costs and expenses of reentry, retaking, repossession and recovering, and of reletting and of redecorating, remodelling and making repairs and alterations to the Premises for the purpose of reletting amortized on a straight line basis (without interest) over the shorter of the term of such reletting or what would have been the remaining Term of this Lease had the default not occurred, the amount of such liability to be computed monthly and paid by Tenant to Landlord at the end of each month. Except to the extent Landlord is required to mitigate its damages under Colorado law, Landlord shall not have any duty to relet the Premises, nor shall any damages or other sums to be paid by Tenant to Landlord be reduced by any failure to relet the Premises or failure to collect the rent from any reletting. Tenant shall not be entitled to any rents received by Landlord in excess of the rents provided for in this Lease. Tenant agrees that Landlord may file suit to recover any sums falling due under the terms of this Paragraph 21 from time to time and that no suit or recovery of any portion due Landlord hereunder shall be any defense to any subsequent action brought for any amount not theretofore reduced to judgment in favor of Landlord. If Landlord relets the Premises, such reletting shall not be considered a termination of this Lease unless Landlord has given Tenant a notice wherein Landlord expressly states that this Lease is terminated.

(v) If Landlord shall terminate this Lease as provided in subparagraph(c)(ii) above, Landlord, at its option, shall be entitled to recover as damages the net present value (discounted at the rate of six percent (6%) per annum) of the excess, if any, at the time of such termination, of the amount of the Base Rent payable under this Lease for the balance of the term of this Lease (including, any extension options which have been exercised) over the then fair rental value of the Premises for the same period, plus all costs and expenses of Landlord caused by Tenant's default, including, but not limited to, reasonable attorney's fees.

(vi) Notwithstanding any provision of this Lease to the contrary, nothing in this Lease shall be construed to relieve the Landlord of its duty to mitigate its damages. Except for a claim under subparagraph 26(o)(ii), Tenant shall not be responsible for any special, consequential or punitive damages including, but not limited to, loss of profits or interruption of business as a result of any default by Tenant under this Lease, except that Tenant shall be responsible for consequential damages incurred by Landlord resulting from Tenant's retention of possession of the Premises, or any portion thereof after the expiration or earlier termination of the term of this Lease without Landlord's written consent.

If any payment of Rent or any other sum, or any part of any such payment, to be made by Tenant under the terms of this Lease shall become overdue for a period in excess of five (5) days Tenant shall pay to Landlord (x) a "late charge" of $.05 for each dollar so overdue, for the purpose of defraying the expense incident to handling such overdue or delinquent payment, and (y) interest on the overdue amount at the Lease Interest Rate (defined below) from the date when such payment was due until the date paid, but in no event more than the amount or rate which is the maximum amount or rate Landlord may lawfully charge in respect of Tenant in such circumstances under applicable law. Notwithstanding the foregoing, the "late charge and interest" shall not be imposed on Tenant's first late payment of Base Rent during any calendar year during the Term provided such payment is made by Tenant within five (5) days after receipt of written notice from Landlord. The "Lease Interest Rate" shall mean the greater of 15% per annum or such variable rate which is from time to time equal to 3% above the prime rate as stated by US Bank, Denver, Colorado or its successor, or, in the absence of there being a successor to US Bank, by such other bank having an

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office in the City of Denver, as Landlord may from time to time select. Nothing herein shall be construed as waiving any rights of Landlord arising out of any default of Tenant by reason of Landlord's accepting any such late charge or interest; the right to collect a late charge and interest is separate and apart from any other rights or remedies of Landlord after default by Tenant.

Without limiting the generality of the foregoing, if Tenant shall be in default in the performance of any of its obligations hereunder, Landlord may (but shall not be obligated to), in addition to any other rights it may have in law or in equity, cure such default on behalf of Tenant, and Tenant shall reimburse Landlord upon demand for any sums paid or costs incurred by Landlord in curing such default, including reasonable attorneys' fees and other legal expenses, together with interest at the Lease Interest Rate from the dates of Landlord's incurring of costs or expenses.

All remedies available to Landlord hereunder and otherwise available at law or in equity shall be cumulative and concurrent. No termination of this Lease nor taking or recovering possession of the Premises shall deprive Landlord of any remedies or actions against Tenant for Rent, for charges, or for damages for the breach of any term, covenant or condition herein contained, nor shall the bringing of any such action for Rent, charges or breach of term, covenant or condition, nor the resort to any other remedy or right for the recovery of Rent, charges or damages for such breach be construed as a waiver or release of Landlord's other remedies. The failure of Landlord to insist upon strict or prompt performance of the terms, agreements, covenants and conditions of this Lease or any of them, or the acceptance of such performance thereafter shall not constitute or be construed as a waiver of Landlord's right to thereafter enforce the same strictly according to the tenor thereof in the event of a continuing or subsequent default.

Notwithstanding anything in this Paragraph 21 or any other provision of this Lease to the contrary, this Lease shall not be terminated by service upon Tenant of a notice from Landlord demanding payment of Rent or possession of the Premises following default by Tenant, or by any action of Tenant to vacate the Premises following receipt of such a notice, unless the notice served by Landlord includes a statement expressly terminating this Lease. Further, Landlord reserves the right to receive payment of all unaccrued Rent for the balance of the Term originally contemplated under Paragraph 1 of this Lease (and any extensions or renewals thereof to which Tenant shall have become bound) following service of such a notice for payment or possession, or a notice terminating this Lease for Tenant's default.

22. Expenses of Enforcement. Provided that Landlord is the prevailing party, Tenant shall pay upon demand all Landlord's costs, charges and expenses, including the fees and out-of-pocket expenses of counsel, agents and others retained by Landlord, incurred by Landlord, whether or not suit is brought, in enforcing Tenant's obligations hereunder or in collecting any amounts due from Tenant or any subtenant or assignee hereof or in enforcing any provision of this Lease or in any litigation, negotiation or transaction in which Tenant causes Landlord without Landlord's fault to become involved or concerned or in reletting the Premises or any portion thereof after default by Tenant. Landlord and Tenant further agree that in the event any legal action or proceeding is commenced to enforce the obligations set forth in this Lease, the prevailing party shall be paid all reasonable costs and expenses including, but not limited to, reasonable attorneys' fees from the other party.

23. Covenant of Quiet Enjoyment. Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved or required and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed, shall, during the Term, peaceably and quietly have, hold and enjoy the Premises free from interference by Landlord or any person claiming by, from or under Landlord, subject, however, to the terms, covenants, conditions, provisions and agreements hereof

24. Security Deposit. Landlord and Tenant acknowledge and agree that Tenant has not provided, and is not required to provide, any initial security deposit in connection with this Lease.

25. Real Estate Broker. Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this Lease by Agent as Landlord's agent and by Garth R. D.

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Tait, Broker, Ltd. ("Tait") as Landlord's subagent, and (ii) Tenant has been represented in connection with this Lease by The Staubach Company (Barry Dorfman, Joe Hollister and Ken Gooden) ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Lease, made by any broker or finder (other than Agent, Tait and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Lease provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, Tait and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Lease, and agrees to indemnify, defend and hold Tenant harmless from and against any claims, for a commission or other compensation in connection with this Lease, made by any broker or finder who claim to have dealt with or communicated to Landlord in connection with this Lease provided that Tenant has not in fact retained such broker or finder.

26. Miscellaneous.

(a) Rights Cumulative . All rights and remedies of the parties under this Lease shall be cumulative and none shall exclude any other rights or remedies allowed by law, in equity or otherwise.

(b) Captions and Usage . The titles appearing in connection with the various sections and paragraphs of this lease are for convenience only; they are not intended to indicate all of the subject matter in the text and they are not to be used in interpreting this Lease nor for any other purpose in the event of any controversy. As used herein (i) the term "person" shall be deemed to include a natural person, a trustee, a corporation, a partnership, a governmental unit and any other form of legal entity; (ii) all usages in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular number as well; the use of any gender includes all genders.

(c) Binding Effect . Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Paragraph 15 hereof

(d) Lease Contains All Terms . There are no promises, representations, warranties or undertakings by, or binding upon, Landlord with respect to the Building, the Premises or the Real Property, including, but not limited to, any with regard to alteration, remodeling, redecorating or installation of equipment or fixtures in the Premises, except those, if any, that are expressly set forth in this Lease. References to this Lease include the Addendum and all Exhibits. No modification, waiver or amendment of this Lease or of any of its conditions or provisions shall be binding upon Landlord unless in writing signed by Landlord or by a duly authorized agent of Landlord empowered by a written authority signed by Landlord. The terms of the executed, revised letter of intent dated May 22, 2002 and signed on behalf of the Landlord on May 28, 2002 are superseded by this Lease.

(e) Submission of Lease . The submission of this Lease to Tenant, or its broker or other agent, does not constitute an offer to Tenant to lease the Premises. This Lease shall have no force and effect until (a) it is executed and delivered by Tenant to Landlord and (b) it is fully reviewed and executed by Landlord; provided, however, that, upon execution of this Lease by Tenant and delivery to Landlord, such execution and delivery by Tenant shall, in consideration of the time and expense incurred by Landlord in reviewing the Lease and Tenant's credit, constitute an offer by Tenant to lease the Premises upon the terms and conditions set forth herein (which offer to lease shall be irrevocable for ten (10) business days following the date of delivery). Tenant acknowledges that Landlord's acceptance of this Lease is conditioned upon approval of this Lease by the beneficiaries of the Existing Mortgages. Landlord's execution and delivery of this Lease shall constitute evidence that such approval has been granted by such beneficiaries.

(f) No Air Rights . No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease.

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(g) Business Days . As used in this Lease, the term "business days" means Mondays through Fridays, excluding days on which the United States Postal Service does not make regularly scheduled deliveries of first class mail.

(h) Landlord's Default . A "Default by Landlord" shall exist hereunder if Landlord breaches or fails to comply with any agreement, term, covenant or condition in this Lease applicable to Landlord and such breach or failure to comply continues for a period of thirty (30) days (fifteen (15) days in the event of a default that is a threat to property or life) after Tenant gives written notice of such breach to Landlord and the holder of any mortgage or deed of trust covering the Building, Real Property or any portion thereof and whose address Tenant has been notified of in writing (a "Landlord's Mortgagee"), if any, which written notice will refer to this subparagraph 26(h) and specify such failure, or, if such breach or failure to comply cannot reasonably be cured within such thirty (30) day period (fifteen (15) days if applicable), if neither Landlord, nor Landlord's Mortgagee, if any, shall in good faith commence to cure such breach or failure to comply within such thirty (30) day period (fifteen (15) days if applicable) or shall not proceed therewith to completion within one hundred eighty (180) days. In addition to any of the rights and remedies Tenant may have under law, in the event of a Default by Landlord,(i) Tenant may bring a separate action against Landlord for any claim Tenant may have against Landlord under this Lease and Tenant may recover actual damages against Landlord, or (ii) Tenant may (but shall not be obligated to), cure such default on behalf of Landlord, and Landlord shall reimburse Tenant upon demand for all reasonable sums paid or costs incurred by Tenant in curing such default, including reasonable attorneys' fees and other legal expenses, together with interest at the Lease Interest Rate from the dates of Tenant's incurring of costs or expenses. Except for a claim under subparagraph 26(o)(iii), Landlord shall not be responsible for any special, consequential or punitive damages including, but not limited to, loss of profits or interruption of business as a result of any Default by Landlord hereunder. In the event Tenant obtains a judgment ("Judgment") against Landlord from a court of competent jurisdiction, Tenant shall have the right to offset the amount due under the Judgment with interest thereon at the Lease Interest Rate against rent becoming due under this Lease after the date of the entry of the Judgment unless Landlord posts a bond with the court entering the Judgment in an amount which is at least equal to the amount of the Judgment. Notwithstanding the foregoing, in the event of Landlord's failure to comply with any obligation under this Lease to pay money to Tenant (including, but not limited to Landlord's obligation to pay the Construction Allowance to Tenant), a Default by Landlord will be deemed to exist if the failure continues for ten (10) days after written notice to Landlord and Landlord's Mortgagee (and whose address Tenant has been notified of in writing). Except for the rights of offset set forth in this subparagraph 26(h), Tenant shall have no other right under this Lease to offset against its obligation to pay Rent or any other amounts due to Landlord under this provision of this Lease. In the event Landlord and Landlord's Mortgagee fail to pay any installment of the Construction Allowance within thirty days after written notice to Landlord and Landlord's Mortgagee (and whose address Tenant has been notified of in writing), Tenant shall have the right to offset the amount owed to Tenant against Rent becoming due under this Lease, and the amount owed will accrue interest at the Lease Interest Rate from the eleventh (11th) day after such notice until paid.

(i) Transfer of Landlord's Interest . Notwithstanding anything contained herein to the contrary, Tenant agrees that(i) neither Landlord nor any partner in Landlord, nor any other person having any interest, direct or indirect, immediate or more removed than immediate, in Landlord, shall have any personal liability with respect to any of the provisions of this Lease; and (ii) Tenant shall look solely to the estate and property of Landlord in the Real Property for the satisfaction of Tenant's remedies, including without limitation, the collection of any judgment or the enforcement of other judicial process requiring the payment or expenditure of money by Landlord, subject, however, to the prior rights of any holder of any mortgage covering all or part of the Real Property; and (iii) no other assets of Landlord or its partners, or of any other aforesaid person having an interest in Landlord, shall be subject to levy, execution or other judicial process for the satisfaction of Tenant's claims. Without limitation of the foregoing, upon each transfer of the Building and Landlord's interest in this Lease, the transferor shall automatically be released from all liability and obligations under this

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Lease; provided, however, Tenant's rights of offset provided under subparagraph 26(h) shall continue to apply after any transfer.

(j) Recording: Short Form Memo . This Lease shall not be recorded by Tenant. If it is recorded by Tenant, Landlord shall have the right to terminate this Lease as of the date of recording or thereafter and Landlord shall have all rights and remedies provided in the case of default by Tenant hereunder. lf requested by Landlord, Tenant shall execute, in recordable form, a short form memorandum of lease that may, at Landlord's option, be placed of record. In addition, if requested by Landlord, Tenant shall execute a memorandum of lease to be filed with the Colorado Department of Revenue, on such form as may be prescribed by said Department, within ten days after the execution of this Lease, or any other such memorandum, so that Landlord may avail itself of the provision of statutes such as C.R.S. § J9-22-604(7)(C).

(k) Covenants and Conditions . All of the covenants of Tenant hereunder shall be deemed and construed to also be "conditions", if Landlord so elects, as well as "covenants" as though the words specifically expressing or importing covenants and conditions were used in each separate instance. Tenant's covenants to pay rent are independent of any other covenant, agreement, term or condition of this Lease.

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

(m) Landlord's Authority . Landlord represents and warrants that it has title to Building and the Real Property and has full right and authority to lease the Premises to Tenant and to otherwise enter into this Lease on the terms and conditions set forth herein.

(n) Governing Law; Partial Invalidity . This Lease shall be governed and construed in accordance with the law of the state in which the Premises is located. If any term, provision of condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease (or the application of such term, provision or condition to persons or circumstances other than those in respect of which it is invalid or unenforceable) shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted bylaw.

(o) Hazardous Materials .

(i) The Landlord hereby represents that to the best of its knowledge, no Hazardous Materials (as defined below) are located within the Building or Parking Garage and that there has never been environmental pollution to the Property. In the event that Hazardous Materials are located in the Building or Parking Garage not as a result of Tenant's conduct, and any action is required to be taken under any Environmental Law (hereinafter defined), then Landlord will promptly give written notice to Tenant that identifies the Hazardous Materials and the actions required to be taken and Landlord will take such action to bring the Building and Parking Garage into compliance with applicable Environmental Laws within thirty (30) days after the requirement arises and will -provide reasonable evidence of such compliance to the Tenant; provided, however, in the event such compliance or registration cannot reasonably be completed or obtained within such thirty (30) days, the Landlord will not be in default hereunder provided the Landlord commences such corrective action within said thirty (30) days and diligently pursues the same to completion. Notwithstanding the foregoing, in the event the presence of Hazardous Substances (for reasons other than the violation of Tenant's covenants under subparagraph 26(o)(ii)) renders all or any portion of the Premises untenantable for seven (7) consecutive business days, then Rent payable hereunder shall abate commencing on the eighth (8th) business day of such untenantability in whole (if the entire Premises

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is untenantable) or in part (if only a portion of the Premises is untenantable) until the Premises are tenantable. For purposes of this subparagraph 26(o)(i),[A] in the event that more than seventy-five percent (75%) of any floor included in the Premises is untenantable, it shall be deemed that the entire floor is untenantable, but if more than fifty percent (50%) of any floor is included in the Premises is untenantable and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that the entire floor is untenantable; and [B] if more than seventy-five percent (75%) of the Premises is untenantable, then all of the Premises will be deemed untenantable. If the period of untenantability shall continue for one hundred twenty (120) days, then Tenant, by notice to Landlord prior to the end of the period of untenantability may terminate this Lease.

(ii) Tenant shall not store highly flammable materials or goods, explosives, perishable foodstuffs (except in refrigerators), contraband, live animals, materials or goods which emit odors (except for ordinary use of microwave ovens) in or upon the Premises. The Tenant covenants that it shall not store, use or possess nor permit the storage, use or possession of any Hazardous Substance (hereinafter defined) upon the Premises, except of the kind and in the quantities customarily used in commercial office buildings and parking garages and except that Tenant shall be permitted to use batteries for the purpose of providing an emergency power supply and halon for the purpose of providing fire suppression in the computer room provided that Tenant complies with all Environmental Laws (hereinafter defined). Hazardous Substance for purposes of this Lease shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea-formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum based products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials, as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq. (including the so-called 11Superfund" amendments thereto); the Toxic Substances Control Act, as amended, 15 U.S.C. Sections 2601, et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Sections 6901, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 5101, et seq. (formerly 49 U.S.C. 1801, et seq.); or any other similar law, rule, regulation or statute concerning the protection of the environment (collectively "Environmental Laws"). Tenant hereby covenants and agrees, at its sole cost and expense, to indemnify, protect and defend and save harmless the Landlord Related Parties from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, actions, proceedings, costs, disbursements and expenses (including, without limitation, attorneys' and experts' fees, expenses and disbursements) of any kind or nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against the Landlord Related Parties relating to, resulting from or arising out of Tenant's failure to comply with its obligations under the foregoing section or Tenant's violation of any Environmental Law with respect to its use of the Premises. Notwithstanding any provision contained in this Lease to the contrary, the indemnification provisions set forth in this subparagraph 26(o)(ii) shall survive any expiration or termination of this Lease.

(iii) Landlord hereby covenants and agrees, at its sole cost and expense, to indemnify, protect and defend and save harmless the Tenant Related Parties from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, actions, proceedings, costs, disbursements and expenses (including, without limitation, attorneys' and experts' fees, expenses and disbursements) of any kind or nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against the Tenant Related Parties resulting from any spill or discharge of a Hazardous Substance within the Building or Parking Garage resulting from Landlord's gross negligence or willful misconduct.

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(p) Americans With Disabilities Act . The Landlord hereby represents that to the best of its knowledge that the Building currently complies with the Americans With Disabilities Act, 42 USC §12101 et seq . and regulations currently promulgated thereunder ("ADA"). In the event the representation contained in this subparagraph is materially untrue or incorrect and as a result thereof the Tenant's use and enjoyment of the Premises is materially and adversely affected, the Landlord shall be permitted thirty (30) days after receipt of written notice from the Tenant to bring the Building into compliance with the ADA and to provide reasonable evidence of the same to the Tenant; provided, however, in the event such compliance cannot reasonably be completed or obtained within such thirty (30) days, the Landlord will not be in default hereunder provided the Landlord commences such corrective action within said thirty (30) days and diligently pursues the same to completion.

(q) Warranty Disclaimer . LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COM:MERCIALPURPOSE, AND TENANT'S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS LEASE, TENANT SHALL CONTINUE TO PAYTHE RENT, WITHOUT ABATEMENT, SET OFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.

(r) Waiver of Trial by Jury . LANDLORD AND TENANT SHALL, AND HEREBY DO, WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND ANY EMERGENCY STATUTORY OR ANY OTHER STATUTORY REMEDY.

(s) Force Majeure . Other than for Tenant's or Landlord's obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent, maintenance of insurance, payments or refunds of Operating Expenses, and payments by Landlord to Tenant of the Construction Allowance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the reasonable control of such party. Notwithstanding the foregoing, no period of time will be extended with respect to the dates for Landlord's payment of the Construction Allowance under subparagraph 3(f), the delivery date of the Premises to Tenant under subparagraph 3(g), periods of interruption of services described in subparagraph 7(c), notice periods and repair periods upon the occurrence of a casualty as described in subparagraph 11(a), periods of time for requests and responses with respect to proposed assignments and sublettings under subparagraphs l5(b), and periods within which nonmonetary defaults may be cured under subparagraph 26(h).

(t) List of Exhibits . All exhibits and attachments attached hereto are incorporated herein by this reference:



Addendum
Exhibit A	Plan
Exhibit B	Rules and Regulation
Exhibit C	Lease Term Agreement
Exhibit D	Parking Agreement
Exhibit E	Janitorial Specifications
Exhibit F	Landlord's Rules for General Contractors
Exhibit G	Existing Mortgages
Exhibit H-1	CGLIC SNDA Form

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Exhibit H-2	SFI I SNDA Form
Exhibit H-3	Newpar SNDA Form
Exhibit I	Storage Lease Form
Exhibit J	Building Standard Materials
Exhibit K	Approved Subcontractors
Exhibit L	HVAC Specifications
Exhibit M	Description of Other Tenant's Rights
Exhibit N	Garage License Agreement (Generator)

27. Telephone and Telecommunications Service.

(a) Tenant acknowledges and agrees that all telephone and telecommunications services ("Telecommunications Services") desired by Tenant shall be ordered and utilized at the sole expense of Tenant. Landlord represents to Tenant that fiberoptic cables connecting the Building to the Complex (the "Fiberoptic Cables") are currently in place. Unless Landlord otherwise requests or consents in writing, all equipment, apparatus and devices, including without limitation wiring and cables, for the provisions of Telecommunications Services (the "Telecommunications Equipment") shall be and remain solely in the Premises; provided, however, that Tenant has Landlord's permission to use up to two (2) lines of the Fiberoptic Cables within or outside of the Premises in order to connect the Premises to Tenant's leased premises located at·the Complex (the "Denver Place Premises") and such lines of the Fiberoptic Cables shall be deemed part of the Telecommunications Equipment hereunder. Tenant shall bear the sole responsibility and expense of coordinating with an existing telecommunications provider for the connection of the Fiberoptic Cables to the Premises and the Denver Place Premises and the servicing thereof; provided, however, that there shall be no additional charge by Landlord for Tenant's use of such Fiberoptic Cables. Unless otherwise specifically agreed in writing, Landlord shall have no responsibility for the maintenance of Tenant's Telecommunications Equipment, nor for any wiring or other infrastructure to which Tenant's Telecommunications Equipment may be connected. Tenant agrees that, to the extent any Telecommunications Services are interrupted, curtailed or discontinued, Landlord shall have no obligation or liability with respect thereto and it shall be the sole obligation of Tenant, at its sole expense, to obtain substitute service, and Tenant will be granted such temporary access to portions of the Building as reasonably required for the purpose of correcting any such interruption.

(b) Landlord shall have the right, upon such notice as is practicable in the case of emergencies, and otherwise upon reasonable prior notice to Tenant, to interrupt or turn off telecommunications facilities in the event of emergency or as necessary in connection with repairs to the Building or installation of telecommunications equipment for other tenants of the Building. Except in the case of emergencies, Landlord will use reasonable efforts to make necessary repairs or permit installation of telecommunications equipment for other tenants outside of normal business hours.

(c) Any and all Telecommunications Equipment installed in the Premises, or elsewhere in the Building by or on behalf of Tenant, including wiring and other facilities for the provision of Telecommunications Services but excluding the Fiberoptic Cables, shall be removed by Tenant upon the expiration or earlier termination of the Term of this Lease, by Tenant at its sole expense or, at Landlord's election, by Landlord at Tenant's sole expense, with the cost thereof to be paid as Additional Rent under this Lease.

(d) If the Telecommunications Equipment (excluding the Fiberoptic Cables) is not removed by Tenant within thirty (30) days of the termination or expiration of this Lease, the Telecommunications Equipment shall conclusively be deemed to have been abandoned and may be removed, appropriated, sold, stored, destroyed, otherwise disposed of, or retained and used, by Landlord without notice to Tenant, without obligation to account therefor, and without payment to Tenant or credit against any amount due from Tenant to Landlord pursuant to this Lease. Tenant shall pay to Landlord upon demand all costs of any such removal, disposition and storage of the Telecommunications Equipment, as well as all costs to repair any damage to the Building caused by such removal.

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(e) In the event that Tenant wishes at any time to utilize the services of a telephone or telecommunications provider whose equipment is not then servicing the Building (a "New Provider"), no such New Provider shall be permitted to install its lines or other equipment within the Building without first securing the prior written approval of Landlord, which approval may be withheld in Landlord's sole and absolute discretion. Landlord's approval shall not be deemed any kind of warranty or representation by Landlord, including, without limitation, any warranty or representation as to the suitability, competence or financial strength of the New Provider. Without limitation of Landlord's right to withhold consent in its sole and absolute discretion, Landlord may refuse to give its approval unless all of the following conditions are satisfied: (i) Landlord shall incur no expense whatsoever with respect to any aspect of the New Provider's provision of its services, including, without limitation, the costs of installation, materials and services; (ii) prior to commencement of any work in or about the Building by the New Provider, the New Provider shall supply Landlord with such written indemnities, insurance, financial statements, and such other items as Landlord, in its sole and absolute discretion, determines to be necessary to protect its financial interests and the interests of the Building related to the proposed activities of the New Provider; (iii) the New Provider agrees in writing to abide by such rules and regulations, building and other codes, job site rules and such other requirements as are determined by Landlord, in its sole and absolute discretion, to be necessary to protect the interest of the Building, the tenants in the Building and Landlord; (iv) Landlord determines, in its sole and absolute discretion, that there is sufficient space in the Building for the placement of all of the New Provider's equipment and materials; (v) Landlord receives from the New Provider such compensation as is determined by Landlord, in its sole and absolute discretion, to compensate it for space used in the Building for the storage and maintenance of the New Provider's equipment, for the fair market value of the New Provider's access to the Building, and any costs which may be expected to be incurred by Landlord; and (vi) all of the foregoing matters are documented in a written agreement between Landlord and the New Provider, the form and content of which are satisfactory to Landlord in its sole and absolute discretion.

(f) Notwithstanding any provision of the preceding subparagraph to the contrary, the wrongful refusal of Landlord to grant its approval to any New Provider shall not be deemed a default or breach by Landlord of its obligation under this Lease that would entitle Tenant to terminate this Lease or claim entitlement to rent abatement for Landlord's refusal to grant Tenant's request for approval of a New Provider. Instead, Tenant will be entitled to an order of specific performance compelling Landlord to grant its approval as to the prospective provider in question. The provisions of this Paragraph 27 may be enforced solely by Tenant and Landlord and are not for the benefit of any other party. Specifically, but without limitation, no telephone or telecommunications provider is intended to be, nor shall be deemed, a third party beneficiary of this Lease.

(g) Tenant shall not utilize any wireless communications equipment (other than usual and customary cellular telephones), including antenna and satellite receiver dishes, within the Premises or the Building, without Landlord' prior written consent. Such consent shall be granted only in the sole and absolute discretion of Landlord, and shall be conditioned in such a manner, in Landlord's sole and absolute discretion, so as to protect Landlord's financial interests and the interests of the Building, and the other tenants therein.

(h) Landlord agrees to provide Tenant with one four inch riser between the ninth (9th) and twelfth (12th) floors of the Building for Tenant's use and Tenant shall not permit use of such riser by any third party, including, but not limited to a New Provider.

28. Notices. All notices to be given under this Lease shall be in writing and delivered personally or deposited in the United States mail, certified or registered mail with return receipt requested, postage prepaid or by reputable overnight courier, addressed as follows:



If to Landlord:		Amerimar Realty Management Co.-Colorado 999 - 18th Street, Suite 1201 Denver, Colorado 80202

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with a copy to:		Amerimar Realty Management Co.-Colorado 999 - 18th Street, Suite 1201 Denver, Colorado 80202

or to such other person or such other address designed by notice sent by Landlord to Tenant.



If to Tenant:		Western Gas Resources, Inc. 12200 North Pecos Street Denver, Colorado 80234 Attention: General Counsel

and after occupancy of the Premises by Tenant, at the Premises, or to such other address as is designated by Tenant in a notice to Landlord; it being agreed that if Tenant shall vacate the Premises, notices to Tenant thereafter shall nevertheless be properly given if addressed to Tenant at the Premises unless and until another address is designated by Tenant by notice to Landlord.

Notice by mail shall only be deemed to have been given and delivered seventy-two (72) hours after being deposited in the United States mail and notice by courier will only be deemed given and delivered on the following business day after deposit with a reputable overnight carrier with instructions for next business day delivery.

29. Time is of the Essence. Time is of the essence hereof.

[Remainder of Page Intentionally Left Blank.]

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IN WITNESS WHEREOF, Landlord and Tenant, intending to be legally bound hereby, have executed this Agreement of lease as of the day and year first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: 7/31/02		By: /s/ Authorized Signatory President & CEO (Title)

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ADDENDUM

THIS ADDENDUM, made as of the 30th day of July, 2002, is between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant"). Landlord and Tenant have executed simultaneously with this Addendum that certain Denver Place Plaza Tower Office Lease (the "Lease") pertaining to certain space in the building commonly known as Denver Place Plaza Tower and located at 1099 Eighteenth Street, Denver, Colorado. In the event of any conflict between the provisions of this Addendum and the provisions of the other portions of the lease, the provisions of this Addendum shall control. The capitalized terms used herein and not defined herein shall have the same meanings used in the other portions of the Lease. Landlord and Tenant hereby agree that the Lease is amended and supplemented as follows:

30. Renewal Options .

(a) First Renewal Option . Tenant shall have the option to renew ("First Renewal") this Lease for one additional term of five (5) years ("First Renewal Term"), commencing upon the expiration of the Original Term of this Lease, on the condition that Tenant is not in default (after expiration of any applicable cure period) under this Lease at the time Tenant gives notice of exercise of its First Renewal option or at the time of commencement of the First Renewal Term. The First Renewal shall be on all of the terms, covenants and conditions of this Lease, except (i) there shall be no Construction Allowance, Partial Termination Option (hereinafter defined) Termination Option (hereinafter defined), (ii) the annual Base Rent for the Premises during the First Renewal Term shall be ninety-five percent (95%) of the Fair Market Rental Rate ("FMRR") as defined in subparagraph 30(c) below, at the time the First Renewal Term begins, and (iii) the Operating Expense Base Amount and the Tax Base Amount shall each be the Calendar Year in which the First Renewal Term commences. Tenant's First Renewal option may be exercised only by Tenant giving Landlord written notice of Tenant's election to exercise such option, at least nine (9) months prior to the end of the Original Term, time being of the essence with respect to such notice.

(b) Second Renewal Option . Provided Tenant exercises the First Renewal, Tenant shall have the option to renew ("Second Renewal") this Lease for one additional term of five (5) years ("Second Renewal Term"), commencing upon the expiration of the First Renewal Term of this Lease, on the condition that Tenant is not in default (after expiration of any applicable cure period) under this Lease at the time Tenant gives notice of exercise of its Second Renewal option or at the time of commencement of the Second Renewal Term. The Second Renewal shall be on all of the terms, covenants and conditions of this Lease, except: (i) there shall be no Construction Allowance, Partial Termination Option and Termination Option, (ii) Tenant shall not have any right to further renewal beyond such additional five - year term, (iii) the annual Base Rent for the Premises during the Second Renewal Term shall be ninety-five percent (95%) of the FMRR as defined in subparagraph 30(c) below, at the time the Second Renewal Term begins, and (iv) the Operating Expense Base Amount and the Tax Base Amount shall each be the Calendar Year in which the Second Renewal Term commences. Tenant's Second Renewal option may be exercised only by Tenant giving Landlord written notice of Tenant's election to exercise such option at least nine (9) months prior to the end of the First Renewal Term of the Lease, time being of the essence with respect to such notice.

(i) For the purposes of this Lease, the term "Fair Market Rental Rate" or "FMRR" shall mean an amount per square foot of the rentable area of the Premises per annum, reasonably determined by reference to the market for comparable space (including the extent and condition of the build-out) in the Building and other first

Addendum- 1

class office buildings similar in size, age, quality and character to the Building and situated in the central business district of Denver, Colorado ("Comparable Buildings") that a willing landlord would offer and a willing tenant would accept in an arms length transaction for the renewal of a lease of such office space

[A] commencing on the commencement date applicable to such Renewal Term,

[B] providing for no free rent, a tenant finish allowance equal to the value of the tenant improvements in place upon the Premises to a prospective tenant as of the commencement date of the Renewal Term, and

[C] otherwise on all of the terms and conditions of this Lease, including the Tenant's obligation to pay the Expense Adjustment Amount and Tax Adjustment Amount in accordance with the provisions of Paragraph 4. (If there are insufficient transactions for comparable space in Comparable Buildings to determine the FMRR, renewal transactions for comparable space in other buildings may be utilized but appropriate adjustments must be made to reflect that the transactions did not occur in Comparable Buildings.)

(ii) Landlord shall deliver to Tenant its proposed FMRR for a Renewal Term within thirty (30) days after Landlord's receipt of notice of Tenant's election to exercise the Renewal Option ("Renewal Notice"). Landlord and Tenant shall use reasonable good faith efforts to mutually agree upon the FMRR within sixty (60) days after Tenant's delivery of the Renewal Notice.

(iii) In the event Landlord and Tenant do not agree upon the FMRR for the Renewal Term within the sixty (60) day period described in subparagraph 30(c)(ii), the FMRR shall be determined by appraisal, said appraisal shall be conducted in accordance with the following procedures:

[A] Within twenty (20) days after receipt of a notice to appraise given by either party, Landlord and Tenant shall each select a real estate appraiser, who shall be a member of the American Institute of Real Estate Appraisers, and who shall have at least five (5) years appraisal experience with respect to commercial and office rental properties in the central business district of Denver, Colorado. If one of the parties hereto fails to appoint an appraiser within the time period prescribed, then the single appraiser appointed shall be the sole appraiser and shall determine the FMRR at issue. If two appraisers are appointed, they shall have thirty (30) days from the date the second appraiser is appointed (the "30-day Appraisal Period") within which to agree upon the FMRR at issue. The appraiser(s) shall be advised that the determination of the FMRR at issue shall be governed by the definitions of same set forth in this Lease. The determination by the two appraisers of the FMRR at issue shall be binding on Landlord and Tenant.

[B] If the two appraisers appointed by the parties hereto are unable to agree upon the FMRR at issue within the 30-day Appraisal Period, then said appraisers shall attempt, within ten (10) days after the expiration of the 30-day Appraisal Period, to select a third appraiser (the "Third Appraiser"). If the first two appraisers are unable to agree on the Third Appraiser within the ten (10) day period prescribed in the immediately preceding sentence, either Landlord or Tenant, by giving ten (10) days notice to the other party hereto, shall request that the presiding judge of the District Court for the City and County of Denver, State of Colorado select the Third Appraiser. The Third Appraiser, however selected, shall meet the qualifications set forth in subparagraph 30(b)(iii)[A] above, and shall be a person who has not within five (5) years previously acted in any capacity for either Landlord or Tenant.

Addendum- 2

[C] On or before the tenth (10th) day after the Third Appraiser is appointed or selected, the first two appraisers shall each simultaneously submit in sealed envelopes his/her opinion of the fair market base rent at issue, together with any written arguments or data in support of said opinion(s), to the Third Appraiser. Within thirty (30) days after he/she is appointed or selected, the Third Appraiser shall determine the FMRR at issue by selecting one of the opinions submitted by the first two appraisers. The selection of the Third Appraiser shall be binding on Landlord and Tenant.

[D] Each party hereto shall pay the fees and expenses of the appraiser selected by such party, and the fees and expenses of the Third Appraiser shall be borne equally by Landlord and Tenant.

31. Right of First Refusal .

(a) Grant of Right of First Refusal . Upon and subject to the terms and conditions set forth in this Paragraph 31, Landlord hereby grants to Tenant a continuous right of first refusal (the."Right of First Refusal") covering all the office space in the Building located upon the third (3rd) through the fifteenth (15th) floors (both inclusive) of the Building (the "Offer Space") throughout th Term. In the event Landlord shall desire to lease all or part of the Offer Space (whether or not as part of a larger space) during the Term, as evidenced by the issuance of a proposal to a third party by or on behalf of Landlord covering such space, or Landlord's acceptance of a proposal from a third party (either of the proposals being herein referred to as an "Acceptable Proposal"), Landlord shall first and promptly offer to lease such Offer Space that Landlord is offering to third parties ("Designated Refusal Space'') to Tenant, by giving written notice ("Landlord's Refusal Notice") to Tenant. Landlord's Refusal Notice shall identify the Designated Refusal Space, state the Designated Refusal Space Rate (as hereinafter defined) for the Designated Refusal Space and the allowance for improvements to the Designated Refusal Space ("Designated Refusal Space Allowance") shall specify any included parking rights and shall specify the date such Designated Refusal Space is expected to be available for commencement of construction of improvements, the expiration date of the lease of the Designated Refusal Space and all other material terms of the proposed lease transaction, including parking rights (if any). Within seven (7) business days after Landlord gives Tenant such notice, Tenant shall, by written notice to Landlord ("Refusal Exercise Notice"), elect or decline to exercise its Right of First Refusal and, with respect to any Refusal Exercise Notice delivered within twenty-seven (27) months after the Commencement Date, Tenant shall select its desired Designated Refusal Space Rate from the two rates provided in Landlord's Refusal Notice pursuant to subparagraph 31(k). Tenant shall have no right to lease less than the entire Designated Refusal Space. If Tenant fails to give such notice to Landlord within such seven (7) business day period, Tenant shall be deemed to have declined to exercise its Right of First Refusal with respect to such Designated Refusal Space. Notwithstanding the foregoing, Tenant shall have no right to exercise the Right of First Refusal (and, at Landlord's option, any previous exercise of the Right of First Refusal shall be null and void) if Tenant is in default (after expiration of any applicable cure period) under this Lease at any time when it attempts to exercise the Right of First Refusal or at any time thereafter until such Designated Refusal Space has been added to the Premises. If Tenant declines or is deemed to have declined to exercise the Right of Refusal, Landlord thereafter shall have the right to lease such Designated Refusal Space to the prospective tenant, upon such terms and conditions and for such period or successive periods of time as Landlord, in its sole discretion, shall determine; provided, however, that (i) the overall economic terms of any lease with the prospective tenant shall not be substantially more favorable to the prospective tenant than the terms set forth in Landlord's Refusal Notice, and (ii) the lease with the prospective tenant shall be fully executed within six (6) months after the date of delivery of the Landlord's Refusal Notice to Tenant or the date of expiration or termination of any lease affecting any portion of such Designated Refusal Space in the event such prospective tenant (or any of its affiliates) is then a tenant of any portion of the Designated Refusal Space, whichever date is later. In the event a lease with the prospective tenant has not been fully executed within the time period provided in clause (ii), Landlord shall not be permitted to

Addendum- 3

lease such Designated Refusal Space without again providing a Landlord's Refusal Notice in compliance with the provisions of this subparagraph 31(a).

(b) Subject to Other Rights . The Right of First Refusal shall be subject and subordinate to any renewal, expansion or similar rights granted to any tenant (including successors and assigns) of the Building prior to the date of this Lease (and specified on Exhibit M attached hereto) or granted to any tenant (including successors and assigns) leasing any Designated Refusal Space after Tenant declines or is deemed to have declined to exercise the Right of First Refusal.

(c) Refusal Space Preliminary Information and Plans . Landlord shall deliver to Tenant no later than three (3) days after Landlord's receipt of the Refusal Exercise Notice for use by Tenant, such plan or plans and other information with respect to such Designated Refusal Space and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's Designated Refusal Space Layout Plans (hereinafter defined). The date that Landlord delivers such plans and other information is herein referred to as the "Information Delivery Date".

(d) Tenant's Designated Refusal Space Layout Plans . In the event Tenant exercises the Right of First Refusal, Tenant shall prepare and deliver to Landlord not later than thirty (30) days after the Information Delivery Date one mylar and two black line prints of architectural layout drawings (which shall be 1/8" scale), three copies of all specifications (including equipment specifications), and two (2) non-copyrighted CADD disks ("Tenant's Designated Refusal Space Layout Plans"), prepared by Architect providing for Tenant's proposed layout for the construction and finishing of improvements to such Designated Refusal Space for Tenant's occupancy. Tenant's Designated Refusal Space Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by the Architect, (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements, and (v) provide for the use of Building standard materials (identified in Exhibit J attached hereto) for drywall, top track system, doors, door frames, hardware, window coverings and HVAC. Tenant's Designated Refusal Space Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed and which only may be disapproved by Landlord in the event that the proposed Tenant's Designated Refusal Space Layout Plans violate any governmental regulations or adversely affect the Building's structure or mechanical systems, and such plans shall be deemed modified to take account any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant's Designated Refusal Space Layout Plans are approved within seven (7) business days after their delivery to Landlord. Tenant's Designated Refusal Space Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final Designated Refusal Space Layout Plans". Concurrently with delivery of Tenant's Designated Refusal Space Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the Premises respecting the matters which are the subject of this Paragraph 31 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 31; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(e) Designated Refusal Space Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval by Landlord of the Final Designated Refusal Space Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("Designated Refusal Space Engineering Plans"), based on the Final Designated Refusal Space Layout Plans (and such pertinent additional information as shall have been submitted

Addendum- 4

by Tenant with Tenant's Designated Refusal Space Layout Plans or as requested by Landlord), as may be required to complete such Designated Refusal Space in accordance with the Final Designated Refusal Space Layout Plans. As soon as reasonably possible, and in any event within seven (7) business days after submission to Tenant by Landlord of the Designated Refusal Space Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final Designated Refusal Space Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the Designated Refusal Space Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contrary within seven (7) business days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final Designated Refusal Space Layout Plans. The Designated Refusal Space Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the Designated Refusal Space Engineering Plans so changed.

(f) Completion of Improvements by Landlord . Landlord shall, in a good and workmanlike manner, cause such Designated Refusal Space to be improved and completed in accordance with the Final Designated Refusal Space Layout Plans and the Designated Refusal Space Engineering Plans (the "Designated Refusal Space Work") (such plans are hereinafter together called the "Designated Refusal Space Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of at least as good a grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's written approval of any material change shall first be obtained (which approval shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final Designated Refusal Space Layout Plans). The Designated Refusal Space Work shall be furnished, installed and performed by Landlord for an amount (hereinafter called the "Designated Refusal Space Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and services applied to the Designated Refusal Space Work, plus a three percent (3%) construction management fee payable to Agent on all Designated Refusal Space Improvement Costs, permit fees and applicable sales taxes. Within five (5) business days after Landlord receives the bid(s) for construction of the Designated Refusal Space Work (the "Designated Refusal Space Bid"), Landlord shall notify Tenant of the estimated Designated Refusal Space Improvement Costs based upon the Designated Refusal Space Bid (the "Estimate of Designated Refusal Space Improvement Costs"). Landlord agrees to obtain not less than two (2) Designated Refusal Space Bids for the completion of any Designated Refusal Space Work from qualified unaffiliated general contractors licensed in the City and County of Denver selected by Landlord. All such Designated Refusal Space Bids must be based upon all work being performed in compliance with all of Landlord's then-current rules and regulations for construction in, on or around the Building, and all work must meet applicable Building standards for construction. Landlord shall enter into a contract with the general contractor that submits the lowest Designated Refusal Space Bid; provided, however, that Landlord may select any general contractor submitting a Designated Refusal Space Bid within four percent (4%) of the lowest Designated Refusal Space Bid submitted. Landlord's contract with the general contractor will provide for either a GMP. The GMP cannot be exceeded except by execution of a change order approved in writing by Tenant, which approval will not be unreasonably withheld. If the Estimate of Designated Refusal Space Improvement Costs is greater than the Designated Refusal Space Allowance, Tenant will be given the opportunity to request revisions to the Designated Refusal Space Construction Plans for the purpose of reducing the amount of such Costs, and in that event Landlord will cause the selected general contractor to reprice its bid based upon the revisions requested by Tenant.

(g) Payment for Designated Refusal Space Tenant Work . Landlord shall pay for the Designated Refusal Space Improvements Cost, up to the amount of the Designated Refusal Space Allowance (hereinafter defined) to be determined in accordance with the provisions of subparagraph 31(k). Tenant shall pay Landlord for the Designated Refusal

Addendum- 5

Space Refusal Space Improvements Cost in excess of the Designated Refusal Space Allowance (''Excess Designated Refusal Space Costs") from time to time during the progress of the work, within ten (10) days after receipt of Landlord's invoice or invoices therefor, in amounts representing the Excess Designated Refusal Space Costs for the Designated Refusal Space Work theretofore performed and also for material for Designated Refusal Space Work delivered to the Building which exceed the Designated Refusal Space Allowance, less (except as next provided) the amounts theretofore paid by Tenant to Landlord on account thereof; provided, however, that Landlord may require that, before Landlord commences any Designated Refusal Space Work, Tenant shall pay to Landlord twenty-five percent (25%) of the amount estimated by Landlord to be the Excess Designated Refusal Space Costs ("Designated Refusal Space Deposit"), which twenty-five percent (25%) shall be applied against the last of the Designated Refusal Space Work to be paid for by Tenant to Landlord. In the event the Designated Refusal Space Allowance is not completely used, Tenant shall not be entitled to any unused portion of the Designated Refusal Space Allowance. In the event an unused balance remains from the Designated Refusal Space Deposit after completion of the Designated Refusal Space Work and payment of Designated Refusal Space Tenant Costs, Landlord agrees to pay to Tenant the unused portions of the Designated Refusal Space Deposit within thirty (30) days after the Designated Refusal Space Commencement Date (hereinafter.defined).

(h) Delivery of Possession of Designated Refusal Space . Landlord shall cause the substantial completion of Designated Refusal Space Work to be completed within a reasonable time period and shall deliver actual possession of the Designated Refusal Space to Tenant upon completion of the Designated Refusal Space Work. If Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Lease), fail to make available to Tenant possession of the Designated Refusal Space on or before any promised or expected date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Under such circumstances, all of Tenant's rights and obligations hereunder with respect to the Designated Refusal Space, including, but not limited to, its obligations to pay the Base Rent, the Tax Adjustment Amount and the Expense Adjustment Amount attributable to the Designated Refusal Space shall not commence until the earlier of the date ("Designated Refusal Space Commencement Date"), that substantial completion of construction of the Designated Refusal Space Work occurs and such Designated Refusal Space is made available for Tenant's occupancy or would have been made available without a Designated Refusal Space Tenant Delay (hereinafter defined), and such failure to make available to Tenant possession of the Designated Refusal Space on any date or to timely complete any work, shall not in any other way affect the validity or continuance of this Lease, or the Term, or the obligations of Tenant hereunder and such deferral of rent shall be Tenant's sole and exclusive right and remedy with respect to any such failure. Notwithstanding the foregoing, if substantial completion and tender of the Designated Refusal Space does not occur within 60 days after its originally estimated delivery date, Tenant shall have the right to terminate the Lease with respect to the Designated Refusal Space by giving written notice of termination to Landlord within 90 days after its originally estimated delivery date, in which event the Designated Refusal Space will not become part of the Premises and Landlord will promptly refund to Tenant any Designated Refusal Space Deposit. As used in this Paragraph 31, "substantial completion" or "substantially completed" means that all of the Designated Refusal Space Work has been completed in accordance with the Designated Refusal Space Construction Plans, final approvals and any other consent of an applicable governmental authority have been obtained to permit Tenant's occupancy and use of the Designated Refusal Space, and all mechanical and other systems are operational and have been inspected. There shall be no deferral of rent, however, to the extent that such failure is caused by any act or omission of Tenant, its agents, servants, employees or contractors and which would not have otherwise occurred, which has the effect of delaying Landlord's delivery of possession or the timely completion of any work to be done by Landlord (hereinafter a "Designated Refusal Space Tenant Delay") including, without limitation, (i) any delay which is caused by changes in the work to be performed by Landlord in readying such Designated Refusal Space for Tenant's occupancy, (ii) any delay which is caused by any failure by Tenant to furnish to Landlord any required plan, information, approval or consent within the period of time required therefor by the terms of

Addendum- 6

this Lease or caused by any reasonable reluctance on the part of Landlord to approve any plan or other information required to be submitted by Tenant and approved by Landlord, but such disapproval may only be because the matter adversely affects the structure of the Building or Building mechanical systems or would violate the regulations of any applicable governmental authority, or (iii) any delay which is caused by the performance of any work or activity in such Designated Refusal Space by Tenant or any of its employees, agents or contractors. Tenant also shall pay to Landlord, within ten (10) days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Designated Refusal Space Work resulting from any Designated Refusal Space Tenant Delay to the extent that the same is not covered by the Designated Refusal Space Construction Allowance.

(i) Occupancy . Designated Refusal Space shall not be deemed incomplete or not ready for occupancy or for delivery of possession, if substantial completion of the Designated Refusal Space Work has occurred, even though details of construction, mechanical adjustments or decoration, or other items of the Designated Refusal Space Work which do not materially interfere with Tenant's use of such Designated Refusal Space, remain to be done. Notwithstanding the foregoing, Tenant shall deliver to Landlord within fifteen (15) days after such Designated Refusal Space Commencement Date a punch-list ("Designated Refusal Space Punch List") of items of the Designated Refusal Space Work which need to be corrected in the reasonable determination of Tenant. Landlord shall cause the items listed in such Designated Refusal Space Punch List to be corrected within thirty (30) days after receipt of such Designated Refusal Space Punch List, provided, however, if any such correction cannot be completed within such thirty (30) days, then Landlord shall commence correcting such item within the thirty (30) day time period and shall pursue completion with reasonable diligence. Landlord will correct the punch list items outside of regular business hours if performing the work during regular business hours would interfere with Tenant's use of the Premises.

(j) Addition to Lease . Such Designated Refusal Space shall be added to the Premises, for all purposes, as of such Designated Refusal Space Commencement Date for the balance of the Term and subject to all of the terms, covenants and conditions of this Lease, except that (i) the Base Rent for the Designated Refusal Space shall be the Designated Refusal Space Rate stated in the Landlord's Refusal Notice; provided, however, in the event Landlord's Refusal Notice includes the Pre-Negotiated DSR Rate (hereinafter defined, the Base Rent shall be the Designated Refusal Space Rate selected by Tenant in its Refusal Exercise Notice), (ii) Tenant shall be provided with an allowance for the completion of such Designated Refusal Space Work equal to the Designated Refusal Space Allowance stated in Landlord's Refusal Notice; provided, however, in the event Tenant selects the Pre-Negotiated DSR Rate in its Refusal Exercise Notice the allowance shall be the Pre-Negotiated DSR Allowance (hereinafter defined), and (iii) Tenant's rights to additional parking shall be as stated in Landlord's Refusal Notice; provided, however, in the event Tenant selects the Pre≠ Negotiated DSR Rate in its Refusal Exercise Notice notwithstanding the parking rights stated in Landlord's Refusal Notice, Tenant shall have an option to rent one (1) additional unreserved parking space located in the Parking Garages for each 1,000 rentable square feet contained in the Designated Refusal Space at the rates posted from time to time by the Operator (as defined in Exhibit D ) which option must be exercised within thirty (30) days after such applicable Designated Refusal Space Commencement Date. The annual Base Rent for the Designated Refusal Space shall be payable in equal monthly installments, in advance, commencing on such Designated Refusal Space Commencement Date. Tenant's Proportionate Share shall be increased to a new percentage, calculated by dividing the then total number of rentable square feet of the Premises (including such Designated Refusal Space) by 514,000 square feet. In the event the Designated Refusal Space Commencement Date occurs on a day other than the first day of a calendar month, then the Base Rent for the initial month in which the Designated Refusal Space Commencement Date occurs shall be prorated on a per diem basis. Upon addition of the Designated Refusal Space to the Premises, this Lease shall be deemed modified in the manner set forth above without the necessity of any further agreement or document; provided, however, Landlord and Tenant agree to execute, acknowledge and deliver an instrument evidencing such modification of this Lease to be prepared by Landlord.

Addendum- 7

(k) Designated Refusal Space Rate and Designated Refusal Space Allowance . For the purposes of this Paragraph 31, the terms: (i) "Designated Refusal Space Rate" shall mean the rate set forth in Landlord's Refusal Notice; provided, however, that with respect to any Landlord's Refusal Notice delivered at least seven (7) days prior to the expiration of the twenty-seventh (27th) month of the Term, the Landlord's Refusal Notice shall state two Designated Refusal Space Rates, one rate shall be equivalent to the rate provided in the Acceptable Proposal and one rate shall be $20.37 on an annual per rentable square foot basis (the "Pre-Negotiated DSR Rate"); and (ii) "Designated Refusal Space Allowance" shall mean the allowance set forth in Landlord's Refusal Notice; provided, however, that with respect to any Landlord's Refusal Notice delivered at least seven (7) days prior to the expiration of the twenty-seventh (27th) month of the Term, the Landlord's Refusal Notice shall state two Designated Refusal Space Allowances, one allowance shall be equivalent to the amount provided in the Acceptable Proposal and the other allowance (the "Pre-Negotiated DSR Allowance") shall be an amount equal (on a per rentable square foot basis) to the product of $25.00 multiplied by a fraction, the denominator of which is 93 and the numerator of which is the number of complete calendar months scheduled to occur from such Designated Refusal Space Commencement Date through the Termination Date.

(l) Additional Offer Space . In the event any Offer Space is or becomes vacant and is not subject to a lease agreement prior to the expiration of the twenty-seventh (27th) month occurring after the Commencement Date and Tenant desires to lease such Offer Space (as evidenced in a writing delivered to Landlord) prior to the Landlord having first offered such Offer Space to third parties as provided in subparagraph 3 l(a) above, the parties agree that Tenant shall be permitted to lease such Offer Space in accordance with the terms of this Paragraph 31 on the following terms: (i) Tenant shall not be entitled to any free rent period; (i) the annual Base Rent shall be $20.37 on an annual per rentable square foot basis; and (iii) the allowance for the construction of improvements to such additional Offer Space shall be equal to the product of $25.00 multiplied by a fraction, the denominator of which is 93 and the numerator of which is the number of complete calendar months scheduled to occur from the date the additional Offer Space is added to the premises under this Lease through the Termination Date.

32. Signs and Building Directory.

(a) Tenant shall have the right to install or erect the following interior signs: (i) such interior signs as Tenant deems necessary or appropriate in or on the Premises, provided the same are not illuminated and are not visible from outside the Building; (ii) a sign bearing Tenant's name (or the name under which Tenant is doing business) and/or Tenant's logo on the entry doors to the Premises; and (iii) a sign bearing Tenant's name (or the name under which Tenant is doing business) and/or Tenant's logo in the public corridor(s) of the floor(s) on which the Premises are located. Notwithstanding the foregoing, any sign on the entry doors to the Premises located on a floor on which Tenant is not the only tenant, and any sign in the public corridor(s) of any floor on which Tenant is not the only Tenant, shall be made up of Landlord's Building standard plaques, on which Tenant may utilize its graphics.

(b) Tenant shall be permitted to maintain its sign on a slot to be designated by Landlord on the Monument Sign (as hereinafter defined). Tenant shall repair and maintain its slot on the Monument Sign and the characters and letter thereon in a condition comparable to the condition of similar signs installed or erected in Comparable Building. If at any time during the Term Tenant's name changes, Landlord, at Tenant's expense, shall change Tenant's name on the Monument Sign. The term "Monument Sign" shall mean that certain monument sign currently located in front of and serving the Building, upon which the name "Sprint" currently appears. In the event the rentable area of the Premises becomes less than 50,000 square feet, the Landlord shall have the right to terminate Tenant's right to maintain its sign on the Monument Sign at any time after the delivery of ten (10) days' prior written notice to Tenant.

Addendum- 8

(c) Landlord shall maintain the directory board in the ground floor lobby of the Building containing the names of tenants and their employees. Tenant shall have the right to use one (1) space or slot on said directory board for each 5,000 rentable square feet contained in the Premises from time to time. In the spaces or slots so allocated to Tenant, Tenant may inscribe Tenant's name, the names of Tenant's employees located in the Building, and the names of Tenant's permitted sublessees or their employees. If from time to time during the Term Tenant wishes to change any name(s) listed on the directory board, Landlord, at its expense, shall change such name; provided, however, that if Tenant requests more than ten (10) changes in any Calendar Year, then Tenant, within thirty (30) days after its receipt of a demand therefor, shall reimburse Landlord for the actual cost to Landlord for the strip needed to make the eleventh (11th) and each subsequent change requested during such Calendar Year.

33. Parking . Landlord shall provide Tenant with the parking rights described in Exhibit D attached hereto.

34. Storage Space . Tenant shall have the option, to be exercised by written notice to Landlord on or before October 1, 2002, to lease up to 300 square feet of storage space located in the Parking Garage. If Tenant exercises its option to lease any such storage space, then (i) Landlord shall deliver the same to Tenant within ninety (90) days after the date of Tenant's exercise notice, (ii) the storage space shall be delivered to Tenant with adequate lighting, a ceiling height of not less than 7 1/2 feet, framed out with unfinished sheetrock walls and with a door and a complete lock set, (iii) the storage space shall be in a maximum of two (2) areas; (iv) the term of the leasing of such storage space shall commence on the date Landlord so delivers the storage space to Tenant and, unless terminated sooner by Tenant, shall end upon the termination of this Lease, and (v) Landlord and Tenant shall enter into a Storage Lease in substantially the same form and content as Exhibit I attached hereto prior to Landlord's delivery of the Storage Space. During the portion of the term of the leasing of the storage space that occurs during the Original Term, Tenant shall pay to Landlord for such space annual rent at the rate of $7.00 per square foot of the storage space per annum. During the portion of the term of the leasing of the storage space that occurs during any Renewal Term, Tenant shall pay to Landlord for such space annual rent at a rate reasonably determined by Landlord to be the prevailing rate for storage space in the Parking Garage leased separately to other tenants of the Building (i.e., not included as part of the base rent) at the time of the commencement of such Renewal Term. The annual rent shall be payable in equal monthly installments on the first day of each calendar month falling within the term of the leasing of the storage space. There shall be no additional rent or other charges due for such storage space; accordingly, the Tenant's Proportionate Share shall not be increased to reflect the addition of the storage space. Tenant, upon at least thirty (30) days prior written notice to Landlord given at any time, may terminate the term of the leasing of the storage space.

35. Satellite Equipment .

In the event that the Premises are not equipped with access to a cable television line, Tenant shall have the right, subject to the provisions of this Paragraph 35, to install and maintain two (2) satellite or microwave antenna and related equipment on the roof of the Building (hereinafter referred to together with any additional and replacements as the "Satellite Equipment").

Tenant shall not be obligated to pay any additional rent to Landlord for the rights granted in this Paragraph 35 during the Original Term and during any Renewal Term Tenant shall pay as additional rent under this Lease a monthly charge reasonably determined by Landlord to be the prevailing charge imposed by Landlord upon other tenants of the Building for similar equipment installed upon the Building.

The Satellite Equipment shall consist of up to two (2) dishes, neither of which shall exceed thirty-six inches (36") in diameter and shall not carry any electrical charge nor be capable of being operated in any manner which could cause any interference with any operations of Landlord or any other tenant of the Building. Tenant agrees to provide information regarding the characteristics of the Satellite Equipment as Landlord may reasonably require from time to time upon ten (10) days' written notice.

Addendum- 9

The Satellite Equipment shall be installed or relocated only by an experienced, licensed and bonded antenna installer, at Tenant's sole expense. Prior to installation or relocation of the Satellite Equipment, Tenant shall obtain Landlord's prior written approval of the installation plan and specifications, which approval shall not be unreasonably withheld. The installation or relocation of the Satellite Equipment shall be overseen by a representative of Landlord, which representative shall be entitled, notwithstanding any prior consent obtained in accordance with this subsection but subject to the other provisions of this Paragraph 35, to terminate or prevent the installation or relocation should said representative determine during the course of the installation or relocation that the installation or relocation of the Satellite Equipment will in any way hinder or interfere with the use of the roof, or will in any way damage or injure the Building's roof.

The location of the Satellite Equipment shall be determined by Landlord from time to time in its reasonable discretion. The Satellite Equipment shall initially be installed on the Building's roof in such location thereon as Landlord determines and that will reasonably satisfy Tenant's requirements for its intended use of the Satellite Equipment. The Landlord reserves the right at any time during the Term, however, to require the Tenant to relocate the Satellite Equipment on the Building's roof within sixty (60) days after Landlord delivers written notice ("Relocation Notice") to the Tenant requiring such relocation. Within such sixty (60) days Tenant shall remove the Satellite Equipment from its.then location and shall install the Satellite Equipment on such new location as is designated by Landlord in the Relocation Notice, provided that Landlord has no right to require relocation of the Satellite Equipment to any location that will materially diminish Tenant's ability to use the Satellite Equipment in the manner and to the extent as used immediately prior to the requested relocation. Landlord shall pay all out-of-pocket costs and expenses of Tenant's physical relocation of the Satellite Equipment to the new location, excluding costs and expenses of any nature which are incidental or consequential to such relocation. Tenant shall not be entitled to any compensation for ny inconvenience or interference with Tenant's business, nor to any abatement or reduction in rent, nor shall Tenant's obligations under this Lease be otherwise affected as a result of the required relocation of the Satellite Equipment.

Tenant agrees that the installation, maintenance, operation, manner of use, relocation and removal of the Satellite Equipment shall conform in all respects with all applicable federal, state and local laws, ordinances and regulations. Before installation of any Satellite Equipment is completed, and thereafter from time to time as may be reasonably required by Landlord, Tenant shall submit to Landlord such evidence of compliance with the foregoing laws and regulations as Landlord may require.

Tenant shall, at its sole expense, install and maintain any Satellite Equipment in safe condition and good repair. Upon twenty (20) days' notice from Landlord, Tenant shall, at its own expense, alter, repair or perform any other work in connection with the Satellite Equipment and any related equipment that may be required by Landlord. Tenant agrees that it shall be liable to Landlord for any damage to the roof or any other part of the Building resulting from, and for any costs or expenses incurred in connection with, the maintenance, use, operation, relocation or removal of the Satellite Equipment, and (ii) shall hold Landlord harmless from the cost and expense of any and all repairs, replacements and other work which the Landlord may incur by reason of the installation, operation, maintenance, use, relocation or removal of any Satellite Equipment.

Subject to the other provisions of this Paragraph 35, Tenant agrees to comply with all reasonable requirements of Landlord as to the manner of installation, operation, maintenance, use, relocation and removal of any Satellite Equipment.

Except in the case of emergencies, during which Tenant shall give such notice as is practicable, Tenant agrees to notify Landlord's building manager during Business Hours and at least four (4) hours prior to any occasion upon which Tenant or any of its employees or agents intend to go upon the Building's roof. Tenant shall at all times comply with all such other reasonable safety and security requirements as may be prescribed by Landlord with respect to access to the Building's roof.

Landlord shall have the right to make any repairs and to do work, including, without limitation, any repairs and/or work relating to waterproofing, in and about the area where any

Addendum- 10

Satellite Equipment is located, which Landlord deems necessary to protect the roof. Subject to the provisions of this Paragraph 35 of the Lease, Tenant agrees that it will reimburse Landlord, upon demand, for the cost of such repairs which, in Landlord's reasonable judgment, are required due to the installation, use, operation, maintenance, relocation or removal of any Satellite Equipment, such reimbursement to be made within thirty (30) days after Landlord's delivery of a statement therefor to Tenant.

Tenant agrees to indemnify, defend and hold Landlord harmless from all demands, damages, losses, costs (including reasonable attorneys' fees) and claims of any injury to any person or damage to any property which arise by reason of Tenant' installation, use, operation, maintenance, relocation or removal of any Satellite Equipment.

In the event that the installation, use, operation, maintenance, relocation or removal of any Satellite Equipment is in violation of any.applicable permit, license, rule, regulation, statute or other provision of any federal, state, county, municipal or other governmental authority, then the provisions of this Paragraph 35 shall immediately terminate, upon notice to Tenant (the "Telecommunications Termination Notice"), but only if Tenant is unable to resolve the purported violation to the reasonable satisfaction of Landlord within ten (10) business days after it receives written notice there.of. Upon the earlier of(i) the termination of the provisions of this Paragraph 35, or (ii) the termination or expiration of this Lease, Tenant shall promptly remove the Satellite Equipment, including all related equipment, wiring, brackets, and miscellaneous apparatus, from its location, and any damage, holes or penetrations shall be promptly repaired by Tenant to Landlord's satisfaction. If the Satellite Equipment is not removed within thirty (30) days of the earlier of (i) Tenant's receipt of the Telecommunications Termination Notice and no cure by Tenant as described in this subparagraph, or (ii) the termination or expiration of this Lease, the Satellite Equipment shall conclusively be deemed to have been abandoned and may be removed, appropriated, sold, stored, destroyed, otherwise disposed of, or retained and used, by Landlord without notice to Tenant, without obligation to account therefor, and without payment to Tenant or credit against any amount due from Tenant to Landlord pursuant to this Lease. Tenant shall pay to Landlord upon demand all costs of any such removal, disposition and storage of the Telecommunications Equipment, as well as all costs to repair any damage to the roof caused by such removal.

The provisions and requirements of Paragraph 8 of this Lease shall apply to work done or caused to be done with respect to the Satellite Equipment.

There shall be no allowance or abatement of rent to Tenant by reason of inconvenience, annoyance or injury to, or interruption of operation of, any Satellite Equipment arising from Landlord, Tenant or others making repairs, restorations, replacements, alterations, additions or improvements to or on the roof.

Tenant shall neither hold nor attempt to hold Landlord or its agents or employees liable for, and Tenant shall hold harmless and indemnify Landlord and its agents and employees from and against, any and all demands, claims, causes of action, liabilities or judgments, and any and all fees and expenses (including, without limitation, reasonable attorneys' fees) incurred by Landlord in connection therewith, arising from the death or injury of any person, including, without limitation, any agent, employee, contractor and any other person in or about the roof, or from damage to any property, including, without limitation, the roof, any adjacent property or the property of any tenant or user of the roof, in connection with or arising out of the Satellite Equipment or related equipment or the installation, use, operation, maintenance, repair, alteration, relocation or removal of any Satellite Equipment or related equipment, or the interruption of operation of any Satellite Equipment from any cause other than the gross negligence or willful misconduct of Landlord, its agents and employees; provided, however, in no event shall Landlord be liable for Tenant's consequential damages. In addition, Tenant shall, at its own expense, and upon demand of Landlord, defend any and all suits, arbitrations or other proceedings brought or instituted by third parties against Landlord, its agents or employees, on such claim, demand or cause of action.

Tenant shall pay Landlord for all charges for electrical current used in the use or operation of the Satellite Equipment, other communications equipment located in the Leased Premises and other equipment associated with the operation of the Satellite Equipment. If necessary

Addendum- 11

to ascertain the specific charges attributable to the Satellite Equipment and related equipment, Landlord shall install or relocate a separate electrical line to service the Satellite Equipment, and Tenant shall immediately pay all costs incurred in connection with such installation or relocation.

All other relevant provisions of the Lease shall apply to the Satellite Equipment and related equipment.

Removal of the Satellite Equipment or termination or expiration of the Lease shall not release Tenant from any liability or obligation hereunder which may have accrued or may be accruing at the time of the renewal or termination or expiration, all of which shall survive such removal or termination or expiration.

The provisions of this Paragraph 35 shall not be deemed to grant any exclusive rights to Tenant, and Landlord shall have the right to enter into agreements permitting the installation of other equipment or facilities on the Building's roof provided, however, that such subsequent agreement shall not operate to materially interfere with the Tenant's operation of the Satellite Equipment.

36. Tenant's First Partial Termination Option . Tenant shall have the one-time option ("Partial Termination Option") to partially terminate this Lease as of June 30, 2008 (the "Early Termination Date") with respect to a portion of the Premises ("Partial Termination Premises") consisting of either the entire portion of the Premises located on the ninth (9th) floor of the Building or the entire portion of the Premises located on the twelfth (12th) floor of the Premises (whichever portion is selected by Tenant), provided that the Tenant delivers written notice of its intent to exercise said option ("Partial Termination Notice") to the Landlord together with the Partial Termination Payment (hereinafter defined) on or before September 30, 2007 ("Termination Notice Date"). In the event Tenant has not delivered the Partial Termination Notice and Partial Termination Payment to Landlord on or before the Termination Notice Date, Tenant's Partial Termination Option shall be deemed to have expired. For purposes of this Paragraph 36 "Partial Termination Payment" shall be the amount of $532,825.53. If the Tenant exercises the Partial Termination Option as provided in this paragraph, then,

(a) the Partial Termination Premises shall no longer constitute a part of the Premises as of 11:59 p.m. (Denver time), on the Early Termination Date,

(b) Tenant shall permanently relinquish its right to lease 60 of the unreserved Parking Spaces and three of the reserved Parking Spaces,

(c) Tenant's annual Base Rent shall be reduced by $413,449.89 (the product of $20.37 multiplied by the number of rentable square feet contained in the Partial Termination Premises),

(d) Tenant's Proportionate Share shall be decreased by 3.95% (20,297 rentable square feet divided by 514,000), and

(e) Tenant shall completely vacate the Partial Termination Premises on or before the Early Termination Date in accordance with the provisions of Paragraph 6 of the Lease.

Landlord and Tenant acknowledge and agree that the losses, damages and costs Landlord will incur as a result of the early partial termination of the Lease pursuant to Tenant's exercise of the Partial Termination Option are extremely difficult to ascertain and that the Partial Termination Payment represents a fair and reasonable estimate of such losses, damages and costs. Notwithstanding any other provision of this Paragraph 36, any Partial Termination Notice given by Tenant shall not be effective if Tenant is in default (after the expiration of any cure period) under this Lease at the time such notice is given or at any time thereafter through the Early Termination Date and this Lease shall remain in full force and effect with respect to the Partial Termination Premises for the full Original Term provided in paragraph 1 of the Lease.

Addendum- 12

37. Tenant's Option to Terminate Lease . Tenant shall have the one-time option ("Termination Option") to terminate this Lease as of 11:59 p.m. (Denver time) on the Early Termination Date, provided that Tenant deliver prior written notice of its intent to exercise the Termination Option ("Termination Notice") to Landlord on or before the Termination Notice Date, and provided that Tenant pays Landlord the Termination Payment (hereinafter defined) within ten (10) days after receipt of Landlord's Calculation of Termination Payment (as hereinafter defined), time being of the essence hereunder. For purposes of this Paragraph 37, the "Termination Payment" shall be an amount equal to the sum of (i)$2,131,302.13, plus (ii) with respect to any office space added to the Premises after the date hereof (including, but not limited to any Designated Refusal Space added pursuant to the terms of Paragraph 31 (hereinafter collectively referred to as "Added Premises") the unamortized costs and expenses incurred by Landlord to complete any Added Premises for Tenant's occupancy and to complete the transactions contemplated by this Lease pertaining to such Added Premises on a straight line basis over the expected portion of the Original Term such Added Premises were expected to be leased by Tenant using an imputed interest rate of twelve percent (12%) per annum (the costs and expenses included herein consist of[A] the costs and expenses of completing any improvements to the Added Premises and/or the cost and expense of providing any improvement or construction allowances; [B] all commissions and/or brokerage fees incurred by Landlord in connection with the Lease and any amendment hereof pertaining to the Added Premises; [C] the fees and costs incurred by Landlord in the completion of architectural and engineering work for improvements to the Added Premises and mechanical systems serving the Added Premises; and (D] attorney's fees incurred by Landlord in connection with any amendments to the Lease pertaining to the Added Premises), plus (iii) the product of all the monthly Base Rent payable by Tenant for the Added Premises multiplied by six (6). Landlord shall, within thirty (30) days after Landlord's receipt of the Termination Notice calculate the Termination Payment and deliver written notice to Tenant reflecting the calculation of the Termination Payment ("Landlord's Calculation of Termination Payment"). Landlord and Tenant hereby agree that the amount of additional costs Landlord will incur as a result of such termination by Tenant is extremely difficult to ascertain and the Termination Payment set forth above represents a fair and reasonable estimate of such costs. If Tenant does not deliver the Termination Notice and Termination Payment to Landlord within the time periods, provided in this Paragraph 37, Tenant shall no longer have any right to terminate this Lease pursuant to this Paragraph 37. If Tenant timely delivers the Termination Notice and timely pays the Termination Payment, this Lease shall expire on the Early Termination Date as if such date were the Termination Date originally specified in this Lease. Notwithstanding any other provision of this Paragraph 37, any Termination Notice given by Tenant shall not be effective if Tenant is in default (after the expiration of any cure period) under this Lease at the time such notice is given or at any time thereafter through the Early Termination Date and this Lease shall remain in full force and effect for the full Original Term provided in Paragraph 1 of the Lease.

38. Nontransferable Rights . Notwithstanding any provision contained in this Lease to the contrary, the Renewal Options provided in Paragraph 30, the First Right of Refusal provided in Paragraph 31, Tenant's right to install and maintain its sign on the Monument Sign provided in Paragraph 32, the Partial Termination Option provided in Paragraph 36, and the Termination Option provided in Paragraph 37, are personal to Tenant and its Affiliates and may not be assigned, transferred, or conveyed by Tenant to any Non-Affiliate of Tenant defined in Paragraph 15; provided, however, Tenant may assign its rights under the Renewal Options to a non-Affiliate in compliance with the provisions of Paragraph 15 provided Tenant expressly reaffirms in writing (in form and substance reasonably acceptable to Landlord) that Tenant shall remain responsible for the performance of all obligations of such transferee under this Lease during any Renewal Term.

39. License Agreement . Concurrently with the execution of the Lease, Landlord and Tenant agree to execute and deliver a Garage License Agreement, in the form attached hereto as Exhibit N , permitting Tenant to license space located in the Parking Garage for the purpose of using, maintaining and removing a natural gas generator up to 350 KVA for emergency purposes.

40. Denver Place Premises . If the Denver Place Lease is terminated due to a default by DPA and Tenant vacates the Denver Place Premises, then Landlord agrees to use commercially reasonable efforts to assist Tenant in locating suitable substitute premises for the Denver Place Premises for Tenant's operation of an off-site computer room (the "New Premises") and agrees to

Addendum- 13

make reasonable accommodations if necessary in order to facilitate the fiber optic connection of the Premises to the New Premises.

All of the terms and provisions of the Lease, as herein amended and supplemented, are hereby ratified and confirmed, and shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be duly executed as of the day and year first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: 7/31/02		By: /s/ Authorized Signatory President & CEO (Title)

Addendum- 14

EXHIBIT B

RULES AND REGULATIONS

Rules and Regulations, to Lease between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, as Landlord ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation, as tenant ("Tenant"), pertaining to certain space in Denver Place Plaza Tower, 1099 - 18th Street, Denver, Colorado 80202.

2. The use of the name of the Building or of pictures or illustrations of the Building in advertising or other publicity, without prior written consent of Landlord, is prohibited.

3. Tenant, its subtenants and its and their customers, invitees, licensees, and guests

a. shall not obstruct and shall not use for any purpose other than ingress and egress, the sidewalks, entrances, passages, courts, corridors, vestibules, halls, elevators and stairways in and about the Building;

b. shall not place objects against glass partitions or doors or windows or adjacent to any open common space which would be unsightly from the Building corridors or from the exterior of the Building, and will promptly remove the same upon notice from Landlord;

c. shall not make noises, cause disturbances, create vibrations, odors or noxious fumes or use or operate any electrical or electronic devices or other devices that emit sound waves or are dangerous to other tenants and occupants of the Building or that would interfere with the operation of any device or equipment or radio or television broadcasting or reception from or within the Building or elsewhere, and shall not place or install any projections, antennae, aerials or similar devices inside or outside of the Premises;

d. shall not make any room-to-room canvass to solicit business from other tenants in the Building, and shall not exhibit, sell or offer to sell, use, rent or exchange any item or services in or from the Premises unless ordinarily embraced within the Tenant's use of the Premises as specified in its Lease;

e. shall refrain from attempting to adjust any controls;

f. shall not waste, and shall not suffer or permit to be wasted, electricity or water and shall cooperate fully with Landlord to assure the most effective operation of the Building's heating and air conditioning;

g. shall keep public corridor doors closed;

h. shall neither install nor operate machinery or any mechanical devices of a nature not directly related to Tenant's ordinary use of the Premises without the written permission of the Landlord;

i. shall not use rest rooms or water fixtures for any purpose other than that for which they are designed;

j. shall not mark upon, paint, cut, drill into, drive nails or screws into, or in any way deface the walls, ceiling partitions or floors of the Premises or of the Building; provided,

Exhibit B- 1

however, that Tenant shall be permitted to use nails or screws for wall hangings provided Tenant receives Landlord's engineer's prior approval of the location of such nails or screws;

k. shall not unduly obstruct any pipes, conduits and ducts in the Premises; and

l. shall use chair pads, to be furnished by Tenant, under all rolling and ordinary desk chairs in the carpeted areas.

4. Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed and secured.

5. Tenant shall make reasonable efforts to report peddlers, solicitors and beggars to the office of the Building or as Landlord otherwise requests.

6. No person or contractor not employed by Landlord shall be used to perform window washing, cleaning, or other normal janitorial work in the Premises.

7. Unless Landlord so consents, Tenant shall not, and Tenant shall not permit or suffer anyone to:

a. Cook in the Premises (except microwave cooking);

b. Place vending or dispensing machines of any kind in the Premises (except vending or dispensing machines for Tenant's own use, provided Landlord is given prior written notice of such use and Tenant complies with Landlord's reasonable restrictions, regarding the placement of any such machines);

c. At any time sell, purchase or give away, or permit the sale, purchase or gift of, food in any form, except as part of Tenant's marketing functions in the ordinary course of its business; or

d. Use the Premises for lodging or for any illegal purposes.

e. Use the Premises to engage in the manufacture or sale of, or permit the excessive use of, any spirituous, fermented, intoxicating or alcoholic beverages on the Premises.

f. Use the Premises to engage in the manufacture or sale of, or permit the use of, any illegal drugs.

8. No furniture shall be placed in front of the Building or in any lobby or corridor, without the prior written consent of Landlord. Landlord shall have the right to remove all non-permitted signs and furniture, without notice to Tenant, at Tenant's expense.

9. No animals are allowed in the Building.

10. No lock or other security device shall be placed by Tenant on any door in the Building without the Building manager being kept furnished with two of the keys, cards or other means of access therefore. At the termination of its tenancy, Tenant shall promptly deliver to Landlord all keys, entry cards and other means of access to offices, rest rooms and vaults.

11. The use of oil, gas or inflammable liquids for heating, lighting, or any other purpose is expressly prohibited. Explosives or other hazardous articles shall not be brought into the Building.

12. Electric floor space heaters, humidifiers or A/C fans are not permitted.

13. a. Landlord shall have the right to approve the movers or moving company employed by Tenant, which approval shall not be unreasonably withheld. Tenant shall cause said

Exhibit B- 2

movers to use only the loading facilities and elevator designated by Landlord. In the event Tenant's movers damage the elevator or any part of the Building, Tenant shall forthwith pay to Landlord the amount required to repair said damage.

b. Furniture, equipment and supplies shall be moved in or out of the Building only during such hours and in such manner as may be prescribed by Landlord.

c. No safe or article, the weight of which may constitute a hazard or danger to the Building or its equipment shall be moved into the Premises.

d. Safes and other equipment, the weight of which is not excessive (as reasonably determined by Landlord) shall be moved into, from or about the Building only during such hours and in such manner as shall be prescribed by Landlord.

14. Smoking shall not be permitted in any common areas of the Building (including but no limited to the parking garage, elevator lobbies, elevators, public corridors and restrooms), or within three feet of the exterior entrance to any doorway or entryway of the Building.

15. Roller skates, bicycles or other vehicles shall not be permitted in the offices, halls, common areas, or corridors in the Building. All vehicles shall use designated parking meters.

16. No window shades, blinds, screens, draperies or other window coverings will be attached or detached by Tenant without Landlord's prior written consent. Tenant agrees to abide by Landlord's rules with respect to maintaining uniform curtain, draperies and/or linings at all windows and hallways.

17. If Tenant desires telegraphic, telephonic, computer or other electric connections, Landlord, or its agents, will direct the electricians as to where and how the wires may be introduced, and without such directions, no boring or cuttings for wires will be permitted. Any such installation and connection shall be made at Tenant's expense, and, at Landlord's option, shall be removed at Tenants expense at the expiration or termination of its Lease.

18. Landlord reserves the right to modify and make such other and further reasonable rules and regulations as in its judgment may, from time to time, be needful and desirable for the safety, security, care and cleanliness of the Premises and preservation of good order therein.

Exhibit B- 3

EXHIBIT C

LEASE TERM AGREEMENT

THIS AGREEMENT, made as of the ______ day of ____________________ , 200__, between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as "Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation (hereinafter referred to as "Tenant").

W l T N E S S E T H

WHEREAS, by Lease (hereinafter called "Lease") dated as of the 30th day of July, 2002, Landlord leased unto Tenant certain premises known as Suite Number 1200, located at 1099 - 18th Street, Denver, Colorado, for a term of ninety-six (96) months commencing on September 1, 2002, unless sooner terminated or extended as provided therein, and

WHEREAS, Landlord and Tenant now desire to set forth the correct Commencement Date of the term and to adjust the Termination Date of the Term to provide for a full term of the Lease of ninety-six (96) months.

NOW, THEREFORE, Landlord and Tenant do hereby agree as follows:


1.	The Term of the Lease commenced on ___________ , _____, and shall continue until _____________, _____, unless sooner terminated or extended as provided therein.


2.	Except as hereby amended, the Lease shall continue in full force and effect.


3.	This Agreement shall be binding on the parties hereto, their heirs, executors, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: _______________________ David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date:_________________		By: ___________________________ (Title)

Exhibit C- 1

EXHIDIT D

PARKING AGREEMENT

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, Landlord, and WESTERN GAS RESOURCES, INC., a Delaware corporation, as Tenant, have executed simultaneously with this Agreement a Lease (the "Lease") pertaining to certain office space located at 1099 - 18th Street to be occupied by Tenant. In consideration of the mutual covenants herein contained, Landlord and Tenant further agree as follows:

The Complex contains a parking garage under the Building located at 1099 - 18th Street, Denver, Colorado 80202 (the "Parking Garage") and a parking garage under the building located at 999 - 18th Street, Denver, Colorado 80202 (the "Denver Place Parking Garage"). (The Parking Garage and Denver Place Parking Garage are parking garages for the benefit of tenants and the general public hereinafter collectively called the "Parking Garages"). The Parking Garages are maintained and operated by an independent contractor (hereinafter called, together with any successor, "Operator"). In order to rent parking spaces in the Parking Garages, Tenant must contract separately with the Operator for such rentals. Landlord shall make available for Tenant and Tenant shall have a non-assignable option to rent from the Operator two hundred forty-three (243) parking spaces (the "Initial Parking Spaces"). At Tenant's election, up to fifteen (15) of the Initial Parking Spaces may be reserved parking spaces in the Parking Garage and the remainder of the Initial Parking Spaces shall be unreserved parking spaces in either the Parking Garage or the Denver Place Parking Garage. The monthly rental rate for unreserved Initial Parking Spaces shall be $85.00 per parking space during the first year of the Original Term, $125.00 per Initial Parking Spaces during the second (2nd) through and including the fifth (5th) year of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $125.00. (For example purposes, the rate for an unreserved Initial Parking Space during the sixth year of the Original Term may not exceed the lesser of the rate posted from time to time by the Operator, or $131.25, and the rate during the seventh year of the Original Term may not exceed the rate posted from time to time by the Operator, or $137.81). The monthly rental rate for reserved Initial Parking Spaces shall be $100.00 per Initial Parking Space during the first year of the Original Term, $185.00 per Initial Parking Spaces during the second (2nd) through and including the fifth (5th) years of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $185.00. (For example purposes, the rate for a reserved Initial Parking Space during the sixth year of the Original Term may not exceed the lesser of the rate posted from time to time by the Operator, or $194.25, and the rate during the seventh year of the Original Term may not exceed the rate posted from time to time by the Operator, or $203.96). In addition to the Initial Parking Spaces, during the second through and including the fifth year of the Original Term, Tenant shall have the non-assignable option to rent fifteen (15) reserved parking spaces (the "Additional Parking Spaces") in the Parking Garages at a rate of $160.00 per parking space per month. Tenant shall have until ten (10) months after the Commencement Date to exercise its option by renting the Initial Parking Spaces and/or Additional Parking Spaces (collectively referred to herein as the "Parking Spaces") directly from the Operator. The Parking Spaces shall only be used by employees of the Tenant working within the Premises and the right to use any of the Parking Spaces is not assignable or transferable except to a permitted assignee or sublessee of Tenant.

In the event Tenant rents less than 228 unreserved Initial Parking Spaces during any month during the first year of the Original Term, Tenant shall receive a credit upon future parking charges hereunder in the amount of $20.00 per month for each Initial Parking Space not used; provided, however, that such credit shall not exceed $1,600 for any month. During the first ten months following the Commencement Date, Tenant may use and pay for less than the maximum number of spaces permitted under this Parking Agreement. Tenant will give Landlord notice in writing of the

Exhibit D- 1

desired number of spaces during the first month after the Commencement Date and Tenant may change the number of spaces during the first eleven (11) months after the Commencement Date with at least thirty-seven (37) days prior written notice given on or before the 24th day of each calendar month. If Tenant wishes to commit to use less than the maximum number of Parking Spaces allocable to it under this Parking Agreement, it must give written notice of the number of spaces to be used by the end of the eleventh (11th) calendar month following the Commencement Date.

The terms and conditions of Tenant's rental shall be governed and fixed solely by the rental agreement between Tenant and Operator, however, Tenant's failure to comply with any term of any such rental agreement shall constitute a default under the Lease. In the event that Tenant chooses to rent any of the Parking Spaces from the Operator as provided for herein, Tenant shall be responsible for payment to the Operator of a refundable security deposit for each parking card or disk issued by the Operator in connection with Tenant's rental of the Parking Spaces(the "Security Deposit"). The Security Deposit shall be in an amount to be determined by the Operator in its sole discretion. Notwithstanding anything in this Agreement or the Lease to the contrary, in no event shall Landlord be responsible for payment of the Security Deposit to the Operator on behalf of Tenant. Payment and refund of the Security Deposit shall be governed and fixed solely by the rental agreement between Tenant and Operator. Landlord's holding of Parking Spaces shall not constitute any assumption of and except with respect to Landlord's gross negligence or willful misconduct, Tenant hereby releases Landlord from any and all liability with respect to such rentals, and any and all damage, loss or injury with respect to such rentals shall be at the sole risk of Tenant unless otherwise provided by Operator under the rental agreement.

The provisions of this Agreement supplement but are subject to all provisions of the Lease. Capitalized terms not otherwise defined in this Agreement have the same meaning as the same terms have in the Lease.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: 7/31/02		By: /s/ Authorized Signatory President & CEO (Title)

Exhibit D- 2

EXHIBIT E

JANITORIAL SPECIFICATIONS

Nightly Services


a.	Secure all lights as soon as possible each night.


b.	Vacuum all carpets.


c.	Dust mop all resilient and composition floors with treated dust mops. Damp mop to remove spills and water stains as required.


d.	Dust all desks and office furniture with treated dust cloths.


e.	Papers and folders on desk are not to be moved.


f.	Empty all waste paper baskets and other trash containers nightly. Empty all jumbo size office paper recycling boxes on Tuesday and Thursday.


g.	Remove all trash from floors to the designated trash area.


h.	Remove fingerprints, dirt smudges, graffiti, etc., from all doors, frames, glass partitions, windows, light switches, walls, elevator door jambs and elevator interiors.


i.	Return chairs and waste baskets to proper positions.


j.	Dust and remove debris from all metal door thresholds.


k.	Wipe clean smudged bright work.

Restroom Services


a.	Restock all restrooms with supplies from the Owner's stock, including paper towels, toilet tissue and hand soap as needed.


b.	Restock all sanitary napkin dispensers from Contractor's stock, as needed. Supplies for this service are the sole responsibility of the janitorial contractor.


c.	Wash and polish all mirrors, dispensers, faucets, flushometers, and bright work with non-scratch disinfectant cleaner.


d.	Wash and sanitize all toilets, toilet seats, urinals, and sinks with a non-scratch disinfectant cleaner. Wipe dry all sinks.


e.	Remove stains, descale toilets, urinals and sinks as required.


f.	Mop all restroom floors with disinfectant germicidal solutions.


g.	Empty all waste and sanitary napkin and tampon receptacles.


h.	Remove all restroom trash from building.


i.	Spot clean fingerprints, marks, smudges and graffiti from walls, partitions, glass, aluminum and light switches as required.

Exhibit E- 1

RECYCLE PROGRAM

Currently we recycle the following items :


•	White Paper


•	Computer Paper


•	Envelopes


•	Carbonless Paper (NCR)


•	Cardboard (small amounts only)


•	Aluminum Cans (in plastic bags only)


•	Colored Paper


•	Letter and Message Paper


•	FAX Paper


•	Bulk Mail


•	File Folders

Exhibit E- 2

EXHIBIT F

LANDLORD RULES FOR GENERAL CONTRACTORS

DENVER PLACE & PLAZA TOWER



Contractor Handout
Contractor Procedures	2
Sign-In Procedures	3
Owner's Rules and Regulations	4 - 7
Sub Contractor's Rules and General Notes	8 - 10
Mechanical and Electrical Notes	11 - 16
Procedures to Take Floors Off-Line	17
Request for Fire System Disconnect	18
Request for After Hours Access and Form	19

FORMS

Off-Line & Access Request for Authorization

Control of Owner-Furnished Materials

Punch List Notification

This verification that on this date, I received the above listed documents including all pages listed. I understand reading the above and compliance to them is required by all contractors.




Name		Company

Signature		Title

Date

AMERIMAR REALTY MANAGEMENT CO.-COLORADO

CONTRACTOR PROCEDURE

All modification to existing tenant suites including addition or demolition of partitions (walls), addition or modifications to electrical, mechanical HVAC, and/ or plumbing systems MUST be approved by the building owner representatives and the building engineers before work may proceed. Anyone performing work in the building without written approval of the above will be asked to leave until the appropriate documentation is received for review and approval.

Drawings and/or specifications MUST be submitted for the building owner's review five (5) working days before the anticipated start date.

GENERAL CONTRACTORS: Any work within an existing suite which requires electrical or HVAC or plumbing additions, and/or adjustments to sprinkler coverage requires a permit and written approval of Amerimar Realty Management Co.-Colorado . Copies of permit documents issued by the City and County of Denver Building Department MUST be clearly posted outside the tenant suite at all times.

EACH individual working at Denver Place or the Plaza Tower MUST sign in each day with the Denver Place Operations Center (DPOC) and clearly display "contractor badges" at all times.

ELECTRICIANS: Permit required . Notify Building Engineer prior to any power-down activity. All floor penetrations must be resealed with fire-stop. Electrical closet must be kept clean.

PLUMBERS: Permit required . Notify building engineer prior to any fluid system shut-off or tie-in. Notify Fire/Life Safety Engineer prior to welding, soldering, or brazing.

IMPORTANT NOTE: Coffee machines, dishwashers, Ice Makers, water filters, etc. must be piped with copper fittings and pipe. Plastic tubing or "saddle valves" are not permitted in either building.

HVAC SERVICE TECHNICIANS: Permit required . Notify building engineer prior to any fluid system shut-off or tie-in.

TELEPHONE INSTALLERS/SERVICE TECHNICIANS: Plenum rated wire required. All wire routing shall be secured to underside of slab. All floor penetrations must be resealed with fire-stop. Electrical closet must be kept clean. All wire pulls between floor shall be labeled on each floor with the name and phone number of the service provider and the name of the tenant.

FIRE SPRINKLER: Permit Required . Building Engineer only will actuate sprinkler system valves, drain-down, and refill ( Forty-eight Hour Notice required ). Do not leave job until system is pressurized and leak-checked.

Be aware of automated fire alarm systems and closed loop condenser/chilled water systems

ALL CONTRACTORS: All ceiling tiles must be reset in place in good condition when job is completed. Contractors will be charged for the replacement of damaged or broken tiles and for cleaning.



Amerimar Realty Management Co.-Colorado	Owner's Rules & Regulations for Contractors	2 of 19

PROCEDURES FOR CONTRACTOR SIGN-IN

Denver Place Operations Center (DPOC), 999 18th Street - 303 312-3940

Prior to starting any type of work, contractors must sign in with the DPOC.


1.	You will receive a pre-numbered temporary contractor's badge with the Denver Place logo on the front and the badge number and your company name on the back. Badges must be visible at all times. Badges must be turned in at the end of each day. A $2.00 per badge charge will be assessed if badges are not turned in. Cost subject to change without notification.


2.	Contractors are to have a valid Certificate of Insurance on file with Amerimar Realty Management Co.-Colorado before starting any work. Security is not authorized to open any electrical closet, janitorial closet, or tenant space until contractors have signed in. Security is not authorized to allow contractors to work without proper insurance on file.


3.	Use of freight elevators must be scheduled a minimum of forty-eight (48) hours in advance.


4.	AFTER HOUR ACCESS – The buildings are accessible between the hours of 6:00 a.m. and 6:30 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturdays. Any work scheduled for after hours or weekends must be approved by the tenant a minimum of forty-eight (48) hours in advance in writing. Contact:

Amerimar Realty Management Co.-Colorado

999 18th Street, Suite 1201

Denver, CO 80202-2499

303 312-3900 or 303 312-3920


5.	Contractors are responsible for leaving all work areas in a neat and clean fashion. All floor penetrations in electrical closets must be made after hours. All floor penetrations require after hours x-raying before proceeding. All floor penetrations must be resealed with fire-stop.

NOTE: The tenant must make arrangements with any contractors, subcontractors (i.e. moving companies) for the removal of any oversized trash, such as packing or shipping crates. Building management is not equipped to handle removal of anything other than standard office trash.



Amerimar Realty Management Co.-Colorado	Owner's Rules & Regulations for Contractors	3 of 19

OWNER'S RULES & REGULATIONS FOR CONTRACTORS

The following rules and regulations shall be adhered to and enforced.


1.	Core Drilling

Core Drilling of concrete floor slabs or core walls is not allowed during regular business hours. All core drilling requires an X-ray verification that no structural or electrical systems will be cut or damaged by the proposed core drilling. Coordinate the after-hours times acceptable for this work with Construction Services.


2.	Oversized Deliveries

Any materials or equipment, which cannot be accommodated in the freight elevator and will therefore require special arrangements must be arranged in advance with the Management Office and will be scheduled before or after business hours. Extensive deliveries may be required to take place on weekends. All additional costs to the building such as special elevator personnel, glazier to remove and reinstall windows, etc., will be charged to the Contractor.


3.	Building Systems Interruptions

Any shut down of any portion of a building system such as electrical circuits, plumbing lines, etc., must be done before or after regular business hours and must be scheduled 48 hours in advance with Construction Services.


4.	Loading Dock and freight Elevator

Loading dock is available on a first come first serve basis. Freight elevator use must be scheduled in advance with Management Office at 303-312-3900.


5.	Testing Alarms

All testing of audible alarms must be done before or after regular business hours and must be coordinated with Property Manager (303 312-3900) a minimum of twenty-four (24) hours in advance.


6.	Inspections

Owner may hire independent construction supervisors, mechanical and electrical engineers to perform on-site inspections regularly during the course of construction to verify adherence to construction documents.


7.	Adjacent Tenants

Any work, which will impact other occupied suites, must be done before or after regular business hours, and access to those suites must be scheduled and approved by Construction Services or the Management Office. In all cases, do not contact other tenants directly for permission to access their suites. Direct all requests for access to Construction Services or the Management Office (if Construction Services is not available).


8.	Protection of Finished Spaces

It is the responsibility of the Contractor to adequately protect all areas, which may be affected by any Subcontractors. This includes lobbies, corridors, elevators, and any other areas. The spaces must have adequate protection to insure that no damage occurs to floor surfaces, walls, ceilings, or any other finish or material. Any damage to areas caused by the Contractor or his Subcontractors may be repaired by the Owner with the Contractor of his choice, and all associated costs will be charged to the General Contractor.


9.	Dust Isolation



Amerimar Realty Management Co.-Colorado	Owner's Rules & Regulations for Contractors	4 of 19

It is the responsibility of the Contractor to adequately protect all other areas from dust that may result from this project. If in doubt about the level of protection required, contact Construction Services. Any costs associated with rectifying problems that result from inadequate dust isolation (such as the accidental activation of fire suppression systems, etc.) will be charged to the Contractor. Smoke detectors are to be disarmed in coordination with building management.


10.	Trash Removal and Dock Usage

It is the responsibility of the Contractor to remove all trash from the Premises daily. Location of Contractor provided Dumpster should be coordinated with the Assistant Property Manager. It will be necessary for the Contractor to bag meters on the street. Dumpsters shall be emptied consistently so as to not overflow in the dock. Contractor shall be responsible for maintaining a clean area around the dock and dumpsters on a daily basis. Abuse of dock privileges may result in suspension of dock privileges. Please schedule space for dumpsters with the Management Office at 303-312-3900.

Dock usage is for pick-up and delivery ONLY. There is no long-term parking available in the dock areas. Vehicles left unattended in the dock areas for extended periods (one hour or more) will be towed away at the owner's expense.


11.	Insurance

Evidence of insurance, in the form of a Certificate of Insurance, for each contractor and subcontractor shall be submitted to the Owner for the duration of the construction, prior to commencement of on-site work. The coverage required for each is as follows:



Workers Compensation:	$	1,000,000.00
Comprehensive & General Liability:	$	1,500,000.00
Property Damage:	$	500,000.00

The "Additional Insureds" should be listed as follows:

Denver Place Associates Limited Partnership (for 999 18th Street), or Denver Stellar Associates Limited Partnership (for 1099 18th Street)

Amerimar Realty Management Co.-Colorado and any partner thereof, general or limited, and affiliated subsidiary controlled or associated company, corporation or other legal entity as now existing or hereinafter constituted.

All Certificates of Insurance shall be submitted to the Management Office before any work may commence.


12.	Building Personnel

Building engineers and other personnel are available to answer questions or clarify procedures. The Contractor is encouraged to take advantage of this availability.

Should any Contractor or Subcontractor interfere with the Building Operation, intentionally or accidentally, in such manner as to require intervention by building personnel, all costs associated with this intervention will be billed to the Contractor.


13.	Construction Schedule

Contractor shall notify Owner in writing two (2) days prior to commencement of on-site construction of Tenant's premises. The general Contractor shall submit to Owner's attention a construction schedule for the first two (2) weeks for the construction of the Premises at least two (2) business days prior to commencement of on-site work and a complete construction schedule not later than five (5) days after the commencement of the site work. The schedule shall indicate intended start of construction, construction duration for all major elements of work to be performed, and anticipated construction completion.


14.	Material Storage



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All equipment and materials necessary for the construction of the Premises are to remain within the leased area and are not to be placed or stored at any time in adjacent or common areas. Security personnel due to this being a fire hazard may remove any materials stored in stairwells at any time without prior notice.


15.	Temporary Power and Utilities

Any requirements for special facilities necessary during the construction of the Premises must be requested, in writing, at least five (5) days prior to construction use. These requests shall be addressed to Construction Services for coordination.


16.	Site Conditions

Work for the Owner will be in progress at the same time as the construction of the Premises. It is necessary that Contractor(s) adhere to the traffic patterns established by Construction Services. Any conflict with the Owner-approved drawings and site conditions are to be brought to the immediate attention of the Owner.


17.	Construction Workers

All construction workers shall park in lots other than those located beneath Denver Place and shall take breaks and lunch in the suite under construction or off-site rather than in common areas of the building.


18.	After-Hours Access

Any· work, which is to occur after normal building hours, must be coordinated through Construction Services 303 312-3920 and the Property Manager 303 312-3900.


19.	Fire & Life Safety

All work pertaining to the fire and life safety systems must be coordinated with Building Engineering, 303-312-3900.


20.	Access

Anyone working in the Plaza Tower or Denver Place MUST check in at the Denver Place Operations Center (DPOC 303 312 3940) located in the South Tower lobby next to the loading dock entrance in 999 Eighteenth Street and receive a contractor badge prior to starting with any work. Any individual working in the buildings without a construction badge will be asked to leave the site. This applies to all areas, both occupied and vacant.


21.	Roof Access

No access to the roof of Plaza Tower or Denver Place will be allowed without the escort of a building engineer or a member of the security staff.


22.	Safety

Contractors are responsible for keeping MSDS documentation on site for each sub-contractor and supplier. All local and national (OSHA) safety procedures and regulations must be followed.


23.	Close-out Procedures

Prior to final payment, Contractor must submit as-built documents, balance report, and copy of signed-off punch list (showing dates items were completed) to Construction Services. Amerimar Realty Management Co.-Colorado will not release retainage until this documentation has been submitted.



Construction Manager:		Jean McDonal/ Amerimar Realty Management Co.-Colorado 999 18th Street, Suite 1201, Denver, Colorado 80202 303-312-3900



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Property Manager:		Jackie Kochis / Amerimar Realty Management Co.-Colorado 999 18th Street, Suite 1201, Denver, Colorado 80202 303-312-3900

Security (DPOC)		Amerimar Realty Management Co.-Colorado 999 18th Street, Suite 1201, Denver, Colorado 80202 303-312-3940

Chief Engineer PLAZA TOWER		Randy Adrian 303-312-3858

Chief Engineer DENVER PLACE		Curtis McNair 303-312-3949



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AMERIMAR REALTY MANAGEMENT CO.-COLORADO

SUB-CONTRACTOR RULES/ GENERAL NOTES

(It is the responsibility of the General Contractor to make sure each subcontractor has a copy of these rules.)

ELECTRICAL


•	No lights are allowed to be installed or to remain straddling any walls.


•	Outlets should be coordinated with millwork being installed.


•	Any outlets/circuits being demo'd MUST be taken back to the panel.


•	Payment will be withheld until a typed panel schedule is updated.


•	All switches and plates should be brushed stainless steel unless otherwise noted.


•	All switches, outlets and pull stations should meet ADA requirements.


•	Provide blank cover plates for all blank boxes.


•	Dedicated outlets must be marked.


•	When working from space plans and not construction drawings, include moving exit lights and re switching as needed. This must be included in the base bid.


•	Denver Place building standard exit lights are Dual-Lite, AC voltage model #LXUGW, green letters with white housing, must comply with UL 924 and NFPA-101. All existing exit lights must be replaced to match the new standard.


•	J-boxes must be marked with circuit and suite number being used from panel.


•	Verify all light fixtures are switched from withiin the tenant's space. Verify no lights outside the tenant space are switched from within the tenant space.

PLUMBING


•	Supply lines to tenant appliances; refrigerators, coffee makers, etc. must be ¼" copper.

MECHANICAL/ HVAC


•	Balancing must be scheduled with building engineers in advance to be sure that the building is running at 2" static necessary to obtain proper reading.


•	Any leaks or problems found by either the balancer or mechanical sub must be reported to the building engineer.


•	Building standard materials must be used at all times. Please refer to engineer drawings.


•	When working from space plans include dividing suites on separate controls.


•	The old model modulines and stats in Denver Place are not compatible with those currently available. Remodeled suites must be carefully arranged for areas to receive new equipment and areas with old equipment. This may require relocating existing equipment. Notify mechanical engineers of any discrepancies on the mechanical drawings.


•	Building engineers MUST be notified before tying-in air conditioning equipment into the building chilled or condenser water systems. Contractors not complying with this will be held liable for any damage to the system and/or damage to other equipment tied into the system.


•	Controls shown on mechanical drawings indicate which equipment is to be controlled by which thermostat. All control tubing is to be new. It is the contractor's option to rework existing where applicable. Contractor shall bid control work as shown on the drawings.

CARPET


•	Only environmentally EPA approved/acceptable glue is to be used.


•	Building standard carpet is Mannington Bellvedere II 36 oz.


•	Building standard base is Roppe 2 1/2". If a suite has existing 4" base - remove base, patch wall and replace with 2½" base.



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PAINT


•	Any paint being sprayed must be done after hours. Building engineers MUST be notified before any spray painting is scheduled to determine if the floor needs to be off-line.


•	All oil-based painting may not be done in the building. Items requiring oil based paint or finish products must be prefinished before they are delivered.


•	Building standard paints are ICI Delux and/or Sherman Williams, no substitutions unless called for on construction or space plans, approved by Landlord. Eggshell finish on walls, semi-gloss finish on doors and frames.


•	Paint all heat convector covers in the North and South Towers, terraces and Mall to match wall V.O.N.

HARDWARE


•	Only building standard hardware is allowed. No substitutions unless prior approval is obtained from the Construction Manager.


•	Cores must be given to building locksmith a minimum of one week before completion of job. Please give more notice for bigger jobs. (All Cores to be of Schlage manufacture).


•	All codes/push button locks to be key passable.


•	All existing hardware not reused or relocated must be returned to the building locksmith. Contractors will be held liable for all missing hardware.

MILLWORK·


•	Grommets are required where there is an existing outlet or one being added below counter.


•	Back and sink splashes required at all sink locations.


•	Blocking as required for all cabinet installations.

CABLE


•	Cable contractors are required to replace ceiling tiles if damaged or broken during cabling installation.


•	All desks and office equipment must be covered when working in the ceiling.


•	All cable must be suspended from the deck above the ceiling.


•	When bringing cable into the building it must be marked at the point of entry with the provider's name.


•	When working in a tenant space, if non-plenum rated cable is found or cable is not suspended from deck, please inform the construction manager.


•	If cabling is installed after the time period allowed in the construction schedule, the cabling firm will be held liable for all expenses to replace tiles, clean the suite and/or for damages due to construction delays.

The following general notes apply to all work done from construction drawings and space plans even if not noted on plans. (Reference cover sheets)


1.	Blinds must be cleaned, repaired/replaced as necessary.


2.	Stained or damaged ceiling tile must be replaced.


3.	All existing doors and frames must be touched up.


4.	At 999 18th Street, when painting, heat convectors are to be painted to match walls.


5.	Ceiling grid and diffusers should be cleaned or replaced if discolored.


6.	Supervisors for construction jobs are required to verify condition of janitorial and electrical closets before start of job and must report problems then. Any time spent by engineering to clean closets during construction will be billed back to the contractor.


7.	General Contractors will be held responsible for any costs incurred to provide additional rest room cleaning during construction. Rest rooms are not to be used to clean brushes, pails etc.


8.	General Contractors will be held responsible for any costs incurred to provide additional cleaning of public areas during construction. Lobbies and corridors must remain clean and clear of obstructions.



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9.	Submittals for all non-building standard equipment located in the building plenum MUST be sent to the building owner and Hadji Associates for review and approval before installation.


10.	Every contractor is responsible for cleaning up after themselves. Desks must be covered when work is done in the ceiling, and the area must be vacuumed before leaving the site. If maintenance is asked to clean up after a contractor, we will bill the time back to the contractor making the mess.


11.	No access to the roof of Plaza Tower or Denver Place will be allowed without the escort of a building engineer.


12.	Core drilling is not allowed in either building without first x-raying the area. All x-raying and core drilling must be scheduled at least 24 hours in advance through the construction manager's office and can only be performed after hours.



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MECHANICAL/ELECTRICAL NOTES

Mechanical/Electrical Contractor to verify that all existing equipment that is to be remain, is in proper working condition, notify Owner and Building Engineer of any defects prior to completion of the scope of work.

General Mechanical/Electrical Requirements, Contract Requirements, Notes

•

Unless otherwise noted, the work described on the plans and specifications shall include the furnishing and installation of all labor and materials necessary for complete and operational Electrical, HVAC, Fire Protection and Plumbing Systems. Contractor shall furnish these even if items required to achieve this (i.e. offsets, isolation and balancing devices, maintenance clearances, etc.) are not specifically shown.

•

Data given on the drawings is as exact as could be secured. Absolute accuracy is not guaranteed and the contractor shall obtain and verify exact locations, measurements, levels, space requirements, potential conflicts with other trades, etc. at the site and shall satisfactorily adapt his work to actual conditions at the Building. The drawings are diagrammatical in nature and shall not be scaled. However, this does not relieve any sub-contractor from coordinating his work with all other trades and from adjusting his work as required by the actual conditions of the project. The contractor shall visit the site before submitting a bid to become thoroughly familiar with the actual conditions of the project.


ð	No extras will be allowed due to the lack of knowledge of existing conditions.


•	Coordinate and adjust all work between trades and existing conditions in order to accomplish a neat, integrated and efficient installation.


ð	Examine the contract documents of all trades (i.e. the architectural reflected ceiling plan, architectural partition plan, electrical lighting plan, fire protection plan, etc.)


ð	Coordinate necessary equipment, ductwork and piping locations so that the final installation is compatible with the materials and equipment of other trades.


ð	Prepare shop drawings for installation of all new work before installation to verify coordination of work between trades.


•	Refer to the architectural division for exact location of all visible fixtures, switches, equipment and air devices .


ð	Final location of all light switches and thermostats in finished spaces and all room air sensors shall be as indicated on the architectural drawings. If not shown on the architectural drawings, field coordinate with architect prior to installation.

EXISTING BUILDING

•

The Contractor's attention is called to the fact that the existing building will be occupied by the Owner during construction. Continued operation of the facility shall not be hindered by this work. The Contractor shall account for all additional costs which may be incurred by him due to the difficulty of working over and around employees, desks, equipment, etc.; and due to the hours of the day in which the area may be available when submitting his bid.


ð	Due to the Owner's requirements, the following construction schedule shall be adhered to:



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•	Maintain a mark-up set of drawings, which indicate variations in the .actual installation from the original design. Surrender drawings to Owner upon completion.


•	All capacities are scheduled at scheduled at job-site altitude of 5,200 feet.

ELECTRICAL COORDINATION


•	Verify the electrical service provided by the electrical contractor before ordering any mechanical equipment requiring electrical connections.

IONIZATIONS SMOKE DETECTORS


•	For air handling units and air systems with a capacity exceeding 2000 cfm, provide UL-listed ionization smoke detectors in return and supply air duct. Connect the detector into the fan control circuit to stop the fan when smoke is detected.

Smoke detectors will be furnished and set in place under this division. (Unless a fire alarm system is to be installed - coordinate with electrical engineer.) Detectors will be wired under division 16. Smoke detectors must be of the same manufacturer, and compatible with the fire alarm system provided under division 16 (if applicable).

Connect relay(s) to fan control circuit to stop fan when smoke is detected.


•	Suspend each trade's work separately from the structure. Ductwork shall be held tight structure except where shown.


•	Install all equipment and materials in accordance with manufacturer's recommendations unless specifically indicated otherwise or where local codes or regulations take precedence.


•	Provide manufacturer's recommended service clearance all around all equipment requiring same.


•	Provide for safe conduct of the work, careful removal and disposition of materials and protection of property, which is to remain undisturbed.


•	Provide access doors for all equipment, valves, cleanouts, actuators and controls which require access for adjustment or servicing and which are located in otherwise inaccessible locations.

For equipment located in "Accessible locations" such as lay-in ceilings: locate equipment to provide adequate service clearance for normal maintenance without removing architectural, electrical or structural elements such as the ceiling support system, electrical fixtures, etc. "Normal Maintenance" includes, but is not limited to: filter changing; greasing o bearings; using P/T ports for pressure or temperature measurements; servicing control valves and servicing control panels.


•	Isolate all pressurized piping water branches for each riser, branch item of equipment and area served.


•	No domestic water, chilled water or condenser water lines shall be located exposed in finished spaces or below the building slab unless shown otherwise on the drawings.


•	Warranty: the entire mechanical system shall be warranted against defects in materials and workmanship for a period of one (1) year after acceptance of the system by the Owner.

DEFINITIONS


1.	(N) Indicates "New: equipment to be provided under this contract.



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2.	(E) Indicates "Existing" equipment on site, which may or may not need to be relocated as a part of this work.


3.	(R) Indicates existing equipment to be relocated as a part of this work.


4.	"Furnish" means to "supply" and usually refers to an item of equipment.


5.	"Install" means to set in place, connect and place in full operational order.


6.	"Provide" means to "Furnish and Install".


7.	"Equivalent" means, "meets the specifications of the reference product or item in all significant aspects." Significant aspects shall be as determined by the Owner.

"Work By Other(s) [Contractors]"; "Re ________ Division"; and similar expressions means work to be performed under the contract documents, but not necessarily under the division or section of the work on which note appears. It is the contractor's responsibility to coordinate the work of the contract between his/her suppliers, sub-contractors and employees. If clarification is required, consult engineer before submitting bid.


9.	"Engineer'' refers to the prime design professional. All questions, submittals, etc. of this division shall be routed through the engineer.


•	In general the work includes, but is not limited to :


•	Contractor requirements

Submit a statement of qualifications listing similar projects completed in the last five (5) years. Contractor must have a minimum of five (5) years experience in this type of work, and submit evidence of that fact with his bid. Inadequate experience as determined by the Architect, Owner, or Engineer shall be cause for rejection of Contractor's bid.


•	Provide all required permits, inspections and coordination with governing authorities. Installation to conform with applicable provisions of:


1.	Environmental Protection Agency - Underground storage tank regulations.


2.	Applicable Local, State and Federal codes, laws and regulations.


3.	Requirements of Fire Department, Wastewater Department, Health Departments and State Oil Inspector servicing the project.


4.	Uniform building, mechanical and plumbing codes. Including the Denver Amendments to the Uniform Building Code.


5.	Applicable pamphlets of the NFPA including the National Electrical Code.


6.	Americans with Disabilities Act (ADA).


•	Keep demolition and cutting to minimum required for proper execution of work.

Be responsible for all cutting and patching necessary for the completion of the work. No cutting (not shown on the contract documents) shall be done without the approval of the Owner as to locations, method and extent of cutting.


•	Repair all accidental or intentional damage to match existing construction with no noticeable difference in continuity, appearance or function.



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IF A SEPARATE CONTROL SPEC IS NOT IN JOB:


•	Installer: the alteration and extension of the temperature control systems shall be done by a representative of the manufacturer of the present control system. The present control system was installed by: ______________

The installing contractor shall be a firm with not less than five (5) years experience designing and installing automatic temperature control systems similar to this one.

Alter and extend existing system as required to meet the new sequence of operation.

•

Submit cut sheets and control diagrams for review and record. Submittals must be reviewed and not rejected before work begins. Manufacturer listed is basis of design. Substitutions may be offered during the submittal phase. Judgment of equivalency shall be made by the engineer. The Contractor shall be responsible for coordinating clearance, dimensions, electrical and other utility requirements and connections to other work.

QUALITY CONTROL


•	Qualification of Products


•	When products are specified by manufacturer and model number, equivalency shall be determined by the engineer.


•	If a product submitted is an equivalent is deemed unacceptable to the Engineer, the specified product shall be provided at no extra cost to the project.


•	Submittals shall include revised and supplemented control diagrams.


•	Submit cut sheets on all of the specified equipment.

IF NO BALANCING SPEC:


•	Submit a written balance report by a NTF (National Training Fund of SMACNA), NEEB or AABC Certified Balancing Contractor. For all hydronic systems - balancer shall remove all strainer screens and thoroughly clean before proceeding with hydronic balancing procedures. Measurements shall include


•	supply and exhaust fan motor at inlet and outlet of all fans, coils, and filters.


•	Pitot tube traverse of supply, exhaust, return and outside air main ducts.


•	At 0% outside air, minimum outside air, and 100% (economizer) outside air.


•	Air inlets and outlets.


•	Waterflow, temperature drop and pressure drop at all coils.


•	Static and velocity pressure readings at the supply plenum.


•	Exhaust risers and all branch ductwork


•	Velocity distribution across the face of the supply and exhaust filters.


•	The Owner shall accept all submittals, witness all tests and demonstrations and respond to all questions during construction. The Owner shall review all submittals and prepare any required clarifications during construction. It is recognized that submittals are made for the ____________'s information and record only.


•	After installation of the system, perform an operational test in he presence of the Owner. This test will consist of successfully demonstrating:


1.	Appearance of Installation



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2.	Function of all controls


3.	the Controls shall be operated in the following modes in each zone.

If the test is not successful in the opinion of the Owner, deficiencies will be remedied and the system will be re-tested until the test is successful. Second and subsequent test will result in the contractor's contract payment being reduced by an amount equal to $75.0 times the number of additional hours spent by the __________ witnessing the test. The Owner shall pay this amount to ____________.

DEMONSTRATION


•	Allow ______ hours for instruction of the maintenance personnel in operation of the system. The instruction shall be coordinated at least 24 hours in advance through the __________, who shall witness the demonstration.


•	Submit two (2) copies of all operating manuals and warranties in bound notebooks to Owner.


•	Final payment shall be issued only after Owner has accepted all work and all manuals, records drawings, etc. have been submitted satisfactorily.

DEMOLITION


•	All "capped" sanitary and vent lines shall be re-connected or rerouted as necessary to prevent "dead-ends" in the piping. All piping shall drain to active sanitary waste lines and all branches with traps shall be adequately vented.

FIRE STOPPING


•	Fire Stopping Requirement.

Penetrations through rated walls and floors shall be sealed with a material capable of preventing the passage of flames and hot gasses when subjected to the requirements of the test standard specific for fire stops ASTM-E-814. Acceptance materials include:


•	Dow Corning RTV Fire Stop Foam for Bare Pipe, Metal Conduit and Electrical Cable.


•	3M Fire Dam 150 Caulk for Bare Pipe, Metal Conduit and Building Construction Gaps


•	3M FS0195 lntumescent Strips for Insulated Pipes, Plastic Pipe or Conduit and Electrical Cable.

STRUCTURE


•	Do not penetrate the legs of the roof and wall structural concrete "TT' members. All equipment supports shall be attached to the flanges of the "TT"s.


•	Do not penetrate any structural members. All equipment supports shall be attached to the load bearing members of structural elements. Do not over-stress any structural members. Contact Structural Engineers for allowable loads for specific Members, if in doubt.

STRUCTURE POST-TENSION


•	The new construction consists of hollow core concrete slabs, which may be penetrated only between steel cords and a maximum of _______ inches wide. Coordinated all penetrations of ________ with ________. All contractors are individually responsible for slab penetrations required by their divisions.

REMODEL


•	Clean all return air grilles. All grilles to remain unless otherwise noted.


•	During demolition operations, all persons and property shall be protected. The work shall proceed in such a manner so as to minimize any spreading of dust, debris and flying particles, and so that any related effects of the demolition do not interfere with surrounding equipment, personnel or the operation of the building.



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•	Minimize disruptions to mechanical and electrical systems in occupied areas. Coordinates any required system outages with the Owner in advance.

BALANCE


•	CFM quantities for rooms without return air openings shall be balanced with doors into open room.

CONSTRUCTION VENTILATION


•	Where existing or new mechanical systems are used for temporary ventilation or climate control, mechanical equipment installer shall provide construction filters, maintain equipment, and clean, adjust and put in new condition before occupancy. Parts and labor warranty shall not be considered to start until acceptance of system by Owner.

PROCEDURES REGARDING TAKING FLOORS OFF-LINE


1.	All outside contractors shall sign-in at Denver Place Operations Center (DPOC) 999 18 ^th Street. The contractor is required to leave his/her driver's license or personal identification with DPOC in the provided envelope, completely filled out. DPOC will record the contractor's name in the comment column on the sign in log.


2.	DPOC shall verify the outside contractor has valid insurance certificates and issue contractor badges. DPOC will notify the Engineer on duty.



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3.	Engineers are available Monday through Friday between 6:00 am and 4:00 pm to disconnect and /or connect the fire point(s). Engineers may be available to disconnect after these hours with forty-eight (48) hours notice and with an After Hours Request Form on file.


4.	Contractors are not to leave the building without notifying the engineer to reconnect.


5.	The engineer on duty will notify the contractor if the hook-up time has been exceeded and inform the contractor action is required to get the floor back on line. The contractor will be charged for any hours exceeding the engineer's duty time.


6.	These procedures will be followed by all personnel unless previous arrangement is made-with Randy Adrian or Curtis McNair.

(pre-printed envelope information)



NAME
COMPANY
JOB LOCATION (BLDG & FLR)
GENERAL CONTRACTOR

Will work extend past 3:30 pm ? _______ If Yes, you are required to fill-out an After Hours Request Form. Otherwise, floors will be reconnected between 3:30 pm and



	AFTER HOURS ACCESS FOR FIRE SYSTEM DISCONNECT

I, ________________________ of _____________________________________ ,
HEREBY REQUEST THE ________ FLOOR OF _________________ BUILDING
TO BE "OFF-LINE" ON THE _________ DAY OF ____________ , ____________.
I ESTIMATE OUR WORK WILL BE DONE BY _______ (AM/PM), AT WHICH TIME
I WILL RETURN TO DPOC TO PICK-UP MY LICENSE. I UNDERSTAND I WILL BE



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RESPONSIBLE FOR ENSURING THAT THE FIRE SYSTEM IS BACK TO NORMAL
BEFORE I LEAVE FOR THE DAY.

COMMENTS:








	AFTER HOURS ACCESS AUTHORIZATION FORM


REQUESTER:

SUITE:

TOWER:

DATE(S):



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TIME(S):

REASON:

VACANT:	YES	NO



THIS ACCESS REQUEST IS AUTHORIZED BY:

SIGNATURE:


COMPANY/SUITE:


DATE:


	PLEASE FAX DIRECTLY TO: 303 295-3643

Questions? Please Call M. Jean McDonald at 303 312-3920



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EXHIBIT G

EXITING MORTGAGES


1.	Two mortgage loans in the amount of $65,000,000 and $25,000,000 made by Connecticut General Life Insurance Company


2.	Two mortgage loans in the amounts of $30,275,459.74 and $22,063,007.69 made by SFI I, LLC


3.	A mortgage loan in the amount of $79,868,613 made by Newpar, LLC

Exhibit G - 1

EXHIBIT H-1

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP

999 18 ^th Street, Suite 1201

Denver CO 80202

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT


Tenant Name:	Western Gas Resources, Inc., a Delaware corporation


Trade Name:	N/A


Premises:	Suites 900, 1000, 1100, 1200

THIS AGREEMENT is dated the ______ day of _________ , 2002, and is made by and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY, having an address c/o CIGNA Investments, Inc., ("Mortgagee"), Western Gas Resources, Inc, having an address of 1099 18 ^th Street, Suite 1200, Denver, Colorado ("Tenant"), and Denver-Stellar Associates Limited Partnership, having an address of 999 18 ^th Street, Suite 1201, Denver, Colorado ("Landlord").

RECITALS:

A. Landlord and Tenant have entered into an Agreement of Lease dated as of July 30, 2002 (the "Office Lease") covering the premises described above (the "Premises") and a Garage License Agreement dated as of July 30, 2002 (the "License Agreement"), both of which pertain to space within the property known as Denver Place Plaza Tower located at 1099 18 ^th Street, Denver CO 80202, more particularly described as shown on Exhibit A, attached hereto (the "Real Property"). The Office Lease and the License Agreement shall be collectively referred to herein as the "Lease".

B. Mortgagee has made two mortgage loans in the amounts of $65,000,000 and $25,000,000 to Landlord, secured by a mortgage of the Real Property (the "Mortgage"), and the parties desire to set forth their agreement herein.

NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. The Lease and all extensions, renewals, replacements or modifications thereof are and shall be subject and subordinate to the Mortgage and all terms and conditions thereof insofar as it affects the Real Property of which the Premises form a part, and to all renewals, modifications, consolidations, replacements and extensions thereof, to the full extent of amounts secured thereby and interest thereon.

2. Tenant shall attorn to and recognize any purchaser at a foreclosure sale under the Mortgage, any transferee who acquires the Premises by deed in lieu of foreclosure (in any such case referred to as a "Successor Landlord"), and the successors and assigns of such purchaser(s), as its landlord for the unexpired balance (and any extensions, if exercised) of the term of the Lease on the same terms and conditions set forth in the Lease. Furthermore, any Successor Landlord, as landlord for the unexpired balance (and any extensions, if exercised) of the term of the Lease, shall not terminate or disturb Tenant's possession of the Premises under the Lease unless Tenant is in default (after expiration of any applicable cure periods) under any of the terms, covenants or conditions of the Lease, and any Successor Landlord shall be bound to Tenant under all the terms and conditions of the Lease except as otherwise provided in this Agreement.

Exhibit H-1 Page 1

3. If it becomes necessary to foreclose the Mortgage, Mortgagee shall neither terminate the Lease nor join Tenant in summary or foreclosure proceedings so long as Tenant is not in default (after expiration of any applicable cure periods) under any of the terms, covenants, or conditions of the Lease.

4. If Mortgagee succeeds to the interest of Landlord under the Lease, Mortgagee shall not be:

a. liable for any act or omission of any prior landlord (including Landlord);

b. liable for the return of any security deposit unless such deposit has been delivered to Mortgagee by Landlord or is in an escrow fund available to Mortgagee;

c. subject to any offsets or defenses that Tenant might have against any prior landlord (including Landlord, except as provided in Section 5 of this Agreement);

d. bound by any rent or additional rent that Tenant might have paid for more than the current month to any prior landlord (including Landlord);

e. bound by any amendment, modification, or termination of the Lease made without Mortgagee's consent;

f. personally liable under the Lease, Mortgagee's liability thereunder being limited to its interest in the Real Property; or

g. bound by any consensual or negotiated surrender, cancellation or termination of the Lease agreed upon between Tenant and any prior landlord (including Landlord), unless effected unilaterally by Tenant pursuant to the express terms of the Lease.

5. Mortgagee acknowledges that Tenant is obligated to pay for all Tenant Work under the provisions of Section 3 of the Lease and that Landlord is obligated to repay the Tenant Costs in accordance with the provisions of such Section 3. Mortgagee also acknowledges that Tenant has the right to offset against Rent otherwise payable to Landlord amounts that Landlord fails to pay to Tenant as described in Sections 26(h) and 26(i) of the Lease ("Offset Right"). Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement will be construed to diminish or otherwise modify Tenant's Offset Right.

6. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, their successors and assigns, any Successor Landlord and its successors and assigns.

7. Tenant shall give Mortgagee, by certified mail, return receipt requested, or by reputable overnight courier, a copy of any notice of default served on Landlord, at Mortgagee's address set forth above or at such other address as to which Tenant has been notified in writing. If Landlord shall have failed to cure such default within the time provided for in the Lease, then Mortgagee shall have an additional ten (10) days within which to cure any default capable of being cured by the payment of money and an additional thirty (30) days within which to cure any other default or if such other default cannot be cured within that time, then such additional time as may be necessary (but in no event more than one hundred eighty (180) days) to cure such other default shall be granted if within such thirty (30) days Mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event the Lease shall not be terminated while such remedies are being so diligently pursued.

Exhibit H-1 Page 2

Tenant, at the address set forth above or at such other address as to which Mortgagee has been notified in writing, that rentals under the Lease should be paid to Mortgagee, Tenant shall pay to Mortgagee, or at the direction of Mortgagee, all monies due or to become due to Landlord under the Lease. Tenant shall have no responsibility to ascertain whether such demand by Mortgagee is permitted under the Mortgage, or to inquire into the existence of a default. Landlord hereby waives any right, claim, or demand it may now or hereafter have against Tenant by reason of such payment to Mortgagee, and any such payment shall discharge the obligations of Tenant to make such payment to Landlord.

9, Tenant declares, agrees and acknowledges that Mortgagee, in making disbursements pursuant to any agreement relating to the Loan, is under no obligation or duty to, nor has Mortgagee represented that it will, see to the application of such proceeds by the person or persons to whom Mortgagee disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement shall not defeat the subordination herein made in whole or in part.

10. Capitalized words used in this Agreement that are not otherwise defined herein shall have the same meanings ascribed to such words in the Lease, unless the context requires otherwise. Notices under this Agreement will be deemed given and delivered in accordance with the provisions of Section 28 of the Lease. If this Agreement conflicts with the terms of the Lease, then this Agreement shall govern as between the parties and any Successor Landlord. This Agreement supercedes and constitutes full compliance with any provisions in the Lease that provide for subordination of the Lease to, or for delivery of non-disturbance agreements by, the holder of one of the Existing Mortgages. Mortgagee confirms that Mortgagee has consented into Landlord's entering into the Lease. The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the internal laws of the State of Colorado, excluding its principles of conflict of laws. All parties represent that they have full authority to enter into this Agreement and that the entry into this Agreement has been duly authorized by all necessary actions.

Exhibit H-1 Page 3

IN WITNESS WHEREOF, the parties hereto have executed these presents as of the day and year first above written.

Mortgagee: CONNECTICUT GENERAL LIFE INSURANCE COMPANY

Date: 9/18/02


By:	/s/ John A. Shaw

John A. Shaw


Its:	Managing Director

Tenant: Western Gas Resources, Inc., a Delaware corporation

Date: 9-20-2002


By:	/s/ John C. Walter


Its:	Executive Vice President


Date:	7/31/02


By:	/s/ Authorized Signatory

Authorized Signatory


Its:	President & CEO

Landlord: Denver-Stellar Associates Limited Partnership,

By Amerimar Realty Management Co. – Colorado, as agent for Landlord

Date: 9/20/02


By:	/s/ Robert T. Flynn

Robert T. Flynn


Its:	Executive Vice President

Exhibit H-1 Page 4

EXHIBIT H-2

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP

999 18 ^th Street, Suite 1201

Denver CO 80202

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT


Tenant Name:	Western Gas Resources, Inc., a Delaware corporation


Trade Name:	N/A


Premises:	Suites 900, 1000, 1100, 1200

THIS AGREEMENT is dated the ______ day of _________ , 2002, and is made by and among SFI I, LLC, a Delaware LLC, having an address c/o iStar Financial Trust, 1114 Avenue of the Americas, 27 ^th Floor, New York, New York 10036 ("Mortgagee"), Western Gas Resources, Inc, having an address of 1099 18 ^th Street, Suite 1200, Denver, Colorado ("Tenant"), and Denver-Stellar Associates Limited Partnership, having an address of 999 18 ^th Street, Suite 1201, Denver, Colorado ("Landlord").

RECITALS:

A. Landlord and Tenant have entered into an Agreement of Lease dated as of July 30, 2002 (the "Office Lease") covering the premises described above (the "Premises") and a Garage License Agreement dated as of July 30, 2002 (the "License Agreement"), both of which pertain to space within the property known as Denver Place Plaza Tower located at 1099 - 18th Street, Denver, CO 80202, more particularly described as shown on Exhibit A, attached hereto (the "Real Property"). The Office Lease and the License Agreement shall be collectively referred to herein as the "Lease".

B. Mortgagee has made two mortgage loans in the amounts of $30,275,459.74 and $22,063,007.69 to Landlord, secured by a mortgage of the Real Property (the "Mortgage"), and the parties desire to set forth their agreement herein.

NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Exhibit H-2 Page 1

4. If Mortgagee succeeds to the interest of Landlord under the Lease, Mortgagee shall not be:

a. liable for any a:ct or omission of any prior landlord (including Landlord);

b. liable for the return of any security deposit unless such deposit has been delivered to Mortgagee by Landlord or is in an escrow fund available to Mortgagee;

c. subject to any offsets or defenses that Tenant might have against any prior landlord (including Landlord, except as provided in Section 5 of this Agreement);

d. bound by any rent or additional rent that Tenant might have paid for more than the current month to any prior landlord (including Landlord);

e. bound by any amendment, modification, or termination of the Lease made without Mortgagee's consent;

f. personally liable under the Lease, Mortgagee's liability thereunder being limited to its interest in the Real Property; or

6. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, their successors and assigns, any Successor Landlord and its successors and assigns.

Exhibit H-2 Page 2

been notified in writing, that rentals under the Lease should be paid to Mortgagee, Tenant shall pay to Mortgagee, or at the direction of Mortgagee, all monies due or to become due to Landlord under the Lease. Tenant shall have no responsibility to ascertain whether such demand by Mortgagee is permitted under the Mortgage, or to inquire into the existence of a default. Landlord hereby waives any right, claim, or demand it may now or hereafter have against Tenant by reason of such payment to Mortgagee, and any such payment shall discharge the obligations of Tenant to make such payment to Landlord.

9. Tenant declares, agrees and acknowledges that Mortgagee, in making disbursements pursuant to any agreement relating to the Loan, is under no obligation or duty to, nor has Mortgagee represented that it will, see to the application of such proceeds by the person or persons to whom Mortgagee disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement shall not defeat the subordination herein made in whole or in part.

10. Capitalized words used in this Agreement that are not otherwise defined herein shall have the same meanings ascribed to such words in the Lease, unless the context requires otherwise. Notices under this Agreement will be deemed given and delivered in accordance with the provisions of Section 28 of the Lease. If this Agreement conflicts w.ith the terms of the Lease, then this Agreement shall govern as between the parties and any Successor Landlord. This Agreement supercedes and constitutes full compliance with any provisions in the Lease that provide for subordination of the Lease to, or for delivery of non-disturbance agreements by, the holder of one of the Existing Mortgages. Mortgagee confirms that Mortgagee has consented into Landlord's entering into the Lease. The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the internal laws of the State of Colorado, excluding its principles of conflict of laws. All parties represent that they have full authority to enter into this Agreement and that the entry into this Agreement has been duly authorized by all necessary actions.

IN WITNESS WHEREOF, the parties hereto have executed these presents as of the day and year first above written.

Mortgagee: SFI I, LLC, a Delaware limited liability company

By iStar Financial Inc., a Maryland corporation

Its Sole Member

Date:


By:	/s/ John F. Kubicko

John F. Kubicko


Its:	Senior Vice President

Tenant: Western Gas Resources, Inc., a Delaware corporation


Date:	Sept. 20, 2002


By:	/s/ John C. Walter


Its:	Executive Vice President


Date:	7/31/02


By:	/s/ Authorized Signatory

Authorized Signatory


Its:	President & CEO

Landlord: Denver-Stellar Associates Limited Partnership,

By Amerimar Realty Management Co. – Colorado, as agent for Landlord

Date: 7/31/02


By:	/s/ Robert T. Flynn

Robert T. Flynn


Its:	Executive Vice President

Exhibit H-2 Page 3

EXHIBIT H-3

DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP

999 18 ^th Street, Suite 1201

Denver CO 80202

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT


Tenant Name:	Western Gas Resources, Inc., a Delaware corporation


Trade Name:	N/A


Premises:	Suites 900, 1000, 1100, 1200

THIS AGREEMENT is dated the ______ day of _________ , 2002, and is made by and among NEWPAR, LLC, a Delaware LLC, having an address c/o iStar Financial Trust, 1114 Avenue of the Americas, 27 ^th Floor, New York, New York 10036 ("Mortgagee"), Western Gas Resources, Inc, having an address of 1099 18 ^th Street, Suite 1200, Denver, Colorado ("Tenant"), and Denver-Stellar Associates Limited Partnership, having an address of 999 18 ^th Street, Suite 1201, Denver, Colorado ("Landlord").

RECITALS:

A. Landlord and Tenant have entered into an Agreement of Lease dated as of July 30, 2002 (the "Office Lease") covering the premises described above (the "Premises") and a Garage License Agreement dated as of July 30, 2002 (the "License Agreement"), both of which pertain to space within the property known as Denver Place Plaza Tower located at 1099 - 18 ^th Street, Denver, CO 80202, more particularly described as shown on Exhibit A, attached hereto (the "Real Property"). The Office Lease and the License Agreement shall be collectively referred to herein as the "Lease".

B. Mortgagee has made a mortgage loan in the amount of $79,868,613 to Landlord, secured by a mortgage of the Real Property (the "Mortgage"), and the parties desire to set forth their agreement herein.

NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt and sufficiency of which arc hereby acknowledged, the parties hereby agree as follows:

3. If it becomes necessary to foreclose the Mortgage, Mortgagee shall neither terminate the Lease nor join Tenant in summary or foreclosure proceedings so long as

Exhibit H-3 Page 1

Tenant is not in default (after expiration of any applicable cure periods) under any of the terms, covenants, or conditions of the Lease.

4. If Mortgagee succeeds to the interest of Landlord under the Lease, Mortgagee shall not be:

a. liable for any act or omission of any prior landlord (including Landlord);

b. liable for the return of any security deposit unless such deposit has been delivered to Mortgagee by Landlord or is in an escrow fund available to Mortgagee;

c. subject to any offsets or defenses that Tenant might have against any prior landlord (including Landlord, except as provided in Section 5 of this Agreement);

d. bound by any rent or additional rent that Tenant might have paid for more than the current month to any prior landlord (including Landlord);

e. bound by any amendment, modification, or termination of the Lease made without Mortgagee's consent;

f. personally liable under the Lease, Mortgagee's liability thereunder being limited to its interest in the Real Property; or

g. bound by any consensual or negotiated surrender, cancellation or tennination of the Lease agreed upon between Tenant and any prior landlord (including Landlord), unless effected unilaterally by Tenant pursuant to the express terms of the Lease.

6. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, their successors and assigns, any Successor Landlord and its successors and assigns.

8. Landlord has agreed under the Mortgage and other loan documents that rentals payable under the Lease shall be paid directly by Tenant to Mortgagee upon default by Landlord under the Mortgage. After receipt of notice from Mortgagee to Tenant, at the address set forth above or at such other address as to which Mortgagee has been notified in writing, that rentals under the Lease should be paid to Mortgagee, Tenant shall pay to Mortgagee, or at the direction of Mortgagee, all monies due or to become due

Exhibit H-3 Page 2

to Landlord under the Lease. Tenant shall have no responsibility to ascertain whether such demand by Mortgagee is permitted under the Mortgage, or to inquire into the existence of a default. Landlord hereby waives any right, claim, or demand it may now or hereafter have against Tenant by reason of such payment to Mortgagee, and any such payment shall discharge the obligations of Tenant to make such payment to Landlord.

Exhibit H-3 Page 3

IN WITNESS WHEREOF, the parties hereto have executed these presents as of the day and year first above written.

Mortgagee: NEWPAR, LLC, a Delaware limited liability company

By Starwood/Denver Place, a limited liability company

a Delaware limited liability company, its

managing member

By iStar Financial Inc., a Maryland

corporation its Sole Member

Date: 9/18/2002


By:	/s/ John F. Kubicko

John F. Kubicko


Its:	Senior Vice President

Tenant: Western Gas Resources, Inc., a Delaware corporation

Date: Sept. 20, 2002


By:	/s/ John C. Walter


Its:	Executive Vice President

Date: 7/31/02


By:	/s/ Authorized Signatory

Authorized Signatory


Its:	President & CEO

Landlord: Denver-Stellar Associates Limited Partnership,

By Amerimar Realty Management Co. – Colorado, as agent for Landlord

Date: 9/25/02


By:	/s/ Robert T. Flynn

Robert T. Flynn


Its:	Executive Vice President

Exhibit H-3 Page 4

EXHIBIT I

STORAGE LEASE

THIS LEASE is made and entered into ______________ , 20___, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership by Amerimar Realty Management Co.-Colorado, as its agent ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

W I T N E S S E T H

WHEREAS, Tenant is desirous of leasing from Landlord certain storage space located on the _____ level in that certain building known as ________________________, _____ - 18th Street, in the City of Denver, State of Colorado, hereinafter referred to as the "Building".

NOW, THEREFORE, it is mutually agreed by and between the parties as follows:

1. For and in consideration of the agreements and promises of each other, Landlord promises to and hereby does lease storage space number ___, hereinafter referred to as the "Premises" to the Tenant.

2. This Lease commences on the Commencement Date and is coterminous with the Agreement of Lease between the parties of even date herewith, but may be terminated by Tenant upon thirty (30) days prior written notice.

3. The monthly rental for this Lease shall be ___________________________________________ Dollars ($__________) payable in advance on the first day of each calendar month during the term of the Lease.

4. Landlord shall not be deemed a bailee of Tenant's property and Landlord does not accept control, custody, or assume any responsibility for the care of Tenant's property. Tenant further agrees that Landlord shall not at any time or to any extent whatsoever be liable, responsible, or in any way accountable for any loss, injury, death or damage to persons or property from any cause or causes whatsoever which at any time may be suffered or sustained by Tenant or by any person in, on, or about the Premises, and Tenant agrees to indemnify and save Landlord harmless from any and all claims, liabilities, losses, damages, costs, attorney's fees, and expenses whatsoever arising out of any such loss, injury, death or damage howsoever occurring. Tenant agrees to pay for all damages done to the Premises, or the Building, by Tenant, or any person or persons permitted on the Premises by Tenant. Tenant bears all risk of loss to property stored by Tenant upon the Premises regardless of how the loss occurred.

5. Landlord shall have the right to enter the Premises at times of emergency or to inspect or do repairs, and if necessary, Landlord shall have the right to move Tenant's property to another place.

6. Tenant shall not use the Premises as a place of business, mailing address or for any unlawful purpose.

7. Tenant shall not store highly flammable materials or goods, explosives, perishable foodstuffs, contraband, live animals, materials or goods which emit odors in or upon the Premises. The Tenant covenants that it shall not store, use or possess nor permit the storage, use or possession of any Hazardous Substance (hereinafter defined) upon the Premises. Hazardous Substance for purposes of this Lease shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea-formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum based products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials, as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq .), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq .), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq .), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601 et seq .), or any other similar law,

Exhibit I - 1

rules, regulation or statute concerning the protection of the.environment (collectively "Environmental Laws"). Tenant hereby covenants and agrees, at its sole cost and expense, to indemnify, protect and defend and save harmless the Landlord and any of its partners, employees and agents from and against any all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, actions, proceedings, costs, disbursements and/or expenses (including, without limitation, attorneys' and experts' fees, expenses and disbursements) of any kind or nature whatsoever which may at any time impose upon, incurred by or asserted or awarded against the Landlord, its partners, agents or employees relating to, resulting from or arising out of Tenant's failure to comply with its obligations under the foregoing paragraph or Tenant's violation of any Environmental Law with respect to its use of the Premises. Notwithstanding any provision contained in this Lease to the contrary, the indemnification provisions set forth in paragraph 4 and in this paragraph shall survive any expiration and/or termination of this Lease.

8. Both parties acknowledge that valid notice shall be made upon the other by mailing a copy of such notice postage prepaid in the Untied States mail to the address set forth below. Such notice shall be in lieu of any other notice that might be required by law.

9. In the event the Landlord commences any action to enforce the provisions of this Lease, the Tenant &hall be obligated to pay for all costs incurred by the Landlord, including but not limited to attorneys' fees.

10. Tenant at any time, if not in default under this Lease, may remove the items stored on the Premises and on expiration or earlier termination of this Lease shall leave the Premises in a good clean and sanitary condition, and shall surrender unto Landlord the Premises in the same condition as when received, ordinary wear and tear excepted.

IN WITNESS WHEREOF, the parties hereto have executed this instrument by proper persons thereunto duly authorized so to do the day and year first herein above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: _______________________ David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date:_________________		By: ___________________________ (Title)

Exhibit I - 2

EXHIBIT J

BUILDING STANDARDS

Denver Place - 999 18 ^th Street

Hardware:

Schlage -All Purpose Entry Lock- D53PD Sparta 626

Schlage - Storeroom Lock - D80PD Sparta 626

Schlage - Passage Set DlOS Sparta 626

Schlage - Mortise Entry Lock L9453P 06A 626

Schlage - Mortise Storeroom Lock L9080P 06A 626

Schlage - Mortise Passage Set L9010 06A 626

Simplex Pushbutton Lock LL1021S 26D LH (w/Schlage J.C. key bypass)

Simplex Pushbutton Lock LL1021S 26D RH (w/Schlage LC. key bypass)

Doors & Frames

Plain slice red oak slab 8'4" x 3'

Ceiling Tile

Armstrong Cortega 2' x 5' lay-in 772-A

Lobbies only- Armstrong 2767 Second Look 2' x 2'

Light Fixtures & Lamps

Parabolume by Columbia Recessed l' x 4' 4542G-43-142 Lamps - General Electric F32 T8/SP35 700 series Electronic ballasts Advance VEL 2P32LW

Exit Lights

Astralite Model single sided-ASTXSLOOlGWSXAA

Astralite Model double sided - ASTXSL002GWSXAA

Colora - White with green LED light

Carpet & Base

Patcraft - All That Jazz 36 oz. cut pile

Shaw Contract - Digital 26 oz. loop

Roppe 2 1/2" straight

Vinyl Tile - either Mannington or Armstrong

Paint - Sherman Williams, Latex eggshell

Mini - Blinds

Levolor - Riviera horizontal color - Low gloss black #892

Hardware:

Schlage -All Purpose Entry Lock- D53PD Sparta 626

Schlage - Storeroom Lock - D80PD Sparta 626

Schlage - Passage Set D1OS Sparta 626

Schlage - Mortise Entry Lock L9453P 06A 626

Schlage - Mortise Storeroom Lock L9080P 06A 626

Schlage - Mortise Passage Set L9010 06A 626

Simplex Pushbutton Lock LLl 021S 26D LH (w/Schlage LC. key bypass)

Simplex Pushbutton Lock LL1021S 26D RH (w/Schlage LC. key bypass)

Doors & Frames

Riff cut oak with provincial stain slab 8'4" x 3'

Ceiling Tile

Armstrong Cortega 2' x 5' lay-in 772-A

Lobbies - 1' x 1' Armstrong concealed spline

Light Fixtures & Lamps

Parabolume by Columbia Lay-in P2-142G-4218 1' x 4'

Lamps - General Electric F32 T8/SP35 700 series

Electronic ballasts Advance VEL 2P32LW

Exit Lights

Astralite Model single sided - ASTXSL001GWSXAA

Astralite Model double sided - ASTXSL002GWSXAA

Colora- White with green LED light

Carpet & Base

Patcraft - All That Jazz 36 oz. cut pile

Shaw Contract - Digital 26 oz. loop

Roppe 2 1/2" straight

Vinyl Tile - either Mannington or Armstrong

Paint - Sherman Williams, Latex eggshell

Mini - Blinds

Lcvolor- Riviera horizontal color - Low gloss black #892

EXHIBIT K

AMERIMAR REALTY MANAGEMENT CO.-COLORADO

Approved and Preferred Contractors' List



Company	Contact	Phone Numbers
	All Projects
RB Construction	Roger Beaver	303 295-7621 fax 303 295-1899
Foothills	Rocky Hollingsworth	303 755-5711 ext. 303 fax 303 755-5977
	Large Projects
Jordy and Company	Sean Wardroup	303 744-6106 fax 303 744-6159
Provident Construction	Paul Tracy	303 759-2535 fax 303 759-3457
Legacy Construction	Larry Moore	303 340-4835 fax 303 340-881o
Tenant Finish Specialty, Inc.	Richard Roberts	303 296-0119 fax 303 296-3304
Ponderosa Construction, Inc.	Mike Buck	303 771-9925 fax 303 773-6843

Approved and Preferred Electricians' List



Company	Contact	Phone Numbers
Choice Electric		303 430-7200
Custom Electric		303 841-2534
Dutchman Electric		303 450-6080
ECS Electric		303 777-7737
Grand Electric		303 698-9001
MC"		303 453-0284
Sierra Electric		303 762-8200
Sturgeon Electric		303 286-8000
Aall Electric		303 820-2255

Approved and Preferred Painters' list



Company	Contact	Phone Numbers
dvh Company	Robert Watkins	303 433-2222 fax 303 447-8527
Historic Decorating	Bobby Heath	303 773-3644 fax 303 850-7726
KSH Decorating, Inc.	Randy Hodgin	303 935-9792 fax 303 935-1712

Approved and Preferred Mechanical List



Company
Bell Plumbing & Heating	Controlled Air	Custom Heating and Air
Braconier Plumbing & Heating	Denver Test & Balance	Walrath Heating & Air
Complete Mechanical Balance	Belcon Mechanical	American Commercial Air
Jebco	Colorado Mechanical	Accurate Air
Heating & Plumbing Engineers	Good News Heating	Mechanical Solutions Inc.

Amerimar Realty Management Co.-Colorado 303 312-3900

EXHIBIT "L"

HVAC STANDARDS

Winter = OSA = #1 degree F - inside = 72 degrees F.

Summer = OSA = 92 DB, 63 WB - inside = 78 degrees F

EXHIBIT M

OTHER TENANTS' RIGHTS

[TO BE SUPPLIED BY LANDLORD AFTER TENANT AND STAUBACH SIGN AND

DELIVER LETTER AGREEMENT OF CONFIDENTIALITY]

Exhibit M- 1

EXHIBIT N

GARAGE LICENSE AGREEMENT

(Generator)

THIS GARAGE LICENSE AGREEMENT, made and entered into effective as of the 30th day of July, 2002, between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Licensor"), and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Licensee"), having an address at 1099 - 18th Street, Suite 1200, Denver, Colorado 80202. In consideration of the mutual covenants herein contained, Licensor and Licensee agree as follows:

1. Premises and Duration . Licensor hereby grants to Licensee an exclusive license, subject to the terms and conditions herein set forth, to use certain premises shown on the drawing attached hereto as Exhibit A ("Garage Premises") located in the parking garage ("Parking Garage") underneath the building known as Denver Place Plaza Tower ("Building"), located at 1099 - 18th Street, Denver Colorado 80202 for the purposes described in Paragraph 4 below. The term of the license (the "Term'') shall commence concurrently with the commencement of that certain Lease entered into by and between Licensor, as Landlord, and Licensee, as Tenant (the "Lease") for space located on the ninth (9 ^th ) through the twelfth(l 2 ^th ) floors of the Building, and shall terminate and only be revocable concurrently with the termination of such Lease (including any renewals thereof) ("Termination Date"), unless terminated prior thereto as hereinafter provided.

2. Connection and Maintenance . Licensee shall, at its sole cost and expense, be responsible for installing and connecting the Generator (as hereinafter defined) to the natural gas line in the Parking Garage. Licensee hereby acknowledges and agrees that Licensor has no obligation with respect to use, operation, maintenance or, if damaged or destroyed, the repair or replacement of the Generator. Licensee shall have the right, but not the obligation to enter into (provided the same may only be entered for the full Term hereof) a commercially reasonable service and maintenance agreement with a qualified service company reasonably acceptable to Licensor (a copy of such service agreement will be given to Licensor).

3. Use . Licensee shall use the Garage Premises solely for the maintenance, use and removal of the following items (the "Generator"): a natural gas powered generator up to 350KVA, and for no other purpose. Licensee shall not use the Garage Premises or the Generator so as to interfere in any way with the ability of other occupants of the Building or occupants of other buildings to receive radio, television, telephone, microwave, short-wave, long-wave, or other signals of any sort, nor so as to interfere with the use by Licensor or such occupants of electric, electronic, or other facilities, equipment, appliances, personal property, and fixtures, nor so as to interfere in any way with the use of any antennae, satellite dishes or other electronic or electric equipment or facilities currently or hereafter located on the Garage or any other floor or area of the Building or other buildings. Licensee shall not use the Garage Premises in any way so as to increase Licensor's insurance payments, and at Licensor's option shall pay such increases. Licensee must comply with all laws, ordinances, rules, and regulations, including rules and regulations established from time to time by Licensor, now or subsequently applicable to the operation, maintenance, repair, and removal of a natural gas generator within the City and County of Denver, Colorado. Licensee shall not be permitted to store any diesel fuel or other flammable or hazardous materials on the Garage Premises except within any fuel tank(s) contained within the Generator itself. The connection of the Generator to the natural gas line and the maintenance, repair, and replacement of the Generator must be coordinated with and approved in advance by Licensor or its management agent for the Building, including scheduling of the same outside of normal business hours as Licensor may require.

4. Removal; Surrender . Licensee shall not be obligated to remove the Generator at the end of the Term, but shall be obligated to surrender the Garage Premises to Licensor at the end of the Term in the condition of the Garage Premises on the date of this Agreement, reasonable wear and tear excepted. In the event that Licensee removes the Generator at the end of the Term, or in the event that the Generator wears out during the Term (so it is not commercially reasonable to repair it) and Licensee, at its sole cost and expense, elects to replace the Generator, then, in either case, Licensee shall be entitled to remove the Generator and shall indemnify and hold harmless Licensor from any costs, damages or expense arising out of or in any way connected with such removal.

Exhibit N - 1

5. Commencement of Term . The Commencement Date set forth in Paragraph 1 shall be delayed to the extent that Licensor fails to deliver possession of the Garage Premises for any other reason, including but not limited to holding over by prior occupants, except to the extent that Licensee, its contractors, agents or employees in any way contribute to such failure. If Licensor so fails for a ninety (90) day initial grace period or such additional time as may be necessary due to strikes, acts of God, shortages of materials, acts or omissions of Licensee, its contractors, agents or employees, or other causes beyond Licensor's reasonable control, Licensee shall have the right to terminate this Agreement by written notice to Licensor any time thereafter until Licensor delivers the Garage Premises to Licensee. Any such delay in the Commencement Date shall not subject Licensor to any liability for any loss or damage resulting therefrom, and Licensee's sole recourse with respect thereto shall be Licensee's right to terminate described above. Upon any such termination, Licensor and Licensee shall be entirely relieved of their obligations hereunder. If the Commencement Date is delayed, the Expiration Date shall not be similarly extended, unless the parties expressly agree in writing. During any period that Licensee shall be permitted to enter the Garage Premises prior to the Commencement Date, Licensee shall comply with all terms and provisions of this Agreement.

6. Indemnity . Licensee shall neither hold nor attempt to hold Licensor or its agents or employees liable for, and Licensee shall hold harmless and indemnify Licensor and Amerimar Realty Management Co.-Colorado and their respective officers, directors, partners, agents, contractors, licensees, servants and employees from and against, any and all demands, claims, causes of action, liabilities or judgments, and any and all fees and expenses (including, without limitation, reasonable attorneys' fees) incurred by Licensor in connection therewith, arising from the death or injury of any person, including, without limitation, any agent, employee, contractor and any other person in or about the Parking Garage, or from damage to any property, including, without limitation, the Garage Premises, any adjacent property or the property of any licensee or user of the Parking Garage, in Connection with or arising out of the Generator or related equipment or the installation, use, operation, maintenance, repair, alteration, relocation or removal of the Generator or related equipment, or the interruption of operation of the Generator from any cause other than the gross negligence or willful misconduct of Licensor, its agents and employees; provided, however, in no event shall Licensor be liable for Licensee's consequential damages. In addition, Licensee shall, at its own expense, and upon demand of Licensor, defend any and all suits, arbitrations or other proceedings brought or instituted by third parties against Licensor, its agents or employees, on such claim, demand or cause of action.

7. Access to Premises . Licensor shall permit Licensee reasonable access to the Garage Premises for the purposes permitted hereunder, during normal business hours at the Building upon reasonable advance notice and scheduling through Licensor's management and security personnel. Except in the case of an emergency, access after normal business hours may be granted by Licensor in its sole discretion, and for such reasonable charges as Licensor shall impose. In the event of an emergency, Licensee will be granted access to the Garage Premises as necessary, subject to such reasonable charges as Licensor may impose, the availability and supervision of Building security personnel, and any other requirements of Licensor governing such emergency access, including but not limited to Licensee's submission to Licensor, upon execution of this Agreement and as updated by Licensee in writing from time to time, of specific personnel of Licensee who are authorized to have emergency access to the Garage Premises. Licensor reserves the right to enter the Garage Premises, without notice, at any time for the purpose of inspecting the same, or of making repairs, additions or alterations to the Building, and to exhibit the Garage Premises to prospective licensees, tenants, purchasers or others, or for any other reason not inconsistent with Licensee's rights hereunder. In connection with exercising such rights, Licensor may, if reasonably necessary, temporarily disconnect and/or move the Generator without liability or cost to Licensee. The exercise by Licensor of any of its rights under this Paragraph 7 shall not be deemed an eviction or disturbance of Licensee's use of the Garage Premises.

8. Installation, Use, Alterations and Removal. Licensee shall not install the Generator, or thereafter make any alterations, additions or improvements to the Garage Premises or the Generator without Licensor's prior written consent. All costs of installation of the Generator shall be borne solely by Licensee. Licensee acknowledges that it has inspected the Garage Premises and agrees to accept the same "AS IS". Licensor shall approve or reject the proposed installation of the Generator within a reasonable time after Licensee submits (a) plans and specifications for the installation of the Generator, (b) copies of all required governmental and quasi-governmental permits, licenses, and authorizations which Licensee will obtain at its own expense, and (c) a certificate of

Exhibit N - 2

insurance evidencing the coverages required herein. Licensor may withhold approval if the installation or operation of the Generator may damage the structural integrity of the Parking Garage or Building, or for any other reasonable ground. Licensor may require that any installation or other work be done under the supervision of Licensor's employees or agents, and in a manner so as to avoid damage to the Parking Garage and the Building. Licensee shall promptly and properly repair during the Term and upon termination of this Agreement any damage or injury to the Parking Garage, the Building, or the Garage Premises caused by Licensee's use of the Garage Premises or its installation, use, maintenance or removal of the Generator. If Licensee does not immediately repair any such damage or injury, or does not remove the Generator when so required, Licensee hereby authorizes Licensor to make such repairs or remove and dispose of the Generator and charge Licensee for all costs and expenses incurred in doing so. Under no circumstances shall Licensor be liable for any property so disposed of or removed by Licensor.

9. Assignment and Sublicensing . Licensee shall not, by operation of law or otherwise, assign or otherwise transfer or encumber this Agreement or the rights granted hereunder, or sublicense the whole or any part of the Garage Premises; provided, however, that in the event that Licensee assigns its rights under the Lease in accordance with the provisions of Paragraph 15 of the Lease, then Licensee may also assign its rights hereunder to the assignee of the Lease provided that Licensee expressly reaffirms in writing (in form and substance reasonably acceptable to Licensor) that Licensee shall remain responsible for the performance of all obligations of such assignee. Licensee may not let any other party tie into or use the Generator or the Garage Premises. Any such transfer without Licensor's consent shall at Licensor's option be null, void and of no effect. If Licensee desires to otherwise assign or sublicense, Licensor may consent to the same in its absolute discretion and upon such terms and conditions as Licensor may impose. In the alternative, Licensor may elect to terminate this Agreement, by written notice to Licensee within thirty (30) days after receiving Licensee's request for approval.

10. License . The interest herein created is a license and no leasehold or tenancy is intended to be or shall be created hereby. Licensor, at its sole option may require Licensee to terminate operation of the Generator, if Licensee or the Generator is causing physical damage to the Parking Garage or the Building, if Licensee or the Generator is disturbing or annoying any other occupant of the Building, or if Licensee defaults in any other way under this Agreement.

11. Entire and Binding Agreement . This Agreement contains all of the agreements between the parties relating to the Garage Premises and Generator, and may not be modified in any manner other than by agreement, in writing, signed by both parties. The terms, covenants and conditions contained herein shall inure to the benefit of and be binding upon Licensor, Licensee and their successors and assigns, except as provided herein to the contrary.

12. Substitute Premises . At any time hereafter, Licensor may substitute for the Garage Premises other premises (herein referred to as "the new garage premises") provided the new garage premises shall be similar to the Garage Premises in area and use for Licensee's purposes and shall be located in the Parking Garage, and further provided: (i) Licensor shall pay the out-of-pocket expense of Licensee for physically moving the Generator from the Garage Premises to the new garage premises; and (ii) Licensor shall first give Licensee at least ten (10) days notice before making such change.

13. Heavy Objects . Licensee shall not bring into or install in the Garage Premises any objects, excluding the Generator contemplated hereunder, the weight of which, singularly or in the aggregate, would exceed the maximum safe load per square foot of the Garage Premises. Licensee shall engage and cause a licensed and qualified engineer to certify the same to Licensor before Licensee shall install, affix or place any items other than the Generator upon the Garage Premises.

14. Applicable Law . This Agreement shall be construed in accordance with the laws of the State of Colorado.

15. Execution and Delivery . The submission of this Agreement for examination or execution does not constitute an offer or reservation of any option for the Garage Premises, and this Agreement shall become effective only upon execution and delivery thereof by both parties.

16. Intentionally Omitted .

Exhibit N - 3

17. Recording . Licensee shall not record this Agreement.

18. Leases . If at any time during the Term, Licensee is tenant under any lease, or any other agreement for office, retail, storage, parking or any other space in the Building or in any other building owned or managed by Licensor or its affiliates (collectively, the "Leases"), any default under this Agreement shall be a default under the Leases.

19. Utilities . Licensor shall install in the Garage Premises or elsewhere, if Licensor shall so elect, one or more meters or other devices to measure the electricity or other utilities used in the Garage Premises, and Licensee shall pay Licensor for such electricity or other utilities within ten (10) days after submission of each bill by Licensor therefor, or Licensor may bill Licensee for such services, at such rates as shall be from time to time determined by Licensor, provided that the rates charged by Licensor shall not exceed Licensor's out-of-pocket cost (including, without limitation, taxes, fuel adjustment charges, and other like charges regularly passed on to customers by public utility companies and transformer costs) of supplying such electricity or other utilities as determined by Licensor using reasonable accounting methods; and the cost of obtaining and installing such meters or other devices shall be paid by Licensee to Licensor within ten days after submission of a bill by Licensor to Licensee therefor.

20. Liens . Licensee shall keep the Building and Garage Premises free from any mechanic's, materialman's or similar liens or other such encumbrances in connection with any work on or respecting the Garage Premises not performed by or at the request of Licensor, and shall indemnify and hold Licensor harmless from and against any claims, liabilities, judgments, or costs (including attorneys' fees) arising out of the same or in connection therewith. Licensee shall give Licensor notice at least twenty (20) days prior to the installation of the Generator or the commencement of any other work on the Garage Premises (or such additional time as may be necessary under applicable Laws), to afford Licensor the opportunity of posting and recording appropriate notices of non-responsibility. Licensee shall remove any such lien or encumbrance within twenty (20) days after written notice by Licensor, and if Licensee fails to do so, Licensor may pay the amount necessary to remove such lien or encumbrance, without being responsible for investigating the validity thereof, and the amount so paid shall be due and payable upon demand, without limitation as to other remedies available to Licensor under this Agreement. Nothing contained in this Agreement shall authorize Licensee to do any act which shall subject Licensor's title to the Building or Garage Premises to any liens or encumbrances whether claimed by operation of law or express or implied contract. Any claim to a lien or encumbrance upon the Building or Garage Premises arising in connection with any work on or respecting the Garage Premises not performed by or at the request of Licensor, shall be null and void, or at Licensor's option shall attach only against Licensee's interest in the Garage Premises and shall in all respects be subordinate to Licensor's title to the Building and Garage Premises.

21. Intentionally Omitted .

22. Personal Property Taxes . Licensee shall pay prior to delinquency all taxes, charges or other governmental impositions assessed against or levied upon the Generator. Whenever possible, Licensee shall cause the Generator to be assessed and billed separately from the property of Licensor. In the event that the Generator or any other items shall be assessed and billed with the property of Licensor, Licensee shall pay Licensor its share of such taxes, charges or other governmental impositions within thirty (30) days after Licensor delivers a statement and a copy of the assessment or other documentation showing the amount of such impositions applicable to Licensee's property.

23. Intentionally Omitted .

24. Estoppel Certificate. Licensee shall from time to time, within twenty (20) days after written request from Licensor, execute, acknowledge and deliver a statement (i) certifying that this Agreement is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying that this Agreement as so modified, is in full force and effect (or if this Agreement is claimed not to be in force and effect, specifying the ground therefor), (ii) acknowledging that there are not, to Licensee's knowledge any uncured defaults on the part of Licensor hereunder, or specifying such defaults if any are claimed, and (iii) certifying to such other matters as Licensor may reasonably request. If Licensee shall fail to execute and return such

Exhibit N - 4

statement within the time required herein, Licensee shall be deemed to have agreed with the matters set forth therein, and Licensor, acting in good faith, shall be authorized, as Licensee's attorney-in-fact, to execute such statement on behalf of Licensee.

25. Conveyance by Licensor and Liability . In case Licensor or any successor owner of the Building shall convey or otherwise dispose of any portion thereof in which the Garage Premises are located, to another party (and nothing herein shall be construed to restrict or prevent such conveyance or disposition), such other party shall thereupon be and become the Licensor hereunder and shall be deemed to have fully assumed and be liable for all obligations of this Agreement to be performed by Licensor which first arise after the date of conveyance, and Licensee shall attorn to such other party, and Licensor or such successor owner shall, from and after the date of conveyance, be free of all liabilities and obligations hereunder not then incurred. The liability of Licensor to Licensee for any default by Licensor under this Agreement or arising in connection herewith or with Licensor's operation, management, leasing repair, renovation, alteration, or any other matter relating to the Building or the Garage Premises, shall be limited to the interest of Licensor in the Building (and the rental proceeds thereof). Licensee agrees to look solely to Licensor's interest in the Building (and the rental proceeds thereof) for the recovery of any judgment against Licensor, and Licensor shall not be personally liable for any such judgment or deficiency after execution thereon. The limitations of liability contained in this Paragraph shall apply equally and inure to the benefit of Licensor's present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future general partner of Licensor (if Licensor is a partnership), or individual trustee or beneficiary (if Licensor or any partner of Licensor is a trust) have any liability for the performance of Licensor's obligations under this Agreement.

26. Licensor's Right to Cure . If Licensor shall fail to perform any term or provision under this Agreement required to be performed by Licensor, Licensor shall not be deemed to be in default hereunder nor subject to any claims for damages of any kind, unless such failure shall have continued for a period of thirty (30) days after written notice thereof by Licensee sufficiently describing such failure to enable Licensor to determine an appropriate cure; provided that, however, if Licensor shall commence to cure such failure within such thirty (30) day period, and thereafter diligently seeks to cure such failure to completion, Licensor shall have such additional time as Licensor may reasonably need in order to complete such cure. The aforementioned periods of time permitted for Licensor to cure shall be extended for any period of time during which Licensor is delayed in, or prevented from, curing due to fire or other casualty, or acts of God, strikes, lockouts or other labor troubles, shortages of equipment or materials, power shortages or outages, delays in obtaining insurance proceeds, enactment or enforcement of laws, acts or omissions by Licensee or other Persons, and other causes beyond Licensor's reasonable control.

If Licensor shall fail to cure within the times permitted for cure herein, Licensor shall be subject to such claims for damages and remedies as may be available to Licensee (subject to the other provisions of this Agreement, including but not limited to Paragraph 24 and this Paragraph 26); provided that, however, Licensee shall have no right of self-help to perform any obligation of Licensor, and shall have no right to withhold, set-off, or abate any rent, nor claim an actual or constructive eviction or disturbance of Licensee's use or possession of the Garage Premises, unless, until and only to the extent that Licensee shall have obtained a valid judgment by a court of competent jurisdiction. As a condition to the recovery of any damages against Licensor, Licensee shall be obligated to use reasonable efforts to mitigate such damages; provided, that, however, Licensee shall in all events comply with the terms and provisions of this Agreement.

27. Notices . Except as expressly provided to the contrary in this Agreement, every notice or other communication to be given by either party to the other with respect hereto shall be in writing and shall not be effective for any purpose unless the same shall be served personally or by national air courier service, or United States certified mail, return receipt requested, postage prepaid, addressed if to Licensee, at the address first set forth in this Agreement, and if to Licensor, at 999 - 18th Street, Suite 1201, Denver, Colorado 80202, or such other address or addresses as Licensee or Licensor 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 third (3rd) business day following the date of such mailing or immediately if personally delivered. Notices not sent in accordance with the foregoing shall be of no force or effect until received by the foregoing parties at such addresses required herein.

Exhibit N - 5

28. Termination . Licensee (subject to its obligations under Paragraph 8 above) shall have the right to terminate this Agreement without cause or liability by notifying Licensor in writing with ninety (90) days notice.

Exhibit N - 6

IN WITNESS WHEREOF, the parties have executed this Garage License Agreement on the day and year first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: 7/31/02		By: /s/ Authorized Signatory President & CEO (Title)

Exhibit N - 7

Exhibit 10.41

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE ("First Amendment") is made and entered into as of this 10 ^th day of September 2002, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into that certain Denver Place Plaza Tower Office Lease dated as of July 31, 2002 (the "Lease"), pursuant to which Tenant leased the premises (the "Premises'') deemed to consist of 81,189 square feet of rentable area located on the ninth (9 ^th ) through the twelfth (12 ^th ) floors of that building known as Denver Place Plaza Tower, located at 1099 - 18th Street, Denver, Colorado (the "Building").

B. Landlord has not delivered the Premises to Tenant by the Scheduled Commencement Date as contemplated by the Lease and Landlord acknowledges that if Tenant is unable to move into the Premises by on or about December 16, 2002, it will be unable to do so until on or about March 1, 2003.

C. Landlord and Tenant now desire to modify the provisions of the Lease pertaining to occupancy of the Premises, the determination of the Extended Rent Commencement Date, Landlord's payment of the Construction Allowance and other modifications of the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and conditions herein, Landlord and Tenant agree as follows:

Rent . Paragraph 2 of the Lease is hereby deleted in its entirety and replaced with the

following:

2. Base Rent . Except as modified by the Lease Term Agreement, the "Base Rent" to be paid hereunder shall be as follows:

(a) The period until the Extended Rent Commencement Date defined in subparagraph 3(g):

Zero dollars ($0.00)

(b) Balance of Term (from and after the Extended Rent Commencement Date through the last day of the 87 ^th complete calendar month to occur after the Extended Rent Commencement Date):

$1,653,819.96 per annum payable in monthly installments of $137,818.33

All payments of Base Rent shall be paid in advance on or before the first day of each calendar month during the Term, in the monthly installments provided above. If the Extended Rent Commencement Date occurs on a date other than on the first day of a month, the Base Rent for the first month of the Term occurring after the Extended Rent Commencement Date shall be prorated, and the Base Rent for the portion of the month in which the obligation to pay Base Rent commences shall be paid on the first day of the calendar month following the month in which the Extended Rent Commencement Date occurs.

2. Completion of Premises .

(a) Subparagraph 3(f) of the Lease is hereby deleted in its entirety and replaced with the following:

(f) Payment for Tenant Work . Tenant shall pay for all Tenant Work on or before the dates payments are due under the Construction Contract and/or any other contracts or agreements pertaining to the Tenant Work that are entered into by Tenant. Landlord shall provide an allowance for the payment of Tenant's out-of-pocket costs and expenses paid by Tenant to Tenant's Contractor, the Architect, material suppliers and/or other sources for the material, labor and services applied to the Tenant Work ("Tenant Costs") in an amount of up to Two Million Twenty-Nine Thousand Seven Hundred Twenty-Five and No/100 Dollars ($2,029,725.00) ("Construction Allowance"). Provided Tenant is not in default (beyond any applicable cure period) in the performance of its obligations under this Lease, Landlord shall pay or credit the Construction Allowance as follows: (i) twenty percent (20%) of the Tenant Costs not to exceed $405,945.00 shall be paid directly to Tenant within thirty (30) days after substantial completion of the Tenant Work; (ii) forty percent (40%) of the Tenant Costs not to exceed $811,890.00 shall be credited in six (6) equal credits against Base Rent for the first six (6) complete calendar months from and after the Extended Rent Commencement Date, and (iii) forty percent (40%) of the Tenant Costs not to exceed $811,890.00 shall be credited in twelve (12) equal credits against Base Rent for the seventh (7 ^th ) though eighteenth (18 ^th )inclusive, complete calendar months from and after the Extended Rent Commencement Date. Notwithstanding the foregoing, Landlord shall not be obligated to pay or credit any portion of the Construction Allowance until ten (10) business days after Landlord has received reasonable evidence of Tenant's payment in full of all Tenant Costs, including, but not limited to copies of all invoices pertaining to the Tenant Work, and mechanic's lien waivers in form and content reasonably acceptable to Landlord executed by Tenant's Contractor, Architect and all subcontractors and suppliers performing any of the Tenant Work. In the event there are any claims in dispute pertaining to any Tenant Work, Landlord shall not be required to pay or credit the Construction Allowance unless and until all claims in dispute have been bonded over to the reasonable satisfaction of Landlord. If necessary in order to avoid a forfeiture of the Construction Allowance by Tenant, the time periods for paying or crediting the Construction Allowance set forth in clauses (i) through (iii) above will be extended in order to permit Tenant to satisfy the conditions precedent to Landlord's obligation to pay or credit the Construction Allowance as such conditions are set forth in this subparagraph 3(f). From time to time during the performance of the Tenant Work, Tenant may request that Landlord review and approve evidence.of Tenant's payment of Tenant Costs, including without limitation review of invoices and mechanic's lien waivers, and in that event Landlord will promptly advise Tenant in writing of its approval or disapproval, and the specific reasons for any disapproval will be stated in Landlord's response. The Construction Allowance may only be used for Tenant Costs. Tenant shall be permitted to include within Tenant Costs up to $405,945 of out-of-pocket costs and expenses paid by Tenant for (i) space planning the Premises, (ii) installation of telecommunication and data cabling at the Premises, and (iii) moving Tenant's furniture, equipment and other personal property into the Premises.

(b) Subparagraph 3(g) of the Lease is hereby deleted in the entirety and replaced with the following:

(g) Delivery of Possession of Premises . Landlord shall cause all of the Premises to be delivered to Tenant for ( purposes of commencing the completion of the Tenant Work as soon as practicable, and the date of such delivery shall be referred to herein as the "Delivery Date". Tenant's rights and obligations hereunder with respect to the Premises, including, but not

limited to, its obligations to pay the Base Rent, the Tax Adjustment and the Operating Expense Adjustment attributable to the Premises shall not commence until that date (the "Extended Rent Commencement Date") that is the earlier of (i) six (6) months after substantial completion of Tenant's Work, provided that if substantial completion of Tenant's Work does not occur within three (3) months after the Delivery Date solely as a result of Landlord Delay or Force Majeure delay, the occurrence of the Extended Rent Commencement Day will be postponed for one (1) day for each day completion of the Tenant Work has been delayed solely due to either a Landlord Delay or Force Majeure Delay and (ii) six (6) months after the date on which Tenant occupies any portion of the Premises for purposes of conducting its business operations. If the Delivery Date docs not occur on or before March 1, 2003, then Tenant shall have, as its sole remedy for Landlord's failure to deliver the Premises, the right to terminate this Lease provided written notice of Tenant's election to terminate is given to Landlord on or before March 15, 2003. Notwithstanding the foregoing provisions of this subparagraph 3(g), in the event the date of substantial completion of the Tenant Work occurs after December 16, 2002, but on or before February 28, 2003, then the Extended Rent Commencement Date shall be deemed to be that date which is the earlier of (i) six.(6) months after the date on which Tenant occupies any portion of the Premises for purposes of conducting its business operations and (ii) September 1, 2003.

3. Three (3) Month Extension Option and Holdover . Landlord and Tenant agree that if Tenant properly exercises the First Renewal option and/or the Second Renewal option as provided in Paragraph 30 of the Lease, then Tenant shall not be permitted to extend the Original Term or the First Renewal Term, as applicable, for the 3-Month Extension Term by virtue of the 3-Month Extension Option.

4. Hazardous Materials . Subparagraph 26(o)(i) of the Lease is hereby deleted in its entirety and replaced with the following:

(o) Hazardous Materials.

(i) The Landlord hereby represents that to the best of its knowledge, no Hazardous Materials (as defined below) are located in violation of applicable law within the Building or Parking Garage. In the event that Hazardous Materials arc located in the Building or Parking Garage not as a result of Tenant's acts, omissions or negligence, and any action is required to be taken under any Environmental Law (hereinafter defined), then Landlord upon becoming aware thereof will promptly give written notice to Tenant that identifies the Hazardous Materials and the actions required to be taken and Landlord will take such action mandated by applicable law to bring the Building and Parking Garage into material compliance with applicable Environmental Laws within thirty (30) days or such longer period of time as is reasonably necessary after the requirement arises and will provide reasonable evidence of such compliance to the Tenant; provided, however, in the event such compliance or registration cannot reasonably be completed or obtained within such thirty (30) days, the Landlord will not be in default hereunder provided the Landlord commences such corrective action within said thirty (30) days and diligently pursues the same to completion. Notwithstanding the foregoing, in the event the presence of Hazardous Substances (for reasons other than the violation of Tenant's covenants under subparagraph 26(o)(ii)) renders all or any portion of the Premises untenantable for seven (7) consecutive business days, then Rent payable hereunder shall abate commencing on the eighth (8th) business day of such untenantability in whole (if the entire Premises is untenantable) or in part (if only a portion of the Premises is untenantable) until the Premises are tenantable. For purposes of this subparagraph 26(o)(i),[A] in the event that more than seventy-five percent (75%) of any floor included in the Premises is untenantable, it shall be deemed that the entire floor is untenantable, but if more than fifty percent (50%) of any floor is included in the Premises is untenantable and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that the entire floor is untenantable; and [B] if more than seventy-five percent (75%) of the Premises is untenantable, then all of the

Premises will be deemed untenantable. If the period of untenantability shall continue for one hundred twenty (120) days, then Tenant, by notice to Landlord prior to the end of the period of untenantability may.terminate this Lease.

5. Parking Agreement . In the event that the Delivery Date does not occur by November 4, 2002, and Tenant does not commence the operation of its business from any portion of the Premises prior to March 1, 2003, then Exhibit D to the Lease (the "Parking Agreement") shall be amended hereby to provide that (a) the monthly rental rate for unreserved Initial Parking Spaces shall be $85.00 per parking space during the first two (2) years of the Original Term, $125.00 per Initial Parking Spaces during the third (3rd) through and including the fifth (5th) year of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $125.00; and (b) the monthly rental rate for reserved Initial Parking Spaces shall be $100.00 per Initial Parking Space during the first two (2) years of the Original Tenn, $185.00 per Initial Parking Spaces during the third (3rd) through and including the fifth (5th) years of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $185.00. If Landlord delivers the Premises-to Tenant for purposes of commencing the completion of the Tenant Work on or before November 4, 2002, or if Tenant substantially completes the Tenant Work on or before December 16, 2002, then the Parking Agreement shall be and remain in the form set forth on Exhibit D to the Lease, without the modifications set forth in this paragraph.

6. Irrevocable Offer . This First Amendment shall have no force and effect until (a) itis executed and delivered by Tenant to Landlord and (b) it is fully reviewed and executed by Landlord; provided, however, that except as stated below, upon execution of this First Amendment by Tenant and delivery to Landlord, such execution and delivery by.Tenant shall, for valuable consideration the receipt of which is hereby acknowledged, constitute an offer by Tenant to modify the Lease upon the terms and conditions set forth herein (which offer shall be irrevocable until September 18, 2002). By execution of this instrument, Tenant does not waive its right to require Landlord to deliver to Tenant with the mutually signed Lease and First Amendment, the executed Nondisturbance Agreements referred to in Paragraph 18(a) of the Lease.

7. Real Estate Broker . Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this First Amendment by Agent as Landlord's agent and by Garth R. D. Tait, Broker, Ltd. ("Tait") as Landlord's subagent, and (ii) Tenant has been represented in connection with this First Amendment by The Staubach Company (Barry Dorfman, Joe Hollister and Ken Gooden) ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this First Amendment, made by any broker or finder (other than Agent, Tait and Staubach) who claim to have dealt with or communicated to Tenant in connection with this First Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, Tait and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this First Amendment, and agrees to indemnify, defend and hold Tenant harmless from and against any claims, for a commission or other compensation in connection with this First Amendment, made by any broker or finder who claim to have dealt with or communicated to Landlord in connection with this First Amendment provided that Tenant has not in fact retained such broker or finder.

8. Binding Effect . This First Amendment becomes effective only upon the execution by Landlord and Tenant.

9. Conflict . If there is any conflict between the terms and provisions of this First Amendment and the terms and provisions of the Lease, the terms and provisions of this First Amendment shall govern. Except as herein specifically set forth, all of the provisions of the Lease shall remain in full force and effect and be binding upon the parties hereto.

10. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

11. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants and conditions of the Lease shall remain and continue in full force and effect as amended herein. If

there is any conflict between the terms and provisions of this First Amendment and the terms and provisions of the Lease, the terms and provisions of this First Amendment shall govern.

12. Governing Law. The governing law of this First Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

13. Complete Agreement . This First Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

14. Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this First Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

15. Counterparts . This First Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this First Amendment to Lease as of the date set forth above.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: Sept. 11, 2002		By: /s/ John C. Walter Executive Vice President (Title)

Exhibit 10.42

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE ("Second Amendment") is entered into as of this 23 ^rd day of July 2004, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into an Office Lease dated as of July 30, 2002 (the "Original lease") wherein Landlord leased to Tenant and Tenant leased from Landlord approximately 81,189 square feet of rentable area (the "Original Premises") located on the the ninth (9 ^th ) through the twelfth (12 ^th ) floors of the building (the "Building") located at 1099 - 18th Street, Denver, Colorado 80202, and further described as Suite 1200.

B. Landlord and Tenant entered in to a First Amendment to Lease dated as of September 10, 2002 ("First Amendment"). The Original Lease as amended by the First Amendment is herein referred to as the "Lease".

C. Landlord and Tenant desire to confirm and amend the Tenant's parking rights and obligations under the Lease.

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and conditions herein, Landlord and Tenant agree as follows:

1. Parking . Landlord and Tenant agree that Paragraph 33 of the Original Lease, Paragraph 5 of the First Amendment and the Parking Agreement attached as Exhibit D to the Original Lease are amended and modified to provide for the following:

(a) Landlord and Tenant acknowledge and agree that pursuant to the provisions of the first paragraph of the Parking Agreement attached to the Original Lease as Exhibit D , Tenant has exercised its option to rent and is currently renting one hundred fifty-eight (158) Parking Spaces, fifteen (15) of which are reserved Parking Spaces (the "Reserved Parking Spaces") and one hundred forty-three (143) of which are unreserved Parking Spaces (the "Unreserved Parking Spaces," together with the Reserved Parking Spaces herein referred to as the "Existing Parking Spaces"). Tenant acknowledges and agrees that pursuant to the terms of the Lease, Tenant has no further options or rights to rent additional parking spaces located in the Parking Garages with the exception of the Existing Parking Spaces. Landlord and Tenant agree that Tenant shall have the right, upon delivery of not less than thirty (30) days advanced written notice to Landlord, to relinquish the use of Existing Parking Spaces (each herein referred to as a "Relinquished Parking Space" and collectively as the "Relinquished Parking Spaces"), and upon such relinquishment Tenant shall not be obligated to pay rent for any Relinquish Parking Spaces. In the event Tenant shall not be obligated to pay rent for any Relinquished Parking Space, Tenant shall have no further right or option to rent the Relinquished Parking Spaces in the future.

(b) Commencing August 1, 2004, in addition to the Existing Parking Spaces, Tenant agrees to rent and Landlord agrees to provide throughout the Term of the Lease, ten

(10) additional unreserved parking spaces (the "Additional Parking Spaces") to be located in either of the Parking Garages as directed from time to time by Landlord. Tenant shall pay as monthly rent for each of the Additional Parking Spaces, in advance, the same rate that Tenant is required to pay for each of the Unreserved Parking Spaces. Tenant shall be obligated to pay rent for the Additional Parking Spaces throughout the Term of the Lease regardless of whether or not the Tenant uses the Additional Parking Spaces.. The Additional Parking Spaces shall be provided to Tenant subject to the provisions of the third paragraph of the Parking Agreement attached to the Original Lease as Exhibit D .

2. Authority of Tenant . Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Second Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or related to the Lease or the Premises.

3. Binding Effect . This Second Amendment becomes effective only upon the execution by Landlord and Tenant.

4. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

5. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants and conditions of the Lease shall remain and continue in full force and effect as amended herein. If there is any conflict between the terms and provisions of this Second Amendment and the terms and provisions of the Lease, the terms and provisions of this Second Amendment shall govern.

6. Governing Law. The governing law of this Second Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

7. Complete Agreement . This Second Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

8. Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Second Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

9. Amendment . This Second Amendment may not be amended except in writing signed by the parties hereto.

10. Headings . The paragraph headings of this Second Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

11. Time . Time is of the essence hereof.

12. Survival . All covenants, agreements, representations and warranties as set forth in this Second Amendment shall survive the termination of the Lease.

13. Counterparts . This Second Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Second Amendment to Lease as of the date set forth above.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date:_________________		By: /s/ John C. Walter Executive Vice President (Title)

EXHIBIT "C"

LEASE TERM AGREEMENT

THIS AGREEMENT, made as of the 20th day of May, 2003, DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as "Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation (hereinafter referred to as "Tenant").

WITNESSETH

WHEREAS, by Lease (hereinafter called "Lease") made July 30, 2002, Landlord leased unto Tenant certain premises known as Suite Number 1200, located at 1099 - 18th Eighteenth Street, Denver, Colorado, for a term of ninety-six (96) months 9/1/03, unless sooner terminated or extended as provided therein, and

WHEREAS, Landlord and Tenant now desire to set forth the correct Commencement Date of the term and to adjust the Expiration Date of the Term to provide for a full term as follows:

NOW, THEREFORE, Landlord and Tenant do hereby agree as follows:


1.	The Extended Rent Commencement Date on September 18, 2003, and shall continue until December 31, 2010 unless sooner terminated or extended as provided therein.


2.	Except as hereby amended, the Lease shall continue in full force and effect.


3.	This Agreement shall be binding on the parties hereto, their heirs, executors, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

LANDLORD:

DENVER-STELLAR ASSOCIATES LIMITED

PARTNERSHIP, a Delaware limited partnership


By:	ARC Denver Associates, L.L.C., a Delaware

limited liability company, its general partner


By:	ARC Denver, Inc., a Delaware corporation,

its manager

By: /s/ David G. Marshall

David G. Marshall, President

TENANT:

WESTERN GAS RESOURCES, INC., a Delaware corporation

By: /s/ John C. Walter

Executive Vice President Title

Exhibit 10.43

THIRD AMENDMENT TO LEASE

THIS THIRD AMENDMENT TO LEASE ("Third Amendment") is entered into as of this 1 ^st day of November 2004, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

C. Tenant has requested and Landlord is willing to lease an additional 12,000 square feet of rentable area located on the sixteenth (16th) floor of the Building which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "First Added Premises").

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. First Added Premises . Effective as of the date (the "First Added Premises Commencement Date"), the First Added Premises are Ready for Occupancy (hereinafter defined) or would have been Ready for Occupancy in the absence of any FAP Tenant Delay (hereinafter defined), the First Added Premises shall be added to the Premises for the balance of the Term, upon and subject to all of the terms, covenants and conditions of the Lease, as amended herein. Landlord and Tenant acknowledge that the Premises will consist of approximately 93,189 square feet of rentable area after the addition of the First Added Premises.

2. Base Rent . Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows:


(a)	From the Commencement Date through and until September 17, 2003;

Zero Dollars ($0.00) (on the Original Premises)


(b)	From September 18, 2003 through and including January 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33

(on the Original Premises)*


(c)	From February 1, 2005** through and until December 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33

(on the Original Premises); and

$183,330.00 per annum payable in monthly installments of $15,277.50) (on

the First Added Premises)*


(d)	From January 1, 2006 through and until December 31, 2010:

$1,653,819.96 per annum payable in monthly installments of $137,818.33

(on the Original Premises); and

$244,440.00 per annum payable in monthly installments of $20,370.00 (on

the First Added Premises)

* The Base Rent payable through March 2005, is subject to a credit against Base Rent pursuant to Paragraph 2 of the First Amendment.

** Or, with respect to the First Added Premises only, the First Added Premises Commencement Date, whichever is later.

3. Additional Rent .

(a) Original Premises . In addition to paying the Base Rent specified in paragraph 2 above, Tenant shall pay as "additional rent" with respect to the Original Premises the amounts determined in accordance with the provisions of paragraph 4 of the Original Lease.

(b) First Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent'' with respect to the First Added Premises an amount determined in accordance with the provisions of paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514,000).

(c) Calculation . Tenant's Proportionate Share under subparagraphs 3(a) and 3(b) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which· is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

4. Acceptance and Improvements of First Added Premises .

(a) Acceptance of First Added Premises . Tenant acknowledges that it has had the opportunity to inspect the First Added Premises and agrees to accept the First Added Premises in its current "as is" condition without any obligation upon Landlord to complete improvements to the First Added Premises or to provide any allowance for the completion of such improvements, except as provided in this Paragraph 4.

(b) Preliminary Information and Plans : Landlord has heretofore delivered to Tenant for use by Tenant's architect or engineer, such plan or plans and other information with respect to the First Added Premises and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's layout plans for the First Added Premises. Receipt of all such information is hereby acknowledged by Tenant.

(c) Tenant's FAP Layout Plans . Tenant shall cause to be prepared at Tenant's expense and, not later than 12:00 noon (Denver time), December 1, 2004, shall deliver to Landlord one mylar and two black line prints of complete and final architectural working drawings (which shall be 1/8" scale), three copies of all specifications and two (2) non-copyrighted CADD disks, prepared by an architect or space planner approved by Landlord ("Tenant's PAP Layout Plans") for the construction and ·finishing of the First Added Premises. Tenant's FAP Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by an architect licensed by and registered in the State of Colorado ("Tenant's Architect"), and (iv) con.form to all applicable laws and requirements of public authorities and insurance underwriters' requirements. Tenant's FAP Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed (and may be disapproved by Landlord only

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in the event that the proposed Tenant's FAP Layout Plans violate any governmental regulations; adversely affect the Building's structure, electric, or mechanical systems (in Landlord's sole opinion with respect to adverse affect on electric and mechanical systems); intrude on the Building's Common Area; or are visible from the Building's Common Area), and such plans shall be deemed modified to take account of any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant FAP Layout Plans are approved within five (5) business days after their delivery to Landlord, provided that Tenant's FAP Layout Plans shall be deemed to be approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within five (5) business days of their receipt by Landlord stating the reason for disapproval of such Plans. Tenant's FAP Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final FAP Layout Plans". Landlord and Tenant agree that they will each use their good faith efforts to mutually agree upon the Final FAP Layout Plans on or before December 8, 2004. Concurrently with delivery of Tenant's FAP Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the First Added Premises respecting the matters which are the subject of this Paragraph 4 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 4; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(d) FAP Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval or deemed approval by Landlord of the Final FAP Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("FAP Engineering Plans"), based on the Final FAP Layout Plans (and such pertinent additional information as shall have been submitted by Tenant with Tenant's FAP Layout Plans or as requested by Landlord), as may be required to complete the First Added Premises in accordance with the Final FAP Layout Plans. As soon as reasonably possible, and in any event within five (5) days after submission to Tenant by Landlord of the FAP Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final FAP Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the FAP Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contrary within five (5) days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final FAP Layout Plans. The FAP Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the FAP Engineering Plans·so changed.

(e) Completion by Landlord . Landlord shall, at Tenant's expense, payable out of the FAP Allowance, in a good and workmanlike manner, cause the First Added Premises to be improved and completed in accordance with the Final FAP Layout Plans and the FAP Engineering Plans (herein referred to together with architectural and engineering services as the ''FAP Tenant Work) (such plans are hereinafter together called the "FAP Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final FAP.Layout Plans). The FAP Tenant Work shall be furnished, installed and performed by Landlord at Tenant's cost for an amount (hereinafter called the "FAP Tenant Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and·services applied to the FAP Tenant Work. plus applicable sales taxes and without, however, any construction management fee payable to Landlord or its affiliates. Landlord and Tenant agree to select two (2) general contractors from the following list of three mutually acceptable general contractors to submit guaranteed maximum price bids for the PAP Tenant Work based upon reviews of the FAP Construction Plans: Foothills Construction, Jordy Construction, and RB Construction. The general contractors submitting bids shall be required to provide an AIA

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Statement of Qualification and have a designated project manager for the FAP Tenant Work with (at a minimum) a "B" class license within the City and County of Denver (the "City''). Landlord agrees to obtain bids from the two mutually selected general contractors for the completion of the FAP Tenant Work. Landlord agrees to·select the contractor submitting the lowest bid; provided, however, in the event the bids are within two percent (2%) of the lowest bid, Tenant shall have the right to select the general contractor. Landlord currently estimates that the FAP Tenant Work can be completed Ready for Occupancy by February 1, 2005 (subject to delays beyond Landlord's control), provided the Final FAP Layout Plans are completed on or before 5:00 p.m. (Denver time), December 8, 2004. "Ready for Occupancy'' shall mean (i) the date on which Landlord has substantially completed the FAP Tenant Work in accordance with the FAP Construction Plans and in substantial compliance with all applicable laws, regulations, and codes, as certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect"), Landlord and the General Contractor, in accordance with the FAP Construction Plans; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by the City permitting the use and occupancy of the Premises subject only to Punch List (defined below) items and Tenant Installations (defined below); and (iii) the services and systems required to be provided to the First Added Premises are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the First Added Premises.

The contract between Landlord and the general contractor will provide for a guaranteed maximum price ("GMP"), and the GMP cannot be exceeded without the execution of a change order approved in writing by Tenant, provided such approval will not be unreasonably withheld.

(f) Access: Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party'') access to the First Added Premises at reasonable times prior to the occupancy of the First Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense, for the purposes of inspecting and verifying Landlord's performance of the FAP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the FAP Tenant Work. Landlord shall provide Tenant and its agents with access to the First Added Premises at least fifteen (15) days prior to the First Added Premises Commencement Date for the purpose of installing furniture and equipment (the "Tenant Installations"). Tenant shall not interrupt the completion of the Tenant Work during completion of Tenant Installations. Tenant shall indemnify and hold Landlord and its partners, agents, servants, employees and general contractor (each herein referred to as an "FAP Tenant Work Indemnified Party") harmless from any and all claims, losses, damages, fines and penalties incurred by an FAP Tenant Work Indemnified Party including, but not limited to, reasonable attorneys' fees that in any way result from a Tenant Party's negligent and/or willfully wrongful activities within the First Added Premises during completion of the FAP Tenant Work or Tenant Installations. Within fifteen (15) days after the FAP Tenant Work is completed., Landlord and Tenant shall prepare a mutually agreed upon list ("Punch List") of items of the FAP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the Punch List to be corrected or repaired within thirty (30) days after the date the Punch List is prepared. As used in this Paragraph 4, "Punch List" items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the First Added Premises.

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completed; (ii) to reimburse Tenant for Tenant Related Costs within fifteen (15) days after Tenant delivers reasonable evidence of such expenditures to Landlord, (iii) to apply the unused portion of the FAP Allowance toward the payment of Base Rent for the First Added Premises, up to an amount not to exceed $40,700.00; and (iv) to apply the balance of any unused portion of the FAP Allowance to reimburse Tenant for the payments incurred by Tenant in connection with the alterations described in Paragraph 10 of this Third Amendment, within fifteen (15) days after Tenant delivers reasonable evidence of such expenditures to Landlord. Tenant shall not be entitled to payment of any remaining FAP Allowance after the payment of Tenant Related Costs, Base Rent, and the costs described in clause (iv) above. Tenant shall be deemed to have waived any such excess FAP Allowance.

(h) First Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Third Amendment) fail to cause the FAP Tenant Work to be completed on or before February 1, 2005 or any other date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the First Added Premises shall commence on the First Added Premises Commencement Date, and such failure to cause the PAP Tenant Work to be completed on or before February 1, 2005, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The term "PAP Tenant Delay" shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the FAP Tenant Work including (a) any delay caused by failure of Tenant to deliver Tenant's FAP Layout Plans on or before December 1, 2004; (b) unreasonable failure to mutually agree upon the Final FAP Layout Plans on or before December 8, 2004; (c) any delay which is caused by changes in the FAP Tenant Work requested by Tenant after mutual approval of the Final FAP Layout Plans; (d) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, promptly to furnish to Landlord any required information, approval or consent or caused by any good faith reluctance on the part of Landlord to approve any information required to be submitted by Tenant and approved by Landlord (provided that such disapproval is permitted pursuant to Subparagraph 4(c) above); or (e) any delay which is caused by the performance of any work or activity in the First Added Premises by Tenant or any of its employees, agents or contractors, including, but not limited to, Tenant Installations. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the First Added Premises resulting from any FAP Tenant Delay, to the extent such cost is not covered by the FAP Allowance. Notwithstanding the foregoing, if the First Added Premises Commencement Date does not occur by April 30, 2005, as such date is extended for any FAP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the First Added Premises pursuant to this Third Amendment. Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any FAP Tenant Delay.

5. Tenant's Option to Terminate Lease . The provisions of paragraph 37 of the Original Lease, subtitled "Tenant's Option to Terminate Lease" is amended and restated to provide in its entirety as follows:

Tenant's Second Partial Termination Option. Tenant shall have the one-time option ("Second Partial Termination Option") to partially terminate this Lease as of June 30, 2008 (the "Second Option Early Termination Date") with respect to the Original Premises only, provided that the Tenant delivers written notice of its intent to exercise said option ("Second Partial Termination Notice") to the Landlord together with the Second Partial Termination Payment (hereinafter defined) on or before September 30, 2007 ("Second Option Termination Notice Date"). In the event Tenant has not delivered the Second Partial Termination Notice and Second Partial Termination Payment to Landlord on or before the Second Option Termination Notice Date, Tenant's Second Partial Termination Option shall be deemed to have expired and be null, void and of no further effect. For purposes of this Paragraph 5 "Second Partial Termination Payment" shall be the amount of $2,131,302.13. If the Tenant exercises the Second Partial Termination Option as provided in this paragraph, then

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(a) the Original Premises shall no longer constitute a part of the Premises as of 11:59 p.m. (Denver time), on the Second Option Early Termination Date,

(b) Tenant shall permanently relinquish all of its parking rights provided under the Parking Agreement attached as Exhibit :Q to the Original Lease,

(d) Tenant's Proportionate Share shall be decreased by 15.8% (81,189 square feet of rentable area divided by 514,000) to 2.33%, and

(e) Tenant shall completely vacate the Original Premises on or before the Second Option Early Termination Date in compliance with the provisions of paragraph 6 of the Original Lease.

Landlord and Tenant acknowledge and agree that the losses, damages and costs Landlord will incur as a result of the early partial termination of the Lease pursuant to Tenant's exercise of the Second Partial Termination Option are extremely difficult to ascertain and that the Second Partial Termination Payment represents a fair and reasonable estimate of such losses, damages and costs and such payment represents a fair and reasonable payment by Tenant to relieve Tenant from its obligations with respect to the Original Premises. Notwithstanding any other provision of this. Paragraph 5, any Second Partial Termination Notice given by Tenant shall· not be effective if Tenant is in default (after the expiration of any cure period) under this Lease at the time such notice is given or at any time thereafter through the Early Termination Date and this Lease shall remain in full force and effect with respect to the Original Premises for the full Original Term provided in paragraph I of the Original Lease.

6. TAL Right of First Refusal .

(a) Grant of TAL Right of First Refusal . Upon and subject to the terms and conditions set forth in this Paragraph 6, Landlord hereby grants to Tenant a continuous right of first refusal (the "TAL Right of First Refusal") covering all of the office space located on the sixteenth (16th) floor of the Building, except the First Added Premises (the "TAL Offer Space") throughout the Term. In the event Landlord shall desire to lease all or part of the TAL Offer Space (whether or not as part of a larger space) during the Term, as evidenced by the issuance of a proposal to a third party by or on behalf of Landlord covering such space, or Landlord's acceptance of a proposal from a third party (either of the proposals being herein referred to as an "Acceptable TAL Proposal"), Landlord shall :first and promptly offer to lease such TAL Offer Space that Landlord is offering to third parties ("Designated TAL Refusal Space"), to Tenant, by giving written notice (''Landlord's TAL Refusal Notice") to Tenant. Landlord's TAL Refusal Notice shall identify the Designated TAL Refusal Space, state the Designated TAL Refusal Space Rate (as hereinafter defined) for the Designated TAL Refusal Space and the allowance for improvements to the Designated TAL Refusal Space ("Designated TAL Refusal Space Allowance") shall specify any included parking rights and shall specify the date such Designated T AL Refusal Space is expected to be available for commencement of construction of improvements, the expiration date of the lease of the Designated TAL Refusal Space and all other material terms of the proposed lease transaction, including parking rights .(if any). Within seven (7) business days after Landlord gives Tenant such notice, Tenant shall, by written notice to Landlord ("TAL Refusal Exercise Notice"), elect or decline to exercise its TAL Right of First Refusal and, with respect to any TAL Refusal Exercise Notice delivered on or before the expiration of the twenty-seventh (27th) month of the Original Term, Tenant shall select its desired Designated TAL Refusal Space Rate from the two rates provided in Landlord's TAL Refusal Notice pursuant to subparagraph 3l(k) of the Original Lease. Tenant shall have no right to lease less than the entire Designated TAL Refusal Space. If Tenant fails to give such notice to Landlord within such seven (7) business day period, Tenant shall be deemed to have declined to exercise its TAL Right of First Refusal with respect to such Designated TAL Refusal Space. Notwithstanding the foregoing, Tenant shall have no right to exercise the TAL Right of First Refusal (and, at Landlord's option, any previous exercise of the TAL Right of First Refusal shall be null and void) if Tenant is in default (after expiration of any applicable cure period) under the Lease as amended herein at any time when it attempts to exercise the TAL Right of First Refusal or at any

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time thereafter until such Designated TAL Refusal Space has been added to the Premises. If Tenant declines or is deemed to have declined to exercise the TAL Right of Refusal, Landlord thereafter shall have the right to lease such Designated TAL Refusal Space to the prospective tenant, upon such terms and conditions and for such period or successive periods of time as Landlord, in its sole discretion, shall determine; provided, however, that (i) the overall economic terms of any lease with the prospective tenant shall not be substantially more favorable to the prospective tenant than the terms set forth in Landlord's TAL Refusal Notice, and (ii) the lease with the prospective tenant shall be fully executed within six (6) months after the date of delivery of the Landlord's TAL Refusal Notice to Tenant or the date of expiration or termination of any lease affecting any portion of such Designated TAL Refusal Space in the event such prospective tenant (or any of its affiliates) is then a tenant of any portion of the Designated TAL Refusal Space, whichever date is later. In the event a lease with the prospective tenant has not been fully executed within the time period provided in clause (ii), Landlord shall not be permitted to lease such Designated TAL Refusal Space without again providing a Landlord's TAL Refusal Notice in compliance with the provisions of this subparagraph 6(a).

(b) Subject to Other Rights . The TAL Right of First Refusal shall be subject and subordinate to any renewal, expansion or similar rights granted to any tenant (including successors and assigns) of the Building prior to the date of this Third Amendment (as set forth on Exhibit B hereto) or granted to any tenant (including successors and assigns) leasing any Designated TAL Refusal Space after Tenant declines or is deemed to have declined to exercise the TAL Right of First Refusal.

(c) TAL Refusal Space Preliminary Information and Plans . Landlord shall deliver to Tenant no later than three (3) days after Landlord's receipt of the TAL Refusal Exercise Notice for use by Tenant, such plan or plans and other information with respect to such Designated TAL Refusal Space and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's Designated TAL Refusal Space Layout Plans (hereinafter defined). The date that Landlord delivers such plans and other information is herein referred to as the "Information Delivery Date".

(d) Tenant's Designated TAL Refusal Space Layout Plans . In the event Tenant exercises the TAL Right of First Refusal, Tenant shall prepare and deliver to Landlord not later than thirty (30) days after the Information Delivery Date one mylar and two black line prints of architectural layout drawings (which shall be 1/8" scale), three copies of all specifications (including equipment specifications), and two (2) non-copyrighted CADD disks ("Tenant's Designated TAL Refusal Space Layout Plans"), prepared by Tenant's Architect providing for Tenant's proposed layout for the construction and finishing of improvements to such Designated TAL Refusal Space for Tenant's occupancy. Tenant's Designated TAL Refusal Space Layout Plans shall (i) include the layout of Tenant's furniture, :fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by Tenant's Architect, (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements, and (v) provide for the use of Building standard materials (identified in Exhibit J attached to the Original Lease) for drywall, top track system, doors, door frames, hardware, window coverings and HVAC. Tenant's Designated TAL Refusal Space Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreason ably withheld or delayed and which only may be disapproved by Landlord in the event that the proposed Tenant's Designated TAL Refusal Space Layout Plans violate any governmental regulations or adversely affect the Building's structure or mechanical systems, and such plans shall be deemed modified to take account any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant's Designated TAL Refusal Space Layout Plans are approved within five (5) business days after their delivery to Landlord; provided that Tenant's Designated TAL Refusal Space Layout Plans shall be deemed to have been approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within five (5) business days of their receipt by Landlord, stating in which respect such Plans are disapproved. Tenant's Designated TAL Refusal Space Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the ''Final Designated TAL Refusal Space Layout Plans". Concurrently with delivery of Tenant's Designated TAL Refusal Space Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the Premises respecting the matters which are the subject of this

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Paragraph 6 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 6; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(e) Designated TAL Refusal Space Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval by Landlord of the Final Designated TAL Refusal Space Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("Designated TAL Refusal Space Engineering Plans"), based on the Final Designated TAL Refusal Space Layout Plans (and such pertinent additional information as shall have been submitted by Tenant with Tenant's Designated TAL Refusal Space Layout ·Plans or as requested by Landlord), as may be required to complete such Designated TAL Refusal Space in accordance with the Final Designated TAL Refusal Space Layout Plans. As soon as reasonably possible, and in any event within seven (7) business days after _submission to Tenant by Landlord of the Designated TAL Refusal Space Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final Designated TAL Refusal Space Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the Designated TAL Refusal Space Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contrary within seven (7) business days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final Designated TAL Refusal Space Layout Plans. The Designated TAL Refusal Space Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the Designated TAL Refusal Space Engineering Plans so changed.

(f) Completion of Improvements by Landlord . Landlord shall, in a good and workmanlike manner, cause such Designated TAL Refusal Space to be improved and completed in accordance with the Final Designated TAL Refusal Space Layout Plans and the Designated TAL Refusal Space Engineering Plans (the "Designated TAL Refusal Space Work") (such plans are hereinafter together called the "Designated TAL Refusal Space Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of at least as good a grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's written approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final Designated TAL Refusal Space Layout Plans). The Designated TAL Refusal Space Work shall be :furnished, installed and performed· by Landlord for an. amount (hereinafter called the "Designated TAL Refusal Space Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and services applied to the Designated TAL Refusal Space Work, plus a three percent (3%) construction management fee payable to Agent on all Designated TAL Refusal Space Improvement Costs, permit fees and applicable sales taxes. Within five (5) business days after Landlord receives the bid(s) for construction of the Designated TAL Refusal Space Work (the "Designated TAL Refusal Space Bid"), Landlord shall notify Tenant of the estimated Designated TAL Refusal Space Improvement Costs based upon the Designated TAL Refusal Space Bid (the "Estimate of Designated TAL Refusal Space Improvement Costs"). Landlord agrees to obtain not less than two (2) Designated TAL Refusal Space Bids for the completion of any Designated TAL Refusal Space Work from qualified unaffiliated general contractors licensed in the City selected by Landlord. All such Designated TAL Refusal Space Bids must be based upon all work being performed in compliance with all of Landlord's then-current rules and regulations for construction in, on or around the Building, and all work must meet applicable Building standards for construction. Landlord shall enter into a contract with the general contractor that submits the lowest Designated TAL Refusal Space Bid; provided, however, that Landlord may select any general contractor submitting a Designated TAL Refusal Space Bid within two percent (2%) of the lowest Designated TAL Refusal Space Bid submitted. Landlord's contract with the general contractor will provide for a GMP. The GMP cannot be exceeded except by execution of a change order approved in writing by Tenant,

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which approval will not be unreasonably withheld. If the Estimate of Designated TAL Refusal Space Improvement Costs is greater than the Designated TAL Refusal Space Allowance, Tenant will be given the opportunity to request revisions to the Designated TAL Refusal Space Construction Plans for the purpose of reducing the amount of such Costs, and in that event Landlord will cause the selected general contractor to reprice its bid based upon the revisions requested by Tenant.

(g) Payment for Designated TAL Refusal Space Tenant Work . Landlord shall pay for the Designated TAL Refusal Space Improvements Cost, up to the amount of the Designated TAL Refusal Space Allowance (hereinafter defined) to be determined in accordance with the provisions of subparagraph 3I(k) of the Original Lease. Tenant shall pay Landlord for the Designated TAL Refusal Space Refusal Space Improvements Cost in excess of the Designated TAL Refusal Space Allowance (''Excess Designated TAL Refusal Space Costs") from time to time during the progress of the work, within ten (10) days after receipt of Landlord's invoice or invoices therefor, in amounts representing the Excess Designated TAL Refusal Space Costs for the Designated TAL Refusal Space Work theretofore performed and also for material for Designated TAL Refusal Space Work delivered to the Building which exceed the Designated TAL Refusal Space Allowance, less (except as next provided) the amounts theretofore paid by Tenant to Landlord on account thereof; provided, however, that Landlord may require that, before Landlord commences any Designated TAL Refusal Space Work, Tenant shall pay to Landlord twenty-five percent (25%) of the amount estimated by Landlord to be the Excess Designated TAL Refusal Space Costs ("Designated TAL Refusal Space Deposit"), which twenty-five percent (25%) shall be applied against the last of the Designated TAL Refusal Space Work to be paid for by Tenant to Landlord. In the event the Designated TAL Refusal Space Allowance is not completely used, Tenant shall not be entitled to any unused portion of the Designated TAL Refusal Space Allowance. In the event an unused balance remains from the Designated TAL Refusal Space Deposit after completion of the Designated TAL Refusal Space Work and payment of Designated TAL Refusal Space Tenant Costs, Landlord agrees to pay to Tenant the unused portions of the Designated TAL Refusal Space Deposit within thirty (30) days after the Designated TAL Refusal Space Commencement Date (hereinafter defined).

(h) Delivery of Possession of Designated TAL Refusal Space . Landlord shall cause the substantial completion of Designated TAL Refusal Space Work to be completed within a reasonable time period and shall deliver actual possession of the Designated TAL Refusal Space to Tenant upon completion of the Designated TAL Refusal Space Work. If Landlord shall, fur any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Lease), fail to make available to Tenant possession of the Designated TAL Refusal Space on or before any promised or expected date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Under such circumstances, all of Tenant's rights and obligations hereunder with respect to the Designated TAL Refusal Space, including, but not limited to, its obligations to pay the Base Rent; the Tax Adjustment Amount and the Expense Adjustment Amount attributable to the Designated TAL Refusal Space shall not commence until the earlier of the date ("Designated TAL Refusal Space Commencement Date"), that substantial completion of construction of the Designated TAL Refusal Space Work occurs and such Designated TAL Refusal Space is made available for Tenant's occupancy or would have been made available without a Designated TAL Refusal Space Tenant Delay (hereinafter defined), and such failure to make available to Tenant possession of the Designated TAL Refusal Space on any date or to timely complete any work, shall not in any other way affect the validity or continuance of the Lease as amended herein, or the Tenn, or the obligations of Tenant hereunder and such deferral of rent shall be Tenant's sole and exclusive right and remedy with respect to any such failure. Notwithstanding the foregoing, if substantial completion and tender of the Designated TAL Refusal Space does not occur within 60 days after its originally estimated delivery date, Tenant shall have the right to terminate the Lease with respect to the Designated TAL Refusal Space by giving written notice of termination to Landlord within 90 days after its originally estimated delivery date, in which event the Designated TAL Refusal Space will not become part of the Premises and Landlord will promptly refund to Tenant any Designated TAL Refusal Space Deposit. As used in this Paragraph 6, "substantial completion" or "substantially completed" means that (i) all of the Designated TAL Refusal Space Work has been completed in accordance with the Designated TAL Refusal Space Construction Plans and in substantial compliance with all applicable laws, regulations, and codes, as certified to Tenant in writing by Landlord's Architect, Landlord, and the general contractor; (ii) a permanent or temporary

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certificate of occupancy or other reasonable evidence of approval has been issued by the City, permitting the use and occupancy of the Designated TAL Refusal Space, subject only to Punch List items and Tenant Installations; and (iii) the services and systems required to be provided to the Designated TAL Refusal Space are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Designated TAL Refusal Space. There shall be no deferral of rent, however, to the extent that such failure is caused by any act or omission of Tenant, its agents, servants, employees or contractors and which would not have otherwise occurred, which has the effect of delaying Landlord's delivery of possession or the timely completion of any work to be done by Landlord (hereinafter a "Designated TAL Refusal Space Tenant Delay") including, without limitation, (i) any delay which is caused by changes in the work requested by Tenant to be performed by Landlord in readying such Designated TAL Refusal Space for Tenant's occupancy; (ii) any ·delay which is caused by any unreasonable failure by Tenant to furnish to Landlord any required plan, information, approval or consent within the period of time required therefor by the terms of this Lease or caused by any reasonable reluctance on the part of Landlord to approve any plan or other information required to be submitted by Tenant and approved by Landlord, but such disapproval may only be because the matter adversely affects the structure of the Building or Building mechanical systems or would violate the regulations of any applicable governmental authority; or (iii) any delay which is caused by the performance of any work or activity in such Designated TAL Refusal Space by Tenant or any of its employees, agents or contractors. Tenant also shall pay to Landlord, within ten (IO) days after receipt of demand made from time to time, a sum equal to .any additional cost to Landlord's completing the Designated TAL Refusal Space Work resulting from any Designated TAL Refusal Space Tenant Delay to the extent that the same is not covered by the Designated TAL Refusal Space Construction Allowance. Landlord agrees to notify Tenant in writing within seven days after the occurrence of any Designated TAL Refusal Space Tenant Delay.

(i) Occupancy . Designated TAL Refusal Space shall not be deemed incomplete or not ready for occupancy or for delivery of possession, if substantial completion of the Designated TAL Refusal Space Work has occurred, even though details of construction, mechanical adjustments or decoration, or other items of the Designated TAL Refusal Space Work which do not materially interfere with Tenant's use of such Designated TAL Refusal Space, remain to be done. Notwithstanding the foregoing, Tenant shall deliver to Landlord within fifteen (15) days after such Designated TAL Refusal Space Commencement Date a punch-list ("Designated TAI. Refusal Space Punch List") of items of the Designated TAI. Refusal Space Work which need to be corrected in the reasonable determination of Tenant. Landlord shall cause the items listed in such Designated TAL Refusal Space Punch List to be corrected within thirty (30) days after receipt of such Designated TAL Refusal Space Punch List, provided, however, if any such correction cannot be completed within such thirty (30) days, then Landlord shall commence correcting such item within the thirty (30) day time period and shall pursue completion with reasonable diligence. Landlord will correct the punch list items outside of regular business hours if performing the work during regular business hours would interfere with Tenant's use of the Premises.

(j) Addition to Lease . Such Designated TAL Refusal Space shall be added to the Premises, for all purposes, as of such Designated TAL Refusal Space Commencement Date for the balance of the Tenn and subject to all of the terms, covenants and conditions of this Lease, except that (i) the Base Rent for the Designated TAL Refusal Space shall be the Designated TAL Refusal Space Rate stated in the Landlord's TAL Refusal Notice; provided, however, in the event Landlord's TAL Refusal Notice includes the Pre-Negotiated DTSR Rate (hereinafter defined), the Base Rent shall be the Designated TAL Refusal Space Rate selected by Tenant in its TAL Refusal Exercise Notice; (ii) in the event the Term remaining after such Designated TAL Refusal Space Commencement Date is less than three (3) years, the term for such Designated TAL Refusal Space (but not for the Original Premises or the First Added Premises) shall be extended until that date ("Designated TAL Refusal Space Expiration Date") which is the last day of the thirty-sixth (36th) complete calendar month after such Designated TAL Refusal Space Commencement Date and the Term of the Lease as amended herein shall be extended through and until the Designated TAL Refusal Space Expiration Date with respect to such Designated TAL Refusal Space, (iii) any Designated TAL Refusal Space Expiration Date shall be extended to the last day of the First Renewal Tenn if Tenant exercises the First Renewal Option and to the last day of the Second Renewal Tenn if Tenant exercises the Second Renewal Option, (iv) Tenant shall be provided with an allowance for the completion of such Designated TAL Refusal Space Work equal to the Designated TAL Refusal Space Allowance stated in Landlord's TAL Refusal Notice; provided,

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however, in the event Tenant selects the Pre-Negotiated DTSR Rate in its TAL REfusal Exercise Notice the allowance shall be the Pre-Negotiated DTSR Allowance (hereinafter defined), and (v) Tenant's rights to additional parking shall be as stated in Landlord's TAL Refusal Notice; provided, however, in the event Tenant selects the Pre-Negotiated DTSR Rate in its TAL Refusal Exercise Notice notwithstanding the parking rights stated in Landlord's TAL Refusal Notice, Tenant shall have an option to rent one (1) additional unreserved parking space located in the Parking Garages for each 1,000 rentable square feet contained in the Designated TAL Refusal Space at the rates posted from time to time by the Operator which option must be exercised within thirty (30) days after such applicable Designated TAL Refusal Space Commencement Date. The annual Base Rent for the Designated TAL Refusal Space shall be payable in equal monthly installments, in advance, commencing on such Designated TAL Refusal Space Commencement Date. Tenant's Proportionate Share shall be increased to a new percentage, calculated by dividing the then total number of rentable square feet of the Premises (including such Designated TAL Refusal Space) by 514,000 square feet. In the event the Designated TAL Refusal Space Commencement Date occurs on a day other than the first day of a calendar month, then the Base Rent for the initial month in which the Designated TAL Refusal Space Commencement Date occurs shall be prorated on a per diem basis. Upon addition of the Designated TAL Refusal Space to the Premises, the Lease as amended herein shall be deemed modified in the manner set forth above without the necessity of any further agreement or document; provided, however, Landlord and Tenant agree to execute, acknowledge and deliver an instrument evidencing such modification of the Lease as amended herein to be prepared by Landlord.

(k) Designated TAL Refusal Space Rate and Designated TAL Refusal Space Allowance . For the purposes of this Paragraph 6, the terms: (i) ''Designated TAL Refusal Space Rate" shall mean the rate set forth in Landlord's TAL Refusal Notice; provided, however, that with respect to any Landlord's TAL Refusal Notice delivered at least seven (7) days prior to the expiration of the twenty-seventh (27th) month of the Original Tenn, the Landlord's TAL Refusal Notice shall state two Designated TAL Refusal Space Rates, one rate shall be equivalent to the rate provided in the Acceptable TAL Proposal and one rate shall be $20.37 on an annual per rentable square foot basis (the "Pre-Negotiated DTSR Rate"); and (ii) "Designated TAL Refusal Space Allowance" shall mean the allowance set forth in Landlord's TAL Refusal Notice; provided, however, that with respect to any Landlord's TAL Refusal Notice delivered at least seven (7) days prior to the expiration of the twenty-seventh (27th) month of the Original Term, the Landlord's TAL Refusal Notice shall state two Designated TAL Refusal Space.Allowances, one allowance shall be equivalent to the amount provided in the Acceptable TAL Proposal and the other allowance (the "Pre-Negotiated DTSR Allowance") shall be an amount equal (on a per rentable square foot basis) to the product of$25.00 multiplied by a fraction, the denominator of which is 93 and the numerator of which is.the number of complete calendar months scheduled to occur from such Designated TAL Refusal Space Commencement Date through the Termination Date (defined in the Original Lease).

(l) Additional TAL Offer Space . In the event any TAL Offer Space is or becomes vacant and is not subject to a lease agreement prior to the expiration of the twenty-seventh (27th) month of the Original Tenn and Tenant desires to lease such TAL Offer Space (as evidenced in a writing delivered to Landlord) prior to the Landlord having first offered such TAL Offer Space to third parties as provided in subparagraph 6(a) above, the parties agree that Tenant shall be permitted to lease such TAL Offer Space in accordance with the terms of this Paragraph 6 on the following terms: (i) Tenant shall not be entitled to any free rent period; (ii) the annual Base Rent shall be $20.37 on an annual per rentable square foot basis; and (iii) the allowance for the construction of improvements to such additional TAL Offer Space shall be equal to the product of$25.00 multiplied by a fraction, the denominator of which is 93 and the numerator of which is the number of complete calendar months scheduled to occur from the date the additional TAL Offer Space is added to the Premises under the Lease as amended herein through the Termination Date (defined in the Original Lease).

7. Nontransferable Rights. Notwithstanding any provision contained in the Lease as amended herein to the contrary, Tenant's Second Partial Termination Option provided in paragraph 5 hereof and Tenant's First Right of Refusal provided in Paragraph 6 hereof, are personal to Tenant and its Affiliates and may not be assigned, transferred, or conveyed by Tenant to any non-Affiliate of Tenant

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8. Parking. Beginning on the first day of the calendar month following the First Added Premises Commencement Date, Exhibit "D'' attached to the Original Lease shall be . amended to reflect that Landlord shall provide Tenant with an option to lease up to twelve (12) additional unreserved parking spaces in the Parking Garage located under the Building at the prevailing market rate quoted from time to time by the Operator. Tenant's option to use these parking spaces will not be affected by Tenant's exercise of the Second Partial Termination Option.

9. Subordination.

(a) Landlord agrees to use good faith efforts to obtain from the present beneficiaries of the Existing Mortgages (as defined in Paragraph 18 of the Original Lease) a non disturbance agreement in recordable form, substantially in the forms of Exhibits H-1, H-2, and H-3 to the Original Lease, respectively, with respect to the First Added Premises. Landlord represents that the beneficiaries of such Existing Mortgages are SFI I and Newpar (as each is defined in Subparagraph 18(a) of the Original Lease) and Prudential Retirement Insurance and Annuity, as the successor-in-interest to CGLIC (as defined in such Subparagraph l 8(a)).

(b) Landlord hereby confirms its agreement to and obligations pursuant to Subparagraphs 18(b) and (c) of the Original Lease. Landlord agrees that Tenant's' obligation to subordinate to any "future mortgage" (as defined therein) shall be conditioned upon Landlord obtaining for and delivering to.Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the First Added Premises (which shall not diminish Tenant's rights of offset provided in subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

10. Alterations to Original Premises. Landlord acknowledges that Tenant intends to request approval for certain alterations to the Original Premises ("Tenant's OP Alteration Plans") pursuant to Paragraph 8 of the Original Lease. Landlord shall notify Tenant whether or not Tenant's OP Alteration Plans are approved or disapproved within seven (7) business days after their delivery to Landlord, provided that Tenant's OP Alterations Plans shall be deemed to be approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within seven (7) business days after their receipt by Landlord, stating the reason for disapproval of such Plans in accordance with Paragraph 8 of the Original Lease and whether such alterations need to be removed and the Original Premises returned to their prior condition upon the termination of the Lease.

11. Brokerage. Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this First Amendment by Agent and by Silverbrae Holdings, Inc. ("SHI") as Landlord's agents, and (ii) Tenant has been represented in connection with this Third Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Third Amendment, made by any broker or finder (other than Agent, Tait and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Third Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, Tait and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Third Amendment.

12. Authority of Tenant . Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Third Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or related to the Lease or the Premises.

13. Binding Effect . This Third Amendment becomes effective only upon the execution by Landlord and Tenant.

14. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

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15. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants and conditions of the Lease shall remain and continue in full force and effect as amended herein. Each of Landlord and Tenant confirms that it is in compliance with the Lease provisions and the neither Tenant nor Landlord has any defenses, claims or offsets against the other as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Third Amendment, the Lease remains in full force and effect. If there is any conflict between the terms and provisions of this Third Amendment and the terms and provisions of the Lease, the terms and provisions of this Third Amendment shall govern.

16. Governing Law. The governing law of this This Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

17. Complete Agreement . This Third Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

18. Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Second Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

19. Amendment . This Third Amendment may not be amended except in writing signed by the parties hereto.

20. Headings . The paragraph headings of this Third Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

21. Headings . The paragraph headings of this Third Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

22. Time . Time is of the essence hereof.

23. Survival . All covenants, agreements, representations and warranties as set forth in this Second Amendment shall survive the termination of the Lease.

24. Counterparts . This Second Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Third Amendment to Lease as of the day and year first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date: 11/11/04		By: /s/ David G. Marshall David G. Marshall, President

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		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: Nov. 8, 2004		By: /s/ John C. Walter Executive Vice President (Title)

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	EXHIBIT "A-1"
	= = = = = = = = = =

EXHIBIT B

to Third Amendment to Lease

PRIOR RIGHTS TO TAL REFUSAL SPACE

NONE

B-1

Exhibit 10.44

FOURTH AMENDMENT TO LEASE

THIS FOURTH AMENDMENT TO LEASE (this "Fourth Amendment") is entered into as of the 31st day of December, 2004, by and between DENVER-STELLARASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into an Office Lease dated as of July 30, 2002 (the "Original Lease") wherein Landlord leased to Tenant and Tenant leased from Landlord approximately 81,189 square feet of rentable area (the "Original Premises") located on the ninth (9th) through the twelfth (12th) floors of the building (the "Building") located at 1099 - 18th Street, Denver, Colorado 80202, and further described as Suite 1200.

B. The Original Lease was amended by First Amendment to Lease dated as of September 10, 2002 ("First Amendment") pursuant to which Landlord and Tenant confirmed the Commencement Date and Base Rent, among other matters, (ii) Second Amendment to Lease dated as of July 23, 2004 ("Second Amendment") pursuant to which certain Tenant parking rights were amended, and (iii) Third Amendment to Lease dated as of November 1, 2004 pursuant to which Tenant leased an additional 12,000 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the First Added Premises. The Original Lease as amended by the First Amendment, Second Amendment and Third Amendment is herein referred to as the "Lease".

C. Tenant has requested and Landlord is willing to lease an additional 1,928 square feet of rentable area located on the sixteenth (16th) floor of the Building, contiguous to the First Added Premises and which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "Second Added Premises").

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. Second Added Premises . Effective as of the date (the "Second Added Premises Commencement Date"), the Second Added Premises are Ready for Occupancy (hereinafter defined) or would have been Ready for.Occupancy in the absence of any SAP Tenant Delay (hereinafter defined), the Second Added Premises shall be added to the Premises for the balance of the Term, upon and subject to all of the terms, covenants and conditions of the Lease, as amended herein. Landlord and Tenant acknowledge that the Premises will consist of approximately 95,117 square feet of rentable area after the addition of the Second Added Premises.

2. Base Rent. Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows:


(a)	From the Commencement Date through and until September 17, 2003:

Zero Dollars ($0.00) (on the Original Premises)


(b)	From September 18, 2003 through and including January 31, 2005:

$1;653,819 per annum payable in monthly installments of $137,818.33 (on the Original Premises)*


(c)	From February 1, 2005**@ through and until February 28, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises) *; and

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises)


(d)	From March 1, 2005**@ through and until March 31, 2005:

$1,653,819.96per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Second Added Premises)


(e)	From April 1, 2005"'*@through and until December 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,8 l 8.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises); and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)


(f)	From January 1, 2006 through and until December 31, 2010:

$1,653,819.96 per annum payable in monthly installments of $137,8 l 8.33 (on the Original Premises);

$244,440.00 per annum payable in monthly installments of $20,370.00 (on the First Added Premises); and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)

* The Base Rent payable through March, 2005, is subject to a credit against Base Rent pursuant to Paragraph 2 of the First Amendment.

** Or, with respect to the First Added Premises only, the First Added Premises Commencement Date, whichever is later.

@ Or, with respect to the Second Added Premises only, the Second Added Premises Commencement Date, whichever is later.

3. Additional Rent .

(b) First Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the First Added Premises an amount determined in accordance with the provisions of paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514,000).

Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Second Added Premises shall mean 0.38% (1,928/514,000).

(d) Calculation . Tenant's Proportionate Share under subparagraphs 3(a), 3(b) and 3(c) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

4. Acceptance and Improvements of Second Added Premises .

(a) Acceptance of Second Added Premises . Tenant acknowledges that it has had the opportunity to inspect the Second Added Premises and agrees to accept the Second Added Premises in its current "as is" condition without any obligation upon Landlord to complete improvements to the Second Added Premises or to provide any allowance for the completion of such improvements, except as provided in this Paragraph 4.

(b) Preliminary Information and Plans . Landlord has heretofore delivered to Tenant for use by Tenant's architect or engineer, such plan or plans and other information with respect to the Second Added Premises and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's layout plans for the Second Added Premises. Receipt of all such information is hereby acknowledged by Tenant.

(c) Tenant's SAP Layout Plans . Tenant shall cause to be prepared at Tenant's expense and, not later than 12:00 noon (Denver time), January 5, 2005, shall deliver to Landlord one mylar and two black line prints of complete and final architectural working drawings (which shall be 1/8" scale), three copies of all specifications and two (2) non copyrighted CADD disks, prepared by an architect or space planner approved by Landlord ("Tenant's SAP Layout Plans") for the construction and finishing of the Second Added Premises. Tenant's SAP Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment (iii) be signed and sealed by an architect licensed by and registered in the State of Colorado ("Tenant's Architect''), and (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements. Tenant's SAP Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed (and may be disapproved by Landlord only in the event that the proposed Tenant's SAP Layout Plans violate any governmental regulations; adversely affect the Building's structure, electric, or mechanical systems (in Landlord's sole opinion with respect to adverse affect on electric and mechanical systems); intrude on the Building's Common Area; or are visible from the Building's Common Area), and such plans shall be deemed modified to take account of any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant SAP Layout Plans are approved within five (5) business days after their delivery to Landlord, provided that Tenant's SAP Layout Plans shall be deemed to be approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within five (5) business days of their receipt by Landlord stating the reason for disapproval of such Plans. Tenant's SAP Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final SAP Layout Plans". Landlord and Tenant agree that they will each use their good faith efforts to mutually agree upon the Final SAP Layout Plans on or before January 19, 2005. Concurrently with delivery of Tenant's SAP Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet-and consult with Landlord at the Second Added Premises respecting the matters-.which are the subject of this Paragraph 4 and who, as between Landlord and Tenant,'"shall have the power to legally bind Tenant, in making requests for

changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 4; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(d) SAP Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval or deemed approval by Landlord of the Final SAP Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("SAP Engineering Plans"), based on the Final SAP Layout Plans (and such pertinent additional information as shall have been submitted by Tenant with Tenant's SAP Layout Plans or as requested by Landlord), as may be required to complete the Second Added Premises in accordance with the Final SAP Layout Plans. As soon as reasonably possible, and in any event within five (5) days after submission to Tenant by Landlord of the SAP Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final SAP Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the SAP Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contract within five (5) days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final SAP Layout Plans. The SAP Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the SAP Engineering Plans so changed.

(e) Completion by Landlord . Landlord shall, at Tenant's expense, payable out of the SAP Allowance, in a good and workmanlike manner, cause the Second Added Premises to be improved and completed in accordance with the Final SAP Layout Plans and the SAP Engineering Plans (herein referred to together with architectural and engineering services as the "SAP Tenant Work'') (such plans are hereinafter together called the "SAP Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final SAP Layout Plans). The SAP Tenant Work shall be furnished, installed and performed by Landlord at Tenant's cost for an amount (hereinafter called the "SAP Tenant Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and services applied to the SAP Tenant Work, plus applicable sales taxes and without, however, any construction management fee payable to Landlord or its affiliates. Landlord and Tenant agree to select two (2) general contractors from the following list of three mutually acceptable general contractors to submit guaranteed maximum price bids for the SAP Tenant Work based upon reviews of the SAP Construction Plans: Foothills Construction, Jordy Construction, and RB Construction Corporation. The general contractors submitting bids shall be required to provide an AIA Statement of Qualification and have a designated project manager for the SAP Tenant Work with (at a minimum) a "B" class license within the City and County of Denver (the "City"). Landlord agrees to obtain bids from the two mutually selected general contractors for the completion of the SAP Tenant Work. Landlord agrees to select the contractor submitting the lowest bid; provided, however, in the event the bids are within two percent (2%) of the lowest bid, Tenant shall have the right to select the general contractor. Landlord currently estimates that the SAP Tenant Work can be completed Ready for Occupancy by March 1, 2005 (subject to delays beyond Landlord's control), provided the Final SAP Layout Plans are completed on or before 5:00 p.m. (Denver time), January 19, 2005. "Ready for Occupancy" shall mean (i) the date on which Landlord has substantially completed the SAP Tenant Work in accordance with the SAP Construction Plans and in substantial compliance with all applicable laws, regulations, and codes, as

certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect''), Landlord and the General Contractor, in accordance with the SAP Construction Plans; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by the City permitting the use and occupancy of the Premises subject only to Punch List (defined below) items and Tenant Installations (defined below); and (iii) the services and systems required to be provided to the Second Added Premises are in operation and have passed ins3ection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Second Added Premises.

The contract between Landlord and the general contractor will provide for a guaranteed maximum price ("GMP"), and the GMP can.not be exceeded without the execution of a change order approved in writing by Tenant, provided such approval will not be unreasonably withheld.

(f) Access; Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party") access to the Second Added Premises at reasonable times prior to the occupancy of the Second Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense, for the purposes of inspecting and verifying Landlord's performance of the SAP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the SAP Tenant Work. Landlord shall provide Tenant and its agents with access to the Second Added Premises at least fifteen (15) days prior to the Second Added Premises Commencement Date for the purpose of installing furniture and equipment (the "Tenant Installations"). Tenant shall not interrupt the completion of the Tenant Work during completion of Tenant Installations. Tenant' shall indemnify and hold Landlord and its partners, agents, servants, employees and general contractor (each herein referred to as an "SAP Tenant Work Indemnified Party") harmless from any and all claims, losses, damages, fines and penalties incurred by an SAP Tenant Work Indemnified Party including, but not limited to, reasonable attorneys' fees that in any way result from a Tenant Party's negligent and/or willfully wrongful activities within the Second Added Premises during completion of the SAP Tenant Work or Tenant Installations. Within fifteen (15) days after the SAP Tenant Work is completed, Landlord and Tenant shall prepare a mutually agreed upon list ("Punch List") of items of the SAP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the Punch List to be corrected or repaired within thirty (30) days after the date the Punch List is prepared. As used in this Paragraph 4, "Punch List" items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the Second Added Premises.

(g) Payment of SAP-Tenant Improvements Costs . Landlord shall provide an allowance for the payment of the SAP Tenant Improvements Costs and Tenant's out-of-pocket expenses to complete voice and data cabling at the Second Added Premises and the cost of physically moving into the Second Added Premises (the "Tenant Related Costs"), in an amount equal to Thirty-Eight Thousand Five Hundred Sixty and No/100 Dollars ($38,560.00) (the "SAP Allowance"). Tenant shall pay for all SAP Tenant Improvements Costs exceeding the SAP Allowance within ten (10) days after Landlord's delivery of written request for payment; provided, however, that Landlord may require that, before Tenant commences the SAP Tenant Work, Tenant to pay to Landlord fifty percent (50%) of the amount that the SAP Tenant Improvements Costs exceed the SAP Allowance as reasonably estimated by Landlord (collectively, the "SAP Deposit"). The SAP Deposit shall be applied against the last completed SAP Tenant Work. In the event an unused balance remains from either the SAP Deposit and/or the SAP Allowance after completion of all SAP Tenant Work and the payment of all SAP Tenant Improvements Costs, Landlord agrees (i) to pay to Tenant the unused balance of the SAP Deposit within thirty (30) days after the SAP Tenant Work is completed; (ii) to reimburse Tenant for Tenant Related Costs within fifteen (15) days after Tenant delivers reasonable evidence of such expenditures to Landlord, (iii) to apply the unused portion of the SAP Allowance toward the payment of Base Rent for the Second Added Premises, up to an amount not to exceed $6,539.13: and (iv) to apply the balance off any unused portion of the SAP Allowance to reimburse Tenant for

the payments incurred by Tenant in connection with the alterations described in Paragraph 10 of this Fourth Amendment, within fifteen (IS) days after Tenant delivers reasonable evidence of such expenditures to Landlord. Tenant shall not be entitled to payment of any remaining SAP Allowance after the payment of Tenant Related Costs, Base Rent, and the costs described in clause (iv) above. Tenant shall be deemed to have waived any such excess SAP Allowance.

(h) Second Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Fourth Amendment) fail to cause the SAP Tenant Work to be completed on or before March I, 2005 or any other date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the Second Added Premises shall commence on the Second Added Premises Commencement Date, and such failure to cause the SAP Tenant Work to be completed on or before March 1, 2005, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The term "SAP Tenant Delay" shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the SAP Tenant Work including (a) any delay caused by failure of Tenant to deliver Tenant's SAP Layout Plans on or before January 5, 2005; (b) unreasonable failure to mutually agree upon the Final SAP Layout Plans on or before January 19, 2005; (c) any delay which is caused by changes in the SAP Tenant Work requested by Tenant after mutual approval of the Final SAP Layout Plans; (d) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, promptly to furnish to Landlord any required information, approval or consent or caused by any good faith reluctance on the part of Landlord to approve any information required to be submitted by Tenant and approved by Landlord (provided that such disapproval is permitted pursuant to Subparagraph 4(c) above); or (e) any delay which is caused by the performance of any work or activity in the Second Added Premises by Tenant or any of its employees, agents or contractors, including, but not limited to, Tenant Installations. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Second Added Premises resulting from any SAP Tenant Delay, to the extent such cost is not covered by the SAP Allowance. Notwithstanding the foregoing, if the Second Added Premises Commencement Date does not occur by May 31, 2005, as such date is extended for any SAP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the Second Added Premises pursuant to this Fourth Amendment. Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any SAP Tenant Delay.

5. Tenant's Second Partial Termination Option . The provisions of subparagraph S(d) of the Third Amendment are amended to provide in their entirety as follows:

(d) Tenant's Proportionate Share shall be decreased by 15.8%(81,189 square feet of rentable area divided by 514,000) to 2.71%, and

6. Parking . Beginning on the first day of the calendar month following the Second Added Premises Commencement Date, Exhibit "D" attached to the Original Lease shall be amended to reflect that Landlord shall provide Tenant with an option to lease up to two (2) additional unreserved parking spaces in the Parking Garage located under the Building at the prevailing market rate quoted from time to time by the Operator. Tenant's option to use these parking spaces will not be affected by Tenant's exercise of the Second Partial Termination Option.

7. Brokerage . Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this Fourth Amendment by Agent and by Silverbrae Holdings, Inc. ("SHI") as Landlord's agents, and (ii) Tenant has been represented in connection with this Fourth Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and. hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Fourth Amendment, made by any broker or finder (other than Agent, Tait and Staubach) who claim to have dealt with or communicated to Tenant in connection

with this Fourth Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, Tait and Staubach pursuant to the terms of separate agreements, for their-services rendered in connection with this Fourth Amendment.

8. Subordination .

(a) Landlord agrees to use good faith efforts to obtain from the present beneficiaries of the Existing Mortgages (as defined in Paragraph 18 of the Original Lease) a non-disturbance agreement in recordable form, substantially in the forms of Exhibits H-1, H-2, and H-3 to the Original Lease, respectively, with respect to the Second Added Premises. Landlord represents that the beneficiaries of such Existing Mortgages are SFI I and Newpar (as each is defined in Subparagraph 18(a) of the Original Lease) and Prudential Retirement Insurance and Annuity, as the successor-in-interest to CGLIC (as defined in such Subparagraph 18(a)).

(b) Landlord hereby confirms its agreement to and obligations pursuant to Subparagraphs 18(b) and (c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any "future mortgage" (as defined therein) shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the Second Added Premises (which shall not diminish Tenant's rights of offset provided in subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

9. Authority of Tenant . Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Fourth Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or: related to the Lease or the Premises.

10. Binding Effect . This Fourth Amendment becomes effective only upon the execution by Landlord and Tenant.

11. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated. ·

12. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants, and conditions of the Lease shall remain and continue in full force and effect as amended herein. Each of Landlord and Tenant confirms that it is in compliance with the Lease provisions and the neither Tenant nor Landlord has any defenses, claims or offsets against the other as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Fourth Amendment, the Lease remains in full force and effect. If there is any conflict between the terms and provisions of this Fourth Amendment and the terms and provisions of the Lease, the terms and provisions of this Fourth Amendment shall govern.

13. Governing Law . The governing law of this Fourth Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

14. Complete Agreement . This Fourth Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

15. Benefit . Subject to.tile limitations on Tenant's assignment and subleasing provided in the Lease, this Fourth Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

16. Amendment . This Fourth Amendment may not be amended except in writing signed by the parties hereto.

17. Headings. The paragraph headings of this Fourth Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

18. Time . Time is of the essence hereof.

19. Survival . All covenants, agreements, representations and warranties as set forth in this Fourth Amendment shall survive the termination of the Lease.

20. Counterparts . This Fourth Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Fourth Amendment to Lease as of the day and year set first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date:_________________		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: Jan. 13, 2005		By: /s/ John C. Walter (Title)

Exhibit 10.45

FIFTH AMENDMENT TO LEASE

THIS FIFTH AMENDMENT TO LEASE (this "Fifth Amendment") is entered into as of the 20th day of April 2005. by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into an Office Lease dated as of July 30, 2002 (the "Original Lease") wherein Landlord leased to Tenant and Tenant leased from Landlord approximately 81,189 square feet of rentable area (the "Original Premises") located on the ninth(9th) through the twelfth (12th) floors of the building (the "Building") located at 1099 - 18th Street, Denver, Colorado 80202, and further described as Suite 1200.

B. The Original Lease was amended by (i) that certain First Amendment to Lease dated as of September 10, 2002 ("First Amendment") pursuan1 to which Landlord and Tenant confirmed the Commencement Date and Base Rent, among other matters, (ii) that certain Second Amendment to Lease dated as of July 23, 2004 ("Second Amendment") pursuant to which certain Tenant parking rights were amended, (iii) that certain Third Amendment lo Lease dated as of November 1, 2004 (''Third Amendment") pursuant to which Tenant leased an additional 12,000 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the First Added Premises, and (iv) that certain Fourth Amendment to Lease dated as of December 31, 2004 ("Fourth Amendment'') pursuant to which Tenant leased an additional 1,928 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the Second Added Premises. The Original Lease as amended by the First-Amendment, Second Amendment, Third Amendment and Fourth Amendment is herein referred to as the "Lease".

C. Tenant has requested and Landlord is willing to lease an additional 994 square feet of rentable area located on the fifth (5th) floor of the Building which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "Third Added Premises").

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, fur good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. Confirmation of Commencement Dates . Landlord and Tenant hereby acknowledge, agree and confirm that (a) the First Added Premises Commencement Date, as defined in the Third Amendment, was February 1, 2005, and (b) the Second Added Premises Commencement Date, as defined in the Fourth Amendment, was March l, 2005.

2. Third Added Premises . Effective as of the date (the "Third Added Premises Commencement Date"), the Third Added Premises arc Ready for Occupancy (hereinafter defined) or would have been Ready for Occupancy in the absence of any TAP Tenant Delay (hereinafter defined), the Third Added Premises shall be added to the Premises for the balance of the Term, upon and subject lo all of the terms, covenants and conditions of the Lease, as amended herein. Landlord and Tenant acknowledge that the Premises will consist of approximately 96,111 square feet of rentable area after the addition of the Third Added Premises.

3. Base Rent . Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows (subject to credits against Base Rent pursuant to Paragraph 2 of the First Amendment):


(a)	From the Commencement Date through and until September 17, 2003: Zero Dollars ($0.00) (on the Original Premise)


(b)	From September 18, 2003 through and including January 31, 2005:

$1,653,819.96 per annum payable in monthly installments or $l37,818.33 (on the Original Premises)


(c)	From February 1, 2005 through and until February 28, 2005:

$1,653,819.96 per annum payable in monthly installment of $137,8l8.33 (on the Original Premises); and

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises)


(d)	Front March 1, 2005 through and unti1 March 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $ 15,277.50 (on the First Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Second Added Premises)


(e)	From April 1, 2005 through and until May 20, 2005:

$l,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)


(f)	From May 21,2005 through and until July 20, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00perannum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises): and

S0.00 per annum payable in monthly installments of $0.00 (on the Third Added Premises)


(g)	July 21, 2005 through and until December 31,2005:

$1,653,319.95 per annum payable in monthly installments of $137,818,33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises)


(h)	January 1, 2006 through and until December 31, 2010:

$l,653,819.95 per annum payable in monthly installments of $l37,818.33 (on the Original Premises);

$244,440.00 per annum payable in monthly installments of $20,370.00 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments $3,319,38 (on the Second Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises)


*	Or, with respect to the Third Added Premises only, the Third Added Premises Commencement Date, whichever is later

4. Additional Rent .

(a) Original Premises . In addition to paying the Base Rent specified in Paragraph 3 above. Tenant shall pay as "additional rent" with respect to the Original Premises the amounts determined in accordance with the provision of Paragraph 4 of the Original) Lease.

(b) First Added Premises . In addition to paying the Base Rent specified in Paragraph 3 hereof, Tenant shall pay as “additional rent" with respect to the First Added Premises.an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514,000).

(c) Second Added Premises . In addition to paying the Base Rent specified in Paragraph 3 hereof, Tenant shall pay as “additional rent" with respect to the Second Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon;(i) the Operating Expense Base Amount" meaning the amount (on a per rentable) square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may he adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Second Added Premises shall mean 0.38% (1,928/514,000).

(d) Third Added Premises . In addition to paying the Base Rent specified in Paragraph 3 hereof, Tenant shall pay as “additional rent" with respect to the Third Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount'' meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Third Added Premises shall mean 0.19% (994/514,000).

(e) Calculation . Tenant's Proportionate Share under Subparagraphs 4(a), 4(b), 4(c) and 4(d) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

5. Acceptance and Improvements of Third Added Premises .

(a) Acceptance of Third Added Premises . Tenant acknowledges that it has had the opportunity to inspect the Third Added Premises and agrees to accept the Third Added Premises in current "as is" condition without any obligation upon Landlord to complete improvements to the Third Added Premises or to provide any allowance for the completion of such improvements, except as provided in this Paragraph 5.

(b) Completion by Landlord . Landlord shall, in a good and workmanlike manner, cause the Third Added Premises to be improved and completed in accordance with the plans (the "TAP Plans") attached hereto as Exhibit A-2 (such improvements are herein referred to as the “TAP Tenant Work"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for mailers other than selection of finish materials shall not be unreasonably

withheld or delayed so long there shall be general conformity with the TAP Plans). The TAP Tenant Work shall be furnished, installed and performed by Landlord at Landlord's cost. Landlord currently estimates that the TAP Tenant Work can be Ready for Occupancy by May 21, 2005 (subject to delays beyond Landlord's control). "Ready for Occupancy" shall mean (i) the date on which Landlord has substantially completed the TAP Tenant Work in accordance with the TAP Plans and insubstantial compliance with all applicable laws. regulations, and codes, as certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect"), Landlord and the applicable general contractor; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by the City and County of Denver ("City") permitting the use and occupancy of the Third Added Premises subject only to TAP Punch List (defined below) items; and (iii) the services and systems required to be provided to the Third Added Premises are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Third Added Premises.

(c) Access; Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party") access to the Third Added Premises at reasonable times prior to the occupancy of the Third Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense. for the purposes of inspecting and verifying Landlord's performance of the TAP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the TAP Tenant Work. Within fifteen (15) days after the TAP Tenant Work is completed, Landlord and Tenant shall prepare a mutually agreed upon list ("TAP Punch List") of items of the TAP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the TAP Punch List to be corrected or repaired within thirty (30) days after the date the TAP Punch List is prepared. As used in this Paragraph 5, ''TAP Punch List items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the Third Added Premises.

(d) Third Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any. required to be done by Landlord under this Fifth Amendment) fail to cause the TAP Tenant Work to be completed on or before May 21, 2005 or any other date, Landlord shall not be subject to any liability fur such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the Third Added Premises shall commence on the Third Added Premises Commencement Date, and such failure to cause the TAP Tenant Work to be completed on or before May 21, 2005, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The lean "TAP Tenant Delay'' shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the TAP Tenant Work including: (i) any delay which is caused by changes in the TAP Plans and/or the TAP Tenant Work requested by Tenant; (ii) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, to promptly furnish to Landlord any required approval or consent within the period of time required therefor by the terms of this Fifth Amendment; or(iii) any delay which is caused by the performance of any work or activity in the Third Added Premises by Tenant or any of its employees, agents or contractors. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Third Added Premises resulting from any TAP Tenant Delay. Notwithstanding the foregoing. If the Third Added Premises Commencement Date does not occur by August I, 2005, as such date is extended for any TAP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the Third Added Premises pursuant to this Fifth Amendment Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any TAP Tenant Delay.

6. Landlord's Partial Substitution Option .

(a) At any time here after, Landlord shall have the right to substitute for the Third Added Premises then being leased or to be leased hereunder other premises within the Building (herein referred to as the "Substitute Third Added Premises") provided that the Substitute Third Added Premises shall be of at least substantially the same size and shall either have substantially Ute same perimeter configuration or a perimeter configuration

which the Third Added Premises were being used by Tenant or, if possession of the Third Added Premises had not yet been received by Tenant, then for the purposes for which the Third Added Premises were to be used by Tenant.

(b) If Tenant shall not have received possession of the Third Added Premises, then, as of the date Landlord gives notice of a substitution, such substitution shall be effective, the Substitute Third Added Premises shall be the Third Added Premises hereunder and the Third Added Premises shall cease to be the Third Added Premises hereunder.

(c) The provisions of this Subparagraph 6(c) shall apply if Tenant shall have already received possession of the Third Added Premises as of the date Landlord gives notice of substitution. Tenant shall vacate and surrender the Third Added Premises not later than the later of the thirtieth (30th) day after the date that Landlord shall notify Tenant of Landlord's intent lo make the substitution in question or the fifteenth (15th) day after Landlord shall have substantially completed the work to be done by Landlord in the Substitute Third Added Premises pursuant to this Subparagraph 6(c). As of the dale of such surrender and vacation, the Substitute Third Added Premises shall be a part of the Premises leased under the Lease and the Third Added Premises shall cease lo be a part of the Premises leased under this Lease, Landlord shall (i) pay the actual and reasonable out-of-pocket expenses of Tenant's moving of its property from the Third Added Premises to the Substitute Third Added Premises and(ii) shall improve the Substitute Third Added Premises so that they are substantially similar to the Third Added Premises and promptly reimburse Tenant for its actual and reasonable out-of-pocket costs in connection with the relocation for the printing of a reasonable quantity of business cards and all other documents that identify Tenant's suite number, and in connection with the relocation of any telephone or other communications equipment and cabling from the Third Added Premises to the Substitute Third Added Premises. However, instead of paying the expenses of Tenant moving its property, Landlord may elect to either move Tenant's property or provide personnel to do so under Tenant's direction. in which event such move may not be made except during evenings, weekends or holidays. so as to incur the least inconvenience to Tenant.

(d) Tenant shall not be entitled to any compensation for any Inconvenience or interference with Tenant's business, nor to any abatement or reduction in rent (except that Base Rent will proportionately decrease if the size of the Substitute Third Added Premises is less than the size of the Third Added Premises), nor shall Tenant's obligations under this Lease be otherwise affected, as a result of the substitution except as otherwise provided in this Paragraph 6. Tenant agrees to cooperate with Landlord so as to facilitate the prompt completion by Landlord of its obligations under this Paragraph 6. Without limiting the generality of the preceding sentence, Tenant agrees to provide to Landlord promptly such approvals, instructions, plans, specifications or other information, as may be reasonably requested by Landlord.

7. Parking . Beginning on the first day of the calendar month following the Third Added Premises Commencement Date, Exhibit "D" attached to the Original Lease shall be amended to reflect that Landlord shall provide Tenant with an option to lease up to one (1) additional unreserved parking space in the Parking Garage located under the Building at the prevailing market rate quoted from time to time by the Operator. Tenant's option to use this parking space will not be affected by Tenant's exercise of the Second Partial Termination Option.

8. Brokerage . Landlord and Tenant acknowledge and agree that (i}Landlord has been represented in connection with this Fifth Amendment by Agent and by Silverbrae Holdings, Inc. ("SHI") as Landlord's agents, and (ii) Tenant has been represented in connection with this Fifth Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Fifth Amendment, made by any broker or finder (other than Agent. SHI and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Fifth Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, SHI and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Fifth Amendment.

9. Authority of Tenant . Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Fifth Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising .from or r.elated to the Lease or the Premises.

10. Binding Effect . This Fifth Amendment becomes effective only upon the.execution by Landlord and Tenant.

11. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

12. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants, and conditions of the Lease shall.remain and continue in full force and effect as amended herein. Each of Landlord and Tenant confirms that it is in compliance with the Lease provisions and the neither Tenant nor Landlord has any defenses, claims or offsets against the other as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or the use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Fifth Amendment, the Lease remains in full force and effect If there is any conflict between the terms and provisions of this Fifth Amendment and the terms and provisions of the Lease, the terms and provisions of this Fifth Amendment shall govern.

13. Governing Law . The governing law of this Fifth Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the Stale of Colorado.

14. Complete Agreement . This Fifth Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

15. Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Fifth Amendment shall irn1re to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

16. Amendment . This Fifth Amendment may not be amended except in writing signed by the parties hereto.

17. Headings . The paragraph headings of this Fifth Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

18. Time . Time is of the essence hereof.

19. Survival . All covenants, agreements, representations and warranties as set forth in this Fifth Amendment shall survive the termination of the Lease.

20. Counterparts . This Fifth Amendment may be executed in two (2) or more counterparts. each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

21. Subordination . Landlord hereby confirms its agreement to and obligations pursuant to Subparagraphs l8(b) and l 8(c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any future mortgage" (as defined in the Original Lease) shall be conditioned upon Landlord obtaining for·and delivering·to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant. and the holder of such future mortgage for the Third Added Premises (which shall not diminish Tenant's rights of offset provided in Subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Fifth Amendment to Lease as of the day and year set first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date: 5/25/05		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: 4/27/05		By: /s/ John C. Walter (Title)

Exhibit 10.46

SIXTH AMENDMENT TO LEASE

THIS SIXTH AMENDMENT TO LEASE (this "Sixth Amendment") is entered into as of the 18th day of May, 2005, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

B. The Original Lease was amended by (i) that certain First Amendment to Lease dated as of September 10, 2002 ("First Amendment") pursuant to which Landlord and Tenant confirmed the Commencement Date and Base Rent, among other matters, (ii) that certain Second Amendment to Lease dated as of July 23, 2004 ("Second Amendment") pursuant to which certain Tenant parking rights were amended, (iii) that certain Third Amendment to Lease dated as of November 1, 2004 ("Third Amendment") pursuant to which Tenant leased an additional 12,000 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the First Added Premises, (iv) that certain Fourth Amendment to Lease dated as of December 31, 2004 ("Fourth Amendment") pursuant to which Tenant leased an additional 1,928 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the Second Added Premises, and (v) that certain Fifth Amendment to Lease dated as of April 20, 2003 ("Fifth Amendment") pursuant to which Tenant leased an additional 994 square feet of rentable area located upon the fifth (5th) floor of the Building described as the Third Added Premises. The Original Lease as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment and Fifth Amendment is herein referred to as the "Lease".

C. Tenant has requested and Landlord is willing to lease an additional 6,772 square feet of rentable area located on the sixteenth (16th) floor of the Building which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "Fourth Added Premises").

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. Fourth Added Premises . Effective as of the date (the "Fourth Added Premises Commencement Date"), the Fourth Added Premises are Ready for Occupancy (hereinafter defined) or would have been Ready for Occupancy in the absence of any FAP Tenant Delay (hereinafter defined), the Fourth Added Premises shall be added to the Premises for the balance of the Tenn, upon and subject to all of the terms, covenants and conditions of the Lease, as amended herein. Landlord and Tenant acknowledge that the Premises will consist of approximately 102,883 square feet of rentable area after the addition of the Fourth Added Premises.

2. Base Rent . Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows (subject to credits against Base Rent pursuant to Paragraph 2 of the First Amendment):


(a)	From the Commencement Date through and until September 17, 2003:

Zero Dollars ($0.00) (on the Original Premises)


(b)	From September 18, 2003 through and including January 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises)


(c)	From February 1, 2005 through and until February 28, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises); and

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises)


(d)	From March 1, 2005 through and until March 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Second Added Premises)


(e)	From April 1, 2005 through and until May 20, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277,50 (on the First Added Premises); and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)


(f)	From May 21, 2005* through and until July 20, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Third Added Premises)


(g)	July 21, 2005 through and until October 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises)


(h)	November 1, 2005** through and until November 30, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises);

and

$0.00 per annum payable in monthly installments of $0.00 (on the Fourth Added Premises)


(i)	From December 1, 2005 through and until December 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises);

and

$142,212.00 per annum payable in monthly installments of $11,851.00 (on the Fourth Added Premises)


(j)	From January 1, 2006 through and until December 31, 2010:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$244,440.00 per annum payable in monthly installments of $20,370.00 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Third Added Premises);

and

$142,212.00 per annum payable in monthly installments of $11,851.00 (on the Fourth Added Premises)


*	Or, with respect to the Third Added Premises only, the Third Added Premises Commencement Date, whichever is later


**	Or, with respect to the Fourth Added Premises only, the Fourth Added Premises Commencement Date, whichever is later

3. Additional Rent.

(a) Original Premises . In addition to paying the Base Rent specified in Paragraph 2 above, Tenant shall pay as "additional rent" with respect to the Original Premises the amounts determined in accordance with the provisions of Paragraph 4 of the Original Lease.

(b) First Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the First Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514,000).

(c) Second Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Second Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Second Added Premises shall mean 0.38% (l,928/514,000).

(d) Third Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Third Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes

incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Third Added Premises shall mean 0.19% (994/514,000).

(e) Fourth Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Fourth Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Fourth Added Premises shall mean 1.32% (6,772/514,000).

(f) Calculation . Tenant's Proportionate Share under Subparagraphs 3(a), 3(b), 3(c), 3(d) and 3(e) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

4. Acceptance and Improvements of Fourth Added Premises.

(a) Acceptance of Fourth Added Premises . Tenant acknowledges that it has had the opportunity to inspect the Fourth Added Premises and agrees to accept the Fourth Added Premises in its current "as is" condition without any obligation upon Landlord to complete improvements to the Fourth Added Premises or to provide any allowance for the completion of such improvements, except as provided in this Paragraph 4.

(b) Preliminary Information and Plans . Landlord has heretofore delivered to Tenant for use by Tenant's architect or engineer, such plan or plans and other information with respect to the Fourth Added Premises and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's layout plans for the Fourth Added Premises. Receipt of all such information is hereby acknowledged by Tenant.

(c) Tenant's FAP Layout Plans . Tenant shall cause to be prepared at Tenant's expense and, not later than 12:00 noon (Denver time), September 5, 2005, shall deliver to Landlord one mylar and two black line prints of complete and final architectural working drawings (which shall be 1/8" scale), three copies of all specifications and two non-copyrighted CADD disks, prepared by an architect or space planner approved by Landlord ("Tenant's FAP Layout Plans") for the construction and finishing of the Fourth Added Premises. Tenant's FAP Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by an architect licensed by and registered in the State of Colorado ("Tenant's Architect"), and (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements. Tenant's FAP Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed (and may be disapproved by Landlord only in the event that the proposed Tenant's FAP Layout Plans violate any governmental regulations; adversely affect the Building's structure, electric, or mechanical systems (in Landlord's sole opinion with respect to adverse affect on electric and mechanical systems); intrude on the Building's Common Area; or are visible from the Building's Common Area), and such plans shall be deemed modified to take account of any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant FAP Layout Plans are approved within five (5) business days after their delivery to Landlord, provided that Tenant's FAP Layout Plans shall be deemed to be approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within five (5) business days of their receipt by Landlord stating the reason for disapproval of such Tenant's FAP Layout Plans. Tenant's FAP Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final FAP Layout Plans". Landlord and Tenant agree that they will each use their good faith efforts to mutually agree upon the Final FAP Layout Plans on or before September 12, 2005. Concurrently with delivery of Tenant's FAP Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the Fourth Added Premises respecting the

matters which are the subject of this Paragraph 4 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 4; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(d) FAP Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval or deemed approval by Landlord of the Final FAP Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("FAP Engineering Plans"), based on the Final FAP Layout Plans (and such pertinent additional information as shall have been submitted by Tenant with Tenant's FAP Layout Plans or as requested by Landlord), as may be required to complete the Fourth Added Premises in accordance with the Final FAP Layout Plans. As soon as reasonably possible, and in any event within five (5) days after submission to Tenant by Landlord of the FAP Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final FAP Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the FAP Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contrary within five (5) days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final FAP Layout Plans. The FAP Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the FAP Engineering Plans so changed.

(e) Completion by Landlord . Landlord shall, at Tenant's expense, payable out of the PAP Allowance (defined below), in a good and workmanlike manner, cause the Fourth Added Premises to be improved and completed in accordance with the Final FAP Layout Plans and the FAP Engineering Plans (herein referred to together with architectural and engineering services as the "FAP Tenant Work") (such plans are hereinafter together called the "FAP Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final PAP Layout Plans). The PAP Tenant Work shall be furnished, installed and performed by Landlord at Tenant's cost for an amount (hereinafter called the "FAP Tenant Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and services applied to the FAP Tenant Work, plus applicable sales taxes and without, however, any construction management fee payable to Landlord or its affiliates. Landlord and Tenant agree to select two (2) general contractors from the following list of three mutually acceptable general contractors to submit guaranteed maximum price bids for the FAP Tenant Work based upon reviews of the FAP Construction Plans: Foothills Construction, Jordy Construction, and RB Construction Corporation. The general contractors submitting bids shall be required to provide an AIA Statement of Qualification and have a designated project manager for the FAP Tenant Work with (at a minimum) a "B" class license within the City and County of Denver ("City"). Landlord agrees to obtain bids from the two mutually selected general contractors for the completion of the FAP Tenant Work. Landlord agrees to select the contractor submitting the lowest bid; provided, however, in the event the bids are within two percent (2%) of the lowest bid, Tenant shall have the right to select the general contractor. Landlord currently estimates that the FAP Tenant Work can be completed Ready for Occupancy by November 1, 2005 (subject to delays beyond Landlord's control), provided the Final FAP Layout Plans are completed on or before 5:00 p.m. (Denver time), September 12, 2005. "Ready for Occupancy" shall mean (i) the date on which Landlord has substantially completed the PAP Tenant Work in accordance with the FAP Construction Plans and in substantial compliance with all applicable laws, regulations, and codes, as certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect"), Landlord and the applicable general contractor; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by

the City permitting the use and occupancy of the Fourth Added Premises subject only to FAP Punch List (defined below) items and FAP Tenant Installations (defined below); and (iii) the services and systems required to be provided to the Fourth Added Premises are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Fourth Added Premises.

Tue contract between Landlord and the general contractor will provide for a guaranteed maximum price ("GMP"), and the GMP cannot be exceeded without the execution of a change order approved in writing by Tenant, provided such approval will not be unreasonably withheld.

(f) Access: Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party") access to the Fourth Added Premises at reasonable times prior to the occupancy of the Fourth Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense, for the purposes of inspecting and verifying Landlord's performance of the FAP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the FAP Tenant Work. Landlord shall provide Tenant and its agents with access to the Fourth Added Premises at least fifteen (15) days prior to the Fourth Added Premises Commencement Date for the purpose of installing furniture and equipment (the "FAP Tenant Installations"). Tenant shall not interrupt the completion of the FAP Tenant Work during completion of FAP Tenant Installations. Tenant shall indemnify and hold Landlord and its partners, agents, servants, employees and general contractor (each herein referred to as an "FAP Tenant Work Indemnified Party") harmless from any and all claims, losses, damages, fines and penalties incurred by an FAP Tenant Work Indemnified Party including, but not limited to, reasonable attorneys' fees that in any way result from a Tenant Party's negligent and/or willfully wrongful activities within the Fourth Added Premises during completion of the PAP Tenant Work or FAP Tenant Installations. Within fifteen (15) days after the FAP Tenant Work is completed, Landlord and Tenant shall prepare a mutually agreed upon list ("FAP Punch List") of items of the FAP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the FAP Punch List to be corrected or repaired within thirty (30) days after the date the FAP Punch List is prepared. As used in this Paragraph 4, "FAP Punch List" items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the Fourth Added Premises.

(g) Payment of FAP Tenant Improvements Costs . Landlord shall provide an allowance for the payment of the FAP Tenant Improvements Costs and Tenant's out-of-pocket expenses to complete voice and data cabling at the Fourth Added Premises and the cost of physically moving into the Fourth Added Premises (the "FAP Tenant Related Costs"), in an amount equal to One Hundred Thirty-Five Thousand Four Hundred Forty and No/100 Dollars ($135,440.00) (the "FAP Allowance"). Tenant shall pay for all FAP Tenant Improvements Costs exceeding the FAP Allowance within ten (10) days after Landlord's delivery of written request for payment; provided, however, that Landlord may require that, before Landlord commences the FAP Tenant Work, Tenant to pay to Landlord fifty percent (50%) of the amount that the PAP Tenant Improvements Costs exceed the FAP Allowance as reasonably estimated by Landlord (collectively, the "FAP Deposit"). The FAP Deposit shall be applied against the last completed FAP Tenant Work. In the event an unused balance remains from either the FAP Deposit and/or the FAP Allowance after completion of all FAP Tenant Work and the payment of all FAP Tenant Improvements Costs, Landlord agrees (i) to pay to Tenant the unused balance of the FAP Deposit within thirty (30) days after the FAP Tenant Work is completed; (ii) to reimburse Tenant for FAP Tenant Related Costs within fifteen (15) days after Tenant delivers reasonable evidence of such expenditures to Landlord, and (iii) to apply the unused portion of the FAP Allowance toward the payment of Base Rent for the Fourth Added Premises. Tenant shall not be entitled to payment of any remaining FAP Allowance after the payment of FAP Tenant Related Costs and Base Rent for the Fourth Added Premises. Tenant shall be deemed to have waived any such excess FAP Allowance.

(h) Fourth Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Sixth Amendment) fail to cause the FAP Tenant Work to be completed on or before November 1, 2005 or any other date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the Fourth Added Premises shall

commence on the Fourth Added Premises Commencement Date, and such failure to cause the FAP Tenant Work to be completed on or before November 1, 2005, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The term "FAP Tenant Delay" shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the FAP Tenant Work including (a) any delay caused by failure of Tenant to deliver Tenant's FAP Layout Plans on or before September 5, 2005; (b) unreasonable failure to mutually agree upon the Final FAP Layout Plans on or before September 12, 2005; (c) any delay which is caused by changes in the FAP Tenant Work requested by Tenant after mutual approval of the Final FAP Layout Plans; (d) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, promptly to furnish to Landlord any required information, approval or consent or caused by any good faith reluctance on the part of Landlord to approve any information required to be submitted by Tenant and approved by Landlord (provided that such disapproval is permitted pursuant to Subparagraph 4(c) above); or (e) any delay which is caused by the performance of any work or activity in the Fourth Added Premises by Tenant or any of its employees, agents or contractors, including, but not limited to, FAP Tenant Installations. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Fourth Added Premises resulting from any FAP Tenant Delay, to the extent such cost is not covered by the FAP Allowance. Notwithstanding the foregoing, if the Fourth Added Premises Commencement Date does not occur by February 28, 2006, as such date is extended for any FAP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the Fourth Added Premises pursuant to this Sixth Amendment. Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any FAP Tenant Delay.

5. Parking. Beginning on the first day of the calendar month following the Fourth Added Premises Commencement Date, Exhibit "D" attached to the Original Lease shall be amended to reflect that Landlord shall provide Tenant with an option to lease up to six (6) additional unreserved parking space in the Parking Garage located under the Building at the prevailing market rate quoted from time to time by the Operator. Tenant's option to use this parking space will not be affected by Tenant's exercise of the Second Partial Termination Option.

6. Brokerage. Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this Sixth Amendment by Agent and by Silverbrae Holdings, Inc. ("SHI") as Landlord's agents, and (ii) Tenant has been represented in connection with this Sixth Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Sixth Amendment, made by any broker or finder (other than Agent, SHI and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Sixth Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, SHI and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Sixth Amendment.

7. Authority of Tenant. Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Sixth Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or related to the Lease or the Premises.

8. Binding Effect. This Sixth Amendment becomes effective only upon the execution by Landlord and Tenant.

9. Definitions. All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or the use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Sixth Amendment, the Lease remains in full force and effect. If there is any conflict between the terms and provisions of this Sixth Amendment and the terms and provisions of the Lease, the terms and provisions of this Sixth Amendment shall govern.

11. Governing Law. The governing law of this Sixth Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

12. Complete Agreement. This Sixth Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

13. Benefit. Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Sixth Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

14. Amendment. This Sixth Amendment may not be amended except in writing signed by the parties hereto.

15. Headings. The paragraph headings of this Sixth Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

16. Time. Time is of the essence hereof.

17. Survival. AU covenants, agreements, representations and warranties as set forth in this Sixth Amendment shall survive the termination of the Lease.

18. Counterparts. This Sixth Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

19. Subordination.

(a) Landlord agrees to use good faith efforts to obtain from the present beneficiaries of the Existing Mortgages (as defined in Paragraph 18 of the Original Lease) a non-disturbance agreement in recordable form, substantially in the forms of Exhibits H-1, H-2, and H-3 to the Original Lease, respectively, with respect to the Fourth Added Premises. Landlord represents that the beneficiaries of such Existing Mortgages are SFI I and Newpar (as each is defined in Subparagraph 18(a) of the Original Lease) and Prudential Retirement Insurance and Annuity, as the successor-in-interest to CGLIC (as defined in such Subparagraph 18(a)).

(b) Landlord hereby confirms its agreement to and obligations pursuant to Subparagraphs 18(b) and 18(c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any "future mortgage" (as defined in the Original Lease) shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the Fourth Added Premises (which shall not diminish Tenant's rights of offset provided in Subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Sixth Amendment to Lease as of the day and year set first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date: 5/31/05		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: May 25, 2005		By: /s/ John C. Walter John Walter Executive VP & General Counsel

Exhibit 10.47

SEVENTH AMENDMENT TO LEASE

THIS SEVENTH AMENDMENT TO LEASE (this "Seventh Amendment") is entered into as of the 15th day of June, 2005, by and between DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord and Tenant entered into an Office Lease dated as of July 30, 2002 (the "Original Lease") wherein Landlord leased to Tenant and Tenant leased from Landlord approximately 81,189 square feet of rentable area (the "Original Premises") located on the ninth (9th) through the twelfth (12th) floors of the building (the "Building") located at 1099 18th Street, Denver, Colorado 80202, and further described as Suite 1200.

B. The Original Lease was amended by (i) that certain First Amendment to Lease dated as of September 10, 2002 ("First Amendment") pursuant to which Landlord and Tenant confirmed the Commencement Date and Base Rent, among other matters, (ii) that certain Second Amendment to Lease dated as of July 23, 2004 ("Second Amendment") pursuant to which certain Tenant parking rights were amended, (iii) that certain Third Amendment to Lease dated as of November 1, 2004 ("Third Amendment") pursuant to which Tenant leased an additional 12,000 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the First Added Premises, (iv) that certain Fourth Amendment to Lease dated as of December 31, 2004 ("Fourth Amendment") pursuant to which Tenant leased an additional 1,928 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the Second Added Premises,. (v) that certain Fifth Amendment to Lease dated as of April 20, 2005 ("Fifth Amendment") pursuant to which Tenant leased an additional 994 square feet of rentable area located upon the fifth (5th) floor of the Building described as the Third Added Premises, and (vi) that certain Sixth Amendment to Lease dated as of May 18, 2005 ("Sixth Amendment") pursuant to which Tenant leased an additional 6,772 square feet of rentable area located upon the sixteenth (16th) floor of the Building-described as the Fourth Added Premises. The Original Lease as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and Sixth Amendment is herein referred to as the "Lease".

C. Tenant and Landlord are desirous of substituting that 994 square feet of rentable area located on the twentieth (20th) floor of the Building, known as Suite 2030 and which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "Fifth Added Premises") with the Third Added Premises.

D. Landlord and Tenant are the sole parties in interest under the Lease.

E. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. Substitution of Fifth Added Premises for Third Added Premises.

(a) Effective as of the date (the "Fifth Added Premises Commencement Date"), the Fifth Added Premises are Ready for Occupancy (hereinafter defined) or would have been Ready for Occupancy in the absence of any Fifth AP Tenant Delay (hereinafter defined), the Fifth Added Premises shall be added to the Premises for the balance of the Term and

substituted in place of the Third Added Premises, upon and subject to all of the terms, covenants and conditions of the Lease, as amended herein.

(b) Landlord and Tenant acknowledge that Tenant has never taken possession of the Third Added Premises and Tenant relinquishes any and all rights under the Lease to possess or occupy the Third Added Premises.

(c) Landlord and Tenant acknowledge that the Premises will consist of approximately 102,883 square feet of rentable area after the addition of the Fifth Added Premises.

2. Base Rent. Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows (subject to credits against Base Rent pursuant to Paragraph 2 of the First Amendment):


(a)	From the Commencement Date through and until September 17, 2003:

Zero Dollars ($0.00) (on the Original Premises)


(b)	From September 18, 2003 through and including January 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises)


(c)	From February 1, 2005 through and until February 28, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises); and

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises)


(d)	From March 1, 2005 through and until March 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.59 (on the First Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Second Added Premises)


(e)	From April 1, 2005 through and until June 30, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises); and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)


(f)	From July 1, 2005* through and until August 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$0,00 per annum payable in monthly installments of $0.00 (on the Fifth Added Premises)


(g)	September 1, 2005 through and until October 31, 2005:

$1,653,8 19.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises)


(h)	November 1, 2005** through and until November 30, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$0.00 per annum payable in monthly installments of $0,00 (on the Fourth Added Premises);

and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises);


(i)	From December 1, 2005 through and until December 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$142,212.00 per annum payable in monthly installments of $11,851.00 (on the Fourth Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises);


(j)	From January 1,2006 through and until December 31, 2010:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$244,440.00 per annum payable in monthly installments of $20,370.06 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$142,212.00 per annum payable in monthly installments of $11,851.00 (on the Fourth Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises);


*	Or, with respect to the Fifth Added Premises only, the Fifth Added Premises Commencement Date, whichever is later


**	Or, with respect to the Fourth Added Premises only, the Fourth Added Premises Commencement Date, whichever is later

3. Additional Rent.

(b) First Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof: Tenant shall pay as "additional rent" with respect to the First Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes

incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514.000).

(d) Third Added Premises . Intentionally Omitted.

(e) Fourth Added Premises. In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Fourth Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Fourth Added Premises shall mean 1.32% (6,772/514,000).

(f) Fifth Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Fifth Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the Fifth Added Premises shall mean 0.19% (994/514,000).

(g) Calculation . Tenant's Proportionate Share under Subparagraphs 3(a), 3(b), 3(c), 3(e) and 3(f) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

4. Acceptance and Improvements of Fifth Added Premises.

(a) Acceptance of Fifth Added Premises . Tenant acknowledges that it has had the opportunity to inspect the Fifth Added Premises and agrees to accept the Fifth Added Premises in its current "as is" condition without any obligation upon Landlord to complete improvements to the Fifth Added Premises or to provide any allowance for the completion of such improvements except as provided in this Paragraph 4.

(b) Completion by Landlord . Landlord shall, in a good and workmanlike manner, cause the Fifth Added Premises to be improved and completed in accordance with the plans (the "Fifth AP Plans") attached hereto as Exhibit A-2 (such improvements are herein referred to as the "Fifth AP Tenant Work"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Fifth AP Plans). The Fifth AP Tenant Work shall be furnished,

installed and performed by Landlord at Landlord's cost. Landlord currently estimates that the Fifth AP Tenant Work can be Ready for Occupancy by July 1, 2005 (subject to delays beyond Landlord's control), "Ready for Occupancy" shall mean (i) the date on which Landlord has substantially completed the Fifth AP Tenant Work in accordance with the Fifth AP Plans and in substantial compliance with all applicable laws, regulations, and codes, as certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect"), Landlord and the applicable general contractor; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by the City and County of Denver ("City") permitting the use and occupancy of the Fifth Added Premises subject only to Fifth AP Punch List (defined below) items; and (iii) the services and systems required to be provided to the Fifth Added Premises are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Fifth Added Premises.

(c) Access; Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party") access to the Fifth Added Premises at reasonable times prior to the occupancy of the Fifth Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense, for the purposes of inspecting and verifying Landlord's performance of the Fifth AP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the Fifth AP Tenant Work. Within fifteen (15) days after the Fifth AP Tenant Work is completed, Landlord and Tenant shall prepare a mutually agreed upon list ("Fifth AP Punch List") of items of the Fifth AP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the Fifth AP Punch List to be corrected or repaired within thirty (30) days after the date the Fifth AP Punch List is prepared. As used in this Paragraph 4, "Fifth AP Punch List" items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the Fifth Added Premises.

(d) Fifth Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Seventh Amendment) fail to cause the Fifth AP Tenant Work to be completed on or before July l, 2005 or any other date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the Fifth Added Premises shall commence on the Fifth Added Premises Commencement Date, and such failure to cause the Fifth AP Tenant Work to be completed on or before July 1, 2005, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The term "Fifth AP Tenant Delay" shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the Fifth AP Tenant Work including: (i) any delay which is caused by changes in the Fifth AP Plans and/or the Fifth AP Tenant Work requested by Tenant; (ii) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, to promptly furnish to Landlord any required approval or consent within the period of time required therefor by the terms of this Seventh Amendment; or (iii) any delay which is caused by the performance of any work or activity in the Fifth Added Premises by Tenant or any of its employees, agents or contractors. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Fifth Added Premises resulting from any Fifth AP Tenant Delay. Notwithstanding the foregoing, if the Fifth Added Premises Commencement Date does not occur by October 1, 2005, as such date is extended for any Fifth AP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the Fifth Added Premises pursuant to this Seventh Amendment. Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any Fifth AP Tenant Delay.

5. Termination of Landlord's Partial Substitution Option. Landlord's partial substitution option pertaining to the Third Added Premises as provided in paragraph 6 of the Fifth Amendment is terminated and deemed null, void and of no further effect.

6. Brokerage. Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this Seventh Amendment by Agent and by Silverbrae Holdings, Inc. ("SHI") as Landlord's agents, and (ii) Tenant has been represented in connection with this Seventh Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Seventh Amendment, made by any broker or finder (other than Agent, SHI and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Seventh Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay Agent, SHI and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Seventh Amendment.

7. Authority of Tenant. Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Seventh Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or related to the Lease or the Premises.

8. Binding Effect. This Seventh Amendment becomes effective only upon the execution by Landlord and Tenant.

9. Definitions. All capitalized terms used herein. but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

10. Reaffirmation of Lease Terms. Tenant and Landlord agree that the terms, covenants, and conditions of the Lease shall remain and continue in full force and effect as amended herein. Each of Landlord and Tenant confirms that it is in compliance with the Lease provisions and the neither Tenant nor Landlord has any defenses, claims or offsets against the other as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or the use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Seventh Amendment, the Lease remains in full force and effect. If there is any conflict between the terms and provisions of this Seventh Amendment and the terms and provisions of the Lease, the terms and provisions of this Seventh Amendment shall govern.

11. Governing Law. The governing law of this Seventh Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

12. Complete Agreement. This Seventh Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

13. Benefit. Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Seventh Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

14. Amendment. This Seventh Amendment may not be amended except in writing signed by the parties hereto.

15. Headings. The paragraph headings of this Seventh Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

16. Time. Time is of the essence hereof.

17. Survival. All covenants, agreements, representations and warranties as set forth in this Seventh Amendment shall survive the termination of the Lease.

18. Counterparts. This Seventh Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

19. Subordination. Landlord hereby confirms its agreement to and obligations pursuant to Subparagraphs 18(b) and 18(c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any "future mortgage" (as defined in the Original Lease) shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the Fifth Added Premises (which shall not diminish Tenant's rights of offset provided in Subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Seventh Amendment to Lease as of the day and year set first above written.



		LANDLORD:

		DENVER-STELLAR ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership

		By: ARC Denver, L.L.C., a Delaware limited liability company, its general partners

		By: ARC Denver, Inc., a Delaware corporation, its manager

Date: 7/6/05		By: /s/ David G. Marshall David G. Marshall, President


		TENANT:

		WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: June 28, 2005		By: /s/ John C. Walter Executive Vice President

Exhibit 10.48

EIGHTH AMENDMENT TO LEASE

THIS EIGHTH AMENDMENT TO LEASE (this "Eighth Amendment") is entered into as of November 15, 2005, by and between CUMBERLAND OFFICE PARK, LCC, a Georgia limited liability company ("Landlord") and WESTERN GAS RESOURCES, INC., a Delaware corporation ("Tenant").

RECITALS

A. Landlord's predecessor, Denver-Stellar Associates Limited Partnership, a Delaware limited partnership ("DSA") and Tenant entered into an Office Lease dated as of July 30, 2002 (the "Original Lease") wherein DSA leased to Tenant and Tenant leased from DSA approximately 81,189 square feet of rentable area (the "Original Premises") located on the ninth (9th) through the twelfth (12th) floors of the building (the "Building") located at 1099 - 18th Street, Denver, Colorado 80202, and further described as Suite 1200.

B. The Original Lease was amended by (i) that certain First Amendment to Lease dated as of September 10, 2002 ("First Amendment") pursuant to which DSA and Tenant confirmed the Commencement Date and Base Rent, among other matters, (ii) that certain Second Amendment to Lease dated as of July 23, 2004 ("Second Amendment") pursuant to which certain Tenant parking rights were amended, (iii) that certain Third Amendment to Lease dated as of November 1, 2004 ("Third Amendment") pursuant to which Tenant leased an additional 12,000 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the First Added Premises, (iv) that certain Fourth Amendment to Lease dated as of December 31, 2004 ("Fourth Amendment") pursuant to which Tenant leased an additional 1,928 square feet of rentable area located upon the sixteenth (16th) floor of the Building described as the Second Added Premises, (v) that certain Fifth Amendment to Lease dated as of April 20, 2005 ("Fifth Amendment") pursuant to which Tenant leased an additional 994 square feet of rentable area located upon the fifth (5th) floor of the Building described as the Third Added Premises, (vi) that certain Sixth Amendment to Lease dated as of May 18, 2005 ("Sixth Amendment") pursuant to which Tenant leased an additional 6,772 square feet of rentable area located upon the sixteenth (16 ^th floor of the Building described as the Fourth Added Premises, and (vii) that certain Seventh Amendment to Lease dated as of June 15, 2005 ("Seventh Amendment") pursuant to which the Third Added Premises were substituted with approximately 994 square feet of rentable area located on the twentieth (20 ^th )floor of the Building described as the Fifth Added Premises. The Original Lease as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment and Seventh Amendment is herein referred to as the "Lease".

C. Landlord has succeeded to DSA's interest in the Real Property (as defined in the Original Lease), the Premises and the Lease.

D. Tenant has requested and Landlord is· willing to lease an additional 380 square feet of rentable area located on the sixteenth (16th) floor of the Building which is depicted on Exhibit A-1 attached hereto and incorporated herein by this reference (the "Sixth Added Premises").

E. Landlord and Tenant are the sole parties in interest under the Lease.

F. Landlord and Tenant now desire to amend the Lease in the manner and form set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby amend the Lease as follows:

1. Sixth Added Premises. Effective as of the date (the "Sixth Added Premises Commencement Date"), the Sixth Added Premises are Ready for Occupancy (hereinafter defined) or would have been Ready for Occupancy in the absence of any SXAP Tenant Delay

(hereinafter defined), the Sixth Added Premises shall be added to the Premises for the balance of the Term, upon and subject to all of the terms, covenants and conditions of the Lease, as amended herein. Landlord and Tenant acknowledge that the Premises will consist of approximately 103,263 square feet of rentable area after the addition of the Sixth Added Premises.

2. Base Rent. Effective as of the Effective Date, the Base Rent to be paid by Tenant to Landlord shall be amended as follows (subject to credits against Base Rent pursuant to Paragraph 2 of the First Amendment):


(a)	From the Commencement Date through and until September 17, 2003:

Zero Dollars ($0.00) (on the Original Premises)


(b)	From September 18, 2003 through and including January 31, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises)


(c)	From February 1, 2005 through and until February 28, 2005:

$1,653,819.96 per annum payable in monthly installments of $137,818.33 (on the Original Premises); and

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises)


(d)	From March 1, 2005 through and until March 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Second Added Premises)


(e)	From April 1, 2005 through and until June 30, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of$15,277.50 (on the First Added Premises); and

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises)


(f)	From July 1, 2005* through and until August 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$0.00 per annum payable in monthly installments of $0.00 (on the Fifth Added Premises)


(g)	September 1, 2005 through and until October 31, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of$15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises)

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(h)	November 1, 2005** through and until November 30, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of$15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$0.00 per annum payable in monthly installments of $0.00 (on the Fourth Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises)


(i)	From December 1, 2005 through and until January 20, 2005:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$183,330.00 per annum payable in monthly installments of $15,277.50 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$142,212.00 per annum payable in monthly installments of$11,851.00 (on the Fourth Added Premises); and

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises)


(j)	From January 21, 2006*** through and until December 31, 2010:

$1,653,819.95 per annum payable in monthly installments of $137,818.33 (on the Original Premises);

$244,440.00 per annum payable in monthly installments of $20,370.00 (on the First Added Premises);

$39,832.56 per annum payable in monthly installments of $3,319.38 (on the Second Added Premises);

$142,212.00 per annum payable in monthly installments of $11,851.00 (on the Fourth Added Premises);

$20,376.96 per annum payable in monthly installments of $1,698.08 (on the Fifth Added Premises); and

$7,980.00 per annum payable in monthly installments of $665.00 (on the Sixth Added Premises)


*	Or, with respect to the Fifth Added Premises only, August 19, 2005 which date Landlord and Tenant stipulate was the Fifth Added Premises Commencement Date


**	Or, with respect to the Fourth Added Premises only, the Fourth Added Premises Commencement Date, whichever is later


***	Or, with respect to the Sixth Added Premises only, the Sixth Added Premises Commencement Date, whichever is later

Base Rent shall be paid to Landlord at the following address:

Cumberland Office Park, LLC

Dept. 1807

Denver, CO 80291-1807

3. Additional Rent.

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2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Share with respect to the First Added Premises shall mean 2.33% (12,000/514,000).

(d) Third Added Premises . Intentionally Omitted.

(g) Sixth Added Premises . In addition to paying the Base Rent specified in Paragraph 2 hereof, Tenant shall pay as "additional rent" with respect to the Sixth Added Premises an amount determined in accordance with the provisions of Paragraph 4 of the Original Lease based upon: (i) the "Operating Expense Base Amount" meaning the amount (on a per rentable square foot basis), of Operating Expenses incurred by Landlord during Calendar Year 2005, as they may be adjusted pursuant to Subparagraph 4(a)(vii)(A) of the Original Lease, and (ii) the "Tax Base Amount" meaning the amount (on a per rentable square foot basis) of Taxes incurred by Landlord during Calendar Year 2005. Tenant's Proportionate Sh.ire with respect to the Sixth Added Premises shall mean 0.074% (380/514,000).

(h) Calculation . Tenant's Proportionate Share under Subparagraphs 3(a), 3(b), 3(c), 3(e), 3(f) and 3(g) are calculated on the basis of the rentable area of the Building consisting of 514,000 square feet which is approximately 95% of the Building's actual rentable area. The Base Rent and additional rent are sometimes herein collectively referred to as the "rent". All amounts of additional rent shall be payable in the same manner and at the same place as the Base Rent.

4. Acceptance and Improvements of Sixth Added Premises.

(a) Acceptance of Sixth Added Premises . Tenant acknowledges that it has had the opportunity to inspect the Sixth Added Premises and agrees to accept the Sixth Added Premises in its current "as is" condition without any obligation upon Landlord to complete improvements to the Sixth Added Premises or to provide any allowance for the completion of such improvements, except as provided in this Paragraph 4.

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(b) Preliminary Information and Plans . Landlord has heretofore delivered to Tenant for use by Tenant's architect or engineer, such plan or plans and other information with respect to the Sixth Added Premises and the Building as Tenant may reasonably require for proper and expeditious preparation of Tenant's layout plans for the Sixth Added Premises. Receipt of all such information is hereby acknowledged by Tenant.

(c) Tenant's SXAP Layout Plans . Tenant shall cause to be prepared at Tenant's expense and, not later than 12:00 noon (Denver time), November 18, 2005, shall deliver to Landlord one mylar and two black line prints of complete and final architectural working drawings (which shall be 1/8" scale), three copies of all specifications and two non-copyrighted CADD disks, prepared by an architect or space planner approved by Landlord ("Tenant's SXAP Layout Plans") for the construction and finishing of the Sixth Added Premises. Tenant's SXAP Layout Plans shall (i) include the layout of Tenant's furniture, fixtures and equipment, (ii) include electrical and heat specifications for all of Tenant's fixtures and equipment, (iii) be signed and sealed by an architect licensed by and registered in the State of Colorado ("Tenant's Architect"), and (iv) conform to all applicable laws and requirements of public authorities and insurance underwriters' requirements. Tenant's SXAP Layout Plans shall be subject to Landlord's review and written approval, which approval shall not be unreasonably withheld or delayed (and may be disapproved by Landlord only in the event that the proposed Tenant's SXAP Layout Plans violate any governmental regulations; adversely affect the Building's structure, electric, or mechanical systems (in Landlord's sole opinion with respect to adverse affect on electric and mechanical systems); intrude on the Building's Common Area; or are visible from the Building's Common Area), and such plans shall be deemed modified to take account of any changes reasonably required by Landlord and approved by Tenant (which approval shall not be unreasonably withheld or delayed). Landlord shall notify Tenant whether or not the Tenant SXAP Layout Plans are approved within five (5) business days after their delivery to Landlord, provided that Tenant's SXAP Layout Plans shall be deemed to be approved by Landlord unless Landlord shall have notified Tenant in writing to the contrary within five (5) business days of their receipt by Landlord stating the reason for disapproval of such Tenant's SXAP Layout Plans. Tenant's SXAP Layout Plans as approved by Landlord and with the aforesaid modifications, if any, are herein called the "Final SXAP Layout Plans". Landlord and Tenant agree that they will each use their good faith efforts to mutually agree upon the Final SXAP Layout Plans on or before November 23, 2005. Concurrently with delivery of Tenant's SXAP Layout Plans to Landlord, Tenant shall by notice to Landlord in writing designate a single individual who Tenant agrees shall be available to meet and consult with Landlord at the Sixth Added Premises respecting the matters which are the subject of this Paragraph 4 and who, as between Landlord and Tenant, shall have the power to legally bind Tenant, in making requests for changes, giving approval of plans or work, giving directions to Landlord or the like, under this Paragraph 4; and any notice or delivery given to such person personally or at his place of business shall have the same effect as a notice or delivery given to Tenant. Landlord's designated individual, who will have the same rights and obligations to Tenant as Tenant's designee has to Landlord, will be Garth R. D. Tait and/or Jean McDonald.

(d) SXAP Engineering Plans . Landlord shall direct its engineers to prepare at Tenant's expense and, not later than fifteen (15) business days after approval or deemed approval by Landlord of the Final SXAP Layout Plans, shall deliver to Tenant mechanical, electrical and fire protection engineering drawings and specifications ("SXAP Engineering Plans"), based on the Final SXAP Layout Plans (and such pertinent additional information as shall have been submitted by Tenant with Tenant's SXAP Layout Plans or as requested by Landlord), as may be required to complete the Sixth Added Premises in accordance with the Final SXAP Layout Plans. As soon as reasonably possible, and in any event within five (5) days after submission to Tenant by Landlord of the SXAP Engineering Plans, Tenant shall give its written approval thereof if they are in substantial conformity with or a direct extension of the Final SXAP Layout Plans, otherwise such approval shall not be unreasonably withheld; however, the SXAP Engineering Plans shall be deemed to have been approved by Tenant unless Tenant shall have notified Landlord in writing to the contrary within five (5) days of their receipt by Tenant, stating in which respects such plans fail to conform with the Final SXAP Layout Plans. The SXAP Engineering Plans shall be deemed to have been approved by Tenant if they are returned by Tenant with specified changes noted and such changes are made, whether or not approval is thereafter specifically noted on the SXAP Engineering Plans so changed.

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(e) Completion by Landlord . Landlord shall, at Tenant's expense, payable out of the SXAP Allowance (defined below), in a good and workmanlike manner, cause the Sixth Added Premises to be improved and completed in accordance with the Final SXAP Layout Plans arid the SXAP Engineering Plans (herein referred to together with architectural and engineering services as the "SXAP Tenant Work") (such plans are hereinafter together called the "SXAP Construction Plans"). Landlord reserves the right however: (i) to make substitutions of material or components of equivalent grade and quality when and if any specified material or component shall not be readily or reasonably available, and (ii) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any such change shall first be obtained (which approval for matters other than selection of finish materials shall not be unreasonably withheld or delayed so long as there shall be general conformity with the Final SXAP Layout Plans). The SXAP Tenant Work shall be furnished, installed and performed by Landlord at Tenant's cost for an amount (hereinafter called the "SXAP Tenant Improvements Costs") equal to Landlord's out-of-pocket contract or purchase price or prices to be paid by Landlord to architects, engineers, material suppliers, subcontractors, independent contractors and/or other sources for the material, labor and services applied to the SXAP Tenant Work, plus applicable sales taxes and without, however, any construction management fee payable to Landlord or its affiliates. Landlord and Tenant agree to select two (2) general contractors from the following list of three mutually acceptable general contractors to submit guaranteed maximum price bids for the SXAP Tenant Work based upon reviews of the SXAP Construction Plans: Foothills Construction, Jordy Construction, and RB Construction Corporation. The general contractors submitting bids shall be required to provide an AIA Statement of Qualification and have a designated project manager for the SXAP Tenant Work with (at a minimum) a 11B 11 class license within the City and County of Denver ("City"). Landlord agrees to obtain bids from the two mutually selected general contractors for the completion of the SXAP Tenant Work. Landlord agrees to select the contractor submitting the lowest bid; provided, however, in the event the bids are within two percent (2%) of the lowest bid, Tenant shall have the right to select the general contractor. Landlord currently estimates that. the SXAP Tenant Work can be completed Ready for Occupancy by January 20, 2006 (subject to delays beyond Landlord's control), provided the Final SXAP Layout Plans are completed on or before 5:00 p.m. (Denver time), November 18, 2005. "Ready for Occupancy" shall mean (i) the date on which Landlord has substantially completed the SXAP Tenant Work in accordance with tl1e SXAP Construction Plans and in substantial compliance witl1 all applicable laws, regulations, and codes, as certified to Tenant in writing by Landlord's architect, Lewis Himes & Associates ("Landlord's Architect"), Landlord and the applicable general contractor; (ii) a permanent or temporary certificate of occupancy or other reasonable evidence of approval has been issued by the City permitting the use and occupancy of the Sixth Added Premises subject only to SXAP Punch List (defined below) items and SXAP Tenant Installations (defined below); and (iii) the services and systems required to be provided to the Sixth Added Premises are in operation and have passed inspection by the appropriate governmental authority required for issuance of a permanent or temporary certificate of occupancy for the Sixth Added Premises.

(f) Access; Acceptance of Work . Landlord shall afford Tenant and its employees and agents (each herein referred to as a "Tenant Party") access; to the Sixth Added Premises at reasonable times prior to the occupancy of the Sixth Added Premises only in the presence of a representative of the Landlord, and at Tenant's sole risk and expense, for the purposes of inspecting and verifying Landlord's performance of the SXAP Tenant Work. Tenant shall advise Landlord promptly of any objection to the construction of the SXAP Tenant Work. Landlord shall provide Tenant and its agents with access to tile Sixth Added Premises at least fifteen (15) days prior to the Sixth Added Premises Commencement Date for the purpose of installing furniture and equipment (the "SXAP Tenant Installations"). Tenant shall not interrupt the completion of the SXAP Tenant Work during completion of SXAP Tenant Installations. Tenant shall indemnify and hold Landlord and its members, agents, servants, employees and general contractor (each herein referred to as an "SXAP Tenant Work Indemnified Party") harmless from any and all claims, losses, damages, fines and penalties incurred by an SXAP Tenant Work Indemnified Party including, but not limited to, reasonable attorneys' fees that in any way result from a Tenant Party's negligent and/or willfully wrongful activities within the

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Sixth Added Premises during completion of the SXAP Tenant Work or SXAP Tenant Installations. Within fifteen (15) days after the SXAP Tenant Work is completed, Landlord and Tenant shall prepare a mutually agreed upon list ("SXAP Punch List") of items of the SXAP Tenant Work that needs to be corrected or repaired. Landlord agrees to cause the items set forth in the SXAP Punch List to be corrected or repaired within thirty (30) days after the date the SXAP Punch List is prepared. As used in this Paragraph 4, "SXAP Punch List" items means minor details of construction or decoration that do not interfere with Tenant's use and enjoyment of the Sixth Added Premises.

(g) Payment of SXAP Tenant Improvements Costs . Landlord shall provide an allowance for the payment of the SXAP Tenant Improvements Costs and Tenant's out-of-pocket expenses to complete voice and data cabling at the Sixth Added Premises and the cost of physically moving into the Sixth Added Premises (the "SXAP Tenant Related Costs"), in an amount equal to Seven Thousand Six Hundred and No/100 Dollars ($7,600.00) (the "SXAP Allowance"). Tenant shall pay for all SXAP Tenant Improvements Costs exceeding the SXAP Allowance within ten (10) days after Landlord's delivery of written request for payment; provided, however, that Landlord may require that, before Landlord commences the SXAP Tenant Work, Tenant to pay to Landlord fifty percent (50%) of the amount that the SXAP Tenant Improvements Costs exceed the SXAP Allowance as reasonably estimated by Landlord (collectively, the "SXAP Deposit"). The SXAP Deposit shall be applied against the last completed SXAP Tenant Work. In the event an unused balance remains from either the SXAP Deposit and/or the SXAP Allowance after completion of all SXAP Tenant Work and the payment of all SXAP Tenant Improvements Costs, Landlord agrees (i) to pay to Tenant the unused balance of the SXAP Deposit within thirty (30) days after the SXAP Tenant Work is completed; (ii) to reimburse Tenant for SXAP Tenant Related Costs within fifteen (15) days after Tenant delivers reasonable evidence of such expenditures to Landlord, and (iii) to apply the unused portion of the SXAP Allowance toward the payment of Base Rent for the Sixth Added Premises. Tenant shall not be entitled to payment of any remaining SXAP Allowance after the payment of SXAP Tenant Related Costs and Base Rent for the Sixth Added Premises. Tenant shall be deemed to have waived any such excess SXAP Allowance.

(h) Sixth Added Premises Commencement Date . Except as provided below, if Landlord shall, for any reason (including, without limitation, failure to complete the work, if any, required to be done by Landlord under this Eighth Amendment) fail to cause the SXAP Tenant Work to be completed on or before January 20, 2006 or any other date, Landlord shall not be subject to any liability for such failure nor for any failure to timely complete any work. Tenant's obligation to pay the Base Rent and additional rent pertaining to the Sixth Added Premises shall commence on the Sixth Added Premises Commencement Date, and such failure to cause the SXAP Tenant Work to be completed on or before January 20, 2006, or any other date, shall not in any other way affect the validity or continuance of the Lease as amended herein. The term "SXAP Tenant Delay" shall mean any act or omission of Tenant, its agents, servants, employees or contractors, which has the effect of hindering or delaying the completion of the SXAP Tenant Work including (a) any delay caused by failure of Tenant to deliver Tenant's SXAP Layout Plans on or before November 18, 2005; (b) unreasonable failure to mutually agree upon the Final SXAP Layout Plans on or before November 23, 2005; (c) any delay which is caused by changes in the SXAP Tenant Work requested by Tenant after mutual approval of the Final SXAP Layout Plans; (d) any delay which is caused by any unreasonable failure by Tenant, without regard to any grace period applicable thereto, promptly to furnish to Landlord any required information, approval or consent or caused by any good faith reluctance on the part of Landlord to approve any information required to be submitted by Tenant and approved by Landlord (provided that such disapproval is permitted pursuant to Subparagraph 4(c) above); or (e) any delay which is caused by the performance of any work or activity in the Sixth Added Premises by Tenant or any of its employees, agents or contractors, including, but not limited to, SXAP Tenant Installations. Tenant also shall pay to Landlord, within 10 days after receipt of demand made from time to time, a sum equal to any additional cost to Landlord in completing the Sixth Added Premises resulting from any SXAP Tenant Delay, to the extent such cost is not covered by the SXAP Allowance. Notwithstanding the foregoing, if the Sixth Added Premises Commencement Date does not occur by February 28, 2006, as such date is extended for any SXAP Tenant Delay, but not for any other delay, whether or not caused by Landlord, Tenant may terminate its lease of the Sixth Added Premises pursuant to this Eighth Amendment. Landlord agrees to notify Tenant, in writing, within seven (7) days after the occurrence of any SXAP Tenant Delay.

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5. Tenant's Acknowledgment of Waiver of Right of First Refusal . Tenant acknowledges that Landlord has disclosed to Tenant certain proposals that have been made to prospective tenants pertaining to (i) all of the office space located upon the sixth (6 ^th )floor of the Building, and (ii) approximately 5,228 square feet of rentable area located on the third (3' ^d ₎ floor of the Building and depicted on Exhibit A-2 attached hereto. (The office space described in clauses (i) and (ii) above are hereinafter collectively referred to as the "EA Offer Space"). Tenant further acknowledges that it does not currently desire to expand the Premises on to any of the EA Offer Space and waives its Right of First Refusal with respect to such EA Offer Space to the extent Landlord has entered into an agreement for the lease of such EA Offer Space on or before December 31, 2005. Any portion of the EA Offer Space which is not tl1e subject of an executed agreement to lease on or before December 31, 2005 shall be subject to Tenant's Right of First Refusal provided in paragraph 31 of the Original Lease.

6. Termination of TAL Right of First Refusal . Tenant's TAL Right of First Refusal provided in paragraph 6 of the Third Amendment is terminated and deemed null, void and of no further effect.

7. Brokerage . Landlord and Tenant acknowledge and agree that: (i) Landlord has been represented in connection with this Eighth Amendment by Silverbrae Holdings, Inc. ("SHI") as Landlord's agent, and (ii) Tenant has been represented in connection with this Eighth Amendment by The Staubach Company ("Staubach") as Tenant's agent. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any claims, for a commission or other compensation in connection with this Eighth Amendment, made by any broker or finder (other than SHI and Staubach) who claim to have dealt with or communicated to Tenant in connection with this Eighth Amendment provided that Landlord has not in fact retained such broker or finder. Landlord agrees to pay SHI and Staubach pursuant to the terms of separate agreements, for their services rendered in connection with this Eighth Amendment.

8. Notice . Paragraph 28 of the Original Lease is amended to provide in its entirety as follows:

All notices to be given under the Lease as amended herein shall be in writing and deposited in the United States mail, certified or registered mail witl1 return receipt requested, postage prepaid or by reputable overnight carrier, addressed as follows:

If to Landlord:

Cumberland Office Park, LLC

5800 Granite Parkway, Suite 750

Plano, Texas 75024

Attention: John D. Anderson

with a copy to:

Cumberland Office Park, LLC

c/o Granite Properties, Inc.

1400 I6th Street, Suite 400

Denver, Colorado 80202

Attention: Stephanie Lawrence

If to Tenant:

Western Gas Resources, Inc.

1099 18th Street, Suite 1200

Denver, Colorado 80202

Attention: General Counsel

or to such other person or such otl1er address designed by notice sent to the other parties. Notice by mail shall be deemed to have been given seventy-two (72) hours after being deposited in the United States mail or the following business

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day after deposit with a reputable overnight carrier with instructions for next-day delivery.

9. Authority of Tenant . Tenant represents to Landlord that Tenant has not made any assignment, sublease, transfer or other disposition of Tenant's interest in the Lease or any portion of the Premises, and that Tenant is fully authorized to execute, deliver and perform this Eighth Amendment. Tenant hereby represents and warrants to Landlord that to the best of its knowledge there are no claims, demands, obligations, liabilities, actions or other cause of actions which have accrued or which may accrue arising from or related to the Lease or the Premises.

10. Binding Effect . This Eighth Amendment becomes effective only upon the execution by Landlord and Tenant.

11. Definitions . All capitalized terms used herein, but not defined herein, shall have the same meanings given to such terms in the Lease unless otherwise indicated.

12. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants, and conditions of the Lease shall remain and continue in full force and effect as amended herein. Each of Landlord and Tenant confirms that it is in compliance with the Lease provisions and the neither Tenant nor Landlord has any defenses, claims or offsets against the other as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or the use or occupancy of the Premises prior to the date hereof. Except as specifically modified in this Eighth Amendment, the Lease remains in full force and effect. If there is any conflict between the terms and provisions of this Eighth Amendment and the terms and provisions of the Lease, the terms and provisions of this Eighth Amendment shall govern.

13. Governing Law . The governing law of this Eighth Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

14. Complete Agreement . This Eighth Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

15. Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Eighth Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

16. Amendment . This Eighth Amendment may not be amended except in writing signed by the parties hereto.

17. Headings . The paragraph headings of this Eighth Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

18. Time . Time is of the essence hereof.

19. Survival . All covenants, agreements, representations and warranties as set forth in this Eighth Amendment shall survive the termination of the Lease.

20. Counterparts . This Eighth Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

21. Subordination . Landlord hereby confirms its agreement to and obligations pursuant to subparagraphs 18(b) and 18(c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any "future mortgage" (as defined in the Original Lease) shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the Sixth Added Premises (which shall not diminish Tenant's rights of offset

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provided in subparagraph 26(h) of the Original Lease), executed by the holder of any such future mortgage.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Eighth Amendment to Lease as of the day and year first above written.



	LANDLORD:

	Cumberland Office Park, LLC , a Georgia limited liability company

	By: GPI Tower, Ltd., a Texas limited partnership, its sole member

	By: SF Realty, Inc., a Texas corporation, its general partner

Date: 12-22-05	By: /s/ Stephanie T. Lawrence Vice President - Managing Director (Title) - Denver


	TENANT:

	WESTERN GAS RESOURCES, INC., a Delaware corporation

Date: Nov. 30, 2005	By: /s/ John C. Walter Executive Vice President (Title)

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Exhibit 10.49

NINTH AMENDMENT TO OFFICE LEASE

1099 18 ^th Street, Denver, Colorado

For valuable consideration, the receipt and adequacy of which are expressly acknowledged, Landlord and Tenant (as defined below) agree as of the Effective Date that:

1. Definitions . In this Ninth Amendment, the following terms have the meaning given:

(a) Effective Date : February 16 , 2007.

(b) Landlord : Cumberland Office Park, LLC, a Georgia limited liability company, as successor-in-interest to Denver-Stellar Associates Limited Partnership, a Delaware limited partnership ("DSA").

(c) Tenant : Anadarko Petroleum Corporation, a Delaware corporation, successor-in-interest to Western Gas Resources, Inc. ("Original Tenant").

(d) Lease : Agreement of Lease, dated July 30, 2002, between DSA and ("Original Lease"), as amended by:

(1) First Amendment to Lease, dated as of September 10, 2002, between DSA and Original Tenant ("First Amendment");

(2) Second Amendment to Lease, dated as of July 23, 2004, between DSA and Original Tenant ("Second Amendment");

(3) Third Amendment to Lease, dated as of November 1, 2004, between DSA and Original Tenant ("Third Amendment");

(4) Fourth Amendment to Lease, dated as of December 31, 2004, between DSA and Original Tenant ("Fourth Amendment");

(5) Fifth Amendment to Lease, dated as of April 20, 2005, between DSA and Original Tenant ("Fifth Amendment");

(6) Sixth Amendment to Lease, dated as of May 18, 2005, between DSA and Original Tenant ("Sixth Amendment");

(7) Seventh Amendment to Lease, dated as of June 15, 2005, between DSA and Original Tenant ("Seventh Amendment");

(8) Eighth Amendment to Lease, dated as of November 15, 2005 ("Eighth Amendment"), between Landlord, as successor-in-interest to DSA and Original Tenant;

(9) This Ninth Amendment between Landlord and Tenant.

(e) Existing Space : Existing Space is comprised of approximately 103,263 rentable square feet more particularly described below:

(1) Original Premises: approximately 81,189 rentable square feet located on the 9 ^th and 12 ^th floors of the Building pursuant to Original Lease (more particularly described on Exhibit B-1 , Exhibit B-2 , Exhibit B-3 , and Exhibit B-4 , hereto);

(2) First Added Premises: approximately 12,000 rentable square feet located on the 16 ^th Floor of the Building (more particularly described on Exhibit B-5 hereto);

(3) Second Added Premises: approximately 1,928 rentable square feet located on the 16 ^th Floor of the Building (more particularly described on Exhibit B-5 hereto);

(4) Third Added Premises: N/A (were replaced by Fifth Added Premises);

(5) Fourth Added Premises: approximately 6,772 rentable square feet located on the 16 ^th Floor of the Building (more particularly described on Exhibit B-5 hereto);

(6) Fifth Added Premises: approximately 994 rentable square feet located on the 20 ^th Floor of the Building (more particularly described on Exhibit B-6 hereto);

(7) Sixth Added Premises: approximately 3.80 rentable square feet located on the 16 ^th Floor of the Building (more particularly described on Exhibit B-5 hereto);

(f) Expansion Space : Expansion Space is comprised of the Floors or portions thereof more particularly described below:

(1) Suite 650 : approximately 16,089 rentable square feet being part of the 6 ^th floor of the Building as shown on Exhibit B-7 hereto;

(2) Floor 13 : approximately 20,740 rentable square feet being the entire 13 ^th floor of the Building as shown on Exhibit B-8 hereto;

(3) Floor 14 : approximately 20,740 rentable square feet being the entire 14 ^th floor of the Building as shown on Exhibit B-9 hereto;

(4) Floor 15 : approximately 20,740 rentable square feet being the entire 15 ^th floor of the Building as shown on Exhibit B-10 hereto;

(5) Floor 17 : approximately 19,688 rentable square feet being the entire 17 ^th floor of the Building as shown on Exhibit B-11 hereto, which floor includes an equipment closet containing approximately 90 square feet, in the core controlled by Landlord through the earlier of vacation of the Floor by the 14,090 square foot tenant or July 31, 2008, which such tenant's lease expires; and

(6) Floor 18 : approximately 20,138 rentable square feet being the entire 18th floor of the Building as shown on Exhibit B-12 hereto. The outside Delivery Date for Floor 18 is August 1, 2008. Landlord will agree to relocate existing tenant with 3,996 rentable square feet but shall not be obligated to relocated.

(g) Hold Option Space : Means the "Floors" or portions thereof set forth below, subject to paragraph 9 below.

(1) Floor 3 : approximately 12,602 rentable square feet being the entire 3rd floor of the Building as shown on Exhibit B-13 hereto. The outside Delivery Date is June 30, 2011, subject to the existing tenant thereon timely vacating such space and subject to an existing tenant's rights to such space. Landlord will enforce the existing lease for such floor and use commercially reasonable efforts to cause such existing tenant to timely vacate such space upon the expiration or earlier termination of its lease.

(2) Floor 22 : approximately 21,154 rentable square feet being the entire 22 ^nd floor of the Building as shown on Exhibit B-14 hereto. The outside Delivery Date for Floor 22 is December 1, 2007, subject to the existing tenant thereon timely vacating such space. Landlord will enforce the existing lease for such floor and use commercially reasonable efforts to cause such existing tenant to timely vacate such space upon the expiration or earlier termination of its lease.

(3) Floor 30 : approximately 19,071 rentable square feet being the entire 30 ^th floor of the Building as shown on Exhibit B-15 hereto. The outside Delivery Date for Floor 30 is December 1, 2007, subject to the existing tenant thereon

timely vacating such space. Landlord will enforce the existing lease for such floor and use commercially reasonable efforts to cause such existing tenant to timely vacate such space upon the expiration or earlier termination of its lease.

(h) Building Address : Granite Tower

1099 18th Street

Denver, CO 80202

(formerly known as Denver Place Plaza Tower)

(i) Original Expiration Date : December 31, 2010

(j) Extended Expiration Date : April 30, 2018

(k) Scheduled Delivery Date of Suite 650 (floor 6) : Upon full execution of this Ninth Amendment

(l) Scheduled Delivery Date of Expansion Space - Floor 17 : June 1, 2007, subject to paragraph 6 below

(m) Scheduled Delivery Date of Expansion Space - Floors 13, 14 and 15 : September 1, 2007, subject to the existing tenant thereon timely vacating such space.

(n) Delivery Date : The actual delivery date as determined pursuant to Exhibit C hereto for each floor of the Expansion Space or Hold Option Space, as applicable. The Delivery Date for each floor will be confirmed by a Delivery Date Certificate substantially in the form of Exhibit D attached hereto.

(o) Capitalized Terms . Any capitalized term used in this Ninth Amendment but not defined in the Ninth Amendment has the meaning set forth for such term in the Original Lease.

2. Controlling Lease Documents . Except as specifically set forth in paragraph 5 below, as of the Effective Date, the term "Lease" shall mean the Original Lease and this Ninth Amendment and the First through Eighth Amendments, inclusive, shall be deemed terminated and replaced in their entirety by this Ninth Amendment.

3. New Landlord/Condominium .

(a) Landlord has succeeded to the interest of DSA under the Lease. Tenant has succeeded to the interest of Original Tenant under the Lease.

(b) As part of Landlord's succession to the interest of DSA under the Lease, the Building became part of a Block 95 Condominiums (the "Condominium Project"). The new legal description of the Building is set forth on Exhibit A hereto. All references in the Lease to the "Building" and/or "Property" shall be deemed to refer to the condominium unit described on such Exhibit A . The Building does not include the parking garage under the Building, which is a separate unit in the Condominium Project. All references in the Lease to the "Land," means the land which comprises the Condominium Project pursuant to the documents described on Exhibit A .

(c) Landlord represents and warrants to Tenant that the Operating Expenses and Taxes will not include the Operating Expenses and Taxes of any other unit in the Condominium Project and that any charges assessed against the Building by the Association of the Condominium Project will not be included in Operating Expenses or Taxes unless Landlord could include such charges in Operating Expenses and/or Taxes in the absence of the establishment of the Condominium Project.

(d) Neither Landlord nor an affiliate of Landlord owns the project known as Denver Place which is across Curtis Street from the Building ("Denver Place"). Accordingly, all references in the Lease to "Denver Place" or to a "Denver Place Lease" by Tenant for parking or premises at Denver Place (including, without limitation Sections 2l(h) and 40 of the Original Lease) are hereby deleted in their entirety.

4. Sixth Added Premises . Landlord and Tenant agree that the Sixth Added Premises Commencement Date was February 3, 2006.

5. Existing Space . As of the Effective Date, Tenant has possession of the Existing Space and accepts such space AS-IS

in its current condition without any obligation to provide any improvements thereto but subject to Landlord's obligation to provide to Tenant a tenant improvement allowance, the "Existing Space Allowance" of $3,304,416.00 ($32.00 per rentable square foot of the Existing Space) in accordance with Exhibit C attached hereto. From the Effective Date through December 31, 2007, Tenant will continue to pay Rent for the Existing Space in accordance with the Original Lease and the First through Eighth Amendments, inclusive. Except for such Rent obligations, from and after the Effective Date, the provisions of the Original Lease as amended by this Ninth Amendment will control.

6. Expansion Space .

(a) As of the Effective Date, Tenant desires to lease, and Landlord is willing to lease to Tenant, the Expansion Space on the terms and conditions of this Ninth Amendment. Subject to the next sentence, Landlord will deliver the Expansion Space to Tenant on or before the Scheduled Delivery Date (defined above for such floor) in the condition required by Exhibit C . Tenant acknowledges that Landlord does not have possession of all of Floor 13 and Floor 17 of the Expansion Space, that Landlord must recover such possession, and therefore the Scheduled Delivery Date for either or both of such Expansion Space floors may be delayed. If the delivery of either of Floors 13 or Floor 17 is delayed beyond its Scheduled Delivery Date (subject to the provisions of Schedule 1 ) Landlord will continue to use commercially reasonable efforts to deliver such floors, but Tenant will be entitled to additional rent abatement for each day of delay in delivery of such floors pursuant to Schedule 1 .

(b) Tenant acknowledges that it has had the opportunity to inspect the Expansion Space and agrees to accept the Expansion Space in its current "as is" condition subject to the provisions of Exhibit C and Landlord's obligation to provide a tenant improvement allowance of $40.00 per rentable square foot of the Expansion Space for improvements to the Expansion Space as set forth in Exhibit C hereto.

(c) From and after the applicable Delivery Date for a floor, all references in the Lease to the term "Premises" shall mean the Existing Space plus the Expansion Space and Hold Option Space delivered by such Delivery Date.

7. Extension of Term . As of the Effective Date, the term of the Lease is extended from the Original Expiration Date of December 31, 2010 to April 30, 2018 (the "Extended Expiration Date"). From and after the Effective Date, all references in the Lease to the "Term" shall mean the period ending on the Extended Expiration Date, as it may be extended or earlier terminated as provided in this Ninth Amendment. "Original Term" means the period from the Commencement Date through December 31, 2007. "First Extended Term" means the period from January 1, 2008 through the Extended Expiration Date.

8. Base Rent . As of January 1, 2008, the Base Rent for the Original Premises and the Expansion Space for the First Extended Term payable in accordance with Section 2 of the Original Lease is set forth on Schedule 1 attached hereto.

9. Hold Option Space .

(a) By written notice to Landlord given on or before June 30, 2007, Tenant will have the right to add all or any portion of the Hold Option Space to the Premises on the same terms and conditions as the lease of the Expansion Space provided that:

(1) The Base Rent for Floors 3, 22 and 30 of the Hold Option Space is set forth on Schedule 2 . Rent will commence for each floor of Hold Option Space on the later of May l, 2008 (after expiration of the rent abatement period), or the ninetieth (90 ^th day after the Delivery Date for such floor (the "Hold Space Rent Commencement Date").

(2) Any tenant finish allowance for the applicable floor of Hold Option Space will be the Expansion Space Allowance per square foot ($40.00) pro rated based on the Hold Space Rent Commencement Date for the applicable Hold Option Space over the remaining months in the First Extended Term as of such date;

(3) If Tenant does not timely notify Landlord of its desire to lease any portion of the Hold Option Space as set forth in this paragraph, the Hold Option Space will be subject to the Right of First Refusal and Preferential Right of First Refusal to lease as further described below.

(b) Tenant acknowledges that the delivery of the Hold Option Space is subject to Landlord's ability to recover possession of such Hold Option Space from existing tenants as described in paragraph (1)(g) above. Landlord will bear the cost to recover any of such Hold Option Space; however, Landlord will not have to deliver an applicable floor prior to the dates set forth in such paragraph (1)(g).

10. Adjustments to Base Year and Operating Expenses . Except as amended in this paragraph, the provisions of Section 4 of the Original Lease shall control:

(a) Base Year : In addition to paying Base Rent for the Premises as set forth above, Tenant shall pay as "additional rent," commencing January 1, 2008 an amount determined in accordance with Paragraph 4 of the Original Lease as amended by the next sentence. As of January 1, 2008, the "Operating Expense Base Amount'' and the "Tax Base Amount" will be the dollar amounts of Operating Expenses and Taxes, respectively per rentable square foot calculated by Landlord for the calendar year 2008, as they may be adjusted pursuant to subparagraph 4(a)(vii)(A) of the Original Lease. Landlord will advise Tenant in writing promptly upon their determination in early 2009. Commencing January l, 2009, Tenant will pay as "additional rent'' for the Premises Tenant's Proportionate Share (as defined below) of the increases, in Operating Expenses and Taxes, per rentable square foot, in excess of the Operating Expense Base Amount and Tax Base Amount, respectively.

(b) Tenant's Proportionate Share . Tenant's Proportionate Share of the Premises will be calculated in accordance with Section 4(a)(iv) of the Original Lease and amended as and when additional space is added to the Premises and Rent commences for such additional space.

(c) Adjustments for Condominium Project . In calculating "Taxes," the Lease will be deemed amended to reflect that the Land is now a Condominium Project and the Property/Building are Unit 1 of such Project.

(d) Management Fees . Management Fees will be calculated at market rate not to exceed three percent of Rent during each year of the First Extended Term. If the percentage basis for determining management fees during any year after the Base Year, increase over the percentage for the Base Year, in calculating Additional Expenses for the year of increase, Landlord will revise the Base Year expenses as though such higher rate was in effect for calculating management fees in the Base Year and for calculating Tenant's Proportionate Share of Additional Expenses for the years in which such fee is increased.

11. Parking .

(a) Original Premises Parking Rights . From the Effective Date through the Original Expiration Date, the provisions of Schedule 3 will apply to the cost of parking spaces for the Original Premises, i.e., for 15 reserved spaces and 153 non reserved spaces (the "Initial Parking Spaces"). As of January 1, 2011, the rate for the Initial Parking Spaces will be determined according to Exhibit F hereto.

(b) From January 1, 2008, through the Term of the Lease, for all square footage in the Premises in excess of the Original Premises square footage (81,189 rentable square feet), Tenant will have the right, in accordance with Exhibit F hereto, to lease 1.1 parking spaces in the Building Garage per 1,000 rentable square feet of the Premises in excess of the Original Premises square footage, of which 10% of such spaces may be reserved, at the rates set forth on Exhibit F , as adjusted from time to time.

(c) If additional parking spaces are available in the Parking Garage, from time to time, Landlord may offer Tenant a license to lease from the Parking Operator, up to an additional .9 parking spaces per 1,000 rentable square feet of the Premises (in excess of the Original Premises square footage of 81,189 rentable square feet), on a month to month basis, at the then market parking rates.

(d) Landlord agrees to assist Tenant in obtaining an additional 200 parking spaces in the surface lots or garages near the Building. Tenant will be responsible for directly contracting and paying for such spaces. Landlord has agreed to make available to Tenant from January 1, 2008 through December 31, 2010, as part of its assistance under this subparagraph, 78 unreserved parking spaces in the parking garage under 999 18th Street, at the market rates in effect in such garage from time to time.

(e) In the event Tenant desires to assign the Lease or sublease all or part of the Premises to an Affiliate (as defined in Section 15(e) of the Original Lease) or to any other third party, subject to any Landlord consent required pursuant to Section 15 of the Original Lease, Tenant will have the right to assign its parking rights hereunder. Tenant may not assign or sublease any parking spaces except in connection with an assignment of the Lease or sublease of the Premises

12. Renewal Option :

(a) If, and only if, on the applicable expiration date and the date Tenant notifies Landlord of its intention to renew the term of this Lease (as provided below), (i) Tenant is not in default after notice and opportunity to cure, and (ii) this Lease is in full force and effect, then Tenant, shall have and may exercise an option to renew this Lease ("Renewal Option") for a minimum of four (4) contiguous floors, up to and including, the entire Premises, beginning at lowest or highest floor levels in the Premises for up to twenty (20) years, in five (5) or ten (10) year increments, at Tenant's election (each a "Renewal Term"), upon substantially the same terms and conditions contained in this Lease with the exception that the rental rate in effect for any Renewal Term shall be the "Market Rate" (as defined in subparagraph (d) below).

(b) If Tenant desires to exercise its Renewal Option, Tenant must notify Landlord in writing of its intention to renew on or before the date which is at least twelve (12) months but no more than fifteen (15) months prior to the then applicable expiration date which notice shall include the period for which Tenant desires to exercise such right. Landlord shall, within the next fifteen (15) business days, notify Tenant in writing of Landlord's determination of the Market Rate for the requested period and Tenant shall, within ten (10) business days following receipt of Landlord's determination of the Market Rate, notify Landlord in writing whether (i) Tenant accepts or rejects Landlord's determination of the Market Rate or (ii) Tenant desires to negotiate such Market Rate as set forth below. If Tenant timely notifies Landlord of Tenant's acceptance of Landlord's determination of the Market Rate, this Lease shall be extended as provided herein and Landlord and Tenant shall, within ten (10) business days of such acceptance enter into an amendment to this Lease to reflect the extension of the term and changes in Rent in accordance with this paragraph 12. If Tenant elects to negotiate such Market Rate in accordance with subparagraph (c) below, Tenant shall be obligated to extend the Term for the period set forth in such notice.

(c) If Tenant elects to negotiate such Market Rate Landlord and Tenant will use good faith efforts to agree on such Market Rate within 45 days after Tenant's notice to negotiate. If Landlord and Tenant are unable to reach agreement on such Market Rate after good faith efforts to do so within such 45 day period, Landlord and Tenant shall, within ten (10) days thereafter, each appoint a "Qualified Appraiser" (as defined below), ("Landlord's Qualified Appraiser" and "Tenant's Qualified Appraiser," respectively). A "Qualified Appraiser" is a licensed real estate broker or an appraiser who is a member of the American Institute of Real Estate Appraisers, (i) who has at least ten (10) years experience in the Central Business District of Denver, Colorado in evaluating and negotiating rental rates for properties and tenancies of this size, and (ii) who has not previously worked for either party. If Landlord's Qualified Appraiser and Tenant's Qualified Appraiser are unable to reach agreement within fifteen (15) days after their appointment, they shall, within ten (10) days thereafter, appoint an additional Qualified Appraiser ("Additional Qualified Appraiser") with the same qualifications. Within 3 business days after the appointment of such Additional Qualified Appraiser, each of Landlord's Qualified Appraiser and Tenant's Qualified Appraiser will submit their respective written reports of the Market Rate applicable to the Premises to the Additional Qualified Appraiser. Within ten (10) days thereafter, the Additional Qualified Appraiser shall determine the Market Rate for the extended term, which will be the Market Rate proposed by Landlord's Qualified Appraiser or the Market Rate proposed by Tenant's Qualified Appraiser. If Landlord's Qualified Appraiser and Tenant's Qualified Appraiser do not agree upon and timely designate the Additional Qualified Appraiser, either Landlord or Tenant may request that the local office of the American Arbitration Association (or, if such organization or its successor shall no longer be in existence, a recognized national arbitration association mutually satisfactory to both parties), designate the Additional Qualified Appraiser, and the Additional Qualified Appraiser so designated shall, for all purposes, have the same standing and powers as though the Additional Qualified Appraiser had been initially appointed by Landlord's Qualified Appraiser and Tenant's Qualified Appraiser. Landlord and Tenant shall each bear the cost of its Qualified Appraiser and shall share equally the cost of the Additional Qualified Appraiser. Upon determination of the Market Rate as provided herein, Landlord and Tenant will execute an amendment to this Lease confirming the extension of the Term and the financial terms of the Market Rate. If the Market Rate is not determined prior to the date of the commencement of any Renewal Term, promptly upon its resolution, Landlord and Tenant will make any necessary rent adjustments.

(d) Market Rate : With respect to the Renewal Option and Preferential Right to Lease provisions hereunder, the applicable fair market value rental rate (the "Market Rate") shall be the then prevailing rents (including, without limitation, those similar to the Base Rent and Additional Rent) payable by tenants having a credit standing substantially similar to that of Tenant, for properties of equivalent quality, size, utility and location as the Premises, including any additions thereto, located within the Denver, Colorado Central Business District and leased for a term equal to the applicable term for which the Market Rate is being determined and taking into account market tenant inducements, such as, leasehold improvement allowances; abatements (including with respect to base rental, operating expenses and real estate taxes, and parking charges); the inclusion of parking charges in rental; lease takeovers/ assumptions; relocation/moving allowances; space planning/ interior architecture and engineering allowances; refurbishment and repainting allowances; club memberships; other concessions or inducements; extent of services provided or to be provided; distinction between "gross" and "net'' lease; base year or dollar amount for escalation purposes (both operating expenses and ad valorem/real estate taxes); any other adjustments (including by way of indexes) to base rental; term or length of lease; the time the particular rental rate under consideration was agreed upon and became or is to become effective; the payment of a leasing commission and/or

fees/bonuses in lieu thereof, whether to Landlord, any person or entity affiliated with Landlord, or otherwise; and any other relevant term or condition in making such Market Rate determination.

(e) Transferability . Tenant shall have the right to transfer this Renewal Option in connection with an assignment or sublease to an Affiliate or Qualified Transferee (as defined in paragraph 26 below).

13. Right of First Refusal . The provisions of Section 31 of the Original Lease shall continue in effect as amended by this paragraph 13.

(a) The Right of First Refusal "Offer Space" shall include all of the 3nl through 23n1 floors, inclusive, of the Building.

(b) If Tenant declines to lease the Designated Refusal Space, Landlord must reoffer the Designated Refusal Space to Tenant if the overall economic terms offered to the prospective tenant are less than 90% of the overall economic terms offered to Tenant, in addition to reoffering any Designated Refusal Space for which a lease is not executed within six (6) months after the date of Landlord's Refusal Notice to Tenant in accordance with the Original Lease.

(c) If Tenant elects to Lease the Designated Refusal Space, Tenant shall execute an amendment to this Lease to add such Designated Refusal Space at the Designated Refusal Space Rate and the Designated Refusal Space Allowance provided that:

(i) Any Designated Refusal Space Allowance will be disbursed to Tenant in accordance with Exhibit C hereto;

(ii) Rent will not commence on such Designated Refusal Space until the later of the 90 ^th day after the Delivery Date of such Space or the 90 ^th day plus any additional period of abatement included in the Designated Refusal Space Rate;

(iii) Designated Refusal Space will be delivered by Landlord in the condition required under Exhibit C hereto;

(iv) Tenant shall have the right to lease up to 1.1 parking spaces per 1,000 rentable square feet of the Designated Refusal Space (up to 10% of such spaces may be reserved), all at the prevailing market rates from time to time during the Term;

(v) If the term set forth in the offer is for more or less than the term remaining in this Lease, Landlord will propose the Market Rate for any different term so that the lease of the Designated Refusal Space becomes coterminous with this Lease provided any lease for the Designated Refusal Space is for at least a twenty-four (24) month term; if Tenant, after receiving Landlord's proposed Market Rate, elects to lease the Designated Refusal Space but objects to such Market Rate for the Designated Refusal Space proposed by Landlord for the period required to make the lease for such Designated Refusal Space coterminous, the provisions of subparagraph 12(c) above shall apply to determine such Market Rate.

(d) If Tenant declines to lease a Designated Refusal Space and thereafter Landlord timely enters into a lease for such Designated Refusal Space with a third party, Tenant's Right of First Refusal will lapse as to any such Designated Refusal Space, but such space will continue to be subject to Tenant's Right of First Offer as set forth in paragraph 14 below

(e) Tenant shall have the right to assign this Right of First Refusal, in whole, but not in part, only in connection with an assignment or sublease, to an Affiliate or Qualified Transferee.

14. Preferential Right of First Offer . In addition to Tenant's Right of First Refusal and subject to the terms of this paragraph 14, Landlord grants to Tenant a preferential right of first offer ("Right of First Offer") to lease any space ("Preferential Space"), in the Building which (i) is greater than 10,000 rentable square feet or (ii) is contiguous to space on a floor in the Premises regardless of its size, and is "Available for Direct Lease" (as defined below) at the Market Rate (as defined above).

(a) "Available for Direct Lease" shall mean vacant or not subject to any unexercised right by a third party; provided that if Tenant desires such space, Landlord will offer such space as required to trigger and resolve such third party right.

(b) Upon at least twenty (20) days' prior written request from Tenant ("Tenant's Request for Space"), which request shall remain valid for one (1) year from the date of such request, or within twenty (20) days after any Preferential Space is Available for Direct Lease and a Tenant's Request for Space is in effect, Landlord will notify Tenant ("Designated Offer Notice") of the availability of such Preferential Space (the "Designated Preferential Space") including date of availability and Landlord's good faith determination of the Market Rate for such Designated Preferential Space ("Landlord's Offer Notice"). Landlord's Offer Notice will contain terms coterminous with the term of this Lease provided that the minimum term offered shall be at least twenty-four (24) months. Within ten (10) business days after receipt of Landlord's Offer Notice, Tenant shall notify Landlord in writing of Tenant's intention to lease such Designated Preferential Space. If Tenant and Landlord are unable after good faith negotiations to agree on the Market Rate for such Designated Preferential Space within thirty (30) days thereafter, Tenant may either (i) decline to lease such Designated Preferential Space, or (ii) agree to lease such space subject to determination of the Market Rate for such Designated Preferential Space in accordance with sub- paragraphs 12(c) and (d) above.

(c) Tenant shall not be in default after notice and opportunity to cure, at the time of Landlord's Designated Offer Notice or the date at which such Designated Preferential Space is to be delivered to Tenant.

(d) Tenant shall have the right to lease up to 1.1 parking spaces per 1,000 rentable square feet of Designated Preferential Space (up to 10% of such spaces may be reserved), at the prevailing market rate for parking from time to time during the Term.

(e) Landlord will deliver the Designated Offer Space to Tenant in the condition required by Exhibit C and any allowance for improvements in the Market Rate shall be subject to Exhibit C . Rent for any such Offer Space will commence upon the 90"' day after the Delivery Date for such Offer Space subject to any abatement included in the Market Rate.

(f) If Tenant declines to lease the Designated Offer Space and Landlord does not enter into a lease for such Designated Offer Space within six (6) months thereafter, or offers such space on economic terms Jess than ninety (90%) percent of those offered to Tenant, Landlord will reoffer such space to Tenant when and if it is Available for Direct Lease.

(g) This Right of First Offer is assignable in whole, but not in part, in connection with an assignment or sublease to an Affiliate or Qualified Transferee.

15. Termination Options . This paragraph replaces in its entirety any termination option (partial or otherwise) set forth in the Original Lease. Tenant (so long as Tenant is not then in default hereunder after notice and opportunity to cure) shall have the right to terminate this Lease effective as of December 31, 2014 (the "Termination Date"), for up to three (3) contiguous floors or all of the Premises, beginning at the lowest or highest floor levels in the Premises, by delivery of a written termination notice (the "Termination Notice") to Landlord at least twelve (12) months prior to the Termination Date and identifying the floors to be terminated. In the event of any such termination, Tenant shall pay to Landlord, within thirty (30) days after Tenant's receipt of the Calculation Statement (as hereafter defined), fifty percent (50%) of the termination fee (the "Termination Fee") in the amount described below with the balance of the Termination Fee payable on or before July 1, 2014. The Termination Fee shall be equal to the sum of (i) an amount equal to twelve (12) months' Rent, plus (ii) the unamortized portion of (w) all improvements to the Premises paid for by Landlord (including any unamortized commissions and allowances for the Existing Premises), (x) all leasing and brokerage commissions and expenses relating to this Lease paid for by Landlord, (y) all design, construction, management and space planning fees and expenses relating to the construction or improvement of the Premises paid for by Landlord; and (z) unamortized free rent (for the period from January 1, 2008 through April 30, 2008) (the sum of the costs described in items (w), (x), (y) and (z) above being referred to as the "Total Costs"). The unamortized portion of the Total Costs shall be the balance of the Total Costs remaining to be amortized as of the Termination Date with the amortization period beginning on January 1, 2008, and ending on the Termination Date. Such amortization shall be calculated using the even payment method, without interest, and all such payments having been assumed to be made through the Termination Date. Within thirty (30) days after the Effective Date, Landlord will provide to Tenant a statement of the Total Costs which can be determined as of the Effective Date together with reasonable documentation of the same; thereafter when space is added to the Premises which is not included in the initial calculation, Landlord will advise Tenant of new Total Costs. Landlord's failure to timely notify Tenant of such Total Costs will not limit Tenant's obligation to pay any Termination Fee hereunder. If Tenant objects to Landlord's calculation of the Total Costs from time to time after meeting with Landlord to review the basis for such calculation, Tenant will have the right to require such Total Costs determination to be decided by arbitration. Within thirty (30) days after the delivery of the Termination Notice, Landlord shall prepare and deliver to Tenant Landlord's calculation of the Termination Fee (the "Calculation Statement''), which shall be final and binding, absent manifest error. Failure of Tenant to give timely notice as required above or to pay timely the Termination Fee, as noted in the Calculation Statement, within the respective time periods set forth herein, shall render this paragraph, and the rights contained herein, null and void and of no further

force or effect. Additionally, Tenant agrees to fully and faithfully perform all of its obligations under the Lease for the period commencing upon receipt of the Termination Notice up through the Termination Date. The rights under this paragraph 15 are transferable in whole only to an Affiliate

16. Use of Premises . Section 5 of the Original Lease is deleted in its entirety and replaced with the following:

(a) Tenant shall use and occupy the Premises for General Business Office use. "General business office" use shall be deemed to include kitchen and eating facilities (including coffee bars and vending machines), computer and telecommunications facilities, data processing and transmission, accounting facilities, conference and meeting facilities and other uses typically made by other office tenants in the geographic area.

(b) Tenant shall also have the right to use the lobby or other public areas of the Building (including the Plaza) for social or cultural events (not more than three (3) times per year subject to adequate notice to Landlord and compliance with Landlord's policies for such events, including, without limitation insurance and liquor liability requirements) and subject to approval by the Condominium Association, if required. All of such events shall be suitable for a first-class office building.

17. Additional Insurance for Tenant's Use . Notwithstanding the provisions of Section 6 of the Original Lease, if Tenant's use of the Premises is, in the opinion of the Building's insurer or an insurance organization, more hazardous than typical first class office use and requires the payment of additional insurance premiums, Tenant shall either cease such use or pay such additional premium as Landlord's sole remedy.

18. Services . As of the Effective Date, the provisions of Section 7(a) of the Original Lease are amended as follows:

(a) HVAC . The cost for Non-Business Hours RVAC Services shall be Landlord's actual out of pocket costs from time to time, and Section 7(a)(J) of the Original Lease is amended accordingly.

(b) Electricity . Section (7)(1)(ii)(A) and (B) of the Original Lease are amended to read as follows:

(A) the continuous total power consumption of such equipment does not exceed an average of 4.5 watts per usable square foot of the Premises over the entire Premises on an annualized basis (but if Tenant exceeds such amount the provisions of Section 7(b)(i)(B) shall apply;

(B) electricity furnished for such equipment uses a nominal 120 volts and no electrical circuit for the supply of such use need have a capacity in excess of 20 amperes excluding Tenant's existing right to use up to 200 amperes for the Computer Room pursuant to the Original Lease; and subject to availability of ampere capacity in the Building, to Tenant's compliance with code, and to separate metering, Tenant shall have the right to additional 480 volt connection (Landlord acknowledges that a 400 amperes 480 volt connection for exclusive use by Tenant exists on the 15 ^th Floor which is separately billed to the tenant and serviced by Xcel Energy).

(c) Elevator . Section 7(a)(v) is amended to read as follows: Two (2) automatic passenger elevators for service to the Premises at all times.

(d) Janitorial . If Tenant vacates a floor, Tenant shall have the right to notify Landlord to cease janitorial service on such floor and Tenant shall be entitled to a credit to that year's operating expenses attributable to the cost of such janitorial service which Landlord is no longer providing.

(e) Security . Landlord agrees to provide Building and Parking Garage security services at a level substantially similar to other first-class office buildings located in the Central Business District area of Denver, Colorado. In addition, Tenant shall have the right, at its sole expense, to install and maintain, within the Premises and outside the Premises for purposes of limiting or providing access to the Premises, an electronic card key access system, cipher Jocks, proximity card readers, palm readers, retinal scanner security devices, video cameras and/or such other security devices or personnel as may be approved by Landlord in writing, such approval not to be unreasonably withheld, conditioned or delayed and provided any such system will be compatible with existing Building systems. Landlord may require any such system to be removed upon the expiration or earlier termination of this Lease.

19. Additional Services . In addition to the services set forth in Section 7(b) of the Original Lease, Landlord will permit Tenant the following:

(a) Additional Supplemental HVAC Equipment : During the Term, in addition to the space utilized by Tenant as of the Effective Date, Landlord shall provide the required space in the Building (subject to availability of space) for Tenant's supplemental HVAC equipment. Such space shall be used for the installation of chillers, pumps, controls and electrical distribution equipment, as required, to supply the Premises with 24 hour, 7 days per week HVAC if required by Tenant. Expenses associated with the installation, operation, maintenance and insuring of such equipment shall be borne by Tenant.

(b) Additional Emergency Generator : During the Term and subject to approval by the City and County of Denver and compliance with applicable code, Landlord shall provide required space in or around the Building in a location mutually agreed upon, for an additional emergency generator, if required by Tenant. All expenses associated with the installation, operation, maintenance and insuring of such generator shall be borne by Tenant, including without limitation payment for any displaced parking or storage space. Tenant shall continue to have its rights and obligations regarding the existing generator pursuant to the Original Lease.

(c) Emergency Generator Fuel Supply : During the Term, but subject to applicable codes and approval by the City and County of Denver and analysis of the location by the Building's structural engineer, Landlord shall provide required space in or around the Building or Parking Garage for a fuel supply tank if required for any additional emergency generator. Tenant acknowledges that Tenant's existing generator uses a natural gas supply. Landlord does not represent that an acceptable location for such a tank exists in or around the Building in an area controlled by Landlord. Expenses associated with the installation, operation, maintenance and insuring of such tank shall be borne by Tenant, and Tenant acknowledges that Landlord will require additional insurance coverage is such a tank is installed. Tenant shall pay market rent equal to the equivalent parking spaces displaced if such tank must be located in the Parking Garage and takes up parking spaces.

(d) Riser Backup Power, Telecom : During the Term, Landlord shall permit Tenant the use of riser space in the Building (of a capacity not less than four 4-inch risers) from Tenant's emergency generator to a central distribution point in the Premises. Such riser space shall be used for installation of conduit containing control wiring and electrical distribution cabling used to supply the Premises with emergency power and for telecommunications wiring and fiber. There shall be no rental cost to Tenant for the use of such riser space, but Landlord shall not be obligated to construct additional riser space for Tenant's use nor shall such riser space be exclusive to Tenant. Expenses associated with the installation, operation, maintenance and insuring of the conduit shall be borne by Tenant, but there shall be no charge to Tenant for the abovementioned existing risers. If Tenant requires services from a new telecom provider who is not currently servicing the Building, arrangement for such services shall be subject to Section 27 of the Original Lease.

(e) Riser Chilled Water : During the Term, Landlord shall provide the required riser space from Tenant's external supplemental cooling package to Tenant's supplemental HVAC equipment located in the Premises. Such riser space shall be used for the installation of piping used to transport chilled water and required control wiring used to supply the Premises with such supplemental cooling. There shall be no rental cost to Tenant for the use of such riser space. Expenses associated with the installation, operation, maintenance and insuring of such equipment shall be borne entirely by Tenant.

20. Interruption of Services : The provisions of Section 7(c) of the Original Lease are restated in their entirety as follows to shorten the time frames previously set forth therein: Except as expressly provided otherwise in this Lease, Tenant agrees that Landlord shall not be liable for damages (by abatement of rent or otherwise) for failure to furnish or, for delay in furnishing, any service, or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, renewals, or improvements, by any strike, lockout or other labor trouble not directed solely against Landlord or its Affiliates, by inability to secure fuel, by governmental laws, regulations or orders, by Landlord's compliance, in whole or in part with any government promulgated program (whether voluntary or mandatory), for conservation of energy by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any cause beyond Landlord's reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant's use and possession of the Premises or relieve Tenant from paying rent or performing any of its obligations under this Lease. Landlord's obligation to furnish services shall also be further conditioned upon the availability of adequate energy sources from the public utility companies then servicing the downtown Denver area. Landlord agrees to use reasonable efforts to restore any suspended service as soon as possible. Notwithstanding the foregoing provisions of this subparagraph 7(c), Base Rent and any applicable Expense Adjustment Amount and Tax Adjustment Amount shall be abated in the event of the disruption of services in accordance with the following provisions: (i) in the case of interruption of electrical power to the Premises resulting in a shutdown of Tenant's computers, antennas, telephones, or other office equipment, if such interruption continues for three (3) consecutive days and as a result Tenant is not using the Premises (or the affected portion), then the Base Rent and any applicable Expense Adjustment

Amount and Tax Adjustment Amount for the Premises (or, if only a portion of the Premises is affected, prorated for such portion) shall be abated commencing on the first day following the third (3 ^rd ) continuous business day of such disruption until the service in question has been restored; (ii) in the case of the substantial failure of the water supply to the restroom or substantial failure of the HVAC system to the Premises or of any portion of the life safety system, and if such interruption continues for three (3) consecutive business days without Landlord having provided reasonable substitute temporary services, and as a result Tenant is not using the Premises (or portion affected) then Base Rent for the Premises and any applicable Expense Adjustment Amount and Tax Adjustment Amount (or, if only a portion of the Premises is affected, for such portion) shall be abated commencing on the first day following the third (3 ^rd ) consecutive business day of such disruption until the service in question has been restored. Notwithstanding the foregoing, [A] in the event that more than fifty percent (50%) of any floor included in the Premises is not used as a result of the disruption (other than by minimally necessary personnel), it shall be deemed that the entire floor is not used as a result of the disruption; and [B] and if more than fifty percent (50%) of the Premises is not used or deemed to be not used as a result of the disruption (other than by minimally necessary personnel), then all of the Premises will be deemed not used as a result of the disruption. If the disruption renders more than seventy-five percent (75%) of the Premises untenantable (i) for over thirty (30) consecutive business days when Landlord has, within its reasonable control, the ability to provide such utility or service, or (ii) for over 180 consecutive days in all other cases (except condemnation or casualty), then Tenant may upon delivery of written notice to Landlord, terminate this Lease which termination shall be effective upon Tenant's vacation from the Premises on the date specified in the notice which date shall be within thirty (30) days after delivery Tenant's notice to terminate.

21. Access to Premises . The provisions of Section 7(d) of the Original Lease are amended and restated in their entirety as follows: Subject to an event of casualty or condemnation or force majeure (provided Landlord shall at all times use commercially reasonable efforts to provide such access despite such conditions), Landlord shall provide Tenant with access to the Premises, the Building and the Parking Garage twenty-four (24) hours a day, seven (7) days a week; provided, however, that (i) Landlord may temporarily restrict access to the Premises, the Building and the Parking Garage as reasonably necessary to repair or maintain the Building or any Building systems (including, but not limited to, one 12-hour interruption each year for Building and systems maintenance upon prior written notice at least thirty (30) days prior to such scheduled shutdown, provided that to the extent commercially practicable Landlord will schedule such work during non-Business Hours and will coordinate the scheduling of any such work if it must occur during Business Hours in a manner that does not materially adversely affect Tenant's business from the Premises), and (ii) Landlord may establish reasonable and nondiscriminatory regulations for the exercise of access to the Premises during non-Business Hours (as long as access is not unreasonably restricted during such hours), for the safety of the tenants or occupants of the Building or for the protection of the Building. In the event Tenant is precluded from access to the Premises for three (3) consecutive business days not the result of a casualty or condemnation or force majeure (subject to Landlord's obligations to use commercially reasonable efforts to provide such access despite such condition), and as a result Tenant is unable to access and use the Premises (or portion affected), then Base Rent and any applicable Expense Adjustment Amount and Tax Adjustment Amount for the Premises (or if only a portion of the Premises is affected, for such portion) shall be abated commencing on the first day following the third (3 ^rd ) consecutive business day of such preclusion until access has been restored. Notwithstanding the foregoing, [A] in the event that Tenant is precluded from access to more than fifty percent (50%) of any floor included in the Premises, it shall be deemed that Tenant is precluded from access to the entire floor; and [B] if Tenant is precluded from access to more than fifty percent (50%) of the Premises, then it shall be deemed that Tenant is precluded from access to the entire Premises. Landlord will take all commercially reasonable efforts to restore all access as soon as practicable.

22. Hazardous Materials . Subparagraph 26(o)(i) of the Original Lease is hereby deleted in its entirety and replaced with the following (which language was included in the First Amendment and is restated in its entirety in this Ninth Amendment):

(i) The Landlord hereby represents that to the best of its knowledge, no Hazardous Materials (as defined below) are located in violation of applicable law within the Building or Parking Garage. In the event that Hazardous Materials are located in the Building or Parking Garage not as a result of Tenant's acts, omissions or negligence, and any action is required to be taken under any Environmental Law (hereinafter defined), then Landlord upon becoming aware thereof will promptly give written notice to Tenant that identifies the Hazardous Materials and the actions required to be taken and Landlord will take such action mandated by applicable law to bring the Building and Parking Garage into material compliance with applicable Environmental Laws within thirty (30) days or such longer period of time as is reasonably necessary after the requirement arises and will provide reasonable evidence of such compliance to the Tenant; provided, however, in the event such compliance or registration cannot reasonably be completed or obtained within such thirty (30) days, the Landlord will not be in default hereunder provided the Landlord commences such corrective action within said thirty (30) days and diligently pursues the same to completion. Notwithstanding the foregoing, in the event the presence of Hazardous Substances (for reasons other than the violation of Tenant's covenants under subparagraph 26(o)(ii)) renders all or any of the Premises untenantable for seven (7) consecutive business days, then Rent payable hereunder shall abate commencing on the eighth (8th) business day of such untenantability in whole (if the entire Premises is

untenantable) or in part (if only a portion of the Premises is untenantable) until the Premises are tenantable. For purposes of this subparagraph 26(o)(i), [A] in the event that more than seventy-five percent (75%) of any floor included in the Premises is untenantable, it shall be deemed that the entire floor is untenantable, but if more than fifty percent (50%) of any floor is included in the Premises is untenantable and Tenant is therefore unable to use the balance of such floor, then it shall be deemed that the entire floor is untenantable; and [B] if more than seventy-five percent (75%) of the Premises is untenantable, then all of the Premises will be deemed untenantable. If the period of untenantability shall continue for one hundred twenty (120) days, then Tenant, by notice to Landlord prior to the end of the period of untenantability may terminate this Lease.

23. Alterations . Subject to Tenant's compliance with the provisions of Section 8 of the Original Lease, Landlord acknowledges and agrees that Tenant shall have the right to incorporate special tenant improvements (in the way of improvements and/or upgrades) into the Building and the Premises, including, but not limited to, interconnecting stairwells (subject to applicable code), facilities for computers, separate, self-contained air conditioning systems (including rooftop equipment for same), conference and meeting room facilities, dining rooms and lunchrooms (including kitchens in support thereof, exercise/health, training and medical facilities, telephone equipment rooms, fiber optics, high-ceiling areas, and other special facilities, including security, incidental to Tenant's office operations, provided same shall be compatible with Landlord's base building systems, and subject to Landlord's consent, which consent shall not be unreasonably withheld, conditioned or delayed. Such special improvements, to the extent that same are for Tenant's sole use, shall be furnished and installed at Tenant's sole cost and expense. Tenant may have an obligation to remove or restore any special improvements added to the premises, which shall be determined based upon review and approval of each special tenant improvement, but shall in no event include doors, walls, floor coverings, wall coverings, window coverings, any typical office ceiling grid, panels or light fixtures or any other finish.

24. Signage . Notwithstanding anything to the contrary in the Original Lease, Landlord grants to Tenant the following signage and identity rights subject to the terms of this paragraph.

(a) Monument Sign . Tenant, at its sole cost and expense, shall have the top two tenant slots on the multi- tenant Building monument sign on 18 ^th Street (generally located as shown on Exhibit I hereto) with only "Granite Tower" above the Tenant's name," which sign may be in Tenant's customary font and provided further that no competitor of Tenant shall be named in the slot immediately below Tenant's name. Landlord agrees that it will not install any other exterior monument signage at the Building which provides for tenant identification without making the comparable top spaces available to Tenant. The foregoing monument sign is different from the Block Signage described on Exhibit I . Tenant shall have the right to transfer its rights to any of such spaces on any monument sign in connection with an assignment or sublease to an Affiliate or any transferee approved by Landlord pursuant to Section 15 of the Original Lease whose name and business are suitable for a first class office building.

(b) Facade Signage . Tenant, at its sole cost and expense, shall have the right to exclusive facade signage bearing the name "Anadarko" or Tenant's logo (substantially in the form shown on Exhibit I or other logo reasonably acceptable to Landlord) in the form of a backlit sign, at or near the top of the Building, subject to the approval of the City and County of Denver and compliance with all applicable codes and subject to Tenant's compliance with all of the following:

(1) Tenant and its Affiliates occupy at least seven (7) floors in the Building;

(2) Tenant is not in default under this Lease after notice and opportunity to cure; and

(3) Tenant installs, repairs and maintains such signage in accordance with provisions of Exhibit I attached hereto.

(4) Tenant shall have the right to assign or transfer this facade signage right solely in compliance with paragraph 25 below.

25. Qualified Transferee . Section 38 of the Original lease is amended and restated in its entirety as follows: Notwithstanding any provision to the contrary set forth in the Original Lease:

(a) the following rights are transferable to an Affiliate or Qualified Transferee"

(1) Renewal Option; provided Tenant confirms its liability under the Lease for any such renewal period and the area of the Premises assigned or sublet; and

(2) Right of First Refusal; provided Tenant transfers the right in its entirety.

(b) Qualified Transferee means (i) an Affiliate or (ii) a third party assignee or subtenant who is approved by Landlord pursuant to Section 15 of the Original Lease and who also meets all of the following criteria:

(1) Leases and fully occupies seven (7) or more floors of the Building;

(2) Has a reputation and business appropriate for a first class office building; and

(3) Is a Fortune 500 or similarly qualified company.

(c) Tenant shall have the right to assign or otherwise transfer its facade signage rights (set forth in subparagraph 24(b) above) only to an Affiliate who otherwise qualifies as a Qualified Transferee, or to a third party Qualified Transferee whose name, in Landlord's reasonable approval, is appropriate for a first class office building and will not negatively impact the Building's market value.

26. Maintenance/Common Area Appearance . Notwithstanding anything to the contrary set forth in the Original Lease, Landlord covenants and agrees that during the Term:

(a) The appearance of any space leased on the ground floor or any other public area of the Building such as the interior plaza level ("Public Area") shall be suitable and appropriate for first class office buildings in the Central Business District of Denver, Colorado;

(b) Without the prior written consent of Tenant, which shall not be unreasonably withheld, no competitor of Tenant shall be permitted to lease space in any Public Area or to signage rights in any Public Area or the Parking Garage with the exception of such competitor's name on (i) permitted monument signage pursuant to subparagraph 24(a), (ii) the information directory on which all tenants are named, and (iii) its reserved parking spaces;

(d) Landlord confirms its obligation under the Original Lease to maintain or to correct, if required by applicable code as a result of a notice of violation or as a requirement of any building permit and approval sought by Tenant to complete its improvements or alterations in the Premises from time to time during the Term, at Landlord's expense and subject to any permitted pass through as an Operating Expense, the Building's restrooms, elevators and public access areas in compliance with the ADA; provided that any such ADA compliance issues which arise because of the special needs of Tenant, its agents or employees, shall be a Tenant obligation and expense.

27. Consent . In all cases where the consent or approval shall be required or requested of either Tenant or Landlord pursuant to the Lease, the giving of such consent or approval shall not be unreasonably withheld, conditioned or delayed by the party from whom such consent is required or requested.

28. Waiver of Landlord's Lien . Notwithstanding any provision to the contrary set forth in the Original Lease, Landlord waives any statutory or other lien in any and all goods, wares, equipment, fixtures, furniture, improvements and other personal property of Tenant now or later situated on the Premises and all proceeds thereof. Tenant's personal property may be removed from the Premises without Landlord's consent at any time.

29. Fire or Casualty . Section 11 of the Original Lease is amended as follows:

(a) Landlord will deliver its notice of the time required to repair the Premises or Building within ten (10) business days after the date of such damage. If Landlord's notice states that the damage to the Premises or Building (if Tenant's use and access is materially impaired), cannot be repaired within one hundred eighty (180) days of the date of such damage, Landlord will have the right to terminate the Lease in such notice. If Landlord does not elect to terminate the Lease and Landlord's notice provides that repairs cannot be made within one hundred eighty (180) days, Tenant will have ten (10) business days after receipt of Landlord's notice to terminate this Lease. If neither Landlord nor Tenant elects to terminate this Lease, Landlord will promptly commence and diligently commence to repair such damage in accordance with such Section 11. Tenant will have another right to terminate the Lease by written notice to Landlord, if Landlord fails to complete such repairs within two hundred ten (210) days following such damage,

unless conditions outside of Landlord's control (e.g. force majeure) result in delay and Landlord is diligently pursuing such repair. Notwithstanding the foregoing, Tenant shall also have the right to terminate this Lease if more than three (3) floors of the Premises are materially damaged during the last twelve (12) months of the Term

30. The 3-Month Holdover . In clarification of the provisions of Section 16(a) of the Original Lease, the right of Tenant to elect a three (3) month holdover will only apply to any part of the Term, including a Renewal Term, if Tenant has not exercised a Renewal Option to extend the Term of the Lease beyond its then current expiration date.

31. Satellite Equipment : Section 35 of the Original Lease is amended to provide as follows:

(a) For the period up to the Extended Expiration Date, Tenant will have space on the roof for up to two (2) thirty-six inch (36") rooftop satellite dishes without charge; Tenant will continue to pay for electricity for such dishes.

(b) If Landlord elects to relocate the Satellite Equipment at Landlord's cost, the Satellite Equipment will be relocated to a location reasonably acceptable to Landlord and Tenant so that the equipment is still operational.

(c) Except in an emergency, Landlord will notify Tenant if any repairs, maintenance or alterations to the roof of the Building will impact Tenant's equipment and Landlord shall use commercially reasonable efforts to minimize any impact on the operation of the equipment.

(d) Landlord agrees to use commercially reasonable efforts to facilitate resolution of interference with any other rooftop equipment, including relocation, if necessary.

(e) Landlord has no obligation to provide any additional roof space for Tenant's equipment.

32. Landlord Default . In addition to the provisions of Section 26(h) of the Original Lease, Landlord agrees that in the event of an emergency, or other event which threatens life or safety, or that materially adversely affects Tenant's use of the Premises to which Landlord fails to respond within 24 hours after notice from Tenant, Tenant shall have a self-help right to take such commercially reasonable actions to cure the problem and the right to require Landlord to pay for the costs thereof. If Landlord fails to timely pay after written notice to Landlord and Landlord's Mortgagee, Tenant may offset such amounts against rent in addition to Tenant's existing offset right for any Tenant allowance properly requested by Tenant, and Landlord's failure to pay after notice and opportunity to cure.

33. Landlord Assignment . Notwithstanding any contrary provision in the Original Lease, upon a transfer by Landlord, Landlord shall not be released from liability until the transferee agrees to assume all of Landlord's obligations under the Lease in writing and Tenant receives written notice of the transfer.

34. Late Payment/Interest . Notwithstanding any contrary provision in the Original Lease, if Tenant fails to pay timely any Rent due hereunder, Landlord agrees to waive one (1) late payment fee in any twelve (12) month period, but interest shall accrue on the unpaid amount from the date due until paid.

35. No On-Demand Payments . Notwithstanding any contrary provision in the Original Lease, any amounts payable by Tenant to Landlord "on-demand" shall not be due and payable until thirty (30) days after Landlord's delivery to Tenant of an invoice therefore.

36. Landlord Reserved Rights . Notwithstanding the provisions of Section 19 of the Original Lease, Landlord will use commercially reasonable efforts, in the exercise of its reserved rights, to minimize interference with Tenant's access to and use of its Premises, the Building and Tenant's parking spaces hereunder. In the event Landlord enters the Premises pursuant to Section 19 of the Original Lease, Landlord agrees (i) to provide at least 24 hours prior written notice (except in the event of an emergency, in which case, notice will not he required), (ii) Tenant may designate a representative to accompany Landlord or its agents, (iii) Tenant's access to the Premises shall not be blocked; (iv) Tenant's computer equipment shall not be moved or operated by Landlord, its agents, contractors or employees; and (v) Landlord shall use commercially reasonable efforts not to disrupt Tenant's use of the Premises and will use all commercially reasonable efforts to minimize interference with Tenant's operations and prosecute to complete Landlord's work in a timely manner. In the event Tenant's use of the Premises is materially, adversely affected for more than fifteen (15) consecutive days due to Landlord's entry pursuant to this Section, Tenant's Rent shall be proportionately abated until Landlord's work is completed.

37. Insurance . As of the Effective Date, Tenant will provide to Landlord a Certificate of Insurance evidencing Tenant's compliance with its existing coverage evidenced on Exhibit G hereto. Tenant agrees that it will carry the insurance evidenced on such certificate during the term of the Lease, and will, from time to time, upon Landlord's request, provide updated certificates of insurance reflecting such coverage. Tenant acknowledges that since Tenant is a Fortune 500 company, Landlord has permitted Tenant to self-insure as set forth on such Exhibit G notwithstanding the provisions of the Original Lease which do not permit Tenant to so self-insure. This permission to self-insure is granted to Anadarko Petroleum Corporation only.

38. Delivery Date Certificate . Within thirty (30) days after the Delivery Date of one or more floors of the Expansion Space or Hold Option Space, Tenant will execute, acknowledge, and deliver to Landlord the Delivery Date Certificate substantially in the form attached hereto as Exhibit D .

39. Rules and Regulations . Notwithstanding anything to the contrary set forth in the Original Lease, as of the Effective Date, Landlord and Tenant acknowledge and agree that:

(a) Tenant has received a copy of the new Rules and Regulations for the Building attached hereto as Exhibit E .

(b) In the event of any conflict between the provisions of the Rules and Regulations and the provisions of this Ninth Amendment or the Original Lease, the provisions of this Ninth Amendment or the Original Lease, as applicable, shall control.

(d) No amendments to the Rules and Regulations will materially increase the economic obligations of Tenant under the Lease or materially adversely affect Tenant's use and occupancy of the Premises.

40. Subordination and Nondisturbance .

(a) Within sixty (60) days after execution and delivery of this Ninth Amendment by Tenant to Landlord together with the Subordination Agreement attached hereto as Exhibit H , Landlord will obtain an original of such Subordination Agreement executed by its lender, Principal Life Insurance Company.

(b) Landlord hereby confirms its agreement to and obligations pursuant to subparagraphs 18(b) and 18(c) of the Original Lease. Landlord agrees that Tenant's obligation to subordinate to any "future mortgage" (as defined in the Original Lease) shall be conditioned upon Landlord obtaining for and delivering to Tenant an agreement in recordable form and in a form reasonably acceptable to Landlord, Tenant, and the holder of such future mortgage for the Building (which shall not diminish Tenant's rights of offset provided in subparagraph 26(h) of the Original Lease as amended by this Ninth Amendment), executed by the holder of any such future mortgage.

41. Notice . Notwithstanding any contrary provisions of the Original Lease, the addresses for Landlord and Tenant for Rent (excluding parking rent) and notices hereunder are as set forth below:

Tenant: John A. Frere, III

Anadarko Petroleum Corporation

1201 Lake Robbins Drive

The Woodlands, Texas 77380

with a copy to: Facilities Manager

Anadarko Petroleum Corporation

1099 18th Street, Suite 1200

Denver, Colorado 80202

with a copy to: James P. Bailey, Jr.

Cushman & Wakefield of Texas, Inc.

1330 Post Oak Boulevard, Suite 2700

Houston, Texas 77056

Landlord: Cumberland Office Park, LLC

5800 Granite Parkway, Suite 750

Plano, Texas 75024

Attention: John D. Anderson

with a copy to: Cumberland Office Park, LLC

c/o Granite Properties, Inc.

1099 18th Street, Suite 2960

Denver, Colorado 80202

Attention: Stephanie Lawrence

Landlord Rent Address:

Envelope for Courier or Overnight Delivery

(use address below of inside envelope)

Wells Fargo Lockbox

Ref: Lockbox 1807 - Granite Properties, Inc.

1700 Lincoln Street, Lower Level 3

Denver, Colorado 80274

Envelope for Mail Delivery :

Cumberland Office Park, LLC

Wells Fargo Lockbox

Ref: Lockbox 1807 - Granite Properties, Inc.

1700 Lincoln Street, Lower Level 3

Denver, Colorado 80274

Via EFT

Bank Name: Wells Fargo Bank, NA

ABA Number 121000248

Account Name: Granite Properties, Inc.

Account Number: 4945061919

Reference: Granite Tower Suite 1200

42. Broker . Each of Landlord and Tenant represents and warrants to the other that neither has dealt with any broker or agent in negotiating this Ninth Amendment except Frederick Ross Company (Landlord's broker) and Cushman & Wakefield of Texas, Inc. (Tenant's broker) (collectively, the "Brokers"). Landlord will pay any commission owed to the Brokers pursuant to a separate agreement. Each of Landlord and Tenant will indemnify and hold the other harmless from all damages paid or incurred by the other resulting from any claims asserted against such party by brokers or agents claiming through the other party.

43. Executive Order . As of the Date, Tenant represents and warrants to Landlord that (a) Tenant is not listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Asset Control Department of the Treasury ("OFAC") pursuant to the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the "Order") or on any other lists of terrorist or terrorist organizations ("Lists") issued pursuant to the rules and regulations of OFAC or in any other enabling legislation or other Executive Orders in respect thereof (the Order and such other rules, regulations, legislation or orders are collectively called the "Orders"); (b) Tenant is not and will not be engaged in any activities prohibited in the Orders; (c) Tenant has not been convicted or pleaded nolo contendere to charges related to activity prohibited in the Orders; and (d) Tenant will not permit the Premises to be used for activities prohibited in the Orders nor permit the Premises to be occupied by any person on such Lists.

44. Reaffirmation of Lease Terms . Tenant and Landlord agree that the terms, covenants, and conditions of the Lease shall remain and continue in full force and effect as amended herein. Tenant confirms that Landlord is in compliance with the Lease provisions and that Tenant does not have any defenses, claims or offsets against Landlord as of the date hereof. As of the date hereof, Tenant waives and releases Landlord and its agents and employees, from any and all claims, demands, damages, actions, causes of action, or suits of any kind or nature whatsoever, known or unknown, arising out of or in connection with the Lease and/or the use or occupancy of the Existing Space prior to the date hereof. Except as specifically modified in this Ninth Amendment, the Lease remains

in full force and effect. If there is any conflict between the terms and provisions of this Ninth Amendment and the terms and provisions of the Original Lease, the terms and provisions of this Ninth Amendment shall govern

45. Authority . Each of Landlord and Tenant represents and warrants to the other that the person executing this Ninth Amendment on behalf of such party is duly authorized to do so. As of the Effective Date, Tenant represents and warrants to Landlord that (a) there are no subleases, assignments, or other agreements between Tenant and any third party concerning or affecting the Lease or the Existing Space or any portion thereof; and (b) Tenant has not assigned, conveyed, pledged, or granted any interest in the Lease or any portion of the Existing Space to any person or entity.

45. Miscellaneous Provisions .

(a) Governing Law . The governing Jaw of this Ninth Amendment and all provisions hereunder shall be governed by and construed in accordance with the laws of the State of Colorado.

(b) Complete Agreement . This Ninth Amendment contains all agreements, understandings and arrangements between the parties hereto with regard to the matters described herein.

(c) Benefit . Subject to the limitations on Tenant's assignment and subleasing provided in the Lease, this Ninth Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

(d) Amendment . This Ninth Amendment may not be amended except in writing signed by the parties hereto.

(e) Headings . The paragraph headings of this Ninth Amendment are for reference only and shall not be deemed to alter or affect the meaning of the terms hereof.

(f) Binding Effect . This Ninth Amendment becomes effective only upon the execution and delivery by Landlord and Tenant.

(g) Time . Time is of the essence hereof.

(h) Survival . All covenants, agreements, representations and warranties as set forth in this Ninth Amendment shall survive the termination of the Lease as amended herein.

(i) Counterparts . This Ninth Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

(j) Exhibits . The following schedule and exhibits are attached to and incorporated in this Ninth Amendment:

Schedule 1 Monthly Base Rent for the Premises

Schedule 2 Monthly Base Rent for the Option Space

Schedule 3 Original Parking Rates Through December 31, 2010

Schedule 4 2007-2008 - Scheduled Building Improvements

Exhibit A Legal Description of Building

Exhibit B Premises

Existing Space

Exhibit B-1 9 ^th Floor Layout of the Building

Exhibit B-2 10 ^th Floor Layout of the Building

Exhibit B-3 11 ^th Floor Layout of the Building

Exhibit B-4 12 ^th Floor Layout of the Building

Exhibit B-5 16 ^th Floor Layout of the Building

Exhibit B-6 20 ^th Floor Layout of the Building

Expansion Space

Exhibit B-7 Suite 650 on the 6 ^th Floor of the Building

Exhibit B-8 13 ^th Floor Layout of the Building

Exhibit B-9 14 ^th Floor Layout of the Building

Exhibit B-10 15 ^th Floor Layout of the Building

Exhibit B-11 17 ^th Floor Layout of the Building

Exhibit B-12 18 ^th Floor Layout of the Building

Hold Option Space

Exhibit B-13 3 ^rd Floor Layout of the Building

Exhibit B-14 22 ^nd Floor Layout of the Building

Exhibit B-15 30 ^th Floor Layout of the Building

Exhibit C Work Letter

Exhibit D Delivery Date Certificate

Exhibit E Rules and Regulations

Exhibit F Parking Agreement

Exhibit G Insurance Certificate

Exhibit H Subordination Agreement

Exhibit I Tenant Exterior Sign on Building and Monument Sign Locations

The undersigned have executed this Tenth Amendment as of the Effective Date.

LANDLORD:

Cumberland Office Park, LLC , a Georgia limited liability company

By: GPI Tower, Ltd., a Texas corporation, its sole member

By: SF Realty, Inc., a Texas corporation, its general

partner

By: /s/ Stephanie T. Lawrence

Name: Stephanie T. Lawrence

Title: Vice President - Managing Director - Denver

TENANT:

Anadarko Petroleum Corporation ,

a Delaware corporation

By: /s/ John A. Frere III

Name: John A. Frere III

Title: Real Estate and Facilities Manager

SCHEDULE 1



Granite Tower
Annual Base Rental Rate for Existing Space and Expansion Space per RSF per Year
Period		Base Rent Excluding Suite 650	Base Rent for Suite 650
From	To	Base Rent Excluding Suite 650	Base Rent for Suite 650
1/1/2008	4/30/2008	Abated	Abated
5/1/2008	12/31/2008	$21.91	$23.75
1/1/2009	12/31/2009	$22.17	$24.34
1/1/2010	12/31/2010	$22.44	$24.95
1/1/2011	12/31/2011	$25.58	$25.58
1/1/2012	12/31/2012	$26.22	$26.22
1/1/2013	12/31/2013	$26.87	$26.87
1/1/2014	12/31/2014	$27.55	$27.54
1/1/2015	12/31/2015	$28.23	$28.23
1/1/2016	12/31/2016	$28.94	$28.94
1/1/2017	12/31/2017	$29.66	$29.66
1/1/2018	4/30/2018	$30.40	$30.40
Base Rent for any particular Expansion Space Floor will begin on the later of 5/1/08 or 120 days from Delivery Date for such floor at the rate set forth above as of such date. Rent for all Premises will be abated from January 1, 2008 to April 30, 2008, subject to the paragraphs below. If Tenant receives delivery of floors 13, 14 or 15 prior to 9/1/07, then Tenant shall pay $36,024.88 per month per floor (which is Sprint's current rent) through 8/31/07 (the "Early Delivery Rent") with no additional rental due until May 1, 2008. The Early Delivery Rent shall be paid, at Tenant's option, from the Expansion Space Allowance or on May 1, 2008. If Floor 13, 14 or 15 is not delivered by September 1, 2007, Tenant will be entitled an additional abatement of Base Rent of $2,817.43 per day per Floor for each day after such date, until Floor 13, 14 or 15 is delivered. If Floor 17 is not delivered by June 1, 2007, Tenant will be entitled an additional abatement of Base Rent of $2,817.43 per day for each day after such date, until Floor 17 is delivered. Rent for Floor 18 will commence one hundred twenty (120) days after the Delivery Date for Floor 18 at the rate set forth above as of such date.

Schedule 1

SCHEDULE 2



Granite Tower
Hold Option Space Annual Rental Rate per RSF
Period		Base Rent For Floor 3	Base Rent For Floor 22	Base Rent For Floor 30
From	To
05/01/08	12/31/08	$20.75	$26.75	$29.75
01/09/09	12/31/09	$21.27	$27.42	$30.49
01/01/10	12/31/10	$21.80	$28.10	$31.26
01/01/11	12/31/11	$22.35	$28.81	$32.04
01/01/12	12/31/12	$22.90	$29.53	$32.84
01/01/13	12/31/13	$23.35	$30.27	$33.66
01/01/14	12/31/14	$22.90	$31.27	$34.50
01/01/15	1:2/31/15	$23.48	$31.80	$35.36
01/01/16	12/31/16	$24.06	$32.59	$36.25
01/01/17	12/31/17	$24.67	$33.41	$37.15
01/01/18	04/30/18	$26.56	$34.24	$38.08

Rent commences for any Hold Option Space ninety (90) days after the Delivery Date for such space, but no earlier than May 1, 2008 (after expiration of the rent abatement period).

Schedule 2

SCHEDULE3

ORIGINAL PARKING RATES THROUGH DECEMBER 31, 2010


Initial Parking Spaces :	Parking Rates as of 1/1/07, subject to increases as set forth below.


Reserved Spaces: 15	$185.00 per reserved space- subject to increase below


Non-Reserved Spaces: 153	$125.00 for unreserved space - subject to increase below

(a) the monthly rental rate for unreserved Initial Parking Spaces shall be $85.00 per parking space during the first two (2) years of the Original Term, $125.00 per Initial Parking Spaces during the third (3rd) through and including the fifth (5th) year of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $125.00; and

(b) the monthly rental rate for reserved Initial Parking Spaces shall be $100.00 per Initial Parking Space during the first two (2) years of the Original Term, $185.00 per Initial Parking Spaces during the third (3rd) through and including the fifth (5th) years of the Original Term and thereafter at the monthly rates posted from time to time by the Operator; provided, however, that such rates shall not increase by more than five percent (5%) per annum on a cumulative basis based on the rate in the fifth year of the Lease in the amount of $185.00.

These rates expire December 31, 2010 and thereafter the Initial Parking Spaces will be subject to the rates then in effect pursuant to Exhibit F for the Expansion Space Parking Spaces.

Schedule 3

SCHEDULE4

2007-2008 - Scheduled Building Improvements



Item	Description
Elevator Cabs (1)	Refurbishment of tower elevator cabs including new textured glass, laminate back walls and new carpet. Completion scheduled 2007.
Main Lobby Lighting (1)	Enhanced lighting with new pendant fixtures and wall sconces. Installation scheduled 2/07.
Building Entry Signage (1)	Signage band across exterior entrance to enhance building identity. Installation scheduled second quarter 2007.
Block Signage (2)	Design and installation of freestanding major monument sign at corner of 18 ^th & Curtis Street, angled for visibility from both directions and listing block amenities.Complimentary signs also to be installed at corner of 18 ^th & Arapahoe and 19 ^th & Arapahoe. Locations shown on Exhibit I .
Plaza Redesign (3)	Design exterior plaza and stair renovation. Implementation of plan scheduled in 2008 after opening of Ritz-Carlton and signature restaurant and establishment of pedestrian traffic patterns.
Plaza Level Retail	Determine potential retail uses for Plaza level to coordinate with plaza redesign.


(1)	We have samples and/or designs of these items available for Tenant's review.


(2)	The Block Signage scheduled for completion in 2007 is used to identify the major components on the block (apartments, hotel, athletic club, office building) and consequently, will not be subject to Tenant's review and is subject to approval by the Condominium Association.


(3)	Plaza Redesign: Landlord will submit plans and/or renderings for the Plaza Redesign ("Plaza Redesign Plans") which Landlord plans to submit to the Condominium Association ("CA") (for CA approval) to Anadarko for Anadarko's review and comment. Tenant acknowledges that Landlord does not have final authority over the design, cost, implementation or timing.

Schedule 4

EXHIBIT A

BUILDING LEGAL DESCRIPTION

Unit 1, BLOCK 95 CONDOMINIUMS, according to the Master Declaration of Block 95 Condominiums recorded August 31, 2005 under Reception No. 2005147039, as amended by the Amended and Restated Master Declaration of Block 95 Condominiums recorded December 19, 2005 at Reception No. 2005215222, and the Condominium Map thereof recorded August 31, 2005 under Reception No. 2005147040, as amended by the Amended and Restated Condominium Map recorded on December 19, 2005 at Reception No. 2005215223, in the records of the Clerk and Recorder of the City and County of Denver, State of Colorado.

Exhibit A

EXHIBIT B-1

9 ^TH FLOOR LAYOUT OF THE BUILDING

Exhibit B- 1

EXHIBIT B-2

10 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 2

EXHIBIT B-3

11 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 3

EXHIBIT B-4

12 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 4

EXHIBIT B-5

16 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 5

EXHIBIT B-6

20 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 6

EXHIBIT B-7

SUITE 650 ON THE 6 ^TH FLOOR LAYOUT OF THE BUILDING

Exhibit B- 7

EXHIBIT B-8

13 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 8

EXHIBIT B-9

14 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 9

EXHIBIT B-10

15 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 10

EXHIBIT B-11

17 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 11

EXHIBIT B-12

18 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 12

EXHIBIT B-13

3 ^rd FLOOR LAYOUT OF THE BUILDING

Exhibit B- 13

EXHIBIT B-14

22 ^nd FLOOR LAYOUT OF THE BUILDING

Exhibit B- 14

EXHIBIT B-15

30 ^th FLOOR LAYOUT OF THE BUILDING

Exhibit B- 15

EXHIBITC

1099 18th Street

WORKLETTER

1. Conflicts: Terms . If there is any conflict or inconsistency between the provisions of the Ninth Amendment and those of this Exhibit C , (the "Work Letter"), the provisions of this Work Letter will control. Except for those terms expressly defined in the Work Letter, all initially capitalized terms will have the meanings stated for such terms in the Ninth Amendment. The following terms have the meanings indicated:

(a) "Scheduled Delivery Date" means the dates set forth in the Ninth Amendment for a Floor.

(b) "Delivery Date" the actual date of the delivery of the applicable floor of the Expansion Space in accordance with subparagraph 3(a) below.

(d) "Tenant's Representative" means John Frere.

(e) "Landlord's Work" means all alterations, improvements and installations to the Expansion Space to be completed by Landlord, at its sole cost and expense, from time to time, pursuant to paragraph 3 below.

(f) "Tenant's Improvements" means all alterations, leasehold improvements and installations to be constructed or installed by Tenant in the Premises, from time to time, according to this Work Letter.

(g) "Building Standard" means those certain component elements utilized in the design and construction of improvements in the Building that have been pre-selected by Landlord to ensure quality, function and appearance throughout the Building (which elements may include, but are not limited to, ceiling systems, doors, hardware, walls, floor coverings, finishes, window coverings, light fixtures and HVAC components).

2. Representatives . Landlord appoints Landlord's Representative to act for Landlord in all matters covered by the Work Letters. Tenant appoints Tenant's Representative to act for Tenant in all matters covered by the Work Letters. All inquiries, requests, instructions, authorizations and other communications with respect to the matters covered by the Work Letters will be made to Landlord's Representative or Tenant's Representative, as the case may be. Tenant will not make any inquiries of or requests to, and will not give any instructions or authorizations to, any other employee or agent of Landlord, including Landlord's architect, engineers and contractors or any of their agents or employees, with regard to matters covered by the Work Letters. Either party may change its Representative under the Work Letters at any time by three (3) days' prior written notice to the other party.

3. Landlord Obligations .

(a) Delivery Conditions . These conditions apply to any space in the Premises, excluding the Existing Premises. On or before the Scheduled Delivery Date for the applicable Floor, Landlord will deliver such Floor and any other space to be delivered by Landlord from time to time under the Lease in its AS-IS condition except as set forth herein:

(1) broom-clean, floors vacuumed and with any prior tenant's personal property removed; and

(2) floors level to a standard of ½ inch over a 10 foot distance, non-cumulative, and if a floor does not meet this standard upon the Delivery Date, Landlord will, at its sole cost and expense, correct the level of such floor, as reasonably necessary, during construction of Tenant's Improvements on such floor.

(b) ADA Restrooms . If, in connection with Tenant's improvements to any of the Premises pursuant to this Exhibit C, a condition to obtaining a building permit and Approval by the City and County of Denver, alterations are required to a floor's restrooms for ADA compliance, which requirement is not the result of a special Tenant need, Landlord, at its sole cost and expense, will make such alterations in a manner acceptable to Landlord to satisfy such code issue. Tenant will cooperate with Landlord to permit Landlord to timely and efficiently complete such work.

Exhibit C - 1

(c) Window Replacement . Tenant acknowledges that certain exterior windows in the Premises may have to be replaced as a result of prior damage. Landlord is completing such work in compliance with OSHA and insurance requirements arising out of the incident. Tenant will cooperate with Landlord to permit such replacement in a timely and efficient manner in connection with Tenant's work hereunder if practicable.

4. Prior Access .

(a) So long as the applicable Expansion Space is vacant, Landlord grants to Tenant, along with its employees, agents, contractors, subcontractors, space planner/interior architect, engineers, consultants, suppliers and other representatives, and their respective employees, a license to enter any of such space at any time prior to the Scheduled Delivery Date for the purposes of inspecting same, and for the installing of "building standard" and non-"building standard" leasehold improvements therein, as well as the installing of furniture, fixtures and equipment (including telephone, communications and computer equipment, further including wiring and cabling for same). It is the intention of Landlord and Tenant that all Expansion Space be delivered to Tenant at the earliest possible date notwithstanding such date may be earlier than the Scheduled Delivery Date.

(b) Such right of prior access shall also include access to and use of loading dock facilities, and freight elevator(s), as well as access to and use of appropriate electrical and other systems and related facilities, provided such entry and work shall be in harmony with Landlord's contractors and subcontractors, and shall not unreasonably interfere with or delay completion of the work to be performed by Landlord in the Premises or elsewhere in the Building.

(c) Except as otherwise set forth on Schedule 1 , (for early delivery of Floors 14 or 15) there shall be no obligation on the part of Tenant to pay Base Rent, or Tenant's pro rata share of Operating Expenses and Taxes, by reason of any such prior access.

(d) There shall be no charge to Tenant, its contractors or their subcontractors for electricity, beating, ventilation, air conditioning, Building Standard security, insurance (except as relates to work which Tenant and/or its contractors or their subcontractors may undertake in the Premises, including general liability coverage and which shall otherwise comply with Schedule C-1 attached hereto) and/or taxes during the construction period, or for the use of the loading dock or freight elevator(s), or the personnel required for the operation thereof, during the construction period or otherwise prior to the commencement date of the Lease for the Initial Premises or any additional space leased by Tenant in the Building during the Term, as applicable.

5. Construction Plans . Tenant agrees to construct in and upon the Premises the Tenant's Improvements in accordance with the provisions of this Work Letter. From time to time after execution of this Ninth Amendment, Tenant shall submit to Landlord for Landlord's approval plans, specifications, and a cost estimate for construction of the Tenant's Improvements for an area of at least one full floor per request ("Tenant's Buildout Proposal"). Landlord will approve or disapprove in writing the Tenant's Buildout Proposal within three (3) business days after receipt from Tenant and, if disapproved, Landlord shall provide Tenant with specific reasons for disapproval. If Landlord fails to approve or disapprove the Tenant's Buildout Proposal on or before the end of such three (3) business day period, Landlord shall be deemed to have approved the last submitted Tenant's Buildout Proposal. The foregoing process shall be repeated until Landlord has approved (which shall include deemed approval) the Tenant's Buildout Proposal for the submitted area (such Tenant's Buildout Proposal, when approved by Landlord and Tenant, is herein referred to as the "Construction Plans").

6. Outside Contractors . Subject to Landlord's approval, which consent shall not be unreasonably withheld, conditioned or delayed, with respect to the construction work to be performed in the Premises, Tenant shall have the right to undertake both "building standard" and non-"building standard" leasehold improvements within the Premises (except where same relate to base building structural and/or mechanical systems) through outside contractors of its own choosing, subject to Landlord's approval, which approval shall not be unreasonably withheld, conditioned or delayed, provided the entry and work on the part of such outside contractors (i) shall be in coordination with Landlord's contractors and their subcontractors, (ii) shall not unreasonably interfere with or delay completion of the work to be performed by Landlord in the Premises or elsewhere in the Building, (iii) subject to reasonable Landlord's Construction Rules and Regulations and in compliance with Landlord's reasonable insurance requirements, provided that, (iv) Outside Contractor will not be allowed for structural engineering and Tenant agrees to utilize Landlord's contractor (currently Martin & Martin) provided that such costs are market.

Exhibit C - 2

7. Construction . Tenant will construct the Tenant's Improvements in a good and workmanlike manner, using only experienced contractors, architects, and other consultants subject to Landlord's reasonable approval and compliance with Landlord's insurance requirements. Even if Landlord has permitted Tenant and its architects and contractors access to the Premises in order for Tenant to prepare the Tenant's Buildout Proposal and/or Construction Plans and to prepare for construction of the Tenant's Improvements, Tenant shall not commence the actual construction of Tenant's Improvements until (1) Tenant has obtained the necessary government permits, and (2) Tenant has furnished to Landlord proof of insurance coverage as hereinafter described. Upon Tenant's request, Landlord will promptly provide to Tenant such drawings, plans, documents, and other technical information in Landlord's possession or subject to Landlord's control which relate to the Building (including but not limited to the structural, plumbing, electrical, HVAC, utilities, reserved water capacity, and other features of the Building) and which may be necessary or convenient for Tenant's preparation of the Tenant's Buildout Proposal, Construction Plans, and/or applications for government permits. All work for the Tenant's Improvements shall be carried out by Tenant's contractor under Tenant's direction, in compliance with the contractor rules and regulations reasonably promulgated by Landlord from time to time. Tenant has received a copy of such rules and regulations in effect as of the Effective Date. Tenant warrants that the Tenant's Improvements shall conform to the Construction Plans and to the requirements of all applicable laws, including building, plumbing, and electrical codes and other requirements (such as ADA compliance, if not Landlord's obligation pursuant to paragraph 3 above), of governmental authorities with jurisdiction over the Tenant's Improvements. Tenant shall timely pay all claims for labor or materials furnished for the Tenant's Improvements at the Premises, and shall not allow any mechanic's or materialman's lien or claim for lien to be justly filed against the Premises in connection with the Tenant's Improvements.

8. Insurance . Tenant's contractor shall carry the following insurance coverage: (a) commercial liability insurance against claims for personal injury or death or property damage occurring in or about the Premise, with coverages of not less than $1,000,000.00 per occurrence, as more particularly described on Schedule C-1 ; (b) builder's risk insurance covering the replacement value of Tenant's Improvements; and (c) auto liability insurance in an amount of at least $500,000 per occurrence, as more particularly described on Schedule C-1 . Such insurance shall expressly insure both Tenant and, as additional insured, Landlord and the Property Manager.

9. Permitted Costs. Finish and Additional Allowance .

(a) Tenant shall bear the costs and expenses for the preparation of Tenant's Buildout Proposal and Construction Plans, obtainment of permits, and construction of Tenant's Improvements. However, Landlord shall reimburse to Tenant a finish allowance set forth below (the "Finish Allowance"), to be disbursed from Landlord to Tenant to pay "Permitted Costs" as defined below, in installments no more frequently than monthly upon receipt of documentation below and subject to 10% retainage from each draw with the final ten percent (10%) retainage paid upon receipt of all required close out documents, which include, but not limited to a Final Inspection by the City of Denver, lien waivers, as-builts, product data, etc. as reasonably required by Landlord. Tenant's requests to Landlord for disbursement of a Finish Allowance installment shall include documentary evidence of the costs and expenses paid out to-date by Tenant for the Tenant's Improvements. "Permitted Costs" means (1) the contract sum required to be paid to the general contractor engaged to construct Tenant's Improvements (the "Contract Sum"), (2) the fees of the preparer of the Engineering Plans and the Construction Plans, and (3) payment of the Construction Management Fee (hereinafter defined). No "Construction Management Fee" shall be payable to Landlord if Landlord is not required to do more than review and approve plans and disburse the Finish Allowance. If Tenant requests construction management services, the rates set forth in subparagraph (d) shall apply.

Finish Allowance : means any and all of the following:

(1) Existing Space Allowance : $32.00 per rentable square foot.

(2) Expansion Space Allowance : $40.00 per rentable square foot.

(3) Hold Space Allowance : prorated Expansion Space Allowance based on Hold Space Rent Commencement Date for applicable Hold Option Space over remainder of the First Extended Term.

(b) Additional Allowance . So long as Tenant is not in default under the Lease (after notice and opportunity to cure) and if the cost of Tenant's Improvements exceeds the Finish Allowance, Tenant may request that Landlord provide up to an additional $10.00 per rentable square foot of the Expansion Space (the "Additional Allowance"), to be applied to Excess Costs in accordance with this paragraph 4. Upon receipt of a request from Tenant for such Additional Allowance, Landlord will notify Tenant in writing (the "Additional Allowance Notice") of the adjusted basic rent (the "Adjusted Basic Rent") determined pursuant to this

Exhibit C - 3

paragraph to incorporate the Additional Allowance. The Adjusted Basic Rent will be the sum of Basic Rent due under this Lease plus the Additional Allowance Factor. The "Additional Allowance Factor" shall be the total Additional Allowance amortized over the 184- month term of the Lease for the Expansion Space at a rate of 9% per annum. Upon receipt of the Additional Allowance Notice, Tenant will have five (5) days to notify Landlord, in writing, of Tenant's acceptance of the Additional Allowance Notice. If Tenant accepts the Additional Allowance Notice, Tenant will execute an amendment to this Lease so confirming the Adjusted Basic Rent within 30 days of receipt of same from Landlord. Tenant's obligation to pay the Adjusted Basic Rent shall commence on the first day of the month following the execution of the Lease amendment and be retroactive to the Delivery Date. If Tenant fails to apply all the Additional Allowance to the cost of Tenant's Improvements, Tenant will have no right to the use of any excess Additional Allowance and the Adjusted Basic Rent will be reduced accordingly. In the event Tenant fails to request the Additional Allowance on or before December 31, 2008, or fails to deliver to Landlord written notice of Tenant's acceptance or rejection of the Additional Allowance Notice, Tenant's option for any Additional Allowance shall terminate.

(c) If Tenant does not use all of the Existing Space Allowance or the Expansion Space Allowance (excluding any Additional Allowance), Tenant shall have the right to apply any of such unused Allowance to the payment of Rent hereunder; Tenant represents to Landlord that Tenant will apply substantially all of such Allowances or out-of-pocket funds in an amount equal to substantially all of such Allowances to the cost of Improvements of the Premises.

(d) Construction Management Fee if Tenant requests Landlord to supervise the Tenant's Improvements.

(1) Existing Space, Expansion Space and Hold Option Space: 2% of the costs of Tenant's Improvements.

(2) All other space:



$0 - $1,000	0%
$1,001 - $10,000	6%
$10,001 - $50,000	5%
$50,001 - $100,000	4%
$100,001+	3%

10. As-Builts . Within sixty (60) days after completion of Tenant's Improvements for a phase of construction (for example, all the Expansion Space), Tenant will provide to Landlord a copy of the CADD file containing the as-builts of such phase of construction, including Mechanical/Electrical/Plumbing (MEP) CADD files.

Exhibit C - 4

SCHEDULE C-1

G RANITE P ROPERTIES , I NC.

A DDITIONAL I NSURED E NDORSEMENT- G ENERAL C ONTRACTORS

I SO E NDORSEMENT AND CGL P OLICY

CERTIFICATE REQUIREMENTS:

The Certificate of Insurance must:


•	List Granite Properties and Partnership entity as additional insured on all liability policies;


•	state that Contractor's policy is primary and non-contributory;


•	state what endorsement form policy being used for additional insured; (see sample on next page)


•	state that umbrella is follow form.

THE FOLLOWING ENDORSEMENTS ARE ACCEPTABLE:

1. CG 20.10.11.85

2. CG 20.37.10.01 with either CG 20.10.10.00 or CG 20.33.10.01

3. CG 70.85.07.02

THE FOLLOWING ENDORSEMENTS ARE NOT ACCEPTABLE:


1.	CG 20 10 10 01 edition - Additional Insured coverage for "your ongoing operations" only . not "your work". Now specifically states in accord with the Pardee Construction decision that coverage is excluded for completed operations (and therefore Construction Defect Liability) for additional insureds.

CG 20 33 10 01 edition - Additional Insured coverage on an automatic basis for "your ongoing operations". Now specifically states in accord with the Pardee Construction decision that status as an insured under this endorsement ends when operations are completed. Specifically excludes coverage for professional liability for design and supervision, as well as completed operations (and therefore does not cover Construction Defect Liability) for additional insureds.

CG 22 94 10 01 edition - Blanket endorsement for all exposures removing the exception to the "your work" exclusion under Exclusion L of Section 1, Coverage A. This is the exception that reads "This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.: With the exception to the exclusion removed, there is NO COVERAGE for damage to the GO's work even when done by subs.


4.	CG 22 95 10 01 edition - Scheduled endorsement similar to 22 94 above but for specific sites or operations.

Schedule C-1, Page 1

Schedule C-2, Page 2

EXHIBIT D

DELIVERY DATE CERTIFICATE

This Acceptance of Premises Memorandum is being executed pursuant to that certain Ninth Amendment (the "Ninth Amendment") dated ____________ , 2007 between Cumberland Office Park, LLC, a Georgia limited liability company, ("Landlord") and Anadarko Petroleum Corporation ("Tenant"), pursuant to which Landlord leased to Tenant and Tenant leased from Landlord approximately ______________ rentable square feet of additional space ________________________in the office building located at 1099 18th Street, Denver, Colorado 80202 (the "Building"). Landlord and Tenant hereby agree that:

1. The Delivery Date of the Floor ________ is _________________________ , 20 ___ .

2. The Expiration Date of the Lease is April 30, 2018.

3. All capitalized terms not defined herein shall have the meaning assigned to them in the Ninth Amendment.

Agreed and executed this _______ day of ___________________________ , 2007.

LANDLORD:

Cumberland Office Park, LLC , a Georgia limited liability company

By: GPI Tower, Ltd., a Texas corporation, its sole member

By: SF Realty, Inc., a Texas corporation, its general

partner

By:

Name:

Title:

TENANT:

Anadarko Petroleum Corporation

By:

Name:

Title:

Exhibit D

EXHIBIT E

RULES AND REGULATIONS

Note: In the event of any conflict between these Rules and Regulations and a tenant's lease, the provisions of the lease control.

2. The sidewalks, walks, plaza entries, corridors, concourses, ramps, staircases, escalators and elevators of the Building shall not be obstructed or used by Tenant, or the employees, agents, servants, visitors or licenses of Tenant for any purpose other than ingress and egress to and from the Premises. No bicycle or motorcycle shall be brought into the Building or kept on the Premises without the prior written consent of Landlord.


3.	Tenant, its subtenants and its and their customers, invitees, licensees, and guests:

(a) shall not make noises, cause disturbances, create vibrations, odors or noxious fumes or use or operate any electrical or electronic devices or other devices that emit sound waves or are dangerous to other tenants and occupants of the Building or that would interfere with the operation of any device or equipment or radio or television broadcasting or reception from or within the Building or elsewhere, and shall not place or install any projections, antennae, aerials or similar devices inside or outside of the Premises;

(b) shall not place objects against glass partitions or doors or windows or adjacent to any open common space which would be unsightly from the Building corridors or from the exterior of the Building, and will promptly remove the same upon notice from Landlord;

(c) shall not waste, and shall not suffer or permit to be wasted, electricity or water and shall cooperate fully with Landlord to assure the most effective operation of the Building's heating and air conditioning;

(d) shall neither install nor operate machinery or any mechanical devices of a nature not directly related to Tenant's ordinary use of the Premises without the written permission of the Landlord;

(e) shall not use rest rooms or water fixtures for any purpose other than that for which they are designed;

(f) shall not mark upon, paint, cut, drill into, drive nails or screws into, or in any way deface the walls, ceiling partitions or floors of the Premises or of the Building; and

(g) shall not unduly obstruct any pipes, conduits and ducts in the Premises.

4. Only persons authorized by Landlord will be permitted to furnish newspapers, ice, drinking water, towels, barbering, shoe shining, janitorial services, floor polishing and other similar services and concessions to Tenant, and only at hours and under regulations fixed by Landlord.

5. Canvassing, soliciting or peddling in the Building and/or Building is prohibited, and Tenant shall cooperate to prevent same.

6. Tenant shall not do any cooking (other than warming in a microwave oven) or conduct any restaurant, luncheonette, automat or cafeteria for the sale or service of food or beverages to its employees or to others, or permit the delivery of any food or beverage to the Premises, except by such persons delivering the same as shall be approved by Landlord and only under regulations fixed by Landlord. Tenant may, however, operate a coffee bar by and for its employees.

7. No birds, fish tanks, or animals, except service animals, are allowed in the Building.

Exhibit E – 1

keys shall be returned to Landlord upon the termination of this Lease, and Tenant shall give to Landlord explanations of the combinations of all safes, vaults and combination locks remaining with the Premises. Landlord may at all times keep a pass key to the Premises. All entrance doors to the Premises shall be left closed at all times and left locked when the Premises are not in use. Landlord agrees to furnish to Tenant, at Landlord's expense, 2 CardKeys for access to the Building during such times as the Building is not open to the public. Upon written request from Tenant, or other parties authorized by Tenant, Landlord will furnish additional CardKeys to Tenant at Tenant's expense. Should any CardKeys be lost or stolen, Tenant will immediately notify Landlord and Landlord will issue replacement CardKeys with a different computer code number. Such replacement CardKeys will be at Tenant's expense.

9. Tenant shall not bring or permit to be brought or kepi in or on the Premises or Building any inflammable, combustible, corrosive, caustic, poisonous, or explosive substance, or cause or permit any odors to permeate in or emanate from the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of light, radiation, magnetism, noise, odors and/or vibrations, or interfere in any way with other tenants or those having business in the Building.

10. Tenant shall use no other method of beating or cooling, including, without limitation, space heaters or funs, than that supplied by Landlord.

11. No freight, furniture or bulky matter of any description will be received into the Building or carried into the elevators except in such a manner, during such hours and using such elevators and passageways as may be approved by Landlord, and then only upon having been scheduled in advance. Any band trucks, carryalls, or similar equipment used for the delivery or receipt of merchandise or equipment shall be equipped with rubber tires, side guards and such other safeguards as Landlord shall require.

12. Smoking shall not be permitted in any areas of the Premises or the Building (including but not limited to the parking garage, elevator lobbies, elevators, public corridors and restrooms), or within three feet of the exterior entrance to any doorway or entryway of the Building. Smoking shall only be permitted in those areas which have been designated as public smoking areas.

13. No window shades, blinds, screens, draperies or other window coverings will be attached or detached by Tenant without Landlord's prior written consent. Tenant agrees to abide by Landlord's rules with respect to maintaining uniform curtain, draperies and/or linings at all windows and hallways.

14. Landlord shall have the right to exclude any person from the Building other than during Business Hours, and any person in the Building will be subject to identification by employees and agents of Landlord. All persons in or entering the Building shall be required to comply with the security policies of the Building. If Tenant desires any additional security service for the Premises, Tenant shall have the right (with the advance written consent of Landlord) to obtain such additional service at Tenant's sole cost and expense. Tenant shall keep doors to unattended areas locked and shall otherwise exercise reasonable precautions to protect property from theft, loss or damage. Landlord shall not be responsible for the theft, loss or damage of any property or for any error with regard to the exclusion from or admission to the Building of any person. In case of invasion, mob, riot or public excitement, Landlord reserves the right to prevent access to the Building during the continuance of same by closing the doors or taking other measures for the safety of the tenants and protection of the Building and property or persons therein.

15. Only workmen employed, designated or approved by Landlord may be employed for repairs, installations, alterations, painting, material moving and other similar work that may be done in or on the Premises. Tenant will refer all contractors, contractor's representatives and installation technicians rendering any service on or to the Premises for Tenant to Landlord for Landlord's approval and supervision before performance of any contractual service. This provision shall apply to all work performed in the Building including installation of cabling, telephones, computer equipment, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings equipment or any other physical portion of the Building.

16. Tenant shall give notice to Landlord, as soon as reasonably practicable, in case of theft, unauthorized solicitation or accident in the Premises or in the Building or of defects therein or in any fixtures or equipment, or of any known emergency in the Building.

17. The requirements of Tenant will be attended to only upon application of Landlord in the Building or at such other address as may be designated by Landlord in the Lease. Employees of Landlord shall not perform any work or do anything outside of their regular duties, unless under special instructions from the office of Landlord.

Exhibit E – 2

18. Landlord reserves the right to exclude or expel from the Building any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of the Rules and Regulations of the Building.

19. Tenant, its employees, agents, contractors, and invitees will comply with the rules and regulations of the Association regarding the use and occupancy of the common areas of the Condominium Project.

20. The "UPS/Battery Backup System Rules and Regulations" attached hereto are incorporated in these Rules and Regulations.

21. Landlord reserves the right to modify and make such other and further reasonable rules and regulations as in its judgment may, from time to time, be needful and desirable for the safety, security, care and cleanliness of the Premises and preservation of good order therein.

Exhibit E – 3

UPS/BATTERY BACKUP SYSTEM RULES AND REGULATIONS

A. General Guidelines–

Tenant shall operate all equipment that is specified as "Stored Electrical and Standby Power Systems" in a safe and reasonable manner and follow manufacturer's operating, replacement, and maintenance instructions. Systems covered in this policy are used for standby power, emergency power, or uninterruptible power supplies ("UPS") and may include different type of batteries (including individual systems for stand-alone desktop computers), conductors, disconnecting means and over-current protective devices, transfer switches, and all control, supervisory, and support devices up to and including the load terminals of the transfer equipment needed for the system to operate with a safe and reliable source of electrical power (collectively, a "System").


2.	Installation of all Systems must comply with all national, state, and city local Codes.

Tenants operating a System must take the required steps during any equipment failure to protect life safety, personal and real property. If System equipment is showing signs of a problem (which in Landlord's reasonable discretion threatens the health and safety of the Building and its tenants), and the appropriate personnel in charge of the equipment cannot be located, Building Management, as Agent for Landlord, is authorized to take any reasonable action, including removal of batteries from service and/or activating the emergency power-off ("EPO") switch to remove such equipment from the main Building electrical grid and/or by utilizing any other service disconnects available. Building Management and/or Landlord will have no liability to Tenant for actions taken hereunder in connection with an actual or threatened System failure.


4.	If a System does not require an annual permit from the Fire Department because of equipment size, Landlord will require evidence that the tenant/owner of such System maintains the System batteries and equipment per the manufacturer's instructions.

B. Tenant's Required Preventive Measures– Each Tenant with a System must:


1.	Have a battery failure response policy.


2.	Have available proper spill containment products, when applicable.


3.	Train staff concerning policy and when to use containment products.


4.	Identify all battery products and quantities. Determine what placards and permits are required by your fire district and/or Building Management.


5.	Identify and properly label all EPO and battery disconnects in the Premises.


6.	Maintain and verify battery room temperature and chare voltages.


7.	Perform at least quarterly maintenance inspections per IEEE-1188 (recommended practice for maintenance, testing, and replacement of valve-regulated lead-acid batteries for stationary applications).


8.	Submit to Landlord annually, on the anniversary date of tenant's lease, a copy of tenant's preventive maintenance inspection and policies as set forth above.

C. Required Actions Upon Threatened or Actual System Failure–


1.	Call the Fire Department.


2.	Activate EPO. This is REQUIRED by Fire/Building Codes. The EPO cuts power to and from the UPS and terminates all power to the room. Should tenant be reluctant to activate the EPO, Landlord's Agent or designated contractor has the authority to do so, in order to protect tenant and the Building.


3.	Contact Building Management.


4.	Contain spill.


5.	Call service technician who is to properly dispose of the failed batteries.

D. Disposal–Small UPS/Battery Unit


1.	Follow the Universal Waste Guidelines established by the EPA. Spent lead-acid battery becomes a waste product. To find technical requirements, visit www.epa.gov/epaoswer/hazwaste/id/univwast/wasts.

Exhibit E – 4


2.	End-of-life electronic equipment from your business can no longer be accepted for disposal at municipal solid waste landfills. As a result, you are responsible for meeting all of the applicable requirements for locating a hazardous waste disposal facility that can accept this waste. Visit www.grxrecycles.com for your recycling needs.

E. For Your Information, Signs of Battery Failure Include–


1.	Strong rotten-egg smell (gassing)


2.	Hissing or popping sounds from the jar (gassing)


3.	Excessive heat in one or more cells (also known as thermal runaway) (hot cells too hot to touch)


4.	Fire or melting of the posts or jar cases (fire or smoke)


5.	Exploded or severely damaged jars.

Exhibit E – 5

EXHIBIT F

PARKING AGREEMENT

Cumberland Office Park, LLC, a Georgia limited liability company, as Landlord, and Anadarko Petroleum Corporation, as Tenant, have executed simultaneously with this Ninth Amendment to Lease dated February 16, 2007 (the "Ninth Amendment'') pursuant to an existing lease (collectively, the "Original Lease" and the Ninth Amendment thereto are referred to as the "Lease") pertaining to certain space in the building located at 1099 18th Street, Denver, Colorado (the "Building"), to be occupied by Tenant. In consideration of the mutual covenants herein contained, Landlord and Tenant further agree as follows:

Below the Building in which the Premises are located is a parking garage for the benefit of tenants and the general public (hereinafter called "Parking Garage"). Landlord does not operate or manage the Parking Garage, but maintains a management agreement with an independent contractor (hereinafter called "Operator") for the management and operation of the Parking Garage. In order to rent parking spaces in the Parking Garage, Tenant must contract separately with the Operator for such rentals.

(a) Landlord has previously made available to Tenant 168 spaces of which 15 are reserved (the "Initial Parking Spaces") and for which the rates are set pursuant to Schedule 3 to the Ninth Amendment through December 31, 2010.

(b) Landlord shall make available for Tenant, and Tenant shall have a non-assignable option to rent from the Operator, up to 1.1 unreserved parking spaces per rentable square foot of the Expansion Space pursuant to this Ninth Amendment of which 10% of such spaces may be reserved (the "Expansion Space Parking Spaces") located in the Parking Garage at the prevailing monthly rate posted by the Operator as of January 1, 2008, as increased from time to time; provided that the parking rate for the Expansion Space Parking Spaces for the period from January 1, 2008 through December 31, 2012, shall not increase over the rate as of January 1, 2008 by more than 10% per year compounded annually.

(c) Commencing January 1, 2011, the parking rate for the Initial Parking Spaces will be the then effective rate for the Expansion Space Parking Spaces, including the cap in effect through 2012.

(d) Commencing January 1, 2013, the rate for all parking spaces will be the then market rate from time to time.

(e) Any additional spaces added during the Term shall be at the market rate in effect as of the date that such spaces are added.

(f) Tenant must exercise its option for parking spaces by renting the Parking Spaces for the Term directly from the Operator within ninety (90) days after the Delivery Date for the square footage to which such spaces relate.

(g) The Parking Spaces shall only be used by Tenant's employees, contractors or licensees working at the Building.

The terms and conditions of Tenant's rental shall be governed and fixed solely by the rental agreement between Tenant and Operator, however, Tenant's failure to comply with any term of any such rental agreement shall constitute a default under the Lease. In the event that Tenant chooses to rent the Parking Spaces from the Operator as provided for herein, Tenant shall be responsible for payment to the Operator of a refundable security deposit for each parking card issued by the Operator in connection with Tenant's. rental of the Parking Spaces (the "Security Deposit"). The Security Deposit shall be in an amount to be determined by the Operator in its sole discretion. Notwithstanding anything in this Agreement or the Lease to the contrary, in no event shall Landlord be responsible for payment of the Security Deposit to the Operator on behalf of Tenant. Payment and refund of the Security Deposit shall be governed and fixed solely by the rental agreement between Tenant and Operator. Landlord's holding of Parking Spaces shall not constitute any assumption of and Tenant hereby releases Landlord from any and all liability with respect to such rentals, and any and all damage, Joss or injury with respect to such rentals shall be at the sole risk of Tenant unless otherwise provided by Operator under the rental agreement.

The provisions of this Agreement with respect to the Parking Spaces supplement but are subject to all provisions of the Ninth Amendment. Capitalized terms not otherwise defined in this Agreement have the same meaning as the same terms have in the Ninth Amendment.

Exhibit F



LANDLORD:		TENANT:

Cumberland Office Park, LLC , a Georgia limited liability company		Anadarko Petroleum Corporation

By: GPI Tower, Ltd., a Texas limited partnership, its sole member

By: SF Realty, Inc., a Texas corporation, its general partner		By /s/ Robert K. Reeves Name Robert K. Reeves Title Gen Counsel & Chief Admin Offcr
By /s/ Stephanie T. Lawrence Name Stephanie T. Lawrence Title Vice President - Managing Director - Denver

Exhibit F

Exhibit G

Insurance Certificate

Exhibit G - 1

Exhibit G - 2

EXHIBIT H

Subordination, Non-Disturbance and Attornment Agreement

Record and return to:

Principal Life Insurance Company

801 Grand Avenue

Des Moines, IA 50392-1360

ATTN: Debra Reinard

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the _______ day of _________________ ,2007, by and between PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, with a principal office at c/o Principal Real Estate Investors, LLC, 801 Grand Avenue, Des Moines, Iowa 50392-1360 (hereinafter called "Lender"), CUMBERLAND OFFICE PARK, LLC, a Georgia limited liability company, with its principal office at 5800 Granite Parkway, Suite 750, Plano, Texas 75024 (hereinafter called "Lessor"), and Anadarko Petroleum Corporation (successor-in-interest to Western Gas Resources, Inc.), with its principal office at 1099 18th Street, Suite 1200, Denver, Colorado 80202 (hereinafter called "Lessee");

WITNESSETH:

WHEREAS, Lessee has by a written lease of dated as of July 30, 2002 ("Original Lease"), as amended by (i) that certain First Amendment to Lease dated as of September 10, 2002, (ii) that certain Second Amendment to Lease dated as of July 23, 2004, (iii) that certain Third Amendment to Lease dated as of November 1, 2004, (iv) that certain Fourth Amendment to Lease dated as of December 31, 2004, (v) that certain Fifth Amendment to Lease dated as of April 20, 2005, (vi) that certain Sixth Amendment to Lease dated as of May 18, 2005, (vii) that certain Seventh Amendment to Lease dated as of June 15, 2005, (viii) that certain Eighth Amendment to Lease dated as of November 15, 2005 and (ix) that certain Ninth Amendment to Lease dated as of February ____ , 2007; (provided that the effective agreements are the Original Lease and the Ninth Amendment, collectively, the "Lease") leased from Lessor, certain premises at 1099-18 ^th thereon located in the City of Denver, State of Colorado, as more particularly described in Exhibit A attached hereto (the "Demised Premises"); and

WHEREAS, Lessor has previously encumbered the Demised Premises as security for a loan (the "Loan") from Lender to Lessor in the form of a deed of trust (hereinafter called the "Mortgage"); and

WHEREAS, Lessee, Lessor and Lender have agreed to the following with respect to their mutual rights and obligations pursuant to the Lease and the Mortgage;

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by each party to the other and the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

(1) Lessee's interest in the Lease and all rights of Lessee thereunder, including but not limited to, any purchase option or right of first refusal in connection with a sale of the Demised Premises, if any, shall be and are hereby declared subject and subordinate to the Mortgage upon the Demised Premises and its terms, and the term "Mortgage" as used herein shall also include any amendment, supplement, modification, renewal, refinance or replacement thereof. Lender further agrees not to join Lessee in any foreclosure proceeding except to the extent necessary under applicable law, but such joinder shall not be in derogation of the rights of Lessee as set forth in this Agreement.

Exhibit H – 1

(2) In the event of any foreclosure of the Mortgage or any conveyance in lieu of foreclosure, provided that the Lessee shall not then be in default beyond any grace period under the Lease and that the Lease shall then be in full force and effect, then Lender shall neither terminate the Lease nor join Lessee in foreclosure proceedings, nor disturb Lessee's possession, and the Lease shall continue in full force and effect as a direct lease between Lessee and Lender. In the event Lender, its successors and/or assigns acquire the Demised Premises through foreclosure proceedings, deed-in-lieu of foreclosure, or otherwise, such event shall not activate Lessee's purchase option or right of first refusal.

(3) After the receipt by Lessee of notice from Lender of any foreclosure of the Mortgage or any conveyance of the Demised Premises in lieu of foreclosure, Lessee will thereafter attorn to and recognize Lender or any purchaser at any foreclosure sale or otherwise as its substitute lessor DI\ the terms and conditions set forth in the Lease.

(4) Lessee hereby agrees that if Lessee has the right to terminate the Lease or to claim a partial or total eviction, or to abate or reduce rent due to a Lessor default under the Lease, Lessee shall give Lender, by certified mail, return receipt requested, or by reputable overnight courier, a copy of any notice of default (or notice of termination under paragraph 15 of the Ninth Amendment) served on Lessor, at Lender's address set forth above or at such other address as to which Lessee has been notified in writing. Except with respect to a termination under paragraph 15 of the Ninth Amendment, if Lessor shall have failed to cure such default within the time provided for in the Lease, then Lender shall have an additional ten (10) days within which to cure any default capable of being cured by the payment of money and an additional thirty (30) days within which to cure any other default or if such other default cannot be cured within that time, then such additional time as may be necessary (but in no event more than one hundred eighty (180) days) to cure such other default shall be granted if within such thirty (30) days Lender has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event the Lease shall not be terminated while such remedies are being so diligently pursued. Lender acknowledges that Lessee has the right to offset against Rent otherwise payable to Lessor amounts the landlord under the Lease fails to pay to Lessee as described in paragraphs 26(h) and (i) of the Original Lease and paragraphs 20, 21, 22, 29, 32, and 36 of the Ninth Amendment (collectively, the "Offset Right"), and notwithstanding any provisions of this Agreement to the contrary, nothing in this Agreement will be construed to diminish or otherwise modify Tenant's Offset Right.

(5) Lessee agrees that if the Lease is terminated, Lessee will remit any payments made in connection with such termination directly and immediately to Lender. Lessor hereby agrees that such payments shall be held by Lender in an interest bearing account as additional security for the Loan, and applied at Lender's sole discretion.

(6) This Agreement and its terms shall be governed by the laws of the state where the Demised Premises are located and shall be binding upon and inure to the benefit of Lender, Lessor and Lessee and their respective successors and assigns, including, without limitation, any purchaser at any foreclosure sale or otherwise. This Agreement may not be modified orally or in any manner other than by an agreement, in writing, signed by the parties.

(7) This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one agreement.

[SIGNATURES FOLLOW ON NEXT THREE PAGES]

Exhibit H – 2

IN WITNESS WHEREOF, this Agreement to be fully executed under seal on the day and year first above written.

LESSOR:

Cumberland Office Park, LLC,

a Georgia limited liability company


By:	GPI Tower, Ltd., a Texas limited:

partnership, its sole member


By:	SF Realty, Inc., a Texas corporation,

its general partner

By: _______________________________________

Name: _____________________________________

Title: ______________________________________

STATE OF ________________ )

) SS

COUNTY OF ______________ )

I, ______________________, Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY, that ______________,as _____________________ of SF Realty, Inc., a Texas corporation, the general partner of GPI Tower, Ltd, a Texas limited partnership, the sole member of CUMBERLAND OFFICE PARK, LLC, a Georgia limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that (he/she) signed and delivered the said instrument as (his/her) own free and voluntary act and as the free and voluntary act on behalf of such limited liability company, for the uses and purposes therein set forth.

GIVEN under my hand and Notarial Seal this ________ day of ______________, 2007.

___________________________________________

NOTARY PUBLIC

My Commission Expires: _______________________

Exhibit H – 3

LENDER:

ANADARKO PETROLEUM CORPORATION,

a Delaware corporation

By: _______________________________________

Name: _____________________________________

Title: ______________________________________

STATE OF ____________ )

) SS

COUNTY OF __________ )

I, ________________________, Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY, that __________________ and _______________________, who are personally known to me to be the _______ President and ____________________ Secretary of _____________________, a __________, and the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that they signed and delivered the said instruments as _____________ President and ______________ Secretary of said corporation and that the said __________________ Secretary then and there caused the corporate seal of said corporation to be affixed thereto, pursuant to authority given by the Board of Directors of said corporation, as (his/her) own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.

GIVEN under my hand and Notarial Seal this ___ day of __________________, 2007.

___________________________________________

NOTARY PUBLIC

My Commission Expires: _______________________

Exhibit H – 4

LENDER:

PRINCIPAL LIFE INSURANCE COMPANY,

an Iowa corporation

By: _______________________________________

Name: _____________________________________

Title: ______________________________________

STATE OF ____________ )

) SS

COUNTY OF __________ )

I, ________________________, Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY, that __________________ and _______________________, who are personally known to me to be the _______ President and ____________________ Secretary of Principal Life Insurance Company, an Iowa corporation, and the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that they signed and delivered the said instrument as _____________ President and ______________ Secretary of said corporation and that the said __________________ Secretary then and there caused the corporate seal of said corporation to be affixed thereto, pursuant to authority given by the Board of Directors of said corporation, as (his/her) own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.

GIVEN under my hand and Notarial Seal this ___ day of __________________, 2007.

___________________________________________

NOTARY PUBLIC

My Commission Expires: _______________________

Exhibit H – 5

EXHIBIT A

LEGAL DESCRIPTION and PREMISES DESCRIPTION

Unit l, BLOCK 95 CONDOMINIUMS, according to the Master Declaration of Block 95 Condominiums recorded August 31, 2005 under Reception No. 2005147039, as amended by the Amended and Restated Master Declaration of Block 95 Condominiums recorded December 19, 2005 at Reception No. 2005215222, and the Condominium Map thereof recorded August 31, 2005 under Reception No. 2005147040, as amended by the Amended and Restated Condominium Map recorded on December 19, 2005 at Reception No. 2005215223, in the records of the Clerk and Recorder of the City and County of Denver, State of Colorado.

ATTACH PREMISES DESCRIPTION

Exhibit H – 6

EXHIBIT H-1

Lessee's Estoppel

To: Principal Life Insurance Company, its successors and assigns ("Lender")

c/o Principal Real Estate Investors, LLC

801 Grand Avenue

Des Moines, Iowa 50392-1360 Attn: Commercial Real Estate


Re:	Lease (the "Lease") dated [DESCRIBE] , between Cumberland Office Park, LLC, as landlord ("Lessor"), and , as tenant ("Lessee") of certain real property in the City and County of Denver, State of Colorado, having a street address of 1099-18 ^th Street, Suite 1900 (the "Property").

Lessee hereby certifies the following representations with respect to the Lease are accurate and complete as of the date hereof with the understanding that Lender will rely upon the representations in connection with a loan to Lessor (the "Loan") and accepting an assignment of the Lessor's interest in the Lease as additional security for making the Loan:

1. The following are the pertinent terms of the Lease: --

a. Current Monthly Base Rent: .

b. Commencement Date: , 2006.

c. Termination Date: , 20 .

2. Lessee has accepted the Property and taken possession thereof without any existing condition or qualification and is in full, physical occupancy and operation at the Property. Lessee has not given any notice of termination or intent to vacate the Property. Both Lessor and Lessee have completed and complied with all required conditions precedent to such acceptance and possession and there are not outstanding sums due Lessee pursuant to the terms of the Lease.

3. The monthly rent due is continuing and is not past due or delinquent in any respect. Lessee has not and shall not prepay any of the rents under the Lease more than one (1) month in advance. As of the date hereof, Lessee has no defense as to its obligations under the Lease and asserts no set-off, claim, or counterclaim against Lessor.

4. Neither Lessee nor Lessor is in default under the Lease. The Lease is in full force and effect and has not been supplemented or amended, nor has any portion of the Property leased by Lessee been sublet.

IN WITNESS WHEREOF, this certificate has been duly executed and delivered by the authorized officers of the undersigned as of ,2006.

Name:

Title:

Exhibit H-1

EXHIBIT I

TENANT EXTERIOR SIGN ON BUILDING AND MONUMENT SIGN LOCATIONS

1. Utilities . Tenant shall reimburse Landlord for any utilities consumed by the Sign (if Landlord expressly permits the sign to be illuminated in writing), as reasonably estimated by Landlord's engineer, within thirty (30) days after billing.

2. Access, Design and Installation . Landlord shall permit Tenant reasonable access to the Sign for the purposes permitted hereunder, during normal business hours at the Property upon reasonable advance notice and scheduling through Landlord's management and security personnel. Access after normal business hours may be granted by Landlord in its reasonable discretion, and for such reasonable charges as Landlord shall impose. Landlord reserves the right to inspect and make repairs, additions or alterations to the Sign Space or area of the Property where the Sign Space is located. In connection with exercising such rights, if Landlord needs to temporarily disconnect the Sign, Landlord will notify Tenant to minimize impact thereof. Tenant shall not install the Sign or thereafter make any alterations, or additions to the Sign without Landlord's prior written consent. Landlord shall approve or reject the proposed installation of the Sign within a reasonable time after Tenant submits (a) plans and specifications for the installation of the Sign, (b) copies of all required governmental and quasi-governmental permits, licenses, and authorizations which Tenant will obtain at its own expense, and (c) a certificate of insurance evidencing the coverage required by Landlord set forth on Schedule I-1 hereto. Tenant's Sign plans must be professionally prepared and shall show all aspects of the design, including, but not limited to, font of lettering, number of letters, content, color and finish, type and quality of materials, dimensions of the Sign and of every detail (including letters), and all other details of the Sign, placement of the Sign, and whether (and in what manner) it will be illuminated. Landlord may withhold approval of any aspect of the Sign plans affecting the appearance or image of the Property in Landlord's sole and absolute discretion (other than the content of the name set forth above), but shall not unreasonably withhold approval of other aspects of the Sign plans. Landlord may require that any installation or other work be done in accordance with any Property rules, standards or other requirements for installations and/or under the supervision of Landlord's employees or agents, and in a manner so as to avoid damage to the Property. All installation work shall be performed in a good and workmanlike manner, in accordance with all governmental requirements and in accordance with all provisions of the Lease respecting Work to the Premises.

3. Condition; Permits. Tenant agrees that Tenant has inspected the Sign Space and agrees to accept the same hereunder "as is". Landlord does not represent or warrant that the Sign or its placement in the Sign Space will be suitable for Tenant's purposes. Tenant shall at all times comply with any applicable federal, state, county or local laws or ordinances, and all applicable covenants, conditions and restrictions, pertaining to Tenant's installation and use of the Sign. Tenant's failure or inability to obtain any necessary permits, approvals, variances or waivers respecting the Sign and Sign Space shall not excuse Tenant from any obligations under this Lease; any variances or waivers shall be subject to Landlord's prior written approval to determine whether such variances or waivers may limit any rights to place or maintain other signs at the Property or otherwise adversely affect Landlord.

4. Roof or Other Property Damage; Removal . Tenant shall take all appropriate actions to prevent any roof or building leaks or other damage or injury to the Sign Space or the Property or contents thereof (collectively, "Property Damage") caused by Tenant's use of the Sign Space or its installation, use, maintenance or removal of the Sign, and shall promptly notify Landlord of any such Property Damage. In the event of any such Property Damage, Landlord may: (i) require that Tenant pay Landlord's reasonable costs for repairing such Property Damage within thirty (30) days after Landlord submits an invoice and reasonable supporting documentation therefor, or (ii) require that Tenant perform the necessary repairs in a good and workmanlike manner using a contractor designated or approved by Landlord at Tenant's expense within thirty (30) days after Landlord's notice. Upon termination of the Lease or this Exhibit, by expiration or otherwise, Tenant shall disconnect and remove the Sign. If Tenant does not immediately remove the Sign when so required, Tenant hereby authorizes Landlord to remove and dispose of the Sign and Tenant shall promptly pay Landlord's reasonable charges for doing so. Landlord shall not be liable for any property so disposed or removed by Landlord.

5. Miscellaneous Sign Provisions. Tenant shall maintain the Sign in good, sightly and first class appearance, condition and repair, and so as not to detract from the appearance or image of the Property. Tenant shall ensure that the Sign is fully and completely illuminated each night between sunset and midnight (or such other time as Tenant reasonably requests, but not beyond sunrise), at Tenant's sole cost and expense. Landlord reserves the right to take, or to grant others the right to take, pictures or films of the Property, and to use the same as Landlord wishes without compensation to Tenant. If Tenant shall fail to maintain, repair, or illuminate (if approved or required by Landlord hereunder), the Sign in the condition required hereunder for 24 hours after written notice by Landlord (or such reasonable time thereafter provided Tenant has commenced the process of such repair and is diligently pursuing its completion), Landlord may so repair, maintain and illuminate the Sign, at Tenant's cost and expense (which Tenant shall

Exhibit I – 1

pay to Landlord as additional rent, when billed by Landlord), without limiting Landlord's other rights and remedies. Once installation of the Sign has commenced, it shall be completed as soon as possible. Tenant shall ensure that the Sign does not interfere with any views from any windows in the Property, nor interfere in any way with the ability of Landlord or its tenants and occupants of the Property and neighboring properties to receive radio, television, telephone, microwave, short-wave, long-wave or other signals of any sort that are transmitted through the air or atmosphere, nor interfere with the use of electric, electronic or other facilities, appliances, personal property and fixtures, nor interfere in any way with the use of any antennas, satellite dishes or other electronic or electric equipment or facilities currently or hereafter located on or about the Property or other property.

6. Other Provisions. Except to the extent expressly inconsistent herewith, all rights and obligations of the parties respecting the Premises under the Lease shall apply to the Sign Space, including, without limitation, obligations respecting compliance with Laws, hazardous materials, repairs, casualty damage, indemnities and insurance (including waivers of insurers' subrogation rights). At Landlord's option by written notice to Tenant, the License Term shall not commence until Tenant and its employees are occupying at least one half of the rentable area of the Premises, and shall terminate at any time thereafter that Tenant and its Affiliates cease to occupy at least seven (7) floors at the Building (whether such cessation is due to Tenant having assigned its rights under the lease or having subleased a portion or portions of such space, or having actually vacated such space or a portion thereof, and without limitation as to any other rights available to Landlord to terminate this license).

Exhibit I – 2

Exhibit I – 3

BLOCK SIGNAGE

At the 18 ^th & Curtis and 18 ^th & Arapahoe corners, the sign would have the following:

Granite Tower

The Ritz-Carlton

The Apartments

The Athletic Club

The Ritz-Carlton Residences

Elway's

At the 19 ^th & Arapahoe corner, the sign would have the following:

The Apartments

Granite Tower

The Ritz-Carlton

The Athletic Club

Subject to final approval by the Condominium Association.

BUILDING MONUMENT SIGNAGE

The building Monument Signage would have:

Granite Tower

Anadarko

Anadarko (2 slots)

Tenant C (no competitor to Anadarko)

Tenant D

Tenant E

1099 18 ^th Street

Exhibit I – 4

Exhibit I – 5

SCHEDULE I-1

SIGN INSURANCE REQUIREMENTS

Schedule I - 1

Schedule I - 2

Exhibit 10.50

TENTH AMENDMENT TO OFFICE LEASE

1099 18 ^th Street, Denver, Colorado

For valuable consideration, the receipt and adequacy of which are expressly acknowledged, Landlord and Tenant (as defined below) agree as of the Effective Date that:

1. Definitions . In this Tenth Amendment, the following terms have the meaning given:

(a) Effective Date : September 11 , 2007.

(b) Landlord : Cumberland Office Park, LLC, a Georgia limited liability company.

(d) Lease : Agreement of Lease, dated July 30, 2002, between Denver-Stellar Associates Limited Partnership, a Delaware limited partnership ("DSA") and Western Gas Resources, Inc. ("Original Tenant") ("Original Lease"), as amended by: